þ |
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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36-2476480
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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1154 Broadway, Hewlett, New York
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11557
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock
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NASDAQ
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Large accelerated filer
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o |
Accelerated filer
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o |
Non-accelerated | o |
Smaller reporting company
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þ |
(Do not check if a smaller reporting company)
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Page No.
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|||||
Forward-Looking Statements
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3 | ||||
4 | |||||
18 | |||||
18 | |||||
18 | |||||
18 | |||||
18 | |||||
19 | |||||
20 | |||||
20 | |||||
48 | |||||
48 | |||||
48 | |||||
48 | |||||
50 | |||||
51 | |||||
54 | |||||
58 | |||||
60 | |||||
61 | |||||
63 | |||||
66 |
(b)
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Business
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Years ended
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||||||||
December 31,
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||||||||
2012
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2011
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|||||||
Balance at beginning of period
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$ | 18,480,717 | $ | 17,711,907 | ||||
Less reinsurance recoverables
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(9,960,334 | ) | (10,431,415 | ) | ||||
Net balance, beginning of period
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8,520,383 | 7,280,492 | ||||||
Incurred related to:
|
||||||||
Current year
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10,460,000 | 8,297,998 | ||||||
Prior years
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774,713 | 273,060 | ||||||
Total incurred
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11,234,713 | 8,571,058 | ||||||
Paid related to:
|
||||||||
Current year
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4,419,000 | 4,108,010 | ||||||
Prior years
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3,270,258 | 3,223,157 | ||||||
Total paid
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7,689,258 | 7,331,167 | ||||||
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||||||||
Net balance at end of period
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12,065,838 | 8,520,383 | ||||||
Add reinsurance recoverables
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18,419,694 | 9,960,334 | ||||||
Balance at end of period
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$ | 30,485,532 | $ | 18,480,717 |
As of and for the Year Ended December 31,
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||||||||||||||||||||||||||||||||||||
2004
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2005
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2006
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2007
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2008
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2009
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2010
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2011
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2012
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||||||||||||||||||||||||||||
Reserve for loss and loss adjustment expenses, net of reinsurance recoverables
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3,141 | 3,074 | 4,370 | 4,799 | 5,823 | 6,001 | 7,280 | 8,520 | 12,065 | |||||||||||||||||||||||||||
Net reserve estimated as of One year later
|
5,122 | 3,627 | 4,844 | 5,430 | 6,119 | 6,235 | 7,483 | 9,261 | ||||||||||||||||||||||||||||
Two years later
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5,698 | 4,315 | 5,591 | 5,867 | 6,609 | 6,393 | 8,289 | |||||||||||||||||||||||||||||
Three years later
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6,356 | 5,101 | 5,792 | 6,433 | 6,729 | 6,486 | ||||||||||||||||||||||||||||||
Four years later
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6,985 | 5,094 | 6,260 | 6,569 | 6,711 | |||||||||||||||||||||||||||||||
Five years later
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7,049 | 5,540 | 6,343 | 6,683 | ||||||||||||||||||||||||||||||||
Six years later
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7,476 | 5,616 | 6,429 | |||||||||||||||||||||||||||||||||
Seven years later
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7,561 | 5,678 | ||||||||||||||||||||||||||||||||||
Eight years later
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7,637 | |||||||||||||||||||||||||||||||||||
Nine years later
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||||||||||||||||||||||||||||||||||||
Ten years later
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||||||||||||||||||||||||||||||||||||
Net cumulative redundancy (deficiency)
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(4,496 | ) | (2,604 | ) | (2,059 | ) | (1,884 | ) | (888 | ) | (485 | ) | (1,009 | ) | (741 | ) |
As of and for the Year Ended December 31,
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||||||||||||||||||||||||||||||||||||
2004
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2005
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2006
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2007
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2008
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2009
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2010
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2011
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2012
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||||||||||||||||||||||||||||
Cumulative amount of reserve paid, net of reinsurance recoverable through
|
||||||||||||||||||||||||||||||||||||
One year later
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3,347 | 1,106 | 2,018 | 1,855 | 2,533 | 2,307 | 3,201 | 3,237 | ||||||||||||||||||||||||||||
Two years later
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4,291 | 2,321 | 3,303 | 3,339 | 3,974 | 3,992 | 4,947 | |||||||||||||||||||||||||||||
Three years later
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4,965 | 3,321 | 4,036 | 4,339 | 5,054 | 4,659 | ||||||||||||||||||||||||||||||
Four years later
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5,598 | 3,705 | 4,471 | 5,146 | 5,373 | |||||||||||||||||||||||||||||||
Five years later
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5,840 | 3,988 | 5,079 | 5,424 | ||||||||||||||||||||||||||||||||
Six years later
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6,101 | 4,484 | 5,305 | |||||||||||||||||||||||||||||||||
Seven years later
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6,557 | 4,595 | ||||||||||||||||||||||||||||||||||
Eight years later
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6,654 | |||||||||||||||||||||||||||||||||||
Nine years later
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||||||||||||||||||||||||||||||||||||
Ten years later
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||||||||||||||||||||||||||||||||||||
Net reserve -
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||||||||||||||||||||||||||||||||||||
December 31,
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3,141 | 3,074 | 4,370 | 4,799 | 5,823 | 6,001 | 7,280 | 8,520 | 12,065 | |||||||||||||||||||||||||||
Reinsurance Recoverable
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7,610 | 7,283 | 6,523 | 6,693 | 9,766 | 10,512 | 10,432 | 9,960 | 18,420 | |||||||||||||||||||||||||||
Gross reserves -
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||||||||||||||||||||||||||||||||||||
December 31,
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10,751 | 10,357 | 10,893 | 11,492 | 15,589 | 16,513 | 17,712 | 18,480 | 30,485 | |||||||||||||||||||||||||||
Net re-estimated reserve
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7,637 | 5,678 | 6,429 | 6,683 | 6,711 | 6,486 | 8,289 | 9,261 | ||||||||||||||||||||||||||||
Re-estimated reinsurance recoverable
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10,513 | 10,682 | 10,825 | 10,621 | 12,365 | 11,879 | 11,780 | 11,018 | ||||||||||||||||||||||||||||
Gross re-estimated reserve
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18,150 | 16,360 | 17,254 | 17,304 | 19,076 | 18,365 | 20,069 | 20,279 | ||||||||||||||||||||||||||||
Gross cumulative redundancy (deficiency)
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(7,399 | ) | (6,003 | ) | (6,361 | ) | (5,812 | ) | (3,487 | ) | (1,852 | ) | (2,357 | ) | (1,799 | ) |
December 31, 2012
|
December 31, 2011
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|||||||||||||||
Percentage of
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Percentage of
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|||||||||||||||
Fair Market
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Fair Market
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Fair Market
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Fair Market
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|||||||||||||
Value
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Value
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Value
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Value
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|||||||||||||
Less than one year
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$ | 560,162 | 2.1 | % | $ | 1,079,924 | 4.8 | % | ||||||||
One to five years
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9,569,943 | 36.6 | % | 7,045,774 | 31.2 | % | ||||||||||
Five to ten years
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13,306,033 | 50.8 | % | 12,680,441 | 56.2 | % | ||||||||||
More than 10 years
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2,745,800 | 10.5 | % | 1,762,793 | 7.8 | % | ||||||||||
Total
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$ | 26,181,938 | 100.0 | % | $ | 22,568,932 | 100.0 | % |
December 31, 2012
|
December 31, 2011
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|||||||||||||||
Percentage of
|
Percentage of
|
|||||||||||||||
Fair Market
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Fair Market
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Fair Market
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Fair Market
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|||||||||||||
Value
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Value
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Value
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Value
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|||||||||||||
Rating
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||||||||||||||||
U.S. Treasury securities
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$ | - | 0.0 | % | $ | 550,188 | 2.4 | % | ||||||||
AAA
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2,226,603 | 8.5 | % | 3,041,576 | 13.5 | % | ||||||||||
AA
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4,088,304 | 15.6 | % | 4,502,733 | 20.0 | % | ||||||||||
A
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6,963,380 | 26.6 | % | 6,977,222 | 30.9 | % | ||||||||||
BBB
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12,903,651 | 49.3 | % | 7,497,213 | 33.2 | % | ||||||||||
Total
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$ | 26,181,938 | 100.00 | % | $ | 22,568,932 | 100.0 | % |
●
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regulating the interest rates, fees and service charges that may be charged;
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●
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imposing minimum capital requirements for our premium finance subsidiary or requiring surety bonds in addition to or as an alternative to such capital requirements;
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●
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governing the form and content of our financing agreements;
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●
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prescribing minimum notice and cure periods before we may cancel a customer’s policy for non-payment under the terms of the financing agreement;
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●
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prescribing timing and notice procedures for collecting unearned premium from the insurance company, applying the unearned premium to our customer’s premium finance account, and, if applicable, returning any refund due to our customer;
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●
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requiring our premium finance company to qualify for and obtain a license and to renew the license each year;
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●
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conducting periodic financial and market conduct examinations and investigations of our premium finance company and its operations;
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●
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requiring prior notice to the regulating agency of any change of control of our premium finance company.
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High
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Low
|
|||||||
2012 Calendar Year
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||||||||
First Quarter
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$ | 3.75 | $ | 2.98 | ||||
Second Quarter
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6.13 | 3.18 | ||||||
Third Quarter
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6.95 | 4.51 | ||||||
Fourth Quarter
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6.24 | 4.50 | ||||||
High
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Low
|
|||||||
2011 Calendar Year
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||||||||
First Quarter
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$ | 3.90 | $ | 3.02 | ||||
Second Quarter
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3.88 | 2.82 | ||||||
Third Quarter
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3.68 | 2.47 | ||||||
Fourth Quarter
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3.59 | 2.97 |
2012
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2011
|
|||||||
Common stock dividends declared
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$ | 533,763 | $ | 230,303 |
Period
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Total Number of Shares Purchased
|
Average Price Paid per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
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Maximum Number of Shares that May Be Purchased Under the Plans or Programs
|
||||||||||||
10/1/12 – 10/31/12
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- | - | - | - | ||||||||||||
11/1/12 – 11/30/12
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- | - | - | - | ||||||||||||
12/1/12 – 12/31/12
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1,915 | $ | 4.84 | - | - | |||||||||||
Total
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1,915 | $ | 4.84 | - | - |
Years ended December 31,
|
||||||||||||||||
($ in thousands)
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2012
|
2011
|
Change
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Percent
|
||||||||||||
Revenues
|
||||||||||||||||
Direct written premiums
|
$ | 49,252 | $ | 40,735 | $ | 8,517 | 20.9 | % | ||||||||
Net written premiums
|
19,560 | 16,296 | 3,264 | 20.0 | % | |||||||||||
Change in net unearned premiums
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(2,343 | ) | (1,427 | ) | (916 | ) | 64.2 | % | ||||||||
Net premiums earned
|
17,217 | 14,869 | 2,348 | 15.8 | % | |||||||||||
Ceding commission revenue (1)
|
9,690 | 10,625 | (935 | ) | (8.8 | ) % | ||||||||||
Net investment income
|
1,015 | 754 | 261 | 34.6 | % | |||||||||||
Net realized gain on investments
|
288 | 524 | (236 | ) | (45.0 | ) % | ||||||||||
Other income
|
868 | 921 | (53 | ) | (5.8 | ) % | ||||||||||
Total revenues
|
29,078 | 27,693 | 1,385 | 5.0 | % | |||||||||||
Expenses
|
||||||||||||||||
Loss and loss adjustment expenses (1)
|
||||||||||||||||
Direct and assumed loss and loss adjustment expenses
|
32,631 | 15,644 | 16,987 | 108.6 | % | |||||||||||
Less: ceded loss and loss adjustment expenses
|
(21,396 | ) | (7,073 | ) | (14,323 | ) | 202.5 | % | ||||||||
Net loss and loss adjustment expenses
|
11,235 | 8,571 | 2,664 | 31.1 | % | |||||||||||
Commission expense
|
7,246 | 6,230 | 1,016 | 16.3 | % | |||||||||||
Other underwriting expenses
|
7,849 | 7,373 | 476 | 6.5 | % | |||||||||||
Other operating expenses
|
1,000 | 1,203 | (203 | ) | (16.9 | ) % | ||||||||||
Depreciation and amortization
|
596 | 603 | (7 | ) | (1.2 | ) % | ||||||||||
Interest expense
|
82 | 121 | (39 | ) | (32.2 | ) % | ||||||||||
Total expenses
|
28,008 | 24,101 | 3,907 | 16.2 | % | |||||||||||
Income from operations before taxes
|
1,070 | 3,592 | (2,522 | ) | (70.2 | ) % | ||||||||||
Provision for income tax
|
303 | 1,089 | (786 | ) | (72.2 | ) % | ||||||||||
Net income
|
$ | 767 | $ | 2,503 | $ | (1,736 | ) | (69.4 | ) % | |||||||
Percent of total revenues:
|
||||||||||||||||
Net premiums earned
|
59.2 | % | 53.7 | % | ||||||||||||
Ceding commission revenue
|
33.3 | % | 38.4 | % | ||||||||||||
Net investment income
|
3.5 | % | 2.7 | % | ||||||||||||
Net realized gains on investments
|
1.0 | % | 1.9 | % | ||||||||||||
Other income
|
3.0 | % | 3.3 | % | ||||||||||||
100.0 | % | 100.0 | % |
Years ended December 31,
|
||||||||||||||||
($ in thousands)
|
2012
|
2011
|
Change
|
Percent
|
||||||||||||
Provisional ceding commissions earned
|
$ | 8,516 | $ | 6,916 | $ | 1,600 | 23.1 | % | ||||||||
Contingent ceding commissions earned
|
1,174 | 3,709 | (2,535 | ) | (68.3 | ) % | ||||||||||
Total ceding commission revenue
|
$ | 9,690 | $ | 10,625 | $ | (935 | ) | (8.8 | ) % |
Years ended
|
||||||||
December 31,
|
||||||||
2012
|
2011
|
|||||||
Revenues
|
||||||||
Net premiums earned
|
$ | 17,216,611 | $ | 14,868,746 | ||||
Ceding commission revenue
|
9,690,155 | 10,624,714 | ||||||
Net investment income
|
1,015,156 | 754,630 | ||||||
Net realized gain on investments
|
288,068 | 523,894 | ||||||
Other income
|
476,661 | 430,034 | ||||||
Total revenues
|
28,686,651 | 27,202,018 | ||||||
Expenses
|
||||||||
Loss and loss adjustment expenses
|
11,234,713 | 8,571,058 | ||||||
Commission expense
|
7,246,245 | 6,230,564 | ||||||
Other underwriting expenses
|
7,848,870 | 7,372,878 | ||||||
Depreciation and amortization
|
595,189 | 597,943 | ||||||
Total expenses
|
26,925,017 | 22,772,443 | ||||||
Income from operations
|
1,761,634 | 4,429,575 | ||||||
Income tax expense
|
495,278 | 1,363,956 | ||||||
Net income
|
$ | 1,266,356 | $ | 3,065,619 |
Personal
|
Commercial
|
Commercial
|
||||||||||||||
Lines
|
Lines
|
Auto
|
Total
|
|||||||||||||
Year ended December 31, 2012:
|
||||||||||||||||
Reinstatement premiums for catastrophe coverage
|
||||||||||||||||
included in net premiums earned
|
$ | 77,344 | $ | - | $ | - | $ | 77,344 | ||||||||
Direct loss and loss adjustment expenses
|
$ | 12,834,503 | $ | 51,445 | $ | 375,016 | $ | 13,260,964 | ||||||||
Less: ceded loss and loss adjustment expenses
|
12,084,503 | - | 33,439 | 12,117,942 | ||||||||||||
Net loss and loss adjustment expenses
|
$ | 750,000 | $ | 51,445 | $ | 341,577 | $ | 1,143,022 | ||||||||
Year ended December 31, 2011:
|
||||||||||||||||
Reinstatement premiums for catastrophe coverage
|
||||||||||||||||
included in net premiums earned
|
$ | - | $ | - | $ | - | $ | - | ||||||||
Direct loss and loss adjustment expenses
|
$ | 1,796,117 | $ | - | $ | - | $ | 1,796,117 | ||||||||
Less: ceded loss and loss adjustment expenses
|
1,347,088 | - | - | 1,347,088 | ||||||||||||
Net loss and loss adjustment expenses
|
$ | 449,029 | $ | - | $ | - | $ | 449,029 |
Direct
|
Assumed
|
Ceded
|
Net
|
|||||||||||||
Year ended December 31, 2012
|
||||||||||||||||
Written premiums
|
$ | 49,251,630 | $ | 23,967 | $ | (29,715,971 | ) | $ | 19,559,626 | |||||||
Unearned premiums
|
(4,724,193 | ) | (5,010 | ) | 2,386,188 | (2,343,015 | ) | |||||||||
Earned premiums
|
$ | 44,527,437 | $ | 18,957 | $ | (27,329,783 | ) | $ | 17,216,611 | |||||||
Loss and loss adjustment expenses exluding
|
||||||||||||||||
the effect of catastrophes
|
$ | 19,339,488 | $ | 31,029 | $ | (9,278,826 | ) | $ | 10,091,691 | |||||||
Catastrophe loss
|
13,260,964 | - | (12,117,942 | ) | 1,143,022 | |||||||||||
Loss and loss adjustment expenses
|
$ | 32,600,452 | $ | 31,029 | $ | (21,396,768 | ) | $ | 11,234,713 | |||||||
Loss ratio excluding the effect of catastrophes
|
43.4 | % | 163.7 | % | 34.0 | % | 58.6 | % | ||||||||
Catastrophe loss
|
29.8 | % | 0.0 | % | 44.3 | % | 6.7 | % | ||||||||
Loss ratio
|
73.2 | % | 163.7 | % | 78.3 | % | 65.3 | % | ||||||||
Year ended December 31, 2011
|
||||||||||||||||
Written premiums
|
$ | 40,734,767 | $ | 10,990 | $ | (24,449,655 | ) | $ | 16,296,102 | |||||||
Unearned premiums
|
(4,005,312 | ) | (516 | ) | 2,578,472 | (1,427,356 | ) | |||||||||
Earned premiums
|
$ | 36,729,455 | $ | 10,474 | $ | (21,871,183 | ) | $ | 14,868,746 | |||||||
Loss and loss adjustment expenses exluding
|
||||||||||||||||
the effect of catastrophes
|
$ | 13,830,599 | $ | 17,368 | $ | (5,725,938 | ) | $ | 8,122,029 | |||||||
Catastrophe loss
|
1,796,117 | - | (1,347,088 | ) | 449,029 | |||||||||||
Loss and loss adjustment expenses
|
$ | 15,626,716 | $ | 17,368 | $ | (7,073,026 | ) | $ | 8,571,058 | |||||||
Loss ratio excluding the effect of catastrophes
|
37.7 | % | 165.8 | % | 26.2 | % | 54.6 | % | ||||||||
Catastrophe loss
|
4.9 | % | 0.0 | % | 6.2 | % | 3.0 | % | ||||||||
Loss ratio
|
42.5 | % | 165.8 | % | 32.3 | % | 57.6 | % |
Years ended
|
||||||||
December 31,
|
||||||||
2012
|
2011
|
|||||||
Net premiums earned
|
$ | 17,216,611 | $ | 14,868,746 | ||||
Ceding commission revenue (1)
|
9,690,155 | 10,624,714 | ||||||
Other income
|
476,661 | 430,034 | ||||||
Loss and loss adjustment expenses (2)
|
11,234,713 | 8,571,058 | ||||||
Acquistion costs and other underwriting expenses:
|
||||||||
Commission expense
|
7,246,245 | 6,230,564 | ||||||
Other underwriting expenses
|
7,848,870 | 7,372,878 | ||||||
Total acquistion costs and other
|
||||||||
underwriting expenses
|
15,095,115 | 13,603,442 | ||||||
Underwriting income
|
$ | 1,053,599 | $ | 3,748,994 | ||||
Key Measures:
|
||||||||
Net loss ratio excluding the effect of catastrophes
|
58.6 | % | 54.6 | % | ||||
Effect of catastrophe loss on loss ratio (2)
|
6.7 | % | 3.0 | % | ||||
Net loss ratio
|
65.3 | % | 57.6 | % | ||||
Net underwriting expense ratio excluding the
|
||||||||
effect of catastrophes
|
17.5 | % | 13.8 | % | ||||
Effect of catastrophe loss on net underwriting
|
||||||||
expense ratio (1) (2)
|
11.1 | % | 3.3 | % | ||||
Net underwriting expense ratio
|
28.6 | % | 17.1 | % | ||||
Net combined ratio excluding the effect
|
||||||||
of catastrophes
|
76.1 | % | 68.5 | % | ||||
Effect of catastrophe loss on net combined
|
||||||||
ratio (1) (2)
|
17.8 | % | 6.3 | % | ||||
Net combined ratio
|
93.9 | % | 74.8 | % | ||||
Reconciliation of net underwriting expense ratio:
|
||||||||
Acquisition costs and other
|
||||||||
underwriting expenses
|
$ | 15,095,115 | $ | 13,603,442 | ||||
Less: Ceding commission revenue (1)
|
(9,690,155 | ) | (10,624,714 | ) | ||||
Less: Other income
|
(476,661 | ) | (430,034 | ) | ||||
|
$ | 4,928,299 | $ | 2,548,694 | ||||
Net earned premium
|
$ | 17,216,611 | $ | 14,868,746 |
December 31, 2012
|
||||||||||||||||||||||||
|
Cost or
|
Gross
|
Gross Unrealized Losses
|
Aggregate
|
% of
|
|||||||||||||||||||
Amortized
|
Unrealized
|
Less than 12
|
More than 12
|
Fair
|
Fair
|
|||||||||||||||||||
Category
|
Cost
|
Gains
|
Months
|
Months
|
Value
|
Value
|
||||||||||||||||||
Political subdivisions of States,
|
||||||||||||||||||||||||
Territories and Possessions
|
$ | 5,219,092 | $ | 257,298 | $ | (1,574 | ) | $ | - | $ | 5,474,816 | 17.4 | % | |||||||||||
Corporate and other bonds
|
||||||||||||||||||||||||
Industrial and miscellaneous
|
19,628,005 | 1,123,392 | (43,553 | ) | (722 | ) | 20,707,122 | 65.8 | % | |||||||||||||||
Total fixed-maturity securities
|
24,847,097 | 1,380,690 | (45,127 | ) | (722 | ) | 26,181,938 | 83.2 | % | |||||||||||||||
Equity Securities
|
5,073,977 | 373,294 | (157,029 | ) | - | 5,290,242 | 16.8 | % | ||||||||||||||||
Total
|
$ | 29,921,074 | $ | 1,753,984 | $ | (202,156 | ) | $ | (722 | ) | $ | 31,472,180 | 100.0 | % |
December 31, 2011
|
||||||||||||||||||||||||
|
Cost or
|
Gross
|
Gross Unrealized Losses
|
Aggregate
|
% of
|
|||||||||||||||||||
Amortized
|
Unrealized
|
Less than 12
|
More than 12
|
Fair
|
Fair
|
|||||||||||||||||||
Category
|
Cost
|
Gains
|
Months
|
Months
|
Value
|
Value
|
||||||||||||||||||
U.S. Treasury securities and
|
||||||||||||||||||||||||
obligations of U.S. government
|
||||||||||||||||||||||||
corporations and agencies
|
$ | 499,832 | $ | 50,356 | $ | - | $ | - | $ | 550,188 | 2.1 | % | ||||||||||||
Political subdivisions of States,
|
||||||||||||||||||||||||
Territories and Possessions
|
5,868,743 | 301,559 | - | - | 6,170,302 | 23.2 | % | |||||||||||||||||
Corporate and other bonds
|
||||||||||||||||||||||||
Industrial and miscellaneous
|
15,846,616 | 338,284 | (228,792 | ) | (107,666 | ) | 15,848,442 | 59.5 | % | |||||||||||||||
Total fixed-maturity securities
|
22,215,191 | 690,199 | (228,792 | ) | (107,666 | ) | 22,568,932 | 84.7 | % | |||||||||||||||
Equity Securities
|
3,857,741 | 311,300 | (98,938 | ) | (4,893 | ) | 4,065,210 | 15.3 | % | |||||||||||||||
Total
|
$ | 26,072,932 | $ | 1,001,499 | $ | (327,730 | ) | $ | (112,559 | ) | $ | 26,634,142 | 100.0 | % |
December 31, 2012
|
||||||||||||||||||||||||
|
Cost or
|
Gross
|
Gross Unrealized Losses
|
% of
|
||||||||||||||||||||
Amortized
|
Unrealized
|
Less than 12
|
More than 12
|
Fair
|
Fair
|
|||||||||||||||||||
Category
|
Cost
|
Gains
|
Months
|
Months
|
Value
|
Value
|
||||||||||||||||||
U.S. Treasury securities
|
$ | 606,281 | $ | 172,745 | $ | - | $ | - | $ | 779,026 | 100.0 | % |
December 31, 2011
|
||||||||||||||||||||||||
|
Cost or
|
Gross
|
Gross Unrealized Losses
|
% of
|
||||||||||||||||||||
Amortized
|
Unrealized
|
Less than 12
|
More than 12
|
Fair
|
Fair
|
|||||||||||||||||||
Category
|
Cost
|
Gains
|
Months
|
Months
|
Value
|
Value
|
||||||||||||||||||
U.S. Treasury securities
|
$ | 606,234 | $ | 171,719 | $ | - | $ | - | $ | 779,953 | 100.0 | % |
December 31, 2012
|
December 31, 2011
|
|||||||||||||||
Percentage of
|
Percentage of
|
|||||||||||||||
Fair Market
|
Fair Market
|
Fair Market
|
Fair Market
|
|||||||||||||
Value
|
Value
|
Value
|
Value
|
|||||||||||||
Rating
|
||||||||||||||||
U.S. Treasury securities
|
$ | - | 0.0 | % | $ | 550,188 | 2.4 | % | ||||||||
AAA
|
2,226,603 | 8.5 | % | 3,041,576 | 13.5 | % | ||||||||||
AA
|
4,088,304 | 15.6 | % | 4,502,733 | 20.0 | % | ||||||||||
A
|
6,963,380 | 26.6 | % | 6,977,222 | 30.9 | % | ||||||||||
BBB
|
12,903,651 | 49.3 | % | 7,497,213 | 33.2 | % | ||||||||||
Total
|
$ | 26,181,938 | 100.00 | % | $ | 22,568,932 | 100.0 | % |
December 31, 2012
|
December 31, 2011
|
|||||||||||||||
Weighted
|
Weighted
|
|||||||||||||||
Average
|
Average
|
|||||||||||||||
Average
|
Duration in
|
Average
|
Duration in
|
|||||||||||||
Category
|
Yield %
|
Years
|
Yield %
|
Years
|
||||||||||||
U.S. Treasury securities and
|
||||||||||||||||
obligations of U.S. government
|
||||||||||||||||
corporations and agencies
|
3.33 | % | 27.8 | 2.75 | % | 17.8 | ||||||||||
Political subdivisions of States,
|
||||||||||||||||
Territories and Possessions
|
4.06 | % | 6.1 | 3.86 | % | 5.2 | ||||||||||
Corporate and other bonds
|
||||||||||||||||
Industrial and miscellaneous
|
4.74 | % | 7.3 | 4.98 | % | 7.1 |
December 31, 2012
|
||||||||||||||||||||||||||||||||
Less than 12 months
|
12 months or more
|
Total
|
||||||||||||||||||||||||||||||
|
No. of
|
No. of
|
Aggregate
|
|||||||||||||||||||||||||||||
Fair
|
Unrealized
|
Positions
|
Fair
|
Unrealized
|
Positions
|
Fair
|
Unrealized
|
|||||||||||||||||||||||||
Category
|
Value
|
Losses
|
Held
|
Value
|
Losses
|
Held
|
Value
|
Losses
|
||||||||||||||||||||||||
Fixed-Maturity Securities:
|
||||||||||||||||||||||||||||||||
U.S. Treasury securities
|
||||||||||||||||||||||||||||||||
and obligations of U.S.
|
||||||||||||||||||||||||||||||||
government corporations
|
||||||||||||||||||||||||||||||||
and agencies
|
$ | - | $ | - | - | $ | - | $ | - | - | $ | - | $ | - | ||||||||||||||||||
Political subdivisions of
|
||||||||||||||||||||||||||||||||
States, Territories and
|
||||||||||||||||||||||||||||||||
Possessions
|
202,798 | (1,574 | ) | 1 | - | - | - | 202,798 | (1,574 | ) | ||||||||||||||||||||||
Corporate and other
|
||||||||||||||||||||||||||||||||
bonds industrial and
|
||||||||||||||||||||||||||||||||
miscellaneous
|
4,025,551 | (43,553 | ) | 19 | 128,125 | (722 | ) | 1 | 4,153,676 | (44,275 | ) | |||||||||||||||||||||
Total fixed-maturity
|
||||||||||||||||||||||||||||||||
securities
|
$ | 4,228,349 | $ | (45,127 | ) | 20 | $ | 128,125 | $ | (722 | ) | 1 | $ | 4,356,474 | $ | (45,849 | ) | |||||||||||||||
Equity Securities:
|
||||||||||||||||||||||||||||||||
Preferred stocks
|
$ | 387,925 | $ | (11,130 | ) | 3 | $ | - | $ | - | - | $ | 387,925 | $ | (11,130 | ) | ||||||||||||||||
Common stocks
|
1,536,860 | (145,899 | ) | 9 | - | - | - | 1,536,860 | (145,899 | ) | ||||||||||||||||||||||
Total equity securities
|
$ | 1,924,785 | $ | (157,029 | ) | 12 | $ | - | $ | - | - | $ | 1,924,785 | $ | (157,029 | ) | ||||||||||||||||
Total
|
$ | 6,153,134 | $ | (202,156 | ) | 32 | $ | 128,125 | $ | (722 | ) | 1 | $ | 6,281,259 | $ | (202,878 | ) |
December 31, 2011
|
||||||||||||||||||||||||||||||||
Less than 12 months
|
12 months or more
|
Total
|
||||||||||||||||||||||||||||||
|
No. of
|
No. of
|
Aggregate
|
|||||||||||||||||||||||||||||
Fair
|
Unrealized
|
Positions
|
Fair
|
Unrealized
|
Positions
|
Fair
|
Unrealized
|
|||||||||||||||||||||||||
Category
|
Value
|
Losses
|
Held
|
Value
|
Losses
|
Held
|
Value
|
Losses
|
||||||||||||||||||||||||
Fixed-Maturity Securities:
|
||||||||||||||||||||||||||||||||
U.S. Treasury securities
|
||||||||||||||||||||||||||||||||
and obligations of U.S.
|
||||||||||||||||||||||||||||||||
government corporations
|
||||||||||||||||||||||||||||||||
and agencies
|
$ | - | $ | - | - | $ | - | $ | - | - | $ | - | $ | - | ||||||||||||||||||
Political subdivisions of
|
||||||||||||||||||||||||||||||||
States, Territories and
|
||||||||||||||||||||||||||||||||
Possessions
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Corporate and other
|
||||||||||||||||||||||||||||||||
bonds industrial and
|
||||||||||||||||||||||||||||||||
miscellaneous
|
4,849,378 | (228,792 | ) | 26 | 1,483,425 | (107,666 | ) | 7 | 6,332,803 | (336,458 | ) | |||||||||||||||||||||
Total fixed-maturity
|
||||||||||||||||||||||||||||||||
securities
|
$ | 4,849,378 | $ | (228,792 | ) | 26 | $ | 1,483,425 | $ | (107,666 | ) | 7 | $ | 6,332,803 | $ | (336,458 | ) | |||||||||||||||
Equity Securities:
|
||||||||||||||||||||||||||||||||
Preferred stocks
|
$ | 368,350 | $ | (76,969 | ) | 12 | $ | 189,364 | $ | (4,893 | ) | 5 | $ | 557,714 | $ | (81,862 | ) | |||||||||||||||
Common stocks
|
397,268 | (21,969 | ) | 14 | - | - | - | 397,268 | (21,969 | ) | ||||||||||||||||||||||
Total equity securities
|
$ | 765,618 | $ | (98,938 | ) | 26 | $ | 189,364 | $ | (4,893 | ) | 5 | $ | 954,982 | $ | (103,831 | ) | |||||||||||||||
Total
|
$ | 5,614,996 | $ | (327,730 | ) | 52 | $ | 1,672,789 | $ | (112,559 | ) | 12 | $ | 7,287,785 | $ | (440,289 | ) |
Years Ended December 31,
|
2012
|
2011
|
||||||
Cash flows provided by (used in):
|
||||||||
Operating activities
|
$ | 6,375,322 | $ | 7,253,489 | ||||
Investing activities
|
(3,961,384 | ) | (6,525,524 | ) | ||||
Financing activities
|
(347,052 | ) | (881,459 | ) | ||||
Net increase (decrease) in cash and cash equivalents
|
2,066,886 | (153,494 | ) | |||||
Cash and cash equivalents, beginning of period
|
173,126 | 326,620 | ||||||
Cash and cash equivalents, end of period
|
$ | 2,240,012 | $ | 173,126 |
Amount
|
||||||||||||
Recoverable
|
||||||||||||
A.M.
|
as of
|
|||||||||||
($ in thousands)
|
Best Rating
|
December 31, 2012
|
%
|
|||||||||
Maiden Reinsurace Company
|
A- | $ | 11,162 | 46.10 | % | |||||||
SCOR Reinsurance Company
|
A | 5,932 | 24.50 | % | ||||||||
17,094 | 70.60 | % | ||||||||||
Others
|
7,118 | 29.40 | % | |||||||||
Total
|
$ | 24,212 | 100.00 | % |
Name
|
Age
|
Positions and Offices Held
|
||
Barry B. Goldstein
|
60 |
President, Chairman of the Board, Chief Executive Officer, Treasurer and Director
|
||
Victor J. Brodsky
|
55 |
Chief Financial Officer and Secretary
|
||
John D. Reiersen
|
70 |
Executive Vice President, Kingstone Insurance Company
|
||
Michael R. Feinsod
|
42 |
Director
|
||
Jay M. Haft
|
77 |
Director
|
||
David A. Lyons
|
63 |
Director
|
||
Jack D. Seibald
|
52 |
Director
|
Name and Principal Position
|
Year
|
Salary
|
Bonus
|
Non-Equity
Incentive Plan
Compensation
|
All Other
Compensation
|
Total
|
|||||||||||||||
Barry B. Goldstein
Chief Executive
|
2012
|
$ | 450,000 | - | $ | 126,985 | (1) | $ | 33,825 | $ | 610,810 | ||||||||||
Officer
|
2011
|
$ | 375,000 | - | $ | 216,327 | (2) | $ | 29,832 | $ | 621,159 | ||||||||||
Victor J. Brodsky
Chief Financial
|
2012
|
$ | 240,000 | - | $ | 6,558 | (3) | $ | 13,792 | $ | 260,350 | ||||||||||
Officer
|
2011
|
$ | 220,000 | $ | 10,000 | $ | 26,893 | (4) | $ | 9,800 | $ | 266,693 | |||||||||
John D. Reiersen
Executive Vice
|
2012
|
$ | 150,200 | - | $ | 7,392 | (3) | $ | 6,064 | $ | 163,656 | ||||||||||
President, Kingstone Insurance Company
|
2011
|
$ | 339,524 | - | $ | 76,091 | (4) | $ | 14,949 | $ | 430,564 |
(1)
|
Represents bonus compensation of $110,540 accrued pursuant to Mr. Goldstein’s employment agreement and paid in 2013, and $16,445 accrued pursuant to the KICO employee profit sharing plan and paid in 2013.
|
(2)
|
Represents bonus compensation of $167,358 accrued pursuant to Mr. Goldstein’s employment agreement and paid in 2012, and $48,968 accrued pursuant to the KICO employee profit sharing plan and paid in 2012.
|
(3)
|
Represents amounts accrued pursuant to the KICO employee profit sharing plan and paid in 2013.
|
(4)
|
Represents amounts accrued pursuant to the KICO employee profit sharing plan and paid in 2012.
|
Option Awards
|
||||||||||||||||
Name
|
Number of Securities Underlying
Unexercised Options
|
Number of Securities Underlying
Unexercised Options
|
Option Exercise
Price
|
Option Expiration Date
|
||||||||||||
Exercisable
|
Unexercisable
|
|||||||||||||||
Barry B. Goldstein
|
141,648 | 47,217 | (1) | $ | 2.50 |
03/24/15
|
||||||||||
Victor J. Brodsky
|
- | - | - | - | ||||||||||||
John D. Reiersen
|
15,000 | 5,000 | (2) | $ | 2.35 |
07/30/14
|
(1)
|
Such options became exercisable on March 24, 2013.
|
(2)
|
Such options are exercisable on July 30, 2013.
|
Name
|
Fees Earned or
Paid in Cash
|
Stock Awards
|
Option Awards
|
Total
|
||||||||||||
Michael R. Feinsod
|
$ | 29,675 | - | - | $ | 29,675 | ||||||||||
Jay M. Haft
|
$ | 29,650 | - | - | $ | 29,650 | ||||||||||
David A. Lyons
|
$ | 30,250 | - | - | $ | 30,250 | ||||||||||
Jack D. Seibald
|
$ | 31,750 | - | - | $ | 31,750 |
·
|
$25,000 per annum (including $5,000 per annum for service as a director of KICO)
|
·
|
up to an additional $5,000 per annum for committee chair (and $1,500 per annum for KICO committee chair)
|
·
|
$500 per Board meeting attended ($250 if telephonic)
|
·
|
$350 per committee meeting attended ($175 if telephonic)
|
Name and Address
of Beneficial Owner
|
Number of Shares
Beneficially Owned
|
Approximate
Percent of Class
|
||||||
Barry B. Goldstein
1154 Broadway
Hewlett, New York
|
931,648 | (1)(2) | 23.4 | % | ||||
Michael R. Feinsod
c/o Infinity Capital
50 Jericho Quadrangle
Jericho, New York
|
504,490 | (1)(3) | 13.1 | % | ||||
Jack D. Seibald
1336 Boxwood Drive West
Hewlett Harbor, New York
|
311,147 | (1)(4) | 8.0 | % | ||||
Jay M. Haft
69 Beaver Dam Road
Salisbury, Connecticut
|
170,275 | (1)(5) | 4.4 | % | ||||
David A. Lyons
252 Brookdale Road
Stamford, Connecticut
|
16,660 | (1) | * | |||||
John D. Reiersen
15 Joys Lane
Kingston, New York
|
19,600 | (1)(6) | * | |||||
Victor J. Brodsky
1154 Broadway
Hewlett, New York
|
11,408 | (1) | * | |||||
All executive officers
and directors as a group
(7 persons)
|
1,962,228 | (1)(2)(3)(4)(5)(6) | 49.1 | % |
(1)
|
Based upon Schedule 13D filed under the Securities Exchange Act of 1934, as amended, and other information that is publicly available.
|
(2)
|
Includes (i) 30,000 shares held in retirement trusts for the benefit of Mr. Goldstein and (ii) 141,648 shares issuable upon the exercise of options that are exercisable currently or within 60 days. Excludes shares owned by members of Mr. Goldstein’s family. Mr. Goldstein disclaims beneficial ownership of the shares owned by such family members.
|
(3)
|
Includes 487,495 shares owned by Infinity Capital Partners, L.P. (“Partners”). Each of (i) Infinity Capital, LLC (“Capital”), as the general partner of Partners, (ii) Infinity Management, LLC (“Management”), as the Investment Manager of Partners, and (iii) Michael Feinsod, as the Managing Member of Capital and Management, the General Partner and Investment Manager, respectively, of Partners, may be deemed to be the beneficial owners of the shares held by Partners. Pursuant to the Schedule 13D filed under the Securities Exchange Act of 1934, as amended, by Partners, Capital, Management and Mr. Feinsod, each has sole voting and dispositive power over the shares. Also includes 10,000 shares held in a retirement trust for the benefit of Mr. Feinsod.
|
(4)
|
Includes (i) 113,000 shares owned jointly by Mr. Seibald and his wife, Stephanie Seibald and (ii) 174,824 shares held in a retirement trust for the benefit of Mr. Seibald.
|
(5)
|
Includes 576 shares held in a retirement trust for the benefit of Mr. Haft.
|
(6)
|
Includes 15,000 shares issuable upon the exercise of currently exercisable options.
|
●
|
All compensation plans previously approved by security holders; and
|
●
|
All compensation plans not previously approved by security holders.
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a)
|
Weighted average exercise price of outstanding options, warrants and rights
(b)
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
|
||||||||||
Equity compensation plans approved by security holders
|
235,115 | $ | 2.58 | 143,635 | ||||||||
Equity compensation plans not approved by security holders
|
-0- | -0- | -0- | |||||||||
Total
|
235,115 | 143,635 | ||||||||||
Fee Category
|
Fiscal 2012 Fees
|
Fiscal 2011 Fees
|
||||||
Audit Fees(1)
|
$ | 121,000 | $ | 177,549 | ||||
Audit-Related Fees(2)
|
- | 4,500 | ||||||
Tax Fees(3)
|
$ | 46,164 | - | |||||
All Other Fees(4)
|
- | - | ||||||
$ | 167,164 | $ | 182,048 |
(1)
|
Audit Fees consist of fees billed for services rendered for the audit of our consolidated financial statements and review of our condensed consolidated financial statements included in our quarterly reports on Form 10-Q and services provided in connection with other statutory or regulatory filings.
|
(2)
|
Audit-Related Fees consist of aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees.”
|
(3)
|
Tax Fees consist of fees billed by our independent auditors for professional services related to preparation of our U.S. federal and state income tax returns, representation for the examination of our 2009 federal tax return, and tax advice.
|
(4)
|
All Other Fees consist of aggregate fees billed for products and services provided by our independent auditors, other than those disclosed above.
|
Exhibit Number
|
Description of Exhibit
|
|
3(a)
|
Restated Certificate of Incorporation, as amended (1)
|
|
3(b)
|
By-laws, as amended (2)
|
|
2005 Equity Participation Plan
|
||
10(b)
|
Employment Agreement, dated as of October 16, 2007, between DCAP Group, Inc. and Barry B. Goldstein (3)
|
|
10(c)
|
Amendment No. 1, dated as of August 25, 2008, to Employment Agreement between DCAP Group, Inc. and Barry B. Goldstein (4)
|
|
10(d)
|
Amendment No. 2, dated as of March 24, 2010, to Employment Agreement between Kingstone Companies, Inc. (formerly DCAP Group, Inc.) and Barry B. Goldstein (5)
|
|
10(e)
|
Amendment No. 3, dated as of May 10, 2011, to Employment Agreement between Kingstone Companies, Inc. (formerly DCAP Group, Inc.) and Barry B. Goldstein (6)
|
|
10(f)
|
Amendment No. 4, dated as of April 16, 2012, to Employment Agreement between Kingstone Companies, Inc. (formerly DCAP Group, Inc.) and Barry B. Goldstein (7)
|
|
10(g)
|
Employment Contract, effective on July 1, 2008, between Commercial Mutual Insurance Company and Barry B. Goldstein (8)
|
|
10(h)
|
Employment Agreement, dated as of May 10, 2011, between Kingstone Insurance Company and Barry B. Goldstein (6)
|
|
Amendment No. 1, dated as of May 14, 2012, to Employment Agreement between Kingstone Insurance Company and Barry B. Goldstein
|
||
10(j)
|
Employment Contract, dated as of September 13, 2006, between Commercial Mutual Insurance Company and Successor Companies and John D. Reiersen (8)
|
|
10(k)
|
Amendment No. 1, dated as of January 25, 2008, to Employment Contract between Commercial Mutual Insurance Company and Successor Companies and John D. Reiersen (8)
|
|
10(l)
|
Amendment No. 2, dated as of July 18, 2008, to Employment Contract between Commercial Mutual Insurance Company and Successor Companies and John D. Reiersen (8)
|
10(m)
|
Amendment No. 3, dated as of February 28, 2011, to Employment Contract between Kingstone Insurance Company (as successor in interest to Commercial Mutual Insurance Company) and John D. Reiersen (9)
|
|
10(n)
|
Stock Option Agreement, dated as of March 24, 2010, between Kingstone Companies, Inc. and Barry B. Goldstein (5)
|
|
10(o)
|
Letter agreement, dated February 23, 2012, between Kingstone Companies, Inc. and Barry Goldstein with regard to outstanding options (10)
|
|
14
|
Code of Ethics (11)
|
|
Subsidiaries
|
||
23(a)
|
Consent of Marcum LLP
|
|
23(b)
|
Consent of EisnerAmper LLP
|
|
31(a)
|
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
31(b)
|
Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
||
101.INS
|
XBRL Instance Document
|
|
101.SCH
|
101.SCH XBRL Taxonomy Extension Schema.
|
|
101.CAL
|
101.CAL XBRL Taxonomy Extension Calculation Linkbase.
|
|
101.DEF
|
101.DEF XBRL Taxonomy Extension Definition Linkbase.
|
|
101.LAB
|
101.LAB XBRL Taxonomy Extension Label Linkbase.
|
|
101.PRE
|
101.PRE XBRL Taxonomy Extension Presentation Linkbase.
|
(1)
|
Denotes document filed as an exhibit to our Quarterly Report on Form 10-Q for the period ended March 31, 2012 and incorporated herein by reference.
|
(2)
|
Denotes document filed as an exhibit to our Current Report on Form 8-K for an event dated November 5, 2009 and incorporated herein by reference.
|
(3)
|
Denotes document filed as an exhibit to our Current Report on Form 8-K for an event dated October 16, 2007 and incorporated herein by reference.
|
(4)
|
Denotes document filed as an exhibit to our Quarterly Report on Form 10-Q for the period ended September 30, 2008 and incorporated herein by reference.
|
(5)
|
Denotes document filed as an exhibit to our Current Report on Form 8-K for an event dated March 24, 2010 and incorporated herein by reference.
|
(6)
|
Denotes document filed as an exhibit to our Current Report on Form 8-K for an event dated May 10, 2011 and incorporated herein by reference.
|
(7)
|
Denotes document filed as an exhibit to our Current Report on Form 8-K for an event dated April 16, 2012 and incorporated herein by reference.
|
(8)
|
Denotes document filed as an exhibit to our Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and incorporated herein by reference.
|
(9)
|
Denotes document filed as an exhibit to our Current Report on Form 8-K for an event dated February 28, 2011 and incorporated herein by reference.
|
(10)
|
Denotes document filed as an exhibit to our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and incorporated herein by reference.
|
(11)
|
Denotes document filed as an exhibit to our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2003 and incorporated herein by reference.
|
KINGSTONE COMPANIES, INC.
|
|||
Dated: April 1, 2013
|
By:
|
/s/ Barry B. Goldstein | |
Barry B. Goldstein | |||
Chief Executive Officer |
Signature
|
Capacity
|
Date
|
||
/s/ Barry B. Goldstein
|
President, Chairman of the Board, Chief Executive Officer, Treasurer and Director (Principal Executive Officer)
|
April 1, 2013
|
||
Barry B. Goldstein | ||||
/s/ Victor J. Brodsky
|
Chief Financial Officer and Secretary (Principal Financial and Accounting Officer)
|
April 1, 2013
|
||
Victor J. Brodsky | ||||
/s/ Michael R. Feinsod
|
Director
|
April 1, 2013
|
||
Michael R. Feinsod | ||||
/s/ Jay M. Haft
|
Director
|
April 1, 2013
|
||
Jay M. Haft | ||||
/s/ David A. Lyons
|
Director
|
April 1, 2013
|
||
David A. Lyons | ||||
/s/ Jack D. Seibald
|
Director
|
April 1, 2013
|
||
Jack D. Seibald |
Page
|
||||
F-2 – F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 – F-8 | ||||
F-9 |
KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
|
||||||||
Consolidated Balance Sheets
|
||||||||
December 31,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
Assets
|
||||||||
Fixed-maturity securities, held to maturity, at amortized cost (fair value of $779,026 at
|
||||||||
December 31, 2012 and $777,953 at December 31, 2011)
|
$ | 606,281 | $ | 606,234 | ||||
Fixed-maturity securities, available for sale, at fair value (amortized cost of $24,847,097
|
||||||||
at December 31, 2012 and $22,215,191 at December 31, 2011)
|
26,181,938 | 22,568,932 | ||||||
Equity securities, available-for-sale, at fair value (cost of $5,073,977
|
||||||||
at December 31, 2012 and $3,857,741 at December 31, 2011)
|
5,290,242 | 4,065,210 | ||||||
Total investments
|
32,078,461 | 27,240,376 | ||||||
Cash and cash equivalents
|
2,240,012 | 173,126 | ||||||
Premiums receivable, net of provision for uncollectible amounts
|
7,766,825 | 5,779,085 | ||||||
Receivables - reinsurance contracts
|
- | 1,734,535 | ||||||
Reinsurance receivables, net of provision for uncollectible amounts
|
38,902,782 | 23,880,814 | ||||||
Notes receivable-sale of business
|
323,141 | 393,511 | ||||||
Deferred acquisition costs
|
5,569,878 | 4,535,773 | ||||||
Intangible assets, net
|
3,184,958 | 3,660,672 | ||||||
Property and equipment, net of accumulated depreciation
|
1,868,422 | 1,646,341 | ||||||
Other assets
|
1,563,919 | 660,672 | ||||||
Total assets
|
$ | 93,498,398 | $ | 69,704,905 | ||||
Liabilities
|
||||||||
Loss and loss adjustment expenses
|
$ | 30,485,532 | $ | 18,480,717 | ||||
Unearned premiums
|
26,012,363 | 21,283,160 | ||||||
Advance premiums
|
610,872 | 544,791 | ||||||
Reinsurance balances payable
|
1,820,527 | 2,761,828 | ||||||
Advance payments from catastrophe reinsurers
|
7,358,391 | - | ||||||
Deferred ceding commission revenue
|
4,877,030 | 3,982,399 | ||||||
Notes payable (includes payable to related parties of $378,000
|
||||||||
at December 31, 2012 and December 31, 2011)
|
1,197,000 | 1,047,000 | ||||||
Accounts payable, accrued expenses and other liabilities
|
3,067,586 | 4,505,016 | ||||||
Deferred income taxes
|
1,787,281 | 1,789,439 | ||||||
Total liabilities
|
77,216,582 | 54,394,350 | ||||||
Commitments and Contingencies
|
||||||||
Stockholders' Equity
|
||||||||
Preferred stock, $.01 par value; authorized 1,000,000 shares;
|
||||||||
-0- shares issued and outstanding
|
$ | - | $ | - | ||||
Common stock, $.01 par value; authorized 10,000,000 shares; issued 4,730,357
|
||||||||
shares at December 31, 2012 and 4,643,122 shares at December 31, 2011;
|
||||||||
outstanding 3,840,899 shares at December 31, 2012 and 3,759,900 shares
|
||||||||
at December 31, 2011
|
47,304 | 46,432 | ||||||
Capital in excess of par
|
13,851,036 | 13,739,792 | ||||||
Accumulated other comprehensive income
|
1,023,729 | 370,399 | ||||||
Retained earnings
|
2,787,292 | 2,554,349 | ||||||
17,709,361 | 16,710,972 | |||||||
Treasury stock, at cost, 889,458 shares at December 31, 2012 and 883,222 shares
|
||||||||
at December 31, 2011
|
(1,427,545 | ) | (1,400,417 | ) | ||||
Total stockholders' equity
|
16,281,816 | 15,310,555 | ||||||
Total liabilities and stockholders' equity
|
$ | 93,498,398 | $ | 69,704,905 |
Consolidated Statements of Comprehensive Income | ||||||||
Years ended December 31,
|
2012
|
2011
|
||||||
Revenues
|
||||||||
Net premiums earned
|
$ | 17,216,611 | $ | 14,868,746 | ||||
Ceding commission revenue
|
9,690,155 | 10,624,714 | ||||||
Net investment income
|
1,015,156 | 754,630 | ||||||
Net realized gain on sale of investments
|
288,068 | 523,894 | ||||||
Other income
|
867,724 | 920,732 | ||||||
Total revenues
|
29,077,714 | 27,692,716 | ||||||
Expenses
|
||||||||
Loss and loss adjustment expenses
|
11,234,713 | 8,571,058 | ||||||
Commission expense
|
7,246,245 | 6,230,564 | ||||||
Other underwriting expenses
|
7,848,870 | 7,372,878 | ||||||
Other operating expenses
|
1,000,308 | 1,203,002 | ||||||
Depreciation and amortization
|
596,347 | 602,704 | ||||||
Interest expense
|
81,616 | 120,876 | ||||||
Total expenses
|
28,008,099 | 24,101,082 | ||||||
Income from operations before taxes
|
1,069,615 | 3,591,634 | ||||||
Income tax expense
|
302,909 | 1,088,513 | ||||||
Net income
|
766,706 | 2,503,121 | ||||||
Other comprehensive income, net of tax
|
||||||||
Gross unrealized investment holding gains
|
||||||||
arising during period
|
989,895 | 341,140 | ||||||
Income tax expense related to items of other
|
||||||||
comprehensive income
|
(336,565 | ) | (115,988 | ) | ||||
Comprehensive income
|
$ | 1,420,036 | $ | 2,728,273 | ||||
Earnings per common share:
|
||||||||
Basic
|
$ | 0.20 | $ | 0.65 | ||||
Diluted
|
$ | 0.20 | $ | 0.64 | ||||
Weighted average common shares outstanding
|
||||||||
Basic
|
3,806,697 | 3,837,190 | ||||||
Diluted
|
3,871,760 | 3,920,784 | ||||||
Dividends declared and paid per common share
|
$ | 0.14 | $ | 0.06 |
KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
|
Consolidated Statement of Stockholders' Equity |
Years ended December 31, 2012 and 2011 |
Preferred Stock
|
Common Stock
|
Capital
in Excess
|
Accumulated
Other
Comprehensive |
Retained
|
Treasury Stock
|
|||||||||||||||||||||||||||||||||||
Shares
|
Amount | Shares | Amount |
of Par
|
Income
|
Earnings
|
Shares
|
Amount
|
Total
|
|||||||||||||||||||||||||||||||
Balance, January 1, 2011
|
- | $ | - | 4,643,122 | $ | 46,432 | $ | 13,633,913 | $ | 145,247 | $ | 281,531 | 804,736 | $ | (1,163,258 | ) | $ | 12,943,865 | ||||||||||||||||||||||
Stock-based compensation
|
- | - | - | - | 105,879 | - | - | - | - | 105,879 | ||||||||||||||||||||||||||||||
Acquisition of treasury stock
|
- | - | - | - | - | - | - | 78,486 | (237,159 | ) | (237,159 | ) | ||||||||||||||||||||||||||||
Dividends
|
- | - | - | - | - | - | (230,303 | ) | - | - | (230,303 | ) | ||||||||||||||||||||||||||||
Net income
|
- | - | - | - | - | - | 2,503,121 | - | - | 2,503,121 | ||||||||||||||||||||||||||||||
Change in unrealized gains on available for
|
||||||||||||||||||||||||||||||||||||||||
sale securities, net of tax
|
- | - | - | - | - | 225,152 | - | - | - | 225,152 | ||||||||||||||||||||||||||||||
Balance, December 31, 2011
|
- | - | 4,643,122 | 46,432 | 13,739,792 | 370,399 | 2,554,349 | 883,222 | (1,400,417 | ) | 15,310,555 | |||||||||||||||||||||||||||||
Stock-based compensation
|
- | - | - | - | 48,277 | - | - | - | - | 48,277 | ||||||||||||||||||||||||||||||
Exercise of stock options
|
- | - | 112,391 | 1,125 | 45,950 | - | - | - | - | 47,075 | ||||||||||||||||||||||||||||||
Shares deducted from exercise of stock
|
||||||||||||||||||||||||||||||||||||||||
options for payment of withholding taxes
|
- | - | (25,156 | ) | (253 | ) | (142,999 | ) | - | - | - | - | (143,252 | ) | ||||||||||||||||||||||||||
Excess tax benefit from exercise
|
||||||||||||||||||||||||||||||||||||||||
of stock options
|
- | - | - | - | 160,016 | - | - | - | - | 160,016 | ||||||||||||||||||||||||||||||
Acquisition of treasury stock
|
- | - | - | - | - | - | - | 6,236 | (27,128 | ) | (27,128 | ) | ||||||||||||||||||||||||||||
Dividends
|
- | - | - | - | - | - | (533,763 | ) | - | - | (533,763 | ) | ||||||||||||||||||||||||||||
Net income
|
- | - | - | - | - | - | 766,706 | - | - | 766,706 | ||||||||||||||||||||||||||||||
Change in unrealized gains on available for
|
||||||||||||||||||||||||||||||||||||||||
sale securities, net of tax
|
- | - | - | - | - | 653,330 | - | - | - | 653,330 | ||||||||||||||||||||||||||||||
Balance, December 31, 2012
|
- | $ | - | 4,730,357 | $ | 47,304 | $ | 13,851,036 | $ | 1,023,729 | $ | 2,787,292 | 889,458 | $ | (1,427,545 | ) | $ | 16,281,816 |
KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
|
||||||||
Consolidated Statements of Cash Flows
|
||||||||
Years ended December 31,
|
2012
|
2011
|
||||||
Cash flows provided by operating activities:
|
||||||||
Net income
|
$ | 766,706 | $ | 2,503,121 | ||||
Adjustments to reconcile net income to net cash provided by operations:
|
||||||||
Net realized gain on sale of investments
|
(288,068 | ) | (523,894 | ) | ||||
Depreciation and amortization
|
596,347 | 602,704 | ||||||
Amortization of bond premium, net
|
128,443 | 150,061 | ||||||
Stock-based compensation
|
48,277 | 105,879 | ||||||
Excess tax benefit from exercise of stock options
|
(160,016 | ) | - | |||||
Deferred income tax expense
|
(338,723 | ) | (325,106 | ) | ||||
(Increase) decrease in assets:
|
||||||||
Premiums receivable, net
|
(1,987,740 | ) | (777,199 | ) | ||||
Receivables - reinsurance contracts
|
1,734,535 | (559,806 | ) | |||||
Reinsurance receivables, net
|
(15,021,968 | ) | (3,160,620 | ) | ||||
Deferred acquisition costs
|
(1,034,105 | ) | (916,772 | ) | ||||
Other assets
|
(742,756 | ) | 876,464 | |||||
Increase (decrease) in liabilities:
|
||||||||
Loss and loss adjustment expenses
|
12,004,815 | 768,810 | ||||||
Unearned premiums
|
4,729,203 | 4,005,828 | ||||||
Advance premiums
|
66,081 | 134,217 | ||||||
Reinsurance balances payable
|
(941,301 | ) | 1,654,931 | |||||
Advance payments from catastrophe reinsurers
|
7,358,391 | - | ||||||
Deferred ceding commission revenue
|
894,631 | 762,886 | ||||||
Accounts payable, accrued expenses and other liabilities
|
(1,437,430 | ) | 1,951,985 | |||||
Net cash flows provided by operating activities
|
6,375,322 | 7,253,489 | ||||||
Cash flows used in investing activities:
|
||||||||
Purchase - fixed-maturity securities available for sale
|
(6,902,429 | ) | (9,483,472 | ) | ||||
Purchase - equity securities
|
(2,835,076 | ) | (3,602,345 | ) | ||||
Sale or maturity - fixed-maturity securities available for sale
|
4,322,120 | 3,532,245 | ||||||
Sale - equity securities
|
1,726,345 | 2,771,631 | ||||||
Recovery of loss from failed bank
|
- | 133,211 | ||||||
Collections of notes receivable and accrued interest - sale of businesses
|
70,370 | 311,508 | ||||||
Other investing activities
|
(342,714 | ) | (188,302 | ) | ||||
Net cash flows used in investing activities
|
(3,961,384 | ) | (6,525,524 | ) | ||||
Cash flows used in financing activities:
|
||||||||
Proceeds from line of credit
|
640,000 | 300,000 | ||||||
Principal payments on line of credit
|
(490,000 | ) | - | |||||
Principal payments on long-term debt (includes $407,000 to related parties in 2011)
|
- | (713,997 | ) | |||||
Proceeds from exercise of stock options
|
47,075 | - | ||||||
Withholding taxes paid on net exercise of stock options
|
(143,252 | ) | - | |||||
Excess tax benefit from exercise of stock options
|
160,016 | - | ||||||
Purchase of treasury stock
|
(27,128 | ) | (237,159 | ) | ||||
Dividends paid
|
(533,763 | ) | (230,303 | ) | ||||
Net cash flows used in financing activities
|
(347,052 | ) | (881,459 | ) |
KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
|
||||||||
Consolidated Statements of Cash Flows
|
||||||||
Years ended December 31,
|
2012
|
2011
|
||||||
Increase (decrease) in cash and cash equivalents
|
$ | 2,066,886 | $ | (153,494 | ) | |||
Cash and cash equivalents, beginning of period
|
173,126 | 326,620 | ||||||
Cash and cash equivalents, end of period
|
$ | 2,240,012 | $ | 173,126 | ||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid for income taxes
|
$ | 1,863,000 | $ | 1,175,371 | ||||
Cash paid for interest
|
$ | 81,716 | $ | 172,964 | ||||
Supplemental schedule of non-cash investing and financing activities:
|
||||||||
Shares deducted from exercise of stock options for payment of withholding taxes
|
$ | 143,252 | $ | - |
Years ended December 31,
|
||||||||
2012
|
2011
|
|||||||
Personal Lines
|
68.4 | % | 65.9 | % | ||||
Commercial Lines
|
16.2 | % | 14.2 | % | ||||
Commercial Automobile
|
11.6 | % | 15.6 | % | ||||
Total premiums earned subject to concentration
|
96.2 | % | 95.7 | % | ||||
Premiums earned not subject to concentration
|
3.8 | % | 4.3 | % | ||||
Total premiums earned
|
100.0 | % | 100.0 | % |
December 31, 2012
|
||||||||||||||||||||||||
Net
|
||||||||||||||||||||||||
|
Cost or
|
Gross
|
Gross Unrealized Losses
|
Unrealized
|
||||||||||||||||||||
Amortized
|
Unrealized
|
Less than 12
|
More than 12
|
Fair
|
Gains/
|
|||||||||||||||||||
Category
|
Cost
|
Gains
|
Months
|
Months
|
Value
|
(Losses)
|
||||||||||||||||||
Fixed-Maturity Securities:
|
||||||||||||||||||||||||
Political subdivisions of States,
|
||||||||||||||||||||||||
Territories and Possessions
|
$ | 5,219,092 | $ | 257,298 | $ | (1,574 | ) | $ | - | $ | 5,474,816 | $ | 255,724 | |||||||||||
Corporate and other bonds
|
||||||||||||||||||||||||
Industrial and miscellaneous
|
19,628,005 | 1,123,392 | (43,553 | ) | (722 | ) | 20,707,122 | 1,079,117 | ||||||||||||||||
Total fixed-maturity securities
|
24,847,097 | 1,380,690 | (45,127 | ) | (722 | ) | 26,181,938 | 1,334,841 | ||||||||||||||||
Equity Securities:
|
||||||||||||||||||||||||
Preferred stocks
|
1,475,965 | 19,512 | (11,130 | ) | - | 1,484,347 | 8,382 | |||||||||||||||||
Common stocks
|
3,598,012 | 353,782 | (145,899 | ) | - | 3,805,895 | 207,883 | |||||||||||||||||
Total equity securities
|
5,073,977 | 373,294 | (157,029 | ) | - | 5,290,242 | 216,265 | |||||||||||||||||
Total
|
$ | 29,921,074 | $ | 1,753,984 | $ | (202,156 | ) | $ | (722 | ) | $ | 31,472,180 | $ | 1,551,106 |
December 31, 2011
|
||||||||||||||||||||||||
Net
|
||||||||||||||||||||||||
|
Cost or
|
Gross
|
Gross Unrealized Losses
|
Unrealized
|
||||||||||||||||||||
Amortized
|
Unrealized
|
Less than 12
|
More than 12
|
Fair
|
Gains/
|
|||||||||||||||||||
Category
|
Cost
|
Gains
|
Months
|
Months
|
Value
|
(Losses)
|
||||||||||||||||||
Fixed-Maturity Securities:
|
||||||||||||||||||||||||
U.S. Treasury securities and
|
||||||||||||||||||||||||
obligations of U.S. government
|
||||||||||||||||||||||||
corporations and agencies
|
$ | 499,832 | $ | 50,356 | $ | - | $ | - | $ | 550,188 | $ | 50,356 | ||||||||||||
Political subdivisions of States,
|
||||||||||||||||||||||||
Territories and Possessions
|
5,868,743 | 301,559 | - | - | 6,170,302 | 301,559 | ||||||||||||||||||
Corporate and other bonds
|
||||||||||||||||||||||||
Industrial and miscellaneous
|
15,846,616 | 338,284 | (228,792 | ) | (107,666 | ) | 15,848,442 | 1,826 | ||||||||||||||||
Total fixed-maturity securities
|
22,215,191 | 690,199 | (228,792 | ) | (107,666 | ) | 22,568,932 | 353,741 | ||||||||||||||||
Equity Securities:
|
||||||||||||||||||||||||
Preferred stocks
|
1,428,435 | 36,762 | (76,969 | ) | (4,893 | ) | 1,383,335 | (45,100 | ) | |||||||||||||||
Common stocks
|
2,429,306 | 274,538 | (21,969 | ) | - | 2,681,875 | 252,569 | |||||||||||||||||
Total equity securities
|
3,857,741 | 311,300 | (98,938 | ) | (4,893 | ) | 4,065,210 | 207,469 | ||||||||||||||||
Total
|
$ | 26,072,932 | $ | 1,001,499 | $ | (327,730 | ) | $ | (112,559 | ) | $ | 26,634,142 | $ | 561,210 |
December 31, 2012
|
December 31, 2011
|
|||||||||||||||
Amortized
|
Amortized
|
|||||||||||||||
Remaining Time to Maturity
|
Cost
|
Fair Value
|
Cost
|
Fair Value
|
||||||||||||
Less than one year
|
$ | 546,952 | $ | 560,162 | $ | 1,063,493 | $ | 1,079,924 | ||||||||
One to five years
|
9,031,248 | 9,569,943 | 6,899,892 | 7,045,774 | ||||||||||||
Five to ten years
|
12,605,798 | 13,306,033 | 12,547,046 | 12,680,441 | ||||||||||||
More than 10 years
|
2,663,099 | 2,745,800 | 1,704,760 | 1,762,793 | ||||||||||||
Total
|
$ | 24,847,097 | $ | 26,181,938 | $ | 22,215,191 | $ | 22,568,932 |
December 31, 2012
|
||||||||||||||||||||||||
Cost or | Gross |
Gross Unrealized Losses
|
Net
Unrealized |
|||||||||||||||||||||
Amortized
|
Unrealized
|
Less than 12
|
More than 12
|
Fair
|
Gains/
|
|||||||||||||||||||
Category
|
Cost
|
Gains
|
Months
|
Months
|
Value
|
(Losses)
|
||||||||||||||||||
U.S. Treasury securities
|
$ | 606,281 | $ | 172,745 | $ | - | $ | - | $ | 779,026 | $ | 172,745 |
December 31, 2011
|
||||||||||||||||||||||||
Gross Unrealized Losses | ||||||||||||||||||||||||
Category
|
Cost or
Amortized |
Gross
Unrealized |
Less than 12
Months |
More than 12
Months |
Fair
Value |
Net
Unrealized |
||||||||||||||||||
U.S. Treasury securities
|
$ | 606,234 | $ | 171,719 | $ | - | $ | - | $ | 777,953 | $ | 171,719 |
Years ended
|
||||||||
December 31,
|
||||||||
2012
|
2011
|
|||||||
Income:
|
|
|
||||||
Fixed-maturity securities
|
$ | 951,895 | $ | 748,046 | ||||
Equity securities
|
268,034 | 168,813 | ||||||
Cash and cash equivalents
|
134 | 5,248 | ||||||
Other
|
23,857 | 11,974 | ||||||
Total
|
1,243,920 | 934,081 | ||||||
Expenses:
|
||||||||
Investment expenses
|
228,764 | 179,451 | ||||||
Net investment income
|
$ | 1,015,156 | $ | 754,630 |
Year ended
|
||||||||
December 31,
|
||||||||
2012
|
2011
|
|||||||
Fixed-maturity securities
|
||||||||
Gross realized gains
|
$ | 233,299 | $ | 190,855 | ||||
Gross realized losses
|
(52,933 | ) | (1,983 | ) | ||||
180,366 | 188,872 | |||||||
Equity securities
|
||||||||
Gross realized gains
|
137,271 | 292,687 | ||||||
Gross realized losses
|
(29,569 | ) | (90,876 | ) | ||||
107,702 | 201,811 | |||||||
Cash and short term investments (1)
|
- | 133,211 | ||||||
Net realized gains
|
$ | 288,068 | $ | 523,894 |
December 31, 2012
|
||||||||||||||||||||||||||||||||
Less than 12 months
|
12 months or more
|
Total
|
||||||||||||||||||||||||||||||
|
No. of
|
No. of
|
Aggregate
|
|||||||||||||||||||||||||||||
Fair
|
Unrealized
|
Positions
|
Fair
|
Unrealized
|
Positions
|
Fair
|
Unrealized
|
|||||||||||||||||||||||||
Category
|
Value
|
Losses
|
Held
|
Value
|
Losses
|
Held
|
Value
|
Losses
|
||||||||||||||||||||||||
Fixed-Maturity Securities:
|
||||||||||||||||||||||||||||||||
Political subdivisions of
|
||||||||||||||||||||||||||||||||
States, Territories and
|
||||||||||||||||||||||||||||||||
Possessions
|
$ | 202,798 | $ | (1,574 | ) | 1 | $ | - | $ | - | - | $ | 202,798 | $ | (1,574 | ) | ||||||||||||||||
Corporate and other
|
||||||||||||||||||||||||||||||||
bonds industrial and
|
||||||||||||||||||||||||||||||||
miscellaneous
|
4,025,551 | (43,553 | ) | 19 | 128,125 | (722 | ) | 1 | 4,153,676 | (44,275 | ) | |||||||||||||||||||||
Total fixed-maturity
|
||||||||||||||||||||||||||||||||
securities
|
$ | 4,228,349 | $ | (45,127 | ) | 20 | $ | 128,125 | $ | (722 | ) | 1 | $ | 4,356,474 | $ | (45,849 | ) | |||||||||||||||
Equity Securities:
|
||||||||||||||||||||||||||||||||
Preferred stocks
|
$ | 387,925 | $ | (11,130 | ) | 3 | $ | - | $ | - | - | $ | 387,925 | $ | (11,130 | ) | ||||||||||||||||
Common stocks
|
1,536,860 | (145,899 | ) | 9 | - | - | - | 1,536,860 | (145,899 | ) | ||||||||||||||||||||||
Total equity securities
|
$ | 1,924,785 | $ | (157,029 | ) | 12 | $ | - | $ | - | - | $ | 1,924,785 | $ | (157,029 | ) | ||||||||||||||||
Total
|
$ | 6,153,134 | $ | (202,156 | ) | 32 | $ | 128,125 | $ | (722 | ) | 1 | $ | 6,281,259 | $ | (202,878 | ) |
December 31, 2011
|
||||||||||||||||||||||||||||||||
Less than 12 months
|
12 months or more
|
Total
|
||||||||||||||||||||||||||||||
|
No. of
|
No. of
|
Aggregate
|
|||||||||||||||||||||||||||||
Fair
|
Unrealized
|
Positions
|
Fair
|
Unrealized
|
Positions
|
Fair
|
Unrealized
|
|||||||||||||||||||||||||
Category
|
Value
|
Losses
|
Held
|
Value
|
Losses
|
Held
|
Value
|
Losses
|
||||||||||||||||||||||||
Fixed-Maturity Securities:
|
||||||||||||||||||||||||||||||||
Corporate and other
|
|
|
|
|
|
|||||||||||||||||||||||||||
bonds industrial and
|
||||||||||||||||||||||||||||||||
miscellaneous
|
$ | 4,849,378 | $ | (228,792 | ) | $ | 26 | $ | 1,483,425 | $ | (107,666 | ) | $ | 7 | $ | 6,332,803 | $ | (336,458 | ) | |||||||||||||
Total fixed-maturity
|
||||||||||||||||||||||||||||||||
securities
|
$ | 4,849,378 | $ | (228,792 | ) | 26 | $ | 1,483,425 | $ | (107,666 | ) | 7 | $ | 6,332,803 | $ | (336,458 | ) | |||||||||||||||
Equity Securities:
|
||||||||||||||||||||||||||||||||
Preferred stocks
|
$ | 368,350 | $ | (76,969 | ) | 12 | $ | 189,364 | $ | (4,893 | ) | 5 | $ | 557,714 | $ | (81,862 | ) | |||||||||||||||
Common stocks
|
397,268 | (21,969 | ) | 14 | - | - | - | 397,268 | (21,969 | ) | ||||||||||||||||||||||
Total equity securities
|
$ | 765,618 | $ | (98,938 | ) | 26 | $ | 189,364 | $ | (4,893 | ) | 5 | $ | 954,982 | $ | (103,831 | ) | |||||||||||||||
Total
|
$ | 5,614,996 | $ | (327,730 | ) | 52 | $ | 1,672,789 | $ | (112,559 | ) | 12 | $ | 7,287,785 | $ | (440,289 | ) |
December 31, 2012
|
||||||||||||||||
($ in thousands)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Fixed-maturity investments available for sale
|
||||||||||||||||
Political subdivisions of
|
||||||||||||||||
States, Territories and
|
||||||||||||||||
Possessions
|
$ | - | $ | 5,475 | $ | - | $ | 5,475 | ||||||||
Corporate and other
|
||||||||||||||||
bonds industrial and
|
||||||||||||||||
miscellaneous
|
11,600 | 9,107 | - | 20,707 | ||||||||||||
Total fixed maturities
|
11,600 | 14,582 | - | 26,182 | ||||||||||||
Equity investments
|
5,290 | - | - | 5,290 | ||||||||||||
Total investments
|
$ | 16,890 | $ | 14,582 | $ | - | $ | 31,472 |
December 31, 2011
|
||||||||||||||||
($ in thousands)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Fixed-maturity investments available for sale
|
||||||||||||||||
U.S. Treasury securities
|
||||||||||||||||
and obligations of U.S.
|
||||||||||||||||
government corporations
|
||||||||||||||||
and agencies
|
$ | 550 | $ | - | $ | - | $ | 550 | ||||||||
Political subdivisions of
|
||||||||||||||||
States, Territories and
|
||||||||||||||||
Possessions
|
- | 6,171 | - | 6,171 | ||||||||||||
Corporate and other
|
||||||||||||||||
bonds industrial and
|
||||||||||||||||
miscellaneous
|
8,465 | 7,168 | 215 | 15,848 | ||||||||||||
Total fixed maturities
|
9,015 | 13,339 | 215 | 22,569 | ||||||||||||
Equity investments
|
4,065 | - | - | 4,065 | ||||||||||||
Total investments
|
$ | 13,080 | $ | 13,339 | $ | 215 | $ | 26,634 |
Years ended
|
||||||||
December 31,
|
||||||||
2012
|
2011
|
|||||||
Beginning balance, January 1
|
$ | 215 | $ | 237 | ||||
Total unrealized (losses)
|
||||||||
included in other comprehensive income
|
- | (22 | ) | |||||
Net transfers out of Level 3
|
(215 | ) | - | |||||
Ending balance, December 31
|
$ | - | $ | 215 |
December 31, 2012
|
December 31, 2011
|
|||||||||||||||
Carrying Value
|
Fair Value
|
Carrying Value
|
Fair Value
|
|||||||||||||
Fixed-maturity investments held to maturity
|
$ | 606,281 | $ | 779,026 | $ | 606,234 | $ | 777,953 | ||||||||
Cash and cash equivalents
|
2,240,012 | 2,240,012 | 173,126 | 173,126 | ||||||||||||
Premiums receivable
|
7,766,825 | 7,766,825 | 5,779,085 | 5,779,085 | ||||||||||||
Receivables - reinsurance contracts
|
- | - | 1,734,535 | 1,734,535 | ||||||||||||
Reinsurance receivables
|
38,902,782 | 38,902,782 | 23,880,814 | 23,880,814 | ||||||||||||
Notes receivable-sale of business
|
323,141 | 323,141 | 393,511 | 393,511 | ||||||||||||
Real estate, net of accumulated depreciation
|
1,696,924 | 1,720,000 | 1,477,639 | 1,510,000 | ||||||||||||
Reinsurance balances payable
|
1,820,527 | 1,820,527 | 2,761,828 | 2,761,828 | ||||||||||||
Advance payments from catastrophe reinsurers
|
7,358,391 | 7,358,391 | - | - | ||||||||||||
Notes payable (including related parties)
|
1,197,000 | 1,197,000 | 1,047,000 | 1,047,000 |
December 31, 2012
|
December 31, 2011
|
|||||||||||||||||||||||||||
Useful
|
Gross
|
Net
|
Gross
|
Net
|
||||||||||||||||||||||||
Life
|
Carrying
|
Accumulated
|
Carrying
|
Carrying
|
Accumulated
|
Carrying
|
||||||||||||||||||||||
(in yrs)
|
Value
|
Amortization
|
Amount
|
Value
|
Amortization
|
Amount
|
||||||||||||||||||||||
Insurance license
|
- | $ | 500,000 | $ | - | $ | 500,000 | $ | 500,000 | $ | - | $ | 500,000 | |||||||||||||||
Customer relationships
|
10 | 3,400,000 | 1,190,000 | 2,210,000 | 3,400,000 | 850,000 | 2,550,000 | |||||||||||||||||||||
Assembled workforce
|
7 | 950,000 | 475,042 | 474,958 | 950,000 | 339,328 | 610,672 | |||||||||||||||||||||
Total
|
$ | 4,850,000 | $ | 1,665,042 | $ | 3,184,958 | $ | 4,850,000 | $ | 1,189,328 | $ | 3,660,672 |
2013
|
$ | 475,714 | ||
2014
|
475,714 | |||
2015
|
475,714 | |||
2016
|
407,816 | |||
2017
|
340,000 | |||
Thereafter
|
510,000 | |||
$ | 2,684,958 |
Unpaid
|
Paid
|
|||||||||||||||
($ in thousands)
|
Losses
|
Losses
|
Total
|
Security
|
||||||||||||
December 31, 2012
|
||||||||||||||||
Maiden Reinsurace Company
|
$ | 8,173 | $ | 2,989 | $ | 11,162 | $ | 6,503 | (1) | |||||||
SCOR Reinsurance Company
|
4,437 | 1,495 | 5,932 | - | ||||||||||||
Motors Insurance Corporation
|
1,550 | 49 | 1,599 | 1,214 | (1) | |||||||||||
Sirius American Insurance Company
|
1,406 | 18 | 1,424 | - | ||||||||||||
Swiss Reinsurance America Corporation
|
1,705 | 756 | 2,461 | - | ||||||||||||
Allied World Assurance Company
|
808 | 372 | 1,180 | - | ||||||||||||
Others
|
341 | 113 | 454 | 91 | (2) | |||||||||||
Total
|
$ | 18,420 | $ | 5,792 | $ | 24,212 | $ | 7,808 | ||||||||
December 31, 2011
|
||||||||||||||||
Maiden Reinsurace Company
|
$ | 3,534 | $ | 514 | $ | 4,048 | $ | 8,156 | (1) | |||||||
SCOR Reinsurance Company
|
2,046 | 272 | 2,318 | - | ||||||||||||
Motors Insurance Corporation
|
1,730 | 228 | 1,958 | 1,923 | (1) | |||||||||||
Sirius American Insurance Company
|
993 | 67 | 1,060 | - | ||||||||||||
Others
|
1,657 | 536 | 2,193 | 360 | (2) | |||||||||||
Total
|
$ | 9,960 | $ | 1,617 | $ | 11,577 | $ | 10,439 |
(1) Secured pursuant to collateralized trust agreements.
|
(2) Guaranteed by an irrevocable letter of credit.
|
Years ended
|
||||||||
December 31,
|
||||||||
2012
|
2011
|
|||||||
Provisional ceding commissions earned
|
$ | 8,516,240 | $ | 6,916,027 | ||||
Contingent ceding commissions earned
|
1,173,915 | 3,708,687 | ||||||
$ | 9,690,155 | $ | 10,624,714 |
December 31, 2012
|
December 31, 2011
|
|||||||||||||||||||||||
Total
|
Current
|
Total
|
Current
|
|||||||||||||||||||||
Note
|
Maturities
|
Long-Term
|
Note
|
Maturities
|
Long-Term
|
|||||||||||||||||||
Sale of Pennsylvania stores
|
$ | 320,833 | $ | 33,814 | $ | 287,019 | $ | 351,861 | $ | 31,028 | $ | 320,833 | ||||||||||||
Sale of Franchise business
|
- | - | - | 37,797 | 37,797 | - | ||||||||||||||||||
320,833 | 33,814 | 287,019 | 389,658 | 68,825 | 320,833 | |||||||||||||||||||
Accrued interest
|
2,308 | 2,308 | - | 3,853 | 3,853 | - | ||||||||||||||||||
Total
|
$ | 323,141 | $ | 36,122 | $ | 287,019 | $ | 393,511 | $ | 72,678 | $ | 320,833 |
Year ended
|
||||||||
December 31,
|
||||||||
2012
|
2011
|
|||||||
Net deferred acquisition costs net of ceding
|
||||||||
commission revenue, beginning of year
|
$ | 553,374 | $ | 399,488 | ||||
Cost incurred and deferred:
|
||||||||
Commissions and brokerage
|
8,087,355 | 6,863,504 | ||||||
Other underwriting and acquisition costs
|
3,012,611 | 2,316,928 | ||||||
Ceding commission revenue
|
(9,410,871 | ) | (7,678,913 | ) | ||||
Net deferred acquisition costs
|
1,689,095 | 1,501,519 | ||||||
Amortization
|
(1,549,621 | ) | (1,347,633 | ) | ||||
139,474 | 153,886 | |||||||
Net deferred acquisition costs net of ceding
|
||||||||
commission revenue, end of year
|
$ | 692,848 | $ | 553,374 |
December 31,
|
||||||||
2012
|
2011
|
|||||||
Deferred acquisition costs
|
$ | 5,569,878 | $ | 4,535,773 | ||||
Deferred ceding commission revenue
|
(4,877,030 | ) | (3,982,399 | ) | ||||
Balance at end of period
|
$ | 692,848 | $ | 553,374 |
Accumulated
|
||||||||||||
Cost
|
Depreciation
|
Net
|
||||||||||
December 31, 2012
|
|
|
|
|||||||||
Building
|
$ | 1,648,838 | $ | (152,976 | ) | $ | 1,495,862 | |||||
Land
|
153,097 | - | 153,097 | |||||||||
Furniture
|
138,115 | (66,570 | ) | 71,545 | ||||||||
Computer equipment and software
|
336,851 | (219,447 | ) | 117,404 | ||||||||
Automobile
|
81,394 | (50,880 | ) | 30,514 | ||||||||
Total
|
$ | 2,358,295 | $ | (489,873 | ) | $ | 1,868,422 | |||||
December 31, 2011
|
||||||||||||
Building
|
$ | 1,457,543 | $ | (112,001 | ) | $ | 1,345,542 | |||||
Land
|
132,097 | - | 132,097 | |||||||||
Furniture
|
132,323 | (52,034 | ) | 80,289 | ||||||||
Computer equipment and software
|
212,224 | (184,050 | ) | 28,174 | ||||||||
Automobile
|
81,394 | (21,155 | ) | 60,239 | ||||||||
Total
|
$ | 2,015,581 | $ | (369,240 | ) | $ | 1,646,341 |
Direct
|
Assumed
|
Ceded
|
Net
|
|||||||||||||
Year ended December 31, 2012
|
|
|
|
|||||||||||||
Premiums written
|
$ | 49,251,630 | $ | 23,967 | $ | (29,715,971 | ) | $ | 19,559,626 | |||||||
Change in unearned premiums
|
(4,724,193 | ) | (5,010 | ) | 2,386,188 | (2,343,015 | ) | |||||||||
Premiums earned
|
$ | 44,527,437 | $ | 18,957 | $ | (27,329,783 | ) | $ | 17,216,611 | |||||||
Year ended December 31, 2011
|
||||||||||||||||
Premiums written
|
$ | 40,734,767 | $ | 10,990 | $ | (24,449,655 | ) | $ | 16,296,102 | |||||||
Change in unearned premiums
|
(4,005,312 | ) | (516 | ) | 2,578,472 | (1,427,356 | ) | |||||||||
Premiums earned
|
$ | 36,729,455 | $ | 10,474 | $ | (21,871,183 | ) | $ | 14,868,746 |
Gross
|
Reinsurance
|
|||||||
Liability
|
Receivables
|
|||||||
December 31, 2012
|
||||||||
Case-basis reserves
|
$ | 21,190,141 | $ | 13,284,613 | ||||
Loss adjustment expenses
|
2,502,169 | 1,064,420 | ||||||
IBNR reserves
|
6,793,222 | 4,070,661 | ||||||
Recoverable on unpaid losses
|
18,419,694 | |||||||
Recoverable on paid losses
|
- | 5,792,405 | ||||||
Total loss and loss adjustment expenses
|
$ | 30,485,532 | 24,212,099 | |||||
Unearned premiums
|
14,690,683 | |||||||
Total reinsurance receivables
|
$ | 38,902,782 | ||||||
December 31, 2011
|
||||||||
Case-basis reserves
|
$ | 11,467,967 | $ | 6,148,765 | ||||
Loss adjustment expenses
|
2,117,242 | 1,017,983 | ||||||
IBNR reserves
|
4,895,508 | 2,793,586 | ||||||
Recoverable on unpaid losses
|
9,960,334 | |||||||
Recoverable on paid losses
|
- | 1,615,981 | ||||||
Total loss and loss adjustment expenses
|
$ | 18,480,717 | 11,576,315 | |||||
Unearned premiums
|
12,304,499 | |||||||
Total reinsurance receivables
|
$ | 23,880,814 |
Years ended
|
||||||||
December 31,
|
||||||||
2012
|
2011
|
|||||||
Balance at beginning of period
|
$ | 18,480,717 | $ | 17,711,907 | ||||
Less reinsurance recoverables
|
(9,960,334 | ) | (10,431,415 | ) | ||||
Net balance, beginning of period
|
8,520,383 | 7,280,492 | ||||||
Incurred related to:
|
||||||||
Current year
|
10,460,000 | 8,297,998 | ||||||
Prior years
|
774,713 | 273,060 | ||||||
Total incurred
|
11,234,713 | 8,571,058 | ||||||
Paid related to:
|
||||||||
Current year
|
4,419,000 | 4,108,010 | ||||||
Prior years
|
3,270,258 | 3,223,157 | ||||||
Total paid
|
7,689,258 | 7,331,167 | ||||||
|
||||||||
Net balance at end of period
|
12,065,838 | 8,520,383 | ||||||
Add reinsurance recoverables
|
18,419,694 | 9,960,334 | ||||||
Balance at end of period
|
$ | 30,485,532 | $ | 18,480,717 |
Accident Year
|
||||||
Product Line
|
Most Recent
|
1st Prior
|
All Other
|
|||
Fire
|
Loss Ratio
|
Loss Development
|
Loss Development
|
|||
Homeowners
|
Loss Ratio
|
Loss Development
|
Loss Development
|
|||
Two to Four Family
|
Loss Ratio
|
Loss Development
|
Loss Development
|
|||
Commercial multiple-peril property
|
Loss Ratio
|
Loss Development
|
Loss Development
|
|||
Commercial multiple-peril liability
|
Loss Ratio
|
Loss Development
|
Loss Development
|
|||
Other Liability
|
Loss Ratio
|
Loss Development
|
Loss Development
|
|||
Commercial Auto Liability
|
Loss Ratio
|
Loss Development
|
Loss Development
|
|||
Auto Physical Damage
|
Loss Ratio
|
Loss Development
|
Loss Development
|
|||
Personal Auto Liability
|
Loss Ratio
|
Loss Development
|
Loss Development
|
December 31, 2012
|
December 31, 2011
|
|||||||||||||||||||||||
Less
|
Less
|
|||||||||||||||||||||||
Total
|
Current
|
Long-Term
|
Total
|
Current
|
Long-Term
|
|||||||||||||||||||
Debt
|
Maturities
|
Debt
|
Debt
|
Maturities
|
Debt
|
|||||||||||||||||||
Notes payable
|
$ | 747,000 | $ | - | $ | 747,000 | $ | 747,000 | $ | - | $ | 747,000 | ||||||||||||
Bank line of credit
|
450,000 | 450,000 | - | 300,000 | 300,000 | - | ||||||||||||||||||
$ | 1,197,000 | $ | 450,000 | $ | 747,000 | $ | 1,047,000 | $ | 300,000 | $ | 747,000 |
Less Principal Prepayments
|
||||||||||||
Balance
December 31, 2012
|
||||||||||||
Balance
|
Year Ended
|
and
|
||||||||||
December 31, 2010
|
December 31, 2011
|
December 31, 2011
|
||||||||||
Barry Goldstein IRA (Mr. Goldstein is Chairman of the Board, President
|
||||||||||||
and Chief Executive Officer, and principal stockholder of the Company)
|
$ | 150,000 | $ | 60,000 | $ | 90,000 | ||||||
Kidstone LLC, a limited liability company owned by Mr. Goldstein, along
|
||||||||||||
with Steven Shapiro (a director of KICO), and a family member of Sam
|
||||||||||||
Yedid (a director of KICO)
|
120,000 | 120,000 | - | |||||||||
Jay Haft, a director of the Company
|
50,000 | 20,000 | 30,000 | |||||||||
A member of the family of Michael Feinsod, a director of the Company
|
100,000 | 40,000 | 60,000 | |||||||||
Mr. Yedid and members of his family
|
295,000 | 139,000 | 156,000 | |||||||||
A member of the family of Floyd Tupper, a director of KICO
|
70,000 | 28,000 | 42,000 | |||||||||
Total related party transactions
|
$ | 785,000 | $ | 407,000 | $ | 378,000 |
Dividend Yield
|
0.00 | % | ||
Volatility
|
50.89% - 89.27 | % | ||
Risk-Free Interest Rate
|
.61 | % | ||
Expected Life
|
5 years
|
Stock Options
|
Number of Shares
|
Weighted Average Exercise Price per Share
|
Weighted Average Remaining Contractual Term
|
Aggregate Intrinsic Value
|
||||||||||||
Outstanding at January 1, 2012
|
393,865 | $ | 2.32 | 2.28 | $ | 498,913 | ||||||||||
Granted
|
10,000 | $ | 4.81 | - | $ | 600 | ||||||||||
Exercised
|
(168,750 | ) | $ | 2.12 | - | $ | 515,281 | |||||||||
Forfeited
|
- | $ | - | - | $ | - | ||||||||||
Outstanding at December 31, 2012
|
235,115 | $ | 2.58 | 2.24 | $ | 539,485 | ||||||||||
Vested and Exercisable at December 31, 2012
|
165,398 | $ | 2.48 | 2.13 | $ | 395,556 |
●
|
Policy acquisition costs are charged to operations in the year such costs are incurred, rather than being deferred and amortized as premiums are earned over the terms of the policies.
|
●
|
Ceding commission revenues are earned when ceded premiums are written except for ceding commission revenues in excess of anticipated acquisition costs, which are deferred and amortized as ceded premiums are earned. GAAP requires that all ceding commission revenues be earned as the underlying ceded premiums are earned over the term of the reinsurance agreements.
|
●
|
Certain assets including certain receivables, a portion of the net deferred tax asset, prepaid expenses and furniture and equipment are not admitted.
|
●
|
Investments in fixed-maturity securities are valued at National Association of Insurance Commissioners (“NAIC”) value for statutory financial purposes, which is primarily amortized cost. GAAP requires certain investments in fixed-maturity securities classified as available for sale, to be reported at fair value.
|
●
|
Certain amounts related to ceded reinsurance are reported on a net basis within the statutory basis financial statements. GAAP requires these amounts to be shown gross.
|
●
|
For SAP purposes, changes in deferred income taxes relating to temporary differences between net income for financial reporting purposes and taxable income are recognized as a separate component of gains and losses in surplus rather than included in income tax expense or benefit as required under GAAP.
|
Years ended December 31,
|
2012
|
2011
|
||||||
Current federal income tax expense
|
$ | 641,857 | $ | 1,394,090 | ||||
Current state income tax expense
|
(225 | ) | 19,529 | |||||
Deferred federal and state income tax expense
|
(338,723 | ) | (325,106 | ) | ||||
Provision for income taxes
|
$ | 302,909 | $ | 1,088,513 |
Years ended December 31,
|
2012
|
2011
|
||||||||||||||
Computed expected tax expense
|
$ | 363,669 | 34.0 | % | $ | 1,221,156 | 34.0 | % | ||||||||
State taxes, net of Federal benefit
|
(44,687 | ) | (4.2 | ) | 1,270 | - | ||||||||||
State valuation allowance
|
104,325 | 9.8 | - | - | ||||||||||||
Permanent differences
|
||||||||||||||||
Dividends received deduction
|
(64,274 | ) | (6.0 | ) | (39,613 | ) | (1.1 | ) | ||||||||
Non-taxable investment income
|
(68,667 | ) | (6.4 | ) | (84,930 | ) | (2.4 | ) | ||||||||
Stock-based compensation expense
|
16,414 | 1.5 | 35,999 | 1.0 | ||||||||||||
Other permanent differences
|
25,956 | 2.4 | (21,548 | ) | 2.4 | |||||||||||
Prior year tax matters
|
(46,906 | ) | (4.4 | ) | (50,886 | ) | (1.4 | ) | ||||||||
Other
|
17,079 | 1.6 | 27,065 | (2.2 | ) | |||||||||||
Total tax
|
$ | 302,909 | 28.3 | % | $ | 1,088,513 | 30.3 | % |
December 31,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
Deferred tax asset:
|
|
|||||||
Net operating loss carryovers (1)
|
$ | 264,648 | $ | 276,312 | ||||
Claims reserve discount
|
313,544 | 220,354 | ||||||
Unearned premium
|
811,413 | 647,596 | ||||||
Deferred ceding commission revenue
|
1,658,190 | 1,354,016 | ||||||
Other
|
10,921 | 4,583 | ||||||
Total deferred tax assets
|
3,058,716 | 2,502,861 | ||||||
Deferred tax liability:
|
||||||||
Investment in KICO (2)
|
1,169,000 | 1,169,000 | ||||||
Deferred acquisition costs
|
1,893,759 | 1,542,163 | ||||||
Intangibles
|
1,082,886 | 1,244,628 | ||||||
Depreciation and amortization
|
152,576 | 133,411 | ||||||
Reinsurance recoverable
|
20,400 | 20,400 | ||||||
Net unrealized appreciation of securities - available for sale
|
527,376 | 172,155 | ||||||
Investment income
|
- | 10,543 | ||||||
Total deferred tax liabilities
|
4,845,997 | 4,292,300 | ||||||
Net deferred income tax liability
|
$ | (1,787,281 | ) | $ | (1,789,439 | ) |
(1)
|
The deferred tax assets from net operating loss carryovers are as follows:
|
December 31,
|
December 31,
|
|||||||||
Type of NOL
|
2012
|
2011
|
Expiration
|
|||||||
State only (A)
|
$ | 380,810 | $ | 284,749 |
December 31, 2032
|
|||||
Valuation allowance
|
(146,762 | ) | (42,437 | ) | ||||||
State only, net of valuation allowance
|
234,048 | 242,312 | ||||||||
Amount subject to Annual Limitation, federal only (B)
|
30,600 | 34,000 |
December 31, 2019
|
|||||||
Total deferred tax asset from net operating loss carryovers
|
$ | 264,648 | $ | 276,312 |
(2)
|
Deferred tax liability - investment in KICO
|
Change in net deferred income tax liabilities
|
$ | (2,158 | ) | |
Deferred tax expense allocated to other comprehensive income
|
336,565 | |||
Deferred income tax provision
|
$ | (338,723 | ) |
Year ended
|
||||||||
December 31,
|
||||||||
2012
|
2011
|
|||||||
Weighted average number of shares outstanding
|
3,806,697 | 3,837,190 | ||||||
Effect of dilutive securities, common share equivalents
|
65,063 | 83,594 | ||||||
Weighted average number of shares outstanding,
|
||||||||
used for computing diluted earnings per share
|
3,871,760 | 3,920,784 |
KINGSTONE INSURANCE COMPANY | |||
By:
|
/s/ Victor Brodsky | ||
Victor Brodsky | |||
Chief Financial Officer | |||
/s/ Barry B. Goldstein | |||
Barry B. Goldstein | |||
Name of Subsidiary
|
State of Incorporation
|
Barry Scott Companies, Inc.(1)
|
Delaware
|
Blast Acquisition Corp.
|
Delaware
|
Blast BSA Inc. (2)
|
New York
|
Blast DA, Inc. (2)
|
Delaware
|
Intandem Corp.
|
New York
|
Payments Inc.
|
New York
|
Kingstone Insurance Company
|
New York
|
CMIC Properties, Inc. (3)
|
New York
|
15 Joys Lane, LLC (4)
|
New York
|
Comutual Services LLC (3)
|
New York
|
(1)
|
A wholly-owned subsidiary of Blast Acquisition Corp.
|
(2)
|
A wholly-owned subsidiary of Barry Scott Companies, Inc.
|
(3)
|
A wholly-owned subsidiary of Kingstone Insurance Company
|
(4)
|
A wholly-owned subsidiary of CMIC Properties, Inc.
|
I, Barry B. Goldstein, certify that:
|
||
1.
|
I have reviewed this Annual Report on Form 10-K of Kingstone Companies, Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: April 1, 2013
|
||
/s/ Barry B. Goldstein | ||
Barry B. Goldstein
|
||
Chief Executive Officer
|
I, Victor Brodsky, certify that:
|
||
1.
|
I have reviewed this Annual Report on Form 10-K of Kingstone Companies, Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: April 1, 2013
|
||
/s/ Victor Brodsky | ||
Victor Brodsky
Chief Financial Officer
|
Date: April 1, 2013
|
||
/s/ Barry B. Goldstein | ||
Barry B. Goldstein
|
||
Chief Executive Officer
|
/s/ Victor Brodsky | ||
Victor Brodsky
Chief Financial Officer
|
13. Stockholders' Equity (Tables)
|
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of weighted average assumptions used | The following weighted average assumptions were used for grants during the year ended December 31, 2012:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Options Activity | A summary of option activity under the Companys 2005 Plan for the year ended December 31, 2012 is as follows:
|
6. Intangibles (Details) (USD $)
|
Dec. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Gross Carrying Value | $ 4,850,000 | $ 4,850,000 |
Accumulated Amortization | 1,665,042 | 1,189,328 |
Net Carrying Amount | 3,184,958 | 3,660,672 |
Insurance license [Member]
|
||
Gross Carrying Value | 500,000 | 500,000 |
Accumulated Amortization | ||
Net Carrying Amount | 500,000 | 500,000 |
Customer relationships [Member]
|
||
Gross Carrying Value | 3,400,000 | 3,400,000 |
Accumulated Amortization | 1,190,000 | 850,000 |
Net Carrying Amount | 2,210,000 | 2,550,000 |
Useful Life (in yrs) | 10 years | |
Assembled workforce [Member]
|
||
Gross Carrying Value | 950,000 | 950,000 |
Accumulated Amortization | 475,042 | 339,328 |
Net Carrying Amount | $ 474,958 | $ 610,672 |
Useful Life (in yrs) | 7 years |
3. Investments (Details 4) (USD $)
|
12 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Fixed-maturity securities: | ||
Gross realized gains | $ 233,299 | $ 190,855 |
Gross realized losses | (52,933) | (1,983) |
Total | 180,366 | 188,872 |
Equity securities: | ||
Gross realized gains | 137,271 | 292,687 |
Gross realized losses | (29,569) | (90,876) |
Total equity securities | 107,702 | 201,811 |
Cash and short term investments | 133,211 | |
Net realized gains | $ 288,068 | $ 523,894 |
6. Intangibles (Details 1) (USD $)
|
Dec. 31, 2012
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2013 | $ 475,714 |
2014 | 475,714 |
2015 | 475,714 |
2016 | 407,816 |
2017 | 340,000 |
Thereafter | 510,000 |
Total | $ 2,684,958 |
16. Income Taxes (Details 3) (USD $)
|
Dec. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Income Taxes Details 3 | ||
State only (A) | $ 380,810 | $ 284,749 |
Valuation allowance | (146,762) | 42,437 |
State only, net of valuation allowance | 234,048 | 242,312 |
Amount subject to Annual Limitation, Federal only (B) | 30,600 | 34,000 |
Total deferred tax asset from net operating loss carryovers | $ 264,648 | $ 276,312 |
State only (A) expiration date | December 31, 2027 | |
Amount subject to Annual Limitation, Federal only (B) expiration date | December 31, 2019 |
3. Investments (Details 2) (US Treasury Securities, USD $)
|
Dec. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
US Treasury Securities
|
||
Cost or Amortized Cost | $ 606,281 | $ 606,234 |
Gross Unrealized Gains | 172,745 | 171,719 |
Gross Unrealized Losses-Less than 12 Months | ||
Gross Unrealized Loss-More than 12 Months | ||
Fair Value | 779,026 | 777,953 |
Net Unrealized Gains/(Losses) | $ 172,745 | $ 171,719 |
7. Reinsurance (Tables)
|
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of approximate reinsurance recoverables | Approximate reinsurance recoverables on unpaid and paid losses by reinsurer are as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Ceding commissions earned | Ceding commissions earned consists of the following:
|
16. Income Taxes (Details 4) (USD $)
|
12 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Income Taxes Details 4 | ||
Change in net deferred income tax liabilities | $ (2,158) | |
Deferred tax expense allocated to other comprehensive income | (336,565) | (115,988) |
Deferred income tax provision | $ (338,723) | $ (325,106) |
13. Stockholders' Equity (Details Narrative) (USD $)
|
12 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Stockholders Equity Details Narrative | ||
Dividends Declared | $ 533,763 | $ 230,303 |
Compensation Expense | 48,000 | 106,000 |
Stock-based compensation expense related to stock options net of estimated forfeitures | 21.00% | |
weighted average estimated fair value of stock options granted | $ 2.47 | |
Intrisic Value-Options Exercised | 515,281 | |
Options Exercised - Cash proceeds | 47,075 | |
Options for the purchase of shares of Common Stock | 22,500 | |
Options net Exercises | 146,250 | |
Unamortized compensation cost related to unvested stock option awards | 26,000 | 55,000 |
Unamortized compensation cost expected to be recognized over a remaining weighted-average vesting period | 1 year 9 months 16 days | |
Fair value of shares vested | $ 135,000 | $ 127,000 |
Shares reserved under the 2005 Plan | 143,635 |
7. Reinsurance (Details) (USD $)
|
Dec. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Unpaid Losses | $ 18,420,000 | $ 9,960,000 |
Paid Losses | 5,792,000 | 1,617,000 |
Total | 24,212,000 | 11,577,000 |
Security | 7,808,000 | 10,439,000 |
Maiden Reinsurace Company [Member]
|
||
Unpaid Losses | 8,173,000 | 3,534,000 |
Paid Losses | 2,989,000 | 514,000 |
Total | 11,162,000 | 4,048,000 |
Security | 6,503,000 | 8,156,000 |
SCOR Reinsurance Company [Member]
|
||
Unpaid Losses | 4,437,000 | 2,046,000 |
Paid Losses | 1,495,000 | 272,000 |
Total | 5,932,000 | 2,318,000 |
Security | ||
Motors Insurance Corporation [Member]
|
||
Unpaid Losses | 1,550,000 | 1,730,000 |
Paid Losses | 49,000 | 228,000 |
Total | 1,599,000 | 1,958,000 |
Security | 1,214,000 | 1,923,000 |
Sirius American Insurance Company [Member]
|
||
Unpaid Losses | 1,406,000 | 993,000 |
Paid Losses | 18,000 | 67,000 |
Total | 1,424,000 | 1,060,000 |
Security | ||
Swiss Reinsurance America Corporation [Member]
|
||
Unpaid Losses | 1,705,000 | |
Paid Losses | 756,000 | |
Total | 2,461,000 | |
Security | ||
Allied World Assurance Company [Member]
|
||
Unpaid Losses | 808,000 | |
Paid Losses | 372,000 | |
Total | 1,180,000 | |
Security | ||
Others [Member]
|
||
Unpaid Losses | 341,000 | 1,657,000 |
Paid Losses | 113,000 | 536,000 |
Total | 454,000 | 2,193,000 |
Security | $ 91,000 | $ 360,000 |
16. Income Taxes (Details 1) (USD $)
|
12 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Income Taxes Details | ||
Computed expected tax expense | $ 363,669 | $ 1,221,156 |
State taxes, net of Federal benefit | (44,687) | 1,270 |
State valuation allowance | 104,325 | |
Permanent differences | ||
Dividends received deduction | (64,274) | (39,613) |
Non-taxable investment income | (68,667) | (84,930) |
Stock based compensation expense | 16,414 | 35,999 |
Other permanent differences | 25,956 | (21,548) |
Prior year tax matters | (46,906) | (50,886) |
Other | 17,079 | 27,065 |
Total tax | $ 302,909 | $ 1,088,513 |
Computed expected tax expense | 34.00% | 34.00% |
State taxes, net of Federal benefit | (4.20%) | |
State valuation allowance | 9.80% | |
Permanent differences | ||
Dividends received deduction | (6.00%) | (1.10%) |
Non-taxable investment income | (6.40%) | (2.40%) |
Stock based compensation expense | 1.50% | 1.00% |
Other permanent differences | 2.40% | 2.40% |
Prior year tax matters | (4.40%) | (1.40%) |
Other | 1.60% | (2.20%) |
Total tax | 28.30% | 30.30% |
17. Employee Benefit Plans (Details Narrative) (USD $)
|
12 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Employee Benefit Plans Details Narrative | ||
Compensation expense | $ 264,000 | $ 352,000 |
Additional contributions expense | $ 155,000 | $ 251,000 |
16. Income Taxes (Details 2) (USD $)
|
Dec. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Deferred tax asset: | ||
Net operating loss carryovers (1) | $ 264,648 | $ 276,312 |
Claims reserve discount | 313,544 | 220,354 |
Unearned premium | 811,413 | 647,596 |
Deferred ceding commission revenue | 1,658,190 | 1,354,016 |
Other | 10,921 | 4,583 |
Total deferred tax assets | 3,058,716 | 2,502,861 |
Deferred tax liability: | ||
Investment in KICO (2) | 1,169,000 | 1,169,000 |
Deferred acquisition costs | 1,893,759 | 1,542,163 |
Intangibles | 1,082,886 | 1,244,628 |
Depreciation and amortization | 152,576 | 133,411 |
Reinsurance recoverable | 20,400 | 20,400 |
Net unrealized appreciation of securities - available for sale | 527,376 | 172,155 |
Investment income | 10,543 | |
Total deferred tax liabilities | 4,845,997 | 4,292,300 |
Net deferred income tax liability | $ (1,787,281) | $ (1,789,439) |
13. Stockholders' Equity (Details)
|
12 Months Ended |
---|---|
Dec. 31, 2012
|
|
Dividend Yield | 0.00% |
Risk-Free Interest Rate | 0.61% |
Expected Life | 5 years |
Minimum [Member]
|
|
Volatility | 50.89% |
Maximum [Member]
|
|
Volatility | 89.27% |
19. Net Income Per Common Share
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
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Earnings per common share: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
19. Net Income Per Common Share | Basic net earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the impact of common shares issuable upon exercise of stock options. The computation of diluted earnings per share excludes those options with an exercise price in excess of the average market price of the Companys common shares during the periods presented.
The computation of diluted earnings per share excludes outstanding options in periods where the exercise of such options would be anti-dilutive. For the years ended December 31, 2012 and 2011 there were 225,115 and 269,432 options, respectively, with an exercise price below the average market price of the Companys Common Stock during the period.
The reconciliation of the weighted average number of shares of Common Stock used in the calculation of basic and diluted earnings per common share for the years ended December 31, 2012 and 2011 follows:
|
3. Investments (Details Narrative) (USD $)
|
12 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Investments Details Narrative | ||
Sale and maturity of fixed-maturity securities | $ 4,322,120 | $ 3,532,245 |
Sale of equity securities | $ 1,726,345 | $ 2,771,631 |
2. Accounting Policies and Basis of Presentation (Details)
|
3 Months Ended | 12 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Dec. 31, 2011
|
Dec. 31, 2012
|
Dec. 31, 2012
Personal Lines [Member]
|
Dec. 31, 2011
Personal Lines [Member]
|
Dec. 31, 2012
Commercial Lines [Member]
|
Dec. 31, 2011
Commercial Lines [Member]
|
Dec. 31, 2012
Commercial Automobile [Member]
|
Dec. 31, 2011
Commercial Automobile [Member]
|
|
Total premiums earned subject to concentration | 0.957 | 0.962 | 0.684 | 0.659 | 0.162 | 0.142 | 0.116 | 0.156 |
Premiums earned not subject to concentration | 0.043 | 0.038 | ||||||
Total premiums earned | 1.000 | 1.000 |
16. Income Taxes (Details) (USD $)
|
12 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Income Taxes Details | ||
Current federal income tax expense | $ 641,857 | $ 1,394,090 |
Current state income tax expense | (225) | 19,529 |
Deferred federal and state income tax expense | (338,723) | (325,106) |
Provision for income taxes | $ 302,909 | $ 1,088,513 |
11. Property and Casualty Insurance Activity (Tables)
|
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earned Premiums | Premiums written, ceded and earned are as follows:
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Schedule of components of the liability for loss and LAE expenses and related reinsurance receivables |
|
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Schedule of a reconciliation of the beginning and ending balances for unpaid losses and loss adjustment expenses | The following table provides a reconciliation of the beginning and ending balances for unpaid losses and loss adjustment expenses (LAE):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of method used by product line and accident year | The table below shows the method used by product line and accident year to select the estimated year-ending loss reserves:
|
4. Fair Value Measurements (Details 1) (USD $)
|
12 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Fair Value Disclosures [Abstract] | ||
Beginning balance, January 1 | $ 215 | $ 237 |
Total unrealized (losses) included in other comprehensive income | (22) | |
Net transfers out of Level 3 | (215) | |
Ending balance, December 31 | $ 215 |
11. Property and Casulty Insurance Activity (Details 3)
|
12 Months Ended |
---|---|
Dec. 31, 2012
|
|
Fire
|
|
Most Recent | Loss Ratio |
1st Prior | Loss Development |
All Other | Loss Development |
Homeowners
|
|
Most Recent | Loss Ratio |
1st Prior | Loss Development |
All Other | Loss Development |
Two to Four Family
|
|
Most Recent | Loss Ratio |
1st Prior | Loss Development |
All Other | Loss Development |
Commercial multiple-peril property
|
|
Most Recent | Loss Ratio |
1st Prior | Loss Development |
All Other | Loss Development |
Commercial multiple-peril liability
|
|
Most Recent | Loss Ratio |
1st Prior | Loss Development |
All Other | Loss Development |
Other Liability
|
|
Most Recent | Loss Ratio |
1st Prior | Loss Development |
All Other | Loss Development |
Commercial Auto Liability
|
|
Most Recent | Loss Ratio |
1st Prior | Loss Development |
All Other | Loss Development |
Auto Physical Damage
|
|
Most Recent | Loss Ratio |
1st Prior | Loss Development |
All Other | Loss Development |
Personal Auto Liability
|
|
Most Recent | Loss Ratio |
1st Prior | Loss Development |
All Other | Loss Development |
9. Deferred Acquisition Costs and Deferred Ceding Commission Revenue (Details) (USD $)
|
12 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Deferred Acquisition Costs And Deferred Ceding Commission Revenue Details | ||
Net deferred acquisition costs net of ceding commission revenue, beginning of year | $ 553,374 | $ 399,488 |
Cost incurred and deferred: | ||
Commissions and brokerage | 8,087,355 | 6,863,504 |
Other underwriting and acquisition costs | 3,012,611 | 2,316,928 |
Ceding commission revenue | (9,410,871) | (7,678,913) |
Net deferred acquisition costs | 1,689,095 | 1,501,519 |
Amortization | (1,549,621) | (1,347,633) |
Deferred acquisition costs | 139,474 | 153,886 |
Net deferred acquisition costs net of ceding commission revenue, end of year | $ 692,848 | $ 553,374 |
3. Investments (Details 3) (USD $)
|
12 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Income: | ||
Fixed-maturity securities | $ 951,895 | $ 748,046 |
Equity securities | 268,034 | 168,813 |
Cash and cash equivalents | 134 | 5,248 |
Other | 23,857 | 11,974 |
Total | 1,243,920 | 934,081 |
Expenses: | ||
Investment expenses | 228,764 | 179,451 |
Net investment income | $ 1,015,156 | $ 754,630 |
3. Investments
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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Text Block [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3. Investments | Available for Sale Securities
The amortized cost and fair value of investments in available for sale fixed-maturity securities and equities as of December 31, 2012 and 2011 are summarized as follows:
A summary of the amortized cost and fair value of the Companys investments in available for sale fixed-maturity securities by contractual maturity as of December 31, 2012 and 2011 is shown below:
The actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalties.
Held to Maturity Securities
The amortized cost and fair value of investments in held to maturity fixed-maturity securities as of December 31, 2012 and 2011 are summarized as follows:
All held to maturity securities are held in trust pursuant to the New York State Department of Financial Services minimum funds requirement.
Contractual maturities of all held to maturity securities are greater than ten years.
Investment Income
Major categories of the Companys net investment income are summarized as follows:
Proceeds from the sale and maturity of fixed-maturity securities were $4,322,120 and $3,532,245 for the years ended December 31, 2012 and 2011, respectively.
Proceeds from the sale of equity securities were $1,726,345 and $2,771,631 for the years ended December 31, 2012 and 2011, respectively.
The Companys net realized gains and losses on investments are summarized as follows:
(1) Realized gain on cash and short term investments is a partial recovery from the FDIC of an amount previously written off in 2009 due to the failure of Waterfield Bank.
Impairment Review
The Company regularly reviews its fixed-maturity securities and equity securities portfolios to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of investments. In evaluating potential impairment, management considers, among other criteria: (i) the current fair value compared to amortized cost or cost, as appropriate; (ii) the length of time the securitys fair value has been below amortized cost or cost; (iii) specific credit issues related to the issuer such as changes in credit rating, reduction or elimination of dividends or non-payment of scheduled interest payments; (iv) managements intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in value to cost; and (v) current economic conditions.
OTTI losses are recorded in the condensed consolidated statement of operations and comprehensive income as net realized losses on investments and result in a permanent reduction of the cost basis of the underlying investment. The determination of OTTI is a subjective process and different judgments and assumptions could affect the timing of loss realization. There are 33 securities at December 31, 2012 that account for the gross unrealized loss. The Company determined that none of the unrealized losses were deemed to be OTTI for its portfolio of fixed maturity investments and equity securities for the years ended December 31, 2012 and 2011. Significant factors influencing the Companys determination that unrealized losses were temporary included the magnitude of the unrealized losses in relation to each securitys cost, the nature of the investment and managements intent and ability to retain the investment for a period of time sufficient to allow for anticipated recovery of fair value to the Companys cost basis.
The Company held securities with unrealized losses representing declines that were considered temporary at December 31, 2012 and 2011 as follows:
|
9. Deferred Acquisition Costs and Deferred Ceding Commission Revenue (Details 1) (USD $)
|
Dec. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Deferred Acquisition Costs And Deferred Ceding Commission Revenue Details 1 | ||
Deferred acquisition costs | $ 5,569,878 | $ 4,535,773 |
Deferred ceding commission revenue | 1,658,190 | 1,354,016 |
Balance at end of period | $ 692,848 | $ 553,374 |