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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Protective Insurance Corporation | NASDAQ:PTVCB | 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% | 23.30 | 23.26 | 23.31 | 0 | 01:00:00 |
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Indiana
|
35-0160330
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification Number)
|
|
111 Congressional Boulevard,
Carmel, Indiana
|
46032
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Securities registered pursuant to Section 12(b) of the Act:
|
||
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Class A Common Stock, No Par Value
|
PTVCA
|
The Nasdaq Stock Market LLC
|
Class B Common Stock, No Par Value
|
PTVCB
|
The Nasdaq Stock Market LLC
|
Common Stock, No Par Value:
|
Class A (voting)
|
2,603,350
|
||
Class B (non-voting)
|
11,552,801
|
|||
14,156,151
|
|
March 31
2021
|
December 31
2020
|
||||||
Assets
|
||||||||
Investments:
|
||||||||
Fixed income securities (less allowance for credit losses of $825 and $1,035)
|
$
|
914,949
|
$
|
919,692
|
||||
Equity securities
|
67,015
|
58,169
|
||||||
Limited partnerships
|
7,476
|
7,214
|
||||||
Commercial mortgage loans (less allowance of $195 and $195)
|
10,866
|
10,602
|
||||||
Short-term and other
|
1,000
|
1,000
|
||||||
1,001,306
|
996,677
|
|||||||
Cash and cash equivalents
|
95,566
|
58,301
|
||||||
Restricted cash and cash equivalents
|
11,538
|
12,128
|
||||||
Accounts receivable (less allowance of $19,960 and $19,960)
|
96,200
|
100,921
|
||||||
Reinsurance recoverable (less allowance of $987 and $972)
|
455,462
|
455,564
|
||||||
Other assets
|
91,839
|
90,256
|
||||||
Deferred federal income taxes
|
10,764
|
8,980
|
||||||
Total Assets
|
$
|
1,762,675
|
$
|
1,722,827
|
||||
Liabilities and shareholders' equity
|
||||||||
Reserves for losses and loss expenses
|
$
|
1,108,132
|
$
|
1,089,669
|
||||
Reserves for unearned premiums
|
59,049
|
63,731
|
||||||
Reinsurance payable
|
75,898
|
76,617
|
||||||
Short-term borrowings
|
20,000
|
20,000
|
||||||
Accounts payable and other liabilities
|
129,367
|
108,962
|
||||||
Current federal income taxes payable
|
3,551
|
766
|
||||||
Total Liabilities
|
1,395,997
|
1,359,745
|
||||||
Shareholders' equity:
|
||||||||
Common stock-no par value:
|
||||||||
Class A voting -- authorized 3,000,000 shares; outstanding -- 2021 - 2,603,350; 2020 - 2,603,350
|
111
|
111
|
||||||
Class B non-voting -- authorized 20,000,000 shares; outstanding -- 2021 - 11,705,070; 2020 - 11,674,345
|
499
|
498
|
||||||
Additional paid-in capital
|
55,645
|
54,571
|
||||||
Accumulated other comprehensive income
|
12,766
|
21,759
|
||||||
Retained earnings
|
297,657
|
286,143
|
||||||
Total Shareholders' Equity
|
366,678
|
363,082
|
||||||
Total Liabilities and Shareholders' Equity
|
$
|
1,762,675
|
$
|
1,722,827
|
|
Three Months Ended
March 31
|
|||||||
2021
|
2020
|
|||||||
Revenues
|
||||||||
Net premiums earned
|
$
|
122,853
|
$
|
109,659
|
||||
Net investment income
|
5,306
|
7,236
|
||||||
Commissions and other income
|
1,858
|
1,663
|
||||||
Net realized gains (losses) on investments, excluding impairment losses
|
2,339
|
(4,787
|
)
|
|||||
Impairment losses on investments
|
(82
|
)
|
(40
|
)
|
||||
Net unrealized gains (losses) on equity securities and limited partnership investments
|
8,252
|
(22,929
|
)
|
|||||
Net realized and unrealized gains (losses) on investments
|
10,509
|
(27,756
|
)
|
|||||
140,526
|
90,802
|
|||||||
Expenses
|
||||||||
Losses and loss expenses incurred
|
82,318
|
81,831
|
||||||
Other operating expenses
|
41,855
|
34,110
|
||||||
124,173
|
115,941
|
|||||||
Income (loss) before federal income tax expense (benefit)
|
16,353
|
(25,139
|
)
|
|||||
Federal income tax expense (benefit)
|
3,415
|
(2,983
|
)
|
|||||
Net income (loss)
|
$
|
12,938
|
$
|
(22,156
|
)
|
|||
Net income (loss) per share:
|
||||||||
Basic
|
$
|
0.91
|
$
|
(1.56
|
)
|
|||
Diluted
|
$
|
0.90
|
$
|
(1.56
|
)
|
|||
Weighted average number of shares outstanding:
|
||||||||
Basic
|
14,153
|
14,169
|
||||||
Dilutive effect of share equivalents
|
154
|
n/a
|
||||||
Diluted
|
14,307
|
14,169
|
|
Three Months Ended
March 31
|
|||||||
2021
|
2020
|
|||||||
Net income (loss)
|
$
|
12,938
|
$
|
(22,156
|
)
|
|||
Other comprehensive loss, net of tax:
|
||||||||
Net unrealized losses on fixed income securities
|
(9,081
|
)
|
(20,861
|
)
|
||||
Foreign currency translation adjustments
|
88
|
(687
|
)
|
|||||
Other comprehensive loss
|
(8,993
|
)
|
(21,548
|
)
|
||||
Comprehensive income (loss)
|
$
|
3,945
|
$
|
(43,704
|
)
|
|
Common Stock
|
Additional
|
Accumulated Other
|
|||||||||||||||||||||||||||||
|
Class A
|
Class B
|
Paid-in
|
Comprehensive
|
Retained
|
Total
|
||||||||||||||||||||||||||
Description
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Income (Loss)
|
Earnings
|
Equity
|
||||||||||||||||||||||||
Balance at December 31, 2020
|
2,603
|
$
|
111
|
11,675
|
$
|
498
|
$
|
54,571
|
$
|
21,759
|
$
|
286,143
|
$
|
363,082
|
||||||||||||||||||
Net income
|
–
|
–
|
–
|
–
|
–
|
–
|
12,938
|
12,938
|
||||||||||||||||||||||||
Foreign currency translation adjustment, net of tax
|
–
|
–
|
–
|
–
|
–
|
88
|
–
|
88
|
||||||||||||||||||||||||
Change in unrealized gains (losses) on investments, net of tax
|
–
|
–
|
–
|
–
|
–
|
(9,081
|
)
|
–
|
(9,081
|
)
|
||||||||||||||||||||||
Common stock dividends
|
–
|
–
|
–
|
–
|
–
|
–
|
(1,424
|
)
|
(1,424
|
)
|
||||||||||||||||||||||
Restricted stock grants
|
–
|
–
|
30
|
1
|
1,074
|
–
|
–
|
1,075
|
||||||||||||||||||||||||
Balance at March 31, 2021
|
2,603
|
$
|
111
|
11,705
|
$
|
499
|
$
|
55,645
|
$
|
12,766
|
$
|
297,657
|
$
|
366,678
|
|
Common Stock
|
Additional
|
Accumulated Other
|
|||||||||||||||||||||||||||||
|
Class A
|
Class B
|
Paid-in
|
Comprehensive
|
Retained
|
Total
|
||||||||||||||||||||||||||
Description
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Income (Loss)
|
Earnings
|
Equity
|
||||||||||||||||||||||||
Balance at December 31, 2019
|
2,603
|
$
|
111
|
11,676
|
$
|
499
|
$
|
53,349
|
$
|
9,369
|
$
|
300,988
|
$
|
364,316
|
||||||||||||||||||
Cumulative effect of the adoption of updated accounting guidance for credit losses, net of tax
|
–
|
–
|
–
|
–
|
–
|
–
|
(12,281
|
)
|
(12,281
|
)
|
||||||||||||||||||||||
Net loss
|
–
|
–
|
–
|
–
|
–
|
–
|
(22,156
|
)
|
(22,156
|
)
|
||||||||||||||||||||||
Foreign currency translation adjustment, net of tax
|
–
|
–
|
–
|
–
|
–
|
(687
|
)
|
–
|
(687
|
)
|
||||||||||||||||||||||
Change in unrealized gains (losses) on investments, net of tax
|
–
|
–
|
–
|
–
|
–
|
(20,861
|
)
|
–
|
(20,861
|
)
|
||||||||||||||||||||||
Common stock dividends
|
–
|
–
|
–
|
–
|
–
|
–
|
(1,426
|
)
|
(1,426
|
)
|
||||||||||||||||||||||
Repurchase of common stock
|
–
|
–
|
(127
|
)
|
(5
|
)
|
(563
|
)
|
–
|
(1,214
|
)
|
(1,782
|
)
|
|||||||||||||||||||
Restricted stock grants
|
–
|
–
|
31
|
1
|
259
|
–
|
–
|
260
|
||||||||||||||||||||||||
Balance at March 31, 2020
|
2,603
|
$
|
111
|
11,580
|
$
|
495
|
$
|
53,045
|
$
|
(12,179
|
)
|
$
|
263,911
|
$
|
305,383
|
|
Three Months Ended
March 31
|
|||||||
2021
|
2020
|
|||||||
Operating activities
|
||||||||
Net income (loss)
|
$
|
12,938
|
$
|
(22,156
|
)
|
|||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
|
7,973
|
20,844
|
||||||
Net cash provided by (used in) operating activities
|
20,911
|
(1,312
|
)
|
|||||
Investing activities
|
||||||||
Purchases of fixed income and equity securities
|
(92,719
|
)
|
(82,641
|
)
|
||||
Distributions from limited partnerships
|
186
|
14,636
|
||||||
Proceeds from maturities of fixed income securities
|
64,453
|
31,088
|
||||||
Proceeds from sales of fixed income securities
|
44,427
|
48,552
|
||||||
Proceeds from sales of equity securities
|
2,064
|
5,480
|
||||||
Purchase of commercial mortgage loans
|
(319
|
)
|
(368
|
)
|
||||
Proceeds from commercial mortgage loans
|
54
|
72
|
||||||
Purchases of property and equipment
|
(1,046
|
)
|
(369
|
)
|
||||
Net cash provided by investing activities
|
17,100
|
16,450
|
||||||
Financing activities
|
||||||||
Dividends paid to shareholders
|
(1,424
|
)
|
(1,426
|
)
|
||||
Repurchase of common stock
|
–
|
(1,782
|
)
|
|||||
Net cash used in financing activities
|
(1,424
|
)
|
(3,208
|
)
|
||||
Effect of foreign exchange rates on cash and cash equivalents
|
88
|
(687
|
)
|
|||||
Increase in cash, cash equivalents and restricted cash and cash equivalents
|
36,675
|
11,243
|
||||||
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period
|
70,429
|
88,888
|
||||||
Cash, cash equivalents and restricted cash and cash equivalents at end of period
|
$
|
107,104
|
$
|
100,131
|
|
Fair
Value
|
Cost or
Amortized Cost
|
Allowance for Credit Losses
|
Gross
Unrealized Gains
|
Gross
Unrealized Losses
|
Net Unrealized
Gains (Losses)
|
||||||||||||||||||
March 31, 2021
|
||||||||||||||||||||||||
Fixed income securities
|
||||||||||||||||||||||||
Agency collateralized mortgage obligations
|
$
|
11,821
|
$
|
11,405
|
$
|
–
|
$
|
485
|
$
|
(69
|
)
|
$
|
416
|
|||||||||||
Agency mortgage-backed securities
|
114,822
|
113,228
|
–
|
2,254
|
(660
|
)
|
1,594
|
|||||||||||||||||
Asset-backed securities
|
102,638
|
102,799
|
–
|
540
|
(701
|
)
|
(161
|
)
|
||||||||||||||||
Bank loans
|
12,073
|
11,998
|
–
|
130
|
(55
|
)
|
75
|
|||||||||||||||||
Collateralized mortgage obligations
|
6,167
|
6,027
|
–
|
240
|
(100
|
)
|
140
|
|||||||||||||||||
Corporate securities
|
362,442
|
353,462
|
–
|
11,149
|
(2,169
|
)
|
8,980
|
|||||||||||||||||
Mortgage-backed securities
|
38,612
|
39,967
|
(825
|
)
|
490
|
(1,020
|
)
|
(530
|
)
|
|||||||||||||||
Municipal obligations
|
46,464
|
45,358
|
–
|
1,184
|
(78
|
)
|
1,106
|
|||||||||||||||||
Non-U.S. government obligations
|
30,648
|
30,083
|
–
|
574
|
(9
|
)
|
565
|
|||||||||||||||||
U.S. government obligations
|
189,262
|
186,682
|
–
|
3,738
|
(1,158
|
)
|
2,580
|
|||||||||||||||||
Total fixed income securities
|
$
|
914,949
|
$
|
901,009
|
$
|
(825
|
)
|
$
|
20,784
|
$
|
(6,019
|
)
|
$
|
14,765
|
|
Fair
Value
|
Cost or
Amortized Cost
|
Allowance for Credit Losses
|
Gross
Unrealized Gains
|
Gross
Unrealized Losses
|
Net Unrealized
Gains (Losses)
|
||||||||||||||||||
December 31, 2020
|
||||||||||||||||||||||||
Fixed income securities
|
||||||||||||||||||||||||
Agency collateralized mortgage obligations
|
$
|
11,931
|
$
|
11,448
|
$
|
–
|
$
|
483
|
$
|
–
|
$
|
483
|
||||||||||||
Agency mortgage-backed securities
|
102,107
|
99,060
|
–
|
3,062
|
(15
|
)
|
3,047
|
|||||||||||||||||
Asset-backed securities
|
107,696
|
108,686
|
–
|
596
|
(1,586
|
)
|
(990
|
)
|
||||||||||||||||
Bank loans
|
11,361
|
11,590
|
–
|
128
|
(357
|
)
|
(229
|
)
|
||||||||||||||||
Collateralized mortgage obligations
|
5,118
|
5,061
|
–
|
151
|
(94
|
)
|
57
|
|||||||||||||||||
Corporate securities
|
360,241
|
344,059
|
–
|
16,380
|
(198
|
)
|
16,182
|
|||||||||||||||||
Mortgage-backed securities
|
38,056
|
40,675
|
(1,035
|
)
|
659
|
(2,243
|
)
|
(1,584
|
)
|
|||||||||||||||
Municipal obligations
|
45,143
|
43,353
|
–
|
1,820
|
(30
|
)
|
1,790
|
|||||||||||||||||
Non-U.S. government obligations
|
30,600
|
29,882
|
–
|
718
|
–
|
718
|
||||||||||||||||||
U.S. government obligations
|
207,439
|
200,654
|
–
|
7,000
|
(215
|
)
|
6,785
|
|||||||||||||||||
Total fixed income securities
|
$
|
919,692
|
$
|
894,468
|
$
|
(1,035
|
)
|
$
|
30,997
|
$
|
(4,738
|
)
|
$
|
26,259
|
|
March 31, 2021
|
December 31, 2020
|
||||||||||||||||||||||
Number of
Securities
|
Fair
Value
|
Gross
Unrealized Loss
|
Number of
Securities
|
Fair
Value
|
Gross
Unrealized Loss
|
|||||||||||||||||||
Fixed income securities:
|
||||||||||||||||||||||||
12 months or less
|
174
|
$
|
275,685
|
$
|
(4,448
|
)
|
100
|
$
|
120,630
|
$
|
(3,405
|
)
|
||||||||||||
Greater than 12 months
|
31
|
51,441
|
(1,571
|
)
|
24
|
33,065
|
(1,333
|
)
|
||||||||||||||||
Total fixed income securities
|
205
|
$
|
327,126
|
$
|
(6,019
|
)
|
124
|
$
|
153,695
|
$
|
(4,738
|
)
|
||||||||||||
|
Fair
Value
|
Cost or
Amortized Cost
|
||||||
One year or less
|
$
|
96,999
|
$
|
96,057
|
||||
Excess of one year to five years
|
368,593
|
358,662
|
||||||
Excess of five years to ten years
|
165,436
|
163,115
|
||||||
Excess of ten years
|
16,028
|
16,601
|
||||||
Contractual maturities
|
647,056
|
634,435
|
||||||
Asset-backed securities
|
267,893
|
266,574
|
||||||
Total
|
$
|
914,949
|
$
|
901,009
|
|
Three Months Ended
March 31
|
|||||||
2021
|
2020
|
|||||||
Gross gains on available-for-sale fixed income securities during the period
|
$
|
4,151
|
$
|
2,652
|
||||
Gross losses on available-for-sale fixed income securities during the period
|
(1,965
|
)
|
(4,741
|
)
|
||||
Impairment losses on investments
|
(82
|
)
|
(40
|
)
|
||||
Change in value of limited partnership investments
|
448
|
(676
|
)
|
|||||
Gains (losses) on equity securities:
|
||||||||
Realized gains (losses) on equity securities sold during the period
|
153
|
(2,698
|
)
|
|||||
Unrealized gains (losses) on equity securities held at the end of the period
|
7,804
|
(22,253
|
)
|
|||||
Realized and unrealized gains (losses) on equity securities during the period
|
7,957
|
(24,951
|
)
|
|||||
Net realized and unrealized gains (losses) on investments
|
$
|
10,509
|
$
|
(27,756
|
)
|
|
2021
|
2020
|
||||||
Three months ended March 31:
|
||||||||
Premiums ceded to reinsurers
|
$
|
26,886
|
$
|
28,467
|
||||
Losses and loss expenses ceded to reinsurers
|
16,986
|
23,536
|
||||||
Commissions from reinsurers
|
6,867
|
7,528
|
|
Three Months Ended
|
|||||||
March 31
|
||||||||
2021
|
2020
|
|||||||
Reserves, gross of reinsurance recoverable, at the beginning of the year
|
$
|
1,089,669
|
$
|
988,305
|
||||
Reinsurance recoverable on unpaid losses at the beginning of the year
|
424,368
|
398,305
|
||||||
Reserves at the beginning of the year, net of reinsurance
|
665,301
|
590,000
|
||||||
Provision for losses and loss expenses, net:
|
||||||||
Claims occurring during the current period
|
83,143
|
81,839
|
||||||
Claims occurring during prior periods
|
(825
|
)
|
(8
|
)
|
||||
Total incurred
|
82,318
|
81,831
|
||||||
Loss and loss expense payments, net:
|
||||||||
Claims occurring during the current period
|
8,082
|
8,169
|
||||||
Claims occurring during prior periods
|
52,847
|
61,812
|
||||||
Total paid
|
60,929
|
69,981
|
||||||
Reserves at the end of the period, net of reinsurance
|
686,690
|
601,850
|
||||||
Reinsurance recoverable on unpaid losses at the end of the period
|
421,442
|
399,749
|
||||||
Reserves, gross of reinsurance recoverable, at the end of the period
|
$
|
1,108,132
|
$
|
1,001,599
|
|
Three Months Ended
March 31
|
|||||||
2021
|
2020
|
|||||||
Revenues:
|
||||||||
Net premiums earned
|
$
|
122,853
|
$
|
109,659
|
||||
Net investment income
|
5,306
|
7,236
|
||||||
Net realized and unrealized gains (losses) on investments
|
10,509
|
(27,756
|
)
|
|||||
Commissions and other income
|
1,858
|
1,663
|
||||||
Total revenues
|
$
|
140,526
|
$
|
90,802
|
Description
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Fixed income securities:
|
||||||||||||||||
Agency collateralized mortgage obligations
|
$
|
11,821
|
$
|
–
|
$
|
11,821
|
$
|
–
|
||||||||
Agency mortgage-backed securities
|
114,822
|
–
|
114,822
|
–
|
||||||||||||
Asset-backed securities
|
102,638
|
–
|
102,638
|
–
|
||||||||||||
Bank loans
|
12,073
|
–
|
12,073
|
–
|
||||||||||||
Collateralized mortgage obligations
|
6,167
|
–
|
6,167
|
–
|
||||||||||||
Corporate securities
|
351,511
|
–
|
351,511
|
–
|
||||||||||||
Options embedded in convertible securities
|
10,931
|
–
|
10,931
|
–
|
||||||||||||
Mortgage-backed securities
|
38,612
|
–
|
38,612
|
–
|
||||||||||||
Municipal obligations
|
46,464
|
–
|
46,464
|
–
|
||||||||||||
Non-U.S. government obligations
|
30,648
|
–
|
30,648
|
–
|
||||||||||||
U.S. government obligations
|
189,262
|
–
|
189,262
|
–
|
||||||||||||
Total fixed income securities
|
914,949
|
–
|
914,949
|
–
|
||||||||||||
Equity securities:
|
||||||||||||||||
Consumer
|
12,373
|
12,373
|
–
|
–
|
||||||||||||
Energy
|
1,661
|
1,661
|
–
|
–
|
||||||||||||
Financial
|
34,108
|
34,108
|
–
|
–
|
||||||||||||
Industrial
|
5,978
|
5,978
|
–
|
–
|
||||||||||||
Technology
|
3,669
|
3,669
|
–
|
–
|
||||||||||||
Other
|
9,226
|
9,226
|
–
|
–
|
||||||||||||
Total equity securities
|
67,015
|
67,015
|
–
|
–
|
||||||||||||
Short-term investments
|
1,000
|
1,000
|
–
|
–
|
||||||||||||
Cash equivalents
|
86,961
|
–
|
86,961
|
–
|
||||||||||||
Total
|
$
|
1,069,925
|
$
|
68,015
|
$
|
1,001,910
|
$
|
–
|
Description
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Fixed income securities:
|
||||||||||||||||
Agency collateralized mortgage obligations
|
$
|
11,931
|
$
|
–
|
$
|
11,931
|
$
|
–
|
||||||||
Agency mortgage-backed securities
|
102,107
|
–
|
102,107
|
–
|
||||||||||||
Asset-backed securities
|
107,696
|
–
|
107,696
|
–
|
||||||||||||
Bank loans
|
11,361
|
–
|
11,361
|
–
|
||||||||||||
Collateralized mortgage obligations
|
5,118
|
–
|
5,118
|
–
|
||||||||||||
Corporate securities
|
352,837
|
–
|
352,837
|
–
|
||||||||||||
Options embedded in convertible securities
|
7,404
|
–
|
7,404
|
–
|
||||||||||||
Mortgage-backed securities
|
38,056
|
–
|
38,056
|
–
|
||||||||||||
Municipal obligations
|
45,143
|
–
|
45,143
|
–
|
||||||||||||
Non-U.S. government obligations
|
30,600
|
–
|
30,600
|
–
|
||||||||||||
U.S. government obligations
|
207,439
|
–
|
207,439
|
–
|
||||||||||||
Total fixed income securities
|
919,692
|
–
|
919,692
|
–
|
||||||||||||
Equity securities:
|
||||||||||||||||
Consumer
|
11,598
|
11,598
|
–
|
–
|
||||||||||||
Energy
|
1,227
|
1,227
|
–
|
–
|
||||||||||||
Financial
|
29,064
|
29,064
|
–
|
–
|
||||||||||||
Industrial
|
5,180
|
5,180
|
–
|
–
|
||||||||||||
Technology
|
2,851
|
2,851
|
–
|
–
|
||||||||||||
Other
|
8,249
|
8,249
|
–
|
–
|
||||||||||||
Total equity securities
|
58,169
|
58,169
|
–
|
–
|
||||||||||||
Short-term investments
|
1,000
|
1,000
|
–
|
–
|
||||||||||||
Cash equivalents
|
47,026
|
–
|
47,026
|
–
|
||||||||||||
Total
|
$
|
1,025,887
|
$
|
59,169
|
$
|
966,718
|
$
|
–
|
|
Carrying
|
Fair Value
|
||||||||||||||||||
Value
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||||||
March 31, 2021
|
||||||||||||||||||||
Assets:
|
||||||||||||||||||||
Limited partnerships
|
$
|
7,476
|
$
|
–
|
$
|
–
|
$
|
7,476
|
$
|
7,476
|
||||||||||
Commercial mortgage loans
|
10,866
|
–
|
–
|
11,688
|
11,688
|
|||||||||||||||
Liabilities:
|
||||||||||||||||||||
Short-term borrowings
|
20,000
|
–
|
20,000
|
–
|
20,000
|
|||||||||||||||
December 31, 2020
|
||||||||||||||||||||
Assets:
|
||||||||||||||||||||
Limited partnerships
|
$
|
7,214
|
$
|
–
|
$
|
–
|
$
|
7,214
|
$
|
7,214
|
||||||||||
Commercial mortgage loans
|
10,602
|
–
|
–
|
11,425
|
11,425
|
|||||||||||||||
Liabilities:
|
||||||||||||||||||||
Short-term borrowings
|
20,000
|
–
|
20,000
|
–
|
20,000
|
Grant Date
|
Number of
Shares Issued
|
Vesting Date
|
Service Period
|
Grant Date Fair
Value Per Share
|
|||||
5/7/2019
|
29,536
|
5/7/2020
|
7/1/2019 - 6/30/2020
|
$
|
16.25
|
||||
5/17/2019
|
3,591
|
5/7/2020
|
7/1/2019 - 6/30/2020
|
$
|
16.25
|
||||
5/22/2019
|
3,541
|
5/7/2020
|
7/1/2019 - 6/30/2020
|
$
|
16.25
|
||||
5/5/2020
|
42,220
|
5/5/2021
|
7/1/2020 - 6/30/2021
|
$
|
14.21
|
||||
|
Foreign
Currency
|
Unrealized Holding Gains (Losses) on
Available-for-sale Securities
|
Total
|
|||||||||
Beginning balance at December 31, 2020
|
$
|
(245
|
)
|
$
|
22,004
|
$
|
21,759
|
|||||
Other comprehensive income (loss) before reclassifications
|
88
|
(8,580
|
)
|
(8,492
|
)
|
|||||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
–
|
(501
|
)
|
(501
|
)
|
|||||||
Net current-period other comprehensive income (loss)
|
88
|
(9,081
|
)
|
(8,993
|
)
|
|||||||
Ending balance at March 31, 2021
|
$
|
(157
|
)
|
$
|
12,923
|
$
|
12,766
|
|
Foreign
Currency
|
Unrealized Holding Gains (Losses) on
Available-for-sale Securities
|
Total
|
|||||||||
Beginning balance at December 31, 2019
|
$
|
(494
|
)
|
$
|
9,863
|
$
|
9,369
|
|||||
Other comprehensive income (loss) before reclassifications
|
(687
|
)
|
(20,256
|
)
|
(20,943
|
)
|
||||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
–
|
(605
|
)
|
(605
|
)
|
|||||||
Net current-period other comprehensive income (loss)
|
(687
|
)
|
(20,861
|
)
|
(21,548
|
)
|
||||||
Ending balance at March 31, 2020
|
$
|
(1,181
|
)
|
$
|
(10,998
|
)
|
$
|
(12,179
|
)
|
|
Three Months Ended
|
|||||||
March 31
|
||||||||
(dollars in thousands)
|
2021
|
2020
|
||||||
Income (loss) before federal income tax expense (benefit)
|
$
|
16,353
|
$
|
(25,139
|
)
|
|||
Less: Net realized and unrealized gains (losses) on investments
|
10,509
|
(27,756
|
)
|
|||||
Less: Net investment income
|
5,306
|
7,236
|
||||||
Less: Corporate charges included in other operating expenses 1
|
(3,474
|
)
|
-
|
|||||
Underwriting income (loss)
|
$
|
4,012
|
$
|
(4,619
|
)
|
|||
Other operating expenses
|
41,855
|
34,110
|
||||||
Less: Corporate charges 1
|
3,474
|
-
|
||||||
Other operating expenses, excluding corporate charges
|
38,381
|
34,110
|
||||||
Ratios
|
||||||||
Losses and loss expenses incurred
|
$
|
82,318
|
$
|
81,831
|
||||
Net premiums earned
|
122,853
|
109,659
|
||||||
Loss ratio
|
67.0
|
%
|
74.6
|
%
|
||||
Other operating expenses
|
$
|
41,855
|
$
|
34,110
|
||||
Less: Commissions and other income
|
1,858
|
1,663
|
||||||
Other operating expenses, less commissions and other income
|
39,997
|
32,447
|
||||||
Net premiums earned
|
122,853
|
109,659
|
||||||
Expense ratio
|
32.6
|
%
|
29.6
|
%
|
||||
Impact of corporate charges
|
(2.9
|
)%
|
-
|
|||||
Expense ratio, excluding corporate charges
|
29.7
|
%
|
29.6
|
%
|
||||
Combined ratio
|
99.6
|
%
|
104.2
|
%
|
||||
Combined ratio, excluding corporate charges
|
96.7
|
%
|
104.2
|
%
|
|
2021
|
2020
|
Change
|
% Change
|
||||||||||||
Gross premiums written
|
$
|
145,056
|
$
|
134,006
|
$
|
11,050
|
8.2
|
%
|
||||||||
Ceded premiums written
|
(26,229
|
)
|
(24,772
|
)
|
(1,457
|
)
|
5.9
|
%
|
||||||||
Net premiums written
|
$
|
118,827
|
$
|
109,234
|
$
|
9,593
|
8.8
|
%
|
||||||||
Net premiums earned
|
$
|
122,853
|
$
|
109,659
|
$
|
13,194
|
12.0
|
%
|
||||||||
Net investment income
|
5,306
|
7,236
|
(1,930
|
)
|
(26.7
|
)%
|
||||||||||
Commissions and other income
|
1,858
|
1,663
|
195
|
11.7
|
%
|
|||||||||||
Net realized and unrealized gains (losses) on investments
|
10,509
|
(27,756
|
)
|
38,265
|
(137.9
|
)%
|
||||||||||
Total revenue
|
140,526
|
90,802
|
||||||||||||||
Losses and loss expenses incurred
|
82,318
|
81,831
|
487
|
0.6
|
%
|
|||||||||||
Other operating expenses
|
41,855
|
34,110
|
7,745
|
22.7
|
%
|
|||||||||||
Total expenses
|
124,173
|
115,941
|
||||||||||||||
Income (loss) before federal income tax expense (benefit)
|
16,353
|
(25,139
|
)
|
41,492
|
||||||||||||
Federal income tax expense (benefit)
|
3,415
|
(2,983
|
)
|
6,398
|
||||||||||||
Net income (loss)
|
$
|
12,938
|
$
|
(22,156
|
)
|
$
|
35,094
|
|||||||||
● |
general economic conditions, including continued volatility of the financial markets, prevailing interest rate levels and stock and credit market performance, which may affect or continue to affect (among other things) our ability to sell our products and to collect amounts due to us, our ability to access capital resources and the costs associated with such access to capital and the market value of our investments;
|
● |
the risks related to our proposed Merger with Progressive, and Merger Sub described above, including:
|
• |
our inability to complete the proposed Merger due to the failure to satisfy any of the conditions to completion of the proposed Merger, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the Merger;
|
• |
the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement;
|
• |
risks related to disruption of management’s attention from our ongoing business operations due to the proposed Merger;
|
• |
the effect of the announcement of the proposed Merger on our relationships with our clients, operating results and business generally; and
|
• |
the outcome of the pending legal proceedings initiated against us and the members of our Board of Directors related to the proposed Merger and the outcome of any other legal proceedings initiated against us, Progressive or others related to the proposed Merger;
|
● |
the effects of the COVID-19 pandemic and associated government actions on our operating and financial performance;
|
● |
our ability to obtain adequate premium rates and manage our growth strategy;
|
● |
increasing competition in the sale of our insurance products and services resulting from the entrance of new competitors into, or the expansion of the operations of existing competitors in, our markets and our ability to retain existing customers;
|
● |
other changes in the markets for our insurance products;
|
● |
the impact of technological advances, including those specific to the transportation industry;
|
● |
changes in the legal or regulatory environment, which may affect the manner in which claims are adjusted or litigated, including loss and loss adjustment expense;
|
● |
legal or regulatory changes or actions, including those relating to the regulation of the sale, underwriting and pricing of insurance products and services and capital requirements;
|
● |
the impact of a downgrade in our financial strength rating;
|
● |
technology or network security disruptions or breaches;
|
● |
adequacy of insurance reserves;
|
● |
availability of reinsurance and ability of reinsurers to pay their obligations;
|
● |
our ability to attract and retain qualified employees;
|
● |
tax law and accounting changes; and
|
● |
legal actions brought against us.
|
|
Fair Value
|
Estimated Change
in Fair Value
|
||||||
200 basis point increase
|
$
|
860,539
|
$
|
(54,410
|
)
|
|||
100 basis point increase
|
887,744
|
(27,205
|
)
|
|||||
Current fair value
|
914,949
|
–
|
||||||
100 basis point decrease
|
942,154
|
27,205
|
||||||
200 basis point decrease
|
969,359
|
54,410
|
•
|
the attention of our management and our employees may be directed to Merger-related considerations and may be diverted from the day-to-day operations of our business;
|
•
|
our employees may experience uncertainty about their future roles with us, which might adversely affect our ability to retain and recruit key employees;
|
•
|
customers, suppliers or other parties with whom we maintain business relationships may experience uncertainty about our future and seek alternative relationships with third parties or seek to alter their business relationships with us; and
|
•
|
the pending legal proceedings instituted against us and the members of our Board of Directors related to the Merger, and any other legal proceedings instituted against us, our directors and/or our officers with respect to the proposed Merger, will require us to devote [substantial] resources and executive time to defend.
|
|
Total Number of
Shares Purchased (1)
|
Average Price
Paid per Share
|
Total Number of Shares
Purchased Under the Program (2)
|
Remaining Shares Available to be Purchased Under the Program (2)
|
||||||||||||
January 1 - January 31
|
-
|
$
|
-
|
-
|
1,375,729
|
|||||||||||
February 1 - February 28
|
-
|
-
|
-
|
1,375,729
|
||||||||||||
March 1 - March 31
|
4,075
|
22.90
|
-
|
1,375,729
|
||||||||||||
Total
|
4,075
|
-
|
(1) |
Amounts represent shares withheld by the Company in connection with employee payroll tax withholding upon the vesting of stock awards. Stock amounts in the condensed consolidated statements of shareholders’ equity are shown net of these shares withheld.
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(2) |
On August 31, 2017, our Board of Directors authorized the reinstatement of the Company’s share repurchase program for up to 2,464,209 shares of its Class A or Class B Common Stock. The repurchases may be made in the open market or through privately negotiated transactions, from time-to-time, and in accordance with applicable laws, rules and regulations. The share repurchase program may be amended, suspended or discontinued at any time and does not commit the Company to repurchase any shares of its Common Stock. The Company has funded, and intends to continue to fund, the share repurchase program from cash on hand. No share repurchases have been made by the Company under the program since March 20, 2020. Additionally, in connection with the Merger Agreement with Progressive, the Company is prohibited from repurchasing any of its Class A or Class B Common Stock under the repurchase program.
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Exhibit No.
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Description
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Agreement and Plan of Merger, dated as of February 14, 2021, by and among Protective Insurance Corporation, The Progressive Corporation and Carnation Merger Sub Inc., incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on February 16, 2021.
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Amended and Restated Articles of Incorporation of Protective Insurance Corporation, incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q filed August 8, 2018.
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Code of By-Laws of Protective Insurance Corporation, as amended through January 3, 2021, incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed on January 4, 2021.
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Voting and Support Agreement, dated as of February 14, 2021, by and among Protective Insurance Corporation, The Progressive Corporation and the Company's shareholders listed therein, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on February 16, 2021.
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Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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101
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The following materials from Protective Insurance Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, formatted in Inline XBRL (eXtensible Business Reporting Language): (1) the Condensed Consolidated Balance Sheets, (2) the Condensed Consolidated Statements of Operations, (3) the Condensed Consolidated Statements of Comprehensive Income (Loss), (4) the Condensed Consolidated Statements of Shareholders' Equity, (5) the Condensed Consolidated Statements of Cash Flows, and (6) the Notes to Unaudited Condensed Consolidated Financial Statements.
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104
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Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101)
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By:
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/s/ Jeremy D. Edgecliffe-Johnson
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Jeremy D. Edgecliffe-Johnson
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Chief Executive Officer
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By:
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/s/ John R. Barnett
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John R. Barnett
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Chief Financial Officer
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