ACQUISITION

We account for business acquisitions in accordance with the acquisition method of accounting, which requires, among other things, that most assets acquired, liabilities assumed, and earn-out consideration be recognized at their fair values as of the acquisition date. Measurement period adjustments to provisional purchase price allocations are recognized in the period in which they are determined as it the accounting had been competed on the acquisition date.

On April 29, 2016, we completed the acquisition of IIC. The purchase price for IIC consisted of $48,450,000 in cash, $8,550,000 in note payable and an accrued liability for $3,471,000 paid during July 2016. The acquisition of IIC supports the Company's growth strategy and further strengthens the Company's overall position in the property and casualty insurance market in the state of New York.

The purchase price consisted of the following amounts:



Cash	$	48,450
Notes payable	8,550
Accrued liability	3,471
Total purchase price	$	60,471

The operations of IIC are included in our Consolidated Statements of Comprehensive Income effective April 29, 2016. We have one year from the acquisition date to finalize the allocation of the purchase price of IIC. The fair value of the net liabilities assumed, the intangible assets and the related goodwill are preliminary and may be subject to change upon completing the final valuation assessment. The preliminary purchase price allocation is as follows:



Cash and cash equivalents	$	15,554
Investments	66,527
Premium and agents' receivable	3,186
Reinsurance receivable	1,042
Intangible assets	5,877
Insurance contract asset	8,334
Goodwill	10,841
Other assets	3,980
Unpaid losses and loss adjustment expenses	(24,967		)
Unearned premiums	(26,243		)
Advanced premiums	(1,472		)
Deferred taxes	(109		)
Other liabilities	(2,079		)
Total purchase price	$	60,471

The unaudited pro forma financial information has been prepared as if the IIC acquisition had taken place on January 1, 2015. The unaudited pro forma information is not necessarily indicative of the results that we would have achieved had the transaction taken place on January 1, 2015, and the unaudited pro forma information does not purport to be indicative of future financial operating results.



	For the Year Ended December 31, 2016						For the Year Ended December 31, 2015
	As		Pro Forma				As		Pro Forma
	Reported		Adjustments⁽¹⁾		Pro Forma		Reported		Adjustments⁽²⁾		Pro Forma
Revenues	$	487,117	$	18,963	$	506,080	$	357,569	$	56,362	$	413,931

Net income	$	5,698	$	8,187	$	13,885	$	27,358	$	5,692	$	33,050

Diluted earnings per share	$	0.26	$	0.38	$	0.64	$	1.28	$	0.26	$	1.54

⁽¹⁾ Adjustments are for the period from January 1, 2016 through April 29, 2016.

⁽²⁾ Adjustments are for the period from January 1, 2015 through December 31, 2015.

On February 3, 2015, we completed the acquisition of FSH and its two wholly owned subsidiaries. The acquisition of FSIC supports the Company's growth strategy and further strengthens the Company's overall position in the property and casualty insurance market in the states of Louisiana and Hawaii. The total purchase price paid to acquire the companies was $13,507,000 that was paid in shares of our common stock in two installments. The first payment occurred at the closing of the transaction when we issued 503,857 shares of our common stock that had a fair value of $12,994,000 on the date of closing the transaction. One year after the closing of the transaction, we issued an additional 32,943 shares of our common stock as payment of $513,000 of contingent consideration that we owed to the former shareholders of FSH pursuant to the terms of the purchase agreement.

The unaudited pro forma financial information has been prepared as if the FSH acquisition had taken place on January 1, 2015. The unaudited pro forma information is not necessarily indicative of the results that we would have achieved had the transaction taken place on January 1, 2015, and the unaudited pro forma information does not purport to be indicative of future financial operating results.



	For the Year Ended December 31, 2015
			Pro Forma
	As Reported		Adjustments		Pro Forma
Revenues	$	357,569	$	1,127	$	358,696

Net income	$	27,358	$	77	$	27,435

Diluted earnings per share	$	1.28	$	—	$	1.28