Schedule II - Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2013

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Schedule II - Condensed Financial Information of Registrant

DCP HOLDING COMPANY (Parent Only)

Schedule II—Condensed Financial Information of Registrant

Condensed Balance Sheets

As of December 31, 2013 and 2012

	2013		2012
ASSETS
INVESTMENTS:
Fixed maturities	$	877,671
Short-term investments		41,738	$	41,733
Total investments		919,409		41,733
CASH AND CASH EQUIVALENTS		1,375,743		1,135,718
ACCRUED INVESTMENT INCOME		4,349
INTERCOMPANY RECEIVABLES		373,829		407,832
INTERCOMPANY NOTE RECEIVABLE		230,000		230,000
PROPERTY		1,907,474		1,886,004
INVESTMENT IN SUBSIDIARIES		9,333,447		8,155,857
DEFERRED INCOME TAX		811,976		669,772
OTHER ASSETS		690,855		533,919
TOTAL ASSETS	$	15,647,082	$	13,060,835
LIABILITIES, REEDEMABLE SHARES, AND SHAREHOLDERS’ EQUITY
OTHER PAYABLES AND ACCRUALS	$	2,183,562	$	1,859,891
MORTGAGE LOAN PAYABLE		1,294,400		1,340,000
DEFERRED COMPENSATION		2,062,783		1,613,111
TOTAL LIABILITIES		5,540,745		4,813,002
COMMITMENTS AND CONTINGENCIES
REDEEMABLE SHARES:
Provider Preferred-2009 Series Redeemable Preferred Shares, no par value, cumulative 5% dividend—authorized, 5,000 shares; issued none
Institutional Preferred Shares-2010 Series, no par value, cumulative 5% dividend—authorized, 300 shares; issued and outstanding, 300 shares at December 31, 2013 and 2012, respectively		391,814		373,743
Institutional Preferred Shares-2012 Series, no par value, cumulative 5% dividend—authorized, 1,000 shares; issued and outstanding, 1,000 shares at December 31, 2013 and 2012, respectively		1,130,946		1,078,785
Institutional Preferred Shares-2013 Series, no par value, cumulative 5% dividend—authorized, 1,000 shares; issued and outstanding, 1,000 shares at December 31, 2013 and zero at December 31, 2012		1,040,242
Class A, Redeemable Common Shares, no par value—authorized, 7,500 shares; issued and outstanding, 546 and 565 shares at December 31, 2013 and 2012, respectively		488,282		460,630
Class B Redeemable Common Shares, no par value—authorized, 100,000 shares; issued and outstanding, 7,889 and 7,770 shares at December 31, 2013 and 2012, respectively		7,055,053		6,334,675
Total redeemable preferred and common shares		10,106,337		8,247,833
SHAREHOLDERS’ EQUITY—Preferred Shares; no par value—authorized, 93,700 shares; issued, none
TOTAL LIABILITIES, REDEEMABLE SHARES AND SHAREHOLDERS’ EQUITY	$	15,647,082	$	13,060,835

This condensed financial information should be read in conjunction with the Consolidated Financial Statements and Notes included in Part II, Item 8, Page 41 and the notes to the Condensed Financial Statements.

DCP HOLDING COMPANY (Parent Only)

Schedule II—Condensed Financial Information of Registrant

Condensed Statements of Comprehensive Income

For the Years ended December 31, 2013, 2012 and 2011

	2013			2012			2011
REVENUES
Management fees from Subsidiaries	$	11,029,944		$	9,531,143		$	8,076,160
Investment income		16,536			7,502			7,480
Administrative fees		713,915			273,251			249,034
Total revenues		11,760,395			9,811,896			8,332,674
EXPENSES
Insurance expense:
Salaries and benefit expense		6,626,586			5,603,918			4,995,472
Other insurance expense		5,043,160			3,956,496			3,358,799
Total expenses		11,669,746			9,560,414			8,354,271
INCOME (LOSS) BEFORE INCOME TAX		90,649			251,482			(21,597	)
PROVISION (BENEFIT) FOR INCOME TAX:
Current		226,519			284,933			56,839
Deferred		(134,903	)		(187,044	)		(35,493	)
Total		91,616			97,889			21,346
(Loss) Income before undistributed income of subsidiaries		(967	)		153,593			(42,943	)
Undistributed income of subsidiaries		1,282,573			1,164,424			633,857
NET INCOME	$	1,281,606		$	1,318,017		$	590,914
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Change in the fair value of interest rate swap					6,900			7,448
Change in the fair value of investments		(104,983	)		143,369			10,800
Reclassification adjustment for gains included in undistributed income					(22,708	)		(11,511	)
Conversion of investments from Held-to-Maturity to Available-for-Sale								41,987
Total other comprehensive income held by subsidaries		(104,983	)		127,561			48,724
Change in the fair value of investments		(4,712	)
Change in the fair value of interest rate swap		(9,466	)		(27,242	)
TOTAL COMPREHENSIVE INCOME	$	1,162,445		$	1,418,336		$	639,638

This condensed financial information should be read in conjunction with the Consolidated Financial Statements and Notes included in Part II, Item 8, Page 41 and the notes to the Condensed Financial Statements.

DCP HOLDING COMPANY (Parent Only)

Schedule II—Condensed Financial Information of Registrant

Condensed Statements of Cash Flows

For the Years ended December 31, 2013, 2012 and 2011

	2013			2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,281,606		$	1,318,017		$	590,914
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		110,567
Loss on disposal of property		56,495
Undistributed income of subsidiaries		(1,282,573	)		(1,164,424	)		(633,857	)
Deferred income taxes		(134,903	)		(187,044	)		(35,493	)
Deferred compensation		675,195			542,630			225,551
Effects of changes in operating assets and liabilities:
Accrued investment income		(4,349	)
Intercompany accounts receivables		34,003			(403,074	)		9,784
Other assets		(151,936	)		5,839			24,187
Other payables and accruals		339,117			684,596			268,936
Net cash provided by operating activities		923,222			796,540			450,022
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments		(885,902	)
Acquisition of property and equipment		(187,427	)
Acquisition of property from subsidiary					(1,886,004	)
Investment, other		(5,000	)		(40,000	)
Net cash used in investing activities		(1,078,329	)		(1,926,004	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Mortgage loan repayments		(45,600	)
Borrowing of mortgage note					1,340,000
Advance to subsidiaries					(605,478	)
Dividends from subsidiaries to finance real estate					360,000
Repurchase of redeemable shares		(264,031	)		(137,891	)		(128,153	)
Issuance of redeemable shares		1,096,959			1,044,245
Additional contribution with share exchange								21,828
Dividends paid		(392,196	)		(260,426	)		(16,577	)
Net cash provided by (used in) financing activities		395,132			1,740,450			(122,902	)
INCREASE IN CASH		240,025			610,986			327,120
CASH AND CASH EQUIVALENTS—Beginning of year		1,135,718			524,732			197,612
CASH AND CASH EQUIVALENTS—End of year	$	1,375,743		$	1,135,718		$	524,732
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	52,000
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Redeemed common shares (in other payables and accruals)	$	130,219		$	160,024		$	71,310
Dividends payable (in other payables and accruals)								16,323
Redeemed common shares issued in lieu of cash payment of deferred compensation		225,522			125,902			120,913
Deferred restricted shares units issued in lieu of cash dividend		52,042			28,210
Class A redeemable common shares exchanged for Class B redeemable common shares		5,672			9,819			1,232
Redeemable provider preferred shares exchanged for Class B redeemable common shares								205,166

This condensed financial information should be read in conjunction with the Consolidated Financial Statements and Notes included in Part II, Item 8, Page 41 and the notes to the Condensed Financial Statements.

SCHEDULE II—PARENT COMPANY FINANCIAL INFORMATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Parent company financial information has been derived from our consolidated financial statements and excludes the accounts of all operating subsidiaries. This information should be read in conjunction with our consolidated financial statements.

Parent company maintains its investment in all subsidiaries on the equity method. The investment in subsidiary is adjusted for the changes in other comprehensive income from the subsidiaries.

2. TRANSACTIONS WITH SUBSIDIARIES

Transfer of real estate

In December 2012, the Dental Care Plus, Inc. subsidiary transferred real estate to the parent totaling approximately $1,886,000.

Management Fee

Through intercompany service agreements approved, if required, by state regulatory agencies, our parent company charges a management fee for reimbursement of certain centralized services provided to its subsidiaries including information systems, investment and cash administration, marketing, legal, finance, executive management oversight and other operating expenses.

Salaries and benefit expense

Salary and benefit expense includes dental benefit expense of approximately $92,000, $80,000, and $75,000, for the years ended December 31, 2013, 2012 and 2011, respectively. These amounts eliminate in consolidation.

Investments in subsidiaries and dividends

There were no dividends declared or paid to the parent company in 2013. In 2012, the parent company received a dividend from the Dental Care Plus, Inc. subsidiary in the amount of $360,000 to finance a portion of the real estate purchase from Dental Care Plus, Inc.

There were no investment in subsidiaries in 2013. In 2012, the parent company advanced approximately $605,000 into Dental Care Plus, Inc.

Reconciliation of Investment in Subsidiaries

	2013			2012
Investment in Subsidiaries—January 1	$	8,155,857		$	6,618,394
Undistributed income of subsidiaries		1,282,573			1,164,424
Total other comprehensive income held by subsidiaries		(104,983	)		127,561
Advance to subsidiaries					605,478
Dividends from subsidiaries to finance real estate					(360,000	)
Increase in Investment in Subsidiary		1,177,590			1,537,463
Investment in Subsidiaries—December 31	$	9,333,447		$	8,155,857