10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ Quarterly report pursuant to section 13 or 15 (d) of the Securities Exchange Act of 1934

For the Quarterly Period ended September 30, 2020.

☐ Transition report pursuant to section 13 or 15 (d) of the Securities Exchange Act of 1934.

For the transition period from                  to                 .

Commission file number 000-28249

AMERINST INSURANCE GROUP, LTD.

(Exact Name of Registrant as Specified in its Charter)

BERMUDA	98-0207447
(State or other jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
c/o Citadel Management Bermuda Limited 25 Church Street, Continental Building P.O. Box HM 1601, Hamilton, Bermuda	HMGX
(Address of Principal Executive Offices)	(Zip Code)

(441) 295-6015

(Telephone number)

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  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    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 “accelerated filer,” “large accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging Growth 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 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  ☒.

Securities registered pursuant to Section 12(b) of the Act: None.

As of November 1, 2020, the Registrant had 995,253 common shares, $1.00 par value per share, outstanding.

Introductory Note

Caution Concerning Forward-Looking Statements

Certain statements contained in this Form 10-Q, or otherwise made by our officers, including statements related to our future performance, our outlook for our businesses and respective markets, projections, statements of our management’s plans or objectives, forecasts of market trends and other matters, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and contain information relating to us that is based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. The words “expect,” “believe,” “may,” “could,” “should,” “would,” “estimate,” “anticipate,” “intend,” “plan,” “target,” “goal” and similar expressions as they relate to us or our management are intended to identify forward-looking statements. Such statements reflect our management’s current views with respect to future events and are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially from those reflected in any forward-looking statements. Our actual future results may differ materially from those set forth in our forward-looking statements. Factors that might cause such actual results to differ materially from those reflected in any forward-looking statements include, but are not limited to the factors discussed in detail in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-Q, as well as:

• the magnitude and duration of the COVID-19 pandemic and its impact on the global and local economies, financial and insurance market conditions and our business, results of operations and financial condition;

• actual losses and loss expenses exceeding our loss reserves and increases in loss reserves, which are necessarily based on the actuarial and statistical projections of ultimate losses;

• our ability to comply with Bermuda statutory liquidity requirements may be adversely impacted by increases in loss reserves;

• changes in the amount of professional liability business accepted by our insurance company partners;

• adequacy of our risk management and loss limitation methods;

• our ability to generate increased revenues and positive earnings in future periods;

• the occurrence of catastrophic events with a frequency or severity exceeding our expectations;

• a worsening global economic market and changing rates of inflation and other economic conditions;

• subjection of our non-U.S. companies to regulation and/or taxation in the United States;

• a decrease in the level of demand for professional liability insurance and reinsurance or an increase in the supply of professional liability insurance and reinsurance capacity;

• our ability to meet the performance goals and metrics set forth in our business plan without a significant depletion of our cash resources while maintaining sufficient capital levels and liquidity levels;

• the effects of security breaches, cyber-attacks or computer viruses that may affect our computer systems or those of our customers, third-party managers and service providers;

• increased competitive pressures, including the consolidation and increased globalization of reinsurance providers;

• increased or decreased rate pressure on premiums;

• the successful integration of businesses we may acquire or new business ventures we may start;

• acts of terrorism, political unrest, outbreak of war and other hostilities or other non-forecasted and unpredictable events;

• changes in Bermuda law or regulation or the political stability of Bermuda;

• compliance with and changes in the legal or regulatory environments in which we operate; and

• other risks, including those risks identified in any of our other filings with the Securities and Exchange Commission.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect our management’s analysis only as of the date they are made. We undertake no obligation to release publicly the results of any future revisions we may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

2

Part I—FINANCIAL INFORMATION

Item 1. Financial Statements.

AMERINST INSURANCE GROUP, LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, expressed in U.S. dollars)

	As of September 30, 2020			As of December 31, 2019
ASSETS
Investments:
Fixed maturity investments, at fair value (amortized cost $16,322,794 and $15,564,687)	$	16,909,494		$	15,668,317
Equity securities, at fair value (cost $0 and $10,889,683)		—			15,365,299
TOTAL INVESTMENTS		16,909,494			31,033,616
Cash and cash equivalents		10,795,173			6,589,810
Restricted cash and cash equivalents		4,328,910			1,169,805
Assumed reinsurance premiums receivable		2,830,194			5,695,847
Accrued investment income		136,062			104,935
Property and equipment		1,107,040			1,105,513
Deferred income taxes		2,440,000			2,564,000
Deferred policy acquisition costs		1,174,491			1,964,052
Prepaid expenses and other assets		1,924,327			2,019,622
TOTAL ASSETS	$	41,645,691		$	52,247,200
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Unpaid losses and loss adjustment expenses	$	18,952,917		$	13,966,044
Unearned premiums		5,301,755			5,308,398
Assumed reinsurance payable		2,701,177			6,756,177
Accrued expenses and other liabilities		5,159,635			5,873,130
TOTAL LIABILITIES	$	32,115,484		$	31,903,749
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY
Common shares, $1 par value, 2020 and 2019: 2,000,000 shares authorized, 995,253 issued and outstanding	$	995,253		$	995,253
Additional paid-in-capital		6,454,626			6,465,776
Retained earnings		10,552,075			21,842,409
Accumulated other comprehensive income		586,700			103,630
Shares held by Subsidiary (369,576 and 369,576 shares) at cost		(9,058,447	)		(9,063,617	)
TOTAL SHAREHOLDERS’ EQUITY		9,530,207			20,343,451
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	41,645,691		$	52,247,200

See the accompanying notes to the unaudited condensed consolidated financial statements.

3

AMERINST INSURANCE GROUP, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF

OPERATIONS, COMPREHENSIVE (LOSS) INCOME

AND RETAINED EARNINGS

(Unaudited, expressed in U.S. dollars)

	Nine Months Ended September 30, 2020			Nine Months Ended September 30, 2019			Three Months Ended September 30, 2020			Three Months Ended September 30, 2019
REVENUE
Net premiums earned	$	8,947,710		$	8,141,526		$	3,437,196		$	2,815,917
Commission income		4,542,478			4,395,855			1,437,181			1,450,367
Net investment income		308,279			355,143			99,444			125,491
Net realized and unrealized (losses) gains on investments		(1,764,300	)		2,595,789			988,562			72,492
TOTAL REVENUE		12,034,167			15,488,313			5,962,383			4,464,267
LOSSES AND EXPENSES
Losses and loss adjustment expenses		14,078,405			5,210,575			10,551,676			1,802,187
Policy acquisition costs		4,097,754			3,012,548			2,058,923			1,041,890
Operating and management expenses		5,019,124			5,138,604			1,592,813			1,636,073
TOTAL LOSSES AND EXPENSES		23,195,283			13,361,727			14,203,412			4,480,150
NET (LOSS) INCOME BEFORE TAX		(11,161,116	)		2,126,586			(8,241,029	)		(15,883	)
Income tax (benefit) expense		129,218			(32,032	)		36,963			6,654
NET (LOSS) INCOME AFTER TAX	$	(11,290,334	)	$	2,158,618		$	(8,277,992	)	$	(22,537	)
OTHER COMPREHENSIVE INCOME
Net unrealized holding gains arising during the period		565,531			335,102			47,914			68,341
Reclassification adjustment for gains included in net income		(82,461	)		—			—			—
OTHER COMPREHENSIVE INCOME		483,070			335,102			47,914			68,341
COMPREHENSIVE (LOSS) INCOME	$	(10,807,264	)	$	2,493,720		$	(8,230,078	)	$	45,804
RETAINED EARNINGS, BEGINNING OF PERIOD	$	21,842,409		$	19,725,581		$	18,830,067		$	21,581,045
Net (loss) income		(11,290,334	)		2,158,618			(8,277,992	)		(22,537	)
Dividends		—			(325,691	)		—			—
RETAINED EARNINGS, END OF PERIOD	$	10,552,075		$	21,558,508		$	10,552,075		$	21,558,508
Per share amounts
Net (loss) income per share
Basic	$	(18.04	)	$	3.41		$	(13.23	)	$	(0.04	)
Diluted	$	(18.04	)	$	3.40		$	(13.23	)	$	(0.04	)
Dividends	$	—		$	0.50		$	—		$	0.00
Weighted average number of shares outstanding for the entire period
Basic		625,677			631,721			625,677			632,554
Diluted		625,677			634,276			625,677			632,554

See the accompanying notes to the unaudited condensed consolidated financial statements.

4

AMERINST INSURANCE GROUP, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited, expressed in U.S. dollars)

As of September 30, 2020

	Common Shares		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Losses)		Shares Held by Subsidiary			Total Shareholders’ Equity
BALANCE AT JANUARY 1, 2020	$	995,253	$	6,465,776		$	21,842,409		$	103,630	$	(9,063,617	)	$	20,343,451
Net loss		—		—			(4,477,597	)		—		—			(4,477,597	)
Stock option awards expense		—		(11,955	)		—			—		—			(11,955	)
Other comprehensive income
Unrealized gains on securities, net of reclassification adjustment		—		—			—			228,774		—			228,774
Purchase of shares by subsidiary, net		—		—			—			—		5,170			5,170
BALANCE AT MARCH 31, 2020	$	995,253	$	6,453,821		$	17,364,812		$	332,404	$	(9,058,447	)	$	16,087,843
Net income		—		—			1,465,255			—		—			1,465,255
Stock option awards expense		—		805			—			—		—			805
Other comprehensive income
Unrealized gains on securities, net of reclassification adjustment		—		—			—			206,382		—			206,382
BALANCE AT JUNE 30, 2020	$	995,253	$	6,454,626		$	18,830,067		$	538,786	$	(9,058,447	)	$	17,760,285
Net loss		—		—			(8,277,992	)		—		—			(8,277,992	)
Stock option awards expense		—		—			—			—		—			—
Other comprehensive income
Unrealized gains on securities, net of reclassification adjustment		—		—			—			47,914		—			47,914
BALANCE AT SEPTEMBER 30, 2020	$	995,253	$	6,454,626		$	10,552,075		$	586,700	$	(9,058,447	)	$	9,530,207

See the accompanying notes to the unaudited condensed consolidated financial statements.

5

AMERINST INSURANCE GROUP, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited, expressed in U.S. dollars)

As of September 30, 2019

	Common Shares		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Losses)			Shares Held by Subsidiary			Total Shareholders’ Equity
BALANCE AT JANUARY 1, 2019	$	995,253	$	6,393,730	$	19,725,581		$	(218,348	)	$	(8,941,051	)	$	17,955,165
Net income		—		—		1,669,711			—			—			1,669,711
Other comprehensive income
Unrealized gains on securities, net of reclassification adjustment		—		—		—			140,409			—			140,409
BALANCE AT MARCH 31, 2019	$	995,253	$	6,393,730	$	21,395,292		$	(77,939	)	$	(8,941,051	)	$	19,765,285
Net income		—		—		511,444			—			—			511,444
Issuance of stock option awards		—		32,266		—			—			—			32,266
Other comprehensive income
Unrealized gain on securities, net of reclassification adjustment		—		—		—			126,352			—			126,352
Issuance of shares by subsidiary, net		—		—		—			—			70,000			70,000
Dividends ($0.50 per share)		—		—		(325,691	)		—			—			(325,691	)
BALANCE AT JUNE 30, 2019	$	995,253	$	6,425,996	$	21,581,045		$	48,413		$	(8,871,051	)	$	20,179,656
Net loss		—		—		(22,537	)		—			—			(22,537	)
Issuance of stock option awards		—		18,040		—			—			—			18,040
Other comprehensive income
Unrealized gain on securities, net of reclassification adjustment		—		—		—			68,341			—			68,341
BALANCE AT SEPTEMBER 30, 2019	$	995,253	$	6,444,036	$	21,558,508		$	116,754		$	(8,871,051	)	$	20,243,500

See the accompanying notes to the unaudited condensed consolidated financial statements.

6

AMERINST INSURANCE GROUP, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, expressed in U.S. dollars)

	Nine Months Ended September 30, 2020			Nine Months Ended September 30, 2019
OPERATING ACTIVITIES
Net Cash (used in) provided by Operating Activities	$	(5,225,829	)	$	1,603,447
INVESTING ACTIVITIES
Purchases of property and equipment		(199,728	)		(434,250	)
Purchases of available-for-sale securities		(6,943,373	)		(5,492,708	)
Proceeds from sales of available-for-sale securities		14,941,147			2,232,592
Proceeds from redemptions of fixed maturity investments		3,082,081			265,000
Proceeds from maturities of fixed maturity investments		1,705,000			3,090,000
Net Cash provided by (used in) Investing Activities		12,585,127			(339,366	)
FINANCING ACTIVITIES
Dividends paid		—			(325,691	)
Purchase of shares by subsidiary, net		5,170			—
Net Cash provided by (used in) Financing Activities		5,170			(325,691	)
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		7,364,468			938,390
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD	$	7,759,615		$	5,971,046
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	15,124,083		$	6,909,436

See the accompanying notes to the unaudited condensed consolidated financial statements.

7

AMERINST INSURANCE GROUP, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

1. BASIS OF PREPARATION AND CONSOLIDATION

The condensed consolidated financial statements included herein have been prepared by AmerInst Insurance Group, Ltd. (“AmerInst”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “Commission”). These financial statements reflect all adjustments consisting of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of our financial position and results of operations as of the end of and for the periods presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All intercompany transactions and balances have been eliminated on consolidation. These statements are condensed and do not incorporate all the information required under U.S. GAAP to be included in a full set of financial statements. In these notes, the terms “we”, “us”, “our” or the “Company” refer to AmerInst and its subsidiaries. These condensed statements should be read in conjunction with the audited consolidated financial statements at and for the year ended December 31, 2019 and notes thereto, included in AmerInst’s Annual Report on Form 10-K for the year then ended.

New Accounting Pronouncements

New Accounting Standards Adopted in 2020

No new accounting standards adopted in 2020.

Accounting Standards Not Yet Adopted

Financial Instruments Credit Losses-Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued ASU 2016-13, which amends the guidance on impairment of financial instruments and significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The ASU will replace the existing “incurred loss” approach, with an “expected loss” model for instruments measured at amortized cost and require entities to record allowances for available-for-sale debt securities rather than reduce the carrying amount under the existing other-than temporary-impairment model. The ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans. The Company’s insurance premium balances receivables are also more significant financial assets within the scope of ASU 2016-13. The guidance requires financial assets to be presented at the net amount expected to be collected. The tentative effective date for the ASU is January 1, 2023. We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

2. INVESTMENTS

The cost or amortized cost, gross unrealized holding gains and losses, and estimated fair value of the Company’s fixed maturity investments, by major security type, and equity securities as of September 30, 2020 and December 31, 2019 are as follows:

	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2020
Fixed maturity investments:
U.S. government agency securities	$	2,331,829	$	49,599	$	—	$	2,381,428
Obligations of U.S. states and political subdivisions		7,118,592		312,371		—		7,430,963
Corporate debt securities		6,872,373		224,730		—		7,097,103
Total fixed maturity investments		16,322,794		586,700		—		16,909,494
Equity securities		—		—		—		—
Total equity securities		—		—		—		—
Total investments	$	16,322,794	$	586,700	$	—	$	16,909,494

8

	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
December 31, 2019
Fixed maturity investments:
U.S. government agency securities	$	4,731,181	$	38,524	$	(1,086	)	$	4,768,619
Obligations of U.S. states and political subdivisions		3,188,217		29,521		(5,936	)		3,211,802
Corporate debt securities		7,645,289		45,080		(2,473	)		7,687,896
Total fixed maturity investments		15,564,687		113,125		(9,495	)		15,668,317
Equity securities		10,889,683		4,854,179		(378,563	)		15,365,299
Total equity securities		10,889,683		4,854,179		(378,563	)		15,365,299
Total investments	$	26,454,370	$	4,967,304	$	(388,058	)	$	31,033,616

The following tables summarize the Company’s fixed maturity and equity securities in an unrealized loss position and the aggregate fair value and gross unrealized loss by length of time the security has continuously been in an unrealized loss position:

12 months or greater

Less than 12 months

Total

Estimated Fair Value

Unrealized Losses

Estimated Fair Value

Unrealized Losses

Estimated Fair Value

Unrealized Losses

September 30, 2020

Fixed maturity investments:

U.S. government agency securities

$

—

$

—

$

—

$

—

$

—

$

—

Obligations of states and political subdivisions

—

—

—

—

—

—

Corporate debt securities

—

—

—

—

—

—

Total fixed maturity investments

—

—

—

—

—

—

Equity securities

—

—

—

—

—

—

Total equity securities

—

—

—

—

—

—

Total investments

$

—

$

—

$

—

$

—

$

—

$

—

	12 months or greater					Less than 12 months					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
December 31, 2019
Fixed maturity investments:
U.S. government agency securities	$	—	$	—		$	1,528,838	$	(1,086	)	$	1,528,838	$	(1,086	)
Obligations of states and political subdivisions		—		—			601,053		(5,936	)		601,053		(5,936	)
Corporate debt securities		743,360		(2,473	)		—		—			743,360		(2,473	)
Total fixed maturity investments		743,360		(2,473	)		2,129,891		(7,022	)		2,873,251		(9,495	)
Equity securities		336,321		(119,313	)		1,496,152		(259,250	)		1,832,473		(378,563	)
Total equity securities		336,321		(119,313	)		1,496,152		(259,250	)		1,832,473		(378,563	)
Total investments	$	1,079,681	$	(121,786	)	$	3,626,043	$	(266,272	)	$	4,705,724	$	(388,058	)

As of September 30, 2020 and December 31, 2019, there were zero and eight fixed income securities in an unrealized loss position with an estimated fair value of $0 and $2,873,251, respectively. As of September 30, 2020 and December 31, 2019, none and two of these fixed income securities had been in an unrealized loss position for 12 months or greater, respectively. As of September 30, 2020 and December 31, 2019, none of the fixed income securities were considered to be other than-temporarily-impaired. The Company has the intent to hold these fixed income securities and it is not more likely than not that the Company will be required to sell these fixed income securities before their fair values recover above the adjusted cost. The unrealized losses from these fixed income securities were not a result of credit, collateral or structural issues.

9

Other-Than-Temporary Impairment Process

The Company assesses whether declines in the fair value of its fixed maturity investments classified as available-for-sale represent impairments that are other-than-temporary by reviewing each fixed maturity investment that is impaired and (1) determining if the Company has the intent to sell the fixed maturity investment or if it is more likely than not that the Company will be required to sell the fixed maturity investment before its anticipated recovery; and (2) assessing whether a credit loss exists, that is, where the Company expects that the present value of the cash flows expected to be collected from the fixed maturity investment are less than the amortized cost basis of the investment.

The Company had no planned sales of its fixed maturity investments classified as available-for-sale that were in an unrealized loss position at September 30, 2020. In assessing whether it is more likely than not that the Company will be required to sell a fixed maturity investment before its anticipated recovery, the Company considers various factors including its future cash flow requirements, legal and regulatory requirements, the level of its cash, cash equivalents, short term investments and fixed maturity investments available for sale in an unrealized gain position, and other relevant factors.

In evaluating credit losses, the Company considers a variety of factors in the assessment of a fixed maturity investment including: (1) the time period during which there has been a significant decline below cost; (2) the extent of the decline below cost and par; (3) the potential for the fixed maturity investment to recover in value; (4) an analysis of the financial condition of the issuer; (5) the rating of the issuer; and (6) failure of the issuer of the fixed maturity investment to make scheduled interest or principal payments.

If we conclude a fixed income investment is other-than-temporarily impaired, we write down the amortized cost of the security to fair value, with a charge to net realized investment gains (losses) in the Consolidated Statement of Operations. Gross unrealized losses on the investment portfolio as of September 30, 2020 and December 31, 2019, relating to zero and eight fixed maturity securities, amounted to $0 and $9,495, respectively. The unrealized losses on these available for sale fixed maturity securities were not as a result of credit, collateral or structural issues. During the nine months and three months ended September 30, 2020, no other-than-temporary impairment charges were recorded.

Fair Value of Investments

Under existing U.S. GAAP, we are required to recognize certain assets at their fair value in our consolidated balance sheets. This includes our fixed maturity investments and equity securities. In accordance with the Fair Value Measurements and Disclosures Topic of Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) 820, fair value is defined as the price 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. ASC 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon whether the inputs to the valuation of an asset or liability are observable or unobservable in the market at the measurement date, with quoted market prices being the highest level (Level 1) and unobservable inputs being the lowest level (Level 3). A fair value measurement will fall within the level of the hierarchy based on the inputs that are significant to determining such measurement. The three levels are defined as follows:

• Level 1: Observable inputs to the valuation methodology that are quoted prices (unadjusted) for identical assets or liabilities in active markets.

• Level 2: Observable inputs to the valuation methodology other than quoted market prices (unadjusted) for identical assets or liabilities in active markets. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in markets that are not active and inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

• Level 3: Inputs to the valuation methodology that are unobservable for the asset or liability.

At each measurement date, we estimate the fair value of the security using various valuation techniques. We utilize, to the extent available, quoted market prices in active markets or observable market inputs in estimating the fair value of our investments. When quoted market prices or observable market inputs are not available, we utilize valuation techniques that rely on unobservable inputs to estimate the fair value of investments. The following describes the valuation techniques we used to determine the fair value of investments held as of September 30, 2020 and December 31, 2019 and what level within the fair value hierarchy each valuation technique resides:

• U.S. government agency securities: Comprised primarily of bonds issued by the Federal Home Loan Bank, the Federal Home Loan Mortgage Corporation, Federal Farm Credit Bank and the Federal National Mortgage Association. The fair values of U.S. government agency securities are priced using the spread above the risk-free U.S. Treasury yield curve. As the yields for the risk-free U.S. Treasury yield curve are observable market inputs, the fair values of U.S. government agency securities are classified as Level 2 in the fair value hierarchy. AmerInst considers a liquid market to exist for these types of securities held. Broker quotes are not used for fair value pricing.

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• Obligations of state and political subdivisions: Comprised of fixed income obligations of state and local governmental municipalities. The fair values of these securities are based on quotes and current market spread relationships, and are classified as Level 2 in the fair value hierarchy. AmerInst considers a liquid market to exist for these types of securities held. Broker quotes are not used for fair value pricing.

• Corporate debt securities: Comprised of bonds issued by corporations. The fair values of these securities are based on quotes and current market spread relationships, and are classified as Level 2 in the fair value hierarchy. AmerInst considers a liquid market to exist for these types of securities held. Broker quotes are not used for fair value pricing.

• Equity securities, at fair value: Comprised primarily of investments in the common stock of publicly traded companies in the U.S. All of the Company’s equities were classified as Level 1 in the fair value hierarchy. The Company had received prices based on closing exchange prices from independent pricing sources to measure fair values for the equities.

In September 2020, the Company liquidated its equity securities portfolios.

While we obtain pricing from independent pricing services, management is ultimately responsible for determining the fair value measurements for all securities. To ensure fair value measurement is applied consistently and in accordance with U.S. GAAP, we periodically update our understanding of the pricing methodologies used by the independent pricing services. We also undertake further analysis with respect to prices we believe may not be representative of fair value under current market conditions. Our review process includes, but is not limited to: (i) initial and ongoing evaluation of the pricing methodologies and valuation models used by outside parties to calculate fair value; (ii) quantitative analysis; (iii) a review of multiple quotes obtained in the pricing process and the range of resulting fair values for each security, if available, and (iv) randomly selecting purchased or sold securities and comparing the executed prices to the fair value estimates provided by the independent pricing sources.

There have been no material changes to our valuation techniques from what was used as of December 31, 2019. Since the fair value of a security is an estimate of what a willing buyer would pay for such security if we sold it, we cannot know the ultimate value of our securities until they are sold. We believe the valuation techniques utilized provide us with a reasonable estimate of the price that would be received if we were to sell our assets or transfer our liabilities in an orderly market transaction between participants at the measurement date. The following tables show the fair value of the Company’s investments in accordance with ASC 820 as of September 30, 2020 and December 31, 2019:

	Carrying amount		Total fair value		Fair value measurement using:
					Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
September 30, 2020
U.S. government agency securities	$	2,381,428	$	2,381,428	$	—	$	2,381,428	$	—
Obligations of U.S. state and political subdivisions		7,430,963		7,430,963				7,430,963
Corporate debt securities		7,097,103		7,097,103				7,097,103
Total fixed maturity investments		16,909,494		16,909,494
Equity securities		—		—
Total equity securities		—		—
Total investments	$	16,909,494	$	16,909,494	$	—	$	16,909,494	$	—

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	Carrying amount		Total fair value		Fair value measurement using:
					Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
December 31, 2019
U.S. government agency securities	$	4,768,619	$	4,768,619	$	—	$	4,768,619	$	—
Obligations of U.S. state and political subdivisions		3,211,802		3,211,802				3,211,802
Corporate debt securities		7,687,896		7,687,896				7,687,896
Total fixed maturity investments		15,668,317		15,668,317
Equity securities		15,365,299		15,365,299		15,365,299
Total equity securities		15,365,299		15,365,299
Total investments	$	31,033,616	$	31,033,616	$	15,365,299	$	15,668,317	$	—

There were no transfers between Levels 1 and 2 during the nine months ended September 30, 2020 and the year ended December 31, 2019.

Contractual Maturities

The cost or amortized cost and estimated fair value of fixed maturity investments as of September 30, 2020 and December 31, 2019 by contractual maturity are shown below. Expected maturities may differ from contractual maturities as borrowers may have the right to call or prepay obligations without penalties.

	Amortized Cost		Estimated Fair Value
September 30, 2020
Due in one year or less	$	3,174,356	$	3,196,828
Due after one year through five years		10,919,495		11,331,133
Due after five years through ten years		1,770,808		1,902,272
Due after ten years		458,135		479,261
Total	$	16,322,794	$	16,909,494

	Amortized Cost		Estimated Fair Value
December 31, 2019
Due in one year or less	$	2,539,709	$	2,542,229
Due after one year through five years		12,518,738		12,619,593
Due after five years through ten years		506,240		506,495
Total	$	15,564,687	$	15,668,317

Information on sales and maturity of investments and net unrealized gains (losses) on equity investments during the nine months ended September 30, 2020 and 2019 are as follows:

	September 30, 2020			September 30, 2019
Total proceeds on sales of available-for-sale securities	$	14,941,147		$	2,232,592
Proceeds from redemptions of fixed maturity investments		3,082,081			265,000
Total proceeds from maturities of fixed maturity investments		1,705,000			3,090,000
Gross gains on sales		4,346,483			570,563
Gross losses on sales		(1,635,113	)		(586,028	)
Net unrealized (losses) gains on equity investments		(4,475,670	)		2,611,254
Total	$	(1,764,300	)	$	2,595,789

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Information on sales and maturity of investments and net unrealized gains (losses) on equity investments during the three months ended September 30, 2020 and 2019 are as follows:

	September 30, 2020			September 30, 2019
Total proceeds on sales of available-for-sale securities	$	12,856,948		$	429,866
Proceeds from redemptions of fixed maturity investments		(17,931	)		265,000
Total proceeds from maturities of fixed maturity investments		500,000			840,000
Gross gains on sales		3,516,795			47,828
Gross losses on sales		(1,250,195	)		(492,424	)
Net unrealized (losses) gains movements		(1,278,038	)		517,088
Total	$	988,562		$	72,492

Net Investment Income

Major categories of net investment income during the nine months ended September 30, 2020 and 2019 are summarized as follows:

	September 30, 2020			September 30, 2019
Interest earned:
Fixed maturity investments	$	262,200		$	263,575
Short term investments and cash and cash equivalents		10,859			55,362
Dividends earned		131,045			138,543
Investment expenses		(95,825	)		(102,337	)
Net investment income	$	308,279		$	355,143

Major categories of net investment income during the three months ended September 30, 2020 and 2019 are summarized as follows:

	September 30, 2020			September 30, 2019
Interest earned:
Fixed maturity investments	$	85,634		$	91,690
Short term investments and cash and cash equivalents		578			19,488
Dividends earned		43,060			44,571
Investment expenses		(29,828	)		(30,258	)
Net investment income	$	99,444		$	125,491

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3. LIABILITY FOR UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES

The following table presents a reconciliation of the beginning and ending balances for the liability for unpaid losses and loss adjustment expenses for the nine months ended September 30, 2020 and 2019:

	September 30, 2020			September 30, 2019
Liability—beginning of year	$	13,966,044		$	12,989,260
Incurred related to:
Current year		4,989,087			5,210,575
Prior years		9,089,318			—
Total incurred		14,078,405			5,210,575
Paid related to:
Current year		(1,392,687	)		(94,416	)
Prior years		(7,698,845	)		(2,308,015	)
Total paid		(9,091,532	)		(2,402,431	)
Liability—end of year	$	18,952,917		$	15,797,403

As a result of the change in estimates of insured events in prior years, the provision for losses and loss adjustment expenses increased by $9,089,318 during the nine months ended September 30, 2020. The unfavorable development during the nine months ended September 30, 2020 was primarily due to higher than expected loss emergence on the Company’s lawyers’ book of business in accident years 2017, 2018 and 2019.

4. SEGMENT INFORMATION

AmerInst has two reportable segments: (1) reinsurance activity, which also includes investments and other activities, and (2) insurance activity, which offers professional liability solutions to professional service firms under the Agency Agreement with C&F, as defined in the “Overview” section below.

The tables below summarize the results of our reportable segments as of and for the nine months ended September 30, 2020 and 2019.

	As of and for the Nine Months Ended September 30, 2020
	Reinsurance Segment			Insurance Segment		Total
Revenues	$	7,487,683		$	4,546,484	$	12,034,167
Total losses and expenses		19,062,602			4,261,899		23,324,501
Segment (loss) income		(11,574,919	)		284,585		(11,290,334	)
Identifiable assets		—			1,107,040		1,107,040

	As of and for the Nine Months Ended September 30, 2019
	Reinsurance Segment		Reinsurance Segment		Reinsurance Segment
Revenues	$	11,053,834	$	4,434,479	$	15,488,313
Total losses and expenses		9,241,760		4,087,935		13,329,695
Segment income		1,812,074		346,544		2,158,618
Identifiable assets		—		983,448		983,448

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The tables below summarize the results of our reportable segments as of and for the three months ended September 30, 2020 and 2019.

	As of and for the Three Months Ended September 30, 2020
	Reinsurance Segment			Insurance Segment		Total
Revenues	$	4,524,821		$	1,437,562	$	5,962,383
Total losses and expenses		12,872,084			1,368,291		14,240,375
Segment (loss) income		(8,347,263	)		69,271		(8,277,992	)
Identifiable assets		—			1,107,040		1,107,040

	As of and for the Three Months Ended September 30, 2019
	Reinsurance Segment			Reinsurance Segment		Reinsurance Segment
Revenues	$	3,001,278		$	1,462,998	$	4,464,267
Total losses and expenses		3,120,582			1,366,222		4,486,804
Segment (loss) income		(119,304	)		96,767		(22,537	)
Identifiable assets		—			983,448		983,448

5. STOCK COMPENSATION

Phantom Shares:

Protexure Insurance Agency, Inc. (“Protexure”), a subsidiary of AmerInst, has employment agreements with three key members of senior management, which grant them phantom shares of the Company. Under these agreements, these employees were initially granted an aggregate of 63,765 phantom shares of the Company on the date of their employment, subject to certain vesting requirements. The phantom shares are eligible for phantom dividends payable at the same rate as regular dividends on the Company’s common shares. The phantom dividends may be used only to purchase additional phantom shares with the purchase price of such phantom shares being the net book value of the Company’s actual common shares as of the end of the previous quarter. During the nine months and three months ended September 30, 2020, no phantom shares were granted. 76,403 phantom shares were outstanding at September 30, 2020 and December 31, 2019.

For these three employees, the phantom shares initially granted, as well as any additional shares granted from dividends declared, vested on January 1, 2015. The liability payable to each of these employees under the phantom share agreements is equal to the value of the phantom shares based on the net book value of the Company’s actual common shares at the end of the previous quarter less the value of phantom shares initially granted and is payable in cash upon (i) the participant’s death, termination of employment due to disability, retirement at or after age 65 or resignation for good reason, (ii) termination of the participant by the Company without cause, (iii) termination by Participant without good reason or (iv) change in control.

The liability relating to these phantom shares is recalculated quarterly based on the net book value of our common shares at the end of each quarter. As a result of the overall decrease in the net book value of our common shares since the grant dates, we have not recorded any liability relating to these phantom shares at September 30, 2020.

Stock Option Plan:

The Company has a nonqualified stock option plan to advance the development, growth and financial condition of the Company. This plan provides incentives through participation in the appreciation of its common stock in order to secure, retain and motivate directors and employees and align such person’s interests with those of its shareholders. A total of 100,000 shares are authorized under the stock option plan.

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A summary of the status of the stock option plan as of September 30, 2020 is as follows:

	Vested Shares		Weighted Average Exercise Price Per Share		Non-vested Shares			Weighted Average Exercise Price Per Share		Total Shares		Weighted Average Exercise Price Per Share
Outstanding—January 1, 2020		16,400	$	28.34		28,600		$	28.65		45,000	$	28.54
Granted		—		—		—			—		—		—
Forfeited		—		—		—			—		—		—
Exercised		—		—		—			—		—		—
Vested		8,400		28.42		(8,400	)		28.42		—		—
Outstanding—September 30, 2020		24,800	$	28.37		20,200		$	28.74		45,000	$	28.54
Options exercisable at year end		—		—		—			—		—		—
Weighted average fair value of options per share granted during the year		—		—	$	—			—	$	—		—
Remaining contractual life (years)		2.4				2.6					2.5

A summary of the status of the stock option plan as of December 31, 2019 is as follows:

	Vested Shares		Weighted Average Exercise Price Per Share		Non-vested Shares			Weighted Average Exercise Price Per Share		Total Shares			Weighted Average Exercise Price Per Share
Outstanding—January 1, 2019		7,000	$	27.99		40,000		$	28.71		47,000		$	28.60
Granted		—		—		—			—		—			—
Forfeited		—		—		(2,000	)		30.14		(2,000	)		30.14
Exercised		—		—		—			—		—			—
Vested		9,400		28.60		(9,400	)		28.60		—			—
Outstanding—December 31, 2019		16,400	$	28.34		28,600		$	28.65		45,000		$	28.54
Options exercisable at year end		—		—		—			—		—			—
Weighted average fair value of options per share granted during the year		—		—	$	—			—	$	—			—
Remaining contractual life (years)		3.2				3.3					3.3

The Company accounts for these options in accordance with GAAP, which requires that the fair value of the equity awards be recognized as compensation expense over the period during which the employee is required to provide service in exchange for such an award. The Company is amortizing compensation expense over the vesting period, or five years. The Company recognized $(11,150) and $72,046 of compensation expense for stock options for the nine months ended September 30, 2020 and for the year ended December 31, 2019, respectively.

6. SUBSEQUENT EVENT

In October 2020, C&F advised us to cease writing business in eight states under the Agency Agreement. We are currently in discussions with alternative carriers to write policies impacted by this directive.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis (“MD&A”) provides supplemental information, which sets forth the major factors that have affected our financial condition and results of operation and should be read in conjunction with our condensed consolidated financial statements and notes thereto included in this Form 10-Q.

Certain statements contained in this Form 10-Q, including this MD&A section, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and contain information relating to us that is based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. The words “expect,” “believe,” “may,” “could,” “should,” “would,” “estimate,” “anticipate,” “intend,” “plan,” “target,” “goal” and similar expressions as they relate to us or our management are intended to identify forward-looking statements.

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All forward-looking statements, by their nature, are subject to risks and uncertainties. Our actual future results may differ materially from those set forth in our forward-looking statements. Please see the Introductory Note and Item 1A “Risk Factors” of our 2019 Annual Report on Form 10-K, as updated in our subsequent quarterly reports filed on Form 10-Q, and in our other filings made from time to time with the Commission after the date of this report for a discussion of factors that could cause our actual results to differ materially from those in the forward-looking statements. However, the risk factors listed in Item 1A “Risk Factors” of our 2019 Annual Report on Form 10-K or discussed in this Quarterly Report on Form 10-Q should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect our management’s analysis only as of the date they are made. We undertake no obligation to release publicly the results of any future revisions we may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

The following discussion addresses our financial condition and results of operations for the periods and as of the dates indicated.

OVERVIEW

Unless otherwise indicated by the context in this quarterly report, we refer to AmerInst Insurance Group, Ltd. and its subsidiaries as the “Company,” “AmerInst,” “we” or “us.” “AMIC Ltd.” means AmerInst’s wholly owned subsidiary, AmerInst Insurance Company, Ltd. “Protexure” means Protexure Insurance Agency, Inc., a Delaware corporation and wholly owned subsidiary of AmerInst Mezco, Ltd. which is a wholly owned subsidiary of AmerInst. “Investco” means AmerInst Investment Company, Ltd., a wholly owned subsidiary of AMIC Ltd. Our principal offices are c/o Citadel Management Bermuda Limited, 25 Church Street, Continental Building, P.O. Box HM 1601, Hamilton, Bermuda, HM GX.

AmerInst Insurance Group, Ltd. is a Bermuda holding company formed in 1998 that provides insurance protection for professional service firms and engages in investment activities. AmerInst has two reportable segments: (1) reinsurance activity, which includes investments and other activities, and (2) insurance activity, which offers professional liability solutions to professional service firms. The revenues of the reinsurance activity reportable segment and the insurance activity reportable segment were $7,487,683 and $4,546,484, respectively, for the nine months ended September 30, 2020 compared to $11,053,834 and $4,434,479, respectively, for the nine months ended September 30, 2019. The revenues for both reportable segments were derived from business operations in the United States other than interest income on bank accounts maintained in Bermuda.

Entry into Agency Agreement

On September 25, 2009, Protexure entered into an agency agreement (the “Agency Agreement”) with The North River Insurance Company, United States Fire Insurance Company, Crum & Forster Indemnity Company, Crum and Forster Insurance Company, and Crum & Forster Specialty Insurance Company (collectively, “C&F”) pursuant to which C&F appointed Protexure as its exclusive agent for the purposes of soliciting, underwriting, quoting, binding, issuing, cancelling, non-renewing and endorsing accountants’ professional liability and lawyers’ professional liability insurance coverage in all 50 states of the United States and the District of Columbia. The initial term of the Agency Agreement was for four years with automatic one-year renewals thereafter. The Agency Agreement automatically renewed on September 25, 2020.

In October 2020, C&F advised us to cease writing business in eight states under the Agency Agreement. We are currently in discussions with alternative carriers to write policies impacted by this directive.

Entry into Reinsurance Agreement

We conduct our reinsurance business through AMIC Ltd., our subsidiary, which is a registered insurer in Bermuda. On September 25, 2009, AMIC Ltd. entered into a professional liability quota share agreement with C&F (the “Reinsurance Agreement”) pursuant to which C&F agreed to cede, and AMIC Ltd. agreed to accept as reinsurance, a 50% quota share of C&F’s liability under insurance written by Protexure on behalf of C&F and classified by C&F as accountants’ professional liability and lawyers’ professional liability, subject to AMIC Ltd.’s surplus limitations. Policies written by insurers other than C&F are not subject to the 50% quota share reinsurance to AMIC Ltd. The term of the Reinsurance Agreement is continuous and may be terminated by either party upon at least 120 days’ prior written notice to the other party.

Third-party Managers and Service Providers

Citadel Management Bermuda Limited provides the day-to-day services necessary for the administration of our business. Our agreement with Citadel Management Bermuda Limited renewed for one year beginning January 1, 2020 and ending December 31, 2020. Mr. Thomas R. McMahon, our Treasurer and Chief Financial Officer, is an officer, director and employee of Citadel Management Bermuda Limited.

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The Country Club Bank of Kansas City, Missouri, provides portfolio management of fixed-income securities and directs our investments pursuant to guidelines approved by us. We have retained Oliver Wyman, an independent casualty actuarial consulting firm, to render advice regarding actuarial matters.

Outlook

During the nine months ended September 30, 2020, worldwide social and economic activity became severely impacted by the spread and threat of COVID-19. Actions to minimize risk to those employed with Protexure and those employed with our management company in Bermuda, Citadel Management Bermuda Limited, have been taken, including restricting travel and instituting extensive work-from-home protocols. This leveraged our existing operational contingency plans at every level of the organization, which ensured business process and control continuity. These actions have helped prevent major disruption to our clients and operations.

There was no significant impact on our insurance premiums and losses during the nine months ended September 30, 2020 relating to the COVID-19 global pandemic nor do we anticipate, at this time, that this global catastrophic event will have a significant impact on our insurance premiums and losses in future quarters due to the types of insurance products we offer and our client base of professional service firms, among other factors. With regard to investments, our investment portfolios that held equity securities incurred significant negative valuation adjustments during the first quarter of 2020 as spreads widened and perceived risks elevated as was reflected in first quarter financial results. During the second and third quarters of 2020, our investment portfolio partially recovered as markets responded to unprecedented monetary and fiscal stimulus in the U.S. and around the world. In September 2020, the Company liquidated its equity securities portfolios as a measure to preserve its capital base. The Company plans to reinvest the proceeds from these liquidations in fixed income securities as market conditions permit.

The Company will continue to evaluate the impact of COVID-19 on its operations over the coming quarters.

RESULTS OF OPERATIONS

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019

We recorded a net loss of $11,290,334 for the nine months ended September 30, 2020 compared to net income of $2,158,618 for the same period in 2019. The decrease in net income was mainly attributable to the decrease in net realized and unrealized gains on investments of $4,360,089 – from a gain of $2,595,789 for the nine months ended September 30, 2019 to a $1,764,300 loss for the nine months ended September 30, 2020, which is due to unfavorable market conditions attributable to the impact of the COVID-19 coronavirus pandemic on the worldwide economy and to the increase in loss and loss adjustment expenses of $8,867,830 – from $5,210,575 for the nine months ended September 30, 2019 to $14,078,405 for the nine months ended September 30, 2020, which is due to higher than expected loss emergence on the Company’s lawyers’ book of business in accident years 2017, 2018 and 2019. This was partially offset by the increase in commission income of $146,623 – from $4,395,855 for the nine months ended September 30, 2019 to $4,542,478 for the nine months ended September 30, 2020 as a result of a higher volume of premiums written under the Agency Agreement.

Our net premiums earned for the nine months ended September 30, 2020 were $8,947,710 compared to $8,141,526 for the nine months ended September 30, 2019, an increase of $806,184 or 9.9%. The net premiums earned for the nine months ended September 30, 2020 and 2019 were attributable to cessions from C&F under the Reinsurance Agreement. The increase in net premiums earned under the Reinsurance Agreement during the first nine months of 2020 compared to the same period in 2019 resulted from increased cessions from C&F in 2020, arising from a higher level of underwriting activity under the Agency Agreement due to the continued marketing of the program by Protexure which resulted in greater penetration in targeted markets.

During the nine months ended September 30, 2020 and 2019, we recorded commission income under the Agency Agreement of $4,542,478 and $4,395,855, respectively, an increase of $146,623 or 3.3%. This increase resulted from a higher volume of premiums written under the Agency Agreement in 2020 due to the continued marketing of the program by Protexure which resulted in greater penetration in the targeted markets.

We recorded net investment income of 308,279 for the nine months ended September 30, 2020 compared to $355,143 for the nine months ended September 30, 2019. The decrease in net investment income was attributable to a decrease in interest earned on short term investments and cash and cash equivalents as the result of lower interest rates in place during the first nine months of 2020 compared to the same period in 2019. The annualized investment yield, calculated as total interest and dividends divided by the net average amount of total investments and cash and cash equivalents, was 1.2% for the nine months ended September 30, 2020, compared to the 1.3% yield earned for the nine months ended September 30, 2019.

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We recorded a net realized and unrealized loss on investments of $1,764,300 during the nine months ended September 30, 2020 compared to net realized gains of $2,595,789 during the nine months ended September 30, 2019, a decrease of $4,360,089 or 168%. The decrease was primarily related to the decrease in the fair value of our equity investments during the nine months ended September 30, 2020, due to unfavorable market conditions attributable to the impact of the COVID-19 coronavirus pandemic on the worldwide economy. During the first quarter of 2020, our investment portfolios that hold equity securities incurred significant negative valuation adjustments as spreads widened and perceived risks elevated as was reflected in first quarter financial results. During the second and third quarters of 2020, our investment portfolio partially recovered as markets responded to unprecedented monetary and fiscal stimulus in the U.S. and around the world. In September 2020, the Company liquidated its equity securities portfolios as a measure to preserve its capital base.

Our losses and loss adjustment expenses increased by 170.2% to $14.078,405 for the nine months ended September 30, 2020 from $5,210,575 for the nine months ended September 30, 2019. The increase in loss and loss adjustment expenses was due to higher than expected loss emergence on the Company’s lawyers’ book of business in accident years 2017, 2018 and 2019.

We recorded policy acquisition costs of $4,097,754 for the nine months ended September 30, 2020 compared to $3,012,548 for the same period in 2019. Policy acquisition costs, which are primarily ceding commissions paid to the ceding insurer, are established as a percentage of premiums earned. Therefore, any increase or decrease in premiums earned will result in a similar increase or decrease in policy acquisition costs. The policy acquisition costs recorded during the nine months ended September 30, 2020 and 2019 were 45.8% and 37% of the net premiums earned under the Reinsurance Agreement of $8,947,710 and $8,141,526, respectively. The increase to the percentage applied to net premiums earned during the nine months ending September 30, 2020 was attributable to the recording of a premium deficiency reserve in September 2020 in the amount of $787,159. This reserve was recorded as management believes that the Company’s unearned premium position at September 30, 2020 may not be sufficient to meet future expected claims and expenses, as a result of recent adverse claim activity, as discussed above.

We expensed operating and management expenses of $5,019,124 for the nine months ended September 30, 2020 compared to $5,138,604 for the same period in 2019, a decrease of $119,480 or 2.3%. The decrease was primarily attributable to decreased board and committee meetings related expenses due to the reduction in physical meetings held during the second and third quarters as the result of travel restrictions imposed in relation to COVID-19.

The tables below summarize the results of the following AmerInst reportable segments: (1) reinsurance activity, which also includes investments and other activities, and (2) insurance activity, which offers professional liability solutions to professional service firms under the Agency Agreement with C&F.

	As of and for the Nine Months Ended September 30, 2020
	Reinsurance Segment			Insurance Segment		Total
Revenues	$	7,487,683		$	4,546,484	$	12,034,167
Total losses and expenses		19,062,602			4,261,899		23,324,501
Segment (loss) income		(11,574,919	)		284,585		(11,290,334	)
Identifiable assets		—			1,107,040		1,107,040

	As of and for the Nine Months Ended September 30, 2019
	Reinsurance Segment		Reinsurance Segment		Reinsurance Segment
Revenues	$	11,053,834	$	4,434,479	$	15,488,313
Total losses and expenses		9,241,760		4,087,935		13,329,695
Segment income		1,812,074		346,544		2,158,618
Identifiable assets		—		983,448		983,448

Three months ended September 30, 2020 compared to three months ended September 30, 2019

We recorded a net loss of $8,277,992 for the three months ended September 30, 2020 compared to a net loss of $22,537 for the same period in 2019. The decrease in net income was mainly attributable to the increase in loss and loss adjustment expenses of $8,749,489 from $1,802,187 for the three months ended September 30, 2019 to $10,551,676 for the three months ended September 30, 2020, which is due to higher than expected loss emergence on the Company’s lawyers book of business in accident years 2017, 2018 and 2019. This was partially offset by the increase in the fair value of our equity investments during the three months ended September 30, 2020 due to favorable market conditions attributable to the unprecedented monetary and fiscal stimulus in the U.S. and around the world to counter the negative impact of the COVID-19 coronavirus pandemic on the worldwide economy.

19

Our net premiums earned for the third quarter of 2020 were $3,437,196 compared to $2,815,917 for the third quarter of 2019, an increase of $621,279 or 22.1%. The net premiums earned during the quarters ended September 30, 2020 and 2019 were attributable to cessions from C&F under the Reinsurance Agreement. The increased cessions arose from a higher level of underwriting activity under the Agency Agreement during 2020 due to the continued marketing of the program by Protexure, which resulted in increased penetration in targeted markets.

For the quarters ended September 30, 2020 and 2019, we recorded commission income under the Agency Agreement of $1,437,181 and $1,450,367, respectively, a marginal decrease of $13,186 or .9%. This decrease resulted from a marginally lower volume of premiums written under the Agency Agreement during the third quarter of 2020 compared to the third quarter of 2019.

We recorded net investment income of $99,444 for the quarter ended September 30, 2020 compared to $125,491, for the quarter ended September 30, 2019. The decrease in net investment income was attributable to a decrease in interest earned on short term investments and cash and cash equivalents as the result of lower interest rates in place during the third quarter of 2020 compared to the same period in 2019. The annualized investment yield, calculated as total interest and dividends divided by the net average amount of total investments and cash and cash equivalents, was 1.2% for the quarter ended September 30, 2020, compared to the 1.3% yield earned for the quarter ended September 30, 2019.

We recorded net realized and unrealized gains on investments of $988,562 during the quarter ended September 30, 2020 compared to net realized and unrealized gains of $72,492 during the quarter ended September 30, 2019, an increase of $916,070 or 1,263.7%. The increase was primarily related to the increase in the fair value of our equity investments during the quarter ended September 30, 2020, due to favorable market conditions attributable to the unprecedented monetary and fiscal stimulus in the U.S. and around the world to counter the negative impact of the COVID-19 coronavirus pandemic on the worldwide economy. In late September 2020, the Company liquidated its equity securities portfolios as a measure to preserve its capital base.

Our losses and loss adjustment expenses increased by 485.5% to $10,551,676 for the three months ended September 30, 2020 from $1,082,187 for the three months ended September 30, 2019. The increase in loss and loss adjustment expenses was due to higher than expected loss emergence on the Company’s lawyers’ book of business in accident years 2017, 2018 and 2019.

We recorded policy acquisition costs of $2,058,923 in the third quarter of 2020 compared to $1,041,890 for the same period in 2019. Policy acquisition costs, which are primarily ceding commissions paid to the ceding insurer, are established as a percentage of premiums earned; therefore, any increase or decrease in premiums earned will result in a similar increase or decrease in policy acquisition costs. The policy acquisition costs recorded during the third quarter of 2020 and 2019 were 59.9% and 37% of the net premiums earned under the Reinsurance Agreement of $3,437,196 and $2,815,917, respectively. The increase to the percentage applied to net premiums earned during the third quarter of 2020 was attributable to the recording of a premium deficiency reserve in September 2020 in the amount of $787,159. This reserve was recorded as management believes that the Company’s unearned premium position at September 30, 2020 may not be sufficient to meet future expected claims and expenses, as a result of recent adverse claim activity, as discussed above.

We incurred operating and management expenses of $1,592,813 in the third quarter of 2020 compared to $1,636,073 for the same period in 2019, a decrease of $43,260 or 2.6%. The decrease was primarily attributable to decreased board and committee meetings related expenses due to the reduction in physical meetings held during the third quarter as the result of travel restrictions imposed in relation to COVID-19.

The tables below summarize the results of the following AmerInst reportable segments: (1) reinsurance activity, which also includes investments and other activities, and (2) insurance activity, which offers professional liability solutions to professional service firms under the Agency Agreement with C&F.

	As of and for the Three Months Ended September 30, 2020
	Reinsurance Segment			Insurance Segment		Total
Revenues	$	4,524,821		$	1,437,562	$	5,962,383
Total losses and expenses		12,872,084			1,368,291		14,240,375
Segment (loss) income		(8,347,263	)		69,271		(8,277,992	)
Identifiable assets		—			1,107,040		1,107,040

20

	As of and for the Three Months Ended September 30, 2019
	Reinsurance Segment			Reinsurance Segment		Reinsurance Segment
Revenues	$	3,001,278		$	1,462,998	$	4,464,267
Total losses and expenses		3,120,582			1,366,222		4,486,804
Segment (loss) income		(119,304	)		96,767		(22,537	)
Identifiable assets		—			983,448		983,448

FINANCIAL CONDITION

As of September 30, 2020, our total investments were $16,909,494, a decrease of $14,124,122 or 45.4%, from $31,033,616 at December 31, 2019. This decrease was primarily due to the Company’s decision to liquidate its equity securities portfolios in September 2020 as a measure to preserve its capital base. The cash and cash equivalents balance increased from $6,589,810 at December 31, 2019 to $10,795,173 at September 30, 2020, an increase of $4,205,363 or 63.8%, and the restricted cash and cash equivalents balance increased from $1,169,805 at December 31, 2019 to $4,328,910 at September 30, 2020, an increase of $3,159,105 or 270.1%. These increases were primarily due to the deposit of the proceeds in relation to the aforementioned equity security portfolio liquidations, partially offset by net losses paid under the Reinsurance Agreement during the nine months ended September 30, 2020. The ratio of cash, total investments and other invested assets to total liabilities at September 30, 2020 was 1.25:1, compared to a ratio of 1.22:1 at December 31, 2019.

The assumed reinsurance balances receivable represents the current assumed premiums receivable from the fronting carriers. As of September 30, 2020, the balance was $2,830,194 compared to $5,695,847 as of December 31, 2019. This balance fluctuates due to the timing of the net premium received from C&F under the Reinsurance Agreement.

The assumed reinsurance payable represents current reinsurance losses payable and commissions payable to the fronting carriers. As of September 30, 2020, the balance was $2,701,177 compared to $6,756,177 as of December 31, 2019. This balance fluctuates due to the timing of losses reported to us.

Deferred policy acquisition costs, which represent the deferral of ceding commission expense related to premiums not yet earned, decreased from $1,964,052 at December 31, 2019 to $1,174,491at September 30, 2020. The decrease in deferred policy acquisition costs in 2020 was due to the decrease in unearned premiums assumed under the Reinsurance Agreement compared to the prior year and to the recording of a premium deficiency reserve in September 2020 in the amount of $787,159. This reserve was recorded as management believes that the Company’s unearned premium position at September 30, 2020 may not be sufficient to meet future expected claims and expenses, as a result of recent adverse claim activity, as discussed above.

Prepaid expenses and other assets were $1,924,327 at September 30, 2020 compared to $2,019,622 as of December 31, 2019. The balance primarily relates to (1) prepaid directors’ and officers’ liability insurance costs, (2) the directors’ prepaid annual retainer, (3) prepaid professional fees and (4) premiums due to Protexure under the Agency Agreement. This balance fluctuates due to the timing of the prepayments and to the timing of the premium receipts by Protexure.

Accrued expenses and other liabilities primarily represent premiums payable by Protexure to C&F under the Agency Agreement and expenses accrued relating largely to professional fees. The balance decreased from $5,873,130 at December 31, 2019 to $5,159,635 at September 30, 2020, a decrease of $713,495 or 12.1%. This balance fluctuates due to the timing of the premium payments to C&F and payments of professional fees.

LIQUIDITY AND CAPITAL RESOURCES

Our cash needs consist of settlement of losses and expenses under our reinsurance treaties and funding day-to-day operations. In continuing the implementation of our business plan, our management expects to meet these cash needs from cash flows arising from our investment portfolio. Because substantially all of our assets are marketable securities, we expect that we will have sufficient flexibility to provide for unbudgeted cash needs that may arise from time to time without resorting to borrowing, subject to Bermuda statutory limitations as discussed in our 2019 Annual Report on Form 10-K.

Total cash, investments and other invested assets decreased from $38,793,231 at December 31, 2019 to $32,033,577 at September 30, 2020, a decrease of $6,759,654 or 17.4%. The net decrease resulted primarily from the decrease in the fair value of certain equity securities as a result of unfavorable market conditions attributable to the impact of the COVID-19 coronavirus pandemic on the worldwide economy and to net losses paid under the Reinsurance Agreement. In September 2020, the Company liquidated its equity securities portfolios as a measure to preserve its capital base.

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The Bermuda Monetary Authority has authorized Investco to purchase our common shares, on a negotiated basis, from shareholders who have died or retired from the practice of public accounting. During the nine months ended September 30, 2020, no such transactions occurred. From inception through September 30, 2020, Investco had repurchased 224,538 common shares from shareholders who had died or retired for a total purchase price of $6,379,286. From time to time, Investco has also purchased shares in privately negotiated transactions. From inception through September 30, 2020, Investco had purchased an additional 75,069 common shares in such privately negotiated transactions for a total purchase price of $1,109,025. During the nine months ended September 30, 2020, no such transactions occurred.

Cash Dividends

We paid no dividends during the nine months ended September 30, 2020. Since we began paying dividends in 1995, our original shareholders have received $22.87 in cumulative dividends per share. Although we have paid cash dividends on a regular basis in the past, the declaration and payment of cash dividends in the future will be at the discretion of our board of directors, subject to the requirements of applicable law, and will depend on, among other things, our financial condition, results of operations, current and anticipated cash needs and other factors that our board of directors considers relevant.

OFF-BALANCE SHEET ARRANGEMENTS

The Company is not a party to any off-balance sheet arrangements.

CRITICAL ACCOUNTING POLICIES

Our critical accounting policies are discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2019 and is incorporated herein by reference.

We have identified accounting for the liability for losses and loss adjustment expenses as our most critical accounting policy and estimate in that it is important to the portrayal of our financial condition and results, and it requires our subjective and complex judgment as a result of the need to make estimates about the effects of matters that are inherently uncertain. This accounting policy, including the nature of the estimates and types of assumptions used, are described throughout this Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2019.

Available Information

We file annual, quarterly, and current reports, proxy statements and other information with the Commission. You may read any public document we file with the Commission at the Commission’s public reference room at 100 F Street, NE, Washington, DC 20549. Please call the Commission at 1-800-SEC-0330 for information on the public reference room. The Commission maintains an internet site that contains annual, quarterly, and current reports, proxy and information statements and other information that issuers (including AmerInst) file electronically with the Commission. The Commission’s internet site is www.sec.gov.

Our internet site is www.amerinst.bm. We make available free of charge through our internet site our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Commission. We also make available, through our internet site, via links to the Commission’s internet site, statements of beneficial ownership of our equity securities filed by our directors, officers, 10% or greater shareholders and others under Section 16 of the Securities Exchange Act. In addition, we post on www.amerinst.bm our Memorandum of Association, our Bye-Laws, our Statement of Share Ownership Policy, Charters for our Audit Committee and Governance and Nominations Committee, as well as our Code of Business Conduct and Ethics. You can request a copy of these documents, excluding exhibits, at no cost, by writing or telephoning us c/o Citadel Management Bermuda Limited, 25 Church Street, Continental Building, P.O. Box HM 1601 Hamilton, Bermuda HM GX, Attention: Investor Relations (441) 295-6015. The information on our internet site is not incorporated by reference into this report.

22

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of September 30, 2020, the end of the period covered by this Form 10-Q, our management, including our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer each concluded that as of September 30, 2020, the end of the period covered by this Form 10-Q, we maintained effective disclosure controls and procedures.

Changes in Internal Control over Financial Reporting

Our management, including our Principal Executive Officer and Principal Financial Officer, has reviewed our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). There have been no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II—OTHER INFORMATION

Item 1. Legal Proceedings

We are party to various legal proceedings generally arising in the normal course of our business. While any proceeding contains an element of uncertainty, we do not believe that the eventual outcome of any litigation or arbitration proceeding to which we are presently a party will have a material adverse effect on our financial condition or business. Pursuant to our insurance and reinsurance agreements, disputes are generally required to be finally settled by arbitration.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our 2019 Annual Report on Form 10-K, as updated in our subsequent quarterly reports. The risks described in our 2019 Annual Report on Form 10-K and our subsequent quarterly reports are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

(a) Exhibits

Exhibit Number	Description
31.1	Certification of Stuart H. Grayston pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Thomas R. McMahon pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Stuart H. Grayston pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Thomas R. McMahon 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.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

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.

Dated: November 16, 2020	AMERINST INSURANCE GROUP, LTD.
	(Registrant)
	By:	/s/ STUART H. GRAYSTON
		Stuart H. Grayston
		President (Principal Executive Officer, duly authorized to sign this Report in such capacity and on behalf of the Registrant)
	By:	/s/ THOMAS R. MCMAHON
		Thomas R. McMahon
		Chief Financial Officer (Principal Financial Officer, duly authorized to sign this Report in such capacity and on behalf of the Registrant)

24

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Stuart H. Grayston, certify that:

1. I have reviewed this quarterly report on Form 10-Q of AmerInst Insurance Group, Ltd.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 16, 2020

/s/ STUART H. GRAYSTON

Stuart H. Grayston

President (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Thomas R. McMahon, certify that:

1. I have reviewed this quarterly report on Form 10-Q of AmerInst Insurance Group, Ltd.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 16, 2020

/s/ THOMAS R. MCMAHON

Thomas R. McMahon

Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of AmerInst Insurance Group, Ltd. (the “Company”) on Form 10-Q for the period ended September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stuart H. Grayston, President and Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ STUART H. GRAYSTON

Stuart H. Grayston

President (Principal Executive Officer)

November 16, 2020

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of AmerInst Insurance Group, Ltd. (the “Company”) on Form 10-Q for the period ended September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas R. McMahon, Chief Financial Officer and Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ THOMAS R. MCMAHON

Thomas R. McMahon

Chief Financial Officer (Principal Financial Officer)

November 16, 2020

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2020	Nov. 01, 2020
Document Information [Line Items]
Entity Registrant Name	AMERINST INSURANCE GROUP LTD
Entity Central Index Key	0001065201
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding (in shares)		995,253
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Sep. 30, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
ASSETS
Fixed maturity investments, at fair value (amortized cost $16,322,794 and $15,564,687)	$ 16,909,494	$ 15,668,317
Equity securities, at fair value (cost $0 and $10,889,683)		15,365,299
TOTAL INVESTMENTS	16,909,494	31,033,616
Cash and cash equivalents	10,795,173	6,589,810
Restricted cash and cash equivalents	4,328,910	1,169,805
Assumed reinsurance premiums receivable	2,830,194	5,695,847
Accrued investment income	136,062	104,935
Property and equipment	1,107,040	1,105,513
Deferred income taxes	2,440,000	2,564,000
Deferred policy acquisition costs	1,174,491	1,964,052
Prepaid expenses and other assets	1,924,327	2,019,622
TOTAL ASSETS	41,645,691	52,247,200
LIABILITIES
Unpaid losses and loss adjustment expenses	18,952,917	13,966,044
Unearned premiums	5,301,755	5,308,398
Assumed reinsurance payable	2,701,177	6,756,177
Accrued expenses and other liabilities	5,159,635	5,873,130
TOTAL LIABILITIES	32,115,484	31,903,749
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY
Common shares, $1 par value, 2020 and 2019: 2,000,000 shares authorized, 995,253 issued and outstanding	995,253	995,253
Additional paid-in-capital	6,454,626	6,465,776
Retained earnings	10,552,075	21,842,409
Accumulated other comprehensive income	586,700	103,630
Shares held by Subsidiary (369,576 and 369,576 shares) at cost	(9,058,447)	(9,063,617)
TOTAL SHAREHOLDERS’ EQUITY	9,530,207	20,343,451
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 41,645,691	$ 52,247,200

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Fixed maturity investments, amortized cost	$ 16,322,794	$ 15,564,687
Equity securities, cost	$ 0	$ 10,889,683
Common shares, par value (in dollars per share)	$ 1	$ 1
Common shares, shares authorized (in shares)	2,000,000	2,000,000
Common shares, issued (in shares)	995,253	995,253
Common shares, outstanding (in shares)	995,253	995,253
Shares held by Subsidiary (in shares)	369,576	369,576

XML

Condensed Consolidated Statements of Operations, Comprehensive (Loss) Income and Retained Earnings (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
REVENUE
Net premiums earned	$ 3,437,196	$ 2,815,917	$ 8,947,710	$ 8,141,526
Commission income	1,437,181	1,450,367	4,542,478	4,395,855
Net investment income	99,444	125,491	308,279	355,143
Net realized and unrealized (losses) gains on investments	988,562	72,492	(1,764,300)	2,595,789
TOTAL REVENUE	5,962,383	4,464,267	12,034,167	15,488,313
LOSSES AND EXPENSES
Losses and loss adjustment expenses	10,551,676	1,802,187	14,078,405	5,210,575
Policy acquisition costs	2,058,923	1,041,890	4,097,754	3,012,548
Operating and management expenses	1,592,813	1,636,073	5,019,124	5,138,604
TOTAL LOSSES AND EXPENSES	14,203,412	4,480,150	23,195,283	13,361,727
NET (LOSS) INCOME BEFORE TAX	(8,241,029)	(15,883)	(11,161,116)	2,126,586
Income tax (benefit) expense	36,963	6,654	129,218	(32,032)
NET (LOSS) INCOME AFTER TAX	(8,277,992)	(22,537)	(11,290,334)	2,158,618
OTHER COMPREHENSIVE INCOME
Net unrealized holding gains arising during the period	47,914	68,341	565,531	335,102
Reclassification adjustment for gains included in net income			(82,461)
OTHER COMPREHENSIVE INCOME	47,914	68,341	483,070	335,102
COMPREHENSIVE (LOSS) INCOME	(8,230,078)	45,804	(10,807,264)	2,493,720
RETAINED EARNINGS, BEGINNING OF PERIOD	18,830,067	21,581,045	21,842,409	19,725,581
Net (loss) income	(8,277,992)	(22,537)	(11,290,334)	2,158,618
Dividends				(325,691)
RETAINED EARNINGS, END OF PERIOD	$ 10,552,075	$ 21,558,508	$ 10,552,075	$ 21,558,508
Net (loss) income per share
Basic (in dollars per share)	$ (13.23)	$ (0.04)	$ (18.04)	$ 3.41
Diluted (in dollars per share)	(13.23)	(0.04)	(18.04)	3.40
Dividends, per share (in dollars per share)		$ 0		$ 0.50
Weighted average number of shares outstanding for the entire period
Basic (in shares)	625,677	632,554	625,677	631,721
Diluted (in shares)	625,677	632,554	625,677	634,276

XML

Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Shares Held By Subsidiary [Member]	Total
Balance (in shares) at Dec. 31, 2018	995,253
Balance at Dec. 31, 2018		$ 6,393,730	$ 19,725,581	$ (218,348)	$ (8,941,051)	$ 17,955,165
Net (loss) income			1,669,711			1,669,711
Unrealized gains on securities, net of reclassification adjustment				140,409		140,409
Balance (in shares) at Mar. 31, 2019	995,253
Balance at Mar. 31, 2019		6,393,730	21,395,292	(77,939)	(8,941,051)	19,765,285
Balance (in shares) at Dec. 31, 2018	995,253
Balance at Dec. 31, 2018		6,393,730	19,725,581	(218,348)	(8,941,051)	17,955,165
Net (loss) income						2,158,618
Unrealized gains on securities, net of reclassification adjustment						335,102
Purchase of shares by subsidiary, net
Issuance of shares by subsidiary, net
Dividends						(325,691)
Balance (in shares) at Sep. 30, 2019	995,253
Balance at Sep. 30, 2019		6,444,036	21,558,508	116,754	(8,871,051)	20,243,500
Balance (in shares) at Mar. 31, 2019	995,253
Balance at Mar. 31, 2019		6,393,730	21,395,292	(77,939)	(8,941,051)	19,765,285
Net (loss) income			511,444			511,444
Unrealized gains on securities, net of reclassification adjustment				126,352		126,352
Purchase of shares by subsidiary, net					(70,000)	(70,000)
Stock option awards expense		32,266				32,266
Stock option awards expense		32,266				32,266
Issuance of shares by subsidiary, net					70,000	70,000
Dividends			(325,691)			(325,691)
Balance (in shares) at Jun. 30, 2019	995,253
Balance at Jun. 30, 2019		6,425,996	21,581,045	48,413	(8,871,051)	20,179,656
Net (loss) income			(22,537)			(22,537)
Unrealized gains on securities, net of reclassification adjustment				68,341		68,341
Stock option awards expense		18,040				18,040
Stock option awards expense		18,040				18,040
Dividends
Balance (in shares) at Sep. 30, 2019	995,253
Balance at Sep. 30, 2019		6,444,036	21,558,508	116,754	(8,871,051)	20,243,500
Balance (in shares) at Dec. 31, 2019	995,253
Balance at Dec. 31, 2019		6,465,776	21,842,409	103,630	(9,063,617)	20,343,451
Net (loss) income			(4,477,597)			(4,477,597)
Stock option awards expense		(11,955)				(11,955)
Unrealized gains on securities, net of reclassification adjustment				228,774		228,774
Purchase of shares by subsidiary, net					5,170	5,170
Issuance of shares by subsidiary, net					(5,170)	(5,170)
Balance (in shares) at Mar. 31, 2020	995,253
Balance at Mar. 31, 2020		6,453,821	17,364,812	332,404	(9,058,447)	16,087,843
Balance (in shares) at Dec. 31, 2019	995,253
Balance at Dec. 31, 2019		6,465,776	21,842,409	103,630	(9,063,617)	20,343,451
Net (loss) income						(11,290,334)
Unrealized gains on securities, net of reclassification adjustment						483,070
Purchase of shares by subsidiary, net						5,170
Issuance of shares by subsidiary, net						(5,170)
Dividends
Balance (in shares) at Sep. 30, 2020	995,253
Balance at Sep. 30, 2020		6,454,626	10,552,075	586,700	(9,058,447)	9,530,207
Balance (in shares) at Mar. 31, 2020	995,253
Balance at Mar. 31, 2020		6,453,821	17,364,812	332,404	(9,058,447)	16,087,843
Net (loss) income			1,465,255			1,465,255
Unrealized gains on securities, net of reclassification adjustment				206,382		206,382
Stock option awards expense		805				805
Stock option awards expense		805				805
Balance (in shares) at Jun. 30, 2020	995,253
Balance at Jun. 30, 2020		6,454,626	18,830,067	538,786	(9,058,447)	17,760,285
Net (loss) income			(8,277,992)			(8,277,992)
Unrealized gains on securities, net of reclassification adjustment				47,914		47,914
Stock option awards expense
Stock option awards expense
Dividends
Balance (in shares) at Sep. 30, 2020	995,253
Balance at Sep. 30, 2020		$ 6,454,626	$ 10,552,075	$ 586,700	$ (9,058,447)	$ 9,530,207

XML

Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (Parentheticals) - $ / shares	3 Months Ended			9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Jun. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Dividends, per share (in dollars per share)		$ 0	$ 0.50		$ 0.50

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
OPERATING ACTIVITIES
Net Cash (used in) provided by Operating Activities			$ (5,225,829)	$ 1,603,447
INVESTING ACTIVITIES
Purchases of property and equipment			(199,728)	(434,250)
Purchases of available-for-sale securities			(6,943,373)	(5,492,708)
Proceeds from sales of available-for-sale securities	$ 12,856,948	$ 429,866	14,941,147	2,232,592
Proceeds from redemptions of fixed maturity investments	(17,931)	265,000	3,082,081	265,000
Proceeds from maturities of fixed maturity investments	500,000	840,000	1,705,000	3,090,000
Net Cash provided by (used in) Investing Activities			12,585,127	(339,366)
FINANCING ACTIVITIES
Dividends paid				(325,691)
Purchase of shares by subsidiary, net			5,170
Net Cash provided by (used in) Financing Activities			5,170	(325,691)
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH			7,364,468	938,390
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD			7,759,615	5,971,046
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$ 15,124,083	$ 6,909,436	$ 15,124,083	$ 6,909,436

XML

Note 1 - Basis of Preparation and Consolidation

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1.

BASIS OF PREPARATION AND CONSOLIDATION

The condensed consolidated financial statements included herein have been prepared by AmerInst Insurance Group, Ltd. (“AmerInst”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “Commission”). These financial statements reflect all adjustments consisting of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of our financial position and results of operations as of the end of and for the periods presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All intercompany transactions and balances have been eliminated on consolidation. These statements are condensed and do

not

incorporate all the information required under U.S. GAAP to be included in a full set of financial statements. In these notes, the terms “we”, “us”, “our” or the “Company” refer to AmerInst and its subsidiaries. These condensed statements should be read in conjunction with the audited consolidated financial statements at and for the year ended

December 

31,

2019

and notes thereto, included in AmerInst's Annual Report on Form

10

-K for the year then ended.

New Accounting Pronouncements

New Accounting Standards Adopted in

2020

No

new accounting standards adopted in

2020.

Accounting Standards

Not

Yet Adopted

Financial Instruments Credit Losses-Measurement of Credit Losses on Financial Instruments

In

June 2016,

the FASB issued ASU

2016

-

13,

which amends the guidance on impairment of financial instruments and significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are

not

measured at fair value through net income. The ASU will replace the existing “incurred loss” approach, with an “expected loss” model for instruments measured at amortized cost and require entities to record allowances for available-for-sale debt securities rather than reduce the carrying amount under the existing other-than temporary-impairment model. The ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans. The Company's insurance premium balances receivables are also more significant financial assets within the scope of ASU

2016

-

13.

The guidance requires financial assets to be presented at the net amount expected to be collected. The tentative effective date for the ASU is

January 

1,

2023.

We do

not

expect the adoption of this ASU to have a material impact on our consolidated financial statements.

XML

Note 2 - Investments

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

2.

INVESTMENTS

The cost or amortized cost, gross unrealized holding gains and losses, and estimated fair value of the Company's fixed maturity investments, by major security type, and equity securities as of

September 

30,

2020

and

December 

31,

2019

are as follows:

	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2020
Fixed maturity investments:
U.S. government agency securities	$	2,331,829	$	49,599	$	—	$	2,381,428
Obligations of U.S. states and political subdivisions		7,118,592		312,371	•			7,430,963
Corporate debt securities		6,872,373		224,730		—		7,097,103
Total fixed maturity investments		16,322,794		586,700		—		16,909,494
Equity securities		—		—		—		—
Total equity securities		—		—		—		—
Total investments	$	16,322,794	$	586,700	$	—	$	16,909,494

	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
December 31, 2019
Fixed maturity investments:
U.S. government agency securities	$	4,731,181	$	38,524	$	(1,086	)	$	4,768,619
Obligations of U.S. states and political subdivisions		3,188,217		29,521		(5,936	)		3,211,802
Corporate debt securities		7,645,289		45,080		(2,473	)		7,687,896
Total fixed maturity investments		15,564,687		113,125		(9,495	)		15,668,317
Equity securities		10,889,683		4,854,179		(378,563	)		15,365,299
Total equity securities		10,889,683		4,854,179		(378,563	)		15,365,299
Total investments	$	26,454,370	$	4,967,304	$	(388,058	)	$	31,033,616

The following tables summarize the Company's fixed maturity and equity securities in an unrealized loss position and the aggregate fair value and gross unrealized loss by length of time the security has continuously been in an unrealized loss position:

12 months or greater

Less than 12 months

Total

Estimated Fair Value

Unrealized Losses

Estimated Fair Value

Unrealized Losses

Estimated Fair Value

Unrealized Losses

September 30, 2020

Fixed maturity investments:

U.S. government agency securities

$

—

$

—

$

—

$

—

$

—

$

—

Obligations of states and political subdivisions

—

—

—

—

—

—

Corporate debt securities

—

—

—

—

—

—

Total fixed maturity investments

—

—

—

—

—

—

Equity securities

—

—

—

—

—

—

Total equity securities

—

—

—

—

—

—

Total investments

$

—

$

—

$

—

$

—

$

—

$

—

	12 months or greater					Less than 12 months					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
December 31, 2019
Fixed maturity investments:
U.S. government agency securities	$	—	$	—		$	1,528,838	$	(1,086	)	$	1,528,838	$	(1,086	)
Obligations of states and political subdivisions		—		—			601,053		(5,936	)		601,053		(5,936	)
Corporate debt securities		743,360		(2,473	)		—		—			743,360		(2,473	)
Total fixed maturity investments		743,360		(2,473	)		2,129,891		(7,022	)		2,873,251		(9,495	)
Equity securities		336,321		(119,313	)		1,496,152		(259,250	)		1,832,473		(378,563	)
Total equity securities		336,321		(119,313	)		1,496,152		(259,250	)		1,832,473		(378,563	)
Total investments	$	1,079,681	$	(121,786	)	$	3,626,043	$	(266,272	)	$	4,705,724	$	(388,058	)

As of

September 

30,

2020

and

December 

31,

2019,

there were

zero

and

eight

fixed income securities in an unrealized loss position with an estimated fair value of

$0

and

$2,873,251,

respectively. As of

September 

30,

2020

and

December 

31,

2019,

none

and

two

of these fixed income securities had been in an unrealized loss position for

12

months or greater, respectively. As of

September 

30,

2020

and

December 

31,

2019,

none

of the fixed income securities were considered to be other than-temporarily-impaired. The Company has the intent to hold these fixed income securities and it is

not

more likely than

not

that the Company will be required to sell these fixed income securities before their fair values recover above the adjusted cost. The unrealized losses from these fixed income securities were

not

a result of credit, collateral or structural issues.

Other-Than-Temporary Impairment Process

The Company assesses whether declines in the fair value of its fixed maturity investments classified as available-for-sale represent impairments that are other-than-temporary by reviewing each fixed maturity investment that is impaired and (

1

) determining if the Company has the intent to sell the fixed maturity investment or if it is more likely than

not

that the Company will be required to sell the fixed maturity investment before its anticipated recovery; and (

2

) assessing whether a credit loss exists, that is, where the Company expects that the present value of the cash flows expected to be collected from the fixed maturity investment are less than the amortized cost basis of the investment.

The Company had

no

planned sales of its fixed maturity investments classified as available-for-sale that were in an unrealized loss position at

September 

30,

2020.

In assessing whether it is more likely than

not

that the Company will be required to sell a fixed maturity investment before its anticipated recovery, the Company considers various factors including its future cash flow requirements, legal and regulatory requirements, the level of its cash, cash equivalents, short term investments and fixed maturity investments available for sale in an unrealized gain position, and other relevant factors.

In evaluating credit losses, the Company considers a variety of factors in the assessment of a fixed maturity investment including: (

1

) the time period during which there has been a significant decline below cost; (

2

) the extent of the decline below cost and par; (

3

) the potential for the fixed maturity investment to recover in value; (

4

) an analysis of the financial condition of the issuer; (

5

) the rating of the issuer; and (

6

) failure of the issuer of the fixed maturity investment to make scheduled interest or principal payments.

If we conclude a fixed income investment is other-than-temporarily impaired, we write down the amortized cost of the security to fair value, with a charge to net realized investment gains (losses) in the Consolidated Statement of Operations. Gross unrealized losses on the investment portfolio as of

September 

30,

2020

and

December 

31,

2019,

relating to

zero

and

eight

fixed maturity securities, amounted to

$0

and

$9,495,

respectively. The unrealized losses on these available for sale fixed maturity securities were

not

as a result of credit, collateral or structural issues. During the

nine

months and

three

months ended

September 

30,

2020,

no

other-than-temporary impairment charges were recorded.

Fair Value of Investments

Under existing U.S. GAAP, we are required to recognize certain assets at their fair value in our consolidated balance sheets. This includes our fixed maturity investments and equity securities. In accordance with the Fair Value Measurements and Disclosures Topic of Financial Accounting Standards Board's Accounting Standards Codification (“ASC”)

820,

fair value is defined as the price 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. ASC

820

establishes a

three

-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon whether the inputs to the valuation of an asset or liability are observable or unobservable in the market at the measurement date, with quoted market prices being the highest level (Level

1

) and unobservable inputs being the lowest level (Level 

3

). A fair value measurement will fall within the level of the hierarchy based on the inputs that are significant to determining such measurement. The

three

levels are defined as follows:

• Level  1 : Observable inputs to the valuation methodology that are quoted prices (unadjusted) for identical assets or liabilities in active markets.

• Level  2 : Observable inputs to the valuation methodology other than quoted market prices (unadjusted) for identical assets or liabilities in active markets. Level  2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in markets that are not active and inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

• Level  3 : Inputs to the valuation methodology that are unobservable for the asset or liability.

At each measurement date, we estimate the fair value of the security using various valuation techniques. We utilize, to the extent available, quoted market prices in active markets or observable market inputs in estimating the fair value of our investments. When quoted market prices or observable market inputs are

not

available, we utilize valuation techniques that rely on unobservable inputs to estimate the fair value of investments. The following describes the valuation techniques we used to determine the fair value of investments held as of

September 

30,

2020

and

December 

31,

2019

and what level within the fair value hierarchy each valuation technique resides:

• U.S. government agency securities : Comprised primarily of bonds issued by the Federal Home Loan Bank, the Federal Home Loan Mortgage Corporation, Federal Farm Credit Bank and the Federal National Mortgage Association. The fair values of U.S. government agency securities are priced using the spread above the risk-free U.S. Treasury yield curve. As the yields for the risk-free U.S. Treasury yield curve are observable market inputs, the fair values of U.S. government agency securities are classified as Level  2 in the fair value hierarchy. AmerInst considers a liquid market to exist for these types of securities held. Broker quotes are not used for fair value pricing.

• Obligations of state and political subdivisions : Comprised of fixed income obligations of state and local governmental municipalities. The fair values of these securities are based on quotes and current market spread relationships, and are classified as Level  2 in the fair value hierarchy. AmerInst considers a liquid market to exist for these types of securities held. Broker quotes are not used for fair value pricing.

• Corporate debt securities : Comprised of bonds issued by corporations. The fair values of these securities are based on quotes and current market spread relationships, and are classified as Level  2 in the fair value hierarchy. AmerInst considers a liquid market to exist for these types of securities held. Broker quotes are not used for fair value pricing.

• Equity securities, at fair value : Comprised primarily of investments in the common stock of publicly traded companies in the U.S. All of the Company's equities were classified as Level  1 in the fair value hierarchy. The Company had received prices based on closing exchange prices from independent pricing sources to measure fair values for the equities.

In

September 2020,

the Company liquidated its equity securities portfolios.

While we obtain pricing from independent pricing services, management is ultimately responsible for determining the fair value measurements for all securities. To ensure fair value measurement is applied consistently and in accordance with U.S. GAAP, we periodically update our understanding of the pricing methodologies used by the independent pricing services. We also undertake further analysis with respect to prices we believe

may

not

be representative of fair value under current market conditions. Our review process includes, but is

not

limited to: (i) initial and ongoing evaluation of the pricing methodologies and valuation models used by outside parties to calculate fair value; (ii) quantitative analysis; (iii) a review of multiple quotes obtained in the pricing process and the range of resulting fair values for each security, if available, and (iv) randomly selecting purchased or sold securities and comparing the executed prices to the fair value estimates provided by the independent pricing sources.

There have been

no

material changes to our valuation techniques from what was used as of

December 

31,

2019.

Since the fair value of a security is an estimate of what a willing buyer would pay for such security if we sold it, we cannot know the ultimate value of our securities until they are sold. We believe the valuation techniques utilized provide us with a reasonable estimate of the price that would be received if we were to sell our assets or transfer our liabilities in an orderly market transaction between participants at the measurement date. The following tables show the fair value of the Company's investments in accordance with ASC

820

as of

September 

30,

2020

and

December 

31,

2019:

					Fair value measurement using:
	Carrying amount		Total fair value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
September 30, 2020
U.S. government agency securities	$	2,381,428	$	2,381,428	$	—	$	2,381,428	$	—
Obligations of U.S. state and political subdivisions		7,430,963		7,430,963				7,430,963
Corporate debt securities		7,097,103		7,097,103				7,097,103
Total fixed maturity investments		16,909,494		16,909,494
Equity securities		—		—
Total equity securities		—		—
Total investments	$	16,909,494	$	16,909,494	$	—	$	16,909,494	$	—

					Fair value measurement using:
	Carrying amount		Total fair value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
December 31, 2019
U.S. government agency securities	$	4,768,619	$	4,768,619	$	—	$	4,768,619	$	—
Obligations of U.S. state and political subdivisions		3,211,802		3,211,802				3,211,802
Corporate debt securities		7,687,896		7,687,896				7,687,896
Total fixed maturity investments		15,668,317		15,668,317
Equity securities		15,365,299		15,365,299		15,365,299
Total equity securities		15,365,299		15,365,299
Total investments	$	31,033,616	$	31,033,616	$	15,365,299	$	15,668,317	$	—

There were

no

transfers between Levels

1

and

2

during the

nine

months ended

September 30, 2020

and the year ended

December 

31,

2019.

Contractual Maturities

The cost or amortized cost and estimated fair value of fixed maturity investments as of

September 30, 2020

and

December 

31,

2019

by contractual maturity are shown below. Expected maturities

may

differ from contractual maturities as borrowers

may

have the right to call or prepay obligations without penalties.

	Amortized Cost		Estimated Fair Value
September 30, 2020
Due in one year or less	$	3,174,356	$	3,196,828
Due after one year through five years		10,919,495		11,331,133
Due after five years through ten years		1,770,808		1,902,272
Due after ten years		458,135		479,261
Total	$	16,322,794	$	16,909,494

	Amortized Cost		Estimated Fair Value
December 31, 2019
Due in one year or less	$	2,539,709	$	2,542,229
Due after one year through five years		12,518,738		12,619,593
Due after five years through ten years		506,240		506,495
Total	$	15,564,687	$	15,668,317

Information on sales and maturity of investments and net unrealized gains (losses) on equity investments during the

nine

months ended

September 

30,

2020

and

2019

are as follows:

	September 30, 2020			September 30, 2019
Total proceeds on sales of available-for-sale securities	$	14,941,147		$	2,232,592
Proceeds from redemptions of fixed maturity investments		3,082,081			265,000
Total proceeds from maturities of fixed maturity investments		1,705,000			3,090,000
Gross gains on sales		4,346,483			570,563
Gross losses on sales		(1,635,113	)		(586,028	)
Net unrealized (losses) gains on equity investments		(4,475,670	)		2,611,254
Total	$	(1,764,300	)	$	2,595,789

Information on sales and maturity of investments and net unrealized gains (losses) on equity investments during the

three

months ended

September 

30,

2020

and

2019

are as follows:

	September 30, 2020			September 30, 2019
Total proceeds on sales of available-for-sale securities	$	12,856,948		$	429,866
Proceeds from redemptions of fixed maturity investments		(17,931	)		265,000
Total proceeds from maturities of fixed maturity investments		500,000			840,000
Gross gains on sales		3,516,795			47,828
Gross losses on sales		(1,250,195	)		(492,424	)
Net unrealized (losses) gains movements		(1,278,038	)		517,088
Total	$	988,562		$	72,492

Net Investment Income

Major categories of net investment income during the

nine

months ended

September 30, 2020

and

2019

are summarized as follows:

	September 30, 2020			September 30, 2019
Interest earned:
Fixed maturity investments	$	262,200		$	263,575
Short term investments and cash and cash equivalents		10,859			55,362
Dividends earned		131,045			138,543
Investment expenses		(95,825	)		(102,337	)
Net investment income	$	308,279		$	355,143

Major categories of net investment income during the

three

months ended

September 

30,

2020

and

2019

are summarized as follows:

	September 30, 2020			September 30, 2019
Interest earned:
Fixed maturity investments	$	85,634		$	91,690
Short term investments and cash and cash equivalents		578			19,488
Dividends earned		43,060			44,571
Investment expenses		(29,828	)		(30,258	)
Net investment income	$	99,444		$	125,491

XML

Note 3 - Liability for Unpaid Losses and Loss Adjustment Expenses

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Liability for Future Policy Benefits and Unpaid Claims Disclosure [Text Block]

3.

LIABILITY FOR UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES

The following table presents a reconciliation of the beginning and ending balances for the liability for unpaid losses and loss adjustment expenses for the

nine

months ended

September 30, 2020

and

2019:

	September 30, 2020			September 30, 2019
Liability—beginning of year	$	13,966,044		$	12,989,260
Incurred related to:
Current year		4,989,087			5,210,575
Prior years		9,089,318			—
Total incurred		14,078,405			5,210,575
Paid related to:
Current year		(1,392,687	)		(94,416	)
Prior years		(7,698,845	)		(2,308,015	)
Total paid		(9,091,532	)		(2,402,431	)
Liability—end of year	$	18,952,917		$	15,797,403

As a result of the change in estimates of insured events in prior years, the provision for losses and loss adjustment expenses increased by

$9,089,318

during the

nine

months ended

September 30, 2020.

The unfavorable development during the

nine

months ended

September 30, 2020

was primarily due to higher than expected loss emergence on the Company's lawyers' book of business in accident years

2017,

2018

and

2019.

XML

Note 4 - Segment Information

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

4.

SEGMENT INFORMATION

AmerInst has

two

reportable segments: (

1

) reinsurance activity, which also includes investments and other activities, and (

2

) insurance activity, which offers professional liability solutions to professional service firms under the Agency Agreement with C&F, as defined in the “Overview” section below.

The tables below summarize the results of our reportable segments as of and for the

nine

months ended

September 30, 2020

and

2019.

	As of and for the Nine Months Ended September 30, 2020
	Reinsurance Segment			Insurance Segment		Total
Revenues	$	7,487,683		$	4,546,484	$	12,034,167
Total losses and expenses		19,062,602			4,261,899		23,324,501
Segment (loss) income		(11,574,919	)		284,585		(11,290,334	)
Identifiable assets		—			1,107,040		1,107,040

	As of and for the Nine Months Ended September 30, 2019
	Reinsurance Segment		Reinsurance Segment		Reinsurance Segment
Revenues	$	11,053,834	$	4,434,479	$	15,488,313
Total losses and expenses		9,241,760		4,087,935		13,329,695
Segment income		1,812,074		346,544		2,158,618
Identifiable assets		—		983,448		983,448

The tables below summarize the results of our reportable segments as of and for the

three

months ended

September 

30,

2020

and

2019.

	As of and for the Three Months Ended September 30, 2020
	Reinsurance Segment			Insurance Segment		Total
Revenues	$	4,524,821		$	1,437,562	$	5,962,383
Total losses and expenses		12,872,084			1,368,291		14,240,375
Segment (loss) income		(8,347,263	)		69,271		(8,277,992	)
Identifiable assets		—			1,107,040		1,107,040

	As of and for the Three Months Ended September 30, 2019
	Reinsurance Segment			Reinsurance Segment		Reinsurance Segment
Revenues	$	3,001,278		$	1,462,998	$	4,464,267
Total losses and expenses		3,120,582			1,366,222		4,486,804
Segment (loss) income		(119,304	)		96,767		(22,537	)
Identifiable assets		—			983,448		983,448

XML

Note 5 - Stock Compensation

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

 

5.

STOCK COMPENSATION

Phantom Shares:

Protexure Insurance Agency, Inc. (“Protexure”), a subsidiary of AmerInst, has employment agreements with

three

key members of senior management, which grant them phantom shares of the Company. Under these agreements, these employees were initially granted an aggregate of

63,765

phantom shares of the Company on the date of their employment, subject to certain vesting requirements. The phantom shares are eligible for phantom dividends payable at the same rate as regular dividends on the Company's common shares. The phantom dividends

may

be used only to purchase additional phantom shares with the purchase price of such phantom shares being the net book value of the Company's actual common shares as of the end of the previous quarter. During the

nine

months and

three

months ended

September 

30,

2020,

no

phantom shares were granted.

76,403

phantom shares were outstanding at

September 30, 2020

and

December 

31,

2019.

For these

three

employees, the phantom shares initially granted, as well as any additional shares granted from dividends declared, vested on

January 

1,

2015.

The liability payable to each of these employees under the phantom share agreements is equal to the value of the phantom shares based on the net book value of the Company's actual common shares at the end of the previous quarter less the value of phantom shares initially granted and is payable in cash upon (i) the participant's death, termination of employment due to disability, retirement at or after age

65

or resignation for good reason, (ii) termination of the participant by the Company without cause, (iii) termination by Participant without good reason or (iv) change in control.

The liability relating to these phantom shares is recalculated quarterly based on the net book value of our common shares at the end of each quarter. As a result of the overall decrease in the net book value of our common shares since the grant dates, we have

not

recorded any liability relating to these phantom shares at

September 30, 2020.

Stock Option Plan:

The Company has a nonqualified stock option plan to advance the development, growth and financial condition of the Company. This plan provides incentives through participation in the appreciation of its common stock in order to secure, retain and motivate directors and employees and align such person's interests with those of its shareholders. A total of

100,000

shares are authorized under the stock option plan.

A summary of the status of the stock option plan as of

September 

30,

2020

is as follows:

	Vested Shares		Weighted Average Exercise Price Per Share		Non-vested Shares			Weighted Average Exercise Price Per Share		Total Shares		Weighted Average Exercise Price Per Share
Outstanding—January 1, 2020		16,400	$	28.34		28,600		$	28.65		45,000	$	28.54
Granted		—		—		—			—		—		—
Forfeited		—		—		—			—		—		—
Exercised		—		—		—			—		—		—
Vested		8,400		28.42		(8,400	)		28.42		—		—
Outstanding— September 30, 2020		24,800	$	28.37		20,200		$	28.74		45,000	$	28.54
Options exercisable at year end		—		—		—			—		—		—
Weighted average fair value of options per share granted during the year		—		—	$	—			—	$	—		—
Remaining contractual life (years)		2.4				2.6					2.5

A summary of the status of the stock option plan as of

December 

31,

2019

is as follows:

	Vested Shares		Weighted Average Exercise Price Per Share		Non-vested Shares			Weighted Average Exercise Price Per Share		Total Shares			Weighted Average Exercise Price Per Share
Outstanding—January 1, 2019		7,000	$	27.99		40,000		$	28.71		47,000		$	28.60
Granted		—		—		—			—		—			—
Forfeited		—		—		(2,000	)		30.14		(2,000	)		30.14
Exercised		—		—		—			—		—			—
Vested		9,400		28.60		(9,400	)		28.60		—			—
Outstanding—December 31, 2019		16,400	$	28.34		28,600		$	28.65		45,000		$	28.54
Options exercisable at year end		—		—		—			—		—			—
Weighted average fair value of options per share granted during the year		—		—	$	—			—	$	—			—
Remaining contractual life (years)		3.2				3.3					3.3

The Company accounts for these options in accordance with GAAP, which requires that the fair value of the equity awards be recognized as compensation expense over the period during which the employee is required to provide service in exchange for such an award. The Company is amortizing compensation expense over the vesting period, or

five

years. The Company recognized $(

11,150

) and

$72,046

of compensation expense for stock options for the

nine

months ended

September 

30,

2020

and for the year ended

December 

31,

2019,

respectively.

XML

Note 6 - Subsequent Event

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Subsequent Events [Text Block]

6.

SUBSEQUENT EVENT

In

October 2020,

C&F advised us to cease writing business in

eight

states under the Agency Agreement.  We are currently in discussions with alternative carriers to write policies impacted by this directive.

XML

Note 2 - Investments (Tables)

9 Months Ended

Sep. 30, 2020

Notes Tables

Schedule of Available-for-sale Securities Reconciliation [Table Text Block]

	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2020
Fixed maturity investments:
U.S. government agency securities	$	2,331,829	$	49,599	$	—	$	2,381,428
Obligations of U.S. states and political subdivisions		7,118,592		312,371	•			7,430,963
Corporate debt securities		6,872,373		224,730		—		7,097,103
Total fixed maturity investments		16,322,794		586,700		—		16,909,494
Equity securities		—		—		—		—
Total equity securities		—		—		—		—
Total investments	$	16,322,794	$	586,700	$	—	$	16,909,494

	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
December 31, 2019
Fixed maturity investments:
U.S. government agency securities	$	4,731,181	$	38,524	$	(1,086	)	$	4,768,619
Obligations of U.S. states and political subdivisions		3,188,217		29,521		(5,936	)		3,211,802
Corporate debt securities		7,645,289		45,080		(2,473	)		7,687,896
Total fixed maturity investments		15,564,687		113,125		(9,495	)		15,668,317
Equity securities		10,889,683		4,854,179		(378,563	)		15,365,299
Total equity securities		10,889,683		4,854,179		(378,563	)		15,365,299
Total investments	$	26,454,370	$	4,967,304	$	(388,058	)	$	31,033,616

Schedule of Unrealized Loss on Investments [Table Text Block]

12 months or greater

Less than 12 months

Total

Estimated Fair Value

Unrealized Losses

Estimated Fair Value

Unrealized Losses

Estimated Fair Value

Unrealized Losses

September 30, 2020

Fixed maturity investments:

U.S. government agency securities

$

—

$

—

$

—

$

—

$

—

$

—

Obligations of states and political subdivisions

—

—

—

—

—

—

Corporate debt securities

—

—

—

—

—

—

Total fixed maturity investments

—

—

—

—

—

—

Equity securities

—

—

—

—

—

—

Total equity securities

—

—

—

—

—

—

Total investments

$

—

$

—

$

—

$

—

$

—

$

—

	12 months or greater					Less than 12 months					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
December 31, 2019
Fixed maturity investments:
U.S. government agency securities	$	—	$	—		$	1,528,838	$	(1,086	)	$	1,528,838	$	(1,086	)
Obligations of states and political subdivisions		—		—			601,053		(5,936	)		601,053		(5,936	)
Corporate debt securities		743,360		(2,473	)		—		—			743,360		(2,473	)
Total fixed maturity investments		743,360		(2,473	)		2,129,891		(7,022	)		2,873,251		(9,495	)
Equity securities		336,321		(119,313	)		1,496,152		(259,250	)		1,832,473		(378,563	)
Total equity securities		336,321		(119,313	)		1,496,152		(259,250	)		1,832,473		(378,563	)
Total investments	$	1,079,681	$	(121,786	)	$	3,626,043	$	(266,272	)	$	4,705,724	$	(388,058	)

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

					Fair value measurement using:
	Carrying amount		Total fair value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
September 30, 2020
U.S. government agency securities	$	2,381,428	$	2,381,428	$	—	$	2,381,428	$	—
Obligations of U.S. state and political subdivisions		7,430,963		7,430,963				7,430,963
Corporate debt securities		7,097,103		7,097,103				7,097,103
Total fixed maturity investments		16,909,494		16,909,494
Equity securities		—		—
Total equity securities		—		—
Total investments	$	16,909,494	$	16,909,494	$	—	$	16,909,494	$	—

					Fair value measurement using:
	Carrying amount		Total fair value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
December 31, 2019
U.S. government agency securities	$	4,768,619	$	4,768,619	$	—	$	4,768,619	$	—
Obligations of U.S. state and political subdivisions		3,211,802		3,211,802				3,211,802
Corporate debt securities		7,687,896		7,687,896				7,687,896
Total fixed maturity investments		15,668,317		15,668,317
Equity securities		15,365,299		15,365,299		15,365,299
Total equity securities		15,365,299		15,365,299
Total investments	$	31,033,616	$	31,033,616	$	15,365,299	$	15,668,317	$	—

Investments Classified by Contractual Maturity Date [Table Text Block]

	Amortized Cost		Estimated Fair Value
September 30, 2020
Due in one year or less	$	3,174,356	$	3,196,828
Due after one year through five years		10,919,495		11,331,133
Due after five years through ten years		1,770,808		1,902,272
Due after ten years		458,135		479,261
Total	$	16,322,794	$	16,909,494

	Amortized Cost		Estimated Fair Value
December 31, 2019
Due in one year or less	$	2,539,709	$	2,542,229
Due after one year through five years		12,518,738		12,619,593
Due after five years through ten years		506,240		506,495
Total	$	15,564,687	$	15,668,317

Realized Gain (Loss) on Investments [Table Text Block]

	September 30, 2020			September 30, 2019
Total proceeds on sales of available-for-sale securities	$	14,941,147		$	2,232,592
Proceeds from redemptions of fixed maturity investments		3,082,081			265,000
Total proceeds from maturities of fixed maturity investments		1,705,000			3,090,000
Gross gains on sales		4,346,483			570,563
Gross losses on sales		(1,635,113	)		(586,028	)
Net unrealized (losses) gains on equity investments		(4,475,670	)		2,611,254
Total	$	(1,764,300	)	$	2,595,789

	September 30, 2020			September 30, 2019
Total proceeds on sales of available-for-sale securities	$	12,856,948		$	429,866
Proceeds from redemptions of fixed maturity investments		(17,931	)		265,000
Total proceeds from maturities of fixed maturity investments		500,000			840,000
Gross gains on sales		3,516,795			47,828
Gross losses on sales		(1,250,195	)		(492,424	)
Net unrealized (losses) gains movements		(1,278,038	)		517,088
Total	$	988,562		$	72,492

Condensed Cash Flow Statement [Table Text Block]

	September 30, 2020			September 30, 2019
Interest earned:
Fixed maturity investments	$	262,200		$	263,575
Short term investments and cash and cash equivalents		10,859			55,362
Dividends earned		131,045			138,543
Investment expenses		(95,825	)		(102,337	)
Net investment income	$	308,279		$	355,143

	September 30, 2020			September 30, 2019
Interest earned:
Fixed maturity investments	$	85,634		$	91,690
Short term investments and cash and cash equivalents		578			19,488
Dividends earned		43,060			44,571
Investment expenses		(29,828	)		(30,258	)
Net investment income	$	99,444		$	125,491

XML

Note 3 - Liability for Unpaid Losses and Loss Adjustment Expenses (Tables)

9 Months Ended

Sep. 30, 2020

Notes Tables

Liability For Losses and Loss Adjustment Expense Activity [Table Text Block]

	September 30, 2020			September 30, 2019
Liability—beginning of year	$	13,966,044		$	12,989,260
Incurred related to:
Current year		4,989,087			5,210,575
Prior years		9,089,318			—
Total incurred		14,078,405			5,210,575
Paid related to:
Current year		(1,392,687	)		(94,416	)
Prior years		(7,698,845	)		(2,308,015	)
Total paid		(9,091,532	)		(2,402,431	)
Liability—end of year	$	18,952,917		$	15,797,403

XML

Note 4 - Segment Information (Tables)

9 Months Ended

Sep. 30, 2020

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	As of and for the Nine Months Ended September 30, 2020
	Reinsurance Segment			Insurance Segment		Total
Revenues	$	7,487,683		$	4,546,484	$	12,034,167
Total losses and expenses		19,062,602			4,261,899		23,324,501
Segment (loss) income		(11,574,919	)		284,585		(11,290,334	)
Identifiable assets		—			1,107,040		1,107,040

	As of and for the Nine Months Ended September 30, 2019
	Reinsurance Segment		Reinsurance Segment		Reinsurance Segment
Revenues	$	11,053,834	$	4,434,479	$	15,488,313
Total losses and expenses		9,241,760		4,087,935		13,329,695
Segment income		1,812,074		346,544		2,158,618
Identifiable assets		—		983,448		983,448

	As of and for the Three Months Ended September 30, 2020
	Reinsurance Segment			Insurance Segment		Total
Revenues	$	4,524,821		$	1,437,562	$	5,962,383
Total losses and expenses		12,872,084			1,368,291		14,240,375
Segment (loss) income		(8,347,263	)		69,271		(8,277,992	)
Identifiable assets		—			1,107,040		1,107,040

	As of and for the Three Months Ended September 30, 2019
	Reinsurance Segment			Reinsurance Segment		Reinsurance Segment
Revenues	$	3,001,278		$	1,462,998	$	4,464,267
Total losses and expenses		3,120,582			1,366,222		4,486,804
Segment (loss) income		(119,304	)		96,767		(22,537	)
Identifiable assets		—			983,448		983,448

XML

Note 5 - Stock Compensation (Tables)

9 Months Ended

Sep. 30, 2020

Notes Tables

Share-based Payment Arrangement, Option, Activity [Table Text Block]

	Vested Shares		Weighted Average Exercise Price Per Share		Non-vested Shares			Weighted Average Exercise Price Per Share		Total Shares		Weighted Average Exercise Price Per Share
Outstanding—January 1, 2020		16,400	$	28.34		28,600		$	28.65		45,000	$	28.54
Granted		—		—		—			—		—		—
Forfeited		—		—		—			—		—		—
Exercised		—		—		—			—		—		—
Vested		8,400		28.42		(8,400	)		28.42		—		—
Outstanding— September 30, 2020		24,800	$	28.37		20,200		$	28.74		45,000	$	28.54
Options exercisable at year end		—		—		—			—		—		—
Weighted average fair value of options per share granted during the year		—		—	$	—			—	$	—		—
Remaining contractual life (years)		2.4				2.6					2.5

	Vested Shares		Weighted Average Exercise Price Per Share		Non-vested Shares			Weighted Average Exercise Price Per Share		Total Shares			Weighted Average Exercise Price Per Share
Outstanding—January 1, 2019		7,000	$	27.99		40,000		$	28.71		47,000		$	28.60
Granted		—		—		—			—		—			—
Forfeited		—		—		(2,000	)		30.14		(2,000	)		30.14
Exercised		—		—		—			—		—			—
Vested		9,400		28.60		(9,400	)		28.60		—			—
Outstanding—December 31, 2019		16,400	$	28.34		28,600		$	28.65		45,000		$	28.54
Options exercisable at year end		—		—		—			—		—			—
Weighted average fair value of options per share granted during the year		—		—	$	—			—	$	—			—
Remaining contractual life (years)		3.2				3.3					3.3

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Note 2 - Investments (Details Textual)	9 Months Ended	12 Months Ended
	Sep. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total		$ 4,705,724
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss, Total		$ 388,058
Fixed Maturities [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Total	0	8
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total	$ 0	$ 2,873,251
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year	0	2
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Total	$ 0	$ 0
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss, Total	$ 0	$ 9,495

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Note 2 - Investments - Cost or Amortized Cost, Gross Unrealized Holding Gains and Losses, and Estimated Fair Value of Fixed Maturity Investments (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Cost or Amortized Cost	$ 16,322,794	$ 26,454,370
Gross Unrealized Gains	586,700	4,967,304
Gross Unrealized Losses		(388,058)
Estimated Fair Value	16,909,494	31,033,616
Fixed Maturities [Member]
Cost or Amortized Cost	16,322,794	15,564,687
Gross Unrealized Gains	586,700	113,125
Gross Unrealized Losses		(9,495)
Estimated Fair Value	16,909,494	15,668,317
Fixed Maturities [Member] | US Government Agencies Debt Securities [Member]
Cost or Amortized Cost	2,331,829	4,731,181
Gross Unrealized Gains	49,599	38,524
Gross Unrealized Losses		(1,086)
Estimated Fair Value	2,381,428	4,768,619
Fixed Maturities [Member] | US States and Political Subdivisions Debt Securities [Member]
Cost or Amortized Cost	7,118,592	3,188,217
Gross Unrealized Gains	312,371	29,521
Gross Unrealized Losses		(5,936)
Estimated Fair Value	7,430,963	3,211,802
Fixed Maturities [Member] | Corporate Debt Securities [Member]
Cost or Amortized Cost	6,872,373	7,645,289
Gross Unrealized Gains	224,730	45,080
Gross Unrealized Losses		(2,473)
Estimated Fair Value	7,097,103	7,687,896
Equity Securities [Member]
Cost or Amortized Cost		10,889,683
Gross Unrealized Gains		4,854,179
Gross Unrealized Losses		(378,563)
Estimated Fair Value		15,365,299
Equity Securities and Hedge Funds [Member]
Cost or Amortized Cost		10,889,683
Gross Unrealized Gains		4,854,179
Gross Unrealized Losses		(378,563)
Estimated Fair Value		$ 15,365,299

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Note 2 - Investments - Fixed Maturity and Securities in an Unrealized Loss Position and Aggregate Fair Value and Gross Unrealized Loss (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
12 months or greater, estimated fair value		$ 1,079,681
12 months or greater, unrealized losses		(121,786)
Less than 12 months, estimated fair value		3,626,043
Less than 12 months, unrealized losses		(266,272)
Total estimated fair value		4,705,724
Total unrealized losses		(388,058)
Fixed Maturities [Member]
12 months or greater, estimated fair value		743,360
12 months or greater, unrealized losses		(2,473)
Less than 12 months, estimated fair value		2,129,891
Less than 12 months, unrealized losses		(7,022)
Total estimated fair value	0	2,873,251
Total unrealized losses	0	(9,495)
Equity Securities [Member]
12 months or greater, estimated fair value		336,321
12 months or greater, unrealized losses		(119,313)
Less than 12 months, estimated fair value		1,496,152
Less than 12 months, unrealized losses		(259,250)
Total estimated fair value		1,832,473
Total unrealized losses		(378,563)
Equity Securities and Hedge Funds [Member]
12 months or greater, estimated fair value		336,321
12 months or greater, unrealized losses		(119,313)
Less than 12 months, estimated fair value		1,496,152
Less than 12 months, unrealized losses		(259,250)
Total estimated fair value		1,832,473
Total unrealized losses		(378,563)
US Government Agencies Debt Securities [Member] | Fixed Maturities [Member]
12 months or greater, estimated fair value
12 months or greater, unrealized losses
Less than 12 months, estimated fair value		1,528,838
Less than 12 months, unrealized losses		(1,086)
Total estimated fair value		1,528,838
Total unrealized losses		(1,086)
US States and Political Subdivisions Debt Securities [Member] | Fixed Maturities [Member]
12 months or greater, estimated fair value
12 months or greater, unrealized losses
Less than 12 months, estimated fair value		601,053
Less than 12 months, unrealized losses		(5,936)
Total estimated fair value		601,053
Total unrealized losses		(5,936)
Corporate Debt Securities [Member] | Fixed Maturities [Member]
12 months or greater, estimated fair value		743,360
12 months or greater, unrealized losses		(2,473)
Less than 12 months, estimated fair value
Less than 12 months, unrealized losses
Total estimated fair value		743,360
Total unrealized losses		$ (2,473)
Equity Securities and Hedge Funds [Member]
12 months or greater, estimated fair value
12 months or greater, unrealized losses
Less than 12 months, estimated fair value
Less than 12 months, unrealized losses
Total estimated fair value
Total unrealized losses

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Note 2 - Investments - Fair Value of Investments (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Total Investments	$ 16,909,494	$ 31,033,616
Equity Securities [Member]
Total Investments		15,365,299
Reported Value Measurement [Member]
Total Investments	16,909,494	31,033,616
Reported Value Measurement [Member] | Fixed Maturities [Member]
Total Investments	16,909,494	15,668,317
Reported Value Measurement [Member] | Fixed Maturities [Member] | US Government Agencies Debt Securities [Member]
Total Investments	2,381,428	4,768,619
Reported Value Measurement [Member] | Fixed Maturities [Member] | US States and Political Subdivisions Debt Securities [Member]
Total Investments	7,430,963	3,211,802
Reported Value Measurement [Member] | Fixed Maturities [Member] | Corporate Debt Securities [Member]
Total Investments	7,097,103	7,687,896
Reported Value Measurement [Member] | Equity Securities [Member]
Total Investments		15,365,299
Estimate of Fair Value Measurement [Member]
Total Investments	16,909,494	31,033,616
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Total Investments	16,909,494	15,668,317
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Total Investments		15,365,299
Estimate of Fair Value Measurement [Member] | Fixed Maturities [Member]
Total Investments	16,909,494	15,668,317
Estimate of Fair Value Measurement [Member] | Fixed Maturities [Member] | US Government Agencies Debt Securities [Member]
Total Investments	2,381,428	4,768,619
Estimate of Fair Value Measurement [Member] | Fixed Maturities [Member] | US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Total Investments	2,381,428	4,768,619
Estimate of Fair Value Measurement [Member] | Fixed Maturities [Member] | US States and Political Subdivisions Debt Securities [Member]
Total Investments	7,430,963	3,211,802
Estimate of Fair Value Measurement [Member] | Fixed Maturities [Member] | US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Total Investments	7,430,963	3,211,802
Estimate of Fair Value Measurement [Member] | Fixed Maturities [Member] | Corporate Debt Securities [Member]
Total Investments	7,097,103	7,687,896
Estimate of Fair Value Measurement [Member] | Fixed Maturities [Member] | Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Total Investments	7,097,103	7,687,896
Estimate of Fair Value Measurement [Member] | Equity Securities [Member]
Total Investments		15,365,299
Estimate of Fair Value Measurement [Member] | Equity Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Total Investments		$ 15,365,299

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Note 2 - Investments - Cost or Amortized Cost and Estimated Fair Value of Fixed Maturity Investments (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Due in one year or less, amortized cost	$ 3,174,356	$ 2,539,709
Due in one year or less, fair value	3,196,828	2,542,229
Due after one year through five years, amortized cost	10,919,495	12,518,738
Due after one year through five years, fair value	11,331,133	12,619,593
Due after five years through ten years, amortized cost	1,770,808	506,240
Due after five years through ten years, fair value	1,902,272	506,495
Due after ten years, amortized cost	458,135
Due after ten years, fair value	479,261
Total, amortized cost	16,322,794	15,564,687
Total, fair value	$ 16,909,494	$ 15,668,317

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Note 2 - Investments - Sales and Maturities of Investments (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Total proceeds on sales of available-for-sale securities	$ 12,856,948	$ 429,866	$ 14,941,147	$ 2,232,592
Proceeds from redemptions of fixed maturity investments	(17,931)	265,000	3,082,081	265,000
Proceeds from maturities of fixed maturity investments	500,000	840,000	1,705,000	3,090,000
Gross gains on sales	3,516,795	47,828	4,346,483	570,563
Gross losses on sales	(1,250,195)	(492,424)	(1,635,113)	(586,028)
Net unrealized (losses) gains on equity investments	(1,278,038)	517,088	(4,475,670)	2,611,254
Total	$ 988,562	$ 72,492	$ (1,764,300)	$ 2,595,789

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Note 2 - Investments - Major Categories of Net Interest and Dividend Income (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Fixed maturity investments	$ 85,634	$ 91,690	$ 262,200	$ 263,575
Short term investments and cash and cash equivalents	578	19,488	10,859	55,362
Dividends earned	43,060	44,571	131,045	138,543
Investment expenses	(29,828)	(30,258)	(95,825)	(102,337)
Net investment income	$ 99,444	$ 125,491	$ 308,279	$ 355,143

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Note 3 - Liability for Unpaid Losses and Loss Adjustment Expenses (Details Textual) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Prior Year Claims and Claims Adjustment Expense	$ 9,089,318

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Note 3 - Liability for Unpaid Losses and Loss Adjustment Expenses - Liability for Losses and Loss Adjustment Expense Activity (Details) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Liability—beginning of year	$ 13,966,044	$ 12,989,260
Incurred related to:
Current year	4,989,087	5,210,575
Prior years	9,089,318
Total incurred	14,078,405	5,210,575
Paid related to:
Current year	(1,392,687)	(94,416)
Prior years	(7,698,845)	(2,308,015)
Total paid	(9,091,532)	(2,402,431)
Liability—end of year	$ 18,952,917	$ 15,797,403

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Note 4 - Segment Information (Details Textual)	9 Months Ended
	Sep. 30, 2020
Number of Reportable Segments	2

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Note 4 - Segment Information - Segment Reporting Information (Details) - USD ($)	3 Months Ended						9 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Revenues	$ 5,962,383			$ 4,464,267			$ 12,034,167	$ 15,488,313
Total losses and expenses	14,240,375			4,486,804			23,324,501	13,329,695
Segment (loss) income	(8,277,992)	$ 1,465,255	$ (4,477,597)	(22,537)	$ 511,444	$ 1,669,711	(11,290,334)	2,158,618
Identifiable assets	1,107,040			983,448			1,107,040	983,448	$ 1,105,513
Reinsurance Segment [Member]
Revenues	4,524,821			3,001,278			7,487,683	11,053,834
Total losses and expenses	12,872,084			3,120,582			19,062,602	9,241,760
Segment (loss) income	(8,347,263)			(119,304)			(11,574,919)	1,812,074
Identifiable assets
Insurance Segment [Member]
Revenues	1,437,562			1,462,998			4,546,484	4,434,479
Total losses and expenses	1,368,291			1,366,222			4,261,899	4,087,935
Segment (loss) income	69,271			96,767			284,585	346,544
Identifiable assets	$ 1,107,040			$ 983,448			$ 1,107,040	$ 983,448

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Note 5 - Stock Compensation (Details Textual) - USD ($)	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Sep. 30, 2020	Dec. 31, 2019
Phantom Share Units (PSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares)	63,765	63,765
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	0	0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number, Ending Balance (in shares)	76,403	76,403	76,403
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Value, Payable Requisite Employee Age (Year)		65 years
Deferred Compensation Share-based Arrangements, Liability, Current and Noncurrent	$ 0	$ 0
Share-based Payment Arrangement, Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares)	100,000	100,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)		5 years
Reversal of Allocated Share-based Comepensation		$ 11,150
Share-based Payment Arrangement, Expense			$ 72,046

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Note 5 - Stock Compensation - Summary of the Status of the Stock Option Plan (Details) - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Balance, vested (in shares)	16,400	7,000
Balance, weighted average exercise price per share (in dollars per share)	$ 28.34	$ 27.99
Balance, non-vested shares (in shares)	28,600	40,000
Balance, weighted average exercise price per share, non-vested (in dollars per share)	$ 28.65	$ 28.71
Balance (in shares)	45,000	47,000
Balance, weighted average exercise price (in dollars per share)	$ 28.54	$ 28.60
Granted, non-vested shares (in shares)
Granted, weighted average exercise price per share, non-vested (in dollars per share)
Granted, weighted average exercise price (in dollars per share)
Forfeited, non-vested shares (in shares)		(2,000)
Forfeited, weighted average exercise price per share, non-vested (in dollars per share)		$ (30.14)
Forfeited (in shares)		(2,000)
Forfeited, weighted average exercise price (in dollars per share)		$ 30.14
Exercised (in shares)
Exercised, weighted average exercise price (in dollars per share)
Vested, vested (in shares)	8,400	9,400
Vested, weighted average exercise price per share (in dollars per share)	$ 28.42	$ 28.60
Vested, non-vested shares (in shares)	(8,400)	(9,400)
Vested, weighted average exercise price per share, non-vested (in dollars per share)	$ 28.42	$ 28.60
Balance, weighted average exercise price (in dollars per share)	$ 28.54	$ 28.54
Options exercisable at year end, vested (in shares)
Options exercisable at year end (in shares)
Options exercisable at year end, weighted average exercise price (in dollars per share)
Remaining contractual life (years), vested (Year)	2 years 146 days	3 years 73 days
Remaining contractual life (years), non-vested shares (Year)	2 years 219 days	3 years 109 days
Remaining contractual life (years), outstanding shares (Year)	2 years 182 days	3 years 109 days
Balance, vested (in shares)	24,800	16,400
Balance, weighted average exercise price per share (in dollars per share)	$ 28.37	$ 28.34
Balance, non-vested shares (in shares)	20,200	28,600
Balance, weighted average exercise price per share, non-vested (in dollars per share)	$ 28.74	$ 28.65
Balance (in shares)	45,000	45,000
Options exercisable at year end, weighted average exercise price per share, vested (in dollars per share)