Note 10 - Statutory Information and Divided Restrictions

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Insurance Disclosure [Text Block]

10. STATUTORY INFORMATION AND DIVIDEND RESTRICTIONS

The statutory financial statements of ICC are presented on the basis of accounting practices prescribed or permitted by the Illinois Department of Insurance, which has adopted the National Association of Insurance Commissioners (NAIC) statutory accounting practices as the basis of its statutory accounting practices. ICC did not use any permitted statutory accounting practices that differ from NAIC prescribed statutory accounting practices. In converting from statutory to GAAP, typical adjustments include deferral of policy acquisition costs, the inclusion of statutory non-admitted assets, recording debt securities at fair value versus amortized cost, net unrealized gains or losses on equity securities are recorded in earnings as opposed to being a component of surplus, and the reclassification of surplus notes from equity to debt.

The NAIC has Risk-Based Capital (RBC) standards that require insurance companies to calculate and report information under a risk-based formula, which measures statutory capital and surplus needs based upon a regulatory definition of risk relative to the Company’s balance sheet and mix of products. As of December 31, 2022 and 2021, ICC had RBC amounts in excess of the authorized control level RBC, as defined by the NAIC. ICC’s statutory capital and surplus as of December 31, 2022 and 2021 were $59,735,420 and $62,511,840, respectively.

The following table includes selected information for our insurance subsidiary:

	As of and Periods Ended December 31,
	2022		2021
Net income, statutory basis	$	3,583,308	$	1,938,995
Surplus, statutory basis	$	59,735,420	$	62,511,840

No Illinois domiciled company may pay any extraordinary dividend or make any other extraordinary distribution to its security holders until: (a) 30 days after the Director has received notice of the declaration thereof and has not within such period disapproved the payment, or (b) the Director approves such payment within the 30-day period. For purposes of this subsection, an extraordinary dividend or distribution is any dividend or distribution of cash or other property whose fair market value, together with that of other dividends or distributions, made within the period of 12 consecutive months ending on the date on which the proposed dividend is scheduled for payment or distribution exceeds the greater of: (a) 10% of the Company’s surplus as regards policyholders as of the 31st day of December next preceding, or (b) the net income of the Company for the 12-month period ending the 31st day of December next preceding, but does not include pro rata distributions of any class of the Company’s own securities. As of December 31, 2022, the amount available for payment of dividends by ICC in 2023 without the prior approval of the Illinois Department of Insurance is approximately $6.0 million. ICC paid dividends of $3,000,000 and $800,000 to ICC Holdings, Inc. as of December 31, 2022 and 2021, respectively.

The Company did not pay any dividends to security holders in 2022 or 2021. It did, however, make cash dividend payments in the amount of $18,446 and $5,563 in 2022 and 2021, respectively, to Wisconsin policyholders in accordance with policy contractual obligations.