Note 8 - Segment Information

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

8.        Segment Information

The Company has four reportable segments: title insurance, real estate, reinsurance, and management advisory services. The Company's chief operating decision maker is Steven A. Hale II, Chief Executive Officer.

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, 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, 2024, the Company owns approximately 28.0% of the voting interest of HC Realty.

Reinsurance Segment

The Company 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, 2024; 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  January 1, 2024, the Company, through HGMA, was engaged to provide management advisory services to a related captive managing general agency, HP Managing Agency, LLC ("HPMA"), and its affiliates, including but not limited to general management, legal compliance, strategy services and review of potential acquisitions and transactions. The engagement was for twelve months from  January 1, 2024 through  December 31, 2024, for a monthly fee of $200,000. HPMA is a related party of the Company as it is controlled by Steven A. Hale II, who serves as our Chairman, Chief Executive Officer and Director. 

Effective  April 1, 2023, the Company, through HGMA, was engaged to provide management advisory services to 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. 

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 included legal entity formation, licensure, regulatory approval, and other general operational services to allow the intermediary to adequately perform its business functions. The engagement was initially for twelve months from  April 1, 2023 at a monthly fee of $50,000, and was renewed effective  April 1, 2024 for an additional nine months. The engagement expired in accordance with its terms on  December 31, 2024. 

Corporate and Other is not considered a segment and includes certain corporate expenses and investment income. The Company's chief operating decision maker does not manage these results separately or allocate resources 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. 

Provided below is selected financial information about the Company’s operations by segment for the year ended December 31, 2024 (in thousands):

	Title			Real					Management Advisory			Corporate
	Insurance			Estate			Reinsurance		Services			and Other			Total
Insurance and other services revenue	$	8,510		$	-		$	-	$	3,003		$	-		$	11,513
Cost of revenues:
Underwriting expenses		(205	)		-			-		-			-			(205	)
Provision for title claim losses		(328	)		-			-		-			-			(328	)
Search and other fees		(62	)		-			-		-			-			(62	)
Total cost of revenue		(595	)		-			-		-			-			(595	)
Gross profit		7,915			-			-		3,003			-			10,918
Operating expenses:
Personnel costs		(6,505	)		-			-		(627	)		(728	)		(7,860	)
Other operating expense (1)		(3,499	)		-			-		(42	)		(1,045	)		(4,586	)
Amortization and depreciation		(131	)		-			-		-			(2	)		(133	)
Total operating expense		(10,135	)		-			-		(669	)		(1,775	)		(12,579	)
Other income/(expense), net		280			(1,024	)		-		-			2,138			1,394
(Loss) income before income taxes	$	(1,940	)	$	(1,024	)	$	-	$	2,334		$	363		$	(267	)
Goodwill and intangible assets (2)	$	6,685		$	-		$	-	$	-		$	-		$	6,685

(1) Other operating expense primarily consist of rent and other occupancy expenses, software and equipment expense, corporate insurance and other regulatory and professional fees. 

(2) 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, 2023 (in thousands):

	Title			Real				Management Advisory			Corporate
	Insurance			Estate		Reinsurance		Services			and Other			Total
Insurance and other services revenue	$	8,553		$	-	$	300	$	2,255		$	-		$	11,108
Cost of revenues:
Underwriting expenses		(279	)		-		-		-			-			(279	)
Provision for title claim losses		(174	)		-		-		-			-			(174	)
Search and other fees		(122	)		-		-		-			-			(122	)
Total cost of revenue		(575	)		-		-		-			-			(575	)
Gross profit		7,978			-		300		2,255			-			10,533
Operating expenses:
Personnel costs		(7,111	)		-		-		(841	)		(287	)		(8,239	)
Other operating expense (1)		(3,568	)		-		-		-			(1,024	)		(4,592	)
Amortization and depreciation		(158	)		-		-		-			(3	)		(161	)
Total operating expense		(10,837	)		-		-		(841	)		(1,314	)		(12,992	)
Other income, net		237			812		-		-			502			1,551
(Loss) income before income taxes	$	(2,622	)	$	812	$	300	$	1,414		$	(812	)	$	(908	)
Goodwill and intangible assets (2)	$	6,759		$	-	$	-	$	-		$	-		$	6,759

(1) Other operating expense primarily consist of rent and other occupancy expenses, software and equipment expense, corporate insurance and other regulatory and professional fees. 

(2) 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 years ended December 31, 2024 and 2023.