Note 4 - Debt

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Debt Disclosure [Text Block]

4. DEBT

Debt Obligation

Debt Obligations

As of  September 30, 2022 and December 31, 2021, the Company had $15.0 million and $18.5 million in outstanding debt, respectively.

ICC Holdings, Inc. secured a loan with a commercial bank in March 2017 in the amount of $3.5 million and used the proceeds to repay ICC for the money borrowed by the ESOP. The term of the loan is five years bearing interest at 3.65%. The Company pledged stock and $1.0 million of marketable assets as collateral for the loan. The Company paid $3.5 million in April 2022, which fully extinguished the loan balance.

The Company also has borrowing capacity of $42.0 million, which is 25% of net admitted statutory assets of Illinois Casualty Company as of the prior year-end.

As part of the Company’s response to COVID-19, the Company obtained, in March 2020, a $6.0 million loan from the FHLBC as a precautionary measure to increase its cash position, to provide increased liquidity, and to compensate for potential reductions in premium receivable collections. The term of the loan is five years bearing interest at 1.40%. The Company pledged $6.8 million of fixed income securities as collateral for this loan.

In  May 2021, the Company entered into a $4.0 million, 0.74% fixed interest, five-year FHLBC loan.

A one year FHLBC loan for $5.0 million, 0% interest was entered into in May 2021. Upon maturity in May 2022, this loan rolled over to a $5.0 million, five-year, 1.36% fixed interest loan.

The Company has $18.8 million in bonds pledged as collateral for all FHLBC loans.

Revolving Line of Credit

We increased our revolving line of credit with a commercial bank from $2.0 million to $4.0 million in July 2022. This line of credit is priced at Prime plus 0.5% with a floor of 4.75% and renews annually with a current expiration date of July 2023. The Company pledged $4.0 million of business assets in the event the Company draws down on the line of credit. This agreement includes an annually calculated financial debt covenant requiring a minimum total adjusted capital of $21.0 million. Total adjusted capital is the sum of an insurer’s statutory capital and surplus as determined in accordance with the statutory accounting applicable to the annual financial statements required to be filed with Illinois Department of Insurance. As of September 30, 2022, our total adjusted capital is in excess of $55.0 million. There was no interest paid on the line of credit during the nine months ended September 30, 2022 and 2021.