10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

Amendment No. 1 

(Mark One)

[X]       Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2018 or

[ ]       Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ____ to ____.

Commission File No. 000-03978

UNICO AMERICAN CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Nevada	95-2583928
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
26050 Mureau Road, Calabasas, California	91302
(Address of Principal Executive Offices)	(Zip Code)

Registrant's telephone number, including area code: (818) 591-9800

No Change

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __ 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes X No__ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer __ Accelerated filer __

Non-accelerated filer __ Smaller reporting company X Emerging growth company __

(Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. __

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes__ No X 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at November 15, 2018
Common Stock, $0 par value per share	5,307,103

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EXPLANATORY NOTE

This Amendment No.1 on Form 10-Q/A (this “Amendment”) amends the Quarterly Report on Form 10-Q of Unico American Corporation for the quarter ended September 30, 2018, originally filed with the Securities and Exchange Commission on November 15, 2018 (the “Original Filing”). We are filing this Amendment for the sole purpose of adding Interactive Data Files unintentionally omitted from the Original Filing. Interactive Data Files are filed with this Amendment as Exhibit 101.

Except as described above, no other changes have been made to the Original Filing. The Original Filing continues to speak as of the date of the Original Filing, and we have not updated the disclosures contained therein to reflect any subsequent events, other than as indicated in this Amendment.

EXHIBIT INDEX

ITEM 6 – EXHIBITS

101 The following information from the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2018, formatted in XBRL (Extensible Business Reporting Language) and furnished electronically herewith: (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Comprehensive Loss; (iv) the Condensed Consolidated Statements of Cash Flows; and (v) the Condensed Notes to Unaudited Condensed Consolidated Financial Statements.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

UNICO AMERICAN CORPORATION

Date: November 15, 2018      By:       /s/ CARY L. CHELDIN

Cary L. Cheldin

Chairman of the Board, President and Chief

Executive Officer, (Principal Executive Officer)

Date: November 15, 2018      By:       /s/ MICHAEL BUDNITSKY

Michael Budnitsky

Treasurer, Chief Financial Officer, (Principal

Accounting and Principal Financial Officer)

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 15, 2018
Document And Entity Information
Entity Registrant Name	Unico American Corporation
Entity Central Index Key	0000100716
Document Type	10-Q/A
Document Period End Date	Sep. 30, 2018
Amendment Flag	true
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		5,307,103
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2018
Amendment Description	Adding XBRL

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Consolidated Balance Sheets - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Available-for-sale:
Fixed maturities, at fair value (amortized cost: $74,869,321 at September 30, 2018, and $58,153,120 at December 31, 2017)	$ 72,856,107	$ 57,849,454
Held-to-maturity:
Fixed maturities, at amortized cost (fair value: $14,864,000 at September 30, 2018, and $28,098,000 at December 31, 2017)	14,864,000	28,098,000
Short-term investments, at fair value	200,000	1,847,778
Total Investments	87,920,107	87,795,232
Cash, cash equivalents, and restricted cash	4,412,669	9,366,944
Accrued investment income	468,198	490,579
Receiveable, net	4,152,861	6,005,764
Reinsurance Recoverable:
Paid losses and loss adjustment expenses	151,691	126,682
Unpaid losses and loss adjustment expenses	8,291,385	8,393,550
Deferred policy acquisition costs	3,603,930	4,162,771
Property and equipment (net)	9,693,555	10,014,869
Deferred income taxes	4,384,772	3,380,806
Other assets	512,738	561,561
Total Assets	123,591,906	130,298,758
LIABILITIES
Unpaid losses and loss adjustment expenses	49,240,342	49,076,991
Unearned premium	16,157,775	18,768,264
Advance premium and premium deposits	367,253	207,808
Accrued expenses and other liabilities	1,932,838	2,300,358
Total Liabilities	67,698,208	70,353,421
STOCKHOLDERS' EQUITY
Common stock, no par, authorized 10,000,000 shares; issued and outstanding shares 5,307,103 and 5,307,133 at September 30, 2018, and at December 31, 2017, respectively	3,772,857	3,772,872
Accumulated other comprehensive loss	(1,590,439)	(239,896)
Retained earnings	53,711,280	56,412,361
Total Stockholders Equity	55,893,698	59,945,337
Total Liabilities and Stockholders' Equity	$ 123,591,906	$ 130,298,758

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Consolidated Balance Sheets (Parenthetical) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Consolidated Balance Sheets Parenthetical Abstract
Fixed maturities, available for sale, amortized cost	$ 74,869,321	$ 58,153,120
Fixed maturities, held to maturity, fair value	$ 14,864,000	$ 28,098,000
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	5,307,103	5,307,133
Common stock, shares outstanding	5,307,103	5,307,133

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Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
REVENUES
Net premium earned	$ 6,924,444	$ 8,168,252	$ 21,969,016	$ 24,309,101
Investment income	487,538	309,405	1,384,748	785,579
Net realized investments gains	11	373	148	528
Other income	125,958	108,169	293,847	243,642
Total Insurance Company Operation	7,537,951	8,586,199	23,647,759	25,338,850
Gross commissions and fees	578,485	685,288	1,856,592	2,097,916
Investment income	21	87	216	206
Finance charges and fees earned	44,575	21,814	97,051	58,155
Other income	2	1	9,759	65
Total Revenues	8,161,034	9,293,389	25,611,377	27,495,192
EXPENSES
Losses and loss adjustment expenses	5,638,620	9,917,896	18,369,580	24,351,751
Policy acquisition costs	1,375,222	1,854,212	4,512,203	4,943,350
Salaries and employee benefits	1,142,827	1,221,182	3,557,408	4,534,550
Commissions to agents/brokers	43,381	39,737	125,262	126,620
Other operating expenses	773,125	695,587	2,383,965	2,592,318
Total Expenses	8,973,175	13,728,614	28,948,418	36,548,589
Loss Before Income Taxes	(812,141)	(4,435,225)	(3,337,041)	(9,053,397)
Income Tax Benefit	150,216	1,507,976	636,161	3,104,390
Net Loss	$ (661,925)	$ (2,927,249)	$ (2,700,880)	$ (5,949,007)
Basic
Loss per share	$ (0.12)	$ (0.55)	$ (0.51)	$ (1.12)
Weighted average shares	5,307,113	5,307,133	5,307,126	5,307,133
Diluted
Loss per share	$ (0.12)	$ (0.55)	$ (0.51)	$ (1.12)
Weighted average shares	5,307,113	5,307,133	5,307,126	5,307,133

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Consolidated Statements of Comprehensive Income (Loss) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Consolidated Statements Of Comprehensive Income
Net Loss	$ (661,925)	$ (2,927,249)	$ (2,700,880)	$ (5,949,007)
Other Changes in Comprehensive Loss:
Unrealized losses on securities classified as available-for-sale arising during the period	(267,259)	(6,208)	(1,709,400)	(22,009)
Income tax benefit related to unrealized losses on securities classified as available-for-sale arising during the period	56,124	2,111	358,974	7,482
Net realized investments gains	(11)	(373)	(148)	(528)
Income tax expense related to net realized investment gains	2	127	31	180
Comprehensive Loss	$ (873,069)	$ (2,931,592)	$ (4,051,423)	$ (5,963,882)

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Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Cash Flows from Operating Activities:
Net Loss	$ (2,700,880)	$ (5,949,007)
Adjustments to reconcile net loss to net cash from operations
Depreciation and amortization	417,261	386,250
Bond amortization, net	160,724	(533,123)
Non-cash stock based compensation	0	11,552
Bad debt expense	384	15,534
Realized investment gains	(148)	(528)
Changes in assets and liabilities:
Net receivables and accrued investment income	1,874,900	(304,116)
Reinsurance recoverable	77,156	(3,801,282)
Deferred policy acquisition costs	558,841	201,467
Other assets	51,589	478,374
Unpaid losses and loss adjustment expenses	163,351	6,010,728
Unearned premium	(2,610,489)	97,396
Advance premium and premium deposits	159,445	206,055
Accrued expenses and other liabilities	(367,520)	(505,559)
Income taxes current/deferred	(647,727)	(3,108,695)
Net Cash Used by Operating Activities	(2,863,113)	(6,794,954)
Cash Flows from Investing Activities:
Purchase of fixed maturity investments	(21,034,427)	(44,321,953)
Proceeds from maturity of fixed maturity investments	16,121,354	39,354,000
Proceeds from sale or call of fixed maturity investments	1,270,296	1,594,097
Net (increase) decrease in short-term investments	1,647,778	(2,274,664)
Additions to property and equipment	(95,947)	(221,281)
Net Cash Used by Investing Activities	(2,090,946)	(5,869,801)
Cash Flows from Financing Activities:
Repurchase of common stock	(216)	0
Net Cash Used by Financing Activities	(216)	0
Net decrease in cash, cash equivalents, and restricted cash	(4,954,275)	(12,664,755)
Cash, cash equivalents and restricted cash beginning of period	9,366,944	22,602,982
Cash, cash equivalents and restricted cash end of period	4,412,669	9,938,227
Cash paid during the period for:
Interest	0	0
Income taxes	$ 8,800	$ 8,800

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Summary of Significant Accounting Policies

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Unico American Corporation is an insurance holding company that underwrites property and casualty insurance through its insurance company subsidiary; provides property, casualty, and health insurance through its agency subsidiaries; and provides insurance premium financing and membership association services through its other subsidiaries. Unico American Corporation is referred to herein as the "Company" or "Unico" and such references include both the corporation and its subsidiaries, all of which are wholly owned. Unico was incorporated under the laws of Nevada in 1969.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of Unico American Corporation and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X for smaller reporting companies. Accordingly, the financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2018, are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. Quarterly condensed financial statements should be read in conjunction with the consolidated financial statements and related notes in the Company’s 2017 Annual Report on Form 10-K as filed with the Securities and Exchange Commission. Certain reclassifications have been made to prior period amounts to conform to current quarter presentation.

Use of Estimates in the Preparation of the Financial Statements

The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect its reported amounts of assets and liabilities and its disclosure of any contingent assets and liabilities at the date of its financial statements, as well as its reported amounts of revenues and expenses during the reporting period. The most significant assumptions in the preparation of these condensed consolidated financial statements relate to losses and loss adjustment expenses. While every effort is made to ensure the integrity of such estimates, actual results may differ.

Fair Value of Financial Instruments

The Company employs a fair value hierarchy that prioritizes the inputs for valuation techniques used to measure fair value. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). Financial assets and financial liabilities recorded on the Condensed Consolidated Balance Sheets at fair value are categorized based on the reliability of inputs for the valuation techniques (see Note 8).

The Company has used the following methods and assumptions in estimating its fair value disclosures for instruments carried at fair value:

• Investment securities, excluding long-term certificates of deposit – Fair values are obtained from widely accepted third party vendors.

• Short-term investments – The carrying amounts reported in the Condensed Consolidated Balance Sheets approximate their fair values given the short-term nature of these instruments.

The Company has used the following methods and assumptions for estimating fair value for other financial instruments not carried at fair value:

• Cash, cash equivalents, and restricted cash – The carrying amounts reported in the Condensed Consolidated Balance Sheets approximate their fair values given the short-term nature of these instruments.

• Long-term certificates of deposit – The carrying amounts reported in the Condensed Consolidated Balance Sheets for these instruments are at amortized cost which approximates their fair value

• Receivables, net – The carrying amounts reported in the Condensed Consolidated Balance Sheets approximate their fair values given the short-term nature of these instruments.

• Accrued expenses and other liabilities – The carrying amounts reported in the Condensed Consolidated Balance Sheets approximate the fair values given the short-term nature of these instruments.

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Repurchase of Common Stock - Effects on Stockholders' Equity

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Repurchase of Common Stock - Effects on Stockholders' Equity

NOTE 2 – REPURCHASE OF COMMON STOCK – EFFECTS ON STOCKHOLDERS’ EQUITY

On December 19, 2008, the Board of Directors authorized a stock repurchase program to acquire from time to time up to an aggregate of 500,000 shares of the Company’s common stock. This program has no expiration date and may be terminated by the Board of Directors at any time. As of September 30, 2018, and December 31, 2017, the Company had remaining authority under the 2008 program to repurchase up to an aggregate of 188,625 and 188,655 shares of its common stock, respectively. The 2008 program is the only program under which there is authority to repurchase shares of the Company’s common stock. The Company repurchased 30 shares of stock during the three and nine months ended September 30, 2018, in unsolicited transactions at a cost of $216 of which $15 was allocated to capital and $201 was allocated to retained earnings. The Company did not repurchase any stock during the three and nine months ended September 30, 2017. The Company has retired or will retire all stock repurchased.

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Earnings Per Share

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Earnings Per Share

NOTE 3 – LOSS PER SHARE

The following table represents the reconciliation of the Company's basic loss per share and diluted loss per share computations reported on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2018 and 2017:

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2018			2017			2018			2017
Basic Loss Per Share
Net loss	$	(661,925	)	$	(2,927,249	)	$	(2,700,880	)	$	(5,949,007	)
Weighted average shares outstanding		5,307,113			5,307,133			5,307,126			5,307,133
Basic loss per share	$	(0.12	)	$	(0.55	)	$	(0.51	)	$	(1.12	)
Diluted Loss Per Share
Net loss	$	(661,925	)	$	(2,927,249	)	$	(2,700,880	)	$	(5,949,007	)
Weighted average shares outstanding		5,307,113			5,307,133			5,307,126			5,307,133
Diluted shares outstanding		5,307,113			5,307,133			5,307,126			5,307,133
Diluted loss per share	$	(0.12	)	$	(0.55	)	$	(0.51	)	$	(1.12	)

Basic earnings per share exclude the impact of common share equivalents and are based upon the weighted average common shares outstanding. Diluted earnings per share utilize the average market price per share when applying the treasury stock method in determining common share dilution. When outstanding stock options are dilutive, they are treated as common share equivalents for purposes of computing diluted earnings per share and represent the difference between basic and diluted weighted average shares outstanding. In loss periods, stock options are excluded from the calculation of diluted loss per share, as the inclusion of stock options would have an anti-dilutive effect.

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Recently Issued Accounting Standards

9 Months Ended

Sep. 30, 2018

Accounting Changes and Error Corrections [Abstract]

Recently Issued Accounting Standards

NOTE 4 – RECENTLY ISSUED ACCOUNTING STANDARDS

Recently adopted standards

In February 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.”  ASU 2018-02 was issued as a result of the enactment of the Tax Cuts and Jobs Act of 2017 (“TCJA”) on December 22, 2017. Accounting guidance required deferred tax items to be revalued based on the new tax laws (the most significant of which reduced the corporate tax rate to 21% percent from 34% percent) and to include the change in income from continuing operations. ASU 2018-02 is effective for annual and interim reporting periods beginning after December 15, 2018, with early adoption permitted. The Company adopted ASU 2018-02 for the year ended December 31, 2017 (see Note 5 for impact of ASU 2018-02 adoption to the Company’s consolidated financial statements).

In May 2017, FASB issued ASU 2017-09, "Compensation - Stock Compensation (Topic 718), Scope of Modification Accounting." ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 became effective for the Company beginning January 1, 2018. ASU 2017-09 does not have a material impact on the Company’s consolidated financial statements and related disclosures.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the transaction price for a contract is allocated among separately identifiable performance obligations and a portion of the transaction price is recognized as revenue when the associated performance obligation has been completed or transferred to the customer. The Company adopted ASU 2014-09 effective January 1, 2018. The adoption of ASU 2014-09 did not have a material impact to the Consolidated Statement of Operations and the Consolidated Balance Sheet.

Standards not yet adopted

In June 2016, the FASB issued ASU 2016-13 “Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 replaces the current incurred loss methodology for recognizing credit losses with a current expected credit loss model, which requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 also requires enhanced disclosures for better understanding of significant estimates and judgments used in estimating credit losses. The Company is currently evaluating the effect ASU 2016-13 will have on the Company's consolidated financial statements, but expects the primary changes to be (i) the use of the expected credit loss model for its premium receivables and reinsurance recoverables and (ii) the presentation of credit losses within the available-for-sale fixed maturities portfolio through an allowance method rather than as a direct write-down. ASU 2016-13 will become effective for fiscal years beginning after December 31, 2019, but provides for an early adoption for fiscal years beginning after December 31, 2018. The Company has not determined when it will adopt ASU 2016-13.

In February 2016, the FASB issued ASU 2016-02 “Leases.” ASU 2016-02 requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by all leases, including those historically accounted for as operating leases. The Company is currently evaluating the effect ASU 2016-02 will have on the Company's consolidated financial statements. The guidance is effective for interim and annual periods beginning after December 31, 2018, and will be applied under a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the consolidated financial statements.

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Accounting For Income Taxes

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Accounting For Income Taxes

NOTE 5 – ACCOUNTING FOR INCOME TAXES

TCJA, signed into law on December 22, 2017, reduced the corporate Federal income tax rate from 34% to 21%, effective for years beginning after December 31, 2017. The current income tax expense for the period ending September 30, 2018 is affected by this change in the law. As a result of the TCJA, the Company has recognized a decrease to its net deferred asset as of December 31, 2017 in the amount of $2,176,862. With the adoption of ASU 2018-02, there is no impact to the consolidated statement of operations and the consolidated balance sheet effect is limited to a reclassification within the equity section, which is an immaterial impact to the consolidated financial statements.

The Company and its wholly owned subsidiaries file consolidated federal and state income tax returns. Pursuant to a tax allocation agreement, the Company’s subsidiaries, Crusader Insurance Company (“Crusader”) and American Acceptance Corporation (“AAC”), are allocated taxes or tax credits in the case of losses, at current corporate rates based on their own taxable income or loss. The Company files income tax returns under U.S. federal and various state jurisdictions. The Company is subject to examination by U.S. federal income tax authorities for tax returns filed starting at taxable year 2014 and California state income tax authorities for tax returns filed starting at taxable year 2013. There are no ongoing examinations of income tax returns by federal or state tax authorities.

As of September 30, 2018, and December 31, 2017, the Company had no unrecognized tax benefits or liabilities and, therefore, had not accrued interest and penalties related to unrecognized tax benefits or liabilities. However, if interest and penalties would need to be accrued related to unrecognized tax benefits or liabilities, such amounts would be recognized as a component of federal income tax expense.

As a California based insurance company, Crusader is obligated to pay a premium tax on gross premiums written in all states that Crusader is admitted. Premium taxes are deferred and amortized as the related premiums are earned. The premium tax is in lieu of state franchise taxes and is not included in the provision for state taxes.

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Property and Equipment (Net of Accumulated Depreciation)

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Property and Equipment (Net of Accumulated Depreciation)

NOTE 6 – PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following:

	September 30			December 31
	2018			2017
Building  and leasehold improvements located in Calabasas, California	$	8,398,275		$	8,352,181
Furniture, fixtures, and equipment		2,766,845			2,724,775
Computer software		363,017			355,234
Accumulated depreciation and amortization		(3,622,067	)		(3,204,806	)
Land located in Calabasas, California		1,787,485			1,787,485
Property and equipment, net	$	9,693,555		$	10,014,869

Depreciation on the Calabasas building, owned by Crusader, is computed using the straight line method over 39 years. Depreciation on furniture, fixtures, and equipment in the Calabasas building is computed using the straight line method over 3 to 15 years. Amortization of leasehold improvements in the Calabasas building is being computed using the shorter of the useful life of the leasehold improvements or the remaining years of the lease. Depreciation and amortization expense on all property and equipment for the three and nine months ended September 30, 2018, was $135,544 and $417,261, respectively, and for the three and nine months ended September 30, 2017, was $121,540 and $386,250, respectively.

For the three and nine months ended September 30, 2018, the Calabasas building has generated rental revenue from non-affiliated tenants in the amount of $89,211 and $264,329, respectively, and for the three and nine months ended September 30, 2017, rental revenue from non-affiliated tenants in the amount of $83,257 and $198,902, respectively, which is included in “Other income” from insurance company operation in the Company’s Condensed Consolidated Statements of Operations.

For the three and nine months ended September 30, 2018, the Calabasas building incurred operating expenses (including depreciation) in the amount of $217,263 and $591,372, respectively, and $201,701 and $549,295 for the three and nine months ended September 30, 2017, respectively, which are included in “Other operating expenses” in the Company’s Condensed Consolidated Statements of Operations.

The total square footage of the Calabasas building is 46,884, including common areas. As of September 30, 2018, 14,481 square feet of the Calabasas building was leased to non-affiliated entities. As of September 30, 2018, the Calabasas building was fully occupied.

The Company capitalizes certain computer software costs purchased from outside vendors for internal use. These costs also include configuration and customization activities, coding, testing and installation. Training costs and maintenance are expensed as incurred, while upgrade and enhancements are capitalized if it is probable that such expenditure will result in additional functionality. The capitalized costs are not depreciated until the software is placed into production.

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Segment Reporting

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Segment Reporting

NOTE 7 – SEGMENT REPORTING

Accounting Standards Codification Topic 280, “Segment Reporting,” establishes standards for the way information about operating segments is reported in financial statements. The Company has identified its insurance company operation as its primary reporting segment. Revenues from this segment comprised 92% of consolidated revenues for the three and nine months ended September 30, 2018 and 2017. The Company’s remaining operations constitute a variety of specialty insurance services, each with unique characteristics and individually insignificant to consolidated revenues.

Revenues, loss before taxes, and assets by segment are as follows:

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2018			2017			2018			2017
Revenues
Insurance company operation	$	7,537,951		$	8,586,199		$	23,647,759		$	25,338,850
Other insurance operations		2,807,648			3,346,184			8,757,192			10,311,036
Intersegment eliminations (1)		(2,184,565	)		(2,638,994	)		(6,793,574	)		(8,154,694	)
Total other insurance operations		623,083			707,190			1,963,618			2,156,342
Total revenues	$	8,161,034		$	9,293,389		$	25,611,377		$	27,495,192
Loss Before Taxes
Insurance company operation	$	(282,446	)	$	(3,917,854	)	$	(1,342,775	)	$	(7,328,672	)
Other insurance operations		(529,695	)		(517,371	)		(1,994,266	)		(1,724,725	)
Total loss before taxes	$	(812,141	)	$	(4,435,225	)	$	(3,337,041	)	$	(9,053,397	)

	As of
	September 30			December 31
	2018			2017
Assets
Insurance company operation	$	112,577,045		$	117,274,626
Intersegment eliminations (2)		(2,576,592	)		(2,486,500	)
Total insurance company operation		110,000,453			114,788,126
Other insurance operations		13,591,453			15,510,632
Total assets	$	123,591,906		$	130,298,758

(1) Intersegment revenue eliminations reflect rents paid by Unico to Crusader for space leased in the Calabasas building and commissions paid by Crusader to Unifax Insurance Systems, Inc. (“Unifax”), a wholly owned subsidiary of Unico.

(2) Intersegment asset eliminations reflect the elimination of Crusader receivables from Unifax and Unifax payables to Crusader.

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Fair Value of Financial Instruments

NOTE 8 – FAIR VALUE OF FINANCIAL INSTRUMENTS

In determining the fair value of its financial instruments, the Company employs a fair value hierarchy that prioritizes the inputs for the valuation techniques used to measure fair value. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). Financial assets and financial liabilities recorded on the Condensed Consolidated Balance Sheets at fair value are categorized based on the reliability of inputs for the valuation techniques as follows:

Level 1 – Financial assets and financial liabilities whose values are based on unadjusted quoted prices in active markets for identical assets or liabilities as of the reporting date.

Level 2 – Financial assets and financial liabilities whose values are based on quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in non-active markets; or valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability as of the reporting date.

Level 3 – Financial assets and financial liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect the Company’s estimates of the assumptions that market participants would use in valuing the financial assets and financial liabilities as of the reporting date.

The hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Thus, a Level 3 fair value measurement may include inputs that are observable (Level 1 or Level 2) or unobservable (Level 3). The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

The following table presents information about the Company’s consolidated financial instruments and their estimated fair values, which are measured on a recurring basis, and are allocated among the three levels within the fair value hierarchy as of September 30, 2018, and December 31, 2017:

	Level 1		Level 2		Level 3		Total
September 30, 2018
Financial instruments:
Available-for-sale fixed maturities:
U.S. treasury securities	$	13,994,039	$	—	$	—	$	13,994,039
Corporate securities		—		37,092,021		—		37,092,021
Agency mortgage backed securities		—		21,770,047		—		21,770,047
Short-term investments		200,000		—		—		200,000
Total financial instruments at fair value	$	14,194,039	$	58,862,068	$	—	$	73,056,107
December 31, 2017
Financial instruments:
Available-for-sale fixed maturities:
U.S. treasury securities	$	7,454,225	$	—	$	—	$	7,454,225
Corporate securities		—		28,657,640		—		28,657,640
Agency mortgage backed securities		—		21,737,589		—		21,737,589
Short-term investments		1,847,778		—		—		1,847,778
Total financial instruments at fair value	$	9,302,003	$	50,395,229	$	—	$	59,697,232

Fair value measurements are not adjusted for transaction costs. The Company recognizes transfers between levels at either the actual date of the event or a change in circumstances that caused the transfer. The Company did not have any transfers between Levels 1, 2, and 3 of the fair value hierarchy during the three and nine months ended September 30, 2018 and 2017.

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Investments

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Investments

NOTE 9 – INVESTMENTS

A summary of investment income, net of investment expenses and realized gains, is as follows:

	Three Months Ended September 30						Nine Months Ended September 30
	2018			2017			2018			2017
Fixed maturities	$	498,656		$	323,023		$	1,430,323		$	746,787
Short-term investments and cash equivalents		14,284			(13,335	)		33,872			64,444
Gross investment income		512,940			309,688			1,464,195			811,231
Less: investment expenses		(25,381	)		(196	)		(79,231	)		(25,446	)
Net investment income		487,559			309,492			1,384,964			785,785
Net realized gains		11			373			148			528
Net investment income and realized gains	$	487,570		$	309,865		$	1,385,112		$	786,313

The amortized cost and estimated fair values of investments in fixed maturities by category are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2018
Available-for-sale fixed maturities:
U.S. treasury securities	$	14,259,817	$	55	$	(265,833	)	$	13,994,039
Corporate securities		38,084,034		4,655		(996,668	)		37,092,021
Agency mortgage-backed securities		22,525,470		—		(755,423	)		21,770,047
Held-to-maturity fixed securities:
Certificates of deposits		14,864,000		—		—			14,864,000
Total fixed maturities	$	89,733,321	$	4,710	$	(2,017,924	)	$	87,720,107

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
December 31, 2017
Available-for-sale fixed maturities:
U.S. treasury securities	$	7,517,901	$	21	$	(63,697	)	$	7,454,225
Corporate securities		28,745,223		43,204		(130,787	)		28,657,640
Agency mortgage-backed securities		21,889,996		—		(152,407	)		21,737,589
Held-to-maturity fixed securities:
Certificates of deposits		28,098,000		—		—			28,098,000
Total fixed maturities	$	86,251,120	$	43,225	$	(346,891	)	$	85,947,454

A summary of the unrealized gains (losses) on investments in fixed maturities carried at fair value and the applicable deferred federal income taxes are shown below:

	September 30			December 31
	2018			2017
Gross unrealized gains on fixed maturities	$	4,710		$	43,225
Gross unrealized losses on fixed maturities		(2,017,924	)		(346,891	)
Net unrealized losses on fixed maturities		(2,013,214	)		(303,666	)
Deferred federal tax benefit		422,775			63,770
Net unrealized losses, net of deferred income taxes	$	(1,590,439	)	$	(239,896	)

A summary of estimated fair value, gross unrealized losses, and number of securities in a gross unrealized loss position by the length of time in which the securities have continually been in that position is shown below:

	Less than 12 Months							12 Months or Longer
	Estimated Fair Value		Gross Unrealized Losses			Number of Securities		Estimated Fair Value		Gross Unrealized Losses			Number of Securities
September 30, 2018
U.S. treasury securities	$	9,007,849	$	(122,653	)		11	$	4,189,941	$	(143,180	)		3
Corporate securities		25,387,401		(730,699	)		38		8,966,787		(265,969	)		10
Agency mortgage-backed securities		6,575,550		(124,950	)		9		15,194,497		(630,473	)		12
Total	$	40,970,800	$	(978,302	)		58	$	28,351,225	$	(1,039,622	)		25

	Less than 12 Months							12 Months or Longer
	Estimated Fair Value		Gross Unrealized Losses			Number of Securities		Estimated Fair Value		Gross Unrealized Losses		Number of Securities
December 31, 2017
U.S. treasury securities	$	7,454,204	$	(63,697	)		6	$	—	$	—		—
Corporate securities		20,335,512		(130,787	)		26		—		—		—
Agency mortgage-backed securities		21,737,589		(152,407	)		17		—		—		—
Total	$	49,527,305	$	(346,891	)		49	$	—	$	—		—

The Company closely monitors its investments. If an unrealized loss is determined to be other-than-temporary, it is written off as a realized loss through the Condensed Consolidated Statements of Operations. The Company’s methodology of assessing other-than-temporary impairments is based on security-specific analysis as of the balance sheet date and considers various factors including the length of time to maturity and the extent to which the fair value has been less than the cost, the financial condition and the near-term prospects of the issuer, and whether the debtor is current on its contractually obligated interest and principal payments. The unrealized losses as of September 30, 2018, and December 31, 2017, were determined to be temporary.

Although the Company does not intend to sell its fixed maturity investments prior to maturity, the Company may sell investment securities from time to time in response to cash flow requirements, economic and/or market conditions. The Company had realized gains of $11 and $148 for the three and nine months ended September 30, 2018, compared to realized gains of $373 and $528 for the three and nine months ended September 30, 2017. The unrealized gains or losses from fixed maturities are reported as “Accumulated other comprehensive income or loss,” which is a separate component of stockholders’ equity, net of any deferred tax effect.

The Company’s investment in certificates of deposit included $14,464,000 and $27,698,000 of brokered certificates of deposit as of September 30, 2018, and December 31, 2017, respectively. Brokered certificates of deposit provide the safety and security of a certificate of deposit combined with the convenience gained by one-stop shopping for rates at various institutions. This allows the Company to spread its investments across multiple institutions so that all of its certificate of deposit investments are insured by the Federal Deposit Insurance Corporation (“FDIC”). Brokered certificates of deposit were purchased through UnionBanc Investment Services, LLC, a registered broker-dealer, investment advisor, member of FINRA/SIPC, and a subsidiary of MUFG Union Bank, N.A. Brokered certificates of deposit are a direct obligation of the issuing depository institution, are bank products of the issuing depository institution, are held in the name of Union Bank as Custodian for the benefit of the Company, and are FDIC insured within permissible limits.

The following certificates of deposit from four different banks represent statutory deposits that are assigned to and held by the California State Treasurer and the Insurance Commissioner of the State of Nevada. These deposits are required for writing certain lines of business in California and for admission to transact insurance business in the state of Nevada.

	September 30		December 31
	2018		2017
Long-term certificates of deposit	$	400,000	$	400,000
Short-term certificates of deposit		200,000		200,000
Total state held deposits	$	600,000	$	600,000

All the Company’s brokered and non-brokered certificates of deposit are within the FDIC insured permissible limits. Due to nature of the Company’s business, certain bank accounts may exceed FDIC insured permissible limits.

Short-term investments have an initial maturity between three and twelve months and consist of the following:

	September 30		December 31
	2018		2017
Certificates of deposit	$	200,000	$	200,000
U.S. treasury bills		—		1,148,395
Commercial paper		—		499,383
Total short-term investments	$	200,000	$	1,847,778

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Cash and Restricted Cash

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Cash and Restricted Cash

NOTE 10- CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets to the amounts shown in the Condensed Consolidated Statements of Cash Flows:

	September 30		December 31
	2018		2017
Cash	$	927,296	$	774,226
Cash equivalents		3,485,373		8,592,718
Restricted cash		—		—
Cash, cash equivalents, and restricted cash	$	4,412,669	$	9,366,944

Cash equivalents were comprised of highly liquid investments with initial maturity of 90 days or less. As of September 30, 2018, and December 31, 2017, cash equivalents included custodial trust, bank money market accounts, and a bank savings account.

The restricted cash was represented by two cash deposits placed by Crusader with the Los Angeles Superior Court in lieu of appeal bonds. In December 2015, a judgment was finalized on a Crusader policy liability claim. Crusader appealed the judgment. As a part of the appeal, Crusader deposited $7,924,178 in cash with the Los Angeles Superior Court on December 28, 2015, in lieu of an appeal bond. This cash deposit was required to appeal the judgment. In March 2016, an additional judgment for plaintiff’s attorney fees and costs on this Crusader policy liability claim was finalized. Crusader appealed this additional judgment. That additional appeal required an additional $5,449,615 cash deposit, which was made on March 21, 2016, in lieu of an appeal bond. In September 2017, the two judgments were settled between the parties thereto for a total of $7,000,000 which was paid from the two deposits, and the remaining funds on deposit with the Los Angeles Superior Court for the two appeals in the amount of $6,373,793 were returned to Crusader and were invested in fixed maturities, short-term investments, and cash equivalents.

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Unpaid Losses and Loss Adjustment Expenses

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Unpaid Losses and Loss Adjustment Expenses

NOTE 11 – UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES

The following table provides an analysis of Crusader’s loss and loss adjustment expense reserves, including a reconciliation of the beginning and ending balance sheet liability for the periods indicated:

	Nine Months Ended September 30
	2018		2017
Reserve for unpaid losses and loss adjustment expenses at January 1 – gross of reinsurance	$	49,076,991	$	47,055,787
Less reinsurance recoverable on unpaid losses and loss adjustment expenses		8,393,550		9,520,970
Reserve for unpaid losses and loss adjustment expenses at January 1 – net of reinsurance		40,683,441		37,534,817
Incurred losses and loss adjustment expenses:
Provision for insured events of current year		15,501,620		18,046,953
Development of insured events of prior years		2,867,960		6,304,798
Total incurred losses and loss adjustment expenses		18,369,580		24,351,751
Loss and loss adjustment expense payments:
Attributable to insured events of the current year		4,781,651		4,375,729
Attributable to insured events of prior years		13,322,413		16,335,178
Total payments		18,104,064		20,710,907
Reserve for unpaid losses and loss adjustment expenses at September 30 – net of reinsurance		40,948,957		41,175,661
Reinsurance recoverable on unpaid losses and loss adjustment expenses		8,291,385		11,890,854
Reserve for unpaid losses and loss adjustment expenses at September 30 – gross of reinsurance	$	49,240,342	$	53,066,515

Some lines of insurance are commonly referred to as "long-tail" lines because of the extended time required before claims are ultimately settled. Lines of insurance in which claims are settled relatively quickly are called "short-tail" lines. It is generally more difficult to estimate loss reserves for long-tail lines because of the long period of time that elapses between the occurrence of a claim and its final disposition and the difficulty of estimating the settlement value of the claim. Crusader’s short-tail lines consist of its property coverages, and its long-tail lines consist of its liability coverages. However, Crusader’s long-tail liability claims tend to be settled relatively quicker than other long-tail lines not underwritten by Crusader, such as workers’ compensation, professional liability, umbrella liability, and medical malpractice. Since trends develop over longer periods of time on long-tail lines of business, the Company generally gives credibility to those trends more slowly than for short-tail or less volatile lines of business.

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Contingencies

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Contingencies

NOTE 12 – CONTINGENCIES

The Company, by virtue of the nature of the business conducted by it, becomes involved in numerous legal proceedings as either plaintiff or defendant. From time to time, the Company is required to resort to legal proceedings against vendors providing services to the Company or against customers or their agents to enforce collection of premiums, commissions, or fees. These routine items of litigation do not materially affect the Company and are handled on a routine basis by the Company through its counsel.

The Company establishes reserves for lawsuits, regulatory actions, and other contingencies for which the Company is able to estimate its potential exposure and believes a loss is probable. For loss contingencies believed to be reasonably possible, the Company discloses the nature of the loss contingency, an estimate of the possible loss, a range of loss, or a statement that such an estimate cannot be made.

Likewise, the Company is sometimes named as a cross-defendant in litigation, which is principally directed against an insured who was issued a policy of insurance directly or indirectly through the Company. Incidental actions related to disputes concerning the issuance or non-issuance of individual policies are sometimes brought by customers or others. These items are also handled on a routine basis by counsel, and they do not generally affect the operations of the Company. Management is confident that the ultimate outcome of pending litigation should not have an adverse effect on the Company's consolidated results of operations or financial position. The Company vigorously defends itself unless a reasonable settlement appears appropriate.

On August 24, 2018, a former employee filed a lawsuit against the Company in the Superior Court of the State California for the County of Los Angeles, naming the Company and two of its subsidiaries as defendants. The lawsuit alleges that the defendants wrongfully terminated the employee after the employee allegedly complained to the Company’s management about certain business practices.  That employee’s lawsuit seeks, among other things, compensatory damages, punitive damages, and attorneys’ fees.   The Company has found no evidence to establish the employee’s allegations or any other wrongdoing on the Company’s part.  The employee had an at-will employment relationship with the Company, and the Company believes that the employee was properly terminated in full compliance with the law and the rights of that employee.  The Company will vigorously defend the lawsuit and exercise and preserve all of its rights.    Although the Company anticipates a successful defense verdict in its favor, the nature of California’s legal system is significantly unpredictable as to the timing and outcome of such matters.

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Subsequent Events

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Subsequent Events

NOTE 13 – SUBSEQUENT EVENTS

In November 2018, a number of wildfires burned through several Northern and Southern California counties. The Company has identified twelve risks it insures located in the fire affected zones. A loss to one of these risks is estimated to be $550,000, net of reinsurance. The amount of other losses, if any, is currently unknown, and the total impact of the wildfires on the Company’s consolidated financial statements cannot be determined at this time.

The Calabasas building is located in an area affected by one of these wildfires. The building sustained smoke damage, and the Company’s operations were disrupted by the fire. The building’s location was declared a “Mandatory Evacuation Area,” and all access roads to the building were closed to the public, preventing the Company’s employees from coming to work for three consecutive business days. At the time of this writing, the Company is attempting to resume its operations to a pre-fire level. The impact of the temporary closure on the Company’s consolidated financial statements cannot be determined at this time.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Unico American Corporation is an insurance holding company that underwrites property and casualty insurance through its insurance company subsidiary; provides property, casualty, and health insurance through its agency subsidiaries; and provides insurance premium financing and membership association services through its other subsidiaries. Unico American Corporation is referred to herein as the "Company" or "Unico" and such references include both the corporation and its subsidiaries, all of which are wholly owned. Unico was incorporated under the laws of Nevada in 1969.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of Unico American Corporation and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X for smaller reporting companies. Accordingly, the financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2018, are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. Quarterly condensed financial statements should be read in conjunction with the consolidated financial statements and related notes in the Company’s 2017 Annual Report on Form 10-K as filed with the Securities and Exchange Commission. Certain reclassifications have been made to prior period amounts to conform to current quarter presentation.

Use of Estimates in the Preparation of the Financial Statements

The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect its reported amounts of assets and liabilities and its disclosure of any contingent assets and liabilities at the date of its financial statements, as well as its reported amounts of revenues and expenses during the reporting period. The most significant assumptions in the preparation of these condensed consolidated financial statements relate to losses and loss adjustment expenses. While every effort is made to ensure the integrity of such estimates, actual results may differ.

Fair Value of Financial Instruments

The Company employs a fair value hierarchy that prioritizes the inputs for valuation techniques used to measure fair value. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). Financial assets and financial liabilities recorded on the Condensed Consolidated Balance Sheets at fair value are categorized based on the reliability of inputs for the valuation techniques (see Note 8).

The Company has used the following methods and assumptions in estimating its fair value disclosures for instruments carried at fair value:

• Investment securities, excluding long-term certificates of deposit – Fair values are obtained from widely accepted third party vendors.

• Short-term investments – The carrying amounts reported in the Condensed Consolidated Balance Sheets approximate their fair values given the short-term nature of these instruments.

The Company has used the following methods and assumptions for estimating fair value for other financial instruments not carried at fair value:

• Cash, cash equivalents, and restricted cash – The carrying amounts reported in the Condensed Consolidated Balance Sheets approximate their fair values given the short-term nature of these instruments.

• Long-term certificates of deposit – The carrying amounts reported in the Condensed Consolidated Balance Sheets for these instruments are at amortized cost which approximates their fair value

• Receivables, net – The carrying amounts reported in the Condensed Consolidated Balance Sheets approximate their fair values given the short-term nature of these instruments.

• Accrued expenses and other liabilities – The carrying amounts reported in the Condensed Consolidated Balance Sheets approximate the fair values given the short-term nature of these instruments.

Nature of Business

Nature of Business

Unico American Corporation is an insurance holding company that underwrites property and casualty insurance through its insurance company subsidiary; provides property, casualty, and health insurance through its agency subsidiaries; and provides insurance premium financing and membership association services through its other subsidiaries. Unico American Corporation is referred to herein as the "Company" or "Unico" and such references include both the corporation and its subsidiaries, all of which are wholly owned. Unico was incorporated under the laws of Nevada in 1969.

Principles of Consolidation

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of Unico American Corporation and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X for smaller reporting companies. Accordingly, the financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2018, are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. Quarterly condensed financial statements should be read in conjunction with the consolidated financial statements and related notes in the Company’s 2017 Annual Report on Form 10-K as filed with the Securities and Exchange Commission. Certain reclassifications have been made to prior period amounts to conform to current quarter presentation.

Use of Estimates in the Preparation of the Financial Statements

Use of Estimates in the Preparation of the Financial Statements

The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect its reported amounts of assets and liabilities and its disclosure of any contingent assets and liabilities at the date of its financial statements, as well as its reported amounts of revenues and expenses during the reporting period. The most significant assumptions in the preparation of these condensed consolidated financial statements relate to losses and loss adjustment expenses. While every effort is made to ensure the integrity of such estimates, actual results may differ.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company employs a fair value hierarchy that prioritizes the inputs for valuation techniques used to measure fair value. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). Financial assets and financial liabilities recorded on the Condensed Consolidated Balance Sheets at fair value are categorized based on the reliability of inputs for the valuation techniques (see Note 8).

The Company has used the following methods and assumptions in estimating its fair value disclosures for instruments carried at fair value:

• Investment securities, excluding long-term certificates of deposit – Fair values are obtained from widely accepted third party vendors.

• Short-term investments – The carrying amounts reported in the Condensed Consolidated Balance Sheets approximate their fair values given the short-term nature of these instruments.

The Company has used the following methods and assumptions for estimating fair value for other financial instruments not carried at fair value:

• Cash, cash equivalents, and restricted cash – The carrying amounts reported in the Condensed Consolidated Balance Sheets approximate their fair values given the short-term nature of these instruments.

• Long-term certificates of deposit – The carrying amounts reported in the Condensed Consolidated Balance Sheets for these instruments are at amortized cost which approximates their fair value

• Receivables, net – The carrying amounts reported in the Condensed Consolidated Balance Sheets approximate their fair values given the short-term nature of these instruments.

• Accrued expenses and other liabilities – The carrying amounts reported in the Condensed Consolidated Balance Sheets approximate the fair values given the short-term nature of these instruments.

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2018

Earnings Per Share Tables Abstract

Basic and diluted earnings per share calculation data

The following table represents the reconciliation of the Company's basic loss per share and diluted loss per share computations reported on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2018 and 2017:

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2018			2017			2018			2017
Basic Loss Per Share
Net loss	$	(661,925	)	$	(2,927,249	)	$	(2,700,880	)	$	(5,949,007	)
Weighted average shares outstanding		5,307,113			5,307,133			5,307,126			5,307,133
Basic loss per share	$	(0.12	)	$	(0.55	)	$	(0.51	)	$	(1.12	)
Diluted Loss Per Share
Net loss	$	(661,925	)	$	(2,927,249	)	$	(2,700,880	)	$	(5,949,007	)
Weighted average shares outstanding		5,307,113			5,307,133			5,307,126			5,307,133
Diluted shares outstanding		5,307,113			5,307,133			5,307,126			5,307,133
Diluted loss per share	$	(0.12	)	$	(0.55	)	$	(0.51	)	$	(1.12	)

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Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2018

Property And Equipment

Property and Equipment

Property and equipment consist of the following:

	September 30			December 31
	2018			2017
Building  and leasehold improvements located in Calabasas, California	$	8,398,275		$	8,352,181
Furniture, fixtures, and equipment		2,766,845			2,724,775
Computer software		363,017			355,234
Accumulated depreciation and amortization		(3,622,067	)		(3,204,806	)
Land located in Calabasas, California		1,787,485			1,787,485
Property and equipment, net	$	9,693,555		$	10,014,869

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Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Revenues and loss before income taxes by segment

Revenues and loss before taxes by segment are as follows:

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2018			2017			2018			2017
Revenues
Insurance company operation	$	7,537,951		$	8,586,199		$	23,647,759		$	25,338,850
Other insurance operations		2,807,648			3,346,184			8,757,192			10,311,036
Intersegment eliminations (1)		(2,184,565	)		(2,638,994	)		(6,793,574	)		(8,154,694	)
Total other insurance operations		623,083			707,190			1,963,618			2,156,342
Total revenues	$	8,161,034		$	9,293,389		$	25,611,377		$	27,495,192
Loss Before Taxes
Insurance company operation	$	(282,446	)	$	(3,917,854	)	$	(1,342,775	)	$	(7,328,672	)
Other insurance operations		(529,695	)		(517,371	)		(1,994,266	)		(1,724,725	)
Total loss before taxes	$	(812,141	)	$	(4,435,225	)	$	(3,337,041	)	$	(9,053,397	)

(1) Intersegment revenue eliminations reflect rents paid by Unico to Crusader for space leased in the Calabasas building and commissions paid by Crusader to Unifax Insurance Systems, Inc. (“Unifax”), a wholly owned subsidiary of Unico.

Assets by segemnt

Assets by segment are as follows:

	As of
	September 30			December 31
	2018			2017
Assets
Insurance company operation	$	112,577,045		$	117,274,626
Intersegment eliminations (1)		(2,576,592	)		(2,486,500	)
Total insurance company operation		110,000,453			114,788,126
Other insurance operations		13,591,453			15,510,632
Total assets	$	123,591,906		$	130,298,758

(1) Intersegment asset eliminations reflect the elimination of Crusader receivables from Unifax and Unifax payables to Crusader.

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Fair Value Of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2018

Fair Value Of Financial Instruments

Fair value of financial instruments

The following table presents information about the Company’s consolidated financial instruments and their estimated fair values, which are measured on a recurring basis, and are allocated among the three levels within the fair value hierarchy as of September 30, 2018, and December 31, 2017:

	Level 1		Level 2		Level 3		Total
September 30, 2018
Financial instruments:
Available-for-sale fixed maturities:
U.S. treasury securities	$	13,994,039	$	—	$	—	$	13,994,039
Corporate securities		—		37,092,021		—		37,092,021
Agency mortgage backed securities		—		21,770,047		—		21,770,047
Short-term investments		200,000		—		—		200,000
Total financial instruments at fair value	$	14,194,039	$	58,862,068	$	—	$	73,056,107
December 31, 2017
Financial instruments:
Available-for-sale fixed maturities:
U.S. treasury securities	$	7,454,225	$	—	$	—	$	7,454,225
Corporate securities		—		28,657,640		—		28,657,640
Agency mortgage backed securities		—		21,737,589		—		21,737,589
Short-term investments		1,847,778		—		—		1,847,778
Total financial instruments at fair value	$	9,302,003	$	50,395,229	$	—	$	59,697,232

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Investments (Tables)

9 Months Ended

Sep. 30, 2018

Investments Tables Abstract

Investment income

A summary of investment income, net of investment expenses and realized gains, is as follows:

	Three Months Ended September 30						Nine Months Ended September 30
	2018			2017			2018			2017
Fixed maturities	$	498,656		$	323,023		$	1,430,323		$	746,787
Short-term investments and cash equivalents		14,284			(13,335	)		33,872			64,444
Gross investment income		512,940			309,688			1,464,195			811,231
Less: investment expenses		(25,381	)		(196	)		(79,231	)		(25,446	)
Net investment income		487,559			309,492			1,384,964			785,785
Net realized gains		11			373			148			528
Net investment income and realized gains	$	487,570		$	309,865		$	1,385,112		$	786,313

Fixed maturity investments

The amortized cost and estimated fair values of investments in fixed maturities by category are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2018
Available-for-sale fixed maturities:
U.S. treasury securities	$	14,259,817	$	55	$	(265,833	)	$	13,994,039
Corporate securities		38,084,034		4,655		(996,668	)		37,092,021
Agency mortgage-backed securities		22,525,470		—		(755,423	)		21,770,047
Held-to-maturity fixed securities:
Certificates of deposits		14,864,000		—		—			14,864,000
Total fixed maturities	$	89,733,321	$	4,710	$	(2,017,924	)	$	87,720,107

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
December 31, 2017
Available-for-sale fixed maturities:
U.S. treasury securities	$	7,517,901	$	21	$	(63,697	)	$	7,454,225
Corporate securities		28,745,223		43,204		(130,787	)		28,657,640
Agency mortgage-backed securities		21,889,996		—		(152,407	)		21,737,589
Held-to-maturity fixed securities:
Certificates of deposits		28,098,000		—		—			28,098,000
Total fixed maturities	$	86,251,120	$	43,225	$	(346,891	)	$	85,947,454

Unrealized gains (losses) on investments

A summary of the unrealized gains (losses) on investments in fixed maturities carried at fair value and the applicable deferred federal income taxes are shown below:

	September 30			December 31
	2018			2017
Gross unrealized gains on fixed maturities	$	4,710		$	43,225
Gross unrealized losses on fixed maturities		(2,017,924	)		(346,891	)
Net unrealized losses on fixed maturities		(2,013,214	)		(303,666	)
Deferred federal tax benefit		422,775			63,770
Net unrealized losses, net of deferred income taxes	$	(1,590,439	)	$	(239,896	)

Components of investments in unrealized loss position for continiuos period of time

A summary of estimated fair value, gross unrealized losses, and number of securities in a gross unrealized loss position by the length of time in which the securities have continually been in that position is shown below:

	Less than 12 Months							12 Months or Longer
	Estimated Fair Value		Gross Unrealized Losses			Number of Securities		Estimated Fair Value		Gross Unrealized Losses			Number of Securities
September 30, 2018
U.S. treasury securities	$	9,007,849	$	(122,653	)		11	$	4,189,941	$	(143,180	)		3
Corporate securities		25,387,401		(730,699	)		38		8,966,787		(265,969	)		10
Agency mortgage-backed securities		6,575,550		(124,950	)		9		15,194,497		(630,473	)		12
Total	$	40,970,800	$	(978,302	)		58	$	28,351,225	$	(1,039,622	)		25

	Less than 12 Months							12 Months or Longer
	Estimated Fair Value		Gross Unrealized Losses			Number of Securities		Estimated Fair Value		Gross Unrealized Losses		Number of Securities
December 31, 2017
U.S. treasury securities	$	7,454,204	$	(63,697	)		6	$	—	$	—		—
Corporate securities		20,335,512		(130,787	)		26		—		—		—
Agency mortgage-backed securities		21,737,589		(152,407	)		17		—		—		—
Total	$	49,527,305	$	(346,891	)		49	$	—	$	—		—

Summary of state held deposits

The following certificates of deposit from four different banks represent statutory deposits that are assigned to and held by the California State Treasurer and the Insurance Commissioner of the State of Nevada. These deposits are required for writing certain lines of business in California and for admission to transact insurance business in the state of Nevada.

	September 30		December 31
	2018		2017
Long-term certificates of deposit	$	400,000	$	400,000
Short-term certificates of deposit		200,000		200,000
Total state held deposits	$	600,000	$	600,000

Investment in short term assets

Short-term investments have an initial maturity between three and twelve months and consist of the following:

	September 30		December 31
	2018		2017
Certificates of deposit	$	200,000	$	200,000
U.S. treasury bills		—		1,148,395
Commercial paper		—		499,383
Total short-term investments	$	200,000	$	1,847,778

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Cash and Restricted Cash (Tables)

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets to the amounts shown in the Condensed Consolidated Statements of Cash Flows:

	September 30		December 31
	2018		2017
Cash	$	927,296	$	774,226
Cash equivalents		3,485,373		8,592,718
Restricted cash		—		—
Cash, cash equivalents, and restricted cash	$	4,412,669	$	9,366,944

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Unpaid Losses and Loss Adjustment Expenses (Tables)

9 Months Ended

Sep. 30, 2018

Unpaid Losses And Loss Adjustment Expenses

Loss and loss adjustment expense reserves

The following table provides an analysis of Crusader’s loss and loss adjustment expense reserves, including a reconciliation of the beginning and ending balance sheet liability for the periods indicated:

	Nine Months Ended September 30
	2018		2017
Reserve for unpaid losses and loss adjustment expenses at January 1 – gross of reinsurance	$	49,076,991	$	47,055,787
Less reinsurance recoverable on unpaid losses and loss adjustment expenses		8,393,550		9,520,970
Reserve for unpaid losses and loss adjustment expenses at January 1 – net of reinsurance		40,683,441		37,534,817
Incurred losses and loss adjustment expenses:
Provision for insured events of current year		15,501,620		18,046,953
Development of insured events of prior years		2,867,960		6,304,798
Total incurred losses and loss adjustment expenses		18,369,580		24,351,751
Loss and loss adjustment expense payments:
Attributable to insured events of the current year		4,781,651		4,375,729
Attributable to insured events of prior years		13,322,413		16,335,178
Total payments		18,104,064		20,710,907
Reserve for unpaid losses and loss adjustment expenses at September 30 – net of reinsurance		40,948,957		41,175,661
Reinsurance recoverable on unpaid losses and loss adjustment expenses		8,291,385		11,890,854
Reserve for unpaid losses and loss adjustment expenses at September 30 – gross of reinsurance	$	49,240,342	$	53,066,515

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Earnings Per Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Notes to Financial Statements
Loss per share - diluted	$ (0.12)	$ (0.55)	$ (0.51)	$ (1.12)
Loss per share - basic	$ (0.12)	$ (0.55)	$ (0.51)	$ (1.12)
Net loss	$ (661,925)	$ (2,927,249)	$ (2,700,880)	$ (5,949,007)
Weighted average shares outstanding - diluted	5,307,113	5,307,133	5,307,126	5,307,133
Weighted average shares outstanding - basic	5,307,113	5,307,133	5,307,126	5,307,133

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Property and Equipment (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Property And Equipment Table Abstract
Office building and leasehold improvements	$ 8,398,275	$ 8,352,181
Furniture, fixtures, and equipment	2,766,845	2,724,775
Accumulated depreciation and amortization	(3,622,067)	(3,204,806)
Land located in Calabasas California	1,787,485	1,787,485
Computer software	363,017	355,234
Net property and equipment	$ 9,693,555	$ 10,014,869

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Segment Reporting - Revenues (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenues
Insurance company operation	$ 7,537,951	$ 8,586,199	$ 23,647,759	$ 25,338,850
Revenues from other insurance operations	2,807,648	3,346,184	8,757,192	10,311,036
Intersegment revenue eliminations	(2,184,565)	(2,638,994)	(6,793,574)	(8,154,694)
Revenues from other insurance operations net of intersegment eliminations	623,083	707,190	1,963,618	2,156,342
Total revenues	8,161,034	9,293,389	25,611,377	27,495,192
Loss Before Income Taxes
Loss before taxes from insurance company operation	(282,446)	(3,917,854)	(1,342,775)	(7,328,672)
Loss before taxes from other insurance operations	(529,695)	(517,371)	(1,994,266)	(1,724,725)
Total loss	$ (812,141)	$ (4,435,225)	$ (3,337,041)	$ (9,053,397)

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Segment Reporting - Assets (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Assets
Insurance company operation	$ 112,577,045	$ 117,274,626
Intersegment asset eliminations	(2,576,592)	(2,486,500)
Total insurance company operation	110,000,453	114,788,126
Other insurance operations assets	13,591,453	15,510,632
Total assets	$ 123,591,906	$ 130,298,758

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Fair Value of Financial Instruments - Fair Value of Invested Assets (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Fixed maturity investments available for sale:
U.S. treasury securities	$ 13,994,039	$ 7,454,225
Corporate securities	37,092,021	28,657,640
Agency mortgage-backed securities	21,770,047	21,737,589
Short-term investments, at fair value	200,000	1,847,778
Total financial instruments at fair value	73,056,107	59,697,232
Level 1
Fixed maturity investments available for sale:
U.S. treasury securities	13,994,039	7,454,225
Corporate securities	0	0
Agency mortgage-backed securities	0	0
Short-term investments, at fair value	200,000	1,847,778
Total financial instruments at fair value	14,194,039	9,302,003
Level 2
Fixed maturity investments available for sale:
U.S. treasury securities	0	0
Corporate securities	37,092,021	28,657,640
Agency mortgage-backed securities	21,770,047	21,737,589
Short-term investments, at fair value	0	0
Total financial instruments at fair value	58,862,068	50,395,229
Level 3
Fixed maturity investments available for sale:
U.S. treasury securities	0	0
Corporate securities	0	0
Agency mortgage-backed securities	0	0
Short-term investments, at fair value	0	0
Total financial instruments at fair value	$ 0	$ 0

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Investments - Investment Income And Realized Gains Losses (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Notes to Financial Statements
Investment income fixed maturities	$ 498,656	$ 323,023	$ 1,430,323	$ 746,787
Investment income short-term investments	14,284	(13,335)	33,872	64,444
Gross investment income	512,940	309,688	1,464,195	811,231
Investment expense	25,381	196	79,231	25,446
Investment income net of expenses	487,559	309,492	1,384,964	785,785
Net realized investment gains	11	373	148	528
Net investment income, realized gains	$ 487,570	$ 309,865	$ 1,385,112	$ 786,313

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Investments - Fixed Maturities by Categories (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Amortized cost, fixed maturities, available for sale	$ 74,869,321	$ 58,153,120
Estimated fair value, fixed maturities, available for sale	72,856,107	57,849,454
Amortized cost, fixed maturities, held to maturity	14,864,000	28,098,000
Estimated fair value, fixed maturities, held to maturity	14,864,000	28,098,000
U.S. treasury securities
Amortized cost, fixed maturities, available for sale	14,259,817	7,517,901
Gross unrealized gains, fixed maturities, available for sale	55	21
Gross unrealized losses, fixed maturities, available for sale	(265,833)	(63,697)
Estimated fair value, fixed maturities, available for sale	13,994,039	7,454,225
Corporate securities
Amortized cost, fixed maturities, available for sale	38,084,034	28,745,223
Gross unrealized gains, fixed maturities, available for sale	4,655	43,204
Gross unrealized losses, fixed maturities, available for sale	(996,668)	(130,787)
Estimated fair value, fixed maturities, available for sale	37,092,021	28,657,640
Agency mortgage-backed securities
Amortized cost, fixed maturities, available for sale	22,525,470
Gross unrealized gains, fixed maturities, available for sale	0
Gross unrealized losses, fixed maturities, available for sale	(755,423)
Estimated fair value, fixed maturities, available for sale	21,770,047
Certificates of deposit
Amortized cost, fixed maturities, held to maturity	14,864,000	28,098,000
Gross unrealized gains, fixed maturities, held to maturity	0	0
Gross unrealized losses, fixed maturities, held to maturity	0	0
Estimated fair value, fixed maturities, held to maturity	14,864,000	28,098,000
Total fixed maturities
Fixed maturities, at amortized cost	89,733,321	86,251,120
Gross unrealized gains, fixed maturities	4,710	43,225
Gross unrealized losses, fixed maturities	(2,017,924)	(346,891)
Fixed maturities, at estimated fair value	$ 87,720,107	85,947,454
Agency mortgage backed securities
Amortized cost, fixed maturities, available for sale		21,889,996
Gross unrealized gains, fixed maturities, available for sale		0
Gross unrealized losses, fixed maturities, available for sale		(152,407)
Estimated fair value, fixed maturities, available for sale		$ 21,737,589

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Investments - Unrealized Gains (Losses) on Investments in Fixed Maturities (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Notes to Financial Statements
Gross unrealized gains on fixed maturities	$ 4,710	$ 43,225
Gross unrealized losses on fixed maturities	(2,017,924)	(346,891)
Net unrealized losses on fixed maturities	(2,013,214)	(303,666)
Deferred federal tax benefit	422,775	63,770
Net unrealized losses, net of deferred income taxes	$ (1,590,439)	$ (239,896)

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Investments - Securities in Unrealized Loss Position (Details)	Sep. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)
U.S. treasury securities
Fair value, less than 12 months	$ 9,007,849	$ 7,454,204
Fair value, 12 months or longer	4,189,941	0
Gross unrealized losses, less than 12 months	122,653	63,697
Gross unrealized losses, 12 months or longer	$ 143,180	$ 0
Number of securities in unrealized loss positions for less than 12 months	11	6
Number of securities in unrealized loss positions for 12 months or longer	3	0
Corporate securities
Fair value, less than 12 months	$ 25,387,401	$ 20,335,512
Fair value, 12 months or longer	8,966,787	0
Gross unrealized losses, less than 12 months	730,699	130,787
Gross unrealized losses, 12 months or longer	$ 265,969	$ 0
Number of securities in unrealized loss positions for less than 12 months	38	26
Number of securities in unrealized loss positions for 12 months or longer	10	0
Agency mortgage-backed securities
Fair value, less than 12 months	$ 6,575,550
Fair value, 12 months or longer	15,194,497
Gross unrealized losses, less than 12 months	124,950
Gross unrealized losses, 12 months or longer	$ 630,473
Number of securities in unrealized loss positions for less than 12 months	9
Number of securities in unrealized loss positions for 12 months or longer	12
Total fixed maturities
Fair value, less than 12 months	$ 40,970,800	$ 49,527,305
Fair value, 12 months or longer	28,351,225	0
Gross unrealized losses, less than 12 months	978,302	346,891
Gross unrealized losses, 12 months or longer	$ 1,039,622	$ 0
Number of securities in unrealized loss positions for less than 12 months	58	49
Number of securities in unrealized loss positions for 12 months or longer	25	0
Agency mortgage backed securities
Fair value, less than 12 months		$ 21,737,589
Fair value, 12 months or longer		0
Gross unrealized losses, less than 12 months		152,407
Gross unrealized losses, 12 months or longer		$ 0
Number of securities in unrealized loss positions for less than 12 months		17
Number of securities in unrealized loss positions for 12 months or longer		0

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Investments - State Held Deposits (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Notes to Financial Statements
Short-term certificates of deposit held by state	$ 200,000	$ 200,000
Long-term certificates of deposit held by state	400,000	400,000
State held deposits	$ 600,000	$ 600,000

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Investments - Short term invesmtments (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Notes to Financial Statements
Short-term U.S. treasury bills	$ 0	$ 1,148,395
Certificates of deposit	200,000	200,000
Commercial paper	0	499,383
Total short-term investments	$ 200,000	$ 1,847,778

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Cash and Restricted Cash - Cash and Restricted Cash (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Dec. 31, 2016
Notes to Financial Statements
Cash	$ 927,296	$ 774,226
Cash equivalents	3,485,373	8,592,718
Restricted cash	0	0
Cash, cash equivalents, and restricted cash	$ 4,412,669	$ 9,366,944	$ 9,938,227	$ 22,602,982

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Unpaid Losses And Loss Adjustment Expenses (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	Dec. 31, 2016
Insurance Loss Reserves [Abstract]
Gross reserves	$ 49,240,342	$ 53,066,515	$ 49,240,342	$ 53,066,515	$ 49,076,991	$ 47,055,787
Reinsurance recoverable on unpaid losses and loss adjustment expenses	8,291,385	11,890,854	8,291,385	11,890,854	8,393,550	9,520,970
Net reserves	40,948,957	41,175,661	40,948,957	41,175,661	$ 40,683,441	$ 37,534,817
Incurred losses and loss adjustment expenses
Current accident year			15,501,620	18,046,953
Prior accident years			2,867,960	6,304,798
Incurred losses and loss adjustment expenses	$ 5,638,620	$ 9,917,896	18,369,580	24,351,751
Paid losses and loss adjustment expenses
Current accident year			4,781,651	4,375,729
Prior accident years			13,322,413	16,335,178
Total payment losses and loss adjustment expenses			$ 18,104,064	$ 20,710,907

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Repurchase of Common Stock - Effects on Stockholders' Equity (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Notes to Financial Statements
Cost of common stock repurchased	$ 216	$ 0	$ 216	$ 0
Share repurchase allocated to paid in capital	15	0	15	0
Share repurchase allocated to retained earnings	$ 201	$ 0	$ 201	$ 0
Stock repurchase authority remiaining			188,625		188,655
Shares repurchased and retired during period - shares	30	0	30	0
Repurchase of common stock previously authorized					500,000

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Deterred Tax Assets (Narrative)	Dec. 31, 2017 USD ($)
Deterred Tax Assets
Corporate Federal income tax rate before Tax Cuts and Jobs Act	34.00%
Corporate Federal income tax rate after Tax Cuts and Jobs Act	21.00%
Reduction in deferred tax asset due to Tax Cuts and Jobs Act	$ 2,176,862

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Property and Equipment (Details Narrative)	3 Months Ended		9 Months Ended
	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)
Property And Equipment Details Abstract
Square footage of building	46,884		46,884
Building square footage leased to non-alliliates	14,481		14,481
Building square footage available for lease	0		0
Depreciation and amortization	$ 135,544	$ 121,540	$ 417,261	$ 386,250
Calabasas building operating expenses including depreciation	217,263	201,701	591,372	549,295
Office building revenue from leases from non-affiliates	$ 89,211	$ 83,257	$ 264,329	$ 198,902

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Segment Reporting (Details Narrative)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Segment Reporting Narrative Abstract
Percentage of consolidated revenues from insurance company operations segment	92.00%	92.00%	92.00%	92.00%

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Investments (Details Narrative)	3 Months Ended		9 Months Ended
	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)
Notes to Financial Statements
Brokered certificates of deposit	$ 14,464,000		$ 14,464,000		$ 27,698,000
Statutory deposits number of banks	4		4		4
Realized investment gains	$ 11	$ 373	$ 148	$ 528

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Cash and Restricted Cash (Details Narrative) - USD ($)	1 Months Ended
	Sep. 30, 2017	Mar. 21, 2016	Dec. 28, 2015
Notes to Financial Statements
Settlement of Two Judgments	$ 7,000,000
Return of Cash Deposited with Court	$ 6,373,793
Restricted Cash Deposited with Court In Lieu of Bond		$ 5,449,615	$ 7,924,178

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Subsequent Events (Details Narrative)	1 Months Ended
	Nov. 30, 2018 USD ($)
Notes to Financial Statements
Risks Insured in Wild Fire Affected Zones	12
Wild Fire Claims Received	1
Wild Fire Claim Estimated Loss Net of Reinsurance	$ 550,000
Consecutive Number of Business Days Employees Could Not Come to Work	3