6. Property and Casualty Insurance Activity (Tables)

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

Schedule of Earned Premiums

Premiums written, ceded and earned are as follows:

	Direct			Assumed		Ceded			Net
Three months ended March 31, 2016
Premiums written	$	23,043,325		$	5,078	$	(8,386,528	)	$	14,661,875
Change in unearned premiums		(126,428	)		3,571		(7,343	)		(130,200	)
Premiums earned	$	22,916,897		$	8,649	$	(8,393,871	)	$	14,531,675
Three months ended March 31, 2015
Premiums written	$	19,489,429		$	7,911	$	(8,619,406	)	$	10,877,934
Change in unearned premiums		(472,331	)		3,912		(23,716	)		(492,135	)
Premiums earned	$	19,017,098		$	11,823	$	(8,643,122	)	$	10,385,799

Schedule of Loss and Loss Adjustment Expenses

The following table provides a reconciliation of the beginning and ending balances for unpaid losses and loss adjustment expense (“LAE”) reserves:

	Three months ended
	March 31,
	2016			2015
Balance at beginning of period	$	39,876,500		$	39,912,683
Less reinsurance recoverables		(16,706,364	)		(18,249,526	)
Net balance, beginning of period		23,170,136			21,663,157
Incurred related to:
Current year		9,903,094			6,956,761
Prior years		(419,239	)		106,456
Total incurred		9,483,855			7,063,217
Paid related to:
Current year		3,006,210			1,685,306
Prior years		3,421,820			3,201,258
Total paid		6,428,030			4,886,564
Net balance at end of period		26,225,961			23,839,810
Add reinsurance recoverables		19,804,804			18,311,454
Balance at end of period	$	46,030,765		$	42,151,264

Schedule of line of business

The Company’s treaties for the July 1, 2014/June 30, 2015 and July 1, 2015/June 30, 2016 treaty years provide for the following material terms:

		Treaty Year
		July 1, 2015			July 1, 2014
		to			to
Line of Business		June 30, 2016			June 30, 2015
Personal Lines:
Homeowners, dwelling fire and canine legal liability
Quota share treaty:
Percent ceded		40	%		55	%
Risk retained	$	450,000		$	360,000
Losses per occurrence subject to quota share reinsurance coverage	$	750,000		$	800,000
Excess of loss coverage above quota share coverage	$	3,750,000		$	3,200,000
		in excess of			in excess of
	$	750,000		$	800,000
Total reinsurance coverage per occurrence	$	4,050,000		$	3,640,000
Losses per occurrence subject to reinsurance coverage	$	4,500,000		$	4,000,000
Expiration date		June 30, 2016			June 30, 2015
Personal Umbrella
Quota share treaty:
Percent ceded - first million dollars of coverage		90	%		90	%
Percent ceded - excess of one million dollars of coverage		100	%		100	%
Risk retained	$	100,000		$	100,000
Total reinsurance coverage per occurrence	$	2,900,000		$	2,900,000
Losses per occurrence subject to quota share reinsurance coverage	$	3,000,000		$	3,000,000
Expiration date		June 30, 2016			June 30, 2015
Commercial Lines:
General liability commercial policies, except for commercial auto
Quota share treaty:
Percent ceded (terminated effective July 1, 2014)		None			None
Risk retained	$	425,000		$	400,000
Losses per occurrence subject to quota share reinsurance coverage		None			None
Excess of loss coverage above quota share coverage	$	4,075,000		$	3,600,000
		in excess of			in excess of
	$	425,000		$	400,000
Total reinsurance coverage per occurrence	$	4,075,000		$	3,600,000
Losses per occurrence subject to reinsurance coverage	$	4,500,000		$	4,000,000
Commercial Auto:
Risk retained	$	300,000		$	300,000
Excess of loss coverage in excess of risk retained	$	1,700,000		$	1,700,000
		in excess of			in excess of
	$	300,000		$	300,000
Catastrophe Reinsurance:
Initial loss subject to personal lines quota share treaty	$	4,000,000		$	4,000,000
Risk retained per catastrophe occurrence (1)	$	2,400,000		$	1,800,000
Catastrophe loss coverage in excess of quota share coverage (2) (3)	$	176,000,000		$	137,000,000
Severe winter weather aggregate (3)		Yes			Yes
Reinstatement premium protection (4)		Yes			No

1. Plus losses in excess of catastrophe coverage.

2. Catastrophe coverage is limited on an annual basis to two times the per occurrence amounts. Effective July 1, 2015, the duration of a catastrophe occurrence from windstorm, hail, tornado, hurricane and cyclone was extended to 120 consecutive hours from 96 consecutive hours.

3. Effective July 1, 2014, our catastrophe treaty also covers losses caused by severe winter weather during any consecutive 28 day period.

4. Effective July 1, 2015, reinstatement premium protection for $16,000,000 of catastrophe coverage in excess of $4,000,000.

Schedule of Single maximum risks under treaties

The single maximum risks per occurrence to which the Company is subject under the new treaties effective July 1, 2015 and under the treaties that expired on June 30, 2015 are as follows:

	July 1, 2015 - June 30, 2016					July 1, 2014 - June 30, 2015
Treaty	Extent of Loss		Risk Retained			Extent of Loss		Risk Retained
Personal Lines		Initial $750,000	$	450,000			Initial $800,000	$	360,000
		$750,000 - $4,500,000		None(1)			$800,000 - $4,000,000		None(1)
		Over $4,500,000		100	%		Over $4,000,000		100	%
Personal Umbrella		Initial $1,000,000	$	100,000			Initial $1,000,000	$	100,000
		$1,000,000 - $3,000,000		None(1)			$1,000,000 - $3,000,000		None(1)
		Over $3,000,000		100	%		Over $3,000,000		100	%
Commercial Lines		Initial $425,000	$	425,000			Initial $400,000	$	400,000
		$425,000 - $4,500,000		None(1)			$400,000 - $4,000,000		None(1)
		Over $4,500,000		100	%		Over $4,000,000		100	%
Commercial Auto		Initial $300,000	$	300,000			Initial $300,000	$	300,000
		$300,000 - $2,000,000		None(1)			$300,000 - $2,000,000		None(1)
		Over $2,000,000		100	%		Over $2,000,000		100	%
Catastrophe (2)		Initial $4,000,000	$	2,400,000			Initial $4,000,000	$	1,800,000
		$4,000,000 - $180,000,000		None			$4,000,000 - $141,000,000		None
		Over $180,000,000		100	%		Over $141,000,000		100	%

(1) Covered by excess of loss treaties.

(2) Catastrophe coverage is limited on an annual basis to two times the per occurrence amounts.

Schedule of Ceding Commission Revenue

Ceding commissions earned consists of the following:

	Three months ended
	March 31,
	2016			2015
Provisional ceding commissions earned	$	3,099,614		$	2,915,029
Contingent ceding commissions earned		(329,277	)		174,375
	$	2,770,337		$	3,089,404