þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
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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
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification Number)
|
Large accelerated filer o
|
Accelerated filero
|
Non-accelerated filer o
(Do not check if a smaller reporting company)
|
Smaller reporting company þ
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PAGE
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49 | |||||
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49 | |||||
49 | |||||
50 | |||||
Signatures | |||||
EXHIBIT 3(a) | |||||
EXHIBIT 3(b) | |||||
EXHIBIT 31.2 | |||||
EXHIBIT 32 | |||||
EXHIBIT 101.INS XBRL Instance Document | |||||
EXHIBIT 101.SCH XBRL Taxonomy Extension Schema | |||||
EXHIBIT 101.CAL XBRL Taxonomy Extension Calculation Linkbase | |||||
EXHIBIT 101.DEF XBRL Taxonomy Extension Definition Linkbase | |||||
EXHIBIT 101.LAB XBRL Taxonomy Extension Label Linkbase | |||||
EXHIBIT 101.PRE XBRL Taxonomy Extension Presentation Linkbase |
Condensed Consolidated Balance Sheets
|
||||||||
June 30,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Fixed-maturity securities, held-to-maturity, at amortized cost (fair value of $702,063 at
|
||||||||
June 30, 2013 and $779,026 at December 31, 2012)
|
$ | 606,292 | $ | 606,281 | ||||
Fixed-maturity securities, available-for-sale, at fair value (amortized cost of $21,974,185
|
||||||||
at June 30, 2013 and $24,847,097 at December 31, 2012)
|
22,395,861 | 26,181,938 | ||||||
Equity securities, available-for-sale, at fair value (cost of $6,875,848
|
||||||||
at June 30, 2013 and $5,073,977 at December 31, 2012)
|
7,190,415 | 5,290,242 | ||||||
Total investments
|
30,192,568 | 32,078,461 | ||||||
Cash and cash equivalents
|
4,384,700 | 2,240,012 | ||||||
Premiums receivable, net of provision for uncollectible amounts
|
8,367,010 | 7,766,825 | ||||||
Reinsurance receivables, net of provision for uncollectible amounts
|
34,533,032 | 38,902,782 | ||||||
Deferred acquisition costs
|
6,206,252 | 5,569,878 | ||||||
Intangible assets, net
|
2,947,101 | 3,184,958 | ||||||
Property and equipment, net of accumulated depreciation
|
1,961,852 | 1,868,422 | ||||||
Other assets
|
1,183,968 | 1,887,060 | ||||||
Total assets
|
$ | 89,776,483 | $ | 93,498,398 | ||||
Liabilities
|
||||||||
Loss and loss adjustment expenses
|
$ | 28,357,468 | $ | 30,485,532 | ||||
Unearned premiums
|
29,435,926 | 26,012,363 | ||||||
Advance premiums
|
841,922 | 610,872 | ||||||
Reinsurance balances payable
|
5,338,056 | 1,820,527 | ||||||
Advance payments from catastrophe reinsurers
|
- | 7,358,391 | ||||||
Deferred ceding commission revenue
|
5,464,760 | 4,877,030 | ||||||
Notes payable (includes payable to related parties of $378,000
|
||||||||
at June 30, 2013 and December 31, 2012)
|
877,000 | 1,197,000 | ||||||
Accounts payable, accrued expenses and other liabilities
|
2,600,978 | 3,067,586 | ||||||
Deferred income taxes
|
1,281,494 | 1,787,281 | ||||||
Total liabilities
|
74,197,604 | 77,216,582 | ||||||
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 June 30, 2013 and December 31, 2012;
|
||||||||
outstanding 3,810,899 shares at June 30, 2013 and 3,840,899 shares at December 31, 2012
|
47,304 | 47,304 | ||||||
Capital in excess of par
|
13,863,974 | 13,851,036 | ||||||
Accumulated other comprehensive income
|
485,919 | 1,023,729 | ||||||
Retained earnings
|
2,739,127 | 2,787,292 | ||||||
17,136,324 | 17,709,361 | |||||||
Treasury stock, at cost, 919,458 shares at June 30, 2013 and 889,458 shares
|
||||||||
at December 31, 2012
|
(1,557,445 | ) | (1,427,545 | ) | ||||
Total stockholders' equity
|
15,578,879 | 16,281,816 | ||||||
Total liabilities and stockholders' equity
|
$ | 89,776,483 | $ | 93,498,398 |
Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)
|
||||||||||||||||
For the Three Months Ended
|
For the Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Revenues
|
||||||||||||||||
Net premiums earned
|
$ | 4,676,282 | $ | 4,164,572 | $ | 9,299,497 | $ | 8,137,107 | ||||||||
Ceding commission revenue
|
2,334,431 | 2,910,858 | 4,628,142 | 5,814,514 | ||||||||||||
Net investment income
|
275,031 | 229,879 | 558,318 | 497,396 | ||||||||||||
Net realized gain on sale of investments
|
249,893 | 6,160 | 355,018 | 45,560 | ||||||||||||
Other income
|
243,825 | 222,691 | 457,815 | 461,746 | ||||||||||||
Total revenues
|
7,779,462 | 7,534,160 | 15,298,790 | 14,956,323 | ||||||||||||
Expenses
|
||||||||||||||||
Loss and loss adjustment expenses
|
3,241,797 | 2,408,505 | 5,711,438 | 4,687,019 | ||||||||||||
Commission expense
|
2,079,084 | 1,805,810 | 4,194,904 | 3,477,417 | ||||||||||||
Other underwriting expenses
|
1,931,611 | 1,994,576 | 4,144,956 | 3,852,322 | ||||||||||||
Other operating expenses
|
227,833 | 287,442 | 471,143 | 574,329 | ||||||||||||
Depreciation and amortization
|
153,985 | 150,472 | 306,971 | 297,021 | ||||||||||||
Interest expense
|
17,890 | 20,111 | 39,105 | 40,896 | ||||||||||||
Total expenses
|
7,652,200 | 6,666,916 | 14,868,517 | 12,929,004 | ||||||||||||
Income from operations before taxes
|
127,262 | 867,244 | 430,273 | 2,027,319 | ||||||||||||
Income tax expense
|
59,161 | 306,928 | 171,164 | 701,585 | ||||||||||||
Net income
|
68,101 | 560,316 | 259,109 | 1,325,734 | ||||||||||||
Other comprehensive income, net of tax
|
||||||||||||||||
Gross unrealized investment holding (losses)
|
||||||||||||||||
gains arising during period
|
(1,260,607 | ) | 294,590 | (814,864 | ) | 741,755 | ||||||||||
Income tax benefit (expense) related to items of
|
||||||||||||||||
other comprehensive income
|
428,607 | (100,161 | ) | 277,054 | (252,197 | ) | ||||||||||
Comprehensive (loss) income
|
$ | (763,899 | ) | $ | 754,745 | $ | (278,701 | ) | $ | 1,815,292 | ||||||
Earnings per common share:
|
||||||||||||||||
Basic
|
$ | 0.02 | $ | 0.15 | $ | 0.07 | $ | 0.35 | ||||||||
Diluted
|
$ | 0.02 | $ | 0.15 | $ | 0.07 | $ | 0.35 | ||||||||
Weighted average common shares outstanding
|
||||||||||||||||
Basic
|
3,827,712 | 3,789,592 | 3,834,269 | 3,780,351 | ||||||||||||
Diluted
|
3,906,432 | 3,883,779 | 3,911,650 | 3,780,351 | ||||||||||||
Dividends declared and paid per common share
|
$ | 0.04 | $ | 0.03 | $ | 0.08 | $ | 0.06 |
Consolidated Statement of Stockholders' Equity
|
||||||||||||||||||||||||||||||||||||||||
Six months ended June 30, 2013 (unaudited)
|
||||||||||||||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||||||||||||||
Other
|
||||||||||||||||||||||||||||||||||||||||
Capital
|
Comprehensive
|
|||||||||||||||||||||||||||||||||||||||
Preferred Stock
|
Common Stock
|
in Excess
|
Income
|
Retained
|
Treasury Stock
|
|||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
of Par
|
(Loss)
|
Earnings
|
Shares
|
Amount
|
Total
|
|||||||||||||||||||||||||||||||
Balance, January 1, 2013
|
- | $ | - | 4,730,357 | $ | 47,304 | $ | 13,851,036 | $ | 1,023,729 | $ | 2,787,292 | 889,458 | $ | (1,427,545 | ) | $ | 16,281,816 | ||||||||||||||||||||||
Stock-based compensation
|
- | - | - | - | 12,938 | - | - | - | - | 12,938 | ||||||||||||||||||||||||||||||
Acquisition of treasury stock
|
- | - | - | - | - | - | - | 30,000 | (129,900 | ) | (129,900 | ) | ||||||||||||||||||||||||||||
Dividends
|
- | - | - | - | - | - | (307,274 | ) | - | - | (307,274 | ) | ||||||||||||||||||||||||||||
Net income
|
- | - | - | - | - | - | 259,109 | - | - | 259,109 | ||||||||||||||||||||||||||||||
Change in unrealized gains on available
|
||||||||||||||||||||||||||||||||||||||||
for sale securities, net of tax
|
- | - | - | - | - | (537,810 | ) | - | - | - | (537,810 | ) | ||||||||||||||||||||||||||||
Balance, June 30, 2013
|
- | $ | - | 4,730,357 | $ | 47,304 | $ | 13,863,974 | $ | 485,919 | $ | 2,739,127 | 919,458 | $ | (1,557,445 | ) | $ | 15,578,879 |
Condensed Consolidated Statements of Cash Flows (Unaudited)
|
||||||||
Six months ended June 30,
|
2013
|
2012
|
||||||
Cash flows provided by operating activities:
|
||||||||
Net income
|
$ | 259,109 | $ | 1,325,734 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Net realized gain on sale of investments
|
(355,018 | ) | (45,560 | ) | ||||
Depreciation and amortization
|
306,971 | 297,021 | ||||||
Amortization of bond premium, net
|
89,558 | 66,998 | ||||||
Stock-based compensation
|
12,938 | 30,111 | ||||||
Excess tax benefit from exercise of stock options
|
- | (63,988 | ) | |||||
Deferred income tax expense
|
(228,734 | ) | (91,107 | ) | ||||
(Increase) decrease in operating assets:
|
||||||||
Premiums receivable, net
|
(600,185 | ) | (1,172,197 | ) | ||||
Receivables - reinsurance contracts
|
- | (1,689,224 | ) | |||||
Reinsurance receivables, net
|
4,369,750 | (2,285,592 | ) | |||||
Deferred acquisition costs
|
(636,374 | ) | (556,662 | ) | ||||
Other assets
|
686,387 | (348,303 | ) | |||||
(Decrease) increase in operating liabilities:
|
||||||||
Loss and loss adjustment expenses
|
(2,128,064 | ) | 2,317,377 | |||||
Unearned premiums
|
3,423,563 | 2,649,487 | ||||||
Advance premiums
|
231,050 | 5,309 | ||||||
Reinsurance balances payable
|
3,517,529 | 795,091 | ||||||
Advance payments from catastrophe reinsurers
|
(7,358,391 | ) | - | |||||
Deferred ceding commission revenue
|
587,730 | 485,115 | ||||||
Accounts payable, accrued expenses and other liabilities
|
(466,608 | ) | (1,255,201 | ) | ||||
Net cash flows provided by operating activities
|
1,711,211 | 464,409 | ||||||
Cash flows provided by investing activities:
|
||||||||
Purchase - fixed-maturity securities available-for-sale
|
(1,649,667 | ) | (915,228 | ) | ||||
Purchase - equity securities
|
(4,298,630 | ) | (853,000 | ) | ||||
Sale or maturity - fixed-maturity securities available-for-sale
|
4,557,745 | 1,837,698 | ||||||
Sale - equity securities
|
2,727,084 | 559,993 | ||||||
Other investing activities
|
(145,881 | ) | (10,676 | ) | ||||
Net cash flows provided by investing activities
|
1,190,651 | 618,787 | ||||||
Cash flows used in financing activities:
|
||||||||
Proceeds from line of credit
|
230,000 | 50,000 | ||||||
Principal payments on line of credit
|
(550,000 | ) | (100,000 | ) | ||||
Proceeds from exercise of stock options
|
- | 47,073 | ||||||
Withholding taxes paid on net exercise of stock options
|
- | (56,630 | ) | |||||
Excess tax benefit from exercise of stock options
|
- | 63,988 | ||||||
Purchase of treasury stock
|
(129,900 | ) | (8,200 | ) | ||||
Dividends paid
|
(307,274 | ) | (226,829 | ) | ||||
Net cash flows used in financing activities
|
(757,174 | ) | (230,598 | ) |
KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
|
||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited)
|
||||||||
Six months ended June 30,
|
2013
|
2012
|
||||||
Increase in cash and cash equivalents
|
$ | 2,144,688 | $ | 852,598 | ||||
Cash and cash equivalents, beginning of period
|
2,240,012 | 173,126 | ||||||
Cash and cash equivalents, end of period
|
$ | 4,384,700 | $ | 1,025,724 | ||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid for income taxes
|
$ | 564,000 | $ | 1,505,000 | ||||
Cash paid for interest
|
$ | 39,087 | $ | 41,202 |
June 30, 2013
|
||||||||||||||||||||||||
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)
|
||||||||||||||||||
(unaudited)
|
||||||||||||||||||||||||
Fixed-Maturity Securities:
|
||||||||||||||||||||||||
Political subdivisions of States,
|
||||||||||||||||||||||||
Territories and Possessions
|
$ | 5,192,989 | $ | 164,220 | $ | (80,990 | ) | $ | (11,909 | ) | $ | 5,264,309 | $ | 71,320 | ||||||||||
Corporate and other bonds
|
||||||||||||||||||||||||
Industrial and miscellaneous
|
16,781,196 | 598,017 | (247,662 | ) | - | 17,131,552 | 350,356 | |||||||||||||||||
Total fixed-maturity securities
|
21,974,185 | 762,237 | (328,652 | ) | (11,909 | ) | 22,395,861 | 421,676 | ||||||||||||||||
Equity Securities:
|
||||||||||||||||||||||||
Preferred stocks
|
3,493,001 | 9,239 | (89,440 | ) | - | 3,412,800 | (80,201 | ) | ||||||||||||||||
Common stocks
|
3,382,847 | 434,290 | (39,522 | ) | - | 3,777,615 | 394,768 | |||||||||||||||||
Total equity securities
|
6,875,848 | 443,529 | (128,962 | ) | - | 7,190,415 | 314,567 | |||||||||||||||||
Total
|
$ | 28,850,033 | $ | 1,205,766 | $ | (457,614 | ) | $ | (11,909 | ) | $ | 29,586,276 | $ | 736,243 |
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 |
June 30, 2013
|
December 31, 2012
|
|||||||||||||||
Amortized
|
Amortized
|
|||||||||||||||
Remaining Time to Maturity
|
Cost
|
Fair Value
|
Cost
|
Fair Value
|
||||||||||||
(unaudited)
|
||||||||||||||||
Less than one year
|
$ | 522,532 | $ | 515,556 | $ | 546,952 | $ | 560,162 | ||||||||
One to five years
|
8,029,987 | 8,396,602 | 9,031,248 | 9,569,943 | ||||||||||||
Five to ten years
|
10,436,021 | 10,612,222 | 12,605,798 | 13,306,033 | ||||||||||||
More than 10 years
|
2,985,645 | 2,871,481 | 2,663,099 | 2,745,800 | ||||||||||||
Total
|
$ | 21,974,185 | $ | 22,395,861 | $ | 24,847,097 | $ | 26,181,938 |
June 30, 2013
|
||||||||||||||||||||||||
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)
|
||||||||||||||||||
(unaudited)
|
||||||||||||||||||||||||
U.S. Treasury securities
|
$ | 606,292 | $ | 95,771 | $ | - | $ | - | $ | 702,063 | $ | 95,771 |
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)
|
||||||||||||||||||
U.S. Treasury securities
|
$ | 606,281 | $ | 172,745 | $ | - | $ | - | $ | 779,026 | $ | 172,745 |
Three months ended
|
Six months ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||
Income:
|
|
|
||||||||||||||
Fixed-maturity securities
|
$ | 234,977 | $ | 226,777 | $ | 495,012 | $ | 461,270 | ||||||||
Equity securities
|
93,389 | 62,310 | 179,844 | 148,239 | ||||||||||||
Cash and cash equivalents
|
- | (1,347 | ) | 29 | 59 | |||||||||||
Other
|
11,817 | 2 | 11,817 | 4 | ||||||||||||
Total
|
340,183 | 287,742 | 686,702 | 609,572 | ||||||||||||
Expenses:
|
||||||||||||||||
Investment expenses
|
65,152 | 57,863 | 128,384 | 112,176 | ||||||||||||
Net investment income
|
$ | 275,031 | $ | 229,879 | $ | 558,318 | $ | 497,396 |
Three months ended
|
Six months ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||
Fixed-maturity securities:
|
||||||||||||||||
Gross realized gains
|
$ | 104,241 | $ | 55,004 | $ | 181,217 | $ | 95,150 | ||||||||
Gross realized losses
|
(56,471 | ) | (54,404 | ) | (56,471 | ) | (54,404 | ) | ||||||||
47,770 | 600 | 124,746 | 40,746 | |||||||||||||
Equity securities:
|
||||||||||||||||
Gross realized gains
|
218,204 | 25,215 | 289,989 | 32,284 | ||||||||||||
Gross realized losses
|
(16,081 | ) | (19,655 | ) | (59,717 | ) | (27,470 | ) | ||||||||
202,123 | 5,560 | 230,272 | 4,814 | |||||||||||||
Net realized gains
|
$ | 249,893 | $ | 6,160 | $ | 355,018 | $ | 45,560 |
June 30, 2013
|
||||||||||||||||||||||||||||||||
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
|
||||||||||||||||||||||||
(unaudited)
|
||||||||||||||||||||||||||||||||
Fixed-Maturity Securities:
|
||||||||||||||||||||||||||||||||
Political subdivisions of
|
||||||||||||||||||||||||||||||||
States, Territories and
|
||||||||||||||||||||||||||||||||
Possessions
|
$ | 1,065,409 | $ | (80,990 | ) | 5 | $ | 254,051 | $ | (11,909 | ) | 3 | $ | 1,319,460 | $ | (92,899 | ) | |||||||||||||||
Corporate and other
|
||||||||||||||||||||||||||||||||
bonds industrial and
|
||||||||||||||||||||||||||||||||
miscellaneous
|
4,921,387 | (247,662 | ) | 24 | - | - | - | 4,921,387 | (247,662 | ) | ||||||||||||||||||||||
Total fixed-maturity
|
||||||||||||||||||||||||||||||||
securities
|
$ | 5,986,796 | $ | (328,652 | ) | 29 | $ | 254,051 | $ | (11,909 | ) | 3 | $ | 6,240,847 | $ | (340,561 | ) | |||||||||||||||
Equity Securities:
|
||||||||||||||||||||||||||||||||
Preferred stocks
|
$ | 2,704,500 | $ | (89,440 | ) | 10 | $ | - | $ | - | - | $ | 2,704,500 | $ | (89,440 | ) | ||||||||||||||||
Common stocks
|
577,170 | (39,522 | ) | 4 | - | - | - | 577,170 | (39,522 | ) | ||||||||||||||||||||||
Total equity securities
|
$ | 3,281,670 | $ | (128,962 | ) | 14 | $ | - | $ | - | - | $ | 3,281,670 | $ | (128,962 | ) | ||||||||||||||||
Total
|
$ | 9,268,466 | $ | (457,614 | ) | 43 | $ | 254,051 | $ | (11,909 | ) | 3 | $ | 9,522,517 | $ | (469,523 | ) |
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 | ) |
June 30, 2013
|
||||||||||||||||
($ in thousands)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
(unaudited)
|
||||||||||||||||
Fixed-maturity securities
|
||||||||||||||||
U.S. Treasury securities
|
||||||||||||||||
and obligations of U.S.
|
||||||||||||||||
government corporations
|
||||||||||||||||
and agencies
|
$ | - | $ | - | $ | - | $ | - | ||||||||
Political subdivisions of
|
||||||||||||||||
States, Territories and
|
||||||||||||||||
Possessions
|
- | 5,264 | - | 5,264 | ||||||||||||
Corporate and other
|
||||||||||||||||
bonds industrial and
|
||||||||||||||||
miscellaneous
|
8,765 | 8,367 | - | 17,132 | ||||||||||||
Total fixed maturities
|
8,765 | 13,631 | - | 22,396 | ||||||||||||
Equity securities
|
7,190 | - | - | 7,190 | ||||||||||||
Total investments
|
$ | 15,955 | $ | 13,631 | $ | - | $ | 29,586 |
December 31, 2012
|
||||||||||||||||
($ in thousands)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Fixed-maturity securities
|
||||||||||||||||
U.S. Treasury securities
|
||||||||||||||||
and obligations of U.S.
|
||||||||||||||||
government corporations
|
||||||||||||||||
and agencies
|
$ | - | $ | - | $ | - | $ | - | ||||||||
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 securities
|
5,290 | - | - | 5,290 | ||||||||||||
Total investments
|
$ | 16,890 | $ | 14,582 | $ | - | $ | 31,472 |
June 30, 2013
|
December 31, 2012
|
|||||||||||||||
Carrying Value
|
Fair Value
|
Carrying Value
|
Fair Value
|
|||||||||||||
(unaudited)
|
||||||||||||||||
Fixed-maturity investments held to maturity
|
$ | 606,292 | $ | 702,063 | $ | 606,281 | $ | 779,026 | ||||||||
Cash and cash equivalents
|
4,384,700 | 4,384,700 | 2,240,012 | 2,240,012 | ||||||||||||
Premiums receivable
|
8,367,010 | 8,367,010 | 7,766,825 | 7,766,825 | ||||||||||||
Reinsurance receivables
|
34,533,032 | 34,533,032 | 38,902,782 | 38,902,782 | ||||||||||||
Notes receivable-sale of business
|
306,478 | 306,478 | 323,141 | 323,141 | ||||||||||||
Real estate, net of accumulated depreciation
|
1,771,251 | 1,816,122 | 1,696,924 | 1,720,000 | ||||||||||||
Reinsurance balances payable
|
5,338,056 | 5,338,056 | 1,820,527 | 1,820,527 | ||||||||||||
Advance payments from catastrophe reinsurers
|
- | - | 7,358,391 | 7,358,391 | ||||||||||||
Notes payable (including related parties)
|
877,000 | 877,000 | 1,197,000 | 1,197,000 |
Direct
|
Assumed
|
Ceded
|
Net
|
|||||||||||||
Six months ended June 30, 2013 (unaudited)
|
|
|
|
|||||||||||||
Premiums written
|
$ | 28,725,957 | $ | 20,047 | $ | (17,781,254 | ) | $ | 10,964,750 | |||||||
Change in unearned premiums
|
(3,452,133 | ) | 28,569 | 1,758,311 | (1,665,253 | ) | ||||||||||
Premiums earned
|
$ | 25,273,824 | $ | 48,616 | $ | (16,022,943 | ) | $ | 9,299,497 | |||||||
Six months ended June 30, 2012 (unaudited)
|
||||||||||||||||
Premiums written
|
$ | 23,674,526 | $ | 3,199 | $ | (14,480,602 | ) | $ | 9,197,123 | |||||||
Change in unearned premiums
|
(2,653,399 | ) | 3,912 | 1,589,471 | (1,060,016 | ) | ||||||||||
Premiums earned
|
$ | 21,021,127 | $ | 7,111 | $ | (12,891,131 | ) | $ | 8,137,107 | |||||||
Three months ended June 30, 2013 (unaudited)
|
||||||||||||||||
Premiums written
|
$ | 15,881,121 | $ | 10,232 | $ | (9,897,589 | ) | $ | 5,993,764 | |||||||
Change in unearned premiums
|
(2,873,166 | ) | 1,128 | 1,554,556 | (1,317,482 | ) | ||||||||||
Premiums earned
|
$ | 13,007,955 | $ | 11,360 | $ | (8,343,033 | ) | $ | 4,676,282 | |||||||
Three months ended June 30, 2012 (unaudited)
|
||||||||||||||||
Premiums written
|
$ | 12,438,801 | $ | 1,799 | $ | (7,623,640 | ) | $ | 4,816,960 | |||||||
Change in unearned premiums
|
(1,681,258 | ) | 2,333 | 1,026,537 | (652,388 | ) | ||||||||||
Premiums earned
|
$ | 10,757,543 | $ | 4,132 | $ | (6,597,103 | ) | $ | 4,164,572 |
Six months ended
|
||||||||
June 30,
|
||||||||
2013
|
2012
|
|||||||
(unaudited)
|
||||||||
Balance at beginning of period
|
$ | 30,485,532 | $ | 18,480,717 | ||||
Less reinsurance recoverables
|
(18,419,694 | ) | (10,001,060 | ) | ||||
Net balance, beginning of period
|
12,065,838 | 8,479,657 | ||||||
Incurred related to:
|
||||||||
Current year
|
5,175,229 | 4,359,416 | ||||||
Prior years
|
536,209 | 327,603 | ||||||
Total incurred
|
5,711,438 | 4,687,019 | ||||||
Paid related to:
|
||||||||
Current year
|
1,416,181 | 933,939 | ||||||
Prior years
|
2,675,112 | 2,586,898 | ||||||
Total paid
|
4,091,293 | 3,520,837 | ||||||
|
||||||||
Net balance at end of period
|
13,685,983 | 9,645,839 | ||||||
Add reinsurance recoverables
|
14,671,485 | 11,152,255 | ||||||
Balance at end of period
|
$ | 28,357,468 | $ | 20,798,094 |
Three months ended
|
Six months ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||
Provisional ceding commissions earned
|
$ | 2,502,845 | $ | 2,074,732 | $ | 4,895,709 | $ | 4,059,715 | ||||||||
Contingent ceding commissions earned
|
(168,414 | ) | 836,126 | (267,567 | ) | 1,754,799 | ||||||||||
$ | 2,334,431 | $ | 2,910,858 | $ | 4,628,142 | $ | 5,814,514 |
June 30, 2013
|
December 31, 2012
|
|||||||||||||||||||||||
Less
|
Less
|
|||||||||||||||||||||||
Total
|
Current
|
Long-Term
|
Total
|
Current
|
Long-Term
|
|||||||||||||||||||
Debt
|
Maturities
|
Debt
|
Debt
|
Maturities
|
Debt
|
|||||||||||||||||||
(unaudited)
|
||||||||||||||||||||||||
Notes payable
|
$ | 747,000 | $ | - | $ | 747,000 | $ | 747,000 | $ | - | $ | 747,000 | ||||||||||||
Bank line of credit
|
130,000 | 130,000 | - | 450,000 | 450,000 | - | ||||||||||||||||||
$ | 877,000 | $ | 130,000 | $ | 747,000 | $ | 1,197,000 | $ | 450,000 | $ | 747,000 |
Barry Goldstein IRA (Mr. Goldstein is Chairman of the Board, President
|
||||
and Chief Executive Officer, and principal stockholder of the Company)
|
$ | 90,000 | ||
Jay Haft, a director of the Company
|
30,000 | |||
A member of the family of Michael Feinsod, a director of the Company
|
60,000 | |||
Mr. Yedid and members of his family
|
156,000 | |||
A member of the family of Floyd Tupper, a director of KICO
|
42,000 | |||
Total related party transactions
|
$ | 378,000 |
Stock Options
|
Number of
Shares
|
Weighted Average Exercise Price
per Share
|
Weighted Average Remaining
Contractual Term
|
Aggregate
Intrinsic Value
|
||||||||||||
Outstanding at January 1, 2013
|
235,115 | $ | 2.58 | 2.24 | $ | 539,485 | ||||||||||
Granted
|
- | $ | - | - | $ | - | ||||||||||
Exercised
|
- | $ | - | - | $ | - | ||||||||||
Forfeited
|
- | $ | - | - | $ | - | ||||||||||
Outstanding at June 30, 2013
|
235,115 | $ | 2.58 | 1.75 | $ | 631,775 | ||||||||||
Vested and Exercisable at June 30, 2013
|
212,615 | $ | 2.48 | 1.66 | $ | 581,875 |
June 30,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
(unaudited)
|
||||||||
Deferred tax asset:
|
||||||||
Net operating loss carryovers (1)
|
$ | 266,800 | $ | 264,648 | ||||
Claims reserve discount
|
355,646 | 313,544 | ||||||
Unearned premium
|
940,362 | 811,413 | ||||||
Deferred ceding commission revenue
|
1,858,019 | 1,658,190 | ||||||
Other
|
- | 10,921 | ||||||
Total deferred tax assets
|
3,420,827 | 3,058,716 | ||||||
Deferred tax liability:
|
||||||||
Investment in KICO (2)
|
1,169,000 | 1,169,000 | ||||||
Deferred acquisition costs
|
2,110,126 | 1,893,759 | ||||||
Intangibles
|
1,002,014 | 1,082,886 | ||||||
Depreciation and amortization
|
153,947 | 152,576 | ||||||
Reinsurance recoverable
|
- | 20,400 | ||||||
Net unrealized appreciation of securities - available for sale
|
250,426 | 527,376 | ||||||
Other
|
16,808 | - | ||||||
Total deferred tax liabilities
|
4,702,321 | 4,845,997 | ||||||
Net deferred income tax liability
|
$ | (1,281,494 | ) | $ | (1,787,281 | ) |
(1)
|
The deferred tax assets from net operating loss carryovers are as follows:
|
June 30,
|
December 31,
|
||||||||
Type of NOL
|
2013
|
2012
|
Expiration
|
||||||
State only (A)
|
$ | 405,725 | $ | 380,810 |
December 31, 2033
|
||||
Valuation allowance
|
(166,125 | ) | (146,762 | ) | |||||
State only, net of valuation allowance
|
239,600 | 234,048 | |||||||
Amount subject to Annual Limitation, federal only (B)
|
27,200 | 30,600 |
December 31, 2019
|
||||||
Total deferred tax asset from net operating loss carryovers
|
$ | 266,800 | $ | 264,648 |
(2)
|
Deferred tax liability - investment in KICO
|
Three months ended
|
Six months ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Weighted average number of shares outstanding | 3,827,712 | 3,789,592 | 3,834,269 | 3,780,351 | ||||||||||||
Effect of dilutive securities, common share equivalents | 78,720 | 94,187 | 77,381 | - | ||||||||||||
Weighted average number of shares outstanding used for computing diluted earnings per share | 3,906,432 | 3,883,779 | 3,911,650 | 3,780,351 |
Six months ended June 30,
|
||||||||||||||||
($ in thousands)
|
2013
|
2012
|
Change
|
Percent
|
||||||||||||
Revenues
|
||||||||||||||||
Direct written premiums
|
$ | 28,726 | $ | 23,675 | $ | 5,051 | 21.3 | % | ||||||||
Assumed written premiums
|
20 | 3 | 17 | 566.7 | % | |||||||||||
28,746 | 23,678 | 5,068 | 21.4 | % | ||||||||||||
Ceded written premiums
|
||||||||||||||||
Ceded to quota share treaties
|
15,863 | 13,473 | 2,390 | 17.7 | % | |||||||||||
Ceded to excess of loss treaties
|
597 | 422 | 175 | 41.5 | % | |||||||||||
Ceded to catastrophe treaties
|
996 | 586 | 410 | 70.0 | % | |||||||||||
Catastrophe reinstatement (1)
|
325 | - | 325 | n/a | ||||||||||||
Total ceded written premiums
|
17,781 | 14,481 | 3,300 | 22.8 | % | |||||||||||
Net written premiums
|
10,965 | 9,197 | 1,768 | 19.2 | % | |||||||||||
Change in net unearned premiums
|
(1,666 | ) | (1,060 | ) | (606 | ) | 57.2 | % | ||||||||
Net premiums earned
|
9,299 | 8,137 | 1,162 | 14.3 | % | |||||||||||
Ceding commission revenue
|
||||||||||||||||
Excluding the effect of catastrophes
|
6,475 | 6,968 | (493 | ) | (7.1 | ) % | ||||||||||
Effect of catastrophes (1)
|
(1,847 | ) | (1,153 | ) | (694 | ) | 60.2 | % | ||||||||
Total ceding commission revenue
|
4,628 | 5,815 | (1,187 | ) | (20.4 | ) % | ||||||||||
Net investment income
|
558 | 497 | 61 | 12.3 | % | |||||||||||
Net realized gain on investments
|
355 | 46 | 309 | 671.7 | % | |||||||||||
Other income
|
458 | 461 | (3 | ) | (0.7 | ) % | ||||||||||
Total revenues
|
15,298 | 14,956 | (342 | ) | 2.3 | % | ||||||||||
Expenses
|
||||||||||||||||
Loss and loss adjustment expenses
|
||||||||||||||||
Direct and assumed:
|
||||||||||||||||
Loss and loss adjustment expenses excluding the effect of catastrophes
|
13,762 | 9,314 | 4,448 | 47.8 | % | |||||||||||
Losses from catastrophes (1)
|
225 | - | 225 |
na
|
||||||||||||
Total direct and assumed loss and loss adjustment expenses
|
13,987 | 9,314 | 4,673 | 50.2 | % | |||||||||||
Ceded loss and loss adjustment expenses:
|
||||||||||||||||
Loss and loss adjustment expenses excluding the effect of catastrophes
|
8,207 | 4,627 | 3,580 | 77.4 | % | |||||||||||
Losses from catastrophes (1)
|
69 | - | 69 |
na
|
||||||||||||
Total ceded loss and loss adjustment expenses
|
8,276 | 4,627 | 3,649 | 78.9 | % | |||||||||||
Net loss and loss adjustment expenses:
|
||||||||||||||||
Loss and loss adjustment expenses excluding the effect of catastrophes
|
5,555 | 4,687 | 868 | 18.5 | % | |||||||||||
Losses from catastrophes (1)
|
156 | - | 156 |
na
|
||||||||||||
Net loss and loss adjustment expenses
|
5,711 | 4,687 | 1,024 | 21.8 | % | |||||||||||
Commission expense
|
4,195 | 3,477 | 718 | 20.6 | % | |||||||||||
Other underwriting expenses
|
4,145 | 3,852 | 293 | 7.6 | % | |||||||||||
Other operating expenses
|
471 | 574 | (103 | ) | (17.9 | ) % | ||||||||||
Depreciation and amortization
|
307 | 297 | 10 | 3.4 | % | |||||||||||
Interest expense
|
39 | 41 | (2 | ) | (4.9 | ) % | ||||||||||
Total expenses
|
14,868 | 12,928 | 1,940 | 15.0 | % | |||||||||||
Income from operations before taxes
|
430 | 2,028 | 1,598 | (78.8 | ) % | |||||||||||
Provision for income tax
|
171 | 702 | (531 | ) | (75.6 | ) % | ||||||||||
Net income
|
$ | 259 | $ | 1,326 | $ | (1,067 | ) | (80.5 | ) % |
Six months ended June 30,
|
||||||||||||||||
($ in thousands)
|
2013
|
2012
|
Change
|
Percent
|
||||||||||||
Provisional ceding commissions earned
|
$ | 4,896 | $ | 4,060 | $ | 836 | 20.6 | % | ||||||||
Contingent ceding commissions earned
|
||||||||||||||||
Contingent ceding commissions earned excluding
|
||||||||||||||||
the effect of catastrophes
|
1,579 | 2,908 | (1,329 | ) | (45.7 | ) % | ||||||||||
Effect of catastrophes on ceding commisions earned
|
(1,847 | ) | (1,153 | ) | (694 | ) | 60.2 | % | ||||||||
Contingent ceding commissions earned
|
(268 | ) | 1,755 | (2,023 | ) | (115.3 | ) % | |||||||||
Total ceding commission revenue
|
$ | 4,628 | $ | 5,815 | $ | (1,187 | ) | (20.4 | ) % |
Three months ended June 30,
|
||||||||||||||||
($ in thousands)
|
2013
|
2012
|
Change
|
Percent
|
||||||||||||
Revenues
|
||||||||||||||||
Direct written premiums
|
$ | 15,881 | $ | 12,439 | $ | 3,442 | 27.7 | % | ||||||||
Assumed written premiums
|
11 | 2 | 9 | 450.0 | % | |||||||||||
15,892 | 12,441 | 3,451 | 27.7 | % | ||||||||||||
Ceded written premiums
|
||||||||||||||||
Ceded to quota share treaties
|
8,821 | 7,093 | 1,728 | 24.4 | % | |||||||||||
Ceded to excess of loss treaties
|
335 | 220 | 115 | 52.3 | % | |||||||||||
Ceded to catastrophe treaties
|
557 | 311 | 246 | 79.1 | % | |||||||||||
Catastrophe reinstatement (1)
|
185 | - | 185 | n/a | ||||||||||||
Total ceded written premiums
|
9,898 | 7,624 | 2,274 | 29.8 | % | |||||||||||
Net written premiums
|
5,994 | 4,817 | 1,177 | 24.4 | % | |||||||||||
Change in net unearned premiums
|
(1,318 | ) | (652 | ) | (666 | ) | 102.1 | % | ||||||||
Net premiums earned
|
4,676 | 4,165 | 511 | 12.3 | % | |||||||||||
Ceding commission revenue
|
||||||||||||||||
Excluding the effect of catastrophes
|
3,265 | 3,797 | (532 | ) | (14.0 | ) % | ||||||||||
Effect of catastrophes (1)
|
(931 | ) | (886 | ) | (45 | ) | 5.1 | % | ||||||||
Total ceding commission revenue
|
2,334 | 2,911 | (577 | ) | (19.8 | ) % | ||||||||||
Net investment income
|
275 | 230 | 45 | 19.6 | % | |||||||||||
Net realized gain on investments
|
250 | 6 | 244 | 4,066.7 | % | |||||||||||
Other income
|
244 | 222 | 22 | 9.9 | % | |||||||||||
Total revenues
|
7,779 | 7,534 | 245 | 3.3 | % | |||||||||||
Expenses
|
||||||||||||||||
Loss and loss adjustment expenses
|
||||||||||||||||
Direct and assumed:
|
||||||||||||||||
Loss and loss adjustment expenses excluding the effect of catastrophes
|
6,237 | 4,347 | 1,890 | 43.5 | % | |||||||||||
Losses from catastrophes (1)
|
225 | - | 225 |
na
|
||||||||||||
Total direct and assumed loss and loss adjustment expenses
|
6,462 | 4,347 | 2,115 | 48.7 | % | |||||||||||
Ceded loss and loss adjustment expenses:
|
||||||||||||||||
Loss and loss adjustment expenses excluding the effect of catastrophes
|
3,152 | 1,938 | 1,214 | 62.6 | % | |||||||||||
Losses from catastrophes (1)
|
69 | - | 69 |
na
|
||||||||||||
Total ceded loss and loss adjustment expenses
|
3,221 | 1,938 | 1,283 | 66.2 | % | |||||||||||
Net loss and loss adjustment expenses:
|
||||||||||||||||
Loss and loss adjustment expenses excluding the effect of catastrophes
|
3,085 | 2,409 | 676 | 28.1 | % | |||||||||||
Losses from catastrophes (1)
|
156 | - | 156 |
na
|
||||||||||||
Net loss and loss adjustment expenses
|
3,241 | 2,409 | 832 | 34.5 | % | |||||||||||
Commission expense
|
2,079 | 1,806 | 273 | 15.1 | % | |||||||||||
Other underwriting expenses
|
1,932 | 1,995 | (63 | ) | (3.2 | ) % | ||||||||||
Other operating expenses
|
228 | 287 | (59 | ) | (20.6 | ) % | ||||||||||
Depreciation and amortization
|
154 | 150 | 4 | 2.7 | % | |||||||||||
Interest expense
|
18 | 20 | (2 | ) | (10.0 | ) % | ||||||||||
Total expenses
|
7,652 | 6,667 | 985 | 14.8 | % | |||||||||||
Income from operations before taxes
|
127 | 867 | (740 | ) | (85.4 | ) % | ||||||||||
Provision for income tax
|
59 | 307 | (248 | ) | (80.8 | ) % | ||||||||||
Net income
|
$ | 68 | $ | 560 | $ | (492 | ) | (87.9 | ) % |
Three months ended June 30,
|
||||||||||||||||
($ in thousands)
|
2013
|
2012
|
Change
|
Percent
|
||||||||||||
Provisional ceding commissions earned
|
$ | 2,503 | $ | 2,075 | $ | 428 | 20.6 | % | ||||||||
Contingent ceding commissions earned
|
||||||||||||||||
Contingent ceding commissions earned excluding
|
||||||||||||||||
the effect of catastrophes
|
762 | 1,722 | (960 | ) | (55.7 | ) % | ||||||||||
Effect of catastrophes on ceding commisions earned
|
(931 | ) | (886 | ) | (45 | ) | 5.1 | % | ||||||||
Contingent ceding commissions earned
|
(169 | ) | 836 | (1,005 | ) | (120.2 | ) % | |||||||||
Total ceding commission revenue
|
$ | 2,334 | $ | 2,911 | $ | (577 | ) | (19.8 | ) % |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenues
|
||||||||||||||||
Net premiums earned
|
$ | 4,676,282 | $ | 4,164,572 | $ | 9,299,497 | $ | 8,137,107 | ||||||||
Ceding commission revenue
|
2,334,431 | 2,910,858 | 4,628,142 | 5,814,514 | ||||||||||||
Net investment income
|
275,031 | 229,879 | 558,318 | 497,396 | ||||||||||||
Net realized gain on investments
|
249,893 | 6,160 | 355,018 | 45,560 | ||||||||||||
Other income
|
152,111 | 124,247 | 268,792 | 239,297 | ||||||||||||
Total revenues
|
7,687,748 | 7,435,716 | 15,109,767 | 14,733,874 | ||||||||||||
Expenses
|
||||||||||||||||
Loss and loss adjustment expenses
|
3,241,797 | 2,408,505 | 5,711,438 | 4,687,019 | ||||||||||||
Commission expense
|
2,079,084 | 1,805,810 | 4,194,904 | 3,477,417 | ||||||||||||
Other underwriting expenses
|
1,931,611 | 1,994,576 | 4,144,956 | 3,852,321 | ||||||||||||
Depreciation and amortization
|
153,139 | 150,183 | 305,278 | 296,442 | ||||||||||||
Total expenses
|
7,405,631 | 6,359,074 | 14,356,576 | 12,313,199 | ||||||||||||
Income from operations
|
282,117 | 1,076,642 | 753,191 | 2,420,675 | ||||||||||||
Income tax expense
|
96,161 | 353,760 | 252,164 | 770,597 | ||||||||||||
Net income
|
$ | 185,956 | $ | 722,882 | $ | 501,027 | $ | 1,650,078 | ||||||||
Key Measures:
|
||||||||||||||||
Net loss ratio
|
69.3 | % | 57.8 | % | 61.4 | % | 57.6 | % | ||||||||
Net underwriting expense ratio
|
32.6 | % | 18.4 | % | 37.0 | % | 15.7 | % | ||||||||
Net combined ratio
|
101.9 | % | 76.2 | % | 98.4 | % | 73.3 | % | ||||||||
Reconciliation of net underwriting expense ratio:
|
||||||||||||||||
Acquisition costs and other
|
||||||||||||||||
underwriting expenses
|
$ | 4,010,695 | $ | 3,800,386 | $ | 8,339,860 | $ | 7,329,738 | ||||||||
Less: Ceding commission revenue
|
(2,334,431 | ) | (2,910,858 | ) | (4,628,142 | ) | (5,814,514 | ) | ||||||||
Less: Other income
|
(152,111 | ) | (124,247 | ) | (268,792 | ) | (239,297 | ) | ||||||||
|
$ | 1,524,153 | $ | 765,281 | $ | 3,442,926 | $ | 1,275,927 | ||||||||
Net earned premium
|
$ | 4,676,282 | $ | 4,164,572 | $ | 9,299,497 | $ | 8,137,107 | ||||||||
Net Underwriting Expense Ratio
|
32.6 | % | 18.4 | % | 37.0 | % | 15.7 | % |
Direct
|
Assumed
|
Ceded
|
Net
|
|||||||||||||
Six months ended June 30, 2013 (unaudited)
|
||||||||||||||||
Written premiums
|
$ | 28,725,957 | $ | 20,047 | $ | (17,781,254 | ) | $ | 10,964,750 | |||||||
Unearned premiums
|
(3,452,133 | ) | 28,569 | 1,758,311 | (1,665,253 | ) | ||||||||||
Earned premiums
|
$ | 25,273,824 | $ | 48,616 | $ | (16,022,943 | ) | $ | 9,299,497 | |||||||
Loss and loss adjustment expenses exluding
|
||||||||||||||||
the effect of catastrophes
|
$ | 13,719,897 | $ | 41,999 | $ | (8,207,099 | ) | $ | 5,554,797 | |||||||
Catastrophe loss
|
225,324 | - | (68,683 | ) | 156,641 | |||||||||||
Loss and loss adjustment expenses
|
$ | 13,945,221 | $ | 41,999 | $ | (8,275,782 | ) | $ | 5,711,438 | |||||||
Loss ratio excluding the effect of catastrophes
|
54.3 | % | 86.4 | % | 51.2 | % | 59.7 | % | ||||||||
Catastrophe loss
|
0.9 | % | 0.0 | % | 0.4 | % | 1.7 | % | ||||||||
Loss ratio
|
55.2 | % | 86.4 | % | 51.6 | % | 61.4 | % | ||||||||
Six months ended June 30, 2012 (unaudited)
|
||||||||||||||||
Written premiums
|
$ | 23,674,526 | $ | 3,199 | $ | (14,480,602 | ) | $ | 9,197,123 | |||||||
Unearned premiums
|
(2,653,399 | ) | 3,912 | 1,589,471 | (1,060,016 | ) | ||||||||||
Earned premiums
|
$ | 21,021,127 | $ | 7,111 | $ | (12,891,131 | ) | $ | 8,137,107 | |||||||
Loss and loss adjustment expenses exluding
|
||||||||||||||||
the effect of catastrophes
|
$ | 9,298,687 | $ | 14,907 | $ | (4,626,575 | ) | $ | 4,687,019 | |||||||
Catastrophe loss
|
- | - | - | - | ||||||||||||
Loss and loss adjustment expenses
|
$ | 9,298,687 | $ | 14,907 | $ | (4,626,575 | ) | $ | 4,687,019 | |||||||
Loss ratio excluding the effect of catastrophes
|
44.2 | % | 209.6 | % | 35.9 | % | 57.6 | % | ||||||||
Catastrophe loss
|
0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||
Loss ratio
|
44.2 | % | 209.6 | % | 35.9 | % | 57.6 | % | ||||||||
Three months ended June 30, 2013 (unaudited)
|
||||||||||||||||
Written premiums
|
$ | 15,881,121 | $ | 10,232 | $ | (9,897,589 | ) | $ | 5,993,764 | |||||||
Unearned premiums
|
(2,873,166 | ) | 1,128 | 1,554,556 | (1,317,482 | ) | ||||||||||
Earned premiums
|
$ | 13,007,955 | $ | 11,360 | $ | (8,343,033 | ) | $ | 4,676,282 | |||||||
Loss and loss adjustment expenses exluding
|
||||||||||||||||
the effect of catastrophes
|
$ | 6,213,188 | $ | 23,572 | $ | (3,151,604 | ) | $ | 3,085,156 | |||||||
Catastrophe loss
|
225,324 | - | (68,683 | ) | 156,641 | |||||||||||
Loss and loss adjustment expenses
|
$ | 6,438,512 | $ | 23,572 | $ | (3,220,287 | ) | $ | 3,241,797 | |||||||
Loss ratio excluding the effect of catastrophes
|
47.8 | % | 207.5 | % | 37.8 | % | 66.0 | % | ||||||||
Catastrophe loss
|
1.7 | % | 0.0 | % | 0.8 | % | 3.3 | % | ||||||||
Loss ratio
|
49.5 | % | 207.5 | % | 38.6 | % | 69.3 | % | ||||||||
Three months ended June 30, 2012 (unaudited)
|
||||||||||||||||
Written premiums
|
$ | 12,438,801 | $ | 1,799 | $ | (7,623,640 | ) | $ | 4,816,960 | |||||||
Unearned premiums
|
(1,681,258 | ) | 2,333 | 1,026,537 | (652,388 | ) | ||||||||||
Earned premiums
|
$ | 10,757,543 | $ | 4,132 | $ | (6,597,103 | ) | $ | 4,164,572 | |||||||
Loss and loss adjustment expenses exluding
|
||||||||||||||||
the effect of catastrophes
|
$ | 4,342,618 | $ | 3,810 | $ | (1,937,923 | ) | $ | 2,408,505 | |||||||
Catastrophe loss
|
- | - | - | - | ||||||||||||
Loss and loss adjustment expenses
|
$ | 4,342,618 | $ | 3,810 | $ | (1,937,923 | ) | $ | 2,408,505 | |||||||
Loss ratio excluding the effect of catastrophes
|
40.4 | % | 92.2 | % | 29.4 | % | 57.8 | % | ||||||||
Catastrophe loss
|
0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||
Loss ratio
|
40.4 | % | 92.2 | % | 29.4 | % | 57.8 | % |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net premiums earned
|
$ | 4,676,282 | $ | 4,164,572 | $ | 9,299,497 | $ | 8,137,107 | ||||||||
Ceding commission revenue (1)
|
2,334,431 | 2,910,858 | 4,628,142 | 5,814,514 | ||||||||||||
Other income
|
152,111 | 124,247 | 268,792 | 239,297 | ||||||||||||
Loss and loss adjustment expenses (2)
|
3,241,797 | 2,408,505 | 5,711,438 | 4,687,019 | ||||||||||||
Acquistion costs and other underwriting expenses:
|
||||||||||||||||
Commission expense
|
2,079,084 | 1,805,810 | 4,194,904 | 3,477,417 | ||||||||||||
Other underwriting expenses
|
1,931,611 | 1,994,576 | 4,144,956 | 3,852,322 | ||||||||||||
Total acquistion costs and other
|
||||||||||||||||
underwriting expenses
|
4,010,695 | 3,800,386 | 8,339,860 | 7,329,739 | ||||||||||||
Underwriting income
|
$ | (89,668 | ) | $ | 990,786 | $ | 145,133 | $ | 2,174,160 | |||||||
Key Measures:
|
||||||||||||||||
Net loss ratio excluding the effect of catastrophes
|
66.0 | % | 57.8 | % | 59.7 | % | 57.6 | % | ||||||||
Effect of catastrophe loss on loss ratio (2)
|
3.3 | % | 0.0 | % | 1.7 | % | 0.0 | % | ||||||||
Net loss ratio
|
69.3 | % | 57.8 | % | 61.4 | % | 57.6 | % | ||||||||
Net underwriting expense ratio excluding the
|
||||||||||||||||
effect of catastrophes
|
12.7 | % | -2.9 | % | 17.2 | % | 1.5 | % | ||||||||
Effect of catastrophe loss on net underwriting
|
||||||||||||||||
expense ratio (1) (2)
|
19.9 | % | 21.3 | % | 19.8 | % | 14.2 | % | ||||||||
Net underwriting expense ratio
|
32.6 | % | 18.4 | % | 37.0 | % | 15.7 | % | ||||||||
Net combined ratio excluding the effect
|
||||||||||||||||
of catastrophes
|
78.7 | % | 54.9 | % | 76.9 | % | 59.1 | % | ||||||||
Effect of catastrophe loss on net combined
|
||||||||||||||||
ratio (1) (2)
|
23.3 | % | 21.3 | % | 21.5 | % | 14.2 | % | ||||||||
Net combined ratio
|
101.9 | % | 76.2 | % | 98.4 | % | 73.3 | % | ||||||||
Reconciliation of net underwriting expense ratio:
|
||||||||||||||||
Acquisition costs and other
|
||||||||||||||||
underwriting expenses
|
$ | 4,010,695 | $ | 3,800,386 | $ | 8,339,860 | $ | 7,329,739 | ||||||||
Less: Ceding commission revenue (1)
|
(2,334,431 | ) | (2,910,858 | ) | (4,628,142 | ) | (5,814,514 | ) | ||||||||
Less: Other income
|
(152,111 | ) | (124,247 | ) | (268,792 | ) | (239,297 | ) | ||||||||
|
$ | 1,524,153 | $ | 765,281 | $ | 3,442,926 | $ | 1,275,928 |
June 30, 2013
|
||||||||||||||||||||||||
|
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
|
||||||||||||||||||
(unaudited)
|
||||||||||||||||||||||||
Political subdivisions of States,
|
||||||||||||||||||||||||
Territories and Possessions
|
$ | 5,192,989 | $ | 164,220 | $ | (80,990 | ) | $ | (11,909 | ) | $ | 5,264,309 | 17.8 | % | ||||||||||
Corporate and other bonds
|
||||||||||||||||||||||||
Industrial and miscellaneous
|
16,781,196 | 598,017 | (247,662 | ) | - | 17,131,552 | 57.9 | % | ||||||||||||||||
Total fixed-maturity securities
|
21,974,185 | 762,237 | (328,652 | ) | (11,909 | ) | 22,395,861 | 75.7 | % | |||||||||||||||
Equity Securities
|
6,875,848 | 443,529 | (128,962 | ) | - | 7,190,415 | 24.3 | % | ||||||||||||||||
Total
|
$ | 28,850,033 | $ | 1,205,766 | $ | (457,614 | ) | $ | (11,909 | ) | $ | 29,586,276 | 100.0 | % |
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 | % |
June 30, 2013
|
||||||||||||||||||||||||
(unaudited)
|
||||||||||||||||||||||||
|
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
|
$ | 606,292 | $ | 95,771 | $ | - | $ | - | $ | 702,063 | 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 | % |
June 30, 2013
|
December 31, 2012
|
|||||||||||||||||
Percentage of
|
Percentage of
|
|||||||||||||||||
Fair Market
|
Fair Market
|
Fair Market
|
Fair Market
|
|||||||||||||||
Value
|
Value
|
Value
|
Value
|
|||||||||||||||
(unaudited)
|
||||||||||||||||||
Rating
|
||||||||||||||||||
U.S. Treasury securities
|
$ | - | 0.0 | % | $ | - | 0.0 | % | ||||||||||
AAA
|
1,549,171 | 6.9 | % | 2,226,603 | 8.5 | % | ||||||||||||
AA
|
3,981,714 | 17.8 | % | 4,088,304 | 15.6 | % | ||||||||||||
A | 6,103,165 | 27.3 | % | 6,963,380 | 26.6 | % | ||||||||||||
BBB
|
10,761,811 | 48.0 | % | 12,903,651 | 49.3 | % | ||||||||||||
Total
|
$ | 22,395,861 | 100.0 | % | $ | 26,181,938 | 100.0 | % |
June 30, 2013
|
December 31, 2012
|
|||||||||||||||
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
|
3.70 | % | 27.3 | 3.33 | % | 27.8 | ||||||||||
Political subdivisions of States,
|
||||||||||||||||
Territories and Possessions
|
4.28 | % | 6.2 | 4.06 | % | 6.1 | ||||||||||
Corporate and other bonds
|
||||||||||||||||
Industrial and miscellaneous
|
4.91 | % | 7.1 | 4.74 | % | 7.3 |
June 30, 2013
|
||||||||||||||||||||||||||||||||
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
|
||||||||||||||||||||||||
(unaudited)
|
||||||||||||||||||||||||||||||||
Fixed-Maturity Securities:
|
||||||||||||||||||||||||||||||||
Political subdivisions of
|
||||||||||||||||||||||||||||||||
States, Territories and
|
||||||||||||||||||||||||||||||||
Possessions
|
$ | 1,065,409 | $ | (80,990 | ) | 5 | $ | 254,051 | $ | (11,909 | ) | 3 | $ | 1,319,460 | $ | (92,899 | ) | |||||||||||||||
Corporate and other
|
||||||||||||||||||||||||||||||||
bonds industrial and
|
||||||||||||||||||||||||||||||||
miscellaneous
|
4,921,387 | (247,662 | ) | 24 | - | - | - | 4,921,387 | (247,662 | ) | ||||||||||||||||||||||
Total fixed-maturity
|
||||||||||||||||||||||||||||||||
securities
|
$ | 5,986,796 | $ | (328,652 | ) | 29 | $ | 254,051 | $ | (11,909 | ) | 3 | $ | 6,240,847 | $ | (340,561 | ) | |||||||||||||||
Equity Securities:
|
||||||||||||||||||||||||||||||||
Preferred stocks
|
$ | 2,704,500 | $ | (89,440 | ) | 10 | $ | - | $ | - | - | $ | 2,704,500 | $ | (89,440 | ) | ||||||||||||||||
Common stocks
|
577,170 | (39,522 | ) | 4 | - | - | - | 577,170 | (39,522 | ) | ||||||||||||||||||||||
Total equity securities
|
$ | 3,281,670 | $ | (128,962 | ) | 14 | $ | - | $ | - | - | $ | 3,281,670 | $ | (128,962 | ) | ||||||||||||||||
Total
|
$ | 9,268,466 | $ | (457,614 | ) | 43 | $ | 254,051 | $ | (11,909 | ) | 3 | $ | 9,522,517 | $ | (469,523 | ) |
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 | ) |
Six Months Ended June 30,
|
2013
|
2012
|
||||||
Cash flows provided by (used in):
|
||||||||
Operating activities
|
$ | 1,711,211 | $ | 464,409 | ||||
Investing activities
|
1,190,651 | 618,787 | ||||||
Financing activities
|
(757,174 | ) | (230,598 | ) | ||||
Net increase in cash and cash equivalents
|
2,144,688 | 852,598 | ||||||
Cash and cash equivalents, beginning of period
|
2,240,012 | 173,126 | ||||||
Cash and cash equivalents, end of period
|
$ | 4,384,700 | $ | 1,025,724 |
Treaty
|
Range of Loss
|
Risk Retained
|
||
Personal Lines
|
Initial $1,200,000
|
$300,000
|
||
$1,200,000 - $2,900,000
|
None
|
|||
Over $2,900,000
|
100%
|
|||
Personal Umbrella
|
Initial $1,000,000
|
$100,000
|
||
$1,000,000 - $2,000,000
|
None
|
|||
Over $2,000,000
|
100%
|
|||
Commercial Lines
|
Initial $400,000
|
$300,000
|
||
$400,000- $2,900,000
|
None
|
|||
Over $2,900,000
|
100%
|
|||
Commercial Auto
|
Initial $300,000
|
$300,000
|
||
$300,000 - $2,000,000
|
None
|
|||
Over $2,000,000
|
100%
|
|||
Catastrophe
|
Initial $4,000,000
|
$1,000,000
|
||
$4,000,000 - $90,000,000
|
None
|
|||
Over $90,000,000
|
100%
|
(a)
|
None
|
(b)
|
Not applicable
|
(c)
|
The following table sets forth certain information with respect to purchases of common stock made by us or any “affiliated purchaser” during the quarter ended June 30, 2013:
|
Period
|
Total Number
of Shares
Purchased
|
Average Price
Paid per Share
|
Total Number of
Shares Purchased
as Part of Publicly Announced Plans
or Programs
|
Maximum Number
of Shares that
May Be Purchased
Under the Plans
or Programs
|
||||||||||||
4/1/13-4/30/13
|
- | - | - | - | ||||||||||||
5/1/13-5/31/13
|
820 | (1) | $ | 5.24 | (1) | - | - | |||||||||
6/1/13-6/30/13
|
31,680 | (2) | $ | 4.38 | (2) | - | - | |||||||||
Total
|
32,500 | (1)(2) | $ | 4.40 | (1)(2) | - | - |
|
Shares purchased by “affiliated purchaser”.
|
|
Includes 1,680 shares purchased by “affiliated purchaser” at an average price per share of $5.22.
|
3(a)
|
Restated Certificate of Incorporation, as amended1
|
|
3(b)
|
By-laws, as amended2
|
|
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
|
||
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 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.
|
KINGSTONE COMPANIES, INC. | |||
Dated: August 14, 2013
|
By: |
/s/ Barry B. Goldstein
|
|
Barry B. Goldstein
President
|
|||
Dated: August 14, 2013
|
By: |
/s/ Victor Brodsky
|
|
Victor Brodsky
Chief Financial Officer
|
|
I, Barry Goldstein, certify that:
|
1.
|
I have reviewed this Form 10-Q 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 small business issuer as of, and for, the periods presented in this report;
|
4.
|
The small business issuer’s other certifying officers 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 small business issuer, 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 small business issuer’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 small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and
|
5.
|
The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’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 small business issuer’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 small business issuer’s internal control over financial reporting.
|
Date: August 14, 2013
|
/s/ Barry B. Goldstein
|
|
Barry B. Goldstein
Principal Executive Officer
|
|
I, Victor Brodsky, certify that:
|
1.
|
I have reviewed this Form 10-Q 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 small business issuer as of, and for, the periods presented in this report;
|
4.
|
The small business issuer’s other certifying officers 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 small business issuer, 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 small business issuer’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 small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and
|
5.
|
The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’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 small business issuer’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 small business issuer’s internal control over financial reporting.
|
Date: August 14, 2013
|
/s/ Victor Brodsky
|
|
Victor Brodsky
Principal Financial Officer
|
Date: August 14, 2013
|
/s/ Barry B. Goldstein
|
|
Barry B. Goldstein
|
||
Chief Executive Officer | ||
/s/ Victor Brodsky
|
||
Victor Brodsky
|
||
Chief Financial Officer
|
11. Commitments and Contingencies
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Notes to Financial Statements | |
11. Commitments and Contingencies | Litigation
From time to time, the Company is involved in various legal proceedings in the ordinary course of business. For example, to the extent a claim asserted by a third party in a law suit against one of the Companys insureds covered by a particular policy, the Company may have a duty to defend the insured party against the claim. These claims may relate to bodily injury, property damage or other compensable injuries as set forth in the policy. Such proceedings are considered in estimating the liability for loss and LAE expenses. The Company is not subject to any other pending legal proceedings that management believes are likely to have a material adverse effect on the financial statements.
State Insurance Regulation
In the aftermath of Superstorm Sandy, the New York State Department of Financial Services has adopted various regulations that affect insurance companies that operate in the state of New York. Included among the regulations are accelerated claims investigation and settlement requirements and mandatory participation in non-binding mediation proceedings funded by the insurer. Further, in February 2013, the state of New York announced that the Department of Financial Services has commenced an investigation into the claims practices of three insurance companies, including KICO, in connection with Superstorm Sandy claims. The Department of Financial Services stated that the three insurers had a much larger than average consumer complaint rate with regard to Superstorm Sandy claims and indicated that the three insurers were being investigated for (i) failure to send adjusters in a timely manner; (ii) failure to process claims in a timely manner; and (iii) inability of homeowners to contact insurance company representatives. KICO has received a letter from the Department of Financial Services seeking information and data with regard to the foregoing. KICO is cooperating with the Department of Financial Services in connection with its investigation and believes that such matter will not have a material adverse effect on the Companys financial position or results of operations. |
Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) (USD $)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Revenues | ||||
Net premiums earned | $ 4,676,282 | $ 4,164,572 | $ 9,299,497 | $ 8,137,107 |
Ceding commission revenue | 2,334,431 | 2,910,858 | 4,628,142 | 5,814,514 |
Net investment income | 275,031 | 229,879 | 558,318 | 497,396 |
Net realized gain on sale of investments | 249,893 | 6,160 | 355,018 | 45,560 |
Other income | 243,825 | 222,691 | 457,815 | 461,746 |
Total revenues | 7,779,462 | 7,534,160 | 15,298,790 | 14,956,323 |
Expenses | ||||
Loss and loss adjustment expenses | 3,241,797 | 2,408,505 | 5,711,438 | 4,687,019 |
Commission expense | 2,079,084 | 1,805,810 | 4,194,904 | 3,477,417 |
Other underwriting expenses | 1,931,611 | 1,994,576 | 4,144,956 | 3,852,322 |
Other operating expenses | 227,833 | 287,442 | 471,143 | 574,329 |
Depreciation and amortization | 153,985 | 150,472 | 306,971 | 297,021 |
Interest expense | 17,890 | 20,111 | 39,105 | 40,896 |
Total expenses | 7,652,200 | 6,666,916 | 14,868,517 | 12,929,004 |
Income from operations before taxes | 127,262 | 867,244 | 430,273 | 2,027,319 |
Income tax expense | 59,161 | 306,928 | 171,164 | 701,585 |
Net income | 68,101 | 560,316 | 259,109 | 1,325,734 |
Gross unrealized investment holding (losses) gains arising during period | (1,260,607) | 294,590 | (814,864) | 741,755 |
Income tax benefit (expense) related to items of other comprehensive income | 428,607 | (100,161) | 277,054 | (252,197) |
Comprehensive income | $ (763,899) | $ 754,745 | $ (278,701) | $ 1,815,292 |
Earnings per common share: | ||||
Basic | $ 0.02 | $ 0.15 | $ 0.07 | $ 0.35 |
Diluted | $ 0.02 | $ 0.15 | $ 0.07 | $ 0.35 |
Weighted average common shares outstanding | ||||
Basic | 3,827,712 | 3,789,592 | 3,834,269 | 3,780,351 |
Diluted | 3,906,432 | 3,883,779 | 3,911,650 | 3,780,351 |
Dividends declared and paid per common share | $ 0.04 | $ 0.03 | $ 0.08 | $ 0.06 |
4. Fair Value Measurements
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4. Fair Value Measurements | The Company follows GAAP guidance regarding fair value measurements. The valuation technique used to fair value the financial instruments is the market approach, which uses prices and other relevant information generated by market transactions involving identical or comparable assets.
This guidance establishes a three-level hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the assets or liabilities fall within different levels of the hierarchy, the classification is based on the lowest level input that is significant to the fair value measurement of the asset or liability. Classification of assets and liabilities within the hierarchy considers the markets in which the assets and liabilities are traded, including during period of market disruption, and the reliability and transparency of the assumptions used to determine fair value. The hierarchy requires the use of observable market data when available. The levels of the hierarchy and those investments included in each are as follows:
Level 1Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities traded in active markets. Included are those investments traded on an active exchange, such as the NASDAQ Global Select Market, U.S. Treasury securities and obligations of U.S. government agencies, together with corporate debt securities that are generally investment grade.
Level 2Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market-corroborated inputs. Municipal and corporate bonds that are traded in less active markets are classified as Level 2. These securities are valued using market price quotations for recently executed transactions.
Level 3Inputs to the valuation methodology are unobservable for the asset or liability and are significant to the fair value measurement. Material assumptions and factors considered in pricing investment securities and other assets may include appraisals, projected cash flows, market clearing activity or liquidity circumstances in the security or similar securities that may have occurred since the prior pricing period.
The availability of observable inputs varies and is affected by a wide variety of factors. When the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires significantly more judgment. The degree of judgment exercised by management in determining fair value is greatest for investments categorized as Level 3. For investments in this category, the Company considers prices and inputs that are current as of the measurement date. In periods of market dislocation, as characterized by current market conditions, the observability of prices and inputs may be reduced for many instruments. This condition could cause a security to be reclassified between levels.
The Companys investments are allocated among pricing input levels at June 30, 2013 and December 31, 2012 as follows:
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7. Long-Term Debt (Tables)
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Jun. 30, 2013
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Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt | Long-term debt consists of:
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Schedule of Related Party Balances | Related party balances as of June 30, 2013 and December 31, 2012, under the 2009/2010 Notes are as follows:
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12. Subsequent Event
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6 Months Ended |
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Jun. 30, 2013
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Notes to Financial Statements | |
12. Subsequent Event | Preferred Stock
On August 13, 2013, the Company received stockholder approval of an amendment to the Certificate of Incorporation of the Company to increase the number of authorized shares of Preferred Stock from 1,000,000 to 2,500,000.
Common Stock
On August 13, 2013, the Company received stockholder approval of an amendment to the Certificate of Incorporation of the Company to increase the number of authorized shares of Common Stock from 10,000,000 to 20,000,000.
Stock Options
On August 13, 2013, the Company received stockholder approval of an amendment to the 2005 Plan to increase the number of shares authorized to be issued pursuant to the 2005 Plan from 550,000 to 700,000.
Dividends Declared and Paid
On August 13, 2013, the Companys Board of Directors approved a dividend of $.04 per share, or $153,637, payable in cash on September 13, 2013 to stockholders of record as of August 30, 2013. |
10. Income Taxes (Details Narrative) (USD $)
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6 Months Ended | ||
---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
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Dec. 31, 2012
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Income Taxes Details Narrative | |||
Effective Tax Rate-Continuing Operations | 39.80% | 34.60% | |
Net operating loss carryover | $ 4,888,000 | $ 4,588,000 | |
Interest or penalties | $ 0 | $ 0 |
6. Property and Casulty Insurance Activity (Details 1) (USD $)
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6 Months Ended | |
---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
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Property And Casulty Insurance Activity Details 1 | ||
Balance at beginning of period | $ 30,485,532 | $ 18,480,717 |
Less reinsurance recoverables | (18,419,694) | (10,001,060) |
Net balance, beginning of period | 12,065,838 | 8,479,657 |
Incurred related to: | ||
Current year | 5,175,229 | 4,359,416 |
Prior years | 536,209 | 327,603 |
Total incurred | 5,711,438 | 4,687,019 |
Paid related to: | ||
Current year | 1,416,181 | 933,939 |
Prior years | 2,675,112 | 2,586,898 |
Total paid | 4,091,293 | 3,520,837 |
Net balance at end of period | 13,685,983 | 9,645,839 |
Add reinsurance recoverables | 14,671,485 | 11,152,255 |
Balance at end of period | $ 28,357,468 | $ 20,798,094 |
10. Net Income Per Common Share (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Earnings per common share: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Income Per Common Share | The reconciliation of the weighted average number of shares of Common Stock used in the calculation of basic and diluted earnings per common share follows:
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9. Income Taxes (Tables)
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Jun. 30, 2013
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Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Deferrred Tax Assets and Liabilities | Significant components of the Companys deferred tax assets and liabilities are as follows:
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Losses subject to Annual Limitation |
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9. Income Taxes (Details) (USD $)
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Jun. 30, 2013
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Dec. 31, 2012
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Deferred tax asset: | ||
Net operating loss carryovers (1) | $ 266,800 | $ 264,648 |
Claims reserve discount | 355,646 | 313,544 |
Unearned premium | 940,362 | 811,413 |
Deferred ceding commission revenue | 1,858,019 | 1,658,190 |
Other | 10,921 | |
Total deferred tax assets | 3,420,827 | 3,058,716 |
Deferred tax liability: | ||
Investment in KICO (2) | 1,169,000 | 1,169,000 |
Deferred acquisition costs | 2,110,126 | 1,893,759 |
Intangibles | 1,002,014 | 1,082,886 |
Depreciation and amortization | 153,947 | 152,576 |
Reinsurance recoverable | 20,400 | |
Net unrealized appreciation of securities - available for sale | 250,426 | 527,376 |
Other | 16,808 | |
Total deferred tax liabilities | 4,702,321 | 4,845,997 |
Net deferred income tax liability | $ (1,281,494) | $ (1,787,281) |
3. Investments (Details Narrative) (USD $)
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6 Months Ended | |
---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
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Text Block [Abstract] | ||
Proceeds from the sale and maturity of fixed-maturity securities | $ 4,557,745 | $ 1,837,698 |
Proceeds from the sale of equity securities | $ 2,727,084 | $ 559,993 |
6. Property and Casulty Insurance Activity (Details Narrative) (USD $)
|
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
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Dec. 31, 2012
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Property And Casulty Insurance Activity Details Narrative | |||
Advance premiums | $ 842,000 | $ 611,000 | |
Incurred Losses and Loss Adjustment Expenses are net of reinsurance recoveries under reinsurance contracts | 8,275,782 | 4,626,575 | |
Advance payments from catastrophe reinsurers | 7,358,391 | ||
Commissions payable to reinsurers | $ 860,408 | $ 807,415 |
10. Net Income Per Share (Details) (USD $)
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3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
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Net Income Per Share Details | ||||
Weighted average number of shares outstanding | 3,827,712 | 3,789,592 | 3,834,269 | 3,780,351 |
Effect of dilutive securities, common share equivalents | $ 78,720 | $ 94,187 | $ 77,381 | |
Weighted average number of shares outstanding, used for computing diluted earnings per share | 3,906,432 | 3,883,779 | 3,911,650 | 3,780,351 |
3. Investments (Details 3) (USD $)
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3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Income: | ||||
Fixed-maturity securities | $ 234,977 | $ 226,777 | $ 495,012 | $ 461,270 |
Equity securities | 93,389 | 62,310 | 179,844 | 148,239 |
Cash and cash equivalents | (1,347) | 29 | 59 | |
Other | 11,817 | 2 | 11,817 | 4 |
Total | 340,183 | 287,742 | 686,702 | 609,572 |
Expenses: | ||||
Investment expenses | 65,152 | 57,863 | 128,384 | 112,176 |
Net investment income | $ 275,031 | $ 229,879 | $ 558,318 | $ 497,396 |
7. Long-Term Debt (Details Narrative) (USD $)
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3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Long-Term Debt Details Narrative | ||||
Interest Expene-Notes | $ 18,000 | $ 18,000 | $ 35,000 | $ 35,000 |
Interest Expense-Related Parties | $ 9,000 | $ 9,000 | $ 18,000 | $ 18,000 |
Interest Rate | 3.75% | 3.75% |
8. Stockholders' Equity (Tables)
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Jun. 30, 2013
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Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Options Activity | A summary of option activity under the Companys 2005 Plan for the six months ended June 30, 2013 is as follows:
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2. Accounting Policies
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6 Months Ended |
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Jun. 30, 2013
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Notes to Financial Statements | |
2. Accounting Policies | Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions, which include the reserves for losses and loss adjustment expenses, are subject to considerable estimation error due to the inherent uncertainty in projecting ultimate claim amounts that will be reported and settled over a period of several years. In addition, estimates and assumptions associated with receivables under reinsurance contracts related to contingent ceding commission revenue require considerable judgment by management. On an on-going basis, management reevaluates its assumptions and the methods of calculating its estimates. Actual results may differ significantly from the estimates and assumptions used in preparing the consolidated financial statements.
Principles of Consolidation
The consolidated financial statements consist of Kingstone and its wholly-owned subsidiaries. Subsidiaries include KICO and its subsidiaries, CMIC Properties, Inc. and 15 Joys Lane, LLC, which together own the land and building from which KICO operates. All significant inter-company transactions have been eliminated in consolidation.
Accounting Pronouncements
In February 2013, Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2013-02, Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income ("ASU 2013-02"). ASU 2013-02 supersedes and replaces the presentation requirements for the reclassifications out of accumulated other comprehensive income. None of the other requirements of previously issued ASUs related to comprehensive income are affected by ASU 2013-02. The Company adopted ASU 2013-02 on January 1, 2013 and the implementation of the standard did not have a material impact on the Company's results of operations, financial position or liquidity.
The Company has determined that all other recently issued accounting pronouncements will not have a material impact on its consolidated financial position, results of operations and cash flows, or do not apply to its operations. |
5. Fair Value of Financial Instruments
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Jun. 30, 2013
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Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5. Fair Value of Financial Instruments | GAAP requires all entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized in the balance sheet, for which it is practicable to estimate fair value. The Company uses the following methods and assumptions in estimating its fair value disclosures for financial instruments:
Equity securities and fixed income securities: Fair value disclosures for these investments are included in Note 3 - Investments.
Cash and cash equivalents: The carrying values of cash and cash equivalents approximate their fair values because of the short maturity of these instruments.
Premiums receivable, reinsurance receivables: The carrying values reported in the accompanying condensed consolidated balance sheets for these financial instruments approximate their fair values due to the short term nature of the assets.
Notes receivable: The carrying amount of notes receivable related to the sale of businesses approximates fair value because of the recently negotiated interest rates based on term of the loan, risk and guaranty.
Real Estate: The fair value of the land and building included in property and equipment, which is used in the Companys operations, approximates the carrying value. The fair value was based on an appraisal prepared using the sales comparison approach, and accordingly the real estate is a Level 3 asset under the fair value hierarchy.
Reinsurance balances payable: The carrying value reported in the condensed consolidated balance sheets for these financial instruments approximates fair value.
Notes payable (including related parties): The Company estimates that the carrying amount of notes payable approximates fair value because of the recently negotiated interest rates based on term of the loan, risk and guaranty.
The estimated fair values of the Companys financial instruments are as follows:
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3. Investments
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Jun. 30, 2013
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Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3. Investments | Available-for-Sale Securities
The amortized cost and fair value of investments in available-for-sale fixed-maturity securities and equity securities as of June 30, 2013 and December 31, 2012 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 June 30, 2013 and December 31, 2012 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 June 30, 2013 and December 31, 2012 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 $4,557,745 and $1,837,698 for the six months ended June 30, 2013 and 2012, respectively.
Proceeds from the sale of equity securities were $2,727,084 and $559,993 for the six months ended June 30, 2013 and 2012, respectively.
The Companys net realized gains and losses on investments are summarized as follows:
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 Statements of Income 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 46 securities at June 30, 2013 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 six months ended June 30, 2013 and 2012. 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 an anticipated recovery of fair value to the Companys cost basis.
The Company held securities with unrealized losses representing declines that were considered temporary at June 30, 2013 and December 31, 2012 as follows:
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7. Long-Term Debt (Details) (USD $)
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Jun. 30, 2013
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Dec. 31, 2012
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Notes Payable | $ 877,000 | $ 1,197,000 |
Total Debt
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Notes Payable | 747,000 | 747,000 |
Line of Credit | 130,000 | 450,000 |
Long-Term Debt-Total | 877,000 | 1,197,000 |
Less Current Maturities
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Notes Payable | ||
Line of Credit | 130,000 | 450,000 |
Long-Term Debt-Total | 130,000 | 450,000 |
LongTermDebt
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Notes Payable | 747,000 | 747,000 |
Line of Credit | ||
Long-Term Debt-Total | $ 747,000 | $ 747,000 |
3. Investments (Details) (USD $)
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6 Months Ended | 12 Months Ended |
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Jun. 30, 2013
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Dec. 31, 2012
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Cost or Amortized Cost | $ 28,850,033 | $ 29,921,074 |
Gross Unrealized Gains | 1,205,766 | 1,753,984 |
Gross Unrealized Losses-Less than 12 Months | (457,614) | (202,156) |
Gross Unrealized Loss-More than 12 Months | (11,909) | (722) |
Fair Value | 29,586,276 | 31,472,180 |
Net Unrealized Gains/(Losses) | 736,243 | 1,551,106 |
Fixed Maturity Securities Political Subdivisions Of States Territories And Possessions
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Cost or Amortized Cost | 5,192,989 | 5,219,092 |
Gross Unrealized Gains | 164,220 | 257,298 |
Gross Unrealized Losses-Less than 12 Months | (80,990) | (1,574) |
Gross Unrealized Loss-More than 12 Months | (11,909) | |
Fair Value | 5,264,309 | 5,474,816 |
Net Unrealized Gains/(Losses) | 71,320 | 255,724 |
Fixed Maturity Securities Corporate And Other Bonds Industrial And Miscellaneous
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Cost or Amortized Cost | 16,781,196 | 19,628,005 |
Gross Unrealized Gains | 598,017 | 1,123,392 |
Gross Unrealized Losses-Less than 12 Months | (247,662) | (43,553) |
Gross Unrealized Loss-More than 12 Months | (722) | |
Fair Value | 17,131,552 | 20,707,122 |
Net Unrealized Gains/(Losses) | 350,356 | 1,079,117 |
Fixed Maturity Securities Total Fixed Maturity Securities
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Cost or Amortized Cost | 21,974,185 | 24,847,097 |
Gross Unrealized Gains | 762,237 | 1,380,690 |
Gross Unrealized Losses-Less than 12 Months | (328,652) | (45,127) |
Gross Unrealized Loss-More than 12 Months | (11,909) | (722) |
Fair Value | 22,395,861 | 26,181,938 |
Net Unrealized Gains/(Losses) | 421,676 | 1,334,841 |
Equity Securities Preferred Stocks
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Cost or Amortized Cost | 3,493,001 | 1,475,965 |
Gross Unrealized Gains | 9,239 | 19,512 |
Gross Unrealized Losses-Less than 12 Months | (89,440) | (11,130) |
Gross Unrealized Loss-More than 12 Months | ||
Fair Value | 3,412,800 | 1,484,347 |
Net Unrealized Gains/(Losses) | (80,201) | 8,382 |
Equity Securities Common Stocks
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Cost or Amortized Cost | 3,382,847 | 3,598,012 |
Gross Unrealized Gains | 434,290 | 353,782 |
Gross Unrealized Losses-Less than 12 Months | (39,522) | (145,899) |
Gross Unrealized Loss-More than 12 Months | ||
Fair Value | 3,777,615 | 3,805,895 |
Net Unrealized Gains/(Losses) | 394,768 | 207,883 |
Equity Securities Total Equity Securities
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Cost or Amortized Cost | 6,875,848 | 5,073,977 |
Gross Unrealized Gains | 443,529 | 373,294 |
Gross Unrealized Losses-Less than 12 Months | (128,962) | (157,029) |
Gross Unrealized Loss-More than 12 Months | ||
Fair Value | 7,190,415 | 5,290,242 |
Net Unrealized Gains/(Losses) | $ 314,567 | $ 216,265 |
3. Investments (Details 4) (USD $)
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3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Fixed-maturity securities: | ||||
Gross realized gains | $ 104,241 | $ 55,004 | $ 181,217 | $ 95,150 |
Gross realized losses | (56,471) | (54,404) | (56,471) | (54,404) |
Total | 47,770 | 600 | 124,746 | 40,746 |
Equity securities: | ||||
Gross realized gains | 218,204 | 25,215 | 289,989 | 32,284 |
Gross realized losses | (16,081) | (19,655) | (59,717) | (27,470) |
Total equity securities | 202,123 | 5,560 | 230,272 | 4,814 |
Net realized gains | $ 249,893 | $ 6,160 | $ 355,018 | $ 45,560 |
6. Property and Casulty Insurance Activity (Details) (USD $)
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3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Premiums Written
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Direct | $ 15,881,121 | $ 12,438,801 | $ 28,725,957 | $ 23,674,526 |
Assumed | 10,232 | 1,799 | 20,047 | 3,199 |
Ceded | (9,897,589) | (7,623,640) | (17,781,254) | (14,480,602) |
Net | 5,993,764 | 4,816,960 | 10,964,750 | 9,197,123 |
Changes In Unearned Premiums
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Direct | (2,873,166) | (1,681,258) | (3,452,133) | (2,653,399) |
Assumed | 1,128 | 2,333 | 28,569 | 3,912 |
Ceded | 1,554,556 | 1,026,537 | 1,758,311 | 1,589,471 |
Net | (1,317,482) | (652,388) | (1,665,253) | (1,060,016) |
Premiums Earned
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Direct | 13,007,955 | 10,757,543 | 25,273,824 | 21,021,127 |
Assumed | 11,360 | 4,132 | 48,616 | 7,111 |
Ceded | (8,343,033) | (6,597,103) | (16,022,943) | (12,891,131) |
Net | $ 4,676,282 | $ 4,164,572 | $ 9,299,497 | $ 8,137,107 |