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Note 9 - Segment Information
 12 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

9.        Segment Information

 

The Company has four reportable segments: title insurance, real estate, reinsurance, and management services. Corporate and Other is not considered a segment and includes certain corporate expenses and investment income. The Company's chief operating decision maker, its CEO, does not manage segment results or allocate resources to segments when considering these items and they are therefore excluded from our definition of segment income (loss). The Company does not manage its assets by segment; accordingly, total assets are not allocated to the segments. 

 

Title Insurance Segment

 

Our title insurance segment issues title insurance policies and provides title agency services on residential and commercial real estate transactions. This segment also provides closing and/or escrow services to facilitate real estate transactions.

 

Real Estate Segment

 

The real estate segment operates through a related party investment in HC Realty. 

 

HC Realty is an internally-managed REIT focused on acquiring, developing, financing, owning and managing build-to-suit or renovate-to-suit, single-tenant properties leased primarily to the U.S. government and administered by the U.S. General Services Administration or directly by the federal government agencies or sub-agencies occupying such properties. 

 

As of December 31, 2023, the Company owns approximately 27.4% of the voting interest of HC Realty.

 

Reinsurance Segment

 

The Company, through the formation of White Rock USA Cell 47, previously engaged in providing another insurance company excess-of-loss reinsurance coverage related to catastrophic weather risk in Texas which expired on December 31, 2022. The Company did not have any reinsurance contracts in-force during the year ended  December 31, 2023; however, the Company may actively look to provide reinsurance coverage to other carriers as future opportunities arise.

 

Management Services Segment

 

The Company, through its wholly-owned subsidiary, HGMA, engages in providing management advisory services including the following:

 

Effective April 1, 2023, the Company, through HGMA, was engaged to provide management advisory services to a related captive managing general agency, HP Managing Agency, LLC ("HPMA"), regarding its affiliated entity's anticipated assumption of policies from Citizens Property Insurance Company. The services included underwriting, modeling, and advising on the subset of potential policies selected for the proposed assumption. The engagement was for six months from April 1, 2023 at a monthly fee of $200,000, and was renewed effective October 1, 2023 for an additional three months. The engagement expired in accordance with its terms on December 31, 2023. HPMA is a related party of the Company as it is controlled by Mr. Hale, who serves as our Chairman, Chief Executive Officer and Director. 

 

Effective April 1, 2023, the Company, through HGMA, was also engaged to provide management advisory services to a related reinsurance intermediary affiliated with HPMA. The services include legal formation, licensure, regulatory approval, and other general operational services to allow the intermediary to adequately perform its business functions. The engagement is for twelve months from April 1, 2023 at a monthly fee of $50,000.

 

Provided below is selected financial information about the Company’s operations by segment for the year ended December 31, 2023 (in thousands):

 

                         
  

Title

  

Real

     

Management

  

Corporate

     
  

Insurance

  

Estate

  

Reinsurance

  

Services

  

and Other

  

Total

 

Insurance and other services revenue

 $8,553  $-  $300  $2,255  $-  $11,108 

Cost of revenues

  (575)  -   -   -   -   (575)

Gross profit

 $7,978  $-  $300  $2,255  $-  $10,533 

Operating expenses

  (10,837)  -   -   (841)  (1,314)  (12,992)

Other income/(expense)

  237   812   -   -   502   1,551 

(Loss) income before income taxes

 $(2,622) $812  $300  $1,414  $(812) $(908)
                         

Goodwill and intangible assets (1)

 $6,759  $-  $-  $-  $-  $6,759 
 

(1)

The Company does not allocate its assets by segment, with the exception of Goodwill and Intangible assets.

 

Provided below is selected financial information about the Company’s operations by segment for the year ended December 31, 2022 (in thousands):

 

                         
  

Title

  

Real

     

Management

  

Corporate

     
  

Insurance

  

Estate

  

Reinsurance

  

Services

  

and Other

  

Total

 

Insurance and other services revenue

 $6,796  $-  $6,330  $1,356  $-  $14,482 

Cost of revenues

  (408)  -   -   -   -   (408)

Gross profit

 $6,388  $-  $6,330  $1,356  $-  $14,074 

Operating expenses

  (8,526)  -   (94)  (400)  (1,220)  (10,240)

Other income/(expense)

  89   590   -   -   (830)  (151)

(Loss) income before income taxes

 $(2,049) $590  $6,236  $956  $(2,050) $3,683 
                         

Goodwill and intangible assets (1)

 $6,834  $-  $-  $-  $-  $6,834 
 

(1)

The Company does not allocate its assets by segment, with the exception of Goodwill and Intangible assets.

 

There were no major customers contributing more than 10% of revenue, aside from HPMA, as noted above, for the year ended December 31, 2023.