(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Large accelerated filer | ☐ | ☒ | Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||||||||||||||
Emerging growth company |
Page | ||||||||
September 30, 2022 | December 31, 2021 | ||||||||||
Assets | (unaudited) | ||||||||||
Fixed maturities, at fair value (amortized cost of $ | $ | $ | |||||||||
Equity securities, at fair value (cost $ | |||||||||||
Total investments | |||||||||||
Cash and cash equivalents | |||||||||||
Restricted cash | |||||||||||
Accrued investment income | |||||||||||
Premiums and other receivables | |||||||||||
Income taxes receivable | |||||||||||
Reinsurance recoverable | |||||||||||
Prepaid reinsurance premiums | |||||||||||
Deferred policy acquisition cost, net | |||||||||||
Property and equipment, net | |||||||||||
Right of use asset | |||||||||||
Deferred tax asset | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities | |||||||||||
Unpaid loss and loss adjustment expenses | $ | $ | |||||||||
Unearned premiums | |||||||||||
Funds held under reinsurance agreements | |||||||||||
Reinsurance premiums payable | |||||||||||
Accounts payable, accrued expenses and other liabilities | |||||||||||
Lease liability | |||||||||||
Deferred tax liability | |||||||||||
Debt | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies | |||||||||||
Stockholders' equity | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive income (loss) | ( | ||||||||||
Total stockholders' equity | |||||||||||
Total liabilities and stockholders' equity | $ | $ | |||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Gross written premiums | $ | $ | $ | $ | |||||||||||||||||||
Increase in gross unearned premiums | ( | ( | ( | ( | |||||||||||||||||||
Gross earned premiums | |||||||||||||||||||||||
Ceded earned premiums | ( | ( | ( | ( | |||||||||||||||||||
Net earned premiums | |||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||
Net realized gains | |||||||||||||||||||||||
Other revenue | |||||||||||||||||||||||
Total revenue | |||||||||||||||||||||||
Expenses | |||||||||||||||||||||||
Losses and loss adjustment expenses | |||||||||||||||||||||||
General and administrative expenses | |||||||||||||||||||||||
Other expenses | |||||||||||||||||||||||
Intangible asset amortization | |||||||||||||||||||||||
Noncash stock compensation | |||||||||||||||||||||||
Interest expense | |||||||||||||||||||||||
Total expenses | |||||||||||||||||||||||
Gains (losses) on embedded derivatives | ( | ||||||||||||||||||||||
Other income | |||||||||||||||||||||||
Income before taxes | |||||||||||||||||||||||
Income tax expense | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Earnings per share: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ | |||||||||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted | |||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Other comprehensive loss, net of tax: | |||||||||||||||||||||||
Unrealized investment losses: | |||||||||||||||||||||||
Unrealized investment losses arising during the period | ( | ( | ( | ( | |||||||||||||||||||
Income tax benefit | ( | ( | ( | ( | |||||||||||||||||||
Unrealized investment losses, net of tax | ( | ( | ( | ( | |||||||||||||||||||
Less reclassification adjustments to: | |||||||||||||||||||||||
Net realized investment gains (losses) included in net realized gains (losses) | ( | ||||||||||||||||||||||
Income tax expense (benefit) | ( | ||||||||||||||||||||||
Total reclassifications included in net income, net of tax | ( | ||||||||||||||||||||||
Other comprehensive loss | ( | ( | ( | ( | |||||||||||||||||||
Total comprehensive income (loss) | $ | ( | $ | $ | ( | $ |
Common Stock | Additional Paid in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total Stockholders' Equity | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||
Balance at June 30, 2022 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||
Stock compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
Common stock issued pursuant to equity compensation awards, net of shares repurchased | — | ( | — | — | ( | ||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Balance at September 30, 2022 | $ | $ | $ | ( | $ | $ |
Balance at June 30, 2021 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Stock compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
Common stock issuances pursuant to equity compensation awards, net of shares repurchased | ( | — | — | ( | |||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Balance at September 30, 2021 | $ | $ | $ | $ | $ |
Balance at December 31, 2021 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Stock compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
Common stock issuances pursuant to equity compensation awards, net of shares repurchased | — | ( | — | — | ( | ||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Balance at September 30, 2022 | $ | $ | $ | ( | $ | $ |
Balance at December 31, 2020 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Stock compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
Common stock issuances pursuant to equity compensation awards, net of shares repurchased | ( | — | — | ( | |||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Balance at September 30, 2021 | $ | $ | $ | $ | $ |
Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Operating activities | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash from operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Stock compensation | |||||||||||
Unrealized gains on embedded derivatives | ( | ( | |||||||||
Net gains on investments | ( | ( | |||||||||
Unrealized losses on equity securities | |||||||||||
Bond amortization and accretion | |||||||||||
Deferred income taxes | ( | ||||||||||
Amortization of debt discount and deferred financing costs | |||||||||||
Changes in operating assets and liabilities: | |||||||||||
Accrued investment income | ( | ||||||||||
Premiums and other receivables | ( | ( | |||||||||
Reinsurance recoverable on paid and unpaid losses | ( | ( | |||||||||
Prepaid reinsurance premiums | ( | ||||||||||
Right of use asset | |||||||||||
Other assets | ( | ( | |||||||||
Unpaid loss and loss adjustment expenses | |||||||||||
Unearned premiums | |||||||||||
Funds held under reinsurance agreements | |||||||||||
Reinsurance premiums payable | ( | ||||||||||
Accounts payable, accrued expenses and other liabilities | ( | ||||||||||
Lease liability | ( | ( | |||||||||
Income taxes payable and receivable | ( | ( | |||||||||
Net cash provided by operating activities | |||||||||||
Investing activities | |||||||||||
Payments for capital expenditures | ( | ( | |||||||||
Return of capital on equity method investment | |||||||||||
Purchase of investments, available for sale | ( | ( | |||||||||
Proceeds from investments sold, matured or repaid | |||||||||||
Acquisition of subsidiary, net of cash received | ( | ||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Financing activities | |||||||||||
Shares redeemed for payroll taxes | ( | ( | |||||||||
Proceeds from surplus notes | |||||||||||
Principal payments on debt | ( | ( | |||||||||
Payment for deferred financing costs | ( | ||||||||||
Payment for interest rate cap | ( | ||||||||||
Payment for acquisition of subsidiary | ( | ||||||||||
Net cash provided by (used in) financing activities | ( | ||||||||||
Net decrease in cash, cash equivalents and restricted cash | ( | ( | |||||||||
Cash, cash equivalents and restricted cash – beginning of period | |||||||||||
Cash, cash equivalents and restricted cash – end of period | $ | $ | |||||||||
Disaggregation of cash and restricted cash: | September 30, 2022 | December 31, 2021 | |||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Total cash, cash equivalents and restricted cash | $ | $ |
Nine Months Ended September 30, | |||||||||||
Supplemental disclosure of cash flow information: | 2022 | 2021 | |||||||||
Cash paid during the year for: | |||||||||||
Interest | $ | $ | |||||||||
Income taxes | |||||||||||
Non-cash investing and financing activity: | |||||||||||
Right-of-use assets obtained in exchange for new operating lease liabilities | |||||||||||
Non-cash transfer of investments to settle funds held for reinsurance | |||||||||||
Non-cash transfer of investments to settle amounts held for others in accounts payable | |||||||||||
Contingent consideration for the acquisition of subsidiary | |||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
Operating cash flows from operating leases |
September 30, 2022 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||
U.S. government and government securities | $ | $ | $ | $ | |||||||||||||||||||
Foreign governments | |||||||||||||||||||||||
States, territories and possessions | |||||||||||||||||||||||
Political subdivisions of states territories and possessions | |||||||||||||||||||||||
Special revenue and special assessment obligations | |||||||||||||||||||||||
Industrial and public utilities | |||||||||||||||||||||||
Commercial mortgage-backed securities | |||||||||||||||||||||||
Residential mortgage-backed securities | |||||||||||||||||||||||
Other loan-backed securities | |||||||||||||||||||||||
Hybrid securities | |||||||||||||||||||||||
Total fixed maturities | |||||||||||||||||||||||
Equity securities | |||||||||||||||||||||||
Total investments | $ | $ | $ | $ | |||||||||||||||||||
Embedded derivatives on funds held under reinsurance agreements | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Interest rate cap agreement | |||||||||||||||||||||||
Debt |
December 31, 2021 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||
U.S. government and government securities | $ | $ | $ | $ | |||||||||||||||||||
Foreign governments | |||||||||||||||||||||||
States, territories and possessions | |||||||||||||||||||||||
Political subdivisions of states, territories and possessions | |||||||||||||||||||||||
Special revenue and special assessment obligations | |||||||||||||||||||||||
Industrial and public utilities | |||||||||||||||||||||||
Commercial mortgage-backed securities | |||||||||||||||||||||||
Residential mortgage-backed securities | |||||||||||||||||||||||
Other loan-backed securities | |||||||||||||||||||||||
Hybrid securities | |||||||||||||||||||||||
Total fixed maturities | |||||||||||||||||||||||
Equity securities | |||||||||||||||||||||||
Total investments | $ | $ | $ | $ | |||||||||||||||||||
Embedded derivatives on funds held under reinsurance agreements | $ | ( | $ | $ | $ | ||||||||||||||||||
Debt |
September 30, 2022 | |||||||||||||||||||||||
Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||
U.S. government and government securities | $ | $ | $ | ( | $ | ||||||||||||||||||
Foreign governments | ( | ||||||||||||||||||||||
States, territories and possessions | ( | ||||||||||||||||||||||
Political subdivisions of states, territories and possessions | ( | ||||||||||||||||||||||
Special revenue and special assessment obligations | ( | ||||||||||||||||||||||
Industrial and public utilities | ( | ||||||||||||||||||||||
Commercial mortgage-backed securities | ( | ||||||||||||||||||||||
Residential mortgage-backed securities | ( | ||||||||||||||||||||||
Other loan-backed securities | ( | ||||||||||||||||||||||
Hybrid securities | ( | ||||||||||||||||||||||
Total fixed maturities available for sale | $ | $ | $ | ( | $ | ||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||
U.S. government and government securities | $ | $ | $ | ( | $ | ||||||||||||||||||
Foreign governments | ( | ||||||||||||||||||||||
States, territories and possessions | ( | ||||||||||||||||||||||
Political subdivisions of states, territories and possessions | ( | ||||||||||||||||||||||
Special revenue and special assessment obligations | ( | ||||||||||||||||||||||
Industrial and public utilities | ( | ||||||||||||||||||||||
Commercial mortgage-backed securities | ( | ||||||||||||||||||||||
Residential mortgage-backed securities | ( | ||||||||||||||||||||||
Other loan-backed securities | ( | ||||||||||||||||||||||
Hybrid securities | |||||||||||||||||||||||
Total fixed maturities available for sale | $ | $ | $ | ( | $ | ||||||||||||||||||
September 30, 2022 | |||||||||||||||||||||||||||||||||||
Less Than 12 Months | 12 Months or More | Total | |||||||||||||||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||||||||||||||
U.S. government and government securities | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
Foreign governments | ( | ( | |||||||||||||||||||||||||||||||||
States, territories and possessions | ( | ( | ( | ||||||||||||||||||||||||||||||||
Political subdivisions of states, territories and possessions | ( | ( | ( | ||||||||||||||||||||||||||||||||
Special revenue and special assessment obligations | ( | ( | ( | ||||||||||||||||||||||||||||||||
Industrial and public utilities | ( | ( | ( | ||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
Other loan-backed securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
Hybrid securities | ( | ( | |||||||||||||||||||||||||||||||||
Total fixed maturities | $ | $ | ( | $ | $ | ( | $ | $ | ( |
December 31, 2021 | |||||||||||||||||||||||||||||||||||
Less Than 12 Months | 12 Months or More | Total | |||||||||||||||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||||||||||||||
U.S. government and government securities | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
Foreign governments | ( | ( | |||||||||||||||||||||||||||||||||
States, territories and possessions | ( | ( | |||||||||||||||||||||||||||||||||
Political subdivisions of states, territories and possessions | ( | ( | |||||||||||||||||||||||||||||||||
Special revenue and special assessment obligations | ( | ( | |||||||||||||||||||||||||||||||||
Industrial and public utilities | ( | ( | ( | ||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | ( | ( | |||||||||||||||||||||||||||||||||
Other loan-backed securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
Hybrid securities | |||||||||||||||||||||||||||||||||||
Total fixed maturities | $ | $ | ( | $ | $ | ( | $ | $ | ( |
Cost or Amortized Cost | Fair Value | ||||||||||
Available for sale: | |||||||||||
Due in one year or less | $ | $ | |||||||||
Due after one year but before five years | |||||||||||
Due after five years but before ten years | |||||||||||
Due after ten years | |||||||||||
Commercial mortgage-backed securities | |||||||||||
Residential mortgage-backed securities | |||||||||||
Other loan-backed securities | |||||||||||
Total | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||
Gains | $ | $ | $ | $ | |||||||||||||||||||
Losses | ( | ( | |||||||||||||||||||||
Total fixed maturities | ( | ||||||||||||||||||||||
Funds held investments: | |||||||||||||||||||||||
Gains | |||||||||||||||||||||||
Losses | ( | ( | ( | ( | |||||||||||||||||||
Total funds held investments | ( | ( | |||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||
Equity method investments: | |||||||||||||||||||||||
Gains | |||||||||||||||||||||||
Losses | ( | ( | ( | ||||||||||||||||||||
Total equity securities | ( | ( | |||||||||||||||||||||
Total net realized gains | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Fixed maturities | $ | $ | $ | $ | |||||||||||||||||||
Income on funds held investments | |||||||||||||||||||||||
Equity securities | |||||||||||||||||||||||
Unrealized losses on equity securities | ( | ( | |||||||||||||||||||||
Interest earned on cash and short-term investments | |||||||||||||||||||||||
Net investment income | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||
Net realized gains (losses) on sales of equity securities | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Change in net unrealized gains (losses) of equity securities still held as of September 30, 2022 and 2021 | ( | ( | ( | ||||||||||||||||||||
Net realized and unrealized gains (losses) on equity securities | $ | ( | $ | ( | $ | ( | $ | ( |
September 30, 2022 | December 31, 2021 | ||||||||||
Funds held under reinsurance agreements, at cost | $ | $ | |||||||||
Embedded derivatives, at fair value | ( | ||||||||||
Total funds held under reinsurance agreements | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Change in fair value of embedded derivatives | $ | $ | $ | $ | |||||||||||||||||||
Effect of net investment income on funds held investments | ( | ( | ( | ( | |||||||||||||||||||
Effect of realized losses (gains) on funds held investments | ( | ( | |||||||||||||||||||||
Total gains (losses) on embedded derivatives | $ | $ | ( | $ | $ |
September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
Face Value | Unamortized Discount and Issuance Costs | Carrying Value | Face Value | Unamortized Discount and Issuance Costs | Carrying Value | ||||||||||||||||||||||||||||||
Secured credit facility | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Surplus notes | ( | ||||||||||||||||||||||||||||||||||
Total debt | $ | $ | ( | $ | $ | $ | ( | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Brokerage | $ | $ | $ | $ | |||||||||||||||||||
Managing general agent fees | |||||||||||||||||||||||
Third-party administrator fees | |||||||||||||||||||||||
Consulting and other fee-based revenue | |||||||||||||||||||||||
Total revenue from contracts with customers | $ | $ | $ | $ |
September 30, 2022 | December 31, 2021 | ||||||||||
Contract assets | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Unpaid losses and LAE reserves at beginning of period | $ | $ | $ | $ | |||||||||||||||||||
Less losses ceded through reinsurance | ( | ( | ( | ( | |||||||||||||||||||
Net unpaid losses and LAE at beginning of period | |||||||||||||||||||||||
Incurred losses and LAE related to: | |||||||||||||||||||||||
Current period | |||||||||||||||||||||||
Prior period | ( | ( | ( | ( | |||||||||||||||||||
Total incurred losses and LAE | |||||||||||||||||||||||
Paid losses and LAE, net of reinsurance, related to: | |||||||||||||||||||||||
Current period | |||||||||||||||||||||||
Prior period | |||||||||||||||||||||||
Total paid losses and LAE | |||||||||||||||||||||||
Net unpaid losses and LAE at end of period | |||||||||||||||||||||||
Plus losses ceded through reinsurance | |||||||||||||||||||||||
Unpaid losses and LAE reserves at end of period | $ | $ | $ | $ | |||||||||||||||||||
Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
Gross | Assumed | Ceded | Net | Gross | Assumed | Ceded | Net | ||||||||||||||||||||||||||||||||||||||||
Written premiums | $ | $ | $ | ( | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
Earned premiums | ( | ( |
Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
Gross | Assumed | Ceded | Net | Gross | Assumed | Ceded | Net | ||||||||||||||||||||||||||||||||||||||||
Written premiums | $ | $ | $ | ( | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
Earned premiums | ( | ( |
September 30, 2022 | December 31, 2021 | ||||||||||
Right of use asset | $ | $ | |||||||||
Lease liability | $ | $ | |||||||||
Weighted average remaining lease term | |||||||||||
Weighted average discount rate | % | % |
Operating Leases | |||||
2022 | $ | ||||
2023 | |||||
2024 | |||||
2025 | |||||
2026 | |||||
Thereafter | |||||
Total lease payments | |||||
Less: imputed interest | ( | ||||
Total lease liabilities | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net income — basic and diluted | $ | $ | $ | $ | |||||||||||||||||||
Weighted average number of shares outstanding — basic | |||||||||||||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||||
Restricted stock units | |||||||||||||||||||||||
Dilutive shares | |||||||||||||||||||||||
Weighted average number of shares outstanding — diluted | |||||||||||||||||||||||
Earnings per share: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Balance at beginning of period | $ | ( | $ | $ | $ | ||||||||||||||||||
Other comprehensive loss, net of tax: | |||||||||||||||||||||||
Unrealized investment losses: | |||||||||||||||||||||||
Unrealized investment losses arising during the period | ( | ( | ( | ( | |||||||||||||||||||
Income tax benefit | ( | ( | ( | ( | |||||||||||||||||||
Unrealized investment losses, net of tax | ( | ( | ( | ( | |||||||||||||||||||
Less reclassification adjustments to: | |||||||||||||||||||||||
Net realized investment gains (losses) included in net realized gains (losses) | ( | ||||||||||||||||||||||
Income tax expense (benefit) | ( | ||||||||||||||||||||||
Total reclassifications included in net income, net of tax | ( | ||||||||||||||||||||||
Other comprehensive loss | ( | ( | ( | ( | |||||||||||||||||||
Balance at end of period | $ | ( | $ | $ | ( | $ |
Fiscal 2022 | Fiscal 2021 | ||||||||||
Expected volatility | |||||||||||
Expected term | |||||||||||
Risk-free interest rate |
Stock Options | Weighted Average Exercise Price Per Share | Aggregate Intrinsic Value | Weighted Average Remaining Contract Term | ||||||||||||||||||||
Balance outstanding, December 31, 2021 | $ | ||||||||||||||||||||||
Granted | $ | ||||||||||||||||||||||
Forfeited or cancelled | ( | $ | |||||||||||||||||||||
Balance outstanding, September 30, 2022 | $ | $ | |||||||||||||||||||||
Balance vested and exercisable, September 30, 2022 | $ | $ |
Fiscal 2022 | Fiscal 2021 | ||||||||||
Total grant date fair value | $ | $ | |||||||||
Total grant date fair value per share | $ | $ | |||||||||
Expected volatility | % | % | |||||||||
Weighted average expected life | |||||||||||
Risk-free interest rate | % | % |
Cumulative TSR % | |||||||||||
Fiscal 2022 | Fiscal 2021 | Percent of Units Vested | |||||||||
Below | Below | ||||||||||
RSUs | MSUs | PSUs | Total | ||||||||||||||||||||||||||||||||||||||||||||
Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | ||||||||||||||||||||||||||||||||||||||||
Non-vested outstanding, December 31, 2021 | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
Granted | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
Vested | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||
Forfeited or cancelled | ( | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
Non-vested outstanding, September 30, 2022 | $ | $ | $ | $ |
Three Months Ended September 30, | Change | Percentage Change (1) | |||||||||||||||||||||
(in thousands, except for percentages) | 2022 | 2021 | |||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Gross written premiums | $ | 162,183 | $ | 177,624 | $ | (15,441) | (8.7)% | ||||||||||||||||
Increase in gross unearned premiums | (1,061) | (28,478) | 27,417 | (96.3)% | |||||||||||||||||||
Gross earned premiums | 161,122 | 149,146 | 11,976 | 8.0% | |||||||||||||||||||
Ceded earned premiums | (89,741) | (97,191) | 7,450 | (7.7)% | |||||||||||||||||||
Net earned premiums | 71,381 | 51,955 | 19,426 | 37.4% | |||||||||||||||||||
Net investment income | 2,951 | 2,187 | 764 | 34.9% | |||||||||||||||||||
Net realized gains | 9 | 49 | (40) | (81.6)% | |||||||||||||||||||
Other revenue | 2,140 | 2,799 | (659) | (23.5)% | |||||||||||||||||||
Total revenue | 76,481 | 56,990 | 19,491 | 34.2% | |||||||||||||||||||
Expenses | |||||||||||||||||||||||
Losses and loss adjustment expenses | 45,647 | 32,129 | 13,518 | 42.1% | |||||||||||||||||||
General and administrative expenses | 23,256 | 13,788 | 9,468 | 68.7% | |||||||||||||||||||
Intangible asset amortization | 1,499 | 1,499 | — | —% | |||||||||||||||||||
Noncash stock compensation | 460 | 468 | (8) | (1.7)% | |||||||||||||||||||
Interest expense | 931 | 419 | 512 | 122.2% | |||||||||||||||||||
Total expenses | 71,793 | 48,303 | 23,490 | 48.6% | |||||||||||||||||||
Gains (losses) on embedded derivatives | 4,871 | (121) | 4,992 | NM | |||||||||||||||||||
Other income | 29 | 35 | (6) | (17.1)% | |||||||||||||||||||
Income before taxes | 9,588 | 8,601 | 987 | 11.5% | |||||||||||||||||||
Income tax expense | 2,014 | 2,083 | (69) | (3.3)% | |||||||||||||||||||
Net income | $ | 7,574 | $ | 6,518 | $ | 1,056 | 16.2% | ||||||||||||||||
(1) The Company defines increases or decreases greater than 200% as "NM" or not meaningful. |
Three Months Ended September 30, | |||||||||||
(in thousands, except for percentages) | 2022 | 2021 | |||||||||
Key metrics: | |||||||||||
Underwriting income(1) | $ | 2,478 | $ | 6,038 | |||||||
Adjusted net income(1) | $ | 5,455 | $ | 7,678 | |||||||
Loss ratio | 63.9 | % | 61.8 | % | |||||||
Expense ratio | 32.6 | % | 26.5 | % | |||||||
Combined ratio | 96.5 | % | 88.3 | % | |||||||
Return on equity | 7.5 | % | 6.2 | % | |||||||
Adjusted return on equity(1) | 5.4 | % | 7.3 | % | |||||||
Return on tangible equity(1) | 15.5 | % | 12.7 | % | |||||||
Adjusted return on tangible equity(1) | 11.2 | % | 15.0 | % | |||||||
(1) This metric represents a non-GAAP financial measure. See 'Reconciliation of Non-GAAP Financial Measures' for a reconciliation of this metric to the applicable GAAP metric. |
Three Months Ended September 30, | Change | Percentage Change | |||||||||||||||||||||
(in thousands, except for percentages) | 2022 | 2021 | |||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Gross written premiums | $ | 162,183 | $ | 177,624 | $ | (15,441) | (8.7)% | ||||||||||||||||
Increase in gross unearned premiums | (1,061) | (28,478) | 27,417 | (96.3)% | |||||||||||||||||||
Gross earned premiums | 161,122 | 149,146 | 11,976 | 8.0% | |||||||||||||||||||
Ceded earned premiums | (89,741) | (97,191) | 7,450 | (7.7)% | |||||||||||||||||||
Net earned premiums | $ | 71,381 | $ | 51,955 | $ | 19,426 | 37.4% | ||||||||||||||||
Three Months Ended September 30, | |||||||||||||||||
2022 | 2021 | Change | |||||||||||||||
Direct commissions | $ | 28,650 | $ | 27,594 | $ | 1,056 | |||||||||||
Ceding commissions | (23,916) | (31,655) | 7,739 | ||||||||||||||
Net commissions | 4,734 | (4,061) | 8,795 | ||||||||||||||
Insurance-related expenses | 6,038 | 5,371 | 667 | ||||||||||||||
General and administrative operating expenses | 12,484 | 12,478 | 6 | ||||||||||||||
Total general and administrative expenses | $ | 23,256 | $ | 13,788 | $ | 9,468 | |||||||||||
General and administrative expenses — % of gross written premiums | 7.7 | % | 7.0 | % | |||||||||||||
Retention rate (1) | 44.3 | % | 34.8 | % | |||||||||||||
Direct commission rate (2) | 17.8 | % | 18.5 | % | |||||||||||||
Ceding commission rate (3) | 26.7 | % | 32.6 | % | |||||||||||||
(1) Net earned premium as a percentage of gross earned premiums. | |||||||||||||||||
(2) Direct commissions as a percentage of gross earned premiums. | |||||||||||||||||
(3) Ceding commissions as a percentage of ceded earned premiums. |
Three Months Ended September 30, | |||||||||||||||||
2022 | 2021 | Change | |||||||||||||||
Change in fair value of embedded derivatives | $ | 5,812 | $ | 573 | $ | 5,239 | |||||||||||
Effect of net investment income on funds held investments | (953) | (585) | (368) | ||||||||||||||
Effect of realized losses (gains) on funds held investments | 12 | (109) | 121 | ||||||||||||||
Total gains (losses) on embedded derivatives | $ | 4,871 | $ | (121) | $ | 4,992 |
Three Months Ended September 30, 2022 | |||||||||||||||||
Owned MGAs | Program Partner | Total | |||||||||||||||
Gross written premiums | $ | 58,567 | $ | 103,616 | $ | 162,183 | |||||||||||
Increase in gross unearned premiums | 2,627 | (3,688) | (1,061) | ||||||||||||||
Gross earned premiums | 61,194 | 99,928 | 161,122 | ||||||||||||||
Ceded earned premiums | (20,454) | (69,287) | (89,741) | ||||||||||||||
Net earned premiums | $ | 40,740 | $ | 30,641 | $ | 71,381 | |||||||||||
Nine Months Ended September 30, | Change | Percentage Change (1) | |||||||||||||||||||||
(in thousands, except for percentages) | 2022 | 2021 | |||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Gross written premiums | $ | 477,775 | $ | 480,905 | $ | (3,130) | (0.7) | % | |||||||||||||||
Increase in gross unearned premiums | (972) | (64,836) | 63,864 | (98.5) | % | ||||||||||||||||||
Gross earned premiums | 476,803 | 416,069 | 60,734 | 14.6 | % | ||||||||||||||||||
Ceded earned premiums | (275,235) | (275,037) | (198) | 0.1 | % | ||||||||||||||||||
Net earned premiums | 201,568 | 141,032 | 60,536 | 42.9 | % | ||||||||||||||||||
Net investment income | 5,136 | 6,562 | (1,426) | (21.7) | % | ||||||||||||||||||
Net realized gains | 311 | 72 | 239 | NM | |||||||||||||||||||
Other revenue | 7,145 | 8,683 | (1,538) | (17.7) | % | ||||||||||||||||||
Total revenue | 214,160 | 156,349 | 57,811 | 37.0 | % | ||||||||||||||||||
Expenses | |||||||||||||||||||||||
Losses and loss adjustment expenses | 125,727 | 86,735 | 38,992 | 45.0 | % | ||||||||||||||||||
General and administrative expenses | 63,235 | 40,946 | 22,289 | 54.4 | % | ||||||||||||||||||
Other expenses | 268 | 845 | (577) | (68.3) | % | ||||||||||||||||||
Intangible asset amortization | 4,498 | 4,326 | 172 | 4.0 | % | ||||||||||||||||||
Noncash stock compensation | 1,019 | 1,098 | (79) | (7.2) | % | ||||||||||||||||||
Interest expense | 1,806 | 1,271 | 535 | 42.1 | % | ||||||||||||||||||
Total expenses | 196,553 | 135,221 | 61,332 | 45.4 | % | ||||||||||||||||||
Gains on embedded derivatives | 14,463 | 1,869 | 12,594 | NM | |||||||||||||||||||
Other income | 76 | 191 | (115) | (60.2) | % | ||||||||||||||||||
Income before taxes | 32,146 | 23,188 | 8,958 | 38.6 | % | ||||||||||||||||||
Income tax expense | 6,741 | 5,102 | 1,639 | 32.1 | % | ||||||||||||||||||
Net income | $ | 25,405 | $ | 18,086 | $ | 7,319 | 40.5 | % | |||||||||||||||
(1) The Company defines increases or decreases greater than 200% as "NM" or not meaningful. |
Nine Months Ended September 30, | |||||||||||
(in thousands, except for percentages) | 2022 | 2021 | |||||||||
Key metrics: | |||||||||||
Underwriting income(1) | $ | 12,606 | $ | 13,351 | |||||||
Adjusted net income(1) | $ | 19,305 | $ | 20,103 | |||||||
Loss ratio | 62.4 | % | 61.5 | % | |||||||
Expense ratio | 31.4 | % | 29.0 | % | |||||||
Combined ratio | 93.8 | % | 90.5 | % | |||||||
Return on equity | 8.2 | % | 5.8 | % | |||||||
Adjusted return on equity(1) | 6.2 | % | 6.4 | % | |||||||
Return on tangible equity(1) | 17.0 | % | 12.1 | % | |||||||
Adjusted return on tangible equity(1) | 12.9 | % | 13.4 | % | |||||||
(1) This metric represents a non-GAAP financial measure. See 'Reconciliation of Non-GAAP Financial Measures' for a reconciliation of this metric to the applicable GAAP metric. |
Nine Months Ended September 30, | Change | Percentage Change | |||||||||||||||||||||
(in thousands, except for percentages) | 2022 | 2021 | |||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Gross written premiums | $ | 477,775 | $ | 480,905 | $ | (3,130) | (0.7) | % | |||||||||||||||
Increase in gross unearned premiums | (972) | (64,836) | 63,864 | (98.5) | % | ||||||||||||||||||
Gross earned premiums | 476,803 | 416,069 | 60,734 | 14.6 | % | ||||||||||||||||||
Ceded earned premiums | (275,235) | (275,037) | (198) | 0.1 | % | ||||||||||||||||||
Net earned premiums | $ | 201,568 | $ | 141,032 | $ | 60,536 | 42.9 | % | |||||||||||||||
Nine Months Ended September 30, | |||||||||||||||||
2022 | 2021 | Change | |||||||||||||||
Direct commissions | $ | 85,691 | $ | 78,304 | $ | 7,387 | |||||||||||
Ceding commissions | (77,541) | (89,547) | 12,006 | ||||||||||||||
Net commissions | 8,150 | (11,243) | 19,393 | ||||||||||||||
Insurance-related expenses | 17,698 | 14,796 | 2,902 | ||||||||||||||
General and administrative operating expenses | 37,387 | 37,393 | (6) | ||||||||||||||
Total general and administrative expenses | $ | 63,235 | $ | 40,946 | $ | 22,289 | |||||||||||
General and administrative expenses — % of gross written premiums | 7.8 | % | 7.8 | % | |||||||||||||
Retention rate (1) | 42.3 | % | 33.9 | % | |||||||||||||
Direct commission rate (2) | 18.0 | % | 18.8 | % | |||||||||||||
Ceding commission rate (3) | 28.2 | % | 32.6 | % | |||||||||||||
(1) Net earned premium as a percentage of gross earned premiums. | |||||||||||||||||
(2) Direct commissions as a percentage of gross earned premiums. | |||||||||||||||||
(3) Ceding commissions as a percentage of ceded earned premiums. |
Nine Months Ended September 30, | |||||||||||||||||
2022 | 2021 | Change | |||||||||||||||
Change in fair value of embedded derivatives | $ | 16,848 | $ | 3,761 | $ | 13,087 | |||||||||||
Effect of net investment income on funds held investments | (2,395) | (1,783) | (612) | ||||||||||||||
Effect of realized losses (gains) on funds held investments | 10 | (109) | 119 | ||||||||||||||
Total gains on embedded derivatives | $ | 14,463 | $ | 1,869 | $ | 12,594 |
Nine Months Ended September 30, 2022 | |||||||||||||||||
Owned MGAs | Program Partner | Total | |||||||||||||||
Gross written premiums | $ | 187,050 | $ | 290,725 | $ | 477,775 | |||||||||||
Increase in gross unearned premiums | (1,732) | 760 | (972) | ||||||||||||||
Gross earned premiums | 185,318 | 291,485 | 476,803 | ||||||||||||||
Ceded earned premiums | (67,781) | (207,454) | (275,235) | ||||||||||||||
Net earned premiums | $ | 117,537 | $ | 84,031 | $ | 201,568 | |||||||||||
Three Months Ended September 30, | |||||||||||
(in thousands, except percentages) | 2022 | 2021 | |||||||||
Net income | $ | 7,574 | $ | 6,518 | |||||||
Income tax expense | 2,014 | 2,083 | |||||||||
Income before taxes | 9,588 | 8,601 | |||||||||
Other revenue | (2,140) | (2,799) | |||||||||
(Gains) losses on embedded derivatives | (4,871) | 121 | |||||||||
Net investment income | (2,951) | (2,187) | |||||||||
Net realized gains | (9) | (49) | |||||||||
Interest expense | 931 | 419 | |||||||||
Intangible asset amortization | 1,499 | 1,499 | |||||||||
Noncash stock compensation | 460 | 468 | |||||||||
Other income | (29) | (35) | |||||||||
Underwriting income | $ | 2,478 | $ | 6,038 | |||||||
Nine Months Ended September 30, | |||||||||||
(in thousands, except percentages) | 2022 | 2021 | |||||||||
Net income | $ | 25,405 | $ | 18,086 | |||||||
Income tax expense | 6,741 | 5,102 | |||||||||
Income before taxes | 32,146 | 23,188 | |||||||||
Other revenue | (7,145) | (8,683) | |||||||||
Gains on embedded derivatives | (14,463) | (1,869) | |||||||||
Net investment income | (5,136) | (6,562) | |||||||||
Net realized gains | (311) | (72) | |||||||||
Other expenses | 268 | 845 | |||||||||
Interest expense | 1,806 | 1,271 | |||||||||
Intangible asset amortization | 4,498 | 4,326 | |||||||||
Noncash stock compensation | 1,019 | 1,098 | |||||||||
Other income | (76) | (191) | |||||||||
Underwriting income | $ | 12,606 | $ | 13,351 | |||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(in thousands, except percentages) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Net income | $ | 7,574 | $ | 6,518 | $ | 25,405 | $ | 18,086 | |||||||||||||||
Intangible asset amortization | 1,499 | 1,499 | 4,498 | 4,326 | |||||||||||||||||||
Noncash stock compensation | 460 | 468 | 1,019 | 1,098 | |||||||||||||||||||
Change in fair value of embedded derivative | (5,812) | (573) | (16,848) | (3,761) | |||||||||||||||||||
Unrealized losses on equity securities | 1,101 | — | 4,542 | — | |||||||||||||||||||
Realized loss (gain) on sale of investment | — | 112 | (1,400) | 112 | |||||||||||||||||||
Other expenses | — | — | 268 | 845 | |||||||||||||||||||
Total adjustments | (2,752) | 1,506 | (7,921) | 2,620 | |||||||||||||||||||
Tax impact of adjustments | 633 | (346) | 1,821 | (603) | |||||||||||||||||||
Adjusted net income | $ | 5,455 | $ | 7,678 | $ | 19,305 | $ | 20,103 | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(in thousands, except percentages) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Adjusted return on equity calculation: | |||||||||||||||||||||||
Numerator: adjusted net income | $ | 5,455 | $ | 7,678 | $ | 19,305 | $ | 20,103 | |||||||||||||||
Denominator: average equity | 406,587 | 419,818 | 412,483 | 416,200 | |||||||||||||||||||
Adjusted return on equity | 5.4 | % | 7.3 | % | 6.2 | % | 6.4 | % | |||||||||||||||
Return on equity | 7.5 | % | 6.2 | % | 8.2 | % | 5.8 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(in thousands, except percentages) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Return on tangible equity calculation: | |||||||||||||||||||||||
Numerator: net income | $ | 7,574 | $ | 6,518 | $ | 25,405 | $ | 18,086 | |||||||||||||||
Denominator: | |||||||||||||||||||||||
Average stockholders' equity | 406,587 | 419,818 | 412,483 | 416,200 | |||||||||||||||||||
Less: average goodwill and other intangible assets | 211,713 | 214,942 | 213,212 | 216,356 | |||||||||||||||||||
Average tangible stockholders' equity | 194,874 | 204,876 | 199,271 | 199,844 | |||||||||||||||||||
Return on tangible equity | 15.5 | % | 12.7 | % | 17.0 | % | 12.1 | % | |||||||||||||||
Return on equity | 7.5 | % | 6.2 | % | 8.2 | % | 5.8 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(in thousands, except percentages) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Adjusted return on tangible equity calculation: | |||||||||||||||||||||||
Numerator: adjusted net income | $ | 5,455 | $ | 7,678 | $ | 19,305 | $ | 20,103 | |||||||||||||||
Denominator: average tangible equity | 194,874 | 204,876 | 199,271 | 199,844 | |||||||||||||||||||
Adjusted return on tangible equity | 11.2 | % | 15.0 | % | 12.9 | % | 13.4 | % | |||||||||||||||
Return on equity | 7.5 | % | 6.2 | % | 8.2 | % | 5.8 | % |
Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Cash, cash equivalents and restricted cash provided by (used in): | |||||||||||
Operating activities | $ | 76,547 | $ | 53,410 | |||||||
Investing activities | (154,742) | (71,131) | |||||||||
Financing activities | 46,020 | (1,125) | |||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | (32,175) | $ | (18,846) |
September 30, 2022 | |||||||||||
Cost or Amortized Cost | Fair Value | ||||||||||
Fixed maturities: | |||||||||||
U.S. government and government securities | $ | 59,974 | $ | 56,899 | |||||||
Foreign governments | 400 | 392 | |||||||||
States, territories and possessions | 16,088 | 14,380 | |||||||||
Political subdivisions of states, territories and possessions | 38,614 | 33,863 | |||||||||
Special revenue and special assessment obligations | 116,311 | 103,318 | |||||||||
Industrial and public utilities | 125,572 | 118,252 | |||||||||
Commercial mortgage-backed securities | 141,552 | 123,478 | |||||||||
Residential mortgage-backed securities | 25,769 | 24,171 | |||||||||
Other loan-backed securities | 51,857 | 50,339 | |||||||||
Hybrid securities | 5,798 | 5,026 | |||||||||
Total fixed maturities | 581,935 | 530,118 | |||||||||
Equity securities | 39,838 | 35,296 | |||||||||
Total investments | $ | 621,773 | $ | 565,414 |
December 31, 2021 | |||||||||||
Cost or Amortized Cost | Fair Value | ||||||||||
Fixed maturities: | |||||||||||
U.S. government and government securities | $ | 41,490 | $ | 41,434 | |||||||
Foreign governments | 2,500 | 2,490 | |||||||||
States, territories and possessions | 10,593 | 10,766 | |||||||||
Political subdivisions of states, territories and possessions | 39,170 | 40,002 | |||||||||
Special revenue and special assessment obligations | 93,664 | 95,991 | |||||||||
Industrial and public utilities | 100,774 | 103,257 | |||||||||
Commercial mortgage-backed securities | 119,378 | 118,218 | |||||||||
Residential mortgage-backed securities | 16,549 | 17,368 | |||||||||
Other loan-backed securities | 41,236 | 41,425 | |||||||||
Hybrid securities | 105 | 110 | |||||||||
Total fixed maturities | 465,459 | 471,061 | |||||||||
Equity securities | 984 | 969 | |||||||||
Total investments | $ | 466,443 | $ | 472,030 |
September 30, 2022 | |||||||||||
(in thousands, except percentages) | Fair Value | % of Total | |||||||||
AAA | $ | 104,952 | 19.8 | % | |||||||
AA | 298,615 | 56.3 | % | ||||||||
A | 93,376 | 17.6 | % | ||||||||
BBB | 29,651 | 5.6 | % | ||||||||
BB | 3,501 | 0.7 | % | ||||||||
Below investment grade | 23 | 0.0 | % | ||||||||
Total fixed maturities | $ | 530,118 | 100.0 | % |
December 31, 2021 | |||||||||||
(in thousands, except percentages) | Fair Value | % of Total | |||||||||
AAA | $ | 80,455 | 17.1 | % | |||||||
AA | 278,557 | 59.1 | % | ||||||||
A | 77,097 | 16.4 | % | ||||||||
BBB | 33,959 | 7.2 | % | ||||||||
BB | 947 | 0.2 | % | ||||||||
Below investment grade | 46 | 0.0 | % | ||||||||
Total fixed maturities | $ | 471,061 | 100.0 | % |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||||||||||||||
July 1, 2022 - July 31, 2022 | 2,491 | $ | 5.39 | — | — | |||||||||||||||||||||
August 1, 2022 - August 31, 2022 | — | $ | — | — | — | |||||||||||||||||||||
September 1, 2022 - September 30, 2022 | 495 | $ | 4.17 | — | — | |||||||||||||||||||||
2,986 | — |
Exhibit Number | Description | |||||||
First Amendment to Second Amended and Restated Credit Agreement by and among Trean Insurance Group, Inc., Trean Corporation, Trean Compstar Holdings LLC, Benchmark Administrators, LLC, the lenders party thereto and First Horizon Bank, N.A., as administrative agent, dated May 6, 2022 (filed as exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on October 4, 2022 and incorporated by reference herein) | ||||||||
31.1+ | ||||||||
31.2+ | ||||||||
32.1* | ||||||||
32.2* | ||||||||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||
101.SCH | XBRL Taxonomy Extension Schema Document | |||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
* This certification is deemed not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference to any filing under the Securities Act of 1933, as amended, or the Exchange Act. | ||||||||
+ Filed herewith. |
TREAN INSURANCE GROUP, INC. | |||||||||||
Date: | November 8, 2022 | By: | /s/ Julie A. Baron | ||||||||
Julie A. Baron | |||||||||||
Chief Executive Officer and President | |||||||||||
(Principal Executive Officer) | |||||||||||
Date: | November 8, 2022 | By: | /s/ Nicholas J. Vassallo | ||||||||
Nicholas J. Vassallo | |||||||||||
Chief Financial Officer | |||||||||||
(Principal Financial and Accounting Officer) |
Date: | November 8, 2022 | /s/ Julie A. Baron | |||||||||
Julie A. Baron | |||||||||||
Chief Executive Officer and President | |||||||||||
(Principal Executive Officer) |
Date: | November 8, 2022 | /s/ Nicholas J. Vassallo | |||||||||
Nicholas J. Vassallo | |||||||||||
Chief Financial Officer | |||||||||||
(Principal Financial Officer) |
Date: | November 8, 2022 | /s/ Julie A. Baron | |||||||||
Julie A. Baron | |||||||||||
Chief Executive Officer and President | |||||||||||
(Principal Executive Officer) |
Date: | November 8, 2022 | /s/ Nicholas J. Vassallo | |||||||||
Nicholas J. Vassallo | |||||||||||
Chief Financial Officer | |||||||||||
(Principal Financial Officer) |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Amortized cost | $ 581,935 | $ 465,459 |
Equity securities, cost | $ 39,838 | $ 984 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 600,000,000 | 600,000,000 |
Common stock, issued (in shares) | 51,220,485 | 51,176,887 |
Common stock, outstanding (in shares) | 51,220,485 | 51,176,887 |
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Revenues | ||||
Gross written premiums | $ 162,183 | $ 177,624 | $ 477,775 | $ 480,905 |
Increase in gross unearned premiums | (1,061) | (28,478) | (972) | (64,836) |
Gross earned premiums | 161,122 | 149,146 | 476,803 | 416,069 |
Ceded earned premiums | (89,741) | (97,191) | (275,235) | (275,037) |
Net earned premiums | 71,381 | 51,955 | 201,568 | 141,032 |
Net investment income | 2,951 | 2,187 | 5,136 | 6,562 |
Net realized gains | 9 | 49 | 311 | 72 |
Other revenue | 2,140 | 2,799 | 7,145 | 8,683 |
Total revenue | 76,481 | 56,990 | 214,160 | 156,349 |
Expenses | ||||
Losses and loss adjustment expenses | 45,647 | 32,129 | 125,727 | 86,735 |
General and administrative expenses | 23,256 | 13,788 | 63,235 | 40,946 |
Other expenses | 0 | 0 | 268 | 845 |
Intangible asset amortization | 1,499 | 1,499 | 4,498 | 4,326 |
Noncash stock compensation | 460 | 468 | 1,019 | 1,098 |
Interest expense | 931 | 419 | 1,806 | 1,271 |
Total expenses | 71,793 | 48,303 | 196,553 | 135,221 |
Gains (losses) on embedded derivatives | 4,871 | (121) | 14,463 | 1,869 |
Other income | 29 | 35 | 76 | 191 |
Income before taxes | 9,588 | 8,601 | 32,146 | 23,188 |
Income tax expense | 2,014 | 2,083 | 6,741 | 5,102 |
Net income | $ 7,574 | $ 6,518 | $ 25,405 | $ 18,086 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.15 | $ 0.13 | $ 0.50 | $ 0.35 |
Diluted (in dollars per share) | $ 0.15 | $ 0.13 | $ 0.50 | $ 0.35 |
Weighted average shares outstanding: | ||||
Weighted average number of shares outstanding - basic (in shares) | 51,216,869 | 51,171,416 | 51,197,296 | 51,157,726 |
Weighted average number of shares outstanding - diluted (in shares) | 51,217,005 | 51,171,416 | 51,197,482 | 51,172,602 |
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 7,574 | $ 6,518 | $ 25,405 | $ 18,086 |
Unrealized investment losses: | ||||
Unrealized investment losses arising during the period | (19,059) | (2,419) | (58,333) | (8,670) |
Income tax benefit | (3,996) | (508) | (12,243) | (1,821) |
Unrealized investment losses, net of tax | (15,063) | (1,911) | (46,090) | (6,849) |
Less reclassification adjustments to: | ||||
Net realized investment gains (losses) included in net realized gains (losses) | 21 | 49 | (1,060) | 72 |
Income tax expense (benefit) | 4 | 10 | (223) | 15 |
Total reclassifications included in net income, net of tax | 17 | 39 | (837) | 57 |
Other comprehensive loss | (15,080) | (1,950) | (45,253) | (6,906) |
Total comprehensive income (loss) | $ (7,506) | $ 4,568 | $ (19,848) | $ 11,180 |
Business and Basis of Presentation |
9 Months Ended |
---|---|
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Basis of Presentation | Business and Basis of Presentation Trean Insurance Group, Inc. (together with its wholly owned subsidiaries, the "Company") provides products and services to the specialty insurance market. Historically, the Company has focused on specialty casualty markets management believes are under-served and where the Company’s expertise allows the Company to achieve higher rates, such as niche workers' compensation markets and small- to medium-sized specialty casualty insurance programs. The Company underwrites specialty-casualty insurance products both through programs where the Company partners with other organizations ("Program Partners") and also through Company owned managing general agencies ("Owned MGAs"). Additionally, the Company provides Program Partners with a variety of services, including issuing carrier services, claims administration, and reinsurance brokerage from which the Company generates fee-based revenues. The Company's wholly owned subsidiaries include: (i) Benchmark Holding Company, a property and casualty insurance holding company, which owns Benchmark Insurance Company ("Benchmark"), a property and casualty insurance company domiciled in the state of Kansas, American Liberty Insurance Company ("ALIC"), a property and casualty insurance company domiciled in the state of Utah, 7710 Insurance Company ("7710"), a property and casualty insurance company domiciled in the state of South Carolina and Benchmark Specialty Insurance Company ("BSIC"), a property and casualty insurance company domiciled in the state of Arkansas; (ii) Compstar Insurance Services LLC, a California-based general agency; and (iii) Trean Corporation ("Trean Corp"), a reinsurance intermediary manager and a managing general agent, which consists of the following wholly owned subsidiaries: (a) Trean Reinsurance Services, LLC ("TRS"), a reinsurance intermediary broker; Benchmark Administrators LLC ("BIC Admin"), a claims third-party administrator; (b) Western Integrated Care, LLC ("WIC"), a managed care organization; and (c) Westcap Insurance Services, LLC ("Westcap"), a managing general agent based in California. The accompanying condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to the Quarterly Report on Form 10-Q under the Securities Exchange Act of 1934, as amended. Accordingly, they do not contain all of the information included in the Company's annual consolidated financial statements and notes. In the opinion of management, all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation of the Company’s condensed consolidated financial position and results of operations for the periods presented have been included. Although management believes the disclosures and information presented are adequate, these interim condensed consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021 (the "2021 Form 10-K"). Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. Use of estimates While preparing the condensed consolidated financial statements, the Company has made certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements, as well as reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Reported amounts that require extensive use of estimates include the reserves for unpaid losses and loss adjustment expenses ("LAE"), reinsurance recoverables, investments, goodwill, and other intangible assets. Except for the captions on the condensed consolidated balance sheets and condensed consolidated statements of comprehensive income, generally, the term loss(es) is used to collectively refer to both losses and LAE. The Company tests for goodwill impairment at the reporting unit level during the fourth quarter of each year and between annual tests if a triggering event indicates the possibility of an impairment. The Company monitors changing business conditions as well as industry and economic factors, among others, for events which could trigger the need for an interim impairment analysis. The declining share price of the Company’s stock has caused the market capitalization to fall below the book value as of September 30, 2022. As a result of the decrease in share price, the Company performed an interim impairment analysis at September 30, 2022 and concluded that no impairment relating to goodwill existed as of September 30, 2022. Accounting pronouncements Recently adopted policies In January 2020, the Financial Accounting Standards Board ("FASB") issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivative and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323 and Topic 815 ("ASU 2020-01"). This update addresses the accounting for certain equity securities upon the application or discontinuation of the equity method of accounting. Further, the update addresses scope considerations for forward contracts and purchased options on certain securities. ASU 2020-01 is effective for annual periods beginning after December 15, 2021, including interim periods thereafter. The Company adopted this standard effective January 1, 2022. Adoption of this standard did not have a material impact on the condensed consolidated financial statements. Pending policies The Company completed its initial public offering in July 2020, and is an emerging growth company as defined under federal securities laws. As such, the Company has elected to adopt pending accounting policies under the dates required for private companies. Therefore, the dates included within this section reflect the effective dates for the adoption of new accounting policies required by private companies. In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments ("ASU 2020-03"). This update represents changes to clarify and improve the codification to allow for easier application by eliminating inconsistencies and providing clarification on items such as (i) the application of fair value option disclosures; (ii) the accounting for fees related to modifications of debt; and (iii) aligning the contractual term of a net investment in a lease in accordance with ASC Topic 326, Financial Instruments - Credit Losses, and the lease term determined in accordance with ASC Topic 842, Leases. The Company adopted items (i) and (ii) effective January 1, 2020 and will adopt item (iii) on January 1, 2023. Adoption of this standard has not had, and is not expected to have, a material impact on the condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). This update requires financial assets measured at amortized cost to be presented at the net amount expected to be collected by means of an allowance for credit losses that runs through net income. Additionally, credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses, with the amount of the allowance limited to the amount by which the fair value is below the amortized cost. ASU 2016-13 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. The Company will adopt this standard effective January 1, 2023. The Company is currently evaluating the impact of this standard on the condensed consolidated financial statements.
|
Acquisitions |
9 Months Ended |
---|---|
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | AcquisitionsWestern Integrated CareEffective July 6, 2021, Trean Corp acquired 100% ownership of WIC for a total purchase price of $5,500, which includes $1,500 that is contingent on WIC's future earnings, as defined in the agreement. WIC is a managed care organization that offers services to workers' compensation insurers to enable employees who are injured on the job to access qualified medical treatment. The Company recorded $1,501 of goodwill and intangible assets of $3,624 associated with the business combination. The Company made an earn-out payment of $750 during the three months ended September 30, 2022. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The Company’s financial instruments include assets and liabilities carried at fair value. The inputs to valuation techniques used to measure fair value are prioritized into a three level hierarchy. The fair value hierarchy is as follows: Level 1: Fair values primarily based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2: Fair values primarily based on observable inputs, other than quoted prices included in Level 1, or based on prices for similar assets and liabilities. Level 3: Fair values primarily based on valuations derived when one or more of the significant inputs are unobservable. With little or no observable market, the determination of fair value uses considerable judgment and represents the Company’s best estimate of an amount that could be realized in a market exchange for the asset or liability. The Company classifies the financial asset or liability by level based upon the lowest level input that is significant to the determination of the fair value. The following tables present the estimated fair value of the Company’s significant financial instruments.
Fixed maturities and equity securities: The Company, through its third-party pricing service provider, uses a variety of sources to estimate the fair value of investments such as Refinitiv (formerly Reuters), PricingDirect, ICE Data Services, and for equities, Bloomberg or S&P Capital IQ Pro. Equity securities are generally valued at the closing price on the exchange on which they are primarily traded as provided by a third-party pricing service. Fixed income securities are generally valued at an evaluated bid as provided by a third-party pricing service. Securities and other assets generally valued using third-party pricing services may also be valued at broker/dealer indications. Values obtained from third-party pricing services can utilize several market data sources for inputs such as transaction data, yield, quality, coupon rate, maturity, issue type, trading characteristics, and other market activity. To validate the reasonableness of the prices, the Company performs various qualitative and quantitative procedures such as analysis of recent trading activity, analytical review of fair values and an evaluation of the underlying pricing methodologies. Based on these procedures, the Company did not adjust the prices or quotes from the third-party pricing service. Embedded derivatives: The Company enters into funds held contracts under reinsurance agreements, which create embedded derivatives on the underlying investments. These embedded derivatives are valued based upon the unrealized gain or loss position of the funds held portfolio, which is determined consistent with other investments using third-party pricing services. To validate the reasonableness of the quoted prices, the Company performs various qualitative and quantitative procedures such as analysis of recent activity, analytical review of fair values and an evaluation of the underlying pricing methodologies. Based on these procedures, the Company did not adjust the prices or quotes from the third-party pricing service. Interest rate cap agreement: The Company entered into an interest cap agreement to hedge cash flows associated with interest rate fluctuations on variable rate debt. The fair value of the interest rate cap agreement is based on the terms of the agreement and commonly quoted data for forward interest rate curves and an implied market volatility. The Company also assessed the significance of credit valuation adjustments to appropriately reflect the respective nonperformance risk in the fair value measurement and determined the credit valuation adjustment is not significant to the overall valuation of the interest rate cap. Debt: The Company holds debt related to its secured credit facility and surplus notes. The Company has determined that the remaining balance of the debt reflected its fair value as this would represent the total amount to repay the debt.
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Investments |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments Fixed income securities include bonds, asset-backed securities, and redeemable preferred securities. Fixed income securities, which may be sold prior to their contractual maturity, are designated as available-for-sale and are carried at fair value. Equity securities primarily include common stocks, mutual funds, and non-redeemable preferred stocks, which are carried at fair value. The cost or amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the Company's fixed maturities investments are as follows:
The following table illustrates the Company’s gross unrealized losses and fair value of fixed maturities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:
The unrealized losses on the Company’s available for sale securities as of September 30, 2022 and December 31, 2021 were primarily attributable to an increase in interest rates, which predominantly impacted fixed maturities acquired since the second quarter of 2020. The amortized cost and estimated fair value of fixed maturities as of September 30, 2022, by contractual maturity, are as follows:
Actual maturities may differ from contractual maturities as issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Realized gains and losses on investments included in the condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021 are as follows:
Net investment income consists of the following for the three and nine months ended September 30, 2022 and 2021:
Net realized and unrealized gains (losses) on equity securities recognized during the three and nine months ended September 30, 2022 and 2021 are as follows:
Embedded derivatives The Company enters into funds held contracts under reinsurance agreements, which create embedded derivatives that are measured at fair value. The embedded derivatives within the Company's funds held under reinsurance agreements relate to a total return swap on the underlying investments. These embedded derivatives had no impact on total operating, investing, and financing activities as presented on the Company’s condensed consolidated statements of cash flows during the nine months ended September 30, 2022 and 2021. Total funds held under reinsurance agreements include the following:
Gains (losses) on embedded derivatives consists of the following for the three and nine months ended September 30, 2022 and 2021:
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Equity Method Investments |
9 Months Ended |
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Sep. 30, 2022 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | Equity Method InvestmentsOn January 3, 2020, the Company sold 15% of its previous 25% ownership in Trean Intermediaries ("TRI") for cash proceeds of $3,000, resulting in a remaining ownership interest of 10%. The Company sold all of its remaining ownership interest in TRI during the third quarter of 2021 for $1,888, resulting in a realized loss of $112, which was included in net realized gains (losses) on the consolidated statements of operations for the three and nine months ended September 30, 2021. The sale agreement included an earn-out that would increase the amount received based on TRI's future performance. The Company received an earn-out payment of $1,400, which was included in net realized gains (losses) on the consolidated statements of operations for the nine months ended September 30, 2022. The Company recorded $0 and $50 of revenue for the three months ended September 30, 2022 and 2021, respectively, and $100 and $150 of revenue for the nine months ended September 30, 2022 and 2021, respectively, for consulting services provided to TRI. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Debt consisted of the following:
Secured Credit Facility In July 2020, the Company entered into a Second Amended and Restated Credit Agreement (the "Credit Agreement") that, among other things, extended the Company's credit facility for a period of five years through May 26, 2025, and increased its term loan facility by $11,707, resulting in a total term loan debt amount of $33,000 and a revolving credit facility of $2,000 at the time of closing. The outstanding principal balance of the loan is to be repaid in quarterly installments, which escalate from $206 to $825. All equity securities of the subsidiaries of the Company (other than Benchmark Holding Company and its subsidiaries) have been pledged as collateral. On May 6, 2022, the Company entered into a First Amendment to the Credit Agreement to, among other things, facilitate the approval of certain internal distributions among the Company and certain of its subsidiaries as part of the Company’s overall capital management strategy. On September 28, 2022, the Company entered into a Second Amendment to the new Credit Agreement that, among other things, replaced LIBOR as the benchmark rate with Term SOFR (as defined in the Credit Agreement), reduced the applicable margin under the Credit Agreement on Eurodollar loans from 4.50% to 3.50% and on ABR loans from 3.50% to 2.50%, and converted all extant Eurodollar loans under the Credit Agreement to Term SOFR loans. The variable interest rate plus applicable margin was 6.76% and 4.64% as of September 30, 2022 and December 31, 2021, respectively. During the three months ended September 30, 2022 and 2021, the Company recorded interest expense of $563 and $419, respectively, on its credit facility including amortization of debt issuance costs. During the nine months ended September 30, 2022 and 2021, the Company recorded interest expense of $1,438 and $1,271, respectively, on its credit facility including amortization of debt issuance costs. The terms of the credit facility require the Company to maintain certain financial covenants and ratios. The Company was in compliance with all covenants and ratios as of September 30, 2022. Interest Rate Cap Agreement In September 2022, the Company entered into an interest rate cap agreement that became effective September 30, 2022, to hedge cash flows associated with interest rate fluctuations on its secured credit facility, with a termination date of May 31, 2024 ("Interest Rate Cap Agreement"). The Interest Rate Cap Agreement has a notional amount of $29,700 that effectively converted the outstanding balance of the secured credit facility from variable rate debt to capped variable rate debt, resulting in a change in the applicable interest rate from an interest rate of one-month SOFR plus the applicable margin (as provided by the secured credit facility) to a one-month SOFR interest rate, capped at 5.00%, plus the applicable margin. The notional amount of the Interest Rate Cap Agreement decreases quarterly in proportion to the quarterly principal payments on the secured credit facility. The Interest Rate Cap Agreement is designated as a cash flow hedge and the change in fair value is recorded in accumulated other comprehensive income and is subsequently reclassified to interest expense in the period when the hedged forecasted interest payments affect earnings. The Company paid a fixed amount of $173 for the Interest Rate Cap Agreement. Surplus Notes On August 24, 2022, Benchmark, a subsidiary of the Company, issued $50,000 in aggregate principal amount of Benchmark’s 6.75% surplus notes due 2042 (the “Surplus Notes”) in a private placement exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). In connection with the issuance of the Surplus Notes, Benchmark entered into a fiscal agency agreement, dated as of August 24, 2022 (the “Fiscal Agency Agreement”), with The Bank of New York Mellon, as fiscal agent, paying agent, registrar and transfer agent, providing for the terms of the Surplus Notes. The Surplus Notes are unsecured, subordinated debt obligations of the Company and are reflected as debt on the condensed consolidated balance sheets of the Company. All principal and interest payments on the Surplus Notes are subject to prior approval by the Commissioner of the Kansas Insurance Department. Interest on the Surplus Notes accrues at the rate of 6.75% per year, and is payable quarterly in arrears on February 24, May 24, August 24 and November 24 of each year, commencing on November 24, 2022. The Surplus Notes may be redeemed after 10 years, in full or in part, for 100% of the principal amount plus accrued but unpaid interest, and the Company may at any time repurchase Surplus Notes from the underlying holders thereof on the open market, after which such Surplus Notes will be cancelled and not re-issued. In addition, the Surplus Notes may be redeemed before August 24, 2032 upon the occurrence of certain changes in applicable tax laws or regulations that would require the Company to pay additional amounts necessary to reimburse the noteholders for new or changed withholding or deduction obligations. In addition, pursuant to the Fiscal Agency Agreement, the Company made certain customary representations and warranties and made certain customary covenants. The covenants, among other things, (i) prevent Benchmark from incurring indebtedness exceeding 35% of its total surplus (as set forth in its statutory financial statements, and including the Surplus Notes), and restrict Benchmark’s ability to pay dividends to the Company if such ratio were to exceed 35% or would exceed 35% as a result of such payment; (ii) limit Benchmark’s ability to engage in a merger, sale or consolidation and require it to preserve its corporate existence; and (iii) require it to provide certain financial information and insurance regulatory filings to the noteholders. All of these covenants are subject to a number of important exceptions, limitations and qualifications. Notwithstanding the foregoing, noteholders do not have the right to declare the Surplus Notes to immediately mature or otherwise become immediately payable as a result of any breach of Benchmark’s covenants or under any other circumstances. Benchmark’s obligations under the Surplus Notes will only be accelerated in the event that any state or federal agency were to obtain an order or grant approval for the rehabilitation, liquidation, conservation or dissolution of Benchmark. During the three and nine months ended September 30, 2022, the Company recorded interest expense of $368 on its Surplus Notes including amortization of debt issuance costs.
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Revenue from Contracts with Customers |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contracts with Customers | Revenue from Contracts with Customers Revenue from contracts with customers, included in other revenue, includes brokerage, management, third-party administrative, and consulting and other fee-based revenue. The following table presents the revenues recognized from contracts with customers included in the condensed consolidated statements of operations.
The Company did not have any contract liabilities as of September 30, 2022 or December 31, 2021. The following table provides information related to the contract assets from contracts with customers. Contract assets are included within other assets on the condensed consolidated balance sheets.
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Income Taxes |
9 Months Ended |
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Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax expense for interim periods is measured using an estimated effective income tax rate for the annual period. The Company's effective tax rate was 21.0% for the three and nine months ended months ended September 30, 2022. The Company’s effective tax rate was 24.2% and 22.0% for the three and nine months ended September 30, 2021, respectively, which differed from the statutory rate primarily due the impact of recording the Company's 2020 tax return accrual to return true-up in the third quarter of 2021.
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Liability for Unpaid Losses and Loss Adjustment Expense |
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liability for Unpaid Losses and Loss Adjustment Expense | Liability for Unpaid Losses and Loss Adjustment Expense The following table represents a reconciliation of changes in the liability for unpaid losses and LAE.
As a result of changes in estimates of insured events in prior years, the provision for unpaid losses and LAE decreased by approximately $26 and $818 for the three and nine months ended September 30, 2022, respectively, and $818 and $1,297 for the three and nine months ended September 30, 2021, respectively.
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Reinsurance |
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Reinsurance Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance | Reinsurance The Company utilizes reinsurance contracts to reduce its exposure to losses in all aspects of its insurance business. Such reinsurance permits recovery of a portion of losses from reinsurers, although it does not relieve the Company from its primary liability to policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial strength of potential reinsurers and continually monitors the financial condition of its reinsurers. A summary of the impact of ceded reinsurance on premiums written and premiums earned is as follows:
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The Company's leases consist of operating leases for office space and equipment. The Company determines if an arrangement is a lease at its inception. Leases with an initial term of twelve months or less are not recorded on the balance sheet. Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease right-of-use assets are recognized at commencement date based on the present value of lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Some of the Company's leases include options to extend the term, which are only included in the lease liability and right-of-use asset calculation when it is reasonably certain the Company will exercise an option. The Company's leases have remaining terms ranging from one month to 57 months, some of which have options to extend the lease for up to an additional 60 months. As of September 30, 2022, the lease liability and right-of-use assets did not include the impact of any lease extension options as it is not reasonably certain that the Company will exercise the extension options. Total lease expense for the three months ended September 30, 2022 was $615, inclusive of $17 in variable lease expense. Total lease expense for the three months ended September 30, 2021 was $626, inclusive of $29 in variable lease expense. The Company also sublets some of its leased office space and recorded $27 and $33 of sublease income for the three months ended September 30, 2022 and 2021, respectively, which is included in other income on the condensed consolidated statements of operations. Total lease expense for the nine months ended September 30, 2022 was $1,855, inclusive of $68 in variable lease expense. Total lease expense for the nine months ended September 30, 2021 was $1,831, inclusive of $56 in variable lease expense. The Company also sublets some of its leased office space and recorded $70 and $74 of sublease income for the nine months ended September 30, 2022 and 2021, respectively, which is included in other income on the condensed consolidated statement of operations. Supplemental balance sheet information, the weighted average remaining lease term and weighted average discount rate related to leases were as follows:
Future maturities of lease liabilities as of September 30, 2022 are as follows:
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Equity |
9 Months Ended |
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Sep. 30, 2022 | |
Equity [Abstract] | |
Equity | Equity Common Stock The Company currently has authorized 600,000,000 shares of common stock with a par value of $0.01. As of September 30, 2022 and December 31, 2021, there were 51,220,485 and 51,176,887 shares of common stock issued and outstanding, respectively.
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share Basic earnings per share ("EPS") is computed by dividing net income by the weighted average number of shares outstanding during reported periods. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock of the Company during reported periods and is calculated using the treasury stock method. The following table presents the calculation of basic and diluted EPS of common stock:
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Accumulated Other Comprehensive Income (Loss) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The following table presents the changes in accumulated other comprehensive income (loss) for unrealized gains and losses on available-for-sale securities:
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Stock Compensation |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Compensation | Stock Compensation As of September 30, 2022, the Company has one incentive plan, the Trean Insurance Group, Inc. 2020 Omnibus Incentive Plan (the "2020 Omnibus Plan"). The purposes of the 2020 Omnibus Plan are to provide additional incentive to selected officers, employees, non-employee directors, independent contractors, and consultants of the Company whose contributions are essential to the growth and success of the business of the Company and its affiliates, to strengthen the commitment and motivate such individuals to faithfully and diligently perform their responsibilities and to attract competent and dedicated individuals whose efforts will result in the long-term growth and profitability of the Company and its affiliates. The 2020 Omnibus Plan is administered by the Compensation, Nominating, and Corporate Governance Committee of the Company's board of directors and provides for the issuance of up to 5,058,085 shares of the Company's common stock granted in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonuses, other stock awards, or any combination of the foregoing. Stock Options Stock compensation expense related to stock option awards was $53 and $49 for the three months ended September 30, 2022 and 2021, respectively, and $149 and $118 for the nine months ended September 30, 2022 and 2021, respectively. Actual forfeitures are recognized as they occur. Employee stock option awards granted set forth, among other things, the option exercise price, the option term, provisions regarding option exercisability, and whether the option is intended to be an incentive stock option ("ISO") or a nonqualified stock option ("NQ"). Stock options may be granted to employees at such exercise prices as the Company’s board of directors may determine but not less than 100% of the fair market value of the underlying stock as of the date of grant. Employee options vest one third annually over a period of three years and have contractual terms of ten years from the date of grant. The fair value of each time-based vesting option award is estimated on the date of grant using the Black-Scholes option pricing model that uses assumptions noted in the following table. The Company’s expected volatility for the period was based on a weighted average expected volatility of an industry peer group of insurance companies of similar size, life cycle, and lines of business. Expected term is calculated using the simplified method taking into consideration the option's contractual life and vesting terms. The Company’s stock option grants qualify as plain vanilla options and as such the Company uses the simplified method in estimating its expected option term as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its common shares have been publicly traded. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Expected dividend yields were not used in the fair value computations as the Company has never declared or paid dividends on its common stock and currently intends to retain earnings for use in operations.
A summary of the status of the Company's stock option activity as of September 30, 2022 and changes during the nine-month period then ended are as follows:
The weighted average grant-date fair value of options granted in the nine months ended September 30, 2022 and 2021 was $2.30 and $5.49, respectively. As of September 30, 2022, total unrecognized compensation cost related to stock options was $304 and is expected to be recognized over a weighted average period of approximately 1.0 years. Restricted Stock Units Compensation expense relating to restricted stock unit grants was $407 and $419 for the three months ended September 30, 2022 and 2021, respectively, and $870 and $980 for the nine months ended September 30, 2022 and 2021, respectively. Actual forfeitures are recognized as they occur. As of September 30, 2022, there was $2,453 of total unrecognized compensation cost related to non-vested restricted stock unit grants, which is expected to be recognized over a weighted average life of 1.7 years. The total fair value of restricted stock units vested during the three and nine months ended September 30, 2022 was $113 and $257, respectively, and $342 and $478 during the three and nine months ended September 30, 2021. The Company has granted time-based restricted stock units ("RSUs"), performance stock units ("PSUs"), and market-based stock units ("MSUs") to certain key employees as part of the Company's long-term incentive program. The estimated fair value of restricted stock units is based on the grant date closing price of the Company's common stock for time-based and performance-based vesting awards. A Monte Carlo valuation model is used to estimate the fair value for market-based vesting awards. RSUs generally vest in three equal annual installments beginning one year from the grant date and are amortized as compensation expense over the three-year vesting period. The Company has also granted time-based restricted stock units to non-employee directors as part of the Company's annual director compensation program. Each time-based restricted stock grant to non-employee directors vests on the day immediately preceding the next annual meeting of stockholders following the date of grant. The grants are amortized as director compensation expense over the vesting period. The Company recognizes compensation expense on PSUs ratably over the requisite performance period of the award and to the extent management views the performance goal attainment as probable. The Company recognizes compensation expense on MSUs ratably over the requisite performance period of the award. For the 2022 and 2021 fiscal year, the Company granted PSUs to certain key employees pursuant to the Company's 2020 Omnibus Plan. The number of shares earned is based on the Company’s achievement of pre-established target threshold goals for total gross written premiums over a three-year performance measurement period. The performance goals allow for a payout ranging from 0% to 200% of the target award. If performance satisfies minimum requirements to result in shares of Company common stock being awarded, the number of shares will be determined between 50% and 200% of target thresholds, as defined in the applicable award agreements. Any earned PSU will vest if the employee’s service has been continuous through the vesting date. Any PSU not earned because of failure to achieve the minimum performance goal at the end of the performance period will be immediately forfeited. The grant date fair value of the PSUs was determined based on the grant date closing price of the Company’s stock. For the 2022 and 2021 fiscal year, the Company granted MSUs to certain key employees pursuant to the Company's 2020 Omnibus Plan. The number of restricted stock units earned is based on the Company’s cumulative total shareholder return ("TSR"), as defined in the applicable award agreement, over a three-year performance measurement period. If TSR satisfies minimum requirements to result in shares being awarded, the number of shares will be determined between 50% and 200% shown in the table below. Any MSU not earned because of failure to achieve the minimum performance goal at the end of the performance period will be immediately forfeited. Grant date fair values were determined using a Monte Carlo valuation model based on the following assumptions:
The percent of the target MSU that will be earned based on the Company’s TSR is as follows:
A summary of the status of the Company’s non-vested restricted stock unit activity as of September 30, 2022 and changes during the nine-month period then ended is as follows:
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Business and Basis of Presentation (Policies) |
9 Months Ended |
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Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Use of estimates | Use of estimates While preparing the condensed consolidated financial statements, the Company has made certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements, as well as reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Reported amounts that require extensive use of estimates include the reserves for unpaid losses and loss adjustment expenses ("LAE"), reinsurance recoverables, investments, goodwill, and other intangible assets. Except for the captions on the condensed consolidated balance sheets and condensed consolidated statements of comprehensive income, generally, the term loss(es) is used to collectively refer to both losses and LAE. The Company tests for goodwill impairment at the reporting unit level during the fourth quarter of each year and between annual tests if a triggering event indicates the possibility of an impairment. The Company monitors changing business conditions as well as industry and economic factors, among others, for events which could trigger the need for an interim impairment analysis. The declining share price of the Company’s stock has caused the market capitalization to fall below the book value as of September 30, 2022. As a result of the decrease in share price, the Company performed an interim impairment analysis at September 30, 2022 and concluded that no impairment relating to goodwill existed as of September 30, 2022.
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Accounting pronouncements | Accounting pronouncements Recently adopted policies In January 2020, the Financial Accounting Standards Board ("FASB") issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivative and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323 and Topic 815 ("ASU 2020-01"). This update addresses the accounting for certain equity securities upon the application or discontinuation of the equity method of accounting. Further, the update addresses scope considerations for forward contracts and purchased options on certain securities. ASU 2020-01 is effective for annual periods beginning after December 15, 2021, including interim periods thereafter. The Company adopted this standard effective January 1, 2022. Adoption of this standard did not have a material impact on the condensed consolidated financial statements. Pending policies The Company completed its initial public offering in July 2020, and is an emerging growth company as defined under federal securities laws. As such, the Company has elected to adopt pending accounting policies under the dates required for private companies. Therefore, the dates included within this section reflect the effective dates for the adoption of new accounting policies required by private companies. In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments ("ASU 2020-03"). This update represents changes to clarify and improve the codification to allow for easier application by eliminating inconsistencies and providing clarification on items such as (i) the application of fair value option disclosures; (ii) the accounting for fees related to modifications of debt; and (iii) aligning the contractual term of a net investment in a lease in accordance with ASC Topic 326, Financial Instruments - Credit Losses, and the lease term determined in accordance with ASC Topic 842, Leases. The Company adopted items (i) and (ii) effective January 1, 2020 and will adopt item (iii) on January 1, 2023. Adoption of this standard has not had, and is not expected to have, a material impact on the condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). This update requires financial assets measured at amortized cost to be presented at the net amount expected to be collected by means of an allowance for credit losses that runs through net income. Additionally, credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses, with the amount of the allowance limited to the amount by which the fair value is below the amortized cost. ASU 2016-13 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. The Company will adopt this standard effective January 1, 2023. The Company is currently evaluating the impact of this standard on the condensed consolidated financial statements.
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Fair value measurements | Fair Value Measurements The Company’s financial instruments include assets and liabilities carried at fair value. The inputs to valuation techniques used to measure fair value are prioritized into a three level hierarchy. The fair value hierarchy is as follows: Level 1: Fair values primarily based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2: Fair values primarily based on observable inputs, other than quoted prices included in Level 1, or based on prices for similar assets and liabilities. Level 3: Fair values primarily based on valuations derived when one or more of the significant inputs are unobservable. With little or no observable market, the determination of fair value uses considerable judgment and represents the Company’s best estimate of an amount that could be realized in a market exchange for the asset or liability. The Company classifies the financial asset or liability by level based upon the lowest level input that is significant to the determination of the fair value.
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Fair Value Options | The following tables present the estimated fair value of the Company’s significant financial instruments.
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Investments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt Securities, Available-for-sale | The cost or amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the Company's fixed maturities investments are as follows:
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Schedule of Continuous Unrealized Loss Position | The following table illustrates the Company’s gross unrealized losses and fair value of fixed maturities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:
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Summary of Investments by Contractual Maturity | The amortized cost and estimated fair value of fixed maturities as of September 30, 2022, by contractual maturity, are as follows:
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Summary of Realized Gain (Loss) on Investments | Realized gains and losses on investments included in the condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021 are as follows:
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Summary of Net Investment Income | Net investment income consists of the following for the three and nine months ended September 30, 2022 and 2021:
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Summary of Unrealized Gain (Loss) on Investments | Net realized and unrealized gains (losses) on equity securities recognized during the three and nine months ended September 30, 2022 and 2021 are as follows:
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Schedule of Funds Held Under Reinsurance Agreements | Total funds held under reinsurance agreements include the following:
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Summary of Embedded Derivatives, Gain (Loss) | Gains (losses) on embedded derivatives consists of the following for the three and nine months ended September 30, 2022 and 2021:
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Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | Debt consisted of the following:
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Revenue from Contracts with Customers (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Disaggregation of Revenue | The following table presents the revenues recognized from contracts with customers included in the condensed consolidated statements of operations.
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Schedule of Contract with Customer, Contract Assets | The following table provides information related to the contract assets from contracts with customers. Contract assets are included within other assets on the condensed consolidated balance sheets.
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Liability for Unpaid Losses and Loss Adjustment Expense (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Liability for Unpaid Losses and Loss Adjustment Expense | The following table represents a reconciliation of changes in the liability for unpaid losses and LAE.
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Reinsurance (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Effects of Reinsurance | A summary of the impact of ceded reinsurance on premiums written and premiums earned is as follows:
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Leases (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Supplemental Balance Sheet Information | Supplemental balance sheet information, the weighted average remaining lease term and weighted average discount rate related to leases were as follows:
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Schedule of Future Maturities of Lease Liabilities | Future maturities of lease liabilities as of September 30, 2022 are as follows:
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Earnings Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table presents the calculation of basic and diluted EPS of common stock:
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Accumulated Other Comprehensive Income (Loss) (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income | The following table presents the changes in accumulated other comprehensive income (loss) for unrealized gains and losses on available-for-sale securities:
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Stock Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions |
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Summary of Stock Option Activity | A summary of the status of the Company's stock option activity as of September 30, 2022 and changes during the nine-month period then ended are as follows:
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Schedule of Share-based Payment Award, Restricted Stock Units, Valuation Assumptions | Grant date fair values were determined using a Monte Carlo valuation model based on the following assumptions:
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Summary of Share-based Payment Award, Total Shareholder Return | The percent of the target MSU that will be earned based on the Company’s TSR is as follows:
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Summary of Nonvested Restricted Stock Unit Activity | A summary of the status of the Company’s non-vested restricted stock unit activity as of September 30, 2022 and changes during the nine-month period then ended is as follows:
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Business and Basis of Presentation - Narrative (Details) |
9 Months Ended |
---|---|
Sep. 30, 2022
USD ($)
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Goodwill impairment | $ 0 |
Acquisitions (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Jul. 06, 2021 |
Sep. 30, 2022 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Dec. 31, 2021 |
|
Business Acquisition [Line Items] | |||||
Goodwill | $ 142,347 | $ 142,347 | $ 142,347 | ||
Finite-lived intangible assets, net | 68,616 | 68,616 | $ 73,114 | ||
Earn-out payment | $ 750 | $ 0 | |||
Western Integrated Care, LLC | |||||
Business Acquisition [Line Items] | |||||
Percentage of voting interests acquired | 100.00% | ||||
Consideration transferred | $ 5,500 | ||||
Due to related parties | 1,500 | ||||
Goodwill | 1,501 | ||||
Finite-lived intangible assets, net | $ 3,624 | ||||
Earn-out payment | $ 750 |
Investments - Summary of Investments by Contractual Maturity (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Cost or Amortized Cost | ||
Due in one year or less | $ 31,666 | |
Due after one year but before five years | 162,478 | |
Due after five years but before ten years | 96,488 | |
Due after ten years | 72,125 | |
Cost or Amortized Cost | 581,935 | $ 465,459 |
Fair Value | ||
Due in one year or less | 31,433 | |
Due after one year but before five years | 153,776 | |
Due after five years but before ten years | 86,189 | |
Due after ten years | 60,732 | |
Fair Value | 530,118 | 471,061 |
Commercial mortgage-backed securities | ||
Cost or Amortized Cost | ||
Cost or Amortized Cost | 141,552 | 119,378 |
Fair Value | ||
Fair Value | 123,478 | 118,218 |
Residential mortgage-backed securities | ||
Cost or Amortized Cost | ||
Cost or Amortized Cost | 25,769 | 16,549 |
Fair Value | ||
Fair Value | 24,171 | 17,368 |
Other loan-backed securities | ||
Cost or Amortized Cost | ||
Cost or Amortized Cost | 51,857 | 41,236 |
Fair Value | ||
Fair Value | $ 50,339 | $ 41,425 |
Investments - Summary of Realized Gain (Loss) on Investments (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Fixed maturities: | ||||
Gains | $ 21 | $ 52 | $ 134 | $ 150 |
Losses | 0 | 0 | (1,194) | (75) |
Total fixed maturities | 21 | 52 | (1,060) | 75 |
Funds held investments: | ||||
Gains | 0 | 110 | 19 | 110 |
Losses | (12) | (1) | (29) | (1) |
Total funds held investments | (12) | 109 | (10) | 109 |
Equity securities: | ||||
Gains | 0 | 0 | 1,400 | 0 |
Losses | 0 | (112) | (19) | (112) |
Total equity securities | 0 | (112) | 1,381 | (112) |
Total net realized gains | $ 9 | $ 49 | $ 311 | $ 72 |
Investments - Summary of Net Investment Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Net Investment Income [Line Items] | ||||
Net investment income | $ 2,951 | $ 2,187 | $ 5,136 | $ 6,562 |
Fixed maturities | ||||
Net Investment Income [Line Items] | ||||
Net investment income | 2,628 | 1,597 | 6,189 | 4,734 |
Income on funds held investments | ||||
Net Investment Income [Line Items] | ||||
Net investment income | 953 | 585 | 2,395 | 1,783 |
Equity securities | ||||
Net Investment Income [Line Items] | ||||
Net investment income | 421 | 5 | 1,031 | 41 |
Unrealized losses on equity securities | ||||
Net Investment Income [Line Items] | ||||
Net investment income | (1,101) | 0 | (4,542) | 0 |
Interest earned on cash and short-term investments | ||||
Net Investment Income [Line Items] | ||||
Net investment income | $ 50 | $ 0 | $ 63 | $ 4 |
Investments - Summary of Unrealized Gain (Loss) on Investments (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Investments, Debt and Equity Securities [Abstract] | ||||
Net realized gains (losses) on sales of equity securities | $ 0 | $ (112) | $ 1,381 | $ (112) |
Change in net unrealized gains (losses) of equity securities still held as of September 30, 2022 and 2021 | (1,101) | (6) | (4,542) | 11 |
Net realized and unrealized gains (losses) on equity securities | $ (1,101) | $ (118) | $ (3,161) | $ (101) |
Investments - Schedule of Funds Held Under Reinsurance Agreements (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Funds held under reinsurance agreements, at cost | $ 221,405 | $ 199,139 |
Embedded derivatives, at fair value | (16,577) | 271 |
Total funds held under reinsurance agreements | $ 204,828 | $ 199,410 |
Investments - Summary of Embedded Derivatives, Gain (Loss) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Net Investment Income [Line Items] | ||||
Change in fair value of embedded derivatives | $ 5,812 | $ 573 | $ 16,848 | $ 3,761 |
Effect of realized losses (gains) on funds held investments | 12 | (109) | 10 | (109) |
Total gains (losses) on embedded derivatives | 4,871 | (121) | 14,463 | 1,869 |
Income on funds held investments | ||||
Net Investment Income [Line Items] | ||||
Effect of net investment income on funds held investments | $ (953) | $ (585) | $ (2,395) | $ (1,783) |
Equity Method Investments (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Jan. 03, 2020 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Jan. 02, 2020 |
|
Gain (Loss) on Investments | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Realized gain (loss) on sale | $ 1,400 | $ 1,400 | ||||
Trean Intermediaries | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Ownership percentage sold | 15.00% | |||||
Ownership percentage | 25.00% | |||||
Proceeds from sale of equity method investments | $ 3,000 | $ 1,888 | ||||
Cumulative percentage ownership after all transactions | 10.00% | |||||
Income from equity method investments | $ 0 | 50 | $ 100 | $ 150 | ||
Trean Intermediaries | Gain (Loss) on Investments | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Realized gain (loss) on sale | $ (112) | $ (112) |
Debt - Schedule of Debt (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Debt Instrument [Line Items] | ||
Face Value | $ 79,700 | $ 30,938 |
Unamortized Discount and Issuance Costs | (2,241) | (576) |
Carrying Value | 77,459 | 30,362 |
Secured credit facility | ||
Debt Instrument [Line Items] | ||
Face Value | 29,700 | 30,938 |
Unamortized Discount and Issuance Costs | (449) | (576) |
Carrying Value | 29,251 | 30,362 |
Surplus notes | ||
Debt Instrument [Line Items] | ||
Face Value | 50,000 | 0 |
Unamortized Discount and Issuance Costs | (1,792) | 0 |
Carrying Value | $ 48,208 | $ 0 |
Debt - Interest Rate Cap Agreement (Details) - USD ($) $ in Thousands |
1 Months Ended | 9 Months Ended | |
---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Debt Instrument [Line Items] | |||
Payment for interest rate cap | $ 173 | $ 0 | |
Interest Rate Cap | |||
Debt Instrument [Line Items] | |||
Notional amount | $ 29,700 | $ 29,700 | |
Capped interest rate | 5.00% | 5.00% | |
Payment for interest rate cap | $ 173 |
Debt - Surplus Notes (Details) - Notes Payable, Other Payables - Surplus notes - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Aug. 24, 2022 |
Sep. 30, 2022 |
Sep. 30, 2022 |
|
Debt Instrument [Line Items] | |||
Face amount | $ 50,000 | ||
Interest rate, stated percentage | 6.75% | ||
Redemption period | 10 years | ||
Redemption price, percentage | 100.00% | ||
Covenant, indebtedness percentage of total surplus, maximum | 35.00% | ||
Debt interest expense | $ 368 | $ 368 |
Revenue from Contracts with Customers - Summary of Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers | $ 2,140 | $ 2,799 | $ 7,145 | $ 8,683 |
Brokerage | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers | 1,581 | 1,989 | 5,396 | 6,214 |
Managing general agent fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers | 83 | 88 | 251 | 407 |
Third-party administrator fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers | 266 | 437 | 838 | 1,191 |
Consulting and other fee-based revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers | $ 210 | $ 285 | $ 660 | $ 871 |
Revenue from Contracts with Customers - Schedule of Contract with Customer, Contract Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 4,878 | $ 3,353 |
Income Taxes (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate, percent | 21.00% | 24.20% | 21.00% | 22.00% |
Liability for Unpaid Losses and Loss Adjustment Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||||
Unpaid losses and LAE reserves at beginning of period | $ 577,686 | $ 502,560 | $ 544,320 | $ 457,817 |
Less losses ceded through reinsurance | (379,274) | (358,601) | (369,008) | (335,655) |
Net unpaid losses and LAE at beginning of period | 198,412 | 143,959 | 175,312 | 122,162 |
Incurred losses and LAE related to: | ||||
Current period | 45,673 | 32,947 | 126,545 | 88,032 |
Prior period | (26) | (818) | (818) | (1,297) |
Total incurred losses and LAE | 45,647 | 32,129 | 125,727 | 86,735 |
Paid losses and LAE, net of reinsurance, related to: | ||||
Current period | 19,570 | 12,638 | 41,268 | 25,111 |
Prior period | 12,859 | 7,092 | 48,141 | 27,428 |
Total paid losses and LAE | 32,429 | 19,730 | 89,409 | 52,539 |
Net unpaid losses and LAE at end of period | 211,630 | 156,358 | 211,630 | 156,358 |
Plus losses ceded through reinsurance | 367,121 | 354,434 | 367,121 | 354,434 |
Unpaid losses and LAE reserves at end of period | $ 578,751 | $ 510,792 | $ 578,751 | $ 510,792 |
Liability for Unpaid Losses and Loss Adjustment Expense - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Insurance [Abstract] | ||||
Prior year claims and claims adjustment expense | $ (26) | $ (818) | $ (818) | $ (1,297) |
Reinsurance (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Written premiums | ||||
Gross | $ 160,505 | $ 175,516 | $ 470,391 | $ 473,463 |
Assumed | 1,678 | 2,108 | 7,384 | 7,442 |
Ceded | (93,790) | (114,374) | (265,234) | (305,164) |
Net written premiums | 68,393 | 63,250 | 212,541 | 175,741 |
Earned premiums | ||||
Gross | 158,643 | 146,170 | 469,403 | 408,936 |
Assumed | 2,479 | 2,976 | 7,400 | 7,133 |
Ceded | (89,741) | (97,191) | (275,235) | (275,037) |
Net earned premiums | $ 71,381 | $ 51,955 | $ 201,568 | $ 141,032 |
Leases - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Lessee, Lease, Description [Line Items] | ||||
Renewal term | 60 months | 60 months | ||
Lease expense | $ 615 | $ 626 | $ 1,855 | $ 1,831 |
Variable lease expense | 17 | 29 | 68 | 56 |
Sublease income | $ 27 | $ 33 | $ 70 | $ 74 |
Minimum | ||||
Lessee, Lease, Description [Line Items] | ||||
Term of contract | 1 month | 1 month | ||
Maximum | ||||
Lessee, Lease, Description [Line Items] | ||||
Term of contract | 57 months | 57 months |
Leases - Schedule of Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Leases [Abstract] | ||
Right of use asset | $ 3,292 | $ 4,530 |
Lease liability | $ 3,629 | $ 4,976 |
Weighted average remaining lease term | 1 year 11 months 12 days | 2 years 5 months 1 day |
Weighted average discount rate | 6.04% | 6.33% |
Leases - Schedule of Future Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Leases [Abstract] | ||
2022 | $ 621 | |
2023 | 1,940 | |
2024 | 1,064 | |
2025 | 164 | |
2026 | 44 | |
Thereafter | 2 | |
Total lease payments | 3,835 | |
Less: imputed interest | (206) | |
Total lease liabilities | $ 3,629 | $ 4,976 |
Equity (Details) - $ / shares |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Equity [Abstract] | ||
Common stock, authorized (in shares) | 600,000,000 | 600,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, issued (in shares) | 51,220,485 | 51,176,887 |
Common stock, outstanding (in shares) | 51,220,485 | 51,176,887 |
Stock Compensation - Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Details) - Stock Options |
9 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 29.80% | 29.80% |
Expected term | 6 years | 6 years |
Risk-free interest rate | 1.92% | 1.32% |
Stock Compensation - Schedule of Share-based Payment Award, Restricted Stock Units, Valuation Assumptions (Details) - Restricted Stock Units (RSUs) - USD ($) $ / shares in Units, $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total grant date fair value | $ 391 | $ 845 |
Total grant date fair value per share (in dollars per share) | $ 6.04 | $ 13.92 |
Expected volatility | 40.00% | 35.00% |
Weighted average expected life | 2 years 9 months 21 days | 2 years 9 months 7 days |
Risk-free interest rate | 1.79% | 0.27% |
Stock Compensation - Summary of Share-based Payment Award, Total Shareholder Return (Details) - Market-Based Stock Units (MSUs) |
3 Months Ended | 9 Months Ended |
---|---|---|
Mar. 31, 2022 |
Sep. 30, 2022 |
|
Share-based payment arrangement, tranche one | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Cumulative TSR % | 25.10% | 29.20% |
Percent of Units Vested | 0.00% | |
Share-based payment arrangement, tranche two | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Cumulative TSR % | 25.10% | 29.20% |
Percent of Units Vested | 50.00% | |
Share-based payment arrangement, tranche three | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Cumulative TSR % | 47.20% | 52.10% |
Percent of Units Vested | 100.00% | |
Share-based payment arrangement, tranche four | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Cumulative TSR % | 69.30% | 74.90% |
Percent of Units Vested | 200.00% |
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