Discontinued Operations (Tables)

3 Months Ended

Mar. 31, 2020

Discontinued Operations

Schedule of discontinued operations

	March 31,		December 31,
	2020		2019
Assets
Cash and due from banks	$	58,103	$	51,333
Securities:
Available for sale, at fair value		86,101		86,899
Equity, at fair value		15,440		19,841
		101,541		106,740
Premises and equipment, net		9,058		9,607
Operating lease right-of-use assets		2,674		2,739
Other assets		50,966		50,533
Goodwill		23,988		23,988
Other intangible assets, net		3,428		3,489
Total assets held for sale	$	249,758	$	248,429
Liabilities
Notes payable	$	27,500	$	27,500
Operating lease liabilities		2,727		2,783
Other liabilities		109,503		110,391
Total liabilities held for sale	$	139,730	$	140,674

The following table presents the results of discontinued operations for NLC for the periods indicated.

	Three Months Ended March 31,
	2020		2019
Interest income:
Securities:
Taxable	$	938	$	960
Other		67		142
Total interest income		1,005		1,102
Interest expense:
Notes payable		406		460
Noninterest income:
Net insurance premiums earned		32,637		33,203
Other		(2,246)		3,302
Total noninterest income		30,391		36,505
Noninterest expense:
Employees' compensation and benefits		2,777		3,202
Occupancy and equipment, net		247		244
Professional services		8,527		8,833
Loss and loss adjustment expenses		12,949		14,926
Other		2,476		3,133
Total noninterest expense		26,976		30,338
Income from discontinued operations before income taxes		4,014		6,809
Income tax expense		863		1,449
Income from discontinued operations, net of income taxes	$	3,151	$	5,360

Summary of statutory capital and surplus and statutory net income (loss) of each insurance subsidiary

A summary of statutory capital and surplus and statutory net income (loss) of each insurance subsidiary is as follows (in thousands).

	March 31,		December 31,
	2020		2019
Statutory capital and surplus:
National Lloyds Insurance Company	$	73,892	$	70,112
American Summit Insurance Company		17,999		19,201

	Three Months Ended March 31,
	2020		2019
Statutory net income (loss):
National Lloyds Insurance Company	$	6,527	$	3,417
American Summit Insurance Company		(185)		417

Schedule of information regarding the reserve for unpaid losses and loss adjustment expenses ("LAE") as included in other liabilities within the consolidated balance sheets

A rollforward of NLC’s reserve for unpaid losses and LAE, as included in other liabilities and reflected as a part of liabilities held for sale for all periods within the consolidated balance sheets, is as follows (in thousands).

		March 31,
	2020		2019
Balance, beginning of period	$	15,342	$	20,552
Less reinsurance recoverables		(1,005)		(3,214)
Net balance, beginning of period		14,337		17,338
Incurred related to:
Current year		11,657		13,993
Prior years		1,474		935
Total incurred		13,131		14,928
Payments related to:
Current year		(7,377)		(7,029)
Prior years		(6,329)		(7,152)
Total payments		(13,706)		(14,181)
Net balance, end of period		13,762		18,085
Plus reinsurance recoverables		746		2,506
Balance, end of period	$	14,508	$	20,591

Summary of claims loss reserve development activity

A summary of claims loss reserve development activity is presented in the following table (dollars in thousands).

	Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance								March 31, 2020
										Total of
										Incurred
										But Not
										Reported
										Reserves Plus	Cumulative
										Development	Number of
Accident	March 31, 2020									On Reported	Reported
Year	2017		2018		2019		2020			Claims	Claims
2017	$	87,899	$	88,025	$	87,534	$	87,568	$	216	20,174
2018				75,217		73,261		73,314		927	14,713
2019						71,687		73,072		4,009	13,798
2020								11,657		1,565	2,317
							$	245,611
	Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance
Accident	March 31, 2020
Year	2017		2018		2019		2020
2017	$	77,675	$	86,319	$	87,203	$	87,291
2018				61,922		70,958		72,255
2019						55,014		66,150
2020								7,377
Total							$	233,073
All outstanding reserves prior to 2017, net of reinsurance								466
Reserve for unpaid losses and allocated loss adjustment expenses, net of reinsurance							$	13,004

Schedule of effects of reinsurance on premiums written and earned

The effects of reinsurance on premiums written and earned are included within discontinued operations for all periods presented and are summarized as follows (in thousands).

	Three Months Ended March 31,
	2020				2019
	Written		Earned		Written		Earned
Premiums from direct business	$	29,980	$	30,746	$	30,790	$	31,737
Reinsurance assumed		2,952		3,244		3,129		3,191
Reinsurance ceded		(1,353)		(1,353)		(1,725)		(1,725)
Net premiums	$	31,579	$	32,637	$	32,194	$	33,203

Schedule of effects of reinsurance on incurred losses

The effects of reinsurance on incurred losses and LAE are included within discontinued operations for all periods and are as follows (in thousands).

	Three Months Ended March 31,
	2020		2019
Losses and LAE incurred	$	12,763	$	14,985
Reinsurance recoverables		186		(59)
Net loss and LAE incurred	$	12,949	$	14,926