Segment Information

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company is engaged in the sale of property and casualty insurance products and has organized its principal operations into two types of insurance businesses: commercial lines and personal lines. Within these two insurance businesses, the Company offers various insurance products. Such insurance businesses are engaged in underwriting and marketing insurance coverages, and administering claims processing for such policies.

The Company defines its operating segments as components of the business where separate financial information is available and used by the chief operating decision maker in deciding how to allocate resources to its segments and in assessing its performance. In assessing performance of its operating segments, the Company’s chief operating decision maker, the Chief Executive Officer, reviews a number of financial measures including gross written premiums, net earned premiums, losses and LAE, net of reinsurance recoveries. However, the primary measure used for making decisions about resources to be allocated to an operating segment and assessing performance is segment underwriting gain or loss which is defined as segment revenues, consisting of net earned premiums and other income, less segment expenses, consisting of losses and LAE, policy acquisition costs and other underwriting and operating expenses of the operating segments. Other underwriting and operating expenses primarily include compensation and related benefits for underwriting personnel, licensing of policy issuance and claims systems, rent and utilities. The Company markets, distributes and sells its insurance products primarily through a network of independent agents. All of the Company’s insurance activities are conducted in the United States with a concentration of activity in Florida, Michigan, Pennsylvania and Texas. For the nine months ended September 30, 2016 and 2015, gross written premiums attributable to these four states were 58% of the Company’s total gross written premiums.

 In addition to the reportable operating segments, the Company maintains a Corporate and Other category to reconcile segment results to the consolidated totals. The Corporate and Other category includes: (i) corporate operating expenses such as salaries and related benefits of the Company’s executive management team and finance and information technology personnel, and other corporate headquarters expenses, (ii) interest expense on the Company’s senior debt obligations; (iii) depreciation and amortization on property and equipment, and (iv) all investment income activity. All investment income activity is reported within net investment income and net realized investment gains on the consolidated statements of operations. The Company’s assets on the consolidated balance sheet are not allocated to the reportable segments.

The Company redefined its operating segments during the quarter ended June 30, 2016 and presented the segment information for the three and nine months ended September 30, 2016 in a manner consistent with the new operational management structure. The segment information for the three and nine months ended September 30, 2015, has been recast to be consistent with the new format.

The following tables present information by reportable operating segment (dollars in thousands):

Three Months Ended September 30, 2016	Commercial Lines		Personal Lines			Corporate & Other			Total
Gross written premiums	$	20,759	$	7,738		$	—		$	28,497
Net written premiums	$	18,230	$	6,404		$	—		$	24,634
Net earned premiums	$	17,878	$	5,502		$	—		$	23,380
Other income	81		101			121			303
Segment revenue	17,959		5,603			121			23,683
Losses and loss adjustment expenses, net	9,564		5,018			—			14,582
Policy acquisition costs	4,868		1,398			—			6,266
Operating expenses	1,803		779			2,128			4,710
Segment expenses	16,235		7,195			2,128			25,558
Segment underwriting gain (loss)	$	1,724	$	(1,592	)	$	(2,007	)	$	(1,875	)
Investment income						560			560
Net realized investment gains						71			71
Interest expense						(168		)	(168		)
Income (loss) before equity earnings of affiliates and income taxes						$	(1,544	)	$	(1,412	)

Three Months Ended September 30, 2015	Commercial Lines		Personal Lines			Corporate & Other			Total
Gross written premiums	$	16,655	$	7,587		$	—		$	24,242
Net written premiums	$	20,786	$	7,813		$	—		$	28,599
Net earned premiums	$	13,621	$	4,262		$	—		$	17,883
Other income	390		115			18			523
Segment revenue	14,011		4,377			18			18,406
Losses and loss adjustment expenses, net	7,043		2,770			—			9,813
Policy acquisition costs	3,448		1,157			—			4,605
Operating expenses	1,304		1,182			839			3,325
Segment expenses	11,795		5,109			839			17,743
Segment underwritinggain (loss)	$	2,216	$	(732	)	$	(821	)	$	663
Investment income						505			505
Net realized investment gains						6			6
Other gains						104			104
Interest expense						(181		)	(181		)
Income (loss) before equity earnings of affiliates and income taxes						$	(387	)	$	1,097

Nine Months Ended September 30, 2016	Commercial Lines		Personal Lines			Corporate & Other			Total
Gross written premiums	$	62,725	$	20,891		$	—		$	83,616
Net written premiums	$	55,767	$	17,094		$	—		$	72,861
Net earned premiums	$	49,641	$	15,523		$	—		$	65,164
Other income	263		419			147			829
Segment revenue	49,904		15,942			147			65,993
Losses and loss adjustment expenses, net	27,543		13,279			—			40,822
Policy acquisition costs	13,619		4,663			—			18,282
Operating expenses	5,147		2,214			6,023			13,384
Segment expenses	46,309		20,156			6,023			72,488
Segment underwritinggain (loss)	$	3,595	$	(4,214	)	$	(5,876	)	$	(6,495	)
Investment income						1,625			1,625
Net realized investment gains						604			604
Interest expense						(468		)	(468		)
Income (loss) before equity earnings of affiliates and income taxes						$	(4,115	)	$	(4,734	)

Nine Months Ended September 30, 2015	Commercial Lines		Personal Lines		Corporate & Other			Total
Gross written premiums	$	50,723	$	17,782	$	—		$	68,505
Net written premiums	$	43,164	$	15,043	$	—		$	58,207
Net earned premiums	$	33,779	$	13,712	$	—		$	47,491
Other income	1,064		351		77			1,492
Segment revenue	34,843		14,063		77			48,983
Losses and loss adjustment expenses, net	17,837		9,522		—			27,359
Policy acquisition costs	7,103		2,736		—			9,839
Operating expenses	3,987		1,805		4,844			10,636
Segment expenses	28,927		14,063		4,844			47,834
Segment underwritinggain (loss)	$	5,916	$	—	$	(4,767	)	$	1,149
Investment income					1,460			1,460
Net realized investment gains					238			238
Other gains					104			104
Interest expense					(664		)	(664		)
Income (loss) before equity earnings of affiliates and income taxes					$	(3,629	)	$	2,287

The Company discontinued offering non-standard personal automobile policies in the first half of 2015, but will continue to pay claims and perform other administrative services as needed until the run-off of the claims on such policies is complete. No premiums were written or earned in the non-standard personal automobile line in 2016. The decision to stop writing non-standard personal automobile policies was the result of the Company’s change in strategic positioning and its desire to increase its personal homeowners product line and pursue existing commercial line opportunities.