Note 4. Fee and Agency Income

6 Months Ended

Jun. 30, 2015

4. Fee and Agency Income

The Company records fee income as corresponding policy premiums are earned. Risk Solutions is compensated in two ways. Risk Solutions earns fee income based on the volume of business produced for marketing, underwriting and administrative services that they provide for their carriers (“fee income–administration”), and earns profit-sharing commissions if such business exceeds certain profitability benchmarks (“fee income–profit commissions”). Profit-sharing commissions are accounted for beginning in the period in which the Company believes they are reasonably estimable, which is typically at the point that claims have developed to a level where recent claim development history (“Claim Development Patterns”) can be applied to generate reasonably reliable estimates of ultimate claim levels. Profit-sharing commissions are a function of Risk Solutions attaining certain profitability thresholds and could vary greatly from quarter to quarter. Agency income consists of commissions, fees and lead revenue earned by our Agencies. Agency income of $1,139,000 for the three months and six months ended June 30, 2015 from GAF is included in the table below with no comparable 2014 amounts.

Fee and Agency income consisted of the following (in thousands):

		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2015		2014		2015		2014

Agency income	$	3,639	$	2,543	$	6,116	$	9,623
Fee income–administration		3,768		2,831		7,568		5,542
Fee income– profit commissions (recovery)		(327)		187		(62)		372

	$	7,080	$	5,561	$	13,622	$	15,537