10. Commitments and Contingencies

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

10. 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 lawsuit against one of the Company’s 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.

Office Lease

On March 27, 2015, the Company entered into a lease agreement for an additional office facility for KICO located in Valley Stream, NY under a non-cancelable operating lease. In addition to the base rental costs, occupancy lease agreements generally provide for rent escalations resulting from increased assessments from real estate taxes and other charges.

The lease commencement date was July 1, 2015 and rent commencement begins January 1, 2016. The lease has a term of seven years and six months.

Rent expense under the lease will be recognized on a straight-line basis over the lease term. At March 31, 2016, cumulative rent expense exceeded cumulative rent payments by $53,190. This difference is recorded as deferred rent and is included in accounts payable, accrued expenses and other liabilities in the accompanying condensed consolidated balance sheets. 

As of March 31, 2016, aggregate future minimum rental commitments under the Company’s lease agreement is as follows:

For the Year
Ending
December 31,		Total
	2016 (nine months)	$	75,563
	2017		104,276
	2018		107,926
	2019		111,703
	2020		115,613
	Thereafter		243,506
	Total	$	758,587

Rent expense for the three months ended March 31, 2016 amounted to $26,126 and is included in the condensed consolidated statements of income and comprehensive income within other underwriting expenses.