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 | |||
Page No. | |||
Item 1. Financial Statements | |||
Condensed Consolidated Balance Sheets | |||
Condensed Consolidated Statements of Income | |||
Condensed Consolidated Statements of Comprehensive Income | |||
Condensed Consolidated Statements of Changes in Shareholders’ Equity | |||
Condensed Consolidated Statements of Cash Flows | |||
Notes to Condensed Consolidated Financial Statements | |||
Review Report of Independent Registered Public Accounting Firm | |||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | |||
Item 3. Quantitative and Qualitative Disclosures about Market Risk | |||
Item 4. Controls and Procedures | |||
PART II. OTHER INFORMATION | |||
Item 1. Legal Proceedings | |||
Item 1A. Risk Factors | |||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | |||
Item 3. Defaults Upon Senior Securities | |||
Item 4. Mine Safety Disclosures | |||
Item 5. Other Information | |||
Item 6. Exhibits | |||
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. |
▪ | 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 a manageable risk, this fluctuation is often 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. |
June 30, 2016 | December 31, 2015 | |||||||
(UNAUDITED) | ||||||||
ASSETS | ||||||||
Investments | ||||||||
Fixed maturities held-to-maturity, at amortized cost (estimated fair value: 2016 - $2,357; 2015 - $2,504) | $ | 2,236 | $ | 2,439 | ||||
Fixed maturities available-for-sale, at estimated fair value (cost: 2016 - $96,219; 2015 - $92,077) | 99,044 | 91,812 | ||||||
Equity securities available-for-sale, at estimated fair value (cost: 2016 - $2,420; 2015 - $2,420) | 5,273 | 4,897 | ||||||
Trading securities | 107 | 107 | ||||||
Mortgage loans on real estate, at cost | 188 | 202 | ||||||
Investment real estate, at book value | 3,291 | 3,291 | ||||||
Policy loans | 1,689 | 1,655 | ||||||
Company owned life insurance | 4,951 | 4,898 | ||||||
Other invested assets | 3,105 | 3,256 | ||||||
Total Investments | 119,884 | 112,557 | ||||||
Cash | 4,063 | 6,763 | ||||||
Accrued investment income | 803 | 797 | ||||||
Policy receivables and agents' balances, net | 12,786 | 11,296 | ||||||
Reinsurance recoverable | 544 | 1,660 | ||||||
Deferred policy acquisition costs | 8,690 | 8,485 | ||||||
Property and equipment, net | 1,950 | 1,946 | ||||||
Deferred income tax asset, net | 2,545 | 3,824 | ||||||
Other assets | 756 | 513 | ||||||
Total Assets | $ | 152,021 | $ | 147,841 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Property and casualty benefit and loss reserves | $ | 7,007 | $ | 9,645 | ||||
Accident and health benefit and loss reserves | 3,161 | 3,197 | ||||||
Life and annuity benefit and loss reserves | 32,281 | 31,962 | ||||||
Unearned premiums | 32,241 | 29,852 | ||||||
Policy and contract claims | 970 | 826 | ||||||
Other policyholder funds | 1,589 | 1,561 | ||||||
Short-term notes payable and current portion of long-term debt | 857 | 857 | ||||||
Long-term debt | 17,106 | 17,100 | ||||||
Accrued income taxes | 71 | 101 | ||||||
Other liabilities | 7,561 | 7,857 | ||||||
Total Liabilities | 102,844 | 102,958 | ||||||
Contingencies | ||||||||
Shareholders' equity | ||||||||
Common stock | 2,517 | 2,512 | ||||||
Additional paid-in capital | 5,412 | 5,341 | ||||||
Accumulated other comprehensive income | 2,732 | 525 | ||||||
Retained earnings | 38,516 | 36,505 | ||||||
Total Shareholders' Equity | 49,177 | 44,883 | ||||||
Total Liabilities and Shareholders' Equity | $ | 152,021 | $ | 147,841 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
REVENUES | |||||||||||||||
Net premiums earned | $ | 15,227 | $ | 14,880 | $ | 30,392 | $ | 29,586 | |||||||
Net investment income | 1,029 | 813 | 2,020 | 1,815 | |||||||||||
Net realized investment gains | 242 | 245 | 249 | 387 | |||||||||||
Other income | 150 | 156 | 304 | 314 | |||||||||||
Total Revenues | 16,648 | 16,094 | 32,965 | 32,102 | |||||||||||
BENEFITS, LOSSES AND EXPENSES | |||||||||||||||
Policyholder benefits and settlement expenses | 8,862 | 9,435 | 17,909 | 17,697 | |||||||||||
Amortization of deferred policy acquisition costs | 906 | 918 | 1,693 | 1,817 | |||||||||||
Commissions | 2,117 | 2,089 | 4,225 | 4,144 | |||||||||||
General and administrative expenses | 2,158 | 2,119 | 4,287 | 4,150 | |||||||||||
Taxes, licenses and fees | 574 | 518 | 1,174 | 1,173 | |||||||||||
Interest expense | 333 | 348 | 678 | 668 | |||||||||||
Total Benefits, Losses and Expenses | 14,950 | 15,427 | 29,966 | 29,649 | |||||||||||
Income Before Income Taxes | 1,698 | 667 | 2,999 | 2,453 | |||||||||||
INCOME TAX EXPENSE | |||||||||||||||
Current | 399 | 161 | 620 | 632 | |||||||||||
Deferred | 3 | (117 | ) | 142 | (110 | ) | |||||||||
402 | 44 | 762 | 522 | ||||||||||||
Net Income | $ | 1,296 | $ | 623 | $ | 2,237 | $ | 1,931 | |||||||
INCOME PER COMMON SHARE BASIC AND DILUTED | $ | 0.52 | $ | 0.25 | $ | 0.89 | $ | 0.77 | |||||||
DIVIDENDS DECLARED PER SHARE | $ | 0.045 | $ | 0.04 | $ | 0.09 | $ | 0.08 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income | $ | 1,296 | $ | 623 | $ | 2,237 | $ | 1,931 | |||||||
Other comprehensive income (loss), net of tax | |||||||||||||||
Changes in: | |||||||||||||||
Unrealized gains (losses) on securities, net of reclassification adjustment of $172 and $257 for 2016 and 2015, respectively | 1,130 | (1,240 | ) | 2,288 | (875 | ) | |||||||||
Unrealized gain (loss) on interest rate swap | 21 | 56 | (81 | ) | (61 | ) | |||||||||
Other comprehensive income (loss), net of tax | 1,151 | (1,184 | ) | 2,207 | (936 | ) | |||||||||
Comprehensive income (loss) | $ | 2,447 | $ | (561 | ) | $ | 4,444 | $ | 995 |
Total | Retained Earnings | Accumulated Other Comprehensive Income | Common Stock | Additional Paid-in Capital | |||||||||||||||
Balance at December 31, 2015 (AUDITED) | $ | 44,883 | $ | 36,505 | $ | 525 | $ | 2,512 | $ | 5,341 | |||||||||
Net income for June 30, 2016 | 2,237 | 2,237 | |||||||||||||||||
Other comprehensive income (net of tax) | 2,207 | 2,207 | |||||||||||||||||
Common stock issued | 76 | 5 | 71 | ||||||||||||||||
Cash dividends | (226 | ) | (226 | ) | |||||||||||||||
Balance at June 30, 2016 | $ | 49,177 | $ | 38,516 | $ | 2,732 | $ | 2,517 | $ | 5,412 |
Six months ended June 30, | |||||||
2016 | 2015 | ||||||
Cash Flows from Operating Activities | |||||||
Net income | $ | 2,237 | $ | 1,931 | |||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||
Depreciation expense and amortization/accretion, net | 154 | 165 | |||||
Increase in cash surrender value of company owned life insurance | (53 | ) | 52 | ||||
Net realized gains on investments | (249 | ) | (387 | ) | |||
Deferred income taxes | 142 | (110 | ) | ||||
Amortization of deferred policy acquisition costs | 1,693 | 1,817 | |||||
Changes in assets and liabilities: | |||||||
Change in accrued investment income | (6 | ) | (4 | ) | |||
Change in reinsurance recoverable | 1,116 | (471 | ) | ||||
Policy acquisition costs deferred | (1,898 | ) | (1,937 | ) | |||
Change in accrued income taxes | (30 | ) | (334 | ) | |||
Change in net policy liabilities and claims | (1,319 | ) | 1,438 | ||||
Change in other assets/liabilities, net | (436 | ) | 929 | ||||
Other, net | 8 | 8 | |||||
Net cash provided by operating activities | 1,359 | 3,097 | |||||
Cash Flows from Investing Activities | |||||||
Purchase of: | |||||||
Available-for-sale securities | (14,278 | ) | (14,290 | ) | |||
Trading securities and short-term investments | — | (88 | ) | ||||
Property and equipment | (84 | ) | (103 | ) | |||
Proceeds from sale or maturities of: | |||||||
Held-to-maturity securities | 213 | 470 | |||||
Available-for-sale securities | 10,317 | 13,668 | |||||
Real estate held for investment | — | 201 | |||||
Property and equipment | — | 5 | |||||
Other invested assets, net | (29 | ) | 371 | ||||
Net cash provided by (used in) investing activities | (3,861 | ) | 234 | ||||
Cash Flows from Financing Activities | |||||||
Change in other policyholder funds | 28 | 22 | |||||
Repayments of long-term debt | — | (500 | ) | ||||
Change in short-term notes payable | — | (700 | ) | ||||
Dividends paid | (226 | ) | (201 | ) | |||
Net cash used in financing activities | (198 | ) | (1,379 | ) | |||
Net change in cash and cash equivalents | (2,700 | ) | 1,952 | ||||
Cash and cash equivalents, beginning of year | 6,763 | 6,426 | |||||
Cash and cash equivalents, end of period | $ | 4,063 | $ | 8,378 |
Available-for-sale securities: | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Corporate debt securities | $ | 40,660 | $ | 1,571 | $ | 482 | $ | 41,749 | ||||||||
Mortgage backed securities | 12,379 | 368 | 62 | 12,685 | ||||||||||||
Private label asset backed securities | 8,765 | 44 | 507 | 8,302 | ||||||||||||
Obligations of states and political subdivisions | 14,612 | 951 | 1 | 15,562 | ||||||||||||
U.S. Treasury securities and obligations of U.S. Government corporations and agencies | 19,803 | 953 | 10 | 20,746 | ||||||||||||
Total fixed maturities | 96,219 | 3,887 | 1,062 | 99,044 | ||||||||||||
Equity securities | 2,420 | 2,919 | 66 | 5,273 | ||||||||||||
Total | $ | 98,639 | $ | 6,806 | $ | 1,128 | $ | 104,317 |
Held-to-maturity securities: | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Mortgage backed securities | $ | 2,201 | $ | 119 | $ | — | $ | 2,320 | ||||||||
U.S. Treasury securities and obligations of U.S. Government corporations and agencies | 35 | 2 | — | 37 | ||||||||||||
Total | $ | 2,236 | $ | 121 | $ | — | $ | 2,357 |
Available-for-sale securities: | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Corporate debt securities | $ | 38,245 | $ | 747 | $ | 1,728 | $ | 37,264 | ||||||||
Mortgage backed securities | 15,324 | 157 | 224 | 15,257 | ||||||||||||
Private label asset backed securities | 6,029 | 24 | 380 | 5,673 | ||||||||||||
Obligations of states and political subdivisions | 14,654 | 869 | 47 | 15,476 | ||||||||||||
U.S. Treasury securities and obligations of U.S. Government corporations and agencies | 17,825 | 413 | 96 | 18,142 | ||||||||||||
Total fixed maturities | 92,077 | 2,210 | 2,475 | 91,812 | ||||||||||||
Equity securities | 2,420 | 2,590 | 113 | 4,897 | ||||||||||||
Total | $ | 94,497 | $ | 4,800 | $ | 2,588 | $ | 96,709 |
Held-to-maturity securities: | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Mortgage backed securities | $ | 2,395 | $ | 62 | $ | — | $ | 2,457 | ||||||||
U.S. Treasury securities and obligations of U.S. Government corporations and agencies | 44 | 3 | — | 47 | ||||||||||||
Total | $ | 2,439 | $ | 65 | $ | — | $ | 2,504 |
(Dollars in Thousands) | Amortized Cost | Fair Value | ||||||
Available-for-sale securities: | ||||||||
Due in one year or less | $ | 3,533 | $ | 3,622 | ||||
Due after one year through five years | 14,967 | 15,451 | ||||||
Due after five years through ten years | 35,639 | 36,295 | ||||||
Due after ten years | 42,080 | 43,676 | ||||||
Total | $ | 96,219 | $ | 99,044 | ||||
Held-to-maturity securities: | ||||||||
Due in one year or less | $ | — | $ | — | ||||
Due after one year through five years | 53 | 54 | ||||||
Due after five years through ten years | 93 | 102 | ||||||
Due after ten years | 2,090 | 2,201 | ||||||
Total | $ | 2,236 | $ | 2,357 |
Less than 12 months | 12 months or longer | Total | |||||||||||||||||||||||||
June 30, 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 | $ | 3,313 | $ | 39 | $ | 5,048 | $ | 443 | $ | 8,361 | $ | 482 | 15 | ||||||||||||||
Mortgage backed securities | 927 | 60 | 316 | 2 | 1,243 | 62 | 6 | ||||||||||||||||||||
Private label asset backed securities | 3,477 | 264 | 2,386 | 243 | 5,863 | 507 | 9 | ||||||||||||||||||||
Obligations of state and political subdivisions | 1,089 | 1 | — | — | 1,089 | 1 | 2 | ||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. Government corporations and agencies | 1,550 | 5 | 331 | 5 | 1,881 | 10 | 2 | ||||||||||||||||||||
Equity securities | — | — | 1,220 | 66 | 1,220 | 66 | 1 | ||||||||||||||||||||
$ | 10,356 | $ | 369 | $ | 9,301 | $ | 759 | $ | 19,657 | $ | 1,128 | 35 |
Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||||
December 31, 2015 | 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 | $ | 18,205 | $ | 821 | $ | 3,783 | $ | 907 | $ | 21,988 | $ | 1,728 | 44 | |||||||||||||
Mortgage backed securities | 9,069 | 161 | 675 | 63 | 9,744 | 224 | 20 | |||||||||||||||||||
Private label asset backed securities | 4,962 | 379 | 84 | 1 | 5,046 | 380 | 10 | |||||||||||||||||||
Obligations of state and political subdivisions | 1,920 | 36 | 331 | 11 | 2,251 | 47 | 5 | |||||||||||||||||||
U.S. Treasury securities and obligations of U.S. Government corporations and agencies | 6,131 | 70 | 1,452 | 26 | 7,583 | 96 | 12 | |||||||||||||||||||
Equity securities | — | — | 1,173 | 113 | 1,173 | 113 | 1 | |||||||||||||||||||
$ | 40,287 | $ | 1,467 | $ | 7,498 | $ | 1,121 | $ | 47,785 | $ | 2,588 | 92 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Fixed maturities | $ | 948 | $ | 868 | $ | 1,849 | $ | 1,762 | |||||||
Equity securities | 26 | 30 | 54 | 60 | |||||||||||
Mortgage loans on real estate | 6 | 4 | 7 | 8 | |||||||||||
Investment real estate | 2 | 2 | 4 | 4 | |||||||||||
Policy loans | 32 | 30 | 64 | 59 | |||||||||||
Company owned life insurance change in surrender value | 19 | (96 | ) | 53 | (52 | ) | |||||||||
Other | 26 | 33 | 75 | 75 | |||||||||||
1,059 | 871 | 2,106 | 1,916 | ||||||||||||
Less: Investment expenses | 30 | 58 | 86 | 101 | |||||||||||
Net investment income | $ | 1,029 | $ | 813 | $ | 2,020 | $ | 1,815 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Fixed maturities | $ | 243 | $ | 250 | $ | 260 | $ | 392 | |||||||
Other, principally real estate | (1 | ) | (5 | ) | (11 | ) | (5 | ) | |||||||
Net realized investment gains | $ | 242 | $ | 245 | $ | 249 | $ | 387 |
June 30, 2016 | December 31, 2015 | ||||||
Net change in unrealized appreciation on available-for-sale securities before deferred tax | $ | 3,466 | $ | (3,225 | ) | ||
Deferred income tax | (1,178 | ) | 1,097 | ||||
Net change in unrealized appreciation on available-for-sale securities | $ | 2,288 | $ | (2,128 | ) |
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 | $ | 41,749 | $ | — | $ | 41,749 | $ | — | ||||||||
Mortgage backed securities | 12,685 | — | 12,685 | — | ||||||||||||
Private label asset backed securities | 8,302 | — | 8,302 | — | ||||||||||||
Obligations of states and political subdivisions | 15,562 | — | 15,562 | — | ||||||||||||
U.S. Treasury securities and obligations of U.S. Government corporations and agencies | 20,746 | 20,746 | — | — | ||||||||||||
Trading securities | 107 | 107 | — | — | ||||||||||||
Equity securities available-for-sale | 5,273 | 4,052 | — | 1,221 | ||||||||||||
Total Financial Assets | $ | 104,424 | $ | 24,905 | $ | 78,298 | $ | 1,221 | ||||||||
Financial Liabilities | ||||||||||||||||
Interest rate swap | $ | (1,541 | ) | $ | — | $ | — | $ | (1,541 | ) | ||||||
Total Financial Liabilities | $ | (1,541 | ) | $ | — | $ | — | $ | (1,541 | ) |
For the six months ended June 30, 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 | 48 | (122 | ) | |||||
Purchases: | — | — | ||||||
Sales: | — | — | ||||||
Issuances: | — | — | ||||||
Settlements: | — | — | ||||||
Transfers in/(out) of Level 3 | — | — | ||||||
Ending balance | $ | 1,221 | $ | (1,541 | ) | |||
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 June 30, 2016: | $ | — | $ | — |
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 | $ | 37,264 | $ | — | $ | 37,264 | $ | — | ||||||||
Mortgage backed securities | 15,257 | — | 15,257 | — | ||||||||||||
Private label asset backed securities | 5,673 | — | 5,673 | — | ||||||||||||
Obligations of states and political subdivisions | 15,476 | — | 15,476 | — | ||||||||||||
U.S. Treasury securities and obligations of U.S. Government corporations and agencies | 18,142 | 18,142 | — | — | ||||||||||||
Trading securities | 107 | 107 | — | — | ||||||||||||
Equity securities available-for-sale | 4,897 | 3,724 | — | 1,173 | ||||||||||||
Total Financial Assets | $ | 96,816 | $ | 21,973 | $ | 73,670 | $ | 1,173 | ||||||||
Financial Liabilities | ||||||||||||||||
Interest rate swap | $ | (1,419 | ) | $ | — | $ | — | $ | (1,419 | ) | ||||||
Total Financial Liabilities | $ | (1,419 | ) | $ | — | $ | — | $ | (1,419 | ) |
For the year ended December 31, 2015 | Equity Securities Available-for-Sale | Interest Rate Swap | ||||||
Beginning balance | $ | 1,116 | $ | (1,238 | ) | |||
Total gains or losses (realized and unrealized): | ||||||||
Included in earnings | — | — | ||||||
Included in other comprehensive income | 57 | (181 | ) | |||||
Purchases: | — | — | ||||||
Sales: | — | — | ||||||
Issuances: | — | — | ||||||
Settlements: | — | — | ||||||
Transfers in/(out) of Level 3 | — | — | ||||||
Ending balance | $ | 1,173 | $ | (1,419 | ) | |||
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, 2015: | $ | — | $ | — |
June 30, 2016 | December 31, 2015 | |||||||||||||||
Assets and related instruments | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | ||||||||||||
Held-to-maturity securities | $ | 2,236 | $ | 2,357 | $ | 2,439 | $ | 2,504 | ||||||||
Mortgage loans | 188 | 188 | 202 | 202 | ||||||||||||
Policy loans | 1,689 | 1,689 | 1,655 | 1,655 | ||||||||||||
Company owned life insurance | 4,951 | 4,951 | 4,898 | 4,898 | ||||||||||||
Other invested assets | 3,105 | 3,105 | 3,256 | 3,256 | ||||||||||||
Liabilities and related instruments | ||||||||||||||||
Other policyholder funds | 1,589 | 1,589 | 1,561 | 1,561 | ||||||||||||
Short-term notes payable and current portion of long-term debt | 857 | 857 | 857 | 857 | ||||||||||||
Long-term debt | 17,106 | 17,106 | 17,100 | 17,100 |
June 30, 2016 | December 31, 2015 | ||||||
Building and improvements | $ | 3,348 | $ | 3,350 | |||
Electronic data processing equipment | 1,560 | 1,631 | |||||
Furniture and fixtures | 533 | 529 | |||||
5,441 | 5,510 | ||||||
Less accumulated depreciation | 3,491 | 3,564 | |||||
Property and equipment, net | $ | 1,950 | $ | 1,946 |
As of June 30, 2016 | As of December 31, 2015 | |||||||
General expenses | $ | 1,544 | $ | 1,569 | ||||
Unearned premiums | 2,193 | 2,039 | ||||||
Claims liabilities | 805 | 730 | ||||||
Litigation settlement | 1,748 | 1,748 | ||||||
AMT credit | 543 | 816 | ||||||
Impairment on real estate owned | 187 | 187 | ||||||
Unrealized loss on interest rate swaps | 524 | 483 | ||||||
Deferred tax assets | 7,544 | 7,572 | ||||||
Depreciation | (115 | ) | (111 | ) | ||||
Deferred policy acquisition costs | (2,954 | ) | (2,885 | ) | ||||
Unrealized gains on securities available-for-sale | (1,930 | ) | (752 | ) | ||||
Deferred tax liabilities | (4,999 | ) | (3,748 | ) | ||||
Net deferred tax asset | $ | 2,545 | $ | 3,824 |
Six months ended June 30, | ||||||||
2016 | 2015 | |||||||
Deferred policy acquisition costs | $ | 69 | $ | 41 | ||||
Unearned premiums | (154 | ) | (169 | ) | ||||
General expenses | 25 | (96 | ) | |||||
Depreciation | 4 | (9 | ) | |||||
Claims liabilities | (75 | ) | 4 | |||||
AMT credit | 273 | 119 | ||||||
Deferred income tax expense (benefit) | $ | 142 | $ | (110 | ) |
Six months ended June 30, | ||||||
2016 | 2015 | |||||
Federal income tax rate applied to pre-tax income/loss | 34.0 | % | 34.0 | % | ||
Dividends received deduction and tax-exempt interest | (1.5 | )% | (2.1 | )% | ||
Company owned life insurance | (0.6 | )% | 0.7 | % | ||
Small life deduction | (5.4 | )% | (7.7 | )% | ||
Other, net | (1.1 | )% | (3.6 | )% | ||
Effective federal income tax rate | 25.4 | % | 21.3 | % |
June 30, | December 31, | |||||||
2016 | 2015 | |||||||
Current portion of installment note payable due November 2016 with variable interest rate equal to the WSJ prime rate plus 1%. Unsecured. | $ | 857 | $ | 857 | ||||
$ | 857 | $ | 857 |
June 30, | December 31, | |||||||
2016 | 2015 | |||||||
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. | $ | 700 | $ | 700 | ||||
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 2017. Interest payments due monthly. Secured. | — | — | ||||||
Long-term portion of installment note with variable interest rate equal to the WSJ prime rate plus 1% and adjustable each November; maturity November 2021. Interest payable annually with principal payable in equal annual installments. Next principal installment on long-term portion due November 2016. Unsecured. | 4,286 | 4,286 | ||||||
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 $183,000 in debt issuance cost ($187,000 in 2015); maturity December 2035. Interest payments due quarterly. All may be redeemed at any time following the tenth anniversary of issuance. Unsecured. | 9,096 | 9,092 | ||||||
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; applied to the outstanding principal; net of $70,000 in debt issuance cost ($71,000 in 2015); maturity June 15, 2037. Interest payments due quarterly. All may be redeemed at any time following the fifth anniversary of issuance. Unsecured. | 3,024 | 3,022 | ||||||
$ | 17,106 | $ | 17,100 |
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 |
June 30, 2016 | December 31, 2015 | |||||||||||||||
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 | 2,517,339 | 2,517,339 | 3,000,000 | 2,512,425 | 2,512,425 |
Six months ended June 30, | ||||||||
2016 | 2015 | |||||||
Gains and Losses on Cash Flow Hedges | ||||||||
Balance at beginning of period | $ | (935 | ) | $ | (816 | ) | ||
Other comprehensive loss for period: | ||||||||
Other comprehensive loss before reclassifications | (81 | ) | (61 | ) | ||||
Amounts reclassified from accumulated other comprehensive income | — | — | ||||||
Net current period other comprehensive loss | (81 | ) | (61 | ) | ||||
Balance at end of period | $ | (1,016 | ) | $ | (877 | ) | ||
Unrealized Gains and Losses on Available-for-Sale Securities | ||||||||
Balance at beginning of period | $ | 1,460 | $ | 3,588 | ||||
Other comprehensive income for period: | ||||||||
Other comprehensive income (loss) before reclassifications | 2,460 | (618 | ) | |||||
Amounts reclassified from accumulated other comprehensive income | (172 | ) | (257 | ) | ||||
Net current period other comprehensive income (loss) | 2,288 | (875 | ) | |||||
Balance at end of period | $ | 3,748 | $ | 2,713 | ||||
Total Accumulated Other Comprehensive Income at end of period | $ | 2,732 | $ | 1,836 |
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 | $ | 260 | Net realized investment gains | |||
260 | Total before tax | |||||
(88 | ) | Tax (expense) or benefit | ||||
$ | 172 | 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 | $ | 390 | Net realized investment gains | |||
390 | Total before tax | |||||
(133 | ) | Tax (expense) or benefit | ||||
$ | 257 | Net of Tax |
Total | P&C Insurance Operations | Life Insurance Operations | Non-Insurance Operations | |||||||||||||
June 30, 2016 | $ | 152,021 | $ | 86,167 | $ | 59,199 | $ | 6,655 | ||||||||
December 31, 2015 | $ | 147,841 | $ | 84,435 | $ | 57,067 | $ | 6,339 |
Three months ended June 30, 2016 | Total | P&C Insurance Operations | Life Insurance Operations | Non-Insurance Operations | |||||||||||
REVENUE | |||||||||||||||
Net premiums earned | $ | 15,227 | $ | 13,646 | $ | 1,581 | $ | — | |||||||
Net investment income | 1,029 | 455 | 559 | 15 | |||||||||||
Net realized investment gains (losses) | 242 | 185 | 57 | — | |||||||||||
Other income | 150 | 150 | — | — | |||||||||||
16,648 | 14,436 | 2,197 | 15 | ||||||||||||
BENEFITS AND EXPENSES | |||||||||||||||
Policyholder benefits paid | 8,862 | 7,577 | 1,285 | — | |||||||||||
Amortization of deferred policy acquisition costs | 906 | 695 | 211 | — | |||||||||||
Commissions | 2,117 | 2,020 | 97 | — | |||||||||||
General and administrative expenses | 2,158 | 1,704 | 310 | 144 | |||||||||||
Taxes, licenses and fees | 574 | 529 | 45 | — | |||||||||||
Interest expense | 333 | — | 20 | 313 | |||||||||||
14,950 | 12,525 | 1,968 | 457 | ||||||||||||
Income (Loss) Before Income Taxes | $ | 1,698 | $ | 1,911 | $ | 229 | $ | (442 | ) |
Three months ended June 30, 2015 | Total | P&C Insurance Operations | Life Insurance Operations | Non-Insurance Operations | |||||||||||
REVENUE | |||||||||||||||
Net premiums earned | $ | 14,880 | $ | 13,276 | $ | 1,604 | $ | — | |||||||
Net investment income | 813 | 336 | 458 | 19 | |||||||||||
Net realized investment gains | 245 | 99 | 146 | — | |||||||||||
Other income | 156 | 156 | — | — | |||||||||||
16,094 | 13,867 | 2,208 | 19 | ||||||||||||
BENEFITS AND EXPENSES | |||||||||||||||
Policyholder benefits paid | 9,435 | 8,534 | 901 | — | |||||||||||
Amortization of deferred policy acquisition costs | 918 | 675 | 243 | — | |||||||||||
Commissions | 2,089 | 1,997 | 92 | — | |||||||||||
General and administrative expenses | 2,119 | 1,619 | 353 | 147 | |||||||||||
Taxes, licenses and fees | 518 | 472 | 46 | — | |||||||||||
Interest expense | 348 | — | 13 | 335 | |||||||||||
15,427 | 13,297 | 1,648 | 482 | ||||||||||||
Income (Loss) Before Income Taxes | $ | 667 | $ | 570 | $ | 560 | $ | (463 | ) |
Six months ended June 30, 2016 | Total | P&C Insurance Operations | Life Insurance Operations | Non-Insurance Operations | |||||||||||
REVENUE | |||||||||||||||
Net premiums earned | $ | 30,392 | $ | 27,247 | $ | 3,145 | $ | — | |||||||
Net investment income | 2,020 | 908 | 1,080 | 32 | |||||||||||
Net realized investment gains (losses) | 249 | 185 | 64 | — | |||||||||||
Other income | 304 | 303 | 1 | — | |||||||||||
32,965 | 28,643 | 4,290 | 32 | ||||||||||||
BENEFITS AND EXPENSES | |||||||||||||||
Policyholder benefits paid | 17,909 | 15,439 | 2,470 | — | |||||||||||
Amortization of deferred policy acquisition costs | 1,693 | 1,391 | 302 | — | |||||||||||
Commissions | 4,225 | 4,036 | 189 | — | |||||||||||
General and administrative expenses | 4,287 | 3,125 | 815 | 347 | |||||||||||
Taxes, licenses and fees | 1,174 | 1,064 | 110 | — | |||||||||||
Interest expense | 678 | — | 38 | 640 | |||||||||||
29,966 | 25,055 | 3,924 | 987 | ||||||||||||
Income (Loss) Before Income Taxes | $ | 2,999 | $ | 3,588 | $ | 366 | $ | (955 | ) |
Six months ended June 30, 2015 | Total | P&C Insurance Operations | Life Insurance Operations | Non-Insurance Operations | |||||||||||
REVENUE | |||||||||||||||
Net premiums earned | $ | 29,586 | $ | 26,398 | $ | 3,188 | $ | — | |||||||
Net investment income | 1,815 | 826 | 951 | 38 | |||||||||||
Net realized investment gains | 387 | 130 | 257 | — | |||||||||||
Other income | 314 | 313 | 1 | — | |||||||||||
32,102 | 27,667 | 4,397 | 38 | ||||||||||||
BENEFITS AND EXPENSES | |||||||||||||||
Policyholder benefits paid | 17,697 | 15,311 | 2,386 | — | |||||||||||
Amortization of deferred policy acquisition costs | 1,817 | 1,350 | 467 | — | |||||||||||
Commissions | 4,144 | 3,965 | 179 | — | |||||||||||
General and administrative expenses | 4,150 | 3,159 | 690 | 301 | |||||||||||
Taxes, licenses and fees | 1,173 | 1,016 | 157 | — | |||||||||||
Interest expense | 668 | — | 23 | 645 | |||||||||||
29,649 | 24,801 | 3,902 | 946 | ||||||||||||
Income (Loss) Before Income Taxes | $ | 2,453 | $ | 2,866 | $ | 495 | $ | (908 | ) |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Life, accident and health operations premiums written: | ||||||||||||||||
Traditional life insurance | $ | 1,124 | $ | 1,104 | $ | 2,243 | $ | 2,241 | ||||||||
Accident and health insurance | 409 | 422 | 827 | 841 | ||||||||||||
Gross life, accident and health | 1,533 | 1,526 | 3,070 | 3,082 | ||||||||||||
Reinsurance premium ceded | (23 | ) | (15 | ) | (48 | ) | (30 | ) | ||||||||
Net life, accident and health premiums written | $ | 1,510 | $ | 1,511 | $ | 3,022 | $ | 3,052 | ||||||||
Property and Casualty operations premiums written: | ||||||||||||||||
Dwelling fire & extended coverage | $ | 9,716 | $ | 9,454 | $ | 18,908 | $ | 18,182 | ||||||||
Homeowners (Including mobile homeowners) | 6,674 | 6,715 | 12,386 | 12,466 | ||||||||||||
Other liability | 570 | 549 | 1,093 | 1,054 | ||||||||||||
Gross property and casualty | 16,960 | 16,718 | 32,387 | 31,702 | ||||||||||||
Reinsurance premium ceded | (1,697 | ) | (1,229 | ) | (2,699 | ) | (2,720 | ) | ||||||||
Net property and casualty written | $ | 15,263 | $ | 15,489 | $ | 29,688 | $ | 28,982 | ||||||||
Consolidated gross premiums written | $ | 18,493 | $ | 18,244 | $ | 35,457 | $ | 34,784 | ||||||||
Reinsurance premium ceded | (1,720 | ) | (1,244 | ) | (2,747 | ) | (2,750 | ) | ||||||||
Consolidated net premiums written | $ | 16,773 | $ | 17,000 | $ | 32,710 | $ | 32,034 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Life, accident and health operations premiums earned: | ||||||||||||||||
Traditional life insurance | $ | 1,194 | $ | 1,199 | $ | 2,367 | $ | 2,377 | ||||||||
Accident and health insurance | 410 | 420 | 826 | 841 | ||||||||||||
Gross life, accident and health | 1,604 | 1,619 | 3,193 | 3,218 | ||||||||||||
Reinsurance premium ceded | (23 | ) | (15 | ) | (48 | ) | (30 | ) | ||||||||
Net life, accident and health premiums earned | $ | 1,581 | $ | 1,604 | $ | 3,145 | $ | 3,188 | ||||||||
Property and Casualty operations premiums earned: | ||||||||||||||||
Dwelling fire & extended coverage | $ | 8,807 | $ | 8,403 | $ | 17,469 | $ | 16,603 | ||||||||
Homeowners (Including mobile homeowners) | 5,881 | 5,955 | 11,787 | 11,903 | ||||||||||||
Other liability | 503 | 480 | 996 | 945 | ||||||||||||
Gross property and casualty | 15,191 | 14,838 | 30,252 | 29,451 | ||||||||||||
Reinsurance premium ceded | (1,545 | ) | (1,562 | ) | (3,005 | ) | (3,053 | ) | ||||||||
Net property and casualty earned | $ | 13,646 | $ | 13,276 | $ | 27,247 | $ | 26,398 | ||||||||
Consolidated gross premiums earned | $ | 16,795 | $ | 16,457 | $ | 33,445 | $ | 32,669 | ||||||||
Reinsurance premium ceded | (1,568 | ) | (1,577 | ) | (3,053 | ) | (3,083 | ) | ||||||||
Consolidated net premiums earned | $ | 15,227 | $ | 14,880 | $ | 30,392 | $ | 29,586 |
/s/ Warren Averett, LLC | |
Birmingham, Alabama | |
August 12, 2016 |
Unaudited Consolidated Financial Summary | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(dollars in thousands) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Gross premiums written | $ | 18,493 | $ | 18,244 | $ | 35,457 | $ | 34,784 | ||||||||
Net premiums written | $ | 16,773 | $ | 17,000 | $ | 32,710 | $ | 32,034 | ||||||||
Net premiums earned | $ | 15,227 | $ | 14,880 | $ | 30,392 | $ | 29,586 | ||||||||
Net investment income | 1,029 | 813 | 2,020 | 1,815 | ||||||||||||
Net realized investment gains | 242 | 245 | 249 | 387 | ||||||||||||
Other income | 150 | 156 | 304 | 314 | ||||||||||||
Total Revenues | 16,648 | 16,094 | 32,965 | 32,102 | ||||||||||||
Policyholder benefits and settlement expenses | 8,862 | 9,435 | 17,909 | 17,697 | ||||||||||||
Amortization of deferred policy acquisition costs | 906 | 918 | 1,693 | 1,817 | ||||||||||||
Commissions | 2,117 | 2,089 | 4,225 | 4,144 | ||||||||||||
General and administrative expenses | 2,158 | 2,119 | 4,287 | 4,150 | ||||||||||||
Taxes, licenses and fees | 574 | 518 | 1,174 | 1,173 | ||||||||||||
Interest expense | 333 | 348 | 678 | 668 | ||||||||||||
Total Benefits, Losses and Expenses | 14,950 | 15,427 | 29,966 | 29,649 | ||||||||||||
Income Before Income Taxes | 1,698 | 667 | 2,999 | 2,453 | ||||||||||||
Income tax expense | 402 | 44 | 762 | 522 | ||||||||||||
Net Income | $ | 1,296 | $ | 623 | $ | 2,237 | $ | 1,931 | ||||||||
Income Per Common Share | $ | 0.52 | $ | 0.25 | $ | 0.89 | $ | 0.77 | ||||||||
Reconciliation of Net Income to non-GAAP Measurement | ||||||||||||||||
Net income | $ | 1,296 | $ | 623 | $ | 2,237 | $ | 1,931 | ||||||||
Income tax expense | 402 | 44 | 762 | 522 | ||||||||||||
Realized investment gains, net | (242 | ) | (245 | ) | (249 | ) | (387 | ) | ||||||||
Pretax Income From Operations | $ | 1,456 | $ | 422 | $ | 2,750 | $ | 2,066 |
Selected Balance Sheet Highlights | June 30, 2016 | December 31, 2015 | ||||||
(dollars in thousands) | (UNAUDITED) | |||||||
Invested Assets | $ | 119,884 | $ | 112,557 | ||||
Cash | $ | 4,063 | $ | 6,763 | ||||
Total Assets | $ | 152,021 | $ | 147,841 | ||||
Policy Liabilities | $ | 77,249 | $ | 77,043 | ||||
Total Debt | $ | 17,963 | $ | 17,957 | ||||
Accumulated Other Comprehensive Income | $ | 2,732 | $ | 525 | ||||
Shareholders' Equity | $ | 49,177 | $ | 44,883 | ||||
Book Value Per Share | $ | 19.54 | $ | 17.87 |
Three months ended June 30, | Percent | ||||||||||
(dollars in thousands) | 2016 | 2015 | increase (decrease) | ||||||||
Life, accident and health operations premiums earned: | |||||||||||
Traditional life insurance | $ | 1,194 | $ | 1,199 | (0.4 | )% | |||||
Accident and health insurance | 410 | 420 | (2.4 | )% | |||||||
Gross life, accident and health | 1,604 | 1,619 | (0.9 | )% | |||||||
Reinsurance premium ceded | (23 | ) | (15 | ) | 53.3 | % | |||||
Net life, accident and health premiums earned | $ | 1,581 | $ | 1,604 | (1.4 | )% | |||||
Property and Casualty operations premiums earned: | |||||||||||
Dwelling fire & extended coverage | $ | 8,807 | $ | 8,403 | 4.8 | % | |||||
Homeowners (Including mobile homeowners) | 5,881 | 5,955 | (1.2 | )% | |||||||
Other liability | 503 | 480 | 4.8 | % | |||||||
Gross property and casualty | 15,191 | 14,838 | 2.4 | % | |||||||
Reinsurance premium ceded | (1,545 | ) | (1,562 | ) | (1.1 | )% | |||||
Net property and casualty premiums earned | $ | 13,646 | $ | 13,276 | 2.8 | % | |||||
Consolidated gross premiums earned | $ | 16,795 | $ | 16,457 | 2.1 | % | |||||
Reinsurance premium ceded | (1,568 | ) | (1,577 | ) | (0.6 | )% | |||||
Consolidated net premiums earned | $ | 15,227 | $ | 14,880 | 2.3 | % |
For the three months ended June 30, 2016 | For the three months ended June 30, 2015 | |||||||||||||||
Cat event | Reported Losses & LAE | Claim Count | Cat event | Reported Losses & LAE | Claim Count | |||||||||||
Cat 16 (Feb 22-24) | $ | 56 | 6 | Cat 70 (Mar 25-26) | $ | 61 | 12 | |||||||||
Cat 17 (Mar 5-11) | 50 | 9 | Cat 71 (Mar 31-Apr 1) | 221 | 50 | |||||||||||
Cat 22 (Mar 30-Apr 1) | 204 | 55 | Cat 75 (Apr 18-21) | 360 | 97 | |||||||||||
Cat 27 (Apr 25-28) | 199 | 48 | Cat 76 (Apr 24-28) | 590 | 183 | |||||||||||
Cat 28 (Apr 29-May 3) | 546 | 109 | Cat 79 (May 6-13) | 473 | 90 | |||||||||||
Cat 29 (May 7-10) | 202 | 24 | Cat 81 (May 23-28) | 340 | 83 | |||||||||||
Cat 31 (May 16-19) | 140 | 30 | ||||||||||||||
Cat 32 (May 26-28) | 144 | 13 | ||||||||||||||
Cat 35 (Jun 16-18) | 353 | 92 | ||||||||||||||
Misc cats less than $100k | 142 | 31 | Misc cats less than $100k | 62 | 5 | |||||||||||
Total Cat losses | $ | 2,036 | 417 | Total Cat losses | $ | 2,107 | 520 | |||||||||
Non-cat wind & hail | $ | 1,824 | 489 | Non-cat wind & hail | $ | 1,465 | 491 |
Six months ended June 30, | Percent | ||||||||||
(dollars in thousands) | 2016 | 2015 | increase (decrease) | ||||||||
Life, accident and health operations premiums earned: | |||||||||||
Traditional life insurance | $ | 2,367 | $ | 2,377 | (0.4 | )% | |||||
Accident and health insurance | 826 | 841 | (1.8 | )% | |||||||
Gross life, accident and health | 3,193 | 3,218 | (0.8 | )% | |||||||
Reinsurance premium ceded | (48 | ) | (30 | ) | 60.0 | % | |||||
Net life, accident and health premiums earned | $ | 3,145 | $ | 3,188 | (1.3 | )% | |||||
Property and Casualty operations premiums earned: | |||||||||||
Dwelling fire & extended coverage | $ | 17,469 | $ | 16,603 | 5.2 | % | |||||
Homeowners (Including mobile homeowners) | 11,787 | 11,903 | (1.0 | )% | |||||||
Other liability | 996 | 945 | 5.4 | % | |||||||
Gross property and casualty | 30,252 | 29,451 | 2.7 | % | |||||||
Reinsurance premium ceded | (3,005 | ) | (3,053 | ) | (1.6 | )% | |||||
Net property and casualty premiums earned | $ | 27,247 | $ | 26,398 | 3.2 | % | |||||
Consolidated gross premiums earned | $ | 33,445 | $ | 32,669 | 2.4 | % | |||||
Reinsurance premium ceded | (3,053 | ) | (3,083 | ) | (1.0 | )% | |||||
Consolidated net premiums earned | $ | 30,392 | $ | 29,586 | 2.7 | % |
Layer | Reinsurers' Limits of Liability |
First Layer | 100% of $13,500,000 in excess of $4,000,000 |
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 six months ended June 30, 2016 | For the six months ended June 30, 2015 | |||||||||||||||
Cat event | Reported Losses & LAE | Claim Count | Cat event | Reported Losses & LAE | Claim Count | |||||||||||
Cat 16 (Feb 22-24) | $ | 1,054 | 239 | Cat 70 (Mar 25-26) | $ | 433 | 81 | |||||||||
Cat 17 (Mar 5-11) | 329 | 101 | Cat 71 (Mar 31-Apr 1) | 221 | 50 | |||||||||||
Cat 22 (Mar 30-Apr 1) | 204 | 55 | Cat 75 (Apr 18-21) | 360 | 97 | |||||||||||
Cat 27 (Apr 25-28) | 199 | 48 | Cat 76 (Apr 24-28) | 590 | 183 | |||||||||||
Cat 28 (Apr 29-May 3) | 546 | 109 | Cat 79 (May 6-13) | 473 | 90 | |||||||||||
Cat 29 (May 7-10) | 202 | 24 | Cat 81 (May 23-28) | 340 | 83 | |||||||||||
Cat 31 (May 16-19) | 140 | 30 | ||||||||||||||
Cat 32 (May 26-28) | 144 | 13 | ||||||||||||||
Cat 35 (Jun 16-18) | 353 | 92 | ||||||||||||||
Misc cats less than $100k | 312 | 91 | Misc cats less than $100k | 201 | 65 | |||||||||||
Total Cat losses | $ | 3,483 | 802 | Total Cat losses | $ | 2,618 | 649 | |||||||||
Non-cat wind & hail | $ | 3,259 | 975 | Non-cat wind & hail | $ | 2,258 | 782 |
Maturity | Available- for-Sale | Held-to-Maturity | Total | Percentage of Total | ||||||||||
Maturity in less than 1 year | $ | 3,533 | $ | — | $ | 3,533 | 3.59 | % | ||||||
Maturity in 1-5 years | 14,967 | 53 | 15,020 | 15.26 | % | |||||||||
Maturity in 5-10 years | 35,639 | 93 | 35,732 | 36.29 | % | |||||||||
Maturity after 10 years | 42,080 | 2,090 | 44,170 | 44.86 | % | |||||||||
$ | 96,219 | $ | 2,236 | $ | 98,455 | 100.00 | % |
31.1 | Certification Pursuant to 18 U. S. C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 | Certification Pursuant to 18 U. S. C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 | Certification Pursuant to 18 U. S. C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101.INS | XBRL Instance Document |
101.SCH | XBRL Taxonomy Extension Schema Document |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
Date of Report | Date Filed | Description | ||
April 11, 2016 | April 11, 2016 | Press release, dated April 11, 2016, issued by The National Security Group, Inc. | ||
May 13, 2016 | May 13, 2016 | Press release, dated May 13, 2016, issued by The National Security Group, Inc. | ||
May 20, 2016 | May 20, 2016 | Item 7.01, 9.01 - investor presentation | ||
May 20, 2016 | May 23, 2016 | Item 5.07 - announcement of annual meeting voting results |
/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 |
Date: August 12, 2016 | |
/s/ William L. Brunson, Jr. | |
William L. Brunson, Jr. | |
President and Chief Executive Officer |
Date: August 12, 2016 | |
/s/ Brian R. McLeod | |
Brian R. McLeod | |
Chief Financial Officer |
Date: August 12, 2016 | |||
/s/ William L. Brunson, Jr. | /s/ Brian R. McLeod | ||
Name: William L. Brunson, Jr. Title: Chief Executive Officer | Name: Brian R. McLeod, CPA Title: Chief Financial Officer |
Document and Entity Information Document - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Aug. 12, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | NATIONAL SECURITY GROUP INC | |
Entity Central Index Key | 0000865058 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 2,517,339 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
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Investments | ||
Fixed maturities held-to-maturity, at estimated fair value | $ 2,357 | $ 2,504 |
Fixed maturities available-for-sale, at cost | 96,219 | 92,077 |
Equity securities available-for-sale, at cost | $ 2,420 | $ 2,420 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
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REVENUES | ||||
Net premiums earned | $ 15,227 | $ 14,880 | $ 30,392 | $ 29,586 |
Net investment income | 1,029 | 813 | 2,020 | 1,815 |
Net realized investment gains | 242 | 245 | 249 | 387 |
Other income | 150 | 156 | 304 | 314 |
Total Revenues | 16,648 | 16,094 | 32,965 | 32,102 |
BENEFITS, LOSSES AND EXPENSES | ||||
Policyholder benefits and settlement expenses | 8,862 | 9,435 | 17,909 | 17,697 |
Amortization of deferred policy acquisition costs | 906 | 918 | 1,693 | 1,817 |
Commissions | 2,117 | 2,089 | 4,225 | 4,144 |
General and administrative expenses | 2,158 | 2,119 | 4,287 | 4,150 |
Taxes, licenses and fees | 574 | 518 | 1,174 | 1,173 |
Interest expense | 333 | 348 | 678 | 668 |
Total Benefits, Losses and Expenses | 14,950 | 15,427 | 29,966 | 29,649 |
Income Before Income Taxes | 1,698 | 667 | 2,999 | 2,453 |
INCOME TAX EXPENSE | ||||
Current | 399 | 161 | 620 | 632 |
Deferred | 3 | (117) | 142 | (110) |
Total income tax expense | 402 | 44 | 762 | 522 |
Net Income | $ 1,296 | $ 623 | $ 2,237 | $ 1,931 |
INCOME PER COMMON SHARE BASIC AND DILUTED | $ 0.52 | $ 0.25 | $ 0.89 | $ 0.77 |
DIVIDENDS DECLARED PER SHARE | $ 0.045 | $ 0.04 | $ 0.090 | $ 0.08 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
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Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 1,296 | $ 623 | $ 2,237 | $ 1,931 |
Other comprehensive income (loss), net of tax | ||||
Unrealized gains (losses) on securities, net of reclassification adjustment of $172 and $257 for 2016 and 2015, respectively | 1,130 | (1,240) | 2,288 | (875) |
Unrealized gain (loss) on interest rate swap | 21 | 56 | (81) | (61) |
Other comprehensive income (loss), net of tax | 1,151 | (1,184) | 2,207 | (936) |
Comprehensive income (loss) | $ 2,447 | $ (561) | $ 4,444 | $ 995 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
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Statement of Comprehensive Income [Abstract] | ||
Reclassification adjustment | $ 172 | $ 257 |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY - 6 months ended Jun. 30, 2016 - USD ($) $ in Thousands |
Total |
Retained Earnings [Member] |
Accumulated Other Comprehensive Income [Member] |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
---|---|---|---|---|---|
Balance at Dec. 31, 2015 | $ 44,883 | $ 36,505 | $ 525 | $ 2,512 | $ 5,341 |
Net income for June 30, 2016 | 2,237 | 2,237 | |||
Other comprehensive income (net of tax) | 2,207 | 2,207 | |||
Common stock issued | 76 | 5 | 71 | ||
Cash dividends | (226) | (226) | |||
Balance at Jun. 30, 2016 | $ 49,177 | $ 38,516 | $ 2,732 | $ 2,517 | $ 5,412 |
Significant Accounting Policies |
6 Months Ended |
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Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation and Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of The National Security Group, Inc. (the Company) and its wholly-owned subsidiaries: National Security Insurance Company (NSIC), National Security Fire and Casualty Company (NSFC) and NATSCO, Inc. (NATSCO). NSFC includes a wholly-owned subsidiary, Omega One Insurance Company (Omega). The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the condensed consolidated financial statements have been included. All significant intercompany transactions and accounts have been eliminated. The financial information presented herein should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, which includes information and disclosures not presented herein. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Among the more significant estimates included in these condensed consolidated financial statements are reserves for future life insurance policy benefits, liabilities for losses and loss adjustment expenses, reinsurance recoverable associated with loss and loss adjustment expense liabilities, deferred policy acquisition costs, deferred income tax assets and liabilities, assessments of other-than-temporary impairments on investments and accruals for contingencies. Actual results could differ from these estimates. Earnings Per Share Earnings per share of common stock is based on the weighted average number of shares outstanding during each year. The adjusted weighted average shares outstanding were 2,513,559 at June 30, 2016 and 2,508,551 at June 30, 2015. The Company did not have any dilutive securities as of June 30, 2016 and 2015. Reclassifications Certain 2015 amounts have been reclassified from the prior year condensed consolidated financial statements to conform to the 2016 presentation. Concentration of Credit Risk The Company maintains cash balances which are generally held in non-interest bearing demand deposit accounts subject to FDIC insured limits of $250,000 per entity. At June 30, 2016, the net amount exceeding FDIC insured limits was $3,242,000 at two financial institutions. The Company has not experienced any losses in such accounts. Management of the Company reviews financial information of financial institutions on a quarterly basis and believes the Company is not exposed to any significant credit risk on cash and cash equivalents. Policy receivables are reported at unpaid balances. Policy receivables are generally offset by associated unearned premium liabilities and are not subject to significant credit risk. Receivables from agents, less provision for credit losses, are composed of balances due from independent agents. At June 30, 2016, the single largest balance due from one agent totaled $1,284,000. Reinsurance contracts do not relieve the Company of its obligations to policyholders. A failure of a reinsurer to meet their obligation could result in losses to the insurance subsidiaries. Allowances for losses are established if amounts are believed to be uncollectible. At June 30, 2016 and December 31, 2015, no amounts were deemed uncollectible. The Company, at least annually, evaluates the financial condition of all reinsurers and evaluates any potential concentrations of credit risk. At June 30, 2016, management does not believe the Company is exposed to any significant credit risk related to its reinsurance program. Change in Accounting Principle: Effective January 1, 2016, the Company elected to change its method of presentation relating to placement fees associated with the issuance of trust preferred securities in accordance with FASB ASU 2015-03. Prior to 2016, the Company’s policy was to present these fees in Other Assets on the balance sheet, net of accumulated amortization. Beginning in 2016, the Company has presented these fees as a direct reduction in the related note payable. Accounting Changes Not Yet Adopted Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (FASB) issued guidance on a comprehensive new revenue recognition standard. This standard will not impact accounting for insurance contracts, leases, financial instruments and guarantees. For those contracts that are impacted by the new guidance, the guidance will require an entity to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to, in exchange for those goods or services. The guidance requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued a deferral of the effective date by one year. This guidance is effective retrospectively for fiscal years beginning after December 15, 2017 and interim periods within those years. Early adoption of this standard is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. Although insurance contracts are specifically scoped out of this new guidance, the Company has minor services that may be subject to the new revenue recognition guidance and are still in the process of evaluating the impact, if any, the guidance may have on its condensed consolidated financial statements. Presentation of Financial Statements - Going Concern In August 2014, the FASB issued guidance on determining when and how to disclose going concern uncertainties in the financial statements, and requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. The updated guidance is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early adoption is permitted. The Company does not expect the adoption to have a material impact on its financial position, results of operations or disclosures. Recognition and Measurement of Financial Assets and Financial Liabilities In January 2016, the FASB issued guidance that requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. The guidance requires entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes and requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset. The guidance eliminates the requirement for public companies to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. This guidance is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company does not expect the adoption to have a material impact on its financial position or results of operations. Leases In February 2016, the FASB issued guidance that requires lessees (for capital and operating leases) to recognize the lease liability and right-of-use asset at the commencement date of the lease. This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. The Company does not expect the adoption to have a material impact on its financial position or results of operations. Contingent Put and Call Options in Debt Instruments In March 2016, the FASB issued guidance that clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those years. The Company does not expect the adoption to have a material impact on its financial position or results of operations. Financial Instruments - Credit Losses In June 2016, the FASB issued guidance that replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those years. The Company does not expect the adoption to have a material impact on its financial position or results of operations. Recently Adopted Accounting Standards Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items In January 2015, the FASB issued guidance that eliminates from GAAP the concept of extraordinary items. The Company adopted this standard on January 1, 2016. This guidance did not have a material effect on results of operations or financial position. Amendments to the Consolidation Analysis In February 2015, the FASB issued additional guidance regarding the consolidation of certain legal entities. The guidance modifies the evaluation of whether or not limited partnerships and similar legal entities are variable interest entities (VIEs) and the consolidation analysis of entities involved with VIEs, particularly those that have fee arrangements and related party relationships. The Company adopted this standard on January 1, 2016. This guidance did not have a material effect on results of operations or financial position. Interest - Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs. In April 2015, the FASB issued guidance to simplify the presentation of debt issuance costs. This ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability. The Company adopted this standard retrospectively on January 1, 2016, which resulted in the reclassification of $258,000 of unamortized debt issuance costs related to Company borrowings from other assets to long-term debt within our condensed consolidated balance sheet as of December 31, 2015. The adoption also resulted in the reclassification of $6,000 from general expenses to interest expense for the six months ended June 30, 2015. Disclosure about Short-Duration Contracts In May 2015, the FASB issued guidance that enhances disclosure about short-duration insurance liabilities to help users understand the nature, amount, timing and uncertainty of future cash flows related to insurance liabilities and the effect of those cash flows on the statement of comprehensive income. The Company adopted this standard on January 1, 2016. Required disclosures will be included in the notes to consolidated financial statements included in the Company's 2016 Annual Report on Form 10-K and in interim reports beginning in 2017. Simplifying the Accounting for Measurement-Period Adjustments In September 2015, the FASB issued guidance that requires an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The acquirer must record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The guidance requires an entity to present on the face of the income statement or to disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The Company adopted this standard on January 1, 2016. This guidance did not have a material effect on results of operations or financial position. |
Variable Interest Entities |
6 Months Ended |
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Jun. 30, 2016 | |
Variable Interest Entities [Abstract] | |
Variable Interest Entities | VARIABLE INTEREST ENTITIES The Company holds a passive interest in a limited partnership that is considered to be a Variable Interest Entity (VIE) under the provisions of ASC 810 Consolidation. The Company is not the primary beneficiary of the entity and is not required to consolidate under ASC 810. The entity is a private placement investment fund formed for the purpose of investing in private equity investments. The Company owns less than 1% of the limited partnership. The carrying value of the investment totals $228,000 and is included as a component of Other Invested Assets in the accompanying condensed consolidated balance sheets. In December 2005, the Company formed National Security Capital Trust I, a statutory trust created under the Delaware Statutory Trust Act, for the sole purpose of issuing, in private placement transactions, $9,000,000 of trust preferred securities (TPS) and using the proceeds thereof, together with the equity proceeds received from the Company in the initial formation of the Trust, to purchase $9,279,000 of variable rate subordinated debentures issued by the Company. The Company owns all voting securities of the Trust and the subordinated debentures are the sole assets of the Trust. The Trust will meet the obligations of the TPS with the interest and principal paid on the subordinated debentures. The Company received net proceeds from the TPS transactions, after commissions and other costs of issuance, of $9,005,000. The Company also holds all the voting securities issued by the Trust and such trusts are considered to be VIE's. The Trust is not consolidated because the Company is not the primary beneficiary of the trust. The Subordinated Debentures, disclosed in Note 7, are reported in the accompanying condensed consolidated balance sheets as a component of long-term debt. The Company's equity investments in the Trust total $279,000 and are included in Other Assets in the accompanying condensed consolidated balance sheets. In June 2007, the Company formed National Security Capital Trust II for the sole purpose of issuing, in private placement transactions, $3,000,000 of trust preferred securities (TPS) and using the proceeds thereof, together with the equity proceeds received from the Company in the initial formation of the Trust, to purchase $3,093,000 unsecured junior subordinated deferrable interest debentures. The Company owns all voting securities of the Trust and the subordinated debentures are the sole assets of the Trust. The Trust will meet the obligations of the TPS with the interest and principal paid on the subordinated debentures. The Company received net proceeds from the TPS transactions, after commissions and other costs of issuance, of $2,995,000. The Company also holds all the voting securities issued by the Trust and such trusts are considered to be VIE's. The Trust is not consolidated because the Company is not the primary beneficiary of the Trust. The Subordinated Debentures, disclosed in Note 7, are reported in the accompanying consolidated balance sheets as a component of long-term debt. The Company's equity investments in the Trust total $93,000 and are included in Other Assets in the accompanying condensed consolidated balance sheets. |
Investments |
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | INVESTMENTS The amortized cost and aggregate fair values of investments in available-for-sale securities as of June 30, 2016 are as follows (dollars in thousands):
The amortized cost and aggregate fair values of investments in held-to-maturity securities as of June 30, 2016 are as follows (dollars in thousands):
The amortized cost and aggregate fair values of investments in available-for-sale securities as of December 31, 2015 are as follows (dollars in thousands):
The amortized cost and aggregate fair values of investments in held-to-maturity securities as of December 31, 2015 are as follows (dollars in thousands):
The amortized cost and aggregate fair value of debt securities at June 30, 2016, by contractual maturity, are presented in the following table (dollars in thousands). Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
A summary of securities available-for-sale with unrealized losses as of June 30, 2016, along with the related fair value, aggregated by the length of time that investments have been in a continuous unrealized loss position, is as follows (dollars in thousands):
There were no securities held-to-maturity with unrealized losses as of June 30, 2016. A summary of securities available-for-sale with unrealized losses as of December 31, 2015, along with the related fair value, aggregated by the length of time that investments have been in a continuous unrealized loss position, is as follows (dollars in thousands):
There were no securities held-to-maturity with unrealized losses as of December 31, 2015. The Company conducts periodic reviews to identify and evaluate securities in an unrealized loss position in order to identify other-than-temporary impairments. For securities in an unrealized loss position, the Company assesses whether the Company has the intent to sell the security or more-likely-than-not will be required to sell the security before the anticipated recovery. If either of these conditions is met, the Company is required to recognize an other-than-temporary impairment with the entire unrealized loss reported in earnings. For securities in an unrealized loss position that do not meet these conditions, the Company assesses whether the impairment of a security is other-than-temporary. If the impairment is determined to be other-than-temporary, the Company is required to separate the other-than-temporary impairments into two components: the amount representing the credit loss and the amount related to all other factors. The credit loss is the portion of the amortized book value in excess of the net present value of the projected future cash flows discounted at the effective interest rate implicit in the debt security prior to impairment. The credit loss component of other-than-temporary impairments is reported in earnings, whereas the amount relating to factors other than credit losses are recorded in other comprehensive income, net of taxes. Management has evaluated each security in a significant unrealized loss position. The Company has no material exposure to sub-prime mortgage loans and approximately 5.6% of the fixed income investment portfolio is rated below investment grade. In evaluating whether or not the equity loss positions were other-than-temporary impairments, Management evaluated financial information on each company and where available, reviewed analyst reports from at least two independent sources. Based on a review of the available financial information, the prospect for future earnings of each company and consideration of the Company’s intent and ability to hold the securities until market values recovered, it was determined that the securities in an accumulated loss position in the portfolio were temporary impairments. For the six months ended June 30, 2016 and year ended December 31, 2015, the Company realized no other-than-temporary impairments. At June 30, 2016, the single largest loss not realized as an impairment was in the bond portfolio and totaled $186,000. The second largest loss position was in the bond portfolio and totaled $155,000. The third largest loss position was in the bond portfolio and totaled $148,000. At December 31, 2015, the single largest loss not realized as an impairment was in the bond portfolio and totaled $252,000. The second largest loss position was in the bond portfolio and totaled $211,000. The third largest loss position was in the bond portfolio and totaled $186,000. Major categories of investment income are summarized as follows (dollars in thousands):
Major categories of realized investment gains and losses are summarized as follows (dollars in thousands):
An analysis of the net change in unrealized appreciation on available-for-sale securities follows (dollars in thousands):
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Fair Value of Financial Assets and Financial Liabilities |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Assets and Financial Liabilities | FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES Our available-for-sale securities consists of fixed maturity and equity securities which are recorded at fair value in the accompanying consolidated balance sheets. The change in the fair value of these investments, unless deemed to be other-than-temporarily impaired, is recorded as a component of other comprehensive income. We are permitted to elect to measure financial instruments and certain other items at fair value, with the change in fair value recorded in earnings. We elected not to measure any eligible items using the fair value option. Accounting standards define fair value as the price that would be received to sell an asset or would be paid to transfer a liability in an orderly transaction between market participants at the measurement date, and establishes a framework to make the measurement of fair value more consistent and comparable. In determining fair value, we primarily use prices and other relevant information generated by market transactions involving identical or comparable assets. The Company categorizes assets and liabilities carried at their fair value based upon a fair value hierarchy: Level 1 – Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 1 assets and liabilities consist of money market fund deposits and certain of our marketable debt and equity instruments, including equity instruments offsetting deferred compensation, that are traded in an active market with sufficient volume and frequency of transactions. Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets include certain of our marketable debt and equity instruments with quoted market prices that are traded in less active markets or priced using a quoted market price for similar instruments. Level 2 assets also include marketable equity instruments with security-specific restrictions that would transfer to the buyer, marketable debt instruments priced using indicator prices which represent non-binding market consensus prices that can be corroborated by observable market quotes, as well as derivative contracts and debt instruments priced using inputs that are observable in the market or can be derived principally from or corroborated by observable market data. Marketable debt instruments in this category generally include commercial paper, bank time deposits, repurchase agreements for fixed-income instruments, and a majority of floating-rate notes, corporate bonds, and municipal bonds. Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities. Level 3 assets and liabilities include marketable debt instruments, non-marketable equity investments, derivative contracts, and company issued debt whose values are determined using inputs that are both unobservable and significant to the values of the instruments being measured. Level 3 assets also include marketable debt instruments that are priced using indicator prices that we were unable to corroborate with observable market quotes. Marketable debt instruments in this category generally include asset-backed securities and certain floating-rate notes, corporate bonds, and municipal bonds. Assets/Liabilities Measured at Fair Value on a Recurring Basis Financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2016 are summarized in the following table by the type of inputs applicable to the fair value measurements (in thousands):
The methods and assumptions the Company uses to estimate the fair value of assets and liabilities measured at fair value on a recurring basis are summarized below. Fixed maturities available-for-sale — The fair values of the Company’s public fixed maturity securities are generally based on prices obtained from independent pricing services. Consistent with the fair value hierarchy described above, securities with validated quotes from pricing services are generally reflected within Level 2, as they are primarily based on observable pricing for similar assets and/or other market observable inputs. Trading securities — Trading securities consist primarily of mutual funds whose fair values are determined consistent with similar instruments described above under “Fixed Maturities” and below under “Equity Securities.” Equity securities — Equity securities consist principally of investments in common and preferred stock of publicly traded companies and privately traded securities. The fair values of our publicly traded equity securities are based on quoted market prices in active markets for identical assets and are classified within Level 1 in the fair value hierarchy. Estimated fair values for our privately traded equity securities require a substantial level of judgment. Privately traded equity securities are classified within Level 3. Interest rate swaps — Interest rate swaps are recorded at fair value either as assets, within other assets or as liabilities, within other liabilities. The fair values of our interest rate swaps are provided by a third-party broker and are classified within Level 3. As of June 30, 2016, Level 3 fair value measurements of assets include $1,221,000 of equity securities in a local community bank whose value is based on an evaluation of the financial statements of the entity. The Company does not develop the unobservable inputs used in measuring fair value. As of June 30, 2016, Level 3 fair value measurements of liabilities include $1,541,000 net fair value of various interest rate swap agreements whose value is based on analysis provided by a third party broker who utilizes financial modeling tools and assumptions on interest and other factors. The Company does not develop the unobservable inputs used in measuring fair value. Additional information regarding the interest rate swap agreements is provided in Note 7. The table below presents a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2016 (in thousands):
For the six months ended June 30, 2016, there were no assets or liabilities measured at fair values on a nonrecurring basis. Financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2015 are summarized in the following table by the type of inputs applicable to the fair value measurements (in thousands):
The table below presents a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2015 (in thousands):
For the year ended December 31, 2015, there were no assets or liabilities measured at fair values on a nonrecurring basis. The Company is exposed to certain risks in the normal course of its business operations. The primary risk that is managed through the use of derivatives is interest rate risk on floating rate borrowings. This risk is managed through the use of interest rate swap agreements which are designated as cash flow hedges. For cash flow hedges, the effective portion of the gain or loss on the interest rate swap is included as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged transaction is recognized in earnings. The Company does not hold or issue derivatives that are not designated as hedging instruments. See Note 7 for additional information about the interest rate swap agreements. The following methods and assumptions were used to estimate fair value of each class of financial instrument for which it is practical to estimate that value: Cash and cash equivalents — the carrying amount is a reasonable estimate of fair value. Fixed maturities held-to-maturity — the carrying amount is amortized cost; the fair values of the Company’s public fixed maturity securities that are classified as held-to-maturity are generally based on prices obtained from independent pricing services. Mortgage loans — the carrying amount is a reasonable estimate of fair value due to the restrictive nature and limited marketability of the mortgage notes. Policy loans — the carrying amount is a reasonable estimate of fair value. Company owned life insurance — the carrying amount is a reasonable estimate of fair value. Other invested assets — the carrying amount is a reasonable estimate of fair value. Other policyholder funds — the carrying amount is a reasonable estimate of fair value. Debt — the carrying amount is a reasonable estimate of fair value. The carrying amount and estimated fair value of the Company’s financial instruments as of June 30, 2016 and December 31, 2015 are as follows (in thousands):
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Property and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | PROPERTY AND EQUIPMENT Major categories of property and equipment are summarized as follows (dollars in thousands):
Depreciation expense for the six months ended June 30, 2016 was $79,000 ($168,000 for the year ended December 31, 2015). |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | INCOME TAXES The Company recognizes tax-related interest and penalties as a component of tax expense. The Company files income tax returns in the U.S. federal jurisdiction and various states. The Company is not subject to examinations by authorities related to its U.S. federal or state income tax filings for years prior to 2010. Tax returns have been filed through the year 2014. Net deferred tax liabilities are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of the enacted tax laws. Management believes that, based on its historical pattern of taxable income, the Company will produce sufficient income in the future to realize its deferred tax assets. The Company recognized net deferred tax asset positions of $2,545,000 at June 30, 2016 and $3,824,000 at December 31, 2015. The tax effect of significant differences representing deferred tax assets and liabilities are as follows (dollars in thousands):
The appropriate income tax effects of changes in temporary differences are as follows (dollars in thousands):
Total income tax expense (benefit) varies from amounts computed by applying current federal income tax rates to income or loss before income taxes. The reasons for these differences and the approximate tax effects are as follows:
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Notes Payable and Long-Term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable and Long-Term Debt | NOTES PAYABLE AND LONG-TERM DEBT Short-term debt and current portion of long-term debt consisted of the following as of June 30, 2016 and December 31, 2015 (dollars in thousands):
Long-term debt consisted of the following as of June 30, 2016 and December 31, 2015 (dollars in thousands):
The Company has entered into various swap agreements related to the trust preferred securities. On March 19, 2009, the Company entered into a forward swap effective September 17, 2012, with a notional amount of $3,000,000 and designated the swap as a hedge against changes in cash flows attributable to changes in the benchmark interest rate (LIBOR) associated with the subordinated debentures issued June 21, 2007. Quarterly, commencing September 17, 2012, under the terms of the forward swap, the Company will pay interest at a fixed rate of 7.02% until March 15, 2019. On May 26, 2010, the Company entered into a forward swap with a notional amount of $9,000,000 effective December 15, 2015, which hedges against changes in cash flows following the termination of the fixed rate period. Quarterly, commencing March 16, 2016 under the terms of the forward swap, the Company pays interest at a fixed rate of 8.49% until March 15, 2020. The swaps entered into in 2009 and 2010 have fair values of $235,000 (liability) and $1,306,000 (liability), respectively, for a total liability of $1,541,000 at June 30, 2016 ($1,419,000 at December 31, 2015). The swap liability is reported as a component of other liabilities on the consolidated balance sheets. A net valuation loss of $81,000 (net of tax) is included in accumulated other comprehensive income related to the swap agreements at June 30, 2016. A net valuation loss of $119,000 (net of tax) was included in accumulated other comprehensive income related to the swap at December 31, 2015. We use dollar offset at the hedge's inception and for each reporting period thereafter to assess whether the derivative used in a hedging transaction is expected to be, and has been, effective in offsetting changes in the fair value of the hedged item. Since inception, no portion of the hedged item has been deemed ineffective. For all hedges, we discontinue hedge accounting if it is determined that a derivative is not expected to be, or has ceased to be, effective as a hedge. The Company’s interest rate swaps include provisions requiring the Company to post collateral when the derivative is in a net liability position. At June 30, 2016, the Company has securities on deposit with fair market values of $1,536,000 and cash of $230,000 (all of which is posted as collateral). At December 31, 2015, the Company had securities on deposit with fair market values of $1,482,000 and cash of $130,000 (all of which is posted as collateral). See Note 4 for additional information about the interest rate swaps. |
Reinsurance |
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Reinsurance Disclosures [Abstract] | |||||||||||||
Reinsurance | REINSURANCE The Company's insurance operations utilize reinsurance in order to limit losses, minimize exposure to large risks, provide additional capacity for future growth and effect business-sharing arrangements. Life reinsurance is accomplished through yearly renewable term coverage. Property and casualty reinsurance is placed on an excess of loss basis to cover losses from catastrophe events. Reinsurance ceded arrangements do not discharge the insurance subsidiaries as the primary insurer, except for cases involving a novation. Failure of re-insurers to honor their obligations could result in losses to the insurance subsidiaries. The insurance subsidiaries evaluate the financial conditions of their reinsurance companies and monitor concentrations of credit risk arising from similar geographic regions, activities, or economic characteristics of the companies to minimize their exposure to significant losses from reinsurance insolvencies. In the normal course of business, NSFC seeks to reduce the loss that may arise from catastrophes or other individually significant large loss events that cause unfavorable underwriting results by re-insuring certain levels of risk in various areas of exposure with reinsurance companies. NSFC maintains a catastrophe reinsurance agreement to cover losses from catastrophic events, primarily hurricanes. Under the catastrophe reinsurance program, the Company retains the first $4,000,000 in losses from each catastrophe event. Catastrophe reinsurance coverage is maintained in three layers as follows:
Each reinsurance layer covers events occurring from January 1 through December 31 of the contract year. All significant reinsurance companies under the program carry A.M. Best ratings of A- (Excellent) or higher, or equivalent ratings. The Company's catastrophe reinsurance contract allows for one reinstatement. The Company maintains reinstatement premium protection (RPP) to cover reinstatement premiums incurred. The RPP further reduces risk from a major catastrophe and serves to strengthen the Company's capital position by reducing the modeled 100 year event net cost. Amounts recoverable from re-insurers are estimated in a manner consistent with the claim liability associated with the underlying insurance policies. Amounts paid for prospective reinsurance contracts are reported as prepaid reinsurance premiums and amortized over the remaining contract period. In the normal course of business, NSIC seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding reinsurance to reinsurance companies under excess coverage contracts. NSIC retains a maximum of $50,000 of coverage per individual life. The cost of reinsurance is amortized over the contract period of the reinsurance. At June 30, 2016, the largest reinsurance recoverable of a single reinsurer was $10,000 ($12,000 at December 31, 2015). Amounts reported as ceded incurred losses in both 2016 and 2015 were related to the development of losses from prior year catastrophes. |
Employee Benefit Plans |
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Jun. 30, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Employee Benefit Plans | EMPLOYEE BENEFIT PLANS The Company and its subsidiaries have an established retirement savings plan (401K Plan). All full-time employees are eligible to participate, and all employer contributions are fully vested for employees who have completed 1,000 hours of service in the year of contribution. Company matching contributions for the six months ended June 30, 2016 and 2015 amounted to $113,000 and $115,000, respectively. The Company contributes dollar-for-dollar matching contributions up to 5% of compensation subject to government limitations. In January 2006, the Company established a non-qualified plan under which directors are allowed to defer all or a portion of directors' fees into various investment options. The supplemental executive retirement plan (SERP) became effective March 1, 2008 and covers named executive officers, with the Company contributing 15% of executive compensation to the plan. Contributions to the plan are fully vested upon the earlier of death, disability, change in control, or ten years of participation in the plan. Costs for amounts credited to the non-qualified deferred compensation plans for the six months ended June 30, 2016 and 2015 amounted to approximately $107,000 and $89,000, respectively. The Company and its subsidiaries established an Employee Stock Ownership Plan (ESOP) in January 2010, to enable its eligible employees to acquire a proprietary interest in the Company's common stock and to provide retirement and other benefits to such employees. There were $150,000 costs incurred during the first six months of 2016 and $158,000 costs incurred during the first six months of 2015 related to ESOP plan contributions. All contributions were made in cash for purchase of Company shares in the open market. The Company has not allocated shares directly to the plan and the plan has no debt. |
Shareholders' Equity |
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Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | SHAREHOLDERS' EQUITY During the six months ended June 30, 2016 and year ended December 31, 2015, changes in shareholders' equity consisted of net income of $2,237,000 and $4,697,000, respectively; dividends paid of $226,000 in 2016 and $402,000 in 2015; increases in accumulated other comprehensive income, net of applicable taxes, of $2,207,000 in 2016 and decreases in accumulated other comprehensive income, net of applicable taxes, of $2,247,000 in 2015. Other comprehensive gains and loss consisted of accumulated unrealized gains and losses on securities available for sale and unrealized loss on interest rate swaps. Preferred Stock Preferred Stock may be issued in one or more series as shall from time to time be determined and authorized by the Board of Directors. The directors may make specific provisions regarding (a) the voting rights, if any (b) whether such dividends are to be cumulative or noncumulative (c) the redemption provisions, if any (d) participating rights, if any (e) any sinking fund or other retirement provisions (f) dividend rates (g) the number of shares of such series and (h) liquidation preference. Common Stock The holders of the Class A Common Stock will have one-twentieth of one vote per share, and the holders of the common stock will have one vote per share. There is currently no Class A Common Stock issued or outstanding. In the event of any liquidation, dissolution or distribution of the assets of the Company remaining after the payments to the holders of the Preferred Stock of the full preferential amounts to which they may be entitled as provided in the resolution or resolutions creating any series thereof, the remaining assets of the Company shall be divided and distributed among the holders of both classes of common stock, except as may otherwise be provided in any such resolution or resolutions. The table below provides information regarding the Company's preferred and common stock as of June 30, 2016 and December 31, 2015:
On May 20, 2016, 4,914 shares of common stock were issued to directors as compensation under the 2009 Equity Incentive Plan previously approved by shareholders. |
Accumulated Other Comprehensive Income |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income | ACCUMULATED OTHER COMPREHENSIVE INCOME Accumulated other comprehensive income (loss) ("AOCI") includes certain items that are reported directly within a separate component of shareholders' equity. The following table presents changes in AOCI balances (dollars in thousands):
The following table presents the amounts reclassified out of AOCI for the six months ended June 30, 2016 (dollars in thousands):
The following table presents the amounts reclassified out of AOCI for the six months ended June 30, 2015 (dollars in thousands):
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Segments |
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Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments | SEGMENTS The Company’s property and casualty insurance operations comprise one business segment. The property and casualty insurance segment primarily underwrites home insurance coverage with primary lines of business consisting of dwelling fire and extended coverage, homeowners (including mobile homeowners) and other liability. Management organizes the business utilizing a niche strategy focusing on lower valued dwellings. Our chief decision makers (Chief Executive Officer, Chief Financial Officer and President) review results and operating plans making decisions on resource allocations on a company-wide basis. The Company’s products are primarily produced through independent agents within the states in which we operate. The Company’s life and accident and health operations comprise the second business segment. The life and accident and health insurance segment consists of two lines of business: traditional life insurance and accident and health insurance. Total assets by industry segment at June 30, 2016 and at December 31, 2015 are summarized below (dollars in thousands):
Premium revenues and operating income by business segment for the three and six months ended June 30, 2016 and 2015 are summarized below (dollars in thousands):
The following table presents the Company’s gross and net premiums written for the property and casualty segment and the life and accident and health segment for the three and six months ended June 30, 2016 and 2015, respectively:
The following table presents the Company’s gross and net premiums earned for the property and casualty segment and the life and accident and health segment for the three and six months ended June 30, 2016 and 2015, respectively:
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Contingencies |
6 Months Ended |
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Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | CONTINGENCIES The Company and its subsidiaries continue to be named individually as parties to litigation related to the conduct of their insurance operations. These suits involve alleged breaches of contracts, torts, including bad faith and fraud claims based on alleged wrongful or fraudulent acts of the Company's subsidiaries, and other miscellaneous causes of action. The Company's property & casualty subsidiaries are defending a limited number of matters filed in the aftermath of Hurricane Ike in Texas. These actions include individual lawsuits with allegations of underpayment of hurricane-related claims. The various suits seek a variety of remedies, including actual and/or punitive damages in unspecified amounts and/or declaratory relief. The Company has reserves set up on litigated claims and the reserves are included in benefit and loss reserves. |
Supplemental Cash Flow Information |
6 Months Ended |
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Jun. 30, 2016 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | SUPPLEMENTAL CASH FLOW INFORMATION Cash paid for interest during the six months ended June 30, 2016 was $561,000 ($561,000 in 2015). Cash paid for income taxes during the six months ended June 30, 2016 was $650,000 ($1,000,000 in 2015). During the six months ended June 30, 2016, non-cash changes in equity included $5,000 in common stock issued to Directors in lieu of cash compensation along with a corresponding $71,000 increase in additional paid-in capital. |
Subsequent Events |
6 Months Ended |
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Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS Management has evaluated subsequent events and their potential effects on these consolidated financial statements through the filing date of this Form 10-Q. |
Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Principles of Consolidation and Basis of Presentation | The accompanying condensed consolidated financial statements include the accounts of The National Security Group, Inc. (the Company) and its wholly-owned subsidiaries: National Security Insurance Company (NSIC), National Security Fire and Casualty Company (NSFC) and NATSCO, Inc. (NATSCO). NSFC includes a wholly-owned subsidiary, Omega One Insurance Company (Omega). The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the condensed consolidated financial statements have been included. All significant intercompany transactions and accounts have been eliminated. The financial information presented herein should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, which includes information and disclosures not presented herein. |
Use of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Among the more significant estimates included in these condensed consolidated financial statements are reserves for future life insurance policy benefits, liabilities for losses and loss adjustment expenses, reinsurance recoverable associated with loss and loss adjustment expense liabilities, deferred policy acquisition costs, deferred income tax assets and liabilities, assessments of other-than-temporary impairments on investments and accruals for contingencies. Actual results could differ from these estimates. |
Earnings Per Share | Earnings per share of common stock is based on the weighted average number of shares outstanding during each year. The adjusted weighted average shares outstanding were 2,513,559 at June 30, 2016 and 2,508,551 at June 30, 2015. The Company did not have any dilutive securities as of June 30, 2016 and 2015. |
Reclassifications | Certain 2015 amounts have been reclassified from the prior year condensed consolidated financial statements to conform to the 2016 presentation. |
Concentration of Credit Risk | The Company maintains cash balances which are generally held in non-interest bearing demand deposit accounts subject to FDIC insured limits of $250,000 per entity. At June 30, 2016, the net amount exceeding FDIC insured limits was $3,242,000 at two financial institutions. The Company has not experienced any losses in such accounts. Management of the Company reviews financial information of financial institutions on a quarterly basis and believes the Company is not exposed to any significant credit risk on cash and cash equivalents. Policy receivables are reported at unpaid balances. Policy receivables are generally offset by associated unearned premium liabilities and are not subject to significant credit risk. Receivables from agents, less provision for credit losses, are composed of balances due from independent agents. At June 30, 2016, the single largest balance due from one agent totaled $1,284,000. Reinsurance contracts do not relieve the Company of its obligations to policyholders. A failure of a reinsurer to meet their obligation could result in losses to the insurance subsidiaries. Allowances for losses are established if amounts are believed to be uncollectible. At June 30, 2016 and December 31, 2015, no amounts were deemed uncollectible. The Company, at least annually, evaluates the financial condition of all reinsurers and evaluates any potential concentrations of credit risk. At June 30, 2016, management does not believe the Company is exposed to any significant credit risk related to its reinsurance program. |
Change in Accounting Principle | Change in Accounting Principle: Effective January 1, 2016, the Company elected to change its method of presentation relating to placement fees associated with the issuance of trust preferred securities in accordance with FASB ASU 2015-03. Prior to 2016, the Company’s policy was to present these fees in Other Assets on the balance sheet, net of accumulated amortization. Beginning in 2016, the Company has presented these fees as a direct reduction in the related note payable. Accounting Changes Not Yet Adopted Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (FASB) issued guidance on a comprehensive new revenue recognition standard. This standard will not impact accounting for insurance contracts, leases, financial instruments and guarantees. For those contracts that are impacted by the new guidance, the guidance will require an entity to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to, in exchange for those goods or services. The guidance requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued a deferral of the effective date by one year. This guidance is effective retrospectively for fiscal years beginning after December 15, 2017 and interim periods within those years. Early adoption of this standard is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. Although insurance contracts are specifically scoped out of this new guidance, the Company has minor services that may be subject to the new revenue recognition guidance and are still in the process of evaluating the impact, if any, the guidance may have on its condensed consolidated financial statements. Presentation of Financial Statements - Going Concern In August 2014, the FASB issued guidance on determining when and how to disclose going concern uncertainties in the financial statements, and requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. The updated guidance is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early adoption is permitted. The Company does not expect the adoption to have a material impact on its financial position, results of operations or disclosures. Recognition and Measurement of Financial Assets and Financial Liabilities In January 2016, the FASB issued guidance that requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. The guidance requires entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes and requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset. The guidance eliminates the requirement for public companies to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. This guidance is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company does not expect the adoption to have a material impact on its financial position or results of operations. Leases In February 2016, the FASB issued guidance that requires lessees (for capital and operating leases) to recognize the lease liability and right-of-use asset at the commencement date of the lease. This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. The Company does not expect the adoption to have a material impact on its financial position or results of operations. Contingent Put and Call Options in Debt Instruments In March 2016, the FASB issued guidance that clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those years. The Company does not expect the adoption to have a material impact on its financial position or results of operations. Financial Instruments - Credit Losses In June 2016, the FASB issued guidance that replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those years. The Company does not expect the adoption to have a material impact on its financial position or results of operations. Recently Adopted Accounting Standards Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items In January 2015, the FASB issued guidance that eliminates from GAAP the concept of extraordinary items. The Company adopted this standard on January 1, 2016. This guidance did not have a material effect on results of operations or financial position. Amendments to the Consolidation Analysis In February 2015, the FASB issued additional guidance regarding the consolidation of certain legal entities. The guidance modifies the evaluation of whether or not limited partnerships and similar legal entities are variable interest entities (VIEs) and the consolidation analysis of entities involved with VIEs, particularly those that have fee arrangements and related party relationships. The Company adopted this standard on January 1, 2016. This guidance did not have a material effect on results of operations or financial position. Interest - Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs. In April 2015, the FASB issued guidance to simplify the presentation of debt issuance costs. This ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability. The Company adopted this standard retrospectively on January 1, 2016, which resulted in the reclassification of $258,000 of unamortized debt issuance costs related to Company borrowings from other assets to long-term debt within our condensed consolidated balance sheet as of December 31, 2015. The adoption also resulted in the reclassification of $6,000 from general expenses to interest expense for the six months ended June 30, 2015. Disclosure about Short-Duration Contracts In May 2015, the FASB issued guidance that enhances disclosure about short-duration insurance liabilities to help users understand the nature, amount, timing and uncertainty of future cash flows related to insurance liabilities and the effect of those cash flows on the statement of comprehensive income. The Company adopted this standard on January 1, 2016. Required disclosures will be included in the notes to consolidated financial statements included in the Company's 2016 Annual Report on Form 10-K and in interim reports beginning in 2017. Simplifying the Accounting for Measurement-Period Adjustments In September 2015, the FASB issued guidance that requires an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The acquirer must record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The guidance requires an entity to present on the face of the income statement or to disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The Company adopted this standard on January 1, 2016. This guidance did not have a material effect on results of operations or financial position. |
Consolidation, Variable Interest Entity | The Company holds a passive interest in a limited partnership that is considered to be a Variable Interest Entity (VIE) under the provisions of ASC 810 Consolidation. The Company is not the primary beneficiary of the entity and is not required to consolidate under ASC 810. The entity is a private placement investment fund formed for the purpose of investing in private equity investments. The Company owns less than 1% of the limited partnership. The carrying value of the investment totals $228,000 and is included as a component of Other Invested Assets in the accompanying condensed consolidated balance sheets. |
Marketable Securities | In evaluating whether or not the equity loss positions were other-than-temporary impairments, Management evaluated financial information on each company and where available, reviewed analyst reports from at least two independent sources. For securities in an unrealized loss position, the Company assesses whether the Company has the intent to sell the security or more-likely-than-not will be required to sell the security before the anticipated recovery. If either of these conditions is met, the Company is required to recognize an other-than-temporary impairment with the entire unrealized loss reported in earnings. For securities in an unrealized loss position that do not meet these conditions, the Company assesses whether the impairment of a security is other-than-temporary. If the impairment is determined to be other-than-temporary, the Company is required to separate the other-than-temporary impairments into two components: the amount representing the credit loss and the amount related to all other factors. The credit loss is the portion of the amortized book value in excess of the net present value of the projected future cash flows discounted at the effective interest rate implicit in the debt security prior to impairment. The credit loss component of other-than-temporary impairments is reported in earnings, whereas the amount relating to factors other than credit losses are recorded in other comprehensive income, net of taxes. |
Fair Value | Fixed maturities available-for-sale — The fair values of the Company’s public fixed maturity securities are generally based on prices obtained from independent pricing services. Consistent with the fair value hierarchy described above, securities with validated quotes from pricing services are generally reflected within Level 2, as they are primarily based on observable pricing for similar assets and/or other market observable inputs. Trading securities — Trading securities consist primarily of mutual funds whose fair values are determined consistent with similar instruments described above under “Fixed Maturities” and below under “Equity Securities.” Equity securities — Equity securities consist principally of investments in common and preferred stock of publicly traded companies and privately traded securities. The fair values of our publicly traded equity securities are based on quoted market prices in active markets for identical assets and are classified within Level 1 in the fair value hierarchy. Estimated fair values for our privately traded equity securities require a substantial level of judgment. Privately traded equity securities are classified within Level 3. Interest rate swaps — Interest rate swaps are recorded at fair value either as assets, within other assets or as liabilities, within other liabilities. The fair values of our interest rate swaps are provided by a third-party broker and are classified within Level 3. Our available-for-sale securities consists of fixed maturity and equity securities which are recorded at fair value in the accompanying consolidated balance sheets. The change in the fair value of these investments, unless deemed to be other-than-temporarily impaired, is recorded as a component of other comprehensive income. We are permitted to elect to measure financial instruments and certain other items at fair value, with the change in fair value recorded in earnings. We elected not to measure any eligible items using the fair value option. Accounting standards define fair value as the price that would be received to sell an asset or would be paid to transfer a liability in an orderly transaction between market participants at the measurement date, and establishes a framework to make the measurement of fair value more consistent and comparable. In determining fair value, we primarily use prices and other relevant information generated by market transactions involving identical or comparable assets. The Company categorizes assets and liabilities carried at their fair value based upon a fair value hierarchy: Level 1 – Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 1 assets and liabilities consist of money market fund deposits and certain of our marketable debt and equity instruments, including equity instruments offsetting deferred compensation, that are traded in an active market with sufficient volume and frequency of transactions. Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets include certain of our marketable debt and equity instruments with quoted market prices that are traded in less active markets or priced using a quoted market price for similar instruments. Level 2 assets also include marketable equity instruments with security-specific restrictions that would transfer to the buyer, marketable debt instruments priced using indicator prices which represent non-binding market consensus prices that can be corroborated by observable market quotes, as well as derivative contracts and debt instruments priced using inputs that are observable in the market or can be derived principally from or corroborated by observable market data. Marketable debt instruments in this category generally include commercial paper, bank time deposits, repurchase agreements for fixed-income instruments, and a majority of floating-rate notes, corporate bonds, and municipal bonds. Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities. Level 3 assets and liabilities include marketable debt instruments, non-marketable equity investments, derivative contracts, and company issued debt whose values are determined using inputs that are both unobservable and significant to the values of the instruments being measured. Level 3 assets also include marketable debt instruments that are priced using indicator prices that we were unable to corroborate with observable market quotes. Marketable debt instruments in this category generally include asset-backed securities and certain floating-rate notes, corporate bonds, and municipal bonds. The following methods and assumptions were used to estimate fair value of each class of financial instrument for which it is practical to estimate that value: Cash and cash equivalents — the carrying amount is a reasonable estimate of fair value. Fixed maturities held-to-maturity — the carrying amount is amortized cost; the fair values of the Company’s public fixed maturity securities that are classified as held-to-maturity are generally based on prices obtained from independent pricing services. Mortgage loans — the carrying amount is a reasonable estimate of fair value due to the restrictive nature and limited marketability of the mortgage notes. Policy loans — the carrying amount is a reasonable estimate of fair value. Company owned life insurance — the carrying amount is a reasonable estimate of fair value. Other invested assets — the carrying amount is a reasonable estimate of fair value. Other policyholder funds — the carrying amount is a reasonable estimate of fair value. Debt — the carrying amount is a reasonable estimate of fair value. |
Derivatives | The Company is exposed to certain risks in the normal course of its business operations. The primary risk that is managed through the use of derivatives is interest rate risk on floating rate borrowings. This risk is managed through the use of interest rate swap agreements which are designated as cash flow hedges. For cash flow hedges, the effective portion of the gain or loss on the interest rate swap is included as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged transaction is recognized in earnings. The Company does not hold or issue derivatives that are not designated as hedging instruments. The swap liability is reported as a component of other liabilities on the consolidated balance sheets. We use dollar offset at the hedge's inception and for each reporting period thereafter to assess whether the derivative used in a hedging transaction is expected to be, and has been, effective in offsetting changes in the fair value of the hedged item. Since inception, no portion of the hedged item has been deemed ineffective. For all hedges, we discontinue hedge accounting if it is determined that a derivative is not expected to be, or has ceased to be, effective as a hedge. |
Income Taxes | Net deferred tax liabilities are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of the enacted tax laws. The Company recognizes tax-related interest and penalties as a component of tax expense. |
Reinsurance | Amounts recoverable from re-insurers are estimated in a manner consistent with the claim liability associated with the underlying insurance policies. Amounts paid for prospective reinsurance contracts are reported as prepaid reinsurance premiums and amortized over the remaining contract period. In the normal course of business, NSIC seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding reinsurance to reinsurance companies under excess coverage contracts. NSIC retains a maximum of $50,000 of coverage per individual life. The cost of reinsurance is amortized over the contract period of the reinsurance. The Company's insurance operations utilize reinsurance in order to limit losses, minimize exposure to large risks, provide additional capacity for future growth and effect business-sharing arrangements. Life reinsurance is accomplished through yearly renewable term coverage. Property and casualty reinsurance is placed on an excess of loss basis to cover losses from catastrophe events. Reinsurance ceded arrangements do not discharge the insurance subsidiaries as the primary insurer, except for cases involving a novation. Failure of re-insurers to honor their obligations could result in losses to the insurance subsidiaries. The insurance subsidiaries evaluate the financial conditions of their reinsurance companies and monitor concentrations of credit risk arising from similar geographic regions, activities, or economic characteristics of the companies to minimize their exposure to significant losses from reinsurance insolvencies. In the normal course of business, NSFC seeks to reduce the loss that may arise from catastrophes or other individually significant large loss events that cause unfavorable underwriting results by re-insuring certain levels of risk in various areas of exposure with reinsurance companies. NSFC maintains a catastrophe reinsurance agreement to cover losses from catastrophic events, primarily hurricanes. |
Business Segment | The Company’s property and casualty insurance operations comprise one business segment. The property and casualty insurance segment primarily underwrites home insurance coverage with primary lines of business consisting of dwelling fire and extended coverage, homeowners (including mobile homeowners) and other liability. The Company’s life and accident and health operations comprise the second business segment. The life and accident and health insurance segment consists of two lines of business: traditional life insurance and accident and health insurance. |
Investments (Tables) |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Amortized Cost and Aggregate Fair Values of Investments in Available-for-Sale Securities | The amortized cost and aggregate fair values of investments in available-for-sale securities as of June 30, 2016 are as follows (dollars in thousands):
The amortized cost and aggregate fair values of investments in available-for-sale securities as of December 31, 2015 are as follows (dollars in thousands):
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Schedule of Amortized Cost and Aggregate Fair Values of Investments in Held-to-Maturity Securities | The amortized cost and aggregate fair values of investments in held-to-maturity securities as of December 31, 2015 are as follows (dollars in thousands):
The amortized cost and aggregate fair values of investments in held-to-maturity securities as of June 30, 2016 are as follows (dollars in thousands):
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Schedule of Amortized Cost and Aggregate Fair Value of Debt Securities, by Contractual Maturity | The amortized cost and aggregate fair value of debt securities at June 30, 2016, by contractual maturity, are presented in the following table (dollars in thousands). Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
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Schedule of Securities Available-for-Sale with Unrealized Losses | A summary of securities available-for-sale with unrealized losses as of December 31, 2015, along with the related fair value, aggregated by the length of time that investments have been in a continuous unrealized loss position, is as follows (dollars in thousands):
A summary of securities available-for-sale with unrealized losses as of June 30, 2016, along with the related fair value, aggregated by the length of time that investments have been in a continuous unrealized loss position, is as follows (dollars in thousands):
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Summary of Major Categories of Investment Income | Major categories of investment income are summarized as follows (dollars in thousands):
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Schedule of Realized Investments Gains (Losses) | Major categories of realized investment gains and losses are summarized as follows (dollars in thousands):
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Schedule of Net Change in Unrealized Appreciation | An analysis of the net change in unrealized appreciation on available-for-sale securities follows (dollars in thousands):
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Fair Value of Financial Assets and Financial Liabilities (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | Financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2015 are summarized in the following table by the type of inputs applicable to the fair value measurements (in thousands):
Financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2016 are summarized in the following table by the type of inputs applicable to the fair value measurements (in thousands):
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Schedule of Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The table below presents a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2015 (in thousands):
The table below presents a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2016 (in thousands):
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Schedule of Fair Value, by Balance Sheet Grouping | The carrying amount and estimated fair value of the Company’s financial instruments as of June 30, 2016 and December 31, 2015 are as follows (in thousands):
|
Property and Equipment (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment | Major categories of property and equipment are summarized as follows (dollars in thousands):
|
Income Taxes (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Deferred Tax Assets and Liabilities | The tax effect of significant differences representing deferred tax assets and liabilities are as follows (dollars in thousands):
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Changes in Temporary Differences in Federal Income Tax | The appropriate income tax effects of changes in temporary differences are as follows (dollars in thousands):
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Schedule of Effective Income Tax Rate Reconciliation | Total income tax expense (benefit) varies from amounts computed by applying current federal income tax rates to income or loss before income taxes. The reasons for these differences and the approximate tax effects are as follows:
|
Notes Payable and Long-Term Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Short-term Debt | Short-term debt and current portion of long-term debt consisted of the following as of June 30, 2016 and December 31, 2015 (dollars in thousands):
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Schedule of Long-term Debt Instruments | Long-term debt consisted of the following as of June 30, 2016 and December 31, 2015 (dollars in thousands):
|
Reinsurance (Tables) |
6 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 | |||||||||||||
Reinsurance Disclosures [Abstract] | |||||||||||||
Schedule of Reinsurance | Catastrophe reinsurance coverage is maintained in three layers as follows:
|
Shareholders' Equity (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock by Class | The table below provides information regarding the Company's preferred and common stock as of June 30, 2016 and December 31, 2015:
|
Accumulated Other Comprehensive Income (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table presents changes in AOCI balances (dollars in thousands):
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Reclassification out of Accumulated Other Comprehensive Income | The following table presents the amounts reclassified out of AOCI for the six months ended June 30, 2016 (dollars in thousands):
The following table presents the amounts reclassified out of AOCI for the six months ended June 30, 2015 (dollars in thousands):
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Segments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | Total assets by industry segment at June 30, 2016 and at December 31, 2015 are summarized below (dollars in thousands):
Premium revenues and operating income by business segment for the three and six months ended June 30, 2016 and 2015 are summarized below (dollars in thousands):
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Schedule of Gross and Net Premiums Written | The following table presents the Company’s gross and net premiums written for the property and casualty segment and the life and accident and health segment for the three and six months ended June 30, 2016 and 2015, respectively:
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Schedule of Gross and Net Premiums Earned | The following table presents the Company’s gross and net premiums earned for the property and casualty segment and the life and accident and health segment for the three and six months ended June 30, 2016 and 2015, respectively:
|
Significant Accounting Policies (Earnings Per Share) (Details) - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Accounting Policies [Abstract] | ||
Weighted average number of shares outstanding | 2,513,559 | 2,508,551 |
Significant Accounting Policies (Concentration of Credit Risk) (Details) - USD ($) |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Concentration Risk [Line Items] | ||
Cash, uninsured amount | $ 3,242,000 | |
Policy receivables and agents' balances, net | 12,786,000 | $ 11,296,000 |
Single Largest Agent Balance Due [Member] | ||
Concentration Risk [Line Items] | ||
Policy receivables and agents' balances, net | $ 1,284,000 |
Significant Accounting Policies (Recently Adopted Accounting Standards) (Details) - Accounting Standards Update 2015-03 [Member] - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
|
Interest Expense [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Prior Period Reclassification Adjustment | $ 6 | |
General and Administrative Expense [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Prior Period Reclassification Adjustment | $ (6) | |
Long-term Debt [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Debt issuance costs, net | $ 258 | |
Other Assets [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Debt issuance costs, net | $ (258) |
Variable Interest Entities (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | |
---|---|---|---|
Jun. 30, 2007 |
Dec. 31, 2005 |
Jun. 30, 2016 |
|
Variable Interest Entity [Line Items] | |||
Carrying amount of investments | $ 228 | ||
Trust Preferred Security Offering, 2005 [Member] | |||
Variable Interest Entity [Line Items] | |||
Payments to acquire trust preferred securities | $ 9,000 | ||
Subordinated debt | 9,279 | ||
Proceeds from issuance of trust preferred securities | 9,005 | ||
Equity investment | $ 279 | ||
Trust Preferred Security Offering, 2007 [Member] | |||
Variable Interest Entity [Line Items] | |||
Payments to acquire trust preferred securities | $ 3,000 | ||
Proceeds from issuance of trust preferred securities | 2,995 | ||
Equity investment | 93 | ||
Trust Preferred Security Offering, 2007 [Member] | Unsecured Debt [Member] | |||
Variable Interest Entity [Line Items] | |||
Subordinated debt | $ 3,093 | ||
Maximum [Member] | |||
Variable Interest Entity [Line Items] | |||
Limited partnership, percent owned | 1.00% |
Investments (Narrative) (Details) - USD ($) |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
|
Gain (Loss) on Investments [Line Items] | ||
Securities held-to-maturity with unrealized losses | $ 0 | $ 0 |
Other-than-temporary impairments, available-for-sale securities | 0 | 0 |
Single Largest Loss Position | 186,000 | 252,000 |
Second Largest Loss Position | 155,000 | 211,000 |
Third Largest Loss Position | $ 148,000 | $ 186,000 |
Maximum [Member] | ||
Gain (Loss) on Investments [Line Items] | ||
Percent of investment portfolio below investment grade | 5.60% |
Investments (Held-to-Maturity Securities) (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | $ 2,236 | $ 2,439 |
Held-to-maturity securities, unrealized gains | 121 | 65 |
Held-to-maturity securities, unrealized losses | 0 | 0 |
Fair Value | 2,357 | 2,504 |
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member] | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | 2,201 | 2,395 |
Held-to-maturity securities, unrealized gains | 119 | 62 |
Held-to-maturity securities, unrealized losses | 0 | 0 |
Fair Value | 2,320 | 2,457 |
US Treasury Securities [Member] | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | 35 | 44 |
Held-to-maturity securities, unrealized gains | 2 | 3 |
Held-to-maturity securities, unrealized losses | 0 | 0 |
Fair Value | $ 37 | $ 47 |
Investments (Major Categories of Investment Gains and Losses) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Gain (Loss) on Investments [Line Items] | ||||
Net realized investment gains | $ 242 | $ 245 | $ 249 | $ 387 |
Fixed Maturities [Member] | ||||
Gain (Loss) on Investments [Line Items] | ||||
Net realized investment gains | 243 | 250 | 260 | 392 |
Other, Principally Real Estate [Member] | ||||
Gain (Loss) on Investments [Line Items] | ||||
Net realized investment gains | $ (1) | $ (5) | $ (11) | $ (5) |
Investments (Schedule of Unrealized Appreciation) (Details) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
|
Investments [Abstract] | ||
Net change in unrealized appreciation on available-for-sale securities before deferred tax | $ 3,466 | $ (3,225) |
Deferred income tax | (1,178) | 1,097 |
Net change in unrealized appreciation on available-for-sale securities | $ 2,288 | $ (2,128) |
Fair Value of Financial Assets and Financial Liabilities (Narrative) (Details) - USD ($) |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Fair value measurements of assets | $ 1,221,000 | |
Fair value measurements of liabilities | (1,541,000) | |
Assets measured at fair values on a nonrecurring basis | 0 | $ 0 |
Liabilities measured at fair values on a nonrecurring basis | $ 0 | $ 0 |
Property and Equipment (Details) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
|
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 5,441 | $ 5,510 |
Less accumulated depreciation | 3,491 | 3,564 |
Property and equipment, net | 1,950 | 1,946 |
Depreciation expense | 79 | 168 |
Building and improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 3,348 | 3,350 |
Electronic Data Processing Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,560 | 1,631 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 533 | $ 529 |
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Net deferred tax asset position | $ 2,545 | $ 3,824 |
Income Taxes (Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
General expenses | $ 1,544 | $ 1,569 |
Unearned premiums | 2,193 | 2,039 |
Claims liabilities | 805 | 730 |
Litigation settlement | 1,748 | 1,748 |
AMT Credit | 543 | 816 |
Impairment on real estate owned | 187 | 187 |
Unrealized loss on interest rate swaps | 524 | 483 |
Deferred tax assets | 7,544 | 7,572 |
Depreciation | (115) | (111) |
Deferred policy acquisition costs | (2,954) | (2,885) |
Unrealized gains on securities available-for-sale | (1,930) | (752) |
Deferred tax liabilities | (4,999) | (3,748) |
Net deferred tax asset | $ 2,545 | $ 3,824 |
Income Taxes (Schedule of Income Tax Effects of Changes in Temporary Differences) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Income Tax Disclosure [Abstract] | ||||
Deferred policy acquisition costs | $ 69 | $ 41 | ||
Unearned premiums | (154) | (169) | ||
General expenses | 25 | (96) | ||
Depreciation | 4 | (9) | ||
Claims liabilities | (75) | 4 | ||
AMT credit | 273 | 119 | ||
Deferred income tax expense (benefit) | $ 3 | $ (117) | $ 142 | $ (110) |
Income Taxes (Schedule of Effective Income Tax Rate Reconciliation) (Details) |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Income Tax Disclosure [Abstract] | ||
Federal income tax rate applied to pre-tax income/loss | 34.00% | 34.00% |
Dividends received deduction and tax-exempt interest | (1.50%) | (2.10%) |
Company owned life insurance | (0.60%) | 0.70% |
Small life deduction | (5.40%) | (7.70%) |
Other, net | (1.10%) | (3.60%) |
Effective federal income tax rate | 25.40% | 21.30% |
Notes Payable and Long-Term Debt (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
Dec. 31, 2010 |
May 26, 2010 |
Dec. 31, 2009 |
Mar. 19, 2009 |
|
Debt Instrument [Line Items] | |||||||||
Derivative, Notional Amount | $ 9,000 | $ 3,000 | |||||||
Derivative, fixed interest rate | 8.49% | 7.02% | |||||||
Cash flow hedge, derivative instrument liabilities at fair value | $ 1,541 | $ 1,541 | $ 1,419 | ||||||
Unrealized loss on interest rate swap | (21) | $ (56) | 81 | $ 61 | 119 | ||||
Available-for-sale securities pledged as collateral | 1,536 | 1,536 | 1,482 | ||||||
Cash pledged as collateral | $ 230 | $ 230 | $ 130 | ||||||
Interest Rate Swap [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Cash flow hedge, liability at fair value | $ 235 | ||||||||
Cash Flow Hedging [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Cash flow hedge, liability at fair value | $ 1,306 |
Notes Payable and Long-Term Debt (Short-Term Debt) (Details) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
|
Short-term Debt [Line Items] | ||
Short-term notes payable | $ 857 | $ 857 |
Unsecured Debt [Member] | ||
Short-term Debt [Line Items] | ||
Current portion of installment note payable November 2016 with variable interest rate equal to the WSJ prime rate plus 1%; Unsecured | 857 | 857 |
Short-term notes payable | $ 857 | $ 857 |
Interest rate description | WSJ | WSJ |
Basis spread on variable rate | 1.00% | 1.00% |
Reinsurance (Reinsurers' Limits of Liability) (Details) - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
|
Reinsurance Maintained by Layers [Line Items] | ||
Catastrophe reinsurance retention | $ 4,000,000 | |
Life insurance policy reinsurance limit | 50,000 | |
Reinsurance recoverable | 544,000 | $ 1,660,000 |
Single Reinsurer [Member] | ||
Reinsurance Maintained by Layers [Line Items] | ||
Reinsurance recoverable | $ 10,000 | $ 12,000 |
First Layer [Member] | ||
Reinsurance Maintained by Layers [Line Items] | ||
Percent of reinsured losses covered by layer | 100.00% | |
Covered losses | $ 13,500,000 | |
Reinsurer's limit of liability | $ 17,500,000 | |
Second Layer [Member] | ||
Reinsurance Maintained by Layers [Line Items] | ||
Percent of reinsured losses covered by layer | 100.00% | |
Covered losses | $ 25,000,000 | |
Reinsurer's limit of liability | $ 42,500,000 | |
Third Layer [Member] | ||
Reinsurance Maintained by Layers [Line Items] | ||
Percent of reinsured losses covered by layer | 100.00% | |
Covered losses | $ 30,000,000 | |
Reinsurer's limit of liability | $ 72,500,000 |
Employee Benefit Plans (Details) |
6 Months Ended | |
---|---|---|
Jun. 30, 2016
USD ($)
hours
|
Jun. 30, 2015
USD ($)
|
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Minimum hours of service completed in year of contribution | hours | 1,000 | |
Matching contribution | $ 113,000 | $ 115,000 |
Employer matching contribution, percent | 5.00% | |
Cash contributions to ESOP | $ 150,000 | 158,000 |
Employee Stock Ownership Plan (ESOP), Debt Structure, Indirect Loan, Amount | 0 | |
Non-Qualified Deferred Compensation Plans [Member] | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Deferred compensation arrangement | $ 107,000 | $ 89,000 |
Executive Officers [Member] | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Employer matching contribution, percent | 15.00% |
Shareholders' Equity (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
May 20, 2016 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|
Stockholders' Equity Note [Abstract] | ||||||
Net income | $ 1,296 | $ 623 | $ 2,237 | $ 1,931 | $ 4,697 | |
Dividends paid | (226) | (402) | ||||
Other comprehensive income, net of tax | $ 1,151 | $ (1,184) | $ 2,207 | $ (936) | $ (2,247) | |
Common Stock [Member] | Director [Member] | 2009 Equity Incentive Plan [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares issued | 4,914 |
Shareholders' Equity (Preferred and Common Stock) (Details) - $ / shares |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Class of Stock [Line Items] | ||
Preferred stock, par value | $ 1 | $ 1 |
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 1 | $ 1 |
Common stock, shares authorized | 3,000,000 | 3,000,000 |
Common stock, shares issued | 2,517,339 | 2,512,425 |
Common stock, shares outstanding | 2,517,339 | 2,512,425 |
Common Class A [Member] | ||
Class of Stock [Line Items] | ||
Common stock, par value | $ 1 | $ 1 |
Common stock, shares authorized | 2,000,000 | 2,000,000 |
Common stock, shares issued | 0 | 0 |
Common stock, shares outstanding | 0 | 0 |
Accumulated Other Comprehensive Income (Amounts reclassified out of AOCI) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|
Reclassification out of Accumulated Other Comprehensive Income [Line Items] | |||||
Net realized investment gains | $ 242 | $ 245 | $ 249 | $ 387 | |
Tax (expense) or benefit | (402) | (44) | (762) | (522) | |
Net Income | $ 1,296 | $ 623 | 2,237 | 1,931 | $ 4,697 |
Reclassification out of Accumulated Other Comprehensive Income [Member] | Unrealized Gains and Losses on Available-for-Sale Securities [Member] | |||||
Reclassification out of Accumulated Other Comprehensive Income [Line Items] | |||||
Net realized investment gains | 260 | 390 | |||
Total before tax | 260 | 390 | |||
Tax (expense) or benefit | (88) | (133) | |||
Net Income | $ 172 | $ 257 |
Segments (Narrative) (Details) |
6 Months Ended |
---|---|
Jun. 30, 2016
Segments
| |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Supplemental Cash Flow Elements [Abstract] | ||
Interest paid | $ 561 | $ 561 |
Income taxes paid | 650 | $ 1,000 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Increase in equity | 76 | |
Common Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Increase in equity | 5 | |
Common Stock [Member] | Director [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock issued | 5 | |
Additional Paid-in Capital [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Increase in equity | $ 71 |
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