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Share Name | Share Symbol | Market | Type |
---|---|---|---|
National Security Group Inc | NASDAQ:NSEC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 16.36 | 16.32 | 16.40 | 0 | 01:00:00 |
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
63-1020300
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(IRS Employer
Identification No.)
|
|
|
|
661 East Davis Street
Elba, Alabama
|
|
36323
|
(Address of principal executive offices)
|
|
(Zip-Code)
|
PART I. FINANCIAL INFORMATION
|
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Page No.
|
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Item 1. Financial Statements
|
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Condensed Consolidated Balance Sheets
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Condensed Consolidated Statements of Operations
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Condensed Consolidated Statements of Comprehensive Income (Loss)
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Condensed Consolidated Statements of Changes in Shareholders’ Equity
|
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Condensed Consolidated Statements of Cash Flows
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Notes to Condensed Consolidated Financial Statements
|
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Review Report of Independent Registered Public Accounting Firm
|
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
|
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Item 4. Controls and Procedures
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PART II. OTHER INFORMATION
|
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Item 1. Legal Proceedings
|
||
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Item 1A. Risk Factors
|
||
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
||
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Item 3. Defaults Upon Senior Securities
|
||
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Item 4. Mine Safety Disclosures
|
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Item 5. Other Information
|
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Item 6. Exhibits
|
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SIGNATURE
|
▪
|
The insurance industry is highly competitive and the Company encounters significant competition in all lines of business from other insurance companies. Many of the competing companies have more abundant financial resources than the Company.
|
▪
|
Insurance is a highly regulated industry. It is possible that legislation may be enacted which would have an adverse effect on the Company's business.
|
▪
|
The Company is subject to regulation by state governments for each of the states in which it conducts business. The Company cannot predict the subject of any future regulatory initiative(s) or its (their) impact on the Company's business. Company insurance rates are also subject to approval by state insurance departments in each of these states. We are often limited in the level of rate increases we can obtain.
|
▪
|
The Company is rated by various insurance rating agencies. If a rating is downgraded from its current level by one of these agencies, sales of the Company's products and stock price could be adversely impacted.
|
▪
|
The Company's financial results are adversely affected by increases in policy claims received by the Company. While we consider this a manageable risk, this fluctuation is unpredictable.
|
▪
|
The Company's investments are subject to a variety of risks. Investments are subject to defaults and changes in market value. Market value can be affected by changes in interest rates, market performance and the economy.
|
▪
|
The Company mitigates risk associated with life policies through implementing effective underwriting and reinsurance strategies. These factors mitigate, not eliminate, risk related to mortality and morbidity exposure. The Company has established reserves for claims and future policy benefits based on amounts determined by independent actuaries. There is no assurance that these estimated reserves will prove to be sufficient or that the Company will not incur claims exceeding reserves, which could result in operating losses and loss of capital.
|
▪
|
The Company mitigates risk associated with property and casualty policies through implementing effective underwriting and reinsurance strategies. The Company obtains reinsurance which increases underwriting capacity and limits the risk associated with policy claims. The Company is subject to credit risk with regard to reinsurers as reinsurance does not alleviate the Company's liability to its insured's for the ceded risks. The Company utilizes a third-party to develop a reinsurance treaty with reinsurers who are reliable and financially stable. However, there is no guarantee that booked reinsurance recoverable will actually be recovered. A reinsurer's insolvency or inability to make payments due could have a material adverse impact on the financial condition of the Company.
|
▪
|
The Company's ability to continue to pay dividends to shareholders is contingent upon profitability and capital adequacy of the insurance subsidiaries. The insurance subsidiaries operate under regulatory restrictions that could limit the ability to fund future dividend payments of the Company. An adverse event or series of events could materially impact the ability of the insurance subsidiaries to fund future dividends, and consequently, the Board of Directors would have to suspend the declaration of dividends to shareholders.
|
▪
|
The Company is subject to the risk of adverse settlements or judgments resulting from litigation of contested claims. It is difficult to predict or quantify the expected results of litigation because the outcome depends on decisions of the court and jury that are based on facts and legal arguments presented at the trial.
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
|
(UNAUDITED)
|
|
|
||||
ASSETS
|
|
|
|
|
||||
Investments
|
|
|
|
|
||||
Fixed maturities held-to-maturity, at amortized cost (estimated fair value: 2017 -
$1,729; 2016 - $1,930)
|
|
$
|
1,684
|
|
|
$
|
1,890
|
|
Fixed maturities available-for-sale, at estimated fair value (cost: 2017 - $91,410;
2016 - $92,837)
|
|
92,823
|
|
|
92,792
|
|
||
Equity securities available-for-sale, at estimated fair value (cost: 2017 - $2,044;
2016 - $2,343)
|
|
4,790
|
|
|
4,943
|
|
||
Trading securities
|
|
107
|
|
|
107
|
|
||
Receivable for securities sold
|
|
—
|
|
|
499
|
|
||
Mortgage loans on real estate, at cost
|
|
163
|
|
|
174
|
|
||
Investment real estate, at book value
|
|
3,221
|
|
|
3,221
|
|
||
Policy loans
|
|
1,768
|
|
|
1,708
|
|
||
Company owned life insurance
|
|
4,959
|
|
|
4,864
|
|
||
Other invested assets
|
|
2,688
|
|
|
2,958
|
|
||
Total Investments
|
|
112,203
|
|
|
113,156
|
|
||
Cash and cash equivalents
|
|
9,770
|
|
|
7,368
|
|
||
Accrued investment income
|
|
815
|
|
|
776
|
|
||
Policy receivables and agents' balances, net
|
|
12,880
|
|
|
11,434
|
|
||
Reinsurance recoverable
|
|
503
|
|
|
1,780
|
|
||
Deferred policy acquisition costs
|
|
8,448
|
|
|
8,351
|
|
||
Property and equipment, net
|
|
1,810
|
|
|
1,880
|
|
||
Accrued income tax recoverable
|
|
1,451
|
|
|
941
|
|
||
Deferred income tax asset, net
|
|
2,613
|
|
|
2,402
|
|
||
Other assets
|
|
822
|
|
|
491
|
|
||
Total Assets
|
|
$
|
151,315
|
|
|
$
|
148,579
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
||
Property and casualty benefit and loss reserves
|
|
$
|
8,897
|
|
|
$
|
7,531
|
|
Accident and health benefit and loss reserves
|
|
3,480
|
|
|
3,405
|
|
||
Life and annuity benefit and loss reserves
|
|
33,110
|
|
|
32,633
|
|
||
Unearned premiums
|
|
32,594
|
|
|
29,968
|
|
||
Policy and contract claims
|
|
923
|
|
|
1,008
|
|
||
Other policyholder funds
|
|
1,683
|
|
|
1,629
|
|
||
Short-term notes payable and current portion of long-term debt
|
|
1,300
|
|
|
1,800
|
|
||
Long-term debt
|
|
15,335
|
|
|
15,326
|
|
||
Other liabilities
|
|
6,877
|
|
|
7,227
|
|
||
Total Liabilities
|
|
104,199
|
|
|
100,527
|
|
||
Contingencies
|
|
|
|
|
|
|
||
Shareholders' equity
|
|
|
|
|
|
|
||
Common stock
|
|
2,522
|
|
|
2,517
|
|
||
Additional paid-in capital
|
|
5,483
|
|
|
5,412
|
|
||
Accumulated other comprehensive income
|
|
2,245
|
|
|
1,007
|
|
||
Retained earnings
|
|
36,866
|
|
|
39,116
|
|
||
Total Shareholders' Equity
|
|
47,116
|
|
|
48,052
|
|
||
Total Liabilities and Shareholders' Equity
|
|
$
|
151,315
|
|
|
$
|
148,579
|
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
REVENUES
|
|
|
|
|
|
|
|
||||||||
Net premiums earned
|
$
|
15,467
|
|
|
$
|
15,675
|
|
|
$
|
45,838
|
|
|
$
|
46,067
|
|
Net investment income
|
939
|
|
|
1,005
|
|
|
2,795
|
|
|
3,025
|
|
||||
Net realized investment gains
|
75
|
|
|
287
|
|
|
312
|
|
|
536
|
|
||||
Other income
|
150
|
|
|
152
|
|
|
447
|
|
|
456
|
|
||||
Total Revenues
|
16,631
|
|
|
17,119
|
|
|
49,392
|
|
|
50,084
|
|
||||
BENEFITS, LOSSES AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
||||
Policyholder benefits and settlement expenses
|
11,184
|
|
|
10,082
|
|
|
34,911
|
|
|
27,991
|
|
||||
Amortization of deferred policy acquisition costs
|
706
|
|
|
758
|
|
|
2,470
|
|
|
2,451
|
|
||||
Commissions
|
2,096
|
|
|
2,088
|
|
|
5,947
|
|
|
6,313
|
|
||||
General and administrative expenses
|
2,398
|
|
|
2,026
|
|
|
6,410
|
|
|
6,313
|
|
||||
Taxes, licenses and fees
|
709
|
|
|
529
|
|
|
1,915
|
|
|
1,703
|
|
||||
Interest expense
|
320
|
|
|
339
|
|
|
969
|
|
|
1,017
|
|
||||
Total Benefits, Losses and Expenses
|
17,413
|
|
|
15,822
|
|
|
52,622
|
|
|
45,788
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income (Loss) Before Income Taxes
|
(782
|
)
|
|
1,297
|
|
|
(3,230
|
)
|
|
4,296
|
|
||||
|
|
|
|
|
|
|
|
||||||||
INCOME TAX EXPENSE (BENEFIT)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Current
|
387
|
|
|
238
|
|
|
(510
|
)
|
|
858
|
|
||||
Deferred
|
(612
|
)
|
|
129
|
|
|
(848
|
)
|
|
271
|
|
||||
|
(225
|
)
|
|
367
|
|
|
(1,358
|
)
|
|
1,129
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net Income (Loss)
|
$
|
(557
|
)
|
|
$
|
930
|
|
|
$
|
(1,872
|
)
|
|
$
|
3,167
|
|
|
|
|
|
|
|
|
|
||||||||
INCOME (LOSS) PER COMMON SHARE BASIC AND DILUTED
|
$
|
(0.22
|
)
|
|
$
|
0.37
|
|
|
$
|
(0.74
|
)
|
|
$
|
1.26
|
|
|
|
|
|
|
|
|
|
||||||||
DIVIDENDS DECLARED PER SHARE
|
$
|
0.05
|
|
|
$
|
0.045
|
|
|
$
|
0.15
|
|
|
$
|
0.135
|
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
(557
|
)
|
|
$
|
930
|
|
|
$
|
(1,872
|
)
|
|
$
|
3,167
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
||||||||
Changes in:
|
|
|
|
|
|
|
|
||||||||
Unrealized gains on securities, net of reclassification adjustment of $205 and $223 for 2017 and 2016, respectively
|
212
|
|
|
69
|
|
|
1,058
|
|
|
2,357
|
|
||||
Unrealized gain on interest rate swap
|
70
|
|
|
134
|
|
|
180
|
|
|
53
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income, net of tax
|
282
|
|
|
203
|
|
|
1,238
|
|
|
2,410
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive income (loss)
|
$
|
(275
|
)
|
|
$
|
1,133
|
|
|
$
|
(634
|
)
|
|
$
|
5,577
|
|
|
Total
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
||||||||||
Balance at December 31, 2016
(AUDITED)
|
$
|
48,052
|
|
|
$
|
39,116
|
|
|
$
|
1,007
|
|
|
$
|
2,517
|
|
|
$
|
5,412
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss for September 30, 2017
|
(1,872
|
)
|
|
(1,872
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive income (net of tax)
|
1,238
|
|
|
—
|
|
|
1,238
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock issued
|
76
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
71
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends
|
(378
|
)
|
|
(378
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at September 30, 2017
|
$
|
47,116
|
|
|
$
|
36,866
|
|
|
$
|
2,245
|
|
|
$
|
2,522
|
|
|
$
|
5,483
|
|
|
Nine months ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
Cash Flows from Operating Activities
|
|
|
|
||||
Net income (loss)
|
$
|
(1,872
|
)
|
|
$
|
3,167
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|||
Depreciation expense and amortization/accretion, net
|
390
|
|
|
255
|
|
||
Decrease in cash surrender value of company owned life insurance
|
(95
|
)
|
|
(80
|
)
|
||
Net realized gains on investments
|
(312
|
)
|
|
(536
|
)
|
||
Deferred income taxes
|
(848
|
)
|
|
271
|
|
||
Amortization of deferred policy acquisition costs
|
2,470
|
|
|
2,451
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Change in receivable for securities sold
|
499
|
|
|
—
|
|
||
Change in accrued investment income
|
(39
|
)
|
|
(73
|
)
|
||
Change in reinsurance recoverable
|
1,277
|
|
|
1,133
|
|
||
Policy acquisition costs deferred
|
(2,567
|
)
|
|
(2,679
|
)
|
||
Change in accrued income taxes
|
(510
|
)
|
|
(43
|
)
|
||
Change in net policy liabilities and claims
|
3,007
|
|
|
(116
|
)
|
||
Change in other assets/liabilities, net
|
(63
|
)
|
|
699
|
|
||
Other, net
|
5
|
|
|
7
|
|
||
Net cash provided by operating activities
|
1,342
|
|
|
4,456
|
|
||
Cash Flows from Investing Activities
|
|
|
|
|
|||
Purchase of:
|
|
|
|
||||
Available-for-sale securities
|
(12,118
|
)
|
|
(23,357
|
)
|
||
Property and equipment
|
(51
|
)
|
|
(84
|
)
|
||
Proceeds from sale or maturities of:
|
|
|
|
||||
Held-to-maturity securities
|
205
|
|
|
383
|
|
||
Available-for-sale securities
|
13,895
|
|
|
18,384
|
|
||
Property and equipment
|
2
|
|
|
—
|
|
||
Other invested assets, net
|
(49
|
)
|
|
(34
|
)
|
||
Net cash provided by (used in) investing activities
|
1,884
|
|
|
(4,708
|
)
|
||
Cash Flows from Financing Activities
|
|
|
|
|
|
||
Change in other policyholder funds
|
54
|
|
|
53
|
|
||
Repayments of long-term debt
|
—
|
|
|
(700
|
)
|
||
Change in short-term notes payable
|
(500
|
)
|
|
—
|
|
||
Dividends paid
|
(378
|
)
|
|
(339
|
)
|
||
Net cash used in financing activities
|
(824
|
)
|
|
(986
|
)
|
||
Net change in cash and cash equivalents
|
2,402
|
|
|
(1,238
|
)
|
||
Cash and cash equivalents, beginning of year
|
7,368
|
|
|
6,763
|
|
||
Cash and cash equivalents, end of period
|
$
|
9,770
|
|
|
$
|
5,525
|
|
Available-for-sale securities:
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Corporate debt securities
|
|
$
|
38,448
|
|
|
$
|
1,244
|
|
|
$
|
555
|
|
|
$
|
39,137
|
|
Mortgage backed securities
|
|
9,882
|
|
|
128
|
|
|
181
|
|
|
9,829
|
|
||||
Private label asset backed securities
|
|
9,917
|
|
|
329
|
|
|
13
|
|
|
10,233
|
|
||||
Obligations of states and political subdivisions
|
|
14,153
|
|
|
476
|
|
|
77
|
|
|
14,552
|
|
||||
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
|
|
19,010
|
|
|
276
|
|
|
214
|
|
|
19,072
|
|
||||
Total fixed maturities
|
|
91,410
|
|
|
2,453
|
|
|
1,040
|
|
|
92,823
|
|
||||
Equity securities
|
|
2,044
|
|
|
2,746
|
|
|
—
|
|
|
4,790
|
|
||||
Total
|
|
$
|
93,454
|
|
|
$
|
5,199
|
|
|
$
|
1,040
|
|
|
$
|
97,613
|
|
Held-to-maturity securities:
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Mortgage backed securities
|
|
$
|
1,681
|
|
|
$
|
45
|
|
|
$
|
—
|
|
|
$
|
1,726
|
|
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Total
|
|
$
|
1,684
|
|
|
$
|
45
|
|
|
$
|
—
|
|
|
$
|
1,729
|
|
Available-for-sale securities:
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Corporate debt securities
|
|
$
|
40,533
|
|
|
$
|
748
|
|
|
$
|
878
|
|
|
$
|
40,403
|
|
Mortgage backed securities
|
|
10,970
|
|
|
134
|
|
|
173
|
|
|
10,931
|
|
||||
Private label asset backed securities
|
|
7,910
|
|
|
29
|
|
|
165
|
|
|
7,774
|
|
||||
Obligations of states and political subdivisions
|
|
14,806
|
|
|
507
|
|
|
147
|
|
|
15,166
|
|
||||
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
|
|
18,618
|
|
|
208
|
|
|
308
|
|
|
18,518
|
|
||||
Total fixed maturities
|
|
92,837
|
|
|
1,626
|
|
|
1,671
|
|
|
92,792
|
|
||||
Equity securities
|
|
2,343
|
|
|
2,628
|
|
|
28
|
|
|
4,943
|
|
||||
Total
|
|
$
|
95,180
|
|
|
$
|
4,254
|
|
|
$
|
1,699
|
|
|
$
|
97,735
|
|
Held-to-maturity securities:
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Mortgage backed securities
|
|
$
|
1,863
|
|
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
1,901
|
|
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
|
|
27
|
|
|
2
|
|
|
—
|
|
|
29
|
|
||||
Total
|
|
$
|
1,890
|
|
|
$
|
40
|
|
|
$
|
—
|
|
|
$
|
1,930
|
|
(Dollars in Thousands)
|
|
Amortized
Cost
|
|
Fair
Value
|
||||
Available-for-sale securities:
|
|
|
|
|
||||
Due in one year or less
|
|
$
|
1,160
|
|
|
$
|
1,168
|
|
Due after one year through five years
|
|
16,753
|
|
|
17,015
|
|
||
Due after five years through ten years
|
|
30,876
|
|
|
31,471
|
|
||
Due after ten years
|
|
42,621
|
|
|
43,169
|
|
||
Total
|
|
$
|
91,410
|
|
|
$
|
92,823
|
|
|
|
|
|
|
||||
Held-to-maturity securities:
|
|
|
|
|
|
|
||
Due in one year or less
|
|
$
|
6
|
|
|
$
|
6
|
|
Due after one year through five years
|
|
1
|
|
|
1
|
|
||
Due after five years through ten years
|
|
65
|
|
|
70
|
|
||
Due after ten years
|
|
1,612
|
|
|
1,652
|
|
||
Total
|
|
$
|
1,684
|
|
|
$
|
1,729
|
|
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
|||||||||||||||||||||
September 30, 2017
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Total
Securities in a Loss Position
|
|||||||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Corporate debt securities
|
|
$
|
6,445
|
|
|
$
|
120
|
|
|
$
|
5,345
|
|
|
$
|
435
|
|
|
$
|
11,790
|
|
|
$
|
555
|
|
|
21
|
|
Mortgage backed securities
|
|
4,583
|
|
|
70
|
|
|
932
|
|
|
111
|
|
|
5,515
|
|
|
181
|
|
|
12
|
|
||||||
Private label asset backed securities
|
|
1,642
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
1,642
|
|
|
13
|
|
|
2
|
|
||||||
Obligations of state and political subdivisions
|
|
1,594
|
|
|
21
|
|
|
1,964
|
|
|
56
|
|
|
3,558
|
|
|
77
|
|
|
7
|
|
||||||
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
|
|
6,284
|
|
|
98
|
|
|
3,617
|
|
|
116
|
|
|
9,901
|
|
|
214
|
|
|
14
|
|
||||||
|
|
$
|
20,548
|
|
|
$
|
322
|
|
|
$
|
11,858
|
|
|
$
|
718
|
|
|
$
|
32,406
|
|
|
$
|
1,040
|
|
|
56
|
|
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||||
December 31, 2016
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Total
Securities in a Loss Position
|
||||||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Corporate debt securities
|
|
$
|
14,036
|
|
|
$
|
396
|
|
|
$
|
2,594
|
|
|
$
|
482
|
|
|
$
|
16,630
|
|
|
$
|
878
|
|
|
33
|
Mortgage backed securities
|
|
4,235
|
|
|
84
|
|
|
847
|
|
|
89
|
|
|
5,082
|
|
|
173
|
|
|
16
|
||||||
Private label asset backed securities
|
|
1,774
|
|
|
53
|
|
|
3,261
|
|
|
112
|
|
|
5,035
|
|
|
165
|
|
|
11
|
||||||
Obligations of state and political subdivisions
|
|
4,154
|
|
|
147
|
|
|
—
|
|
|
—
|
|
|
4,154
|
|
|
147
|
|
|
9
|
||||||
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
|
|
11,421
|
|
|
294
|
|
|
291
|
|
|
14
|
|
|
11,712
|
|
|
308
|
|
|
16
|
||||||
Equity securities
|
|
—
|
|
|
—
|
|
|
1,258
|
|
|
28
|
|
|
1,258
|
|
|
28
|
|
|
1
|
||||||
|
|
$
|
35,620
|
|
|
$
|
974
|
|
|
$
|
8,251
|
|
|
$
|
725
|
|
|
$
|
43,871
|
|
|
$
|
1,699
|
|
|
86
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Fixed maturities
|
$
|
860
|
|
|
$
|
895
|
|
|
$
|
2,518
|
|
|
$
|
2,744
|
|
Equity securities
|
24
|
|
|
23
|
|
|
72
|
|
|
77
|
|
||||
Mortgage loans on real estate
|
2
|
|
|
4
|
|
|
7
|
|
|
11
|
|
||||
Investment real estate
|
2
|
|
|
1
|
|
|
4
|
|
|
5
|
|
||||
Policy loans
|
30
|
|
|
32
|
|
|
96
|
|
|
96
|
|
||||
Company owned life insurance change in surrender value
|
38
|
|
|
27
|
|
|
95
|
|
|
80
|
|
||||
Other
|
14
|
|
|
61
|
|
|
101
|
|
|
136
|
|
||||
|
970
|
|
|
1,043
|
|
|
2,893
|
|
|
3,149
|
|
||||
Less: Investment expenses
|
31
|
|
|
38
|
|
|
98
|
|
|
124
|
|
||||
Net investment income
|
$
|
939
|
|
|
$
|
1,005
|
|
|
$
|
2,795
|
|
|
$
|
3,025
|
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Fixed maturities
|
$
|
75
|
|
|
$
|
78
|
|
|
$
|
310
|
|
|
$
|
338
|
|
Other, principally real estate
|
—
|
|
|
209
|
|
|
2
|
|
|
198
|
|
||||
Net realized investment gains
|
$
|
75
|
|
|
$
|
287
|
|
|
$
|
312
|
|
|
$
|
536
|
|
|
September 30,
2017 |
|
December 31, 2016
|
||||
Net change in unrealized appreciation on available-for-sale securities before deferred tax
|
$
|
1,603
|
|
|
$
|
343
|
|
Deferred income tax
|
(545
|
)
|
|
(117
|
)
|
||
Net change in unrealized appreciation on available-for-sale securities
|
$
|
1,058
|
|
|
$
|
226
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||||
Description
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturities available-for-sale
|
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
|
$
|
39,137
|
|
|
$
|
—
|
|
|
$
|
39,137
|
|
|
$
|
—
|
|
Mortgage backed securities
|
|
9,829
|
|
|
—
|
|
|
9,829
|
|
|
—
|
|
||||
Private label asset backed securities
|
|
10,233
|
|
|
—
|
|
|
10,233
|
|
|
—
|
|
||||
Obligations of states and political subdivisions
|
|
14,552
|
|
|
—
|
|
|
14,552
|
|
|
—
|
|
||||
U.S. Treasury securities and obligations of U.S.
Government corporations and agencies
|
|
19,072
|
|
|
19,072
|
|
|
—
|
|
|
—
|
|
||||
Trading securities
|
|
107
|
|
|
107
|
|
|
—
|
|
|
—
|
|
||||
Equity securities available-for-sale
|
|
4,790
|
|
|
3,717
|
|
|
—
|
|
|
1,073
|
|
||||
Total Financial Assets
|
|
$
|
97,720
|
|
|
$
|
22,896
|
|
|
$
|
73,751
|
|
|
$
|
1,073
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest rate swap
|
|
$
|
(757
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(757
|
)
|
Total Financial Liabilities
|
|
$
|
(757
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(757
|
)
|
For the nine months ended September 30, 2017
|
|
Equity Securities Available-for-Sale
|
|
Interest Rate Swap
|
||||
Beginning balance
|
|
$
|
1,258
|
|
|
$
|
(1,030
|
)
|
Total gains or losses (realized and unrealized):
|
|
|
|
|
|
|
||
Included in earnings
|
|
—
|
|
|
—
|
|
||
Included in other comprehensive income
|
|
114
|
|
|
273
|
|
||
Purchases:
|
|
46
|
|
|
—
|
|
||
Sales:
|
|
(345
|
)
|
|
—
|
|
||
Issuances:
|
|
—
|
|
|
—
|
|
||
Settlements:
|
|
—
|
|
|
—
|
|
||
Transfers in/(out) of Level 3
|
|
—
|
|
|
—
|
|
||
Ending balance
|
|
$
|
1,073
|
|
|
$
|
(757
|
)
|
The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held as of September 30, 2017:
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||||
Description
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturities available-for-sale
|
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
|
$
|
40,403
|
|
|
$
|
—
|
|
|
$
|
40,403
|
|
|
$
|
—
|
|
Mortgage backed securities
|
|
10,931
|
|
|
—
|
|
|
10,931
|
|
|
—
|
|
||||
Private label asset backed securities
|
|
7,774
|
|
|
—
|
|
|
7,774
|
|
|
—
|
|
||||
Obligations of states and political subdivisions
|
|
15,166
|
|
|
—
|
|
|
15,166
|
|
|
—
|
|
||||
U.S. Treasury securities and obligations of U.S.
Government corporations and agencies
|
|
18,518
|
|
|
18,518
|
|
|
—
|
|
|
—
|
|
||||
Trading securities
|
|
107
|
|
|
107
|
|
|
—
|
|
|
—
|
|
||||
Equity securities available-for-sale
|
|
4,943
|
|
|
3,685
|
|
|
—
|
|
|
1,258
|
|
||||
Total Financial Assets
|
|
$
|
97,842
|
|
|
$
|
22,310
|
|
|
$
|
74,274
|
|
|
$
|
1,258
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swap
|
|
$
|
(1,030
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,030
|
)
|
Total Financial Liabilities
|
|
$
|
(1,030
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,030
|
)
|
For the year ended December 31, 2016
|
|
Equity Securities Available-for-Sale
|
|
Interest Rate Swap
|
||||
Beginning balance
|
|
$
|
1,173
|
|
|
$
|
(1,419
|
)
|
Total gains or losses (realized and unrealized):
|
|
|
|
|
|
|
||
Included in earnings
|
|
—
|
|
|
—
|
|
||
Included in other comprehensive income
|
|
85
|
|
|
389
|
|
||
Purchases:
|
|
—
|
|
|
—
|
|
||
Sales:
|
|
—
|
|
|
—
|
|
||
Issuances:
|
|
—
|
|
|
—
|
|
||
Settlements:
|
|
—
|
|
|
—
|
|
||
Transfers in/(out) of Level 3
|
|
—
|
|
|
—
|
|
||
Ending balance
|
|
$
|
1,258
|
|
|
$
|
(1,030
|
)
|
The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held as of December 31, 2016:
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||
Assets and related instruments
|
|
Carrying
Value
|
|
Estimated
Fair Value
|
|
Carrying
Value
|
|
Estimated
Fair Value
|
||||||||
Held-to-maturity securities
|
|
$
|
1,684
|
|
|
$
|
1,729
|
|
|
$
|
1,890
|
|
|
$
|
1,930
|
|
Mortgage loans
|
|
163
|
|
|
163
|
|
|
174
|
|
|
174
|
|
||||
Policy loans
|
|
1,768
|
|
|
1,768
|
|
|
1,708
|
|
|
1,708
|
|
||||
Company owned life insurance
|
|
4,959
|
|
|
4,959
|
|
|
4,864
|
|
|
4,864
|
|
||||
Other invested assets
|
|
2,688
|
|
|
2,688
|
|
|
2,958
|
|
|
2,958
|
|
||||
Liabilities and related instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other policyholder funds
|
|
1,683
|
|
|
1,683
|
|
|
1,629
|
|
|
1,629
|
|
||||
Short-term notes payable and current portion of long-term debt
|
|
1,300
|
|
|
1,300
|
|
|
1,800
|
|
|
1,800
|
|
||||
Long-term debt
|
|
15,335
|
|
|
15,335
|
|
|
15,326
|
|
|
15,326
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
Building and improvements
|
$
|
3,379
|
|
|
$
|
3,348
|
|
Electronic data processing equipment
|
1,559
|
|
|
1,548
|
|
||
Furniture and fixtures
|
508
|
|
|
515
|
|
||
|
5,446
|
|
|
5,411
|
|
||
Less accumulated depreciation
|
3,636
|
|
|
3,531
|
|
||
Property and equipment, net
|
$
|
1,810
|
|
|
$
|
1,880
|
|
|
|
As of September 30,
2017
|
|
As of December 31, 2016
|
||||
General expenses
|
|
$
|
1,691
|
|
|
$
|
1,685
|
|
Unearned premiums
|
|
2,225
|
|
|
2,046
|
|
||
Claims liabilities
|
|
782
|
|
|
746
|
|
||
AMT credit
|
|
1,390
|
|
|
1,230
|
|
||
NOL carryforward
|
|
500
|
|
|
—
|
|
||
Impairment on real estate owned
|
|
187
|
|
|
187
|
|
||
Unrealized loss on interest rate swaps
|
|
258
|
|
|
350
|
|
||
Deferred tax assets
|
|
7,033
|
|
|
6,244
|
|
||
|
|
|
|
|
||||
Depreciation
|
|
(135
|
)
|
|
(135
|
)
|
||
Deferred policy acquisition costs
|
|
(2,872
|
)
|
|
(2,839
|
)
|
||
Unrealized gains on securities available-for-sale
|
|
(1,413
|
)
|
|
(868
|
)
|
||
Deferred tax liabilities
|
|
(4,420
|
)
|
|
(3,842
|
)
|
||
Net deferred tax asset
|
|
$
|
2,613
|
|
|
$
|
2,402
|
|
|
|
Nine months ended September 30,
|
||||||
|
|
2017
|
|
2016
|
||||
Deferred policy acquisition costs
|
|
$
|
33
|
|
|
$
|
77
|
|
Unearned premiums
|
|
(179
|
)
|
|
(167
|
)
|
||
General expenses
|
|
(6
|
)
|
|
3
|
|
||
Depreciation
|
|
—
|
|
|
6
|
|
||
Claims liabilities
|
|
(36
|
)
|
|
(9
|
)
|
||
AMT credit
|
|
(160
|
)
|
|
361
|
|
||
NOL carryforward
|
|
(500
|
)
|
|
—
|
|
||
Deferred income tax expense (benefit)
|
|
$
|
(848
|
)
|
|
$
|
271
|
|
|
|
Nine months ended September 30,
|
||||
|
|
2017
|
|
2016
|
||
Federal income tax rate applied to pre-tax income/loss
|
|
34.0
|
%
|
|
34.0
|
%
|
Dividends received deduction and tax-exempt interest
|
|
1.5
|
%
|
|
(1.4
|
)%
|
Company owned life insurance
|
|
1.0
|
%
|
|
(0.6
|
)%
|
Small life deduction
|
|
10.0
|
%
|
|
(5.9
|
)%
|
Other, net
|
|
(4.5
|
)%
|
|
0.2
|
%
|
Effective federal income tax rate
|
|
42.0
|
%
|
|
26.3
|
%
|
|
|
September 30,
|
|
December 31,
|
||||
|
|
2017
|
|
2016
|
||||
Current portion of installment note payable $1,000,000 due March 2017 with $800,000 due November 2017 with variable interest rate equal to the WSJ prime rate plus 0.5%. Unsecured.
|
|
$
|
800
|
|
|
$
|
1,800
|
|
Line of credit, $1,000,000 available, with variable interest rate equal to the WSJ prime rate, subject to a 4.5% floor; maturity September 2018. Interest payments due monthly. Secured.
|
|
—
|
|
|
—
|
|
||
Line of credit with variable interest rate equal to the WSJ prime rate, subject to a 5.0% floor; maturity March 2018. Interest payments due quarterly. Unsecured.
|
|
500
|
|
|
—
|
|
||
|
|
$
|
1,300
|
|
|
$
|
1,800
|
|
|
|
September 30,
|
|
December 31,
|
||||
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
||||
Promissory note with variable interest rate equal to the WSJ prime rate plus 0.5%; maturity November 2019. Annual installment payments beginning November 2017 with final balloon payment due November 30, 2019. Unsecured.
|
|
$
|
3,200
|
|
|
$
|
3,200
|
|
|
|
|
|
|
||||
Subordinated debentures issued on December 15, 2005 with fixed interest rate of 8.83% each distribution period thereafter until December 15, 2015 when the coupon rate shall equal the 3-Month LIBOR plus 3.75% applied to the outstanding principal; net of $171,000 in debt issuance cost ($178,000 in 2016); maturity December 2035. Interest payments due quarterly. All may be redeemed at any time following the tenth anniversary of issuance. Unsecured.
|
|
9,108
|
|
|
9,101
|
|
||
|
|
|
|
|
||||
Subordinated debentures issued on June 21, 2007 with a floating interest rate equal to the 3-Month LIBOR plus 3.40% applied to the outstanding principal; net of $66,000 in debt issuance cost ($68,000 in 2016); maturity June 15, 2037. Interest payments due quarterly. All may be redeemed at any time following the fifth anniversary of issuance. Unsecured.
|
|
3,027
|
|
|
3,025
|
|
||
|
|
$
|
15,335
|
|
|
$
|
15,326
|
|
|
|
Nine months ended
September 30, |
||||||
|
|
2017
|
|
2016
|
||||
Summary of claims and claim adjustment expense reserves
|
|
|
|
|
||||
Balance, beginning of year
|
|
$
|
7,531
|
|
|
$
|
9,645
|
|
Less reinsurance recoverable on unpaid losses
|
|
1,184
|
|
|
1,380
|
|
||
Net balances at beginning of year
|
|
6,347
|
|
|
8,265
|
|
||
Net losses:
|
|
|
|
|
||||
Provision for claims and claim adjustment expenses for claims arising in current year
|
|
32,867
|
|
|
25,987
|
|
||
Estimated claims and claim adjustment expenses for claims arising in prior years
|
|
(1,355
|
)
|
|
(1,673
|
)
|
||
Total increases
|
|
31,512
|
|
|
24,314
|
|
||
Claims and claim adjustment expense payments for claims arising in:
|
|
|
|
|
||||
Current year
|
|
26,275
|
|
|
20,923
|
|
||
Prior years
|
|
3,041
|
|
|
4,650
|
|
||
Total payments
|
|
29,316
|
|
|
25,573
|
|
||
Net balance at end of period
|
|
8,543
|
|
|
7,006
|
|
||
Plus reinsurance recoverable on unpaid losses
|
|
354
|
|
|
427
|
|
||
Claims and claim adjustment expense reserves at end of period
|
|
$
|
8,897
|
|
|
$
|
7,433
|
|
Layer
|
Reinsurers' Limits of Liability
|
First Layer
|
100% of $13,500,000 in excess of $4,000,000 retention
|
Second Layer
|
100% of $25,000,000 in excess of $17,500,000
|
Third Layer
|
100% of $30,000,000 in excess of $42,500,000
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||||
|
Authorized
|
|
Issued
|
|
Outstanding
|
|
Authorized
|
|
Issued
|
|
Outstanding
|
||||||
Preferred Stock, $1 par value
|
500,000
|
|
|
—
|
|
|
—
|
|
|
500,000
|
|
|
—
|
|
|
—
|
|
Class A Common Stock, $1 par value
|
2,000,000
|
|
|
—
|
|
|
—
|
|
|
2,000,000
|
|
|
—
|
|
|
—
|
|
Common Stock, $1 par value
|
3,000,000
|
|
|
2,522,312
|
|
|
2,522,312
|
|
|
3,000,000
|
|
|
2,517,339
|
|
|
2,517,339
|
|
|
|
Nine months ended
September 30, |
||||||
|
|
2017
|
|
2016
|
||||
Gains and Losses on Cash Flow Hedges
|
|
|
|
|
||||
Balance at beginning of period
|
|
$
|
(679
|
)
|
|
$
|
(935
|
)
|
Other comprehensive loss for period:
|
|
|
|
|
||||
Other comprehensive gain before reclassifications
|
|
180
|
|
|
53
|
|
||
Amounts reclassified from accumulated other comprehensive income
|
|
—
|
|
|
—
|
|
||
Net current period other comprehensive income
|
|
180
|
|
|
53
|
|
||
Balance at end of period
|
|
$
|
(499
|
)
|
|
$
|
(882
|
)
|
Unrealized Gains and Losses on Available-for-Sale Securities
|
|
|
|
|
||||
Balance at beginning of period
|
|
$
|
1,686
|
|
|
$
|
1,460
|
|
Other comprehensive income for period:
|
|
|
|
|
||||
Other comprehensive income before reclassifications
|
|
1,263
|
|
|
2,580
|
|
||
Amounts reclassified from accumulated other comprehensive income
|
|
(205
|
)
|
|
(223
|
)
|
||
Net current period other comprehensive income
|
|
1,058
|
|
|
2,357
|
|
||
Balance at end of period
|
|
$
|
2,744
|
|
|
$
|
3,817
|
|
Total Accumulated Other Comprehensive Income at end of period
|
|
$
|
2,245
|
|
|
$
|
2,935
|
|
Details about Accumulated Other Comprehensive Income Components
|
|
Amounts Reclassified from Accumulated Other Comprehensive Income
|
|
Affected Line Item in the Statement Where Net Income is Presented
|
||
Unrealized Gains and Losses on
Available-for-Sale Securities
|
|
$
|
310
|
|
|
Net realized investment gains
|
|
|
310
|
|
|
Total before tax
|
|
|
|
(105
|
)
|
|
Tax (expense) or benefit
|
|
|
|
$
|
205
|
|
|
Net of Tax
|
Details about Accumulated Other Comprehensive Income Components
|
|
Amounts Reclassified from Accumulated Other Comprehensive Income
|
|
Affected Line Item in the Statement Where Net Income is Presented
|
||
Unrealized Gains and Losses on
Available-for-Sale Securities
|
|
$
|
338
|
|
|
Net realized investment gains
|
|
|
338
|
|
|
Total before tax
|
|
|
|
(115
|
)
|
|
Tax (expense) or benefit
|
|
|
|
$
|
223
|
|
|
Net of Tax
|
|
|
Total
|
|
P&C Insurance Operations
|
|
Life Insurance Operations
|
|
Non-Insurance Operations
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
September 30, 2017
|
|
$
|
151,315
|
|
|
$
|
83,884
|
|
|
$
|
60,758
|
|
|
$
|
6,673
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
December 31, 2016
|
|
$
|
148,579
|
|
|
$
|
82,647
|
|
|
$
|
58,689
|
|
|
$
|
7,243
|
|
Three months ended September 30, 2017
|
Total
|
|
P&C Insurance Operations
|
|
Life Insurance Operations
|
|
Non-Insurance Operations
|
||||||||
REVENUE
|
|
|
|
|
|
|
|
||||||||
Net premiums earned
|
$
|
15,467
|
|
|
$
|
13,893
|
|
|
$
|
1,574
|
|
|
$
|
—
|
|
Net investment income
|
939
|
|
|
417
|
|
|
505
|
|
|
17
|
|
||||
Net realized investment gains (losses)
|
75
|
|
|
63
|
|
|
12
|
|
|
—
|
|
||||
Other income
|
150
|
|
|
149
|
|
|
1
|
|
|
—
|
|
||||
|
16,631
|
|
|
14,522
|
|
|
2,092
|
|
|
17
|
|
||||
BENEFITS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
||||
Policyholder benefits paid
|
11,184
|
|
|
9,865
|
|
|
1,319
|
|
|
—
|
|
||||
Amortization of deferred policy acquisition costs
|
706
|
|
|
694
|
|
|
12
|
|
|
—
|
|
||||
Commissions
|
2,096
|
|
|
2,015
|
|
|
81
|
|
|
—
|
|
||||
General and administrative expenses
|
2,398
|
|
|
1,634
|
|
|
547
|
|
|
217
|
|
||||
Taxes, licenses and fees
|
709
|
|
|
669
|
|
|
40
|
|
|
—
|
|
||||
Interest expense
|
320
|
|
|
—
|
|
|
13
|
|
|
307
|
|
||||
|
17,413
|
|
|
14,877
|
|
|
2,012
|
|
|
524
|
|
||||
Income (Loss) Before Income Taxes
|
$
|
(782
|
)
|
|
$
|
(355
|
)
|
|
$
|
80
|
|
|
$
|
(507
|
)
|
Three months ended September 30, 2016
|
Total
|
|
P&C Insurance Operations
|
|
Life Insurance Operations
|
|
Non-Insurance Operations
|
||||||||
REVENUE
|
|
|
|
|
|
|
|
||||||||
Net premiums earned
|
$
|
15,675
|
|
|
$
|
14,016
|
|
|
$
|
1,659
|
|
|
$
|
—
|
|
Net investment income
|
1,005
|
|
|
449
|
|
|
540
|
|
|
16
|
|
||||
Net realized investment gains
|
287
|
|
|
81
|
|
|
206
|
|
|
—
|
|
||||
Other income
|
152
|
|
|
151
|
|
|
1
|
|
|
—
|
|
||||
|
17,119
|
|
|
14,697
|
|
|
2,406
|
|
|
16
|
|
||||
BENEFITS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
||||
Policyholder benefits paid
|
10,082
|
|
|
8,466
|
|
|
1,616
|
|
|
—
|
|
||||
Amortization of deferred policy acquisition costs
|
758
|
|
|
696
|
|
|
62
|
|
|
—
|
|
||||
Commissions
|
2,088
|
|
|
1,999
|
|
|
89
|
|
|
—
|
|
||||
General and administrative expenses
|
2,026
|
|
|
1,428
|
|
|
400
|
|
|
198
|
|
||||
Taxes, licenses and fees
|
529
|
|
|
482
|
|
|
47
|
|
|
—
|
|
||||
Interest expense
|
339
|
|
|
—
|
|
|
19
|
|
|
320
|
|
||||
|
15,822
|
|
|
13,071
|
|
|
2,233
|
|
|
518
|
|
||||
Income (Loss) Before Income Taxes
|
$
|
1,297
|
|
|
$
|
1,626
|
|
|
$
|
173
|
|
|
$
|
(502
|
)
|
Nine months ended September 30, 2017
|
Total
|
|
P&C Insurance Operations
|
|
Life Insurance Operations
|
|
Non-Insurance Operations
|
||||||||
REVENUE
|
|
|
|
|
|
|
|
||||||||
Net premiums earned
|
$
|
45,838
|
|
|
$
|
41,131
|
|
|
$
|
4,707
|
|
|
$
|
—
|
|
Net investment income
|
2,795
|
|
|
1,195
|
|
|
1,551
|
|
|
49
|
|
||||
Net realized investment gains (losses)
|
312
|
|
|
123
|
|
|
189
|
|
|
—
|
|
||||
Other income
|
447
|
|
|
444
|
|
|
3
|
|
|
—
|
|
||||
|
49,392
|
|
|
42,893
|
|
|
6,450
|
|
|
49
|
|
||||
BENEFITS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
||||
Policyholder benefits paid
|
34,911
|
|
|
31,057
|
|
|
3,854
|
|
|
—
|
|
||||
Amortization of deferred policy acquisition costs
|
2,470
|
|
|
2,083
|
|
|
387
|
|
|
—
|
|
||||
Commissions
|
5,947
|
|
|
5,728
|
|
|
219
|
|
|
—
|
|
||||
General and administrative expenses
|
6,410
|
|
|
4,511
|
|
|
1,165
|
|
|
734
|
|
||||
Taxes, licenses and fees
|
1,915
|
|
|
1,736
|
|
|
179
|
|
|
—
|
|
||||
Interest expense
|
969
|
|
|
—
|
|
|
52
|
|
|
917
|
|
||||
|
52,622
|
|
|
45,115
|
|
|
5,856
|
|
|
1,651
|
|
||||
Income (Loss) Before Income Taxes
|
$
|
(3,230
|
)
|
|
$
|
(2,222
|
)
|
|
$
|
594
|
|
|
$
|
(1,602
|
)
|
Nine months ended September 30, 2016
|
Total
|
|
P&C Insurance Operations
|
|
Life Insurance Operations
|
|
Non-Insurance Operations
|
||||||||
REVENUE
|
|
|
|
|
|
|
|
||||||||
Net premiums earned
|
$
|
46,067
|
|
|
$
|
41,263
|
|
|
$
|
4,804
|
|
|
$
|
—
|
|
Net investment income
|
3,025
|
|
|
1,357
|
|
|
1,620
|
|
|
48
|
|
||||
Net realized investment gains
|
536
|
|
|
266
|
|
|
270
|
|
|
—
|
|
||||
Other income
|
456
|
|
|
454
|
|
|
2
|
|
|
—
|
|
||||
|
50,084
|
|
|
43,340
|
|
|
6,696
|
|
|
48
|
|
||||
BENEFITS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
||||
Policyholder benefits paid
|
27,991
|
|
|
23,905
|
|
|
4,086
|
|
|
—
|
|
||||
Amortization of deferred policy acquisition costs
|
2,451
|
|
|
2,087
|
|
|
364
|
|
|
—
|
|
||||
Commissions
|
6,313
|
|
|
6,035
|
|
|
278
|
|
|
—
|
|
||||
General and administrative expenses
|
6,313
|
|
|
4,553
|
|
|
1,215
|
|
|
545
|
|
||||
Taxes, licenses and fees
|
1,703
|
|
|
1,546
|
|
|
157
|
|
|
—
|
|
||||
Interest expense
|
1,017
|
|
|
—
|
|
|
57
|
|
|
960
|
|
||||
|
45,788
|
|
|
38,126
|
|
|
6,157
|
|
|
1,505
|
|
||||
Income (Loss) Before Income Taxes
|
$
|
4,296
|
|
|
$
|
5,214
|
|
|
$
|
539
|
|
|
$
|
(1,457
|
)
|
/s/ Warren Averett, LLC
|
|
|
|
Birmingham, Alabama
|
|
November 13, 2017
|
|
•
|
The Property and Casualty (P&C) segment is the most significant segment, accounting for
90.6%
of gross earned premium in 2017. The P&C segment has insurance in-force in the states of Alabama, Arkansas, Georgia, Louisiana, Mississippi, Oklahoma, South Carolina, and Tennessee.
|
•
|
The Life segment accounted for
9.4%
of gross premium revenue in 2017. The Life segment is licensed to underwrite life and accident and health insurance in Alabama, Florida, Georgia, Mississippi, South Carolina, Tennessee and Texas.
|
Consolidated Financial Summary
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
(dollars in thousands)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Gross premiums written
|
|
$
|
17,246
|
|
|
$
|
17,166
|
|
|
$
|
52,953
|
|
|
$
|
52,623
|
|
Net premiums written
|
|
$
|
15,499
|
|
|
$
|
15,640
|
|
|
$
|
48,354
|
|
|
$
|
48,350
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net premiums earned
|
|
$
|
15,467
|
|
|
$
|
15,675
|
|
|
$
|
45,838
|
|
|
$
|
46,067
|
|
Net investment income
|
|
939
|
|
|
1,005
|
|
|
2,795
|
|
|
3,025
|
|
||||
Net realized investment gains
|
|
75
|
|
|
287
|
|
|
312
|
|
|
536
|
|
||||
Other income
|
|
150
|
|
|
152
|
|
|
447
|
|
|
456
|
|
||||
Total Revenues
|
|
16,631
|
|
|
17,119
|
|
|
49,392
|
|
|
50,084
|
|
||||
Policyholder benefits and settlement expenses
|
|
11,184
|
|
|
10,082
|
|
|
34,911
|
|
|
27,991
|
|
||||
Amortization of deferred policy acquisition costs
|
|
706
|
|
|
758
|
|
|
2,470
|
|
|
2,451
|
|
||||
Commissions
|
|
2,096
|
|
|
2,088
|
|
|
5,947
|
|
|
6,313
|
|
||||
General and administrative expenses
|
|
2,398
|
|
|
2,026
|
|
|
6,410
|
|
|
6,313
|
|
||||
Taxes, licenses and fees
|
|
709
|
|
|
529
|
|
|
1,915
|
|
|
1,703
|
|
||||
Interest expense
|
|
320
|
|
|
339
|
|
|
969
|
|
|
1,017
|
|
||||
Total Benefits, Losses and Expenses
|
|
17,413
|
|
|
15,822
|
|
|
52,622
|
|
|
45,788
|
|
||||
Income (Loss) Before Income Taxes
|
|
(782
|
)
|
|
1,297
|
|
|
(3,230
|
)
|
|
4,296
|
|
||||
Income tax expense (benefit)
|
|
(225
|
)
|
|
367
|
|
|
(1,358
|
)
|
|
1,129
|
|
||||
Net Income (Loss)
|
|
$
|
(557
|
)
|
|
$
|
930
|
|
|
$
|
(1,872
|
)
|
|
$
|
3,167
|
|
Income (Loss) Per Common Share
|
|
$
|
(0.22
|
)
|
|
$
|
0.37
|
|
|
$
|
(0.74
|
)
|
|
$
|
1.26
|
|
Reconciliation of Net Income (Loss) to non-GAAP Measurement
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
$
|
(557
|
)
|
|
$
|
930
|
|
|
$
|
(1,872
|
)
|
|
$
|
3,167
|
|
Income tax expense (benefit)
|
|
(225
|
)
|
|
367
|
|
|
(1,358
|
)
|
|
1,129
|
|
||||
Realized investment gains, net
|
|
(75
|
)
|
|
(287
|
)
|
|
(312
|
)
|
|
(536
|
)
|
||||
Pretax Income (Loss) From Operations
|
|
$
|
(857
|
)
|
|
$
|
1,010
|
|
|
$
|
(3,542
|
)
|
|
$
|
3,760
|
|
Selected Balance Sheet Highlights
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
(dollars in thousands)
|
|
(UNAUDITED)
|
|
|
||||
Invested Assets
|
|
$
|
112,203
|
|
|
$
|
113,156
|
|
Cash
|
|
$
|
9,770
|
|
|
$
|
7,368
|
|
Total Assets
|
|
$
|
151,315
|
|
|
$
|
148,579
|
|
Policy Liabilities
|
|
$
|
80,687
|
|
|
$
|
76,174
|
|
Total Debt
|
|
$
|
16,635
|
|
|
$
|
17,126
|
|
Accumulated Other Comprehensive Income
|
|
$
|
2,245
|
|
|
$
|
1,007
|
|
Shareholders' Equity
|
|
$
|
47,116
|
|
|
$
|
48,052
|
|
Book Value Per Share
|
|
$
|
18.68
|
|
|
$
|
19.09
|
|
|
|
Three months ended
September 30,
|
|
Percent
|
|||||||
(dollars in thousands)
|
|
2017
|
|
2016
|
|
increase (decrease)
|
|||||
Life, accident and health operations premiums earned:
|
|
|
|
|
|
|
|||||
Traditional life insurance
|
|
$
|
1,049
|
|
|
$
|
1,108
|
|
|
(5.3
|
)%
|
Accident and health insurance
|
|
548
|
|
|
561
|
|
|
(2.3
|
)%
|
||
Gross life, accident and health
|
|
1,597
|
|
|
1,669
|
|
|
(4.3
|
)%
|
||
Reinsurance premium ceded
|
|
(23
|
)
|
|
(10
|
)
|
|
130.0
|
%
|
||
Net life, accident and health premiums earned
|
|
$
|
1,574
|
|
|
$
|
1,659
|
|
|
(5.1
|
)%
|
|
|
|
|
|
|
|
|||||
Property and Casualty operations premiums earned:
|
|
|
|
|
|
|
|
||||
Dwelling fire & extended coverage
|
|
$
|
9,218
|
|
|
$
|
8,941
|
|
|
3.1
|
%
|
Homeowners (Including mobile homeowners)
|
|
5,715
|
|
|
5,923
|
|
|
(3.5
|
)%
|
||
Other liability
|
|
532
|
|
|
515
|
|
|
3.3
|
%
|
||
Gross property and casualty
|
|
15,465
|
|
|
15,379
|
|
|
0.6
|
%
|
||
Reinsurance premium ceded
|
|
(1,572
|
)
|
|
(1,363
|
)
|
|
15.3
|
%
|
||
Net property and casualty premiums earned
|
|
$
|
13,893
|
|
|
$
|
14,016
|
|
|
(0.9
|
)%
|
|
|
|
|
|
|
|
|||||
Consolidated gross premiums earned
|
|
$
|
17,062
|
|
|
$
|
17,048
|
|
|
0.1
|
%
|
Reinsurance premium ceded
|
|
(1,595
|
)
|
|
(1,373
|
)
|
|
16.2
|
%
|
||
Consolidated net premiums earned
|
|
$
|
15,467
|
|
|
$
|
15,675
|
|
|
(1.3
|
)%
|
For the three months ended September 30, 2017
|
|
For the three months ended September 30, 2016
|
||||||||||||||
Cat Event
|
|
Reported
Losses & LAE
|
|
Claim Count
|
|
Cat Event
|
|
Reported
Losses & LAE
|
|
Claim Count
|
||||||
Cat 11 (Jan 1-3)
|
|
$
|
(1
|
)
|
|
—
|
|
|
Cat 16 (Feb 22-24)
|
|
$
|
(12
|
)
|
|
1
|
|
Cat 13 (Jan 18-22)
|
|
16
|
|
|
3
|
|
|
Cat 17 (Mar 5-11)
|
|
(6
|
)
|
|
—
|
|
||
Cat 19 (Feb 28-Mar 2)
|
|
11
|
|
|
3
|
|
|
Cat 22 (Mar 30-Apr 1)
|
|
5
|
|
|
2
|
|
||
Cat 20 (Mar 6-9)
|
|
—
|
|
|
—
|
|
|
Cat 27 (Apr 25-28)
|
|
(10
|
)
|
|
(1
|
)
|
||
Cat 21 (Mar 21-22)
|
|
18
|
|
|
7
|
|
|
Cat 28 (Apr 29-May 3)
|
|
47
|
|
|
11
|
|
||
Cat 22 (Mar 26-28)
|
|
10
|
|
|
3
|
|
|
Cat 29 (May 7-10)
|
|
53
|
|
|
4
|
|
||
Cat 24 (Apr 2-3)
|
|
6
|
|
|
3
|
|
|
Cat 31 (May 16-19)
|
|
30
|
|
|
1
|
|
||
Cat 25 (Apr 4-6)
|
|
59
|
|
|
13
|
|
|
Cat 32 (May 26-28)
|
|
(1
|
)
|
|
2
|
|
||
Cat 28 (Apr 21-25)
|
|
27
|
|
|
5
|
|
|
Cat 35 (Jun 16-18)
|
|
85
|
|
|
7
|
|
||
Cat 30 (Apr 28-May 1)
|
|
36
|
|
|
10
|
|
|
Cat 40 (July 13-15)
|
|
311
|
|
|
87
|
|
||
Cat 31 (May 3-5)
|
|
21
|
|
|
6
|
|
|
Cat 44 (Aug 11-13)
|
|
647
|
|
|
262
|
|
||
Cat 32 (May 8-11)
|
|
20
|
|
|
6
|
|
|
Cat 46 (Aug 31-Sept 4)
|
|
357
|
|
|
114
|
|
||
Cat 33 (May 15-18)
|
|
58
|
|
|
6
|
|
|
|
|
|
|
|
||||
Cat 34 (May 27-28)
|
|
37
|
|
|
6
|
|
|
|
|
|
|
|
||||
Cat 38 (June 2-4)
|
|
7
|
|
|
11
|
|
|
|
|
|
|
|
||||
T.S. Cindy (June 21-25)
|
|
155
|
|
|
12
|
|
|
|
|
|
|
|
||||
Cat 42 (Aug 5-8)
|
|
120
|
|
|
42
|
|
|
|
|
|
|
|
||||
Cat 43 (Aug 25-31)
|
|
288
|
|
|
73
|
|
|
|
|
|
|
|
||||
Cat 44 (Sept 11-15)
|
|
2,718
|
|
|
832
|
|
|
|
|
|
|
|
||||
Misc cats less than $100k
|
|
20
|
|
|
1
|
|
|
Misc cats less than $100k
|
|
136
|
|
|
44
|
|
||
Total Cat losses
|
|
$
|
3,626
|
|
|
1,042
|
|
|
Total Cat losses
|
|
$
|
1,642
|
|
|
534
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Non-cat wind & hail
|
|
$
|
1,862
|
|
|
584
|
|
|
Non-cat wind & hail
|
|
$
|
1,574
|
|
|
538
|
|
|
|
Nine months ended
September 30,
|
|
Percent
|
|||||||
(dollars in thousands)
|
|
2017
|
|
2016
|
|
increase (decrease)
|
|||||
Life, accident and health operations premiums earned:
|
|
|
|
|
|
|
|||||
Traditional life insurance
|
|
$
|
3,395
|
|
|
$
|
3,475
|
|
|
(2.3
|
)%
|
Accident and health insurance
|
|
1,378
|
|
|
1,387
|
|
|
(0.6
|
)%
|
||
Gross life, accident and health
|
|
4,773
|
|
|
4,862
|
|
|
(1.8
|
)%
|
||
Reinsurance premium ceded
|
|
(66
|
)
|
|
(58
|
)
|
|
13.8
|
%
|
||
Net life, accident and health premiums earned
|
|
$
|
4,707
|
|
|
$
|
4,804
|
|
|
(2.0
|
)%
|
|
|
|
|
|
|
|
|||||
Property and Casualty operations premiums earned:
|
|
|
|
|
|
|
|
||||
Dwelling fire & extended coverage
|
|
$
|
27,066
|
|
|
$
|
26,410
|
|
|
2.5
|
%
|
Homeowners (Including mobile homeowners)
|
|
17,179
|
|
|
17,710
|
|
|
(3.0
|
)%
|
||
Other liability
|
|
1,572
|
|
|
1,511
|
|
|
4.0
|
%
|
||
Gross property and casualty
|
|
45,817
|
|
|
45,631
|
|
|
0.4
|
%
|
||
Reinsurance premium ceded
|
|
(4,686
|
)
|
|
(4,368
|
)
|
|
7.3
|
%
|
||
Net property and casualty premiums earned
|
|
$
|
41,131
|
|
|
$
|
41,263
|
|
|
(0.3
|
)%
|
|
|
|
|
|
|
|
|||||
Consolidated gross premiums earned
|
|
$
|
50,590
|
|
|
$
|
50,493
|
|
|
0.2
|
%
|
Reinsurance premium ceded
|
|
(4,752
|
)
|
|
(4,426
|
)
|
|
7.4
|
%
|
||
Consolidated net premiums earned
|
|
$
|
45,838
|
|
|
$
|
46,067
|
|
|
(0.5
|
)%
|
Layer
|
Reinsurers' Limits of Liability
|
First Layer
|
100% of $13,500,000 in excess of $4,000,000 retention
|
Second Layer
|
100% of $25,000,000 in excess of $17,500,000
|
Third Layer
|
100% of $30,000,000 in excess of $42,500,000
|
For the nine months ended September 30, 2017
|
|
For the nine months ended September 30, 2016
|
||||||||||||||
Cat event
|
|
Reported
Losses & LAE
|
|
Claim Count
|
|
Cat event
|
|
Reported
Losses & LAE
|
|
Claim Count
|
||||||
Cat 11 (Jan 1-3)
|
|
$
|
800
|
|
|
180
|
|
|
Cat 16 (Feb 22-24)
|
|
$
|
1,042
|
|
|
240
|
|
Cat 13 (Jan 18-22)
|
|
2,141
|
|
|
370
|
|
|
Cat 17 (Mar 5-11)
|
|
323
|
|
|
101
|
|
||
Cat 19 (Feb 28-Mar 2)
|
|
558
|
|
|
145
|
|
|
Cat 22 (Mar 30-Apr 1)
|
|
209
|
|
|
57
|
|
||
Cat 20 (Mar 6-9)
|
|
128
|
|
|
43
|
|
|
Cat 27 (Apr 25-28)
|
|
189
|
|
|
47
|
|
||
Cat 21 (Mar 21-22)
|
|
306
|
|
|
76
|
|
|
Cat 28 (Apr 29-May 3)
|
|
593
|
|
|
120
|
|
||
Cat 22 (Mar 26-28)
|
|
424
|
|
|
75
|
|
|
Cat 29 (May 7-10)
|
|
255
|
|
|
28
|
|
||
Cat 24 (Apr 2-3)
|
|
774
|
|
|
153
|
|
|
Cat 31 (May 16-19)
|
|
170
|
|
|
31
|
|
||
Cat 25 (Apr 4-6)
|
|
671
|
|
|
165
|
|
|
Cat 32 (May 26-28)
|
|
143
|
|
|
15
|
|
||
Cat 28 (Apr 21-25)
|
|
434
|
|
|
68
|
|
|
Cat 35 (Jun 16-18)
|
|
438
|
|
|
99
|
|
||
Cat 30 (Apr 28-May 1)
|
|
798
|
|
|
179
|
|
|
Cat 40 (July 13-15)
|
|
311
|
|
|
87
|
|
||
Cat 31 (May 3-5)
|
|
504
|
|
|
103
|
|
|
Cat 44 (Aug 11-13)
|
|
647
|
|
|
262
|
|
||
Cat 32 (May 8-11)
|
|
275
|
|
|
53
|
|
|
Cat 46 (Aug 31-Sept 4)
|
|
357
|
|
|
114
|
|
||
Cat 33 (May 15-18)
|
|
342
|
|
|
54
|
|
|
|
|
|
|
|
||||
Cat 34 (May 27-28)
|
|
633
|
|
|
83
|
|
|
|
|
|
|
|
||||
Cat 38 (June 2-4)
|
|
154
|
|
|
52
|
|
|
|
|
|
|
|
||||
T.S. Cindy (June 21-25)
|
|
517
|
|
|
102
|
|
|
|
|
|
|
|
||||
Cat 42 (Aug 5-8)
|
|
120
|
|
|
42
|
|
|
|
|
|
|
|
||||
Cat 43 (Aug 25-31)
|
|
288
|
|
|
73
|
|
|
|
|
|
|
|
||||
Cat 44 (Sept 11-15)
|
|
2,718
|
|
|
832
|
|
|
|
|
|
|
|
||||
Misc cats less than $100k
|
|
219
|
|
|
50
|
|
|
Misc cats less than $100k
|
|
448
|
|
|
135
|
|
||
Total Cat losses
|
|
$
|
12,804
|
|
|
2,898
|
|
|
Total Cat losses
|
|
$
|
5,125
|
|
|
1,336
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Non-cat wind & hail
|
|
$
|
4,802
|
|
|
1,311
|
|
|
Non-cat wind & hail
|
|
$
|
4,833
|
|
|
1,513
|
|
Maturity
|
Available- for-Sale
|
|
Held-to-Maturity
|
|
Total
|
|
Percentage of Total
|
|||||||
Maturity in less than 1 year
|
$
|
1,160
|
|
|
$
|
6
|
|
|
$
|
1,166
|
|
|
1.25
|
%
|
Maturity in 1-5 years
|
16,753
|
|
|
1
|
|
|
16,754
|
|
|
18.00
|
%
|
|||
Maturity in 5-10 years
|
30,876
|
|
|
65
|
|
|
30,941
|
|
|
33.24
|
%
|
|||
Maturity after 10 years
|
42,621
|
|
|
1,612
|
|
|
44,233
|
|
|
47.51
|
%
|
|||
|
$
|
91,410
|
|
|
$
|
1,684
|
|
|
$
|
93,094
|
|
|
100.00
|
%
|
Date of Report
|
|
Date Filed
|
|
Description
|
July 13, 2017
|
|
July 13, 2017
|
|
|
July 22, 2017
|
|
July 24, 2017
|
|
|
August 11, 2017
|
|
August 11, 2017
|
|
|
September 18, 2017
|
|
September 19, 2017
|
|
/s/ Brian R. McLeod
|
|
/s/ William L. Brunson, Jr.
|
Brian R. McLeod
|
|
William L. Brunson, Jr.
|
Chief Financial Officer and Treasurer
|
|
President, Chief Executive Officer and Director
|
1 Year National Security Chart |
1 Month National Security Chart |
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