Discontinued Operations Classification

9 Months Ended

Sep. 30, 2023

Discontinued Operations Classification [Abstract]

Discontinued Operations Classification

4. Discontinued Operations Classification

On October 7, 2022 the Company consummated the sale of substantially all of its excess and surplus lines operations to Core Specialty Insurance Holdings, Inc. (“Core Specialty”) for $40.0 million cash consideration, plus an estimated $19.9 million consideration for the acquisition costs associated with certain net unearned premium reserves.  The Company retained the related loss and loss adjustment expenses (“LAE”) reserves of its excess and surplus lines businesses and will experience future cash outflows and change in estimates for these reserves until all claims have been settled. The transaction was comprised of substantially all of nine business units within the Company’s former Specialty Commercial Segment, certain related assets and liabilities, and the immediate transition to Core Specialty of approximately 200 employees who produce and support these lines of businesses. This transaction met the criteria for discontinued operations accounting. As a result, the results of operations for the affected excess and surplus lines are included in discontinued operations in our Consolidated Statements of Operations for all periods shown. The following table summarizes income (loss) from discontinued operations (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Gross premiums written	$	(54,688)	$	113,502	$	(25,459)	$	331,190
Ceded premiums written		53,479		(70,088)		23,933		(203,861)
Net premiums written		(1,209)		43,414		(1,526)		127,329
Change in unearned premiums		-		(1,463)		-		859
Net premiums earned		(1,209)		41,951		(1,526)		128,188
Commissions and fees		-		241		-		810
Other income		1,978		-		6,786		-
Total revenues		769		42,192		5,260		128,998
Losses and loss adjustment expenses		3,184		31,244		(1,803)		95,174
Operating expenses		2,432		8,028		5,930		22,894
Amortization of intangible assets		-		119		-		357
Total expenses		5,616		39,391		4,127		118,425
(Loss) income from discontinued operations before tax	$	(4,847)	$	2,801	$	1,133	$	10,573
Income tax expense from discontinued operations		-		1,701		-		6,419
Net (loss) income from discontinued operations	$	(4,847)	$	1,100	$	1,133	$	4,154