10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

Commission File Number: 001-12117

FIRST ACCEPTANCE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	75-1328153
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
3813 Green Hills Village Drive Nashville, Tennessee	37215
(Address of principal executive offices)	(Zip Code)

(615) 844-2800

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐  (Do not check if a smaller reporting company)	Smaller Reporting Company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐    No ☒

At August 8, 2017, there were 41,199,854 shares outstanding of the registrant’s common stock, par value $0.01 per share.

FIRST ACCEPTANCE CORPORATION

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2017

INDEX

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3. Quantitative and Qualitative Disclosures About Market Risk	25
Item 4. Controls and Procedures	27
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	28
Item 4. Mine Safety Disclosures	28
Item 6. Exhibits	28
SIGNATURES

i

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

	June 30,			December 31,
	2017			2016
	(Unaudited)
ASSETS
Investments, available-for-sale at fair value (amortized cost of $115,233 and    $117,902, respectively)	$	116,012		$	117,212
Cash, cash equivalents, and restricted cash		125,530			118,681
Premiums, fees, and commissions receivable, net of allowance of $378 and    $279, respectively		76,847			66,393
Deferred tax assets, net		34,784			35,641
Other investments		10,468			9,994
Other assets		5,753			6,078
Property and equipment, net		3,475			4,213
Deferred acquisition costs		5,332			4,852
Goodwill		29,384			29,384
Identifiable intangible assets, net		7,243			7,626
TOTAL ASSETS	$	414,828		$	400,074
LIABILITIES AND STOCKHOLDERS’ EQUITY
Loss and loss adjustment expense reserves	$	162,232		$	161,079
Unearned premiums and fees		91,644			78,861
Debentures payable		40,324			40,302
Term loan from principal stockholder		29,792			29,779
Accrued expenses		5,514			7,089
Other liabilities		11,701			10,476
Total liabilities		341,207			327,586
Stockholders’ equity:
Preferred stock, $.01 par value, 10,000 shares authorized		—			—
Common stock, $.01 par value, 75,000 shares authorized; 41,200 and 41,160 issued and outstanding, respectively		412			412
Additional paid-in capital		457,898			457,750
Accumulated other comprehensive income, net of tax of $(482) and $(1,110), respectively		2,474			1,316
Accumulated deficit		(387,163	)		(386,990	)
Total stockholders’ equity		73,621			72,488
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	414,828		$	400,074

See notes to consolidated financial statements.

1

FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited)

(in thousands, except per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Revenues:
Premiums earned	$	73,459		$	80,850		$	143,272		$	157,257
Commission and fee income		16,824			19,183			34,052			38,764
Investment income		1,123			1,646			2,156			2,608
Gain on sale of foreclosed real estate		—			1,237			—			1,237
Net realized gains (losses) on investments, available-for-sale		5			(162	)		—			(164	)
		91,411			102,754			179,480			199,702
Costs and expenses:
Losses and loss adjustment expenses		62,806			100,765			119,086			174,184
Insurance operating expenses		27,879			30,314			55,935			59,961
Other operating expenses		267			283			538			563
Stock-based compensation		74			68			113			105
Depreciation		540			616			1,086			1,267
Amortization of identifiable intangibles assets		195			239			398			477
Interest expense		1,130			1,076			2,228			2,126
		92,891			133,361			179,384			238,683
(Loss) income before income taxes		(1,480	)		(30,607	)		96			(38,981	)
(Benefit) provision for income taxes		(577	)		(10,708	)		269			(13,577	)
Net loss	$	(903	)	$	(19,899	)	$	(173	)	$	(25,404	)
Net loss per share:
Basic	$	(0.02	)	$	(0.48	)	$	(0.00	)	$	(0.62	)
Diluted	$	(0.02	)	$	(0.48	)	$	(0.00	)	$	(0.62	)
Number of shares used to calculate net loss per share:
Basic		41,164			41,064			41,162			41,062
Diluted		41,164			41,064			41,162			41,062
Reconciliation of net loss income to other comprehensive (loss) income:
Net loss	$	(903	)	$	(19,899	)	$	(173	)	$	(25,404	)
Net unrealized change in investments, net of tax of $388,     $757, $628 and $1,668, respectively		720			1,407			1,158			3,098
Comprehensive (loss) income	$	(183	)	$	(18,492	)	$	985		$	(22,306	)
Detail of net realized gains (losses) on investments, available-for-sale:
Net realized gains (losses) on redemptions	$	5		$	(15	)	$	—		$	(17	)
Other-than-temporary impairment charges		—			(147	)		—			(147	)
Net realized gains (losses) on investments, available-for-sale	$	5		$	(162	)	$	-		$	(164	)

See notes to consolidated financial statements.

2

FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)

	Six Months Ended
	June 30,
	2017			2016
Cash flows from operating activities:
Net loss	$	(173	)	$	(25,404	)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation		1,086			1,267
Amortization of identifiable intangibles assets		398			477
Stock-based compensation		113			105
Deferred income taxes		229			(13,736	)
Other-than-temporary impairment on investments, available-for-sale		—			147
Net realized losses on redemptions of investments		—			17
Investment income from other investments		(343	)		(355	)
Gain on sale of foreclosed real estate, net		—			(1,237	)
Other		118			61
Change in:
Premiums, fees, and commission receivable		(10,355	)		(9,230	)
Deferred acquisition costs		(480	)		(183	)
Loss and loss adjustment expense reserves		1,153			43,941
Unearned premiums and fees		12,783			11,920
Other liabilities		1,225			1,347
Other		(1,221	)		1,652
Net cash provided by operating activities		4,533			10,789
Cash flows from investing activities:
Purchases of investments, available-for-sale		(3,519	)		(156	)
Maturities and redemptions of investments, available-for-sale		5,977			6,968
Purchases of other investments		(133	)		(725	)
Distributions from other investments		319			2,190
Capital expenditures		(348	)		(1,983	)
Proceeds from sale of foreclosed real estate, net		—			1,769
Acquisition of identifiable intangible assets		(15	)		(40	)
Net cash provided by investing activities		2,281			8,023
Cash flows from financing activities:
Net proceeds from issuance of common stock		35			40
Net cash provided by financing activities		35			40
Net change in cash, cash equivalents, and restricted cash		6,849			18,852
Cash, cash equivalents, and restricted cash, beginning of period		118,681			115,587
Cash, cash equivalents, and restricted cash, end of period	$	125,530		$	134,439

See notes to consolidated financial statements.

3

FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. General

The consolidated financial statements of First Acceptance Corporation (the “Company”) included herein have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been omitted. In the opinion of management, the consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the interim periods.

The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2016.

Cash, Cash Equivalents, and Restricted Cash

Cash, cash equivalents, and restricted cash consist of bank demand deposits and highly-liquid investments. All investments with maturities of three months or less at the date of purchase are considered cash equivalents. At June 30, 2017 and December 31, 2016, the Company had restricted cash equivalents of $17.3 million and $18.6 million, respectively.

2. Fair Value

Fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are generally based upon observable and unobservable inputs. Observable inputs are based on market data from independent sources, while unobservable inputs reflect the Company’s view of market assumptions in the absence of observable market information. All assets and liabilities that are carried at fair value are classified and disclosed in one of the following categories:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Quoted market prices for similar assets or liabilities in active markets; quoted prices by independent pricing services for identical or similar assets or liabilities in markets that are not active; and valuations, using models or other valuation techniques, that use observable market data. All significant inputs are observable, or derived from observable information in the marketplace, or are supported by observable levels at which transactions are executed in the marketplace.

Level 3 - Instruments that use non-binding broker quotes or model driven valuations that do not have observable market data.

NAV    -   Calculated net asset value (“NAV”) based on an ownership interest to which a proportionate share of net assets is attributed.

The Company considers the valuation methods used in both its identifiable intangible assets initial measurement and impairment tests as Level 3. To determine the fair value of acquired trademarks and trade names, the Company uses the relief-from-royalty method, which requires the Company to estimate the future revenue for the related brands, the appropriate royalty rate and the weighted average cost of capital. To determine the fair value of the acquired policy renewal rights and customer relationships, the Company uses an “excess earnings” method that relies on projected future net cash flows and includes key assumptions for the customer retention and renewal rates. The data used in these methods is not observable in the market.

4

FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Fair Value of Financial Instruments

The carrying values and fair values of certain financial instruments were as follows (in thousands).

	June 30, 2017				December 31, 2016
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Assets:
Investments, available-for-sale	$	116,012	$	116,012	$	117,212	$	117,212
Other investments		10,468		10,468		9,994		9,994
Liabilities:
Debentures payable		40,324		17,266		40,302		11,488
Term loan from principal stockholder		29,792		22,126		29,779		15,000

The fair values as presented represent the Company’s best estimates and may not be substantiated by comparisons to independent markets. The fair value of the debentures payable and the term loan from principal shareholder are categorized as Level 3, since they were based on current market rates offered for debt with similar risks and maturities, an unobservable input categorized as Level 3. Carrying values of certain financial instruments, such as cash and cash equivalents and premiums, fees, and commissions receivable, approximate fair value due to the short-term nature of the instruments and are not required to be disclosed. Therefore, the aggregate of the fair values presented in the preceding table does not purport to represent the Company’s underlying value.

The following tables present the fair-value measurements for each major category of assets that are measured on a recurring basis (in thousands). Other investments are carried at net asset value which approximates fair value.

			Fair Value Measurements Using
			Quoted Prices		Significant
			in Active		Other		Significant		Proportionate
			Markets for		Observable		Unobservable		Share of
			Identical Assets		Inputs		Inputs		Net Assets
June 30, 2017	Total		(Level 1)		(Level 2)		(Level 3)		(NAV)
Fixed maturities, available-for-sale:
U.S. government and agencies	$	19,499	$	19,499	$	—	$	—	$	—
Political subdivisions		4,183		—		4,183		—		—
Revenue and assessment		5,463		—		5,463		—		—
Corporate bonds		44,829		—		44,829		—		—
Collateralized mortgage obligations:
Agency backed		21,610		—		21,610		—		—
Non-agency backed – residential		2,765		—		2,765		—		—
Non-agency backed – commercial		1,710		—		1,710		—		—
Total fixed maturities, available-for-sale		100,059		19,499		80,560		—		—
Preferred stocks, available-for-sale		3,266		3,266		—		—		—
Mutual funds, available-for-sale		12,687		12,687	—			—		—
Total investments, available-for-sale		116,012		35,452		80,560		—		—
Other investments		10,468		—		—		5,252		5,216
Cash, cash equivalents, and restricted cash		125,530		125,530		—		—		—
Total	$	252,010	$	160,982	$	80,560	$	5,252	$	5,216

5

FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

			Fair Value Measurements Using
			Quoted Prices		Significant
			in Active		Other		Significant		Proportionate
			Markets for		Observable		Unobservable		Share of
			Identical Assets		Inputs		Inputs		Net Assets
December 31, 2016	Total		(Level 1)		(Level 2)		(Level 3)		(NAV)
Fixed maturities, available-for-sale:
U.S. government and agencies	$	18,951	$	18,951	$	—	$	—	$	—
Political subdivisions		4,165		—		4,165		—		—
Revenue and assessment		5,683		—		5,683		—		—
Corporate bonds		45,540		—		45,540		—		—
Collateralized mortgage obligations:
Agency backed		22,422		—		22,422		—		—
Non-agency backed – residential		2,933		—		2,933		—		—
Non-agency backed – commercial		1,895		—		1,895		—		—
Total fixed maturities, available-for-sale		101,589		18,951		82,638		—		—
Preferred stocks, available-for-sale		3,112		3,112		—		—		—
Mutual funds, available-for-sale		12,511		12,511	—			—		—
Total investments, available-for-sale		117,212		34,574		82,638		—		—
Other investment		9,994		—		—		4,858		5,136
Cash, cash equivalents, and restricted cash		118,681		118,681		—		—		—
Total	$	245,887	$	153,255	$	82,638	$	4,858	$	5,136

The fair values of the Company’s investments are determined by management after taking into consideration available sources of data. All of the portfolio valuations classified as Level 1 or Level 2 in the above tables are priced exclusively by utilizing the services of independent pricing sources using observable market data. The Level 2 classified security valuations are obtained from a single independent pricing service. The Level 3 classified security in the table above consists of an investment in the common stock of a real estate investment trust for which fair value has been determined using a model driven valuation that does not have observable market data. There were no transfers between Level 1 and Level 2 for the three and six months ended June 30, 2017 and 2016. The Company’s policy is to recognize transfers between levels at the end of the reporting period based on specific identification. The Company has not made any adjustments to the prices obtained from the independent pricing sources.

The Company has reviewed the pricing techniques and methodologies of the independent pricing service for Level 2 investments and believes that its policies adequately consider market activity, either based on specific transactions for the security valued or based on modeling of securities with similar credit quality, duration, yield and structure that were recently traded. The Company monitored security-specific valuation trends and has made inquiries with the pricing service about material changes or the absence of expected changes to understand the underlying factors and inputs and to validate the reasonableness of the pricing.  Likewise, the Company reviews the Level 3 valuation model to understand the underlying factors and inputs and to validate the reasonableness of the pricing.

6

FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following table represents the quantitative disclosure for the asset classified as Level 3 during the six months ended June 30, 2017 (in thousands).

	Fair Value
	Measurements Using
	Significant Unobservable
	Inputs (Level 3)
	Common Stock
	at Fair Value
Balance at December 31, 2016	$	4,858
Gains included in net loss		—
Gains included in comprehensive income (loss)		317
Investments and capital calls		77
Distributions received		—
Transfers into and out of Level 3		—
Balance at June 30, 2017	$	5,252

3. Investments

Investments, Available-for-Sale

The following tables summarize the Company’s investment securities (in thousands).

		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
June 30, 2017	Cost	Gains	Losses	Value
U.S. government and agencies	$       19,641	$                 96	$              (238)	$          19,499
Political subdivisions	4,173	10	—	4,183
Revenue and assessment	5,255	208	—	5,463
Corporate bonds	45,908	67	(1,146)	44,829
Collateralized mortgage obligations:
Agency backed	22,149	68	(607)	21,610
Non-agency backed – residential	2,213	560	(8)	2,765
Non-agency backed – commercial	1,056	654	—	1,710
Total fixed maturities, available-for-sale	100,395	1,663	(1,999)	100,059
Preferred stocks, available-for-sale	3,025	281	(40)	3,266
Mutual funds, available-for-sale	11,813	874		12,687
	$        115,233	$            2,818	$           (2,039)	$        116,012

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2016	Cost		Gains		Losses			Value
U.S. government and agencies	$	19,142	$	112	$	(303	)	$	18,951
Political subdivisions		4,233		—		(68	)		4,165
Revenue and assessment		5,539		185		(41	)		5,683
Corporate bonds		47,238		107		(1,805	)		45,540
Collateralized mortgage obligations:
Agency backed		23,093		73		(744	)		22,422
Non-agency backed – residential		2,411		529		(7	)		2,933
Non-agency backed – commercial		1,408		487		—			1,895
Total fixed maturities, available-for-sale		103,064		1,493		(2,968	)		101,589
Preferred stocks, available-for-sale		3,025		198		(111	)		3,112
Mutual funds, available-for-sale		11,813		698		—			12,511
	$	117,902	$	2,389	$	(3,079	)	$	117,212

7

FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following table sets forth the scheduled maturities of the Company’s fixed maturity securities based on their fair values (in thousands). Actual maturities may differ from contractual maturities because certain securities may be called or prepaid by the issuers.

					Securities
	Securities		Securities		with No		All
	with		with		Unrealized		Fixed
	Unrealized		Unrealized		Gains or		Maturity
June 30, 2017	Gains		Losses		Losses		Securities
One year or less	$	1,779	$	3,574	$	—	$	5,353
After one through five years		12,802		17,345		—		30,147
After five through ten years		2,844		30,879		—		33,723
After ten years		4,751		—		—		4,751
No single maturity date		4,818		21,267		—		26,085
	$	26,994	$	73,065	$	—	$	100,059

The following table reflects the number of fixed maturity securities with gross unrealized gains and losses. Gross unrealized losses are further segregated by the length of time that individual securities have been in a continuous unrealized loss position.

	Gross Unrealized Losses
	Less than		Greater		Gross
	or equal to		than 12		Unrealized
At:	12 months		months		Gains
June 30, 2017		36		1		39
December 31, 2016		37		—		40

The following table reflects the fair value and gross unrealized losses of those fixed maturity securities in a continuous unrealized loss position for greater than 12 months at June 30, 2017. There were no securities meeting these criteria at December 31, 2016. Gross unrealized losses are further segregated by the percentage of amortized cost (in thousands, except number of securities).

	Number				Gross
Gross Unrealized Losses	of		Fair		Unrealized
at June 30, 2017:	Securities		Value		Losses
Less than or equal to 10%		1	$	108	$	(4	)
Greater than 10%		—		—		—
		1	$	108	$	(4	)

8

FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following tables set forth the amount of gross unrealized losses by current severity (as compared to amortized cost) and length of time that individual securities have been in a continuous unrealized loss position (in thousands).

	Fair Value of
	Securities with
Length of	Gross		Gross			Severity of Gross Unrealized Losses
Gross Unrealized Losses	Unrealized		Unrealized			Less			5% to			Greater
at June 30, 2017:	Losses		Losses			than 5%				10%		than 10%
Less than or equal to:
Three months	$	12,453	$	(39	)	$	(39	)	$	—		$	—
Six months		299		(3	)		(3	)		—			—
Nine months		34,834		(983	)		(983	)		—			—
Twelve months		27,008		(1,010	)		(839	)		(171	)		—
Greater than twelve months		108		(4	)		(4	)		—			—
Total	$	74,702	$	(2,039	)	$	(1,868	)	$	(171	)	$	—

	Fair Value of
	Securities with
Length of	Gross		Gross			Severity of Gross Unrealized Losses
Gross Unrealized Losses	Unrealized		Unrealized			Less			5% to			Greater
at December 31, 2016:	Losses		Losses			than 5%				10%		than 10%
Less than or equal to:
Three months	$	58,550	$	(1,886	)	$	(1,461	)	$	(425	)	$	—
Six months		27,193		(1,186	)		(232	)		(954	)		—
Nine months		152		—			—			—
Twelve months		105		(7	)		—			(7	)		—
Greater than twelve months		—		—			—			—			—
Total	$	86,000	$	(3,079	)	$	(1,693	)	$	(1,386	)	$	-

Other-Than-Temporary Impairment

For the six months ended June 30, 2017, the Company did not recognize any OTTI charges in net income (loss).

The Company believes that the securities having unrealized losses at June 30, 2017 were not other-than-temporarily impaired. The Company also does not intend to sell any of these securities and it is more likely than not that the Company will not be required to sell any of these securities before the recovery of their amortized cost basis.

For the six months ended June 30, 2016, the Company recognized OTTI charges in net income (loss) of $147 thousand related to one mutual fund.

Other Investments

Other investments consist of the common stock of a real estate investment trust and limited partnership interests in three funds that invest in (i) commercial real estate and secured commercial real estate loans acquired from financial intuitions, (ii) undervalued international publicly-traded equities and (iii)a pre-identified pool of select buyout private equity funds. These investments have redemption and transfer restrictions. The Company does not intend to sell these investments, and it is more likely than not that the Company will not be required to sell them before the expiration of such restrictions.At June 30, 2017, the Company had unfunded commitments to invest $2.5 million into two of these investments.

Restrictions

At June 30, 2017, fixed maturities and cash equivalents with a fair value and amortized cost of $6.4 million were on deposit with various insurance departments as a requirement of doing business in those states. Cash equivalents with a fair value and amortized cost of $17.2 million were on deposit with another insurance company as collateral for an assumed reinsurance contract.

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FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Investment Income and Net Realized Gains and Losses

The major categories of investment income follow (in thousands).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Fixed maturities, available-for-sale	$	616		$	981		$	1,239		$	1,951
Mutual funds, available-for-sale		158			160			320			366
Preferred stocks		44			25			89			49
Other investments		194			525			343			355
Cash and cash equivalents		217			66			376			107
Other		17			14			31			27
Investment expenses		(123	)		(125	)		(242	)		(247	)
	$	1,123		$	1,646		$	2,156		$	2,608

The components of net realized gains (losses) on investments, available-for-sale at fair value follow (in thousands).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Gains	$	8		$	—		$	8		$	—
Losses		(3	)		(15	)		(8	)		(17	)
Other-than-temporary impairment		—			(147	)		—			(147	)
	$	5		$	(162	)	$	-		$	(164	)

Realized gains and losses on sales and redemptions are computed based on specific identification. The non-credit related portion of other-than-temporary impairment (“OTTI”) is included in other comprehensive loss. The amounts of non-credit OTTI for securities still owned was $1.1 million at both June 30, 2017 and December 31, 2016.

4. Net Loss Per Share

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share data).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Net loss	$	(903	)	$	(19,899	)	$	(173	)	$	(25,404	)
Weighted average common basic shares		41,164			41,064			41,162			41,062
Effect of dilutive securities		—			—			—			—
Weighted average common dilutive shares		41,164			41,064			41,162			41,062
Basic and diluted net loss per share	$	(0.02	)	$	(0.48	)	$	(0.00	)	$	(0.62	)

On May 9, 2017, the Compensation Committee of the Board of Directors of the Company awarded 500 thousand restricted stock units to an executive officer. Such restricted stock units will vest, and an equal number of shares of common stock will be deliverable upon the third anniversary of the date of grant. Compensation expense related to the units of $590 thousand was calculated based upon the closing market price of the common stock on the date of grant ($1.18) and is recorded on a straight-line basis over the vesting period.

For the three and six months ended June 30, 2017, the computation of diluted net loss per share did not include 576 thousand     restricted stock units having dilutive effects of 37 and 39 thousand shares, respectively, since their inclusion would have been anti-dilutive. Options to purchase 120 thousand shares and 93 thousand restricted stock units were not included in the computation of diluted net income per share for these periods, since the exercise price of the stock options was in excess of the average stock price for this period and the inclusion of the restricted stock units would have been anti-dilutive.

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FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

For the three and six months ended June 30, 2016, the computation of diluted net loss per share did not include options to purchase 825 thousand shares and 270 thousand restricted stock units, a dilutive effect of 180 thousand shares and 237 thousand shares, respectively, since their inclusion would have been anti-dilutive. Options to purchase 240 thousand shares were not included in the computation of diluted net loss per share for the three and six months ended June 30, 2016, since their exercise price was in excess of the average stock price for these periods.  

5. Losses and Loss Adjustment Expenses Incurred and Paid

Information regarding the reserve for unpaid losses and loss adjustment expenses (“LAE”) is as follows (in thousands).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Liability for unpaid losses and LAE at beginning of period, gross	$	156,410		$	132,650		$	161,079		$	122,071
Reinsurance balances receivable		(763	)		(491	)		(769	)		(464	)
Liability for unpaid losses and LAE at beginning of period, net		155,647			132,159			160,310			121,607
Add: Provision for losses and LAE:
Current period		62,599			74,974			119,665			143,173
Prior periods		207			25,791			(579	)		31,011
Net losses and LAE incurred		62,806			100,765			119,086			174,184
Less: Losses and LAE paid:
Current period		30,182			40,345			46,319			58,750
Prior periods		26,833			27,241			71,639			71,703
Net losses and LAE paid		57,015			67,586			117,958			130,453
Liability for unpaid losses and LAE at end of period, net		161,438			165,338			161,438			165,338
Reinsurance balances receivable		794			674			794			674
Liability for unpaid losses and LAE at end of period, gross	$	162,232		$	166,012		$	162,232		$	166,012

The development for the three and six months ended June 30, 2017 was the net result of favorable LAE development related to bodily injury claims over multiple prior accident periods, offset by unfavorable development on losses related to bodily injury severity related to the 2016 and 2017 accident years.  

The unfavorable development for the three and six months ended June 30, 2016 was the result of increased losses primarily from the 2015 accident year across all major coverages. The most significant causes of the development were a greater than usual emergence of reported claims and higher bodily injury severity.

.

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FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

6. Income Taxes

The (benefit) provision for income taxes consisted of the following (in thousands).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017		2016
Federal:
Current	$	(92	)	$	—		$	30	$	—
Deferred		(398	)		(10,665	)		229		(13,627	)
		(490	)		(10,665	)		259		(13,627	)
State:
Current		(70	)		60			10		159
Deferred		(17	)		(103	)		—		(109	)
		(87	)		(43	)		10		50
	$	(577	)	$	(10,708	)	$	269	$	(13,577	)

The (benefit) provision for income taxes differs from the amounts computed by applying the statutory federal corporate tax rate of 35% to loss before income taxes as a result of the following (in thousands).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017		2016
(Benefit) provision for income taxes at statutory rate	$	(518	)	$	(10,712	)	$	34	$	(13,643	)
Tax effect of:
Tax-exempt investment income		—			(10	)		—		(20	)
Stock option expirations		—			13			229		17
State income taxes, net of federal income tax benefit    and state valuation allowance		(63	)		(65	)		6		(6	)
Other		4			66			—		75
	$	(577	)	$	(10,708	)	$	269	$	(13,577	)

The Company had a deferred tax asset (“DTA”) valuation allowance of $1.8 million at both June 30, 2017 and  December 31, 2016, attributable to certain amounts related to state taxes and OTTI that are not more likely than not to be realized. In assessing the Company’s ability to realize the DTA, both positive and negative evidence are used to evaluate the allowance. Although the Company incurred a 2016 pre-tax loss of $45.1 million which is a source of negative evidence, it placed greater weight on its outlook for future taxable income over the allowable time period for realization of the DTA and concluded that it is more likely than not that the remaining DTA will be realized. Regarding the length of time available to realize the DTA, at June 30, 2017, $23.8 million of the DTA related to net operating loss carryforwards do not expire until 2031 through 2036 and $2.0 million in AMT (“Alternative Minimum Tax”) carryforwards have no expiration date. The DTA valuation allowance may be adjusted in future periods if management determines that it is more likely than not that some portion or all of the DTA will not be realized. In the event the DTA valuation allowance is increased, the Company would record an income tax expense for the adjustment.

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FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

7. Segment Information

The Company operates in two business segments with its primary focus being the selling, servicing and underwriting of non-standard personal automobile insurance. The real estate and corporate segment consists of the activities related to the disposition of foreclosed real estate held for sale and other operating expenses not directly related to the insurance operations, interest expense and stock-based compensation, offset by investment income on corporate invested assets.

The following table presents selected financial data by business segment (in thousands).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Revenues:
Insurance	$	91,394		$	101,501		$	179,447		$	198,434
Real estate and corporate		17			1,253			33			1,268
Consolidated total	$	91,411		$	102,754		$	179,480		$	199,702
(Loss) income before income taxes:
Insurance	$	(26	)	$	(30,434	)	$	2,942		$	(37,455	)
Real estate and corporate		(1,454	)		(173	)		(2,846	)		(1,526	)
Consolidated total	$	(1,480	)	$	(30,607	)	$	96		$	(38,981	)

	June 30,		December 31,
	2017		2016
Total assets:
Insurance	$	369,700	$	354,008
Real estate and corporate		45,128		46,066
Consolidated total	$	414,828	$	400,074

8. Litigation

The Company is named as a defendant in various lawsuits, arising in the ordinary course of business, generally relating to its insurance operations. All legal actions relating to claims made under insurance policies are considered by the Company in establishing its loss and loss adjustment expense reserves. The Company also faces lawsuits from time to time that seek damages beyond policy limits, commonly known as bad faith claims, as well as class action and individual lawsuits that involve issues arising in the course of the Company’s business. The Company continually evaluates potential liabilities and reserves for litigation of these types using the criteria established by FASB ASC 450, Contingencies (“FASB ASC 450”). Pursuant to FASB ASC 450, reserves for a loss may only be recognized if the likelihood of occurrence is probable and the amount can be reasonably estimated. If a loss, while not probable, is judged to be reasonably possible, management will disclose, if it can be estimated, a possible range of loss or state that an estimate cannot be made. Management evaluates each legal action and records reserves for losses, as warranted, by establishing a reserve in its consolidated balance sheets in loss and loss adjustment expense reserves for bad faith claims and in other liabilities for other lawsuits. Amounts incurred are recorded in the Company’s consolidated statements of comprehensive income (loss) in losses and loss adjustment expenses for bad faith claims and in insurance operating expenses for other lawsuits unless otherwise disclosed.

9. Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board (“IASB”) jointly issued a new revenue recognition standard, Accounting Standard Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” that will supersede virtually all revenue recognition guidance in GAAP and International Financial Reporting Standards (“IFRS”). This guidance had an effective date for public companies for annual and interim periods beginning after December 15, 2016, with early adoption not permitted. In July 2015, the FASB issued a one-year deferral of this effective date with the option for entities to early adopt at the original effective date. The standard is intended to increase comparability across industries and jurisdictions. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. The new standard will not change accounting guidance for insurance contracts. However, the Company has revenue from non-insurance arrangements which falls under this guidance, as would the sale of the Company’s tract of land that is held for sale. The Company is currently evaluating the applicability of this guidance to the various types of fee income related to its insurance contracts.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Approximately 20% of the Company’s total revenues may be subject to the guidance in ASU No. 2014-09. Historically, approximately 40% of these revenues are in the form of commissions paid by third party insurance carriers which are earned upon the effective date of bound coverage, less an estimated allowance for return commissions based upon historical experience, since no significant performance obligation remains in these arrangements after coverage is bound and the control of the underlying insurance policy is transferred to the customer. Approximately 25% of these revenues are in the form of commissions paid by a third-party entity on the sales of ancillary insurance products that are earned on a pro-rata basis over the life of the underlying contracts, since the Company has a contractual performance obligation for these contracts. Approximately 35% of these revenues are derived from various fees related to insurance contracts that are recognized into income as the related services are performed and costs are incurred.

The Company has not finalized the impact, if any, on our consolidated financial statements at this time. However, based on our initial evaluation of this guidance, including contract reviews, the Company does not expect the future impacts to be material.

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments – Overall (Subtopic 825-20): Recognition and Measure of Financial Assets and Financial Liabilities” which requires entities to measure many equity investments at fair value and recognize changes in fair value in net income (loss), as opposed to the current practice of other comprehensive income (loss). The guidance provides a new measurement alternative for equity investments that do not have readily determinable fair values and do not qualify for the net asset value practical expedient. Under this alternative, these investments can be measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The guidance is effective for public business entities for annual periods beginning after December 15, 2017, and interim periods within those years. The Company has not determined the impact on future consolidated financial statements once this is adopted.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” which requires lessees to record most leases on their balance sheets as lease liabilities with corresponding right-of-use assets, but recognize expense in a manner similar to the current accounting treatment. The guidance is effective for public business entities for annual periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in their financial statements. The Company’s lease arrangements fall under this guidance and will be required to be shown on its consolidated balance sheet. The Company is currently evaluating controls and processes to ensure this guidance is reflected properly on future consolidated financial statements and expects to adopt this guidance in its consolidated balance sheet as of March 31 2019 along with a corresponding restatement of its consolidated balance sheet as of March 31, 2018, As detailed in Note 8 of the 2016 10-K, the undiscounted contractual cash payments remaining on leased properties was $16.8 million as of December 31, 2017.  

In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting” which addressed the recognition, presentation and classification of awards, forfeitures and shares withheld for tax purposes. The standard was effective for fiscal periods beginning after December 15, 2016, with each provision having a different application method. The adoption of this standard effective January 1, 2017 did not have a material impact on our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326)” which requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses will be based on relevant information, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The expected increases and decreases in the credit loss will be reflected on the consolidated statement of comprehensive income (loss). The guidance is effective for public business entities for annual periods beginning after December 15, 2019, and interim periods within those years. Early adoption is permitted. The Company has not determined the impact on future consolidated financial statements once this is adopted.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” which clarifies how entities should classify certain cash receipts and cash payments, including how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. Entities will have to apply the guidance retrospectively, but if it is impracticable to do so for an issue, the amendments related to that issue would be applied prospectively. The Company has not determined the impact on future consolidated financial statements once this is adopted.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” which eliminates the requirement to calculate the implied fair value of goodwill to measure an impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value.

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FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The standard will be applied prospectively. The guidance is effective for annual and interim impairment tests performed by public business entities for periods beginning after December 15, 2019. Early adoption is permitted for impairment testing dates after January 1, 2017. The Company believes that it will be reasonably able to comply with these requirements.

In April 2017, the FASB issued ASU No. 2017-08, “Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities” which shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date instead of the current practice of amortizing the premium as a yield adjustment over the contractual life of the security. The guidance is effective for public business entities for periods beginning after December 15, 2018. Early adoption is permitted. The guidance calls for a modified retrospective transition approach under which a cumulative-effect adjustment will be made to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Company believes that it will be reasonably able to comply with these requirements and has not determined the impact on future consolidated financial statements once this is adopted.

In May 2017, the FASB issued ASU No. 2017-09, “Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting” that clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The new guidance will provide relief to entities that make non-substantive changes to their share-based payment awards. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The Company currently has no intentions to modify any of its currently outstanding share-based payment awards, however, it would likely consider early adoption of this guidance upon any such occurrence.

10. Related Parties

On June 29, 2015, to finance the acquisition of the Titan Agencies, the Company borrowed the full amount under a $30 million Loan Agreement (the “Loan Agreement”) with Diamond Family Investments, LP, an affiliate of Gerald J. Ford, the Company’s controlling stockholder.  The Loan Agreement provided a $30 million interest-only senior term loan facility, maturing in full on June 29, 2025. Commencing June 29, 2016, the Company has the right to prepay the loan in whole or in part, in cash, without premium or penalty, upon written notice to the lender. Amounts prepaid under the Loan Agreement may not be reborrowed. The term loan outstanding under the Loan Agreement bears interest at a rate of 8% per annum. The Loan Agreement contains certain representations, warranties and covenants. The Loan Agreement also contains customary events of default, including but not limited to: nonpayment; material inaccuracy of representations and warranties; violations of covenants; cross-default to material indebtedness; certain material judgments; certain bankruptcies and liquidations; invalidity of the loan documents and related events; and a change of control (as defined in the Loan Agreement).

In April 2016, the Company entered into standard agreements for treasury and investment custodial services with a bank in which our principal shareholder has a 15% indirect ownership interest. The fees under these agreements for the three and six months ended June 30, 2017 were $42 thousand and $91 thousand, respectively, and $32 thousand for the three months ended June 30, 2016.

11. Current Liquidity and Statutory Capital and Surplus

The Company has $70.0 million in long-term borrowings of which $40.0 million matures in 2037 and $30.0 million matures in 2025. At June 30, 2017, the Company was in compliance with the covenants related to these borrowings. Such borrowings are not obligations of the Company’s regulated insurance company subsidiaries who at June 30, 2017 had combined statutory capital and surplus of $60.6 million. The Company believes that it has sufficient liquidity to meet its current obligations in the foreseeable future, including the payment of interest on its long-term borrowings which it currently funds through the cash flows of its agency operations which are generated outside the Company’s regulated insurance company subsidiaries and are not subject to any limitation on the payment of dividends to the holding company.

The Company has three insurance company subsidiaries that are organized and domiciled under the insurance statutes of Texas, Georgia, and Tennessee. The insurance company subsidiaries operate under licenses issued by various state insurance authorities. Such licenses may be of perpetual duration or periodically renewable, provided the insurance company subsidiaries continue to meet applicable regulatory requirements.

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FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The National Association of Insurance Commissioners (“NAIC”) Model Act for risk-based capital provides formulas to determine each December 31 on an annual basis the amount of statutory capital and surplus that an insurance company needs to ensure that it has an acceptable expectation of not becoming financially impaired. Failure to meet applicable risk-based capital requirements could subject our insurance company subsidiaries to further examination or corrective action imposed by state regulators, including limitations on their writing of additional business, state supervision, or even liquidation. Although statutory risk-based capital calculations are only made as of each December 31, the Company estimated that the three insurance company subsidiaries are above the regulatory company action levels as of June 30,2017. There are also statutory guidelines that suggest that on an annual calendar year basis an insurance company should not exceed a ratio of net premiums written to statutory capital and surplus of 3-to-1. On a combined basis, the ratio for our insurance company subsidiaries of net premiums written for the last twelve months to statutory capital and surplus was 4.7-to-1 at June 30, 2017which is in excess of the suggested guidelines. Management is currently operating under a business plan to reduce premium writings and increase statutory capital and surplus to address the net premiums written tostatutory capital and surplus guidelines.

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FIRST ACCEPTANCE CORPORATION 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements which involve risks and uncertainties. Our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such a difference include those discussed in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for year ended December 31, 2016. The following discussion should be read in conjunction with our consolidated financial statements included with this report and our consolidated financial statements and related Management’s Discussion and Analysis of Financial Condition and Results of Operations for year ended December 31, 2016 included in our Annual Report on Form 10-K for the year ended December 31, 2016.

Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements made in this report, other than statements of historical fact, are forward-looking statements. You can identify these statements from our use of the words “may,” “should,” “could,” “potential,” “continue,” “plan,” “forecast,” “estimate,” “project,” “believe,” “intent,” “anticipate,” “expect,” “target,” “is likely,” “will,” or the negative of these terms and similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include, among other things, statements and assumptions relating to:

• the accuracy and adequacy of our loss reserving methodologies;

• income (loss), income (loss) per share and other financial performance measures;

• the anticipated effects on our results of operations or financial condition from recent and expected developments or events;

• the financial condition of, and other issues relating to the strength of and liquidity available to, issuers of securities held in our investment portfolio;

• and our business and growth strategies.

We believe that our expectations are based on reasonable assumptions. However, these forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results to differ materially from our expectations of future results, performance or achievements expressed or implied by these forward-looking statements. In addition, our past results of operations do not necessarily indicate our future results. We discuss these and other uncertainties in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2016.

You should not place undue reliance on any forward-looking statements. These statements speak only as of the date of this report. Except as otherwise required by applicable laws, we undertake no obligation to publicly update or revise any forward-looking statements or the risk factors described in this report, whether as a result of new information, future events, changed circumstances or any other reason after the date of this report.

General

We are principally a retailer, servicer and underwriter of non-standard personal automobile insurance. Non-standard personal automobile insurance is made available to individuals because of their inability or unwillingness to obtain standard insurance coverage due to various factors, including payment history, payment preference, and failure in the past to maintain continuous insurance coverage, driving record and/or vehicle type. At June 30, 2017, we also owned a tract of land in San Antonio, Texas that is held for sale.

At June 30, 2017, we leased and operated 354 retail locations (or “stores”) and a call center staffed by employee-agents who primarily sell non-standard personal automobile insurance products underwritten by us as well as certain commissionable ancillary products. In most states, our employee-agents also sell a complementary insurance product providing personal property and liability coverage for renters underwritten by us. In addition, retail locations in some markets offer non-standard personal automobile insurance serviced and underwritten by other third-party insurance carriers for which we receive a commission.

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FIRST ACCEPTANCE CORPORATION 10-Q

Our insurance operations actively generate revenue from selling non-standard personal automobile insurance products and related products in 16 states. In December 2016, we closed all of our retail locations and ceased writing new business in the state of Missouri. As a result, we currently conduct our servicing and underwriting operations in 13 states and are licensed as an insurer in 13 additional states. After obtaining a license in California, we began selling our non-standard personal automobile insurance product in late June 2016 on a limited basis.

At June 30, 2017, 277 of our 354 stores primarily sell non-standard personal automobile insurance products underwritten by us. The other retail locations primarily offer non-standard personal automobile insurance serviced and underwritten by other third-party insurance carriers for which we receive a commission.

See the discussion in Item 1. “Business—General” in our Annual Report on Form 10-K for the year ended December 31, 2016 for additional information with respect to our business.

The following table shows the number of our retail locations. Retail location counts are based upon the date that a location commenced or ceased writing business. Since December 31, 2015, 90 locations were closed which included 53 that were part of our recent actions to improve profitability, 24 in the Chicago-area whose leases expired in January 2016, and 13 others closed in the normal course of business. During this period, 4 new locations were strategically-placed to replace and consolidate the closed Chicago-area locations.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Retail locations – beginning of period		355			414			355			440
Opened		—			2			—			4
Closed		(1	)		(6	)		(1	)		(34	)
Retail locations – end of period		354			410			354			410

The following table shows the number of our retail locations by state.

	June 30,		December 31,
	2017	2016	2016	2015
Alabama	23	24	23	24
Arizona	10	10	10	10
California	47	48	47	48
Florida	34	34	34	39
Georgia	50	60	50	60
Illinois	38	41	39	61
Indiana	16	17	16	17
Mississippi	6	7	6	7
Missouri	—	9	—	9
Nevada	4	4	4	4
New Mexico	5	5	5	5
Ohio	27	27	27	27
Pennsylvania	11	13	11	14
South Carolina	15	23	15	24
Tennessee	23	23	23	23
Texas	45	65	45	68
Total	354	410	355	440

In response to consumer demand to purchase personal automobile insurance over the phone and through the internet, we offer customers the choice to purchase a policy through an employee-agent in our call center or via our www.acceptance.com website and mobile platform. As of June 30, 2017, approximately 13% of our policies in force were sold through a non-retail sales channel. 

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FIRST ACCEPTANCE CORPORATION 10-Q

Recent Actions

Since August 2016, we have taken the following actions towards the goal of returning our ratio of net premiums written to statutory capital and surplus to within regulatory guidelines and improving profitability:

• Strengthened our Product team and filed and received approval for substantial rate increases and structural changes in our rating programs in response to our increase in claim frequency.  The magnitude and frequency of these rate increases have been unprecedented in our recent history;

• Reduced premium writings, through the closing of 53 poorly performing stores, by temporarily suspending or eliminating new business in selected areas of our business, and tightening our underwriting standards;

At June 30, 2017, these actions have resulted in a year-over year 23% decrease in our policies in force, which has been partially offset by a 17% year-over-year increase in our average in-force premium. This premium increase was driven by an estimated effective rate increase of 12% attained over the last twelve months.

Aggressive actions have been taken in our claims-handling operations. In October 2016, we hired a new Senior Vice President and restructured claims management to include three additional functional Vice President positions. This new structure makes optimal use of departmental availability and experience through redesigned workflows and increases accountability through recurring quality assurance review programs. In May 2017, a new text message status process was instituted allowing insureds and claimants to receive updates during the life cycle of their claim. Along with increased staffing and training, these efforts are helping reduce pending claims to targeted levels.

Collectively, we believe that these actions have contributed to the improved loss ratio for the current 2017 accident period.  

Consolidated Results of Operations

Overview

Our insurance operations actively generate revenues from selling non-standard personal automobile insurance products and related products in 16 states. We currently conduct our servicing and underwriting operations in 13 states through three insurance company subsidiaries: First Acceptance Insurance Company, Inc., First Acceptance Insurance Company of Georgia, Inc. and First Acceptance Insurance Company of Tennessee, Inc. (In December 2016, we closed all of our retail locations and ceased writing new business in the state of Missouri.) Our insurance revenues were primarily generated from:

• premiums earned, including policy and renewal fees, from sales of policies written and assumed by our insurance company subsidiaries;

• commission and fee income, including installment fees on policies written, agency fees and commissions and fees for other ancillary products and policies sold on behalf of third-party insurance carriers; and

• investment income earned on the invested assets of the insurance company subsidiaries.

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FIRST ACCEPTANCE CORPORATION 10-Q

The following table presents gross premiums earned by state (in thousands). The effect of a 23% decrease in our year-over-year policies in force offset by a 17% year-over-year increase in our average in-force premium, resulted in net premiums earned for the three and six months ended June 30, 2017 decreasing by 9%compared with the same period in the prior year.

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2017	2016	2017	2016
Gross premiums earned:
Georgia	$          17,402	$          16,271	$          33,663	$          31,328
Florida	10,761	12,176	21,012	23,785
Texas	8,252	11,266	16,796	21,883
Alabama	8,442	7,286	15,896	14,050
Ohio	7,707	8,094	15,012	15,690
South Carolina	5,281	7,352	10,231	13,946
Tennessee	5,275	5,107	10,023	9,988
Illinois	3,868	5,516	8,075	11,256
Indiana	2,492	2,395	4,810	4,672
Pennsylvania	2,395	2,575	4,646	4,993
Mississippi	1,115	1,043	2,078	2,038
California	420	—	734	—
Missouri	60	1,633	302	3,386
Virginia	96	251	206	465
Total gross premiums earned	73,566	80,965	143,484	157,480
Premiums ceded to reinsurer	(107)	(115)	(212)	(223)
Total net premiums earned	$          73,459	$          80,850	$        143,272	$        157,257

Our insurance segment presents a combined ratio as a measure of its overall underwriting profitability. The components of the combined ratio are as follows:

Loss Ratio - Loss ratio is the ratio (expressed as a percentage) of losses and loss adjustment expenses incurred to premiums earned and is a basic element of underwriting profitability. We calculate this ratio based on all direct and assumed premiums earned, net of ceded reinsurance.

Expense Ratio - Expense ratio is the ratio (expressed as a percentage) of insurance operating expenses (including depreciation and amortization) to net premiums earned. Insurance operating expenses are reduced by commission and fee income from insureds. This is a measurement that illustrates relative management efficiency in administering our operations.

Combined Ratio - Combined ratio is the sum of the loss ratio and the expense ratio. If the combined ratio is at or above 100%, an insurance company cannot be profitable without sufficient investment income.

The following table presents the loss, expense, and combined ratios for our insurance operations:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Loss		85.5	%		124.6	%		83.1	%		110.8	%
Expense		16.0	%		14.8	%		16.3	%		14.6	%
Combined		101.5	%		139.4	%		99.4	%		125.4	%

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FIRST ACCEPTANCE CORPORATION 10-Q

Investments

We use the services of an independent investment manager to manage our investment portfolio. The investment manager conducts, in accordance with our investment policy, all of the investment purchases and sales for our insurance company subsidiaries. Our investment policy has been established by the Investment Committee of our Board of Directors and specifically addresses overall investment goals and objectives, authorized investments, prohibited securities, restrictions on sales by the investment manager and guidelines as to asset allocation, duration and credit quality. Management and the Investment Committee meet regularly with our investment manager to review the performance of the portfolio and compliance with our investment guidelines.

The invested assets of the insurance company subsidiaries consist substantially of marketable, investment grade debt securities, and include U.S. government securities, municipal bonds, corporate bonds, mutual funds, and collateralized mortgage obligations (“CMOs”), in addition to other alternative investments made into limited partnership interests and a real estate investment trust. Investment income is comprised primarily of interest earned on these securities, net of related investment expenses. Although investments are generally purchased with the intention to hold them until maturity, realized gains and losses could occur from time to time as changes are made to our holdings based upon changes in interest rates or the credit quality of specific securities, or as we did in 2016, to increase the statutory capital and surplus of the insurance company subsidiaries that carry fixed maturity securities at amortized cost.

The value of our consolidated available-for-sale investment portfolio was $116.0 million at June 30, 2017 and consisted of fixed maturity securities, preferred stocks, and investments in mutual funds, all carried at fair value with unrealized gains and losses reported in a separate component of stockholders’ equity. At June 30, 2017, we had gross unrealized gains of $2.8 million and gross unrealized losses of $2.0 million in our consolidated investments available-for-sale portfolio.

The value of our other investments was $10.5 million at June 30, 2017 and consisted of limited partnership interests carried at net asset value, which approximates fair value, with unrealized gains and losses reported as investment income, and a privately-held real estate investment trust (“REIT”) carried at fair value, with unrealized gains and losses reported in a separate component of stockholders’ equity. At June 30, 2017, we had gross unrealized gains attributable to the REIT of $1.2 million in our consolidated other investments.

At June 30, 2017, 96% of the fair value of our fixed maturity portfolio was rated “investment grade” (a credit rating of AAA to BBB-) by nationally recognized statistical rating organizations. Investment grade securities generally bear lower yields and have lower degrees of risk than those that are unrated or non-investment grade. We believe that a high-quality investment portfolio is more likely to generate a stable and predictable investment return.

The following table summarizes our investment securities at June 30, 2017 (in thousands).

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
June 30, 2017	Cost		Gains		Losses			Value
U.S. government and agencies	$	19,641	$	96	$	(238	)	$	19,499
Political subdivisions		4,173		10		—			4,183
Revenue and assessment		5,255		208		—			5,463
Corporate bonds		45,908		67		(1,146	)		44,829
Collateralized mortgage obligations:
Agency backed		22,149		68		(607	)		21,610
Non-agency backed – residential		2,213		560		(8	)		2,765
Non-agency backed – commercial		1,056		654		—			1,710
Total fixed maturities, available-for-sale		100,395		1,663		(1,999	)		100,059
Preferred stocks, available-for-sale		3,025		281		(40	)		3,266
Mutual funds, available-for-sale		11,813		874					12,687
	$	115,233	$	2,818	$	(2,039	)	$	116,012

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Three and Six Months Ended June 30, 2017 Compared with the Three and Six Months Ended June 30, 2016

Consolidated Results

Revenues for the three months ended June 30, 2017 decreased 11% to $91.4 million from $102.8 million in the same period in the prior year. Loss before income taxes, for the three months ended June 30, 2017 was $1.5 million, compared with a loss before income taxes of $30.6 million for the three months ended June 30, 2016. Net loss for the three months ended June 30, 2017 was $0.9 million, compared with a net loss of $19.9 million for the three months ended June 30, 2016. Basic and diluted net loss per share were $0.02 for the three months ended June 30, 2017, compared with a basic and diluted net loss per share of $0.48 for the same period in the prior year.

For the three months ended June 30, 2017 and 2016, we recognized $0.2 million and $25.8 million, respectively, of unfavorable prior period loss and LAE development.

Revenues for the six months ended June 30, 2017 decreased 10% to $179.5 million from $199.7 million in the same period in the prior year. Income before income taxes, for the six months ended June 30, 2017 was $96 thousand, compared with a loss before income taxes of $39.0 million for the six months ended June 30, 2016. Net loss for the six months ended June 30, 2017 was $173 thousand, compared with a net loss of $25.4 million for the six months ended June 30, 2016. Basic and diluted net loss per share were $0.004 for the six months ended June 30, 2017, compared with a basic and diluted net loss per share of $0.62 for the same period in the prior year.  

For the six months ended June 30, 2017, we recognized $0.6 million of favorable prior period loss and LAE development, and for the six months ended June 30, 2016, we recognized $31.0 million of unfavorable prior period loss and LAE development.     

Insurance Operations

Revenues from insurance operations were $91.4 million for the three months ended June 30, 2017, compared with $101.5 million for the three months ended June 30, 2016. Revenues from insurance operations were $179.4 million for six months ended June 30, 2017, compared with $198.4 million for the six months ended June 30, 2016.

Loss before income taxes from insurance operations for the three months ended June 30, 2017 was $26 thousand, compared with a loss before income taxes of $30.4 million for the three months ended June 30, 2016. Income before income taxes from insurance operations for the six months ended June 30, 2017 was $2.9 million, compared with a loss before income taxes from insurance operations of $37.5 million for the six months ended June 30, 2016.

Premiums Earned

Premiums earned decreased by $7.4 million, or 9%, to $73.5 million for the three months ended June 30, 2017, from $80.9 million for the three months ended June 30, 2016. For the six months ended June 30, 2017, premiums earned decreased by $14.0 million, or 9%, to $143.3 million from $157.3 million for the six months ended June 30, 2016. These decreases were the result of a targeted decline in new policies written to eliminate unprofitable business through store closures, rate increases and the tightening of underwriting standards. These actions resulted in a 23% decrease in our year-over-year policies in force which was partially offset by a 17% year-over-year increase in our average in-force premium that was driven by our recent rate actions. The estimated effective rate increase attained over the last twelve months was 12%.

Commission and Fee Income

Commission and fee income decreased by $2.4 million, or 12%, to $16.8 million for the three months ended June 30, 2017, from $19.2 million for the three months ended June 30, 2016. For the six months ended June 30, 2017, commission and fee income decreased by $4.7 million, or 12%, to $34.1 million from $38.8 million for the six months ended June 30, 2016. This decrease was primarily the result of a decrease in monthly billing fees as a result of the previously-mentioned decline in the number of policies in force.

Investment Income

Investment income decreased to $1.1 million for the three months ended June 30, 2017 from $1.6 million for the three months ended June 30, 2016, and to $2.2 million for the six months ended June 30, 2017 from $2.6 million for the six months ended June 30, 2016.

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During the three months ended September 30, 2016, in order to increase the statutory capital and surplus of our insurance company subsidiaries by realizing gains on fixed maturities carried at amortized cost for statutory purposes, we sold $66.9 million of available-for-sale securities yielding 3.6% and reinvested the proceeds at 2.2%. As a result, our investment income from fixed maturities in subsequent periods has declined from the reduced yield in our fixed maturities portfolio. Recent results however have been favorable as a result of increased yields on cash and cash equivalents while returns from limited partnership investments, although favorable, have fluctuated from period-to-period.

At June 30, 2017 and 2016, the tax-equivalent book yields for our managed fixed maturities and cash equivalents portfolio were 2.0% and 2.1%, respectively, with effective durations of 2.33 and 2.71 years, respectively.

Net Realized Gains (Losses) on Investments, Available-for-sale

 Net realized gains (losses) on investments, available-for-sale during the three and six months ended June 30, 2016 included $147 thousand of charges related to other-than-temporary-impairment (“OTTI”) on a mutual fund and other net realized losses from redemptions. Other amounts recognized relate to gains and losses realized on redemptions.

Loss and Loss Adjustment Expenses

The loss ratio was 85.5% for the three months ended June 30, 2017, compared with 124.6% for the three months ended June 30, 2016. For the six months ended June 30, 2017, the loss ratio was 83.1% compared with 110.8% for the six months ended June 30, 2016. We experienced unfavorable development related to prior periods of $0.2 million for the three months ended June 30, 2017, and favorable development of $0.6 million for the six months ended June 30, 2017, compared with unfavorable development of $25.8 million and $31.0 million for the three and six months ended June 30, 2016.

The development for the three and six months ended June 30, 2017 was the net result of favorable LAE development related to bodily injury claims over multiple prior accident periods and unfavorable development on losses related to bodily injury severity related to the 2016 and 2017 accident years. The unfavorable development for the three and six months ended June 30, 2016 was the result of an increase in losses across all major coverages and over multiple prior accident periods. The primary causes of the unfavorable development were a sharp increase in bodily injury severity and a greater than usual amount of subsequent payments on previously closed claims.

Excluding the development related to prior periods, the loss ratio for the three months ended June 30, 2017 was 85.2% as compared with 81.4% for the preceding three months ended March 31, 2017. The primary causes for this higher loss ratio were increases in frequency across all major coverages and in bodily injury severity.

Excluding the development related to prior periods, the loss ratio for the six months ended June 30, 2017 was 83.5% as compared with 91.8% for the year ended December 31, 2016. We believe that this improvement in the loss ratio was the result of our aggressive rate and underwriting actions in addition to a moderate reduction in claims frequency.

Insurance Operating Expenses

Insurance operating expenses decreased 8% to $27.9 million for the three months ended June 30, 2017, from $30.3 million for the three months ended June 30, 2016. For the six months ended June 30, 2017, insurance operating expenses decreased 7% to $56.0 million from $60.0 million for the six months ended June 30, 2016. These decreases in operating expenses were primarily due to the costs savings from the recent store closures, a reduction in advertising costs, and reduced variable expenses (e.g. underwriting reports and postage) as a result of the decline in new business written.

The expense ratio was 16.0% for the three months ended June 30, 2017, compared with 14.8% for the three months ended June 30, 2016. For the six months ended June 30, 2017, the expense ratio was 16.3% compared with 14.6% for the six months ended June 30, 2016. The year-over-year increases in the expense ratio were primarily due to the decrease in premiums earned which resulted in a higher percentage of fixed expenses and the previously-mentioned decline in commission and fee income.

Overall, the combined ratio decreased to 101.5% for the three months ended June 30, 2017 from 139.4% for the three months ended June 30, 2016. For the six months ended June 30, 2017, the combined ratio decreased to 99.4% from 125.4% for the six months ended June 30, 2016.

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(Benefit) Provision for Income Taxes

The benefit for income taxes was $0.6 million for the three months ended June 30, 2017, compared with $10.7 million for the three months ended June 30, 2016. For the six months ended June 30, 2017, the provision for income taxes was $0.3 million compared with a benefit of $13.6 million for the six months ended June 30, 2016.

In assessing our ability to realize our deferred tax assets (“DTA”), both positive and negative evidence are used to evaluate the allowance. Although we incurred a 2016 pre-tax loss of $45.1 million which is a source of negative evidence, we placed greater weight on our outlook for future taxable income over the allowable time period for realization of the DTA and concluded that it is more likely than not that the remaining DTA will be realized. Regarding the length of time available to realize the DTA, at June 30, 2017, $23.8 million of the DTA related to net operating loss carryforwards do not expire until 2031 through 2036 and $2.0 million in AMT (“Alternative Minimum Tax”) carryforwards have no expiration date. The DTA valuation allowance may be adjusted in future periods if management determines that it is more likely than not that some portion or all of the DTA will not be realized. In the event the DTA valuation allowance is increased, we would record an income tax expense for the adjustment. Likewise, we would record an income tax expense in the period in which any reduction in the corporate tax rate was enacted.

Real Estate and Corporate

Loss before income taxes from real estate and corporate operations for the three months ended June 30, 2017, was $1.5 million, compared with a loss before income taxes of $0.2 million for the three months ended June 30, 2016. Loss before income taxes from real estate and corporate operations for the six months ended June 30, 2017, was $2.8 million, compared with a loss before income taxes of $1.5 million for the six months ended June 30, 2016. The three and six months ended June 30, 2016 include a $1.2 million gain on the sale of foreclosed real estate. Segment losses consist of other operating expenses not directly related to our insurance operations, interest expense and stock-based compensation, offset by investment income on corporate invested assets.

We incurred $1.1 million of interest expense for both the three months ended June 30, 2017 and 2016. For the six months ended June 30, 2017, interest expense increased to $2.2 million from $2.1 million for the six months ended June 30, 2016 as the result of an increase in LIBOR. Interest expense is from our debentures payable and the term loan from our principal stockholder to finance the July 1, 2015 Titan Agencies acquisition. For additional information, see “Liquidity and Capital Resources” in this report.

Liquidity and Capital Resources

Our primary sources of funds are premiums, fees and investment income from our insurance company subsidiaries and commissions and fee income from our non-insurance company subsidiaries. Our primary uses of funds are the payment of claims and operating expenses. Net cash provided by operating activities for the six months ended June 30, 2017 was $4.5 million, compared with net cash provided by operating activities of $10.8 million for the same period in the prior year. This decrease was primarily the result of the recent reduction in new business written. Net cash provided by investing activities for the six months ended June 30, 2017 was $2.3 million, compared to $8.0 million for the same period in the prior year. This decrease was primarily the result of a greater amount of purchases of investments, available-for-sale and a reduction in the amount of capital expenditures in the current year.

Our holding company requires cash for general corporate overhead expenses and for debt service related to our debentures and term loan payable. The holding company’s primary source of unrestricted cash to meet its obligations is the sale of ancillary products and insurance policies on behalf of third-party carriers by our agency operations, including the 2015 Titan Agencies acquisition. During the six months ended June 30, 2017, the holding company contributed $4.0 million to the statutory capital and surplus of the insurance company subsidiaries from our insurance agency net income. At June 30, 2017, our holding company had $3.2 million available remaining in unrestricted cash and investments. These funds and the additional unrestricted cash from our agency operations will be used to pay our future cash requirements outside of the insurance company subsidiaries in the short-term and foreseeable future.

The holding company has debt service requirements related to the debentures payable and the term loan to a principal stockholder. The debentures are interest-only and mature in full in July 2037. The debentures accrue interest at a variable rate equal to Three-Month LIBOR plus 375 basis points, which resets quarterly. The interest rate related to the debentures for the six months ended June 30, 2017 ranged from 4.637% to 4.920%. In July 2017, the interest rate reset to 5.061% through October 2017. The term loan is interest-only and matures in full in June 2025. The interest rate on the term loan is 8%.

State insurance laws limit the amount of dividends that may be paid from our insurance company subsidiaries. At June 30, 2017, our insurance company subsidiaries could not pay any dividends due to a negative unassigned surplus position.

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FIRST ACCEPTANCE CORPORATION 10-Q

We have three insurance company subsidiaries that are organized and domiciled under the insurance statutes of Texas, Georgia, and Tennessee. Our insurance company subsidiaries also operate under licenses issued by various state insurance authorities. Such licenses may be of perpetual duration or periodically renewable, provided we continue to meet applicable regulatory requirements.

The National Association of Insurance Commissioners (“NAIC”) Model Act for risk-based capital provides formulas to determine each December 31 on an annual basis the amount of statutory capital and surplus that an insurance company needs to ensure that it has an acceptable expectation of not becoming financially impaired. Failure to meet applicable risk-based capital requirements could subject our insurance company subsidiaries to further examination or corrective action imposed by state regulators, including limitations on their writing of additional business, state supervision or even liquidation. Although statutory risk-based capital calculations are only made as of each December 31, we have estimated that the insurance company subsidiaries remain above the company action levels as of June 30, 2017. There are also statutory guidelines that suggest that on an annual calendar year basis an insurance company should not exceed a ratio of net premiums written to statutory capital and surplus of 3-to-1. On a combined basis, the ratio for our insurance company subsidiaries of net premiums written for the last twelve months to statutory capital and surplus was 4.7-to-1 at June 30, 2017 which is in excess of the suggested guidelines.

Management is currently operating under a business plan to reduce premium writings and increase statutory capital and surplus to address the net premiums written to statutory capital and surplus guidelines. We believe that existing cash and investment balances, when combined with anticipated cash flows as noted above, will be adequate to meet our expected liquidity needs, for both the holding company and our insurance company subsidiaries, in both the short-term and the foreseeable future.

Off-Balance Sheet Arrangements

We use off-balance sheet arrangements (e.g., operating leases) where the economics and sound business principles warrant their use. For information with respect to our off-balance sheet arrangements at December 31, 2016, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Off-Balance Sheet Arrangements” included in our Annual Report on Form 10-K for the year ended December 31, 2016. We have not entered into any new material off-balance sheet arrangements since December 31, 2016.

Critical Accounting Estimates

There have been no significant changes to our critical accounting estimates during the six months ended June 30, 2017 compared with those disclosed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” included in our Annual Report on Form 10-K for the year ended December 31, 2016.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk represents the potential economic loss arising from adverse changes in the fair value of financial instruments. Our exposures to market risk relate primarily to our investment portfolio, which is exposed primarily to interest rate risk and credit risk. The fair value of our investment portfolio is directly impacted by changes in market interest rates; generally, the fair value of fixed-income investments moves inversely with movements in market interest rates. Our fixed maturity portfolio is comprised of substantially all fixed rate investments with primarily short-term and intermediate-term maturities. Likewise, the underlying investments of our mutual fund investments are also primarily fixed-income investments. This portfolio composition allows flexibility in reacting to fluctuations of interest rates. Other investments offer additional risk through the diversity of their underlying investments and their lack of marketability. The portfolios of our insurance company subsidiaries are managed to achieve an adequate risk-adjusted return while maintaining sufficient liquidity to meet policyholder obligations.

Interest Rate Risk

The fair values of our fixed maturity investments fluctuate in response to changes in market interest rates. Increases and decreases in prevailing interest rates generally translate into decreases and increases, respectively, in the fair values of those instruments. Additionally, the fair values of interest rate sensitive instruments may be affected by the creditworthiness of the issuer, prepayment options, relative values of alternative investments, the liquidity of the instrument and other general market conditions.

The following table summarizes the estimated effects of hypothetical increases and decreases in interest rates resulting from parallel shifts in market yield curves on our fixed maturity portfolio (in thousands). It is assumed that the effects are realized immediately upon the change in interest rates. The hypothetical changes in market interest rates do not reflect what could be deemed

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best or worst case scenarios. Variations in market interest rates could produce significant changes in the timing of repayments due to prepayment options available. For these and other reasons, actual results might differ from those reflected in the table.

	Sensitivity to Instantaneous Interest Rate Changes (basis points)
	(100)		(50)			0		50		100		200
Fair value of fixed maturity portfolio	$	104,736	$	102,400	$	100,059	$	97,221	$	95,380	$	90,699

The following table provides information about our fixed maturity investments at June 30, 2017 which are sensitive to interest rate risk. The table shows expected principal cash flows (at par value, which differs from amortized cost as a result of premiums or discounts at the time of purchase and any previously recognized impairment) by expected maturity date for each of the next five fiscal years and collectively for all fiscal years thereafter (in thousands). Callable bonds and notes are included based on call date or maturity date depending upon which date produces the most conservative yield. CMOs and sinking fund issues are included based on maturity year adjusted for expected payment patterns. Actual cash flows may differ from those expected.

Year Ending December 31,	Securities with Unrealized Gains		Securities with Unrealized Losses		Securities with No Unrealized Gains or Losses		All Fixed Maturity Securities
2017	$	5,793	$	5,629	$	—	$	11,422
2018		3,472		4,075		—		7,547
2019		3,985		7,075		—		11,060
2020		1,769		9,575		—		11,344
2021		4,126		12,939		—		17,065
Thereafter		6,961		34,099		—		41,060
Total	$	26,106	$	73,392	$	—	$	99,498
Fair value	$	26,994	$	73,065	$	—	$	100,059

On June 15, 2007, our wholly-owned unconsolidated trust entity, First Acceptance Statutory Trust I (“FAST I”), used the proceeds from its sale of trust preferred securities to purchase $41.2 million of junior subordinated debentures. FAST I is a variable interest entity that does not meet the requirements for consolidation of FASB ASC 810, Consolidation. The debentures are interest-only and mature in full in July 2037. The debentures accrue interest at a variable rate equal to Three-Month LIBOR plus 375 basis points, which resets quarterly. The interest rate related to the debentures for the six months ended June 30, 2017 ranged from 4.637% to 4.920%. In July 2017, the interest rate reset to 5.061% through October 2017.

Credit Risk

Credit risk is managed by diversifying our investment portfolio to avoid concentrations in any single industry group or issuer and by limiting investments in securities with lower credit ratings. Our largest investment, excluding U.S. government and agency securities, is in a single mutual fund with a fair value of $7.8 million, or 7% of our available-for-sale portfolio. Our five largest investments make up 25% of our available-for-sale portfolio.

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The following table presents the underlying ratings of our fixed maturity portfolio by nationally recognized statistical rating organizations at June 30, 2017 (in thousands).

Comparable Rating	Amortized Cost		% of Amortized Cost			Fair Value		% of Fair Value
AAA	$	1,375		1	%	$	1,385		1	%
AA+, AA, AA-		56,646		56	%		55,975		56	%
A+, A, A-		27,939		28	%		27,236		27	%
BBB+, BBB, BBB-		11,459		11	%		11,289		11	%
Total investment grade		97,419		97	%		95,885		96	%
Not rated		—		0	%		—		0	%
BB+, BB, BB-		500		0	%		505		1	%
B+, B, B-		547		1	%		580		1	%
CCC+, CCC, CCC-		938		1	%		1,518		2	%
CC+, CC, CC-		—		0	%		—		0	%
C+, C, C-		165		0	%		512		1	%
D		826		1	%		1,059		1	%
Total non-investment grade		2,976		3	%		4,174		4	%
Total	$	100,395		100	%	$	100,059		100	%

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management team, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, or the “Exchange Act”) as of June 30, 2017. Based on that evaluation, our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) concluded that our disclosure controls and procedures were effective as of June 30, 2017 to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control Over Financial Reporting

During the period covered by this report, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

27

FIRST ACCEPTANCE CORPORATION 10-Q

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We and our subsidiaries are named from time to time as defendants in various legal actions that are incidental to our business, including those which arise out of or are related to the handling of claims made in connection with our insurance policies. The plaintiffs in some of these lawsuits have alleged bad faith or extra-contractual damages, and some have sought punitive damages or class action status. We believe that the resolution of these legal actions will not have a material adverse effect on our financial condition or results of operations. However, the ultimate outcome of these matters is uncertain. See Note 8 to our consolidated financial statements for further information about legal proceedings.

Item 4. Mine Safety Disclosures

None.

Item 6. Exhibits

The following exhibits are attached to this report:

31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a).
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a).
32.1	Principal Executive Officer’s Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Principal Financial Officer’s Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101 –	XBRL

28

FIRST ACCEPTANCE CORPORATION 10-Q

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FIRST ACCEPTANCE CORPORATION
Date: August 9, 2017	By:	/s/ Brent J. Gay
		Brent J. Gay
		Chief Financial Officer

29

EX-31.1

Exhibit 31.1

SECTION 302 CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

I, Kenneth D. Russell, certify that:

1. I have reviewed this quarterly report on Form 10-Q of First Acceptance Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2017

/s/ Kenneth D. Russell

Kenneth D. Russell

Chief Executive Officer

EX-31.2

Exhibit 31.2

SECTION 302 CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

I, Brent J. Gay, certify that:

1.I have reviewed this quarterly report on Form 10-Q of First Acceptance Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2017

/s/ Brent J. Gay

Brent J. Gay

Chief Financial Officer

 

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of First Acceptance Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kenneth D. Russell, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

/s/ Kenneth D. Russell

Kenneth D. Russell

Chief Executive Officer

August 9, 2017

A signed original of this written statement required by Section 906 has been provided to First Acceptance Corporation, and will be retained by First Acceptance Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of First Acceptance Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brent J. Gay, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

/s/ Brent J. Gay

Brent J. Gay

Chief Financial Officer

August 9, 2017

A signed original of this written statement required by Section 906 has been provided to First Acceptance Corporation, and will be retained by First Acceptance Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Aug. 08, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Trading Symbol	FAC
Entity Registrant Name	FIRST ACCEPTANCE CORP /DE/
Entity Central Index Key	0001017907
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		41,199,854

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
ASSETS
Investments, available-for-sale at fair value (amortized cost of $115,233 and $117,902, respectively)	$ 116,012	$ 117,212
Cash, cash equivalents, and restricted cash	125,530	118,681
Premiums, fees, and commissions receivable, net of allowance of $378 and $279, respectively	76,847	66,393
Deferred tax assets, net	34,784	35,641
Other investments	10,468	9,994
Other assets	5,753	6,078
Property and equipment, net	3,475	4,213
Deferred acquisition costs	5,332	4,852
Goodwill	29,384	29,384
Identifiable intangible assets, net	7,243	7,626
TOTAL ASSETS	414,828	400,074
LIABILITIES AND STOCKHOLDERS’ EQUITY
Loss and loss adjustment expense reserves	162,232	161,079
Unearned premiums and fees	91,644	78,861
Debentures payable	40,324	40,302
Term loan from principal stockholder	29,792	29,779
Accrued expenses	5,514	7,089
Other liabilities	11,701	10,476
Total liabilities	341,207	327,586
Stockholders’ equity:
Preferred stock, $.01 par value, 10,000 shares authorized
Common stock, $.01 par value, 75,000 shares authorized; 41,200 and 41,160 issued and outstanding, respectively	412	412
Additional paid-in capital	457,898	457,750
Accumulated other comprehensive income, net of tax of $(482) and $(1,110), respectively	2,474	1,316
Accumulated deficit	(387,163)	(386,990)
Total stockholders’ equity	73,621	72,488
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 414,828	$ 400,074

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Statement Of Financial Position [Abstract]
Amortized cost of investments	$ 115,233	$ 117,902
Allowance for premiums, fees and Commission receivable	$ 378	$ 279
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	41,200,000	41,160,000
Common stock, shares outstanding	41,200,000	41,160,000
Accumulated Other Comprehensive Income, tax	$ (482)	$ (1,110)

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited) - USD ($) shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Revenues:
Premiums earned	$ 73,459,000	$ 80,850,000	$ 143,272,000	$ 157,257,000
Commission and fee income	16,824,000	19,183,000	34,052,000	38,764,000
Investment income	1,123,000	1,646,000	2,156,000	2,608,000
Gain on sale of foreclosed real estate		1,237,000		1,237,000
Net realized gains (losses) on investments, available-for-sale	5,000	(162,000)		(164,000)
Total revenues	91,411,000	102,754,000	179,480,000	199,702,000
Costs and expenses:
Losses and loss adjustment expenses	62,806,000	100,765,000	119,086,000	174,184,000
Insurance operating expenses	27,879,000	30,314,000	55,935,000	59,961,000
Other operating expenses	267,000	283,000	538,000	563,000
Stock-based compensation	74,000	68,000	113,000	105,000
Depreciation	540,000	616,000	1,086,000	1,267,000
Amortization of identifiable intangibles assets	195,000	239,000	398,000	477,000
Interest expense	1,130,000	1,076,000	2,228,000	2,126,000
Total costs and expenses	92,891,000	133,361,000	179,384,000	238,683,000
(Loss) income before income taxes	(1,480,000)	(30,607,000)	96,000	(38,981,000)
(Benefit) provision for income taxes	(577,000)	(10,708,000)	269,000	(13,577,000)
Net loss	$ (903,000)	$ (19,899,000)	$ (173,000)	$ (25,404,000)
Net loss per share:
Basic	$ (0.02)	$ (0.48)	$ 0.00	$ (0.62)
Diluted	$ (0.02)	$ (0.48)	$ 0.00	$ (0.62)
Number of shares used to calculate net loss per share:
Basic	41,164	41,064	41,162	41,062
Diluted	41,164	41,064	41,162	41,062
Reconciliation of net loss income to other comprehensive (loss) income:
Net loss	$ (903,000)	$ (19,899,000)	$ (173,000)	$ (25,404,000)
Net unrealized change in investments, net of tax of $388, $757, $628 and $1,668, respectively	720,000	1,407,000	1,158,000	3,098,000
Comprehensive (loss) income	(183,000)	(18,492,000)	985,000	(22,306,000)
Detail of net realized gains (losses) on investments, available-for-sale:
Net realized gains (losses) on redemptions	5,000	(15,000)		(17,000)
Other-than-temporary impairment charges		(147,000)	$ 0	(147,000)
Net realized gains (losses) on investments, available-for-sale	$ 5,000	$ (162,000)		$ (164,000)

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Statement [Abstract]
Net unrealized change in investments, tax	$ 388	$ 757	$ 628	$ 1,668

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities:
Net loss	$ (173,000)	$ (25,404,000)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation	1,086,000	1,267,000
Amortization of identifiable intangibles assets	398,000	477,000
Stock-based compensation	113,000	105,000
Deferred income taxes	229,000	(13,736,000)
Other-than-temporary impairment on investments, available-for-sale	0	147,000
Net realized losses on redemptions of investments		17,000
Investment income from other investments	(343,000)	(355,000)
Gain on sale of foreclosed real estate, net		(1,237,000)
Other	118,000	61,000
Change in:
Premiums, fees, and commission receivable	(10,355,000)	(9,230,000)
Deferred acquisition costs	(480,000)	(183,000)
Loss and loss adjustment expense reserves	1,153,000	43,941,000
Unearned premiums and fees	12,783,000	11,920,000
Other liabilities	1,225,000	1,347,000
Other	(1,221,000)	1,652,000
Net cash provided by operating activities	4,533,000	10,789,000
Cash flows from investing activities:
Purchases of investments, available-for-sale	(3,519,000)	(156,000)
Maturities and redemptions of investments, available-for-sale	5,977,000	6,968,000
Purchases of other investments	(133,000)	(725,000)
Distributions from other investments	319,000	2,190,000
Capital expenditures	(348,000)	(1,983,000)
Proceeds from sale of foreclosed real estate, net		1,769,000
Acquisition of identifiable intangible assets	(15,000)	(40,000)
Net cash provided by investing activities	2,281,000	8,023,000
Cash flows from financing activities:
Net proceeds from issuance of common stock	35,000	40,000
Net cash provided by financing activities	35,000	40,000
Net change in cash, cash equivalents, and restricted cash	6,849,000	18,852,000
Cash, cash equivalents, and restricted cash, beginning of period	118,681,000	115,587,000
Cash, cash equivalents, and restricted cash, end of period	$ 125,530,000	$ 134,439,000

XML

General

6 Months Ended

Jun. 30, 2017

Organization Consolidation And Presentation Of Financial Statements [Abstract]

General

1. General

The consolidated financial statements of First Acceptance Corporation (the “Company”) included herein have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been omitted. In the opinion of management, the consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the interim periods.

The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2016.

Cash, Cash Equivalents, and Restricted Cash

Cash, cash equivalents, and restricted cash consist of bank demand deposits and highly-liquid investments. All investments with maturities of three months or less at the date of purchase are considered cash equivalents. At June 30, 2017 and December 31, 2016, the Company had restricted cash equivalents of $17.3 million and $18.6 million, respectively.

XML

Fair Value

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value

2. Fair Value

Fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are generally based upon observable and unobservable inputs. Observable inputs are based on market data from independent sources, while unobservable inputs reflect the Company’s view of market assumptions in the absence of observable market information. All assets and liabilities that are carried at fair value are classified and disclosed in one of the following categories:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Quoted market prices for similar assets or liabilities in active markets; quoted prices by independent pricing services for identical or similar assets or liabilities in markets that are not active; and valuations, using models or other valuation techniques, that use observable market data. All significant inputs are observable, or derived from observable information in the marketplace, or are supported by observable levels at which transactions are executed in the marketplace.

Level 3 - Instruments that use non-binding broker quotes or model driven valuations that do not have observable market data.

NAV    -   Calculated net asset value (“NAV”) based on an ownership interest to which a proportionate share of net assets is attributed.

The Company considers the valuation methods used in both its identifiable intangible assets initial measurement and impairment tests as Level 3. To determine the fair value of acquired trademarks and trade names, the Company uses the relief-from-royalty method, which requires the Company to estimate the future revenue for the related brands, the appropriate royalty rate and the weighted average cost of capital. To determine the fair value of the acquired policy renewal rights and customer relationships, the Company uses an “excess earnings” method that relies on projected future net cash flows and includes key assumptions for the customer retention and renewal rates. The data used in these methods is not observable in the market.

Fair Value of Financial Instruments

The carrying values and fair values of certain financial instruments were as follows (in thousands).

	June 30, 2017				December 31, 2016
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Assets:
Investments, available-for-sale	$	116,012	$	116,012	$	117,212	$	117,212
Other investments		10,468		10,468		9,994		9,994
Liabilities:
Debentures payable		40,324		17,266		40,302		11,488
Term loan from principal stockholder		29,792		22,126		29,779		15,000

The fair values as presented represent the Company’s best estimates and may not be substantiated by comparisons to independent markets. The fair value of the debentures payable and the term loan from principal shareholder are categorized as Level 3, since they were based on current market rates offered for debt with similar risks and maturities, an unobservable input categorized as Level 3. Carrying values of certain financial instruments, such as cash and cash equivalents and premiums, fees, and commissions receivable, approximate fair value due to the short-term nature of the instruments and are not required to be disclosed. Therefore, the aggregate of the fair values presented in the preceding table does not purport to represent the Company’s underlying value.

The following tables present the fair-value measurements for each major category of assets that are measured on a recurring basis (in thousands). Other investments are carried at net asset value which approximates fair value.

			Fair Value Measurements Using
			Quoted Prices		Significant
			in Active		Other		Significant		Proportionate
			Markets for		Observable		Unobservable		Share of
			Identical Assets		Inputs		Inputs		Net Assets
June 30, 2017	Total		(Level 1)		(Level 2)		(Level 3)		(NAV)
Fixed maturities, available-for-sale:
U.S. government and agencies	$	19,499	$	19,499	$	—	$	—	$	—
Political subdivisions		4,183		—		4,183		—		—
Revenue and assessment		5,463		—		5,463		—		—
Corporate bonds		44,829		—		44,829		—		—
Collateralized mortgage obligations:
Agency backed		21,610		—		21,610		—		—
Non-agency backed – residential		2,765		—		2,765		—		—
Non-agency backed – commercial		1,710		—		1,710		—		—
Total fixed maturities, available-for-sale		100,059		19,499		80,560		—		—
Preferred stocks, available-for-sale		3,266		3,266		—		—		—
Mutual funds, available-for-sale		12,687		12,687	—			—		—
Total investments, available-for-sale		116,012		35,452		80,560		—		—
Other investments		10,468		—		—		5,252		5,216
Cash, cash equivalents, and restricted cash		125,530		125,530		—		—		—
Total	$	252,010	$	160,982	$	80,560	$	5,252	$	5,216

			Fair Value Measurements Using
			Quoted Prices		Significant
			in Active		Other		Significant		Proportionate
			Markets for		Observable		Unobservable		Share of
			Identical Assets		Inputs		Inputs		Net Assets
December 31, 2016	Total		(Level 1)		(Level 2)		(Level 3)		(NAV)
Fixed maturities, available-for-sale:
U.S. government and agencies	$	18,951	$	18,951	$	—	$	—	$	—
Political subdivisions		4,165		—		4,165		—		—
Revenue and assessment		5,683		—		5,683		—		—
Corporate bonds		45,540		—		45,540		—		—
Collateralized mortgage obligations:
Agency backed		22,422		—		22,422		—		—
Non-agency backed – residential		2,933		—		2,933		—		—
Non-agency backed – commercial		1,895		—		1,895		—		—
Total fixed maturities, available-for-sale		101,589		18,951		82,638		—		—
Preferred stocks, available-for-sale		3,112		3,112		—		—		—
Mutual funds, available-for-sale		12,511		12,511	—			—		—
Total investments, available-for-sale		117,212		34,574		82,638		—		—
Other investment		9,994		—		—		4,858		5,136
Cash, cash equivalents, and restricted cash		118,681		118,681		—		—		—
Total	$	245,887	$	153,255	$	82,638	$	4,858	$	5,136

The fair values of the Company’s investments are determined by management after taking into consideration available sources of data. All of the portfolio valuations classified as Level 1 or Level 2 in the above tables are priced exclusively by utilizing the services of independent pricing sources using observable market data. The Level 2 classified security valuations are obtained from a single independent pricing service. The Level 3 classified security in the table above consists of an investment in the common stock of a real estate investment trust for which fair value has been determined using a model driven valuation that does not have observable market data. There were no transfers between Level 1 and Level 2 for the three and six months ended June 30, 2017 and 2016. The Company’s policy is to recognize transfers between levels at the end of the reporting period based on specific identification. The Company has not made any adjustments to the prices obtained from the independent pricing sources.

The Company has reviewed the pricing techniques and methodologies of the independent pricing service for Level 2 investments and believes that its policies adequately consider market activity, either based on specific transactions for the security valued or based on modeling of securities with similar credit quality, duration, yield and structure that were recently traded. The Company monitored security-specific valuation trends and has made inquiries with the pricing service about material changes or the absence of expected changes to understand the underlying factors and inputs and to validate the reasonableness of the pricing.  Likewise, the Company reviews the Level 3 valuation model to understand the underlying factors and inputs and to validate the reasonableness of the pricing.

The following table represents the quantitative disclosure for the asset classified as Level 3 during the six months ended June 30, 2017 (in thousands).

	Fair Value
	Measurements Using
	Significant Unobservable
	Inputs (Level 3)
	Common Stock
	at Fair Value
Balance at December 31, 2016	$	4,858
Gains included in net loss		—
Gains included in comprehensive income (loss)		317
Investments and capital calls		77
Distributions received		—
Transfers into and out of Level 3		—
Balance at June 30, 2017	$	5,252

XML

Investments

6 Months Ended

Jun. 30, 2017

Investments Debt And Equity Securities [Abstract]

Investments

3. Investments

Investments, Available-for-Sale

The following tables summarize the Company’s investment securities (in thousands).

		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
June 30, 2017	Cost	Gains	Losses	Value
U.S. government and agencies	$       19,641	$                 96	$              (238)	$          19,499
Political subdivisions	4,173	10	—	4,183
Revenue and assessment	5,255	208	—	5,463
Corporate bonds	45,908	67	(1,146)	44,829
Collateralized mortgage obligations:
Agency backed	22,149	68	(607)	21,610
Non-agency backed – residential	2,213	560	(8)	2,765
Non-agency backed – commercial	1,056	654	—	1,710
Total fixed maturities, available-for-sale	100,395	1,663	(1,999)	100,059
Preferred stocks, available-for-sale	3,025	281	(40)	3,266
Mutual funds, available-for-sale	11,813	874		12,687
	$        115,233	$            2,818	$           (2,039)	$        116,012

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2016	Cost		Gains		Losses			Value
U.S. government and agencies	$	19,142	$	112	$	(303	)	$	18,951
Political subdivisions		4,233		—		(68	)		4,165
Revenue and assessment		5,539		185		(41	)		5,683
Corporate bonds		47,238		107		(1,805	)		45,540
Collateralized mortgage obligations:
Agency backed		23,093		73		(744	)		22,422
Non-agency backed – residential		2,411		529		(7	)		2,933
Non-agency backed – commercial		1,408		487		—			1,895
Total fixed maturities, available-for-sale		103,064		1,493		(2,968	)		101,589
Preferred stocks, available-for-sale		3,025		198		(111	)		3,112
Mutual funds, available-for-sale		11,813		698		—			12,511
	$	117,902	$	2,389	$	(3,079	)	$	117,212

The following table sets forth the scheduled maturities of the Company’s fixed maturity securities based on their fair values (in thousands). Actual maturities may differ from contractual maturities because certain securities may be called or prepaid by the issuers.

					Securities
	Securities		Securities		with No		All
	with		with		Unrealized		Fixed
	Unrealized		Unrealized		Gains or		Maturity
June 30, 2017	Gains		Losses		Losses		Securities
One year or less	$	1,779	$	3,574	$	—	$	5,353
After one through five years		12,802		17,345		—		30,147
After five through ten years		2,844		30,879		—		33,723
After ten years		4,751		—		—		4,751
No single maturity date		4,818		21,267		—		26,085
	$	26,994	$	73,065	$	—	$	100,059

The following table reflects the number of fixed maturity securities with gross unrealized gains and losses. Gross unrealized losses are further segregated by the length of time that individual securities have been in a continuous unrealized loss position.

	Gross Unrealized Losses
	Less than		Greater		Gross
	or equal to		than 12		Unrealized
At:	12 months		months		Gains
June 30, 2017		36		1		39
December 31, 2016		37		—		40

The following table reflects the fair value and gross unrealized losses of those fixed maturity securities in a continuous unrealized loss position for greater than 12 months at June 30, 2017. There were no securities meeting these criteria at December 31, 2016. Gross unrealized losses are further segregated by the percentage of amortized cost (in thousands, except number of securities).

	Number				Gross
Gross Unrealized Losses	of		Fair		Unrealized
at June 30, 2017:	Securities		Value		Losses
Less than or equal to 10%		1	$	108	$	(4	)
Greater than 10%		—		—		—
		1	$	108	$	(4	)

The following tables set forth the amount of gross unrealized losses by current severity (as compared to amortized cost) and length of time that individual securities have been in a continuous unrealized loss position (in thousands).

	Fair Value of
	Securities with
Length of	Gross		Gross			Severity of Gross Unrealized Losses
Gross Unrealized Losses	Unrealized		Unrealized			Less			5% to			Greater
at June 30, 2017:	Losses		Losses			than 5%				10%		than 10%
Less than or equal to:
Three months	$	12,453	$	(39	)	$	(39	)	$	—		$	—
Six months		299		(3	)		(3	)		—			—
Nine months		34,834		(983	)		(983	)		—			—
Twelve months		27,008		(1,010	)		(839	)		(171	)		—
Greater than twelve months		108		(4	)		(4	)		—			—
Total	$	74,702	$	(2,039	)	$	(1,868	)	$	(171	)	$	—

	Fair Value of
	Securities with
Length of	Gross		Gross			Severity of Gross Unrealized Losses
Gross Unrealized Losses	Unrealized		Unrealized			Less			5% to			Greater
at December 31, 2016:	Losses		Losses			than 5%				10%		than 10%
Less than or equal to:
Three months	$	58,550	$	(1,886	)	$	(1,461	)	$	(425	)	$	—
Six months		27,193		(1,186	)		(232	)		(954	)		—
Nine months		152		—			—			—
Twelve months		105		(7	)		—			(7	)		—
Greater than twelve months		—		—			—			—			—
Total	$	86,000	$	(3,079	)	$	(1,693	)	$	(1,386	)	$	-

Other-Than-Temporary Impairment

For the six months ended June 30, 2017, the Company did not recognize any OTTI charges in net income (loss).

The Company believes that the securities having unrealized losses at June 30, 2017 were not other-than-temporarily impaired. The Company also does not intend to sell any of these securities and it is more likely than not that the Company will not be required to sell any of these securities before the recovery of their amortized cost basis.

For the six months ended June 30, 2016, the Company recognized OTTI charges in net income (loss) of $147 thousand related to one mutual fund.

Other Investments

Other investments consist of the common stock of a real estate investment trust and limited partnership interests in three funds that invest in (i) commercial real estate and secured commercial real estate loans acquired from financial intuitions, (ii) undervalued international publicly-traded equities and (iii)a pre-identified pool of select buyout private equity funds. These investments have redemption and transfer restrictions. The Company does not intend to sell these investments, and it is more likely than not that the Company will not be required to sell them before the expiration of such restrictions.At June 30, 2017, the Company had unfunded commitments to invest $2.5 million into two of these investments.

Restrictions

At June 30, 2017, fixed maturities and cash equivalents with a fair value and amortized cost of $6.4 million were on deposit with various insurance departments as a requirement of doing business in those states. Cash equivalents with a fair value and amortized cost of $17.2 million were on deposit with another insurance company as collateral for an assumed reinsurance contract.

Investment Income and Net Realized Gains and Losses

The major categories of investment income follow (in thousands).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Fixed maturities, available-for-sale	$	616		$	981		$	1,239		$	1,951
Mutual funds, available-for-sale		158			160			320			366
Preferred stocks		44			25			89			49
Other investments		194			525			343			355
Cash and cash equivalents		217			66			376			107
Other		17			14			31			27
Investment expenses		(123	)		(125	)		(242	)		(247	)
	$	1,123		$	1,646		$	2,156		$	2,608

The components of net realized gains (losses) on investments, available-for-sale at fair value follow (in thousands).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Gains	$	8		$	—		$	8		$	—
Losses		(3	)		(15	)		(8	)		(17	)
Other-than-temporary impairment		—			(147	)		—			(147	)
	$	5		$	(162	)	$	-		$	(164	)

Realized gains and losses on sales and redemptions are computed based on specific identification. The non-credit related portion of other-than-temporary impairment (“OTTI”) is included in other comprehensive loss. The amounts of non-credit OTTI for securities still owned was $1.1 million at both June 30, 2017 and December 31, 2016.

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Net Loss Per Share

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Net Loss Per Share

4. Net Loss Per Share

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share data).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Net loss	$	(903	)	$	(19,899	)	$	(173	)	$	(25,404	)
Weighted average common basic shares		41,164			41,064			41,162			41,062
Effect of dilutive securities		—			—			—			—
Weighted average common dilutive shares		41,164			41,064			41,162			41,062
Basic and diluted net loss per share	$	(0.02	)	$	(0.48	)	$	(0.00	)	$	(0.62	)

On May 9, 2017, the Compensation Committee of the Board of Directors of the Company awarded 500 thousand restricted stock units to an executive officer. Such restricted stock units will vest, and an equal number of shares of common stock will be deliverable upon the third anniversary of the date of grant. Compensation expense related to the units of $590 thousand was calculated based upon the closing market price of the common stock on the date of grant ($1.18) and is recorded on a straight-line basis over the vesting period.

For the three and six months ended June 30, 2017, the computation of diluted net loss per share did not include 576 thousand     restricted stock units having dilutive effects of 37 and 39 thousand shares, respectively, since their inclusion would have been anti-dilutive. Options to purchase 120 thousand shares and 93 thousand restricted stock units were not included in the computation of diluted net income per share for these periods, since the exercise price of the stock options was in excess of the average stock price for this period and the inclusion of the restricted stock units would have been anti-dilutive.

For the three and six months ended June 30, 2016, the computation of diluted net loss per share did not include options to purchase 825 thousand shares and 270 thousand restricted stock units, a dilutive effect of 180 thousand shares and 237 thousand shares, respectively, since their inclusion would have been anti-dilutive. Options to purchase 240 thousand shares were not included in the computation of diluted net loss per share for the three and six months ended June 30, 2016, since their exercise price was in excess of the average stock price for these periods.     

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Losses and Loss Adjustment Expenses Incurred and Paid

6 Months Ended

Jun. 30, 2017

Insurance [Abstract]

Losses and Loss Adjustment Expenses Incurred and Paid

5. Losses and Loss Adjustment Expenses Incurred and Paid

Information regarding the reserve for unpaid losses and loss adjustment expenses (“LAE”) is as follows (in thousands).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Liability for unpaid losses and LAE at beginning of period, gross	$	156,410		$	132,650		$	161,079		$	122,071
Reinsurance balances receivable		(763	)		(491	)		(769	)		(464	)
Liability for unpaid losses and LAE at beginning of period, net		155,647			132,159			160,310			121,607
Add: Provision for losses and LAE:
Current period		62,599			74,974			119,665			143,173
Prior periods		207			25,791			(579	)		31,011
Net losses and LAE incurred		62,806			100,765			119,086			174,184
Less: Losses and LAE paid:
Current period		30,182			40,345			46,319			58,750
Prior periods		26,833			27,241			71,639			71,703
Net losses and LAE paid		57,015			67,586			117,958			130,453
Liability for unpaid losses and LAE at end of period, net		161,438			165,338			161,438			165,338
Reinsurance balances receivable		794			674			794			674
Liability for unpaid losses and LAE at end of period, gross	$	162,232		$	166,012		$	162,232		$	166,012

The development for the three and six months ended June 30, 2017 was the net result of favorable LAE development related to bodily injury claims over multiple prior accident periods, offset by unfavorable development on losses related to bodily injury severity related to the 2016 and 2017 accident years.  

The unfavorable development for the three and six months ended June 30, 2016 was the result of increased losses primarily from the 2015 accident year across all major coverages. The most significant causes of the development were a greater than usual emergence of reported claims and higher bodily injury severity.

.

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Income Taxes

6 Months Ended

Jun. 30, 2017

Income Tax Disclosure [Abstract]

Income Taxes

6. Income Taxes

The (benefit) provision for income taxes consisted of the following (in thousands).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017		2016
Federal:
Current	$	(92	)	$	—		$	30	$	—
Deferred		(398	)		(10,665	)		229		(13,627	)
		(490	)		(10,665	)		259		(13,627	)
State:
Current		(70	)		60			10		159
Deferred		(17	)		(103	)		—		(109	)
		(87	)		(43	)		10		50
	$	(577	)	$	(10,708	)	$	269	$	(13,577	)

The (benefit) provision for income taxes differs from the amounts computed by applying the statutory federal corporate tax rate of 35% to loss before income taxes as a result of the following (in thousands).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017		2016
(Benefit) provision for income taxes at statutory rate	$	(518	)	$	(10,712	)	$	34	$	(13,643	)
Tax effect of:
Tax-exempt investment income		—			(10	)		—		(20	)
Stock option expirations		—			13			229		17
State income taxes, net of federal income tax benefit    and state valuation allowance		(63	)		(65	)		6		(6	)
Other		4			66			—		75
	$	(577	)	$	(10,708	)	$	269	$	(13,577	)

The Company had a deferred tax asset (“DTA”) valuation allowance of $1.8 million at both June 30, 2017 and  December 31, 2016, attributable to certain amounts related to state taxes and OTTI that are not more likely than not to be realized. In assessing the Company’s ability to realize the DTA, both positive and negative evidence are used to evaluate the allowance. Although the Company incurred a 2016 pre-tax loss of $45.1 million which is a source of negative evidence, it placed greater weight on its outlook for future taxable income over the allowable time period for realization of the DTA and concluded that it is more likely than not that the remaining DTA will be realized. Regarding the length of time available to realize the DTA, at June 30, 2017, $23.8 million of the DTA related to net operating loss carryforwards do not expire until 2031 through 2036 and $2.0 million in AMT (“Alternative Minimum Tax”) carryforwards have no expiration date. The DTA valuation allowance may be adjusted in future periods if management determines that it is more likely than not that some portion or all of the DTA will not be realized. In the event the DTA valuation allowance is increased, the Company would record an income tax expense for the adjustment.

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Segment Information

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Segment Information

7. Segment Information

The Company operates in two business segments with its primary focus being the selling, servicing and underwriting of non-standard personal automobile insurance. The real estate and corporate segment consists of the activities related to the disposition of foreclosed real estate held for sale and other operating expenses not directly related to the insurance operations, interest expense and stock-based compensation, offset by investment income on corporate invested assets.

The following table presents selected financial data by business segment (in thousands).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Revenues:
Insurance	$	91,394		$	101,501		$	179,447		$	198,434
Real estate and corporate		17			1,253			33			1,268
Consolidated total	$	91,411		$	102,754		$	179,480		$	199,702
(Loss) income before income taxes:
Insurance	$	(26	)	$	(30,434	)	$	2,942		$	(37,455	)
Real estate and corporate		(1,454	)		(173	)		(2,846	)		(1,526	)
Consolidated total	$	(1,480	)	$	(30,607	)	$	96		$	(38,981	)

	June 30,		December 31,
	2017		2016
Total assets:
Insurance	$	369,700	$	354,008
Real estate and corporate		45,128		46,066
Consolidated total	$	414,828	$	400,074

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Litigation

6 Months Ended

Jun. 30, 2017

Commitments And Contingencies Disclosure [Abstract]

Litigation

8. Litigation

The Company is named as a defendant in various lawsuits, arising in the ordinary course of business, generally relating to its insurance operations. All legal actions relating to claims made under insurance policies are considered by the Company in establishing its loss and loss adjustment expense reserves. The Company also faces lawsuits from time to time that seek damages beyond policy limits, commonly known as bad faith claims, as well as class action and individual lawsuits that involve issues arising in the course of the Company’s business. The Company continually evaluates potential liabilities and reserves for litigation of these types using the criteria established by FASB ASC 450, Contingencies (“FASB ASC 450”). Pursuant to FASB ASC 450, reserves for a loss may only be recognized if the likelihood of occurrence is probable and the amount can be reasonably estimated. If a loss, while not probable, is judged to be reasonably possible, management will disclose, if it can be estimated, a possible range of loss or state that an estimate cannot be made. Management evaluates each legal action and records reserves for losses, as warranted, by establishing a reserve in its consolidated balance sheets in loss and loss adjustment expense reserves for bad faith claims and in other liabilities for other lawsuits. Amounts incurred are recorded in the Company’s consolidated statements of comprehensive income (loss) in losses and loss adjustment expenses for bad faith claims and in insurance operating expenses for other lawsuits unless otherwise disclosed.

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2017

Accounting Changes And Error Corrections [Abstract]

Recent Accounting Pronouncements

9. Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board (“IASB”) jointly issued a new revenue recognition standard, Accounting Standard Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” that will supersede virtually all revenue recognition guidance in GAAP and International Financial Reporting Standards (“IFRS”). This guidance had an effective date for public companies for annual and interim periods beginning after December 15, 2016, with early adoption not permitted. In July 2015, the FASB issued a one-year deferral of this effective date with the option for entities to early adopt at the original effective date. The standard is intended to increase comparability across industries and jurisdictions. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. The new standard will not change accounting guidance for insurance contracts. However, the Company has revenue from non-insurance arrangements which falls under this guidance, as would the sale of the Company’s tract of land that is held for sale. The Company is currently evaluating the applicability of this guidance to the various types of fee income related to its insurance contracts.

Approximately 20% of the Company’s total revenues may be subject to the guidance in ASU No. 2014-09. Historically, approximately 40% of these revenues are in the form of commissions paid by third party insurance carriers which are earned upon the effective date of bound coverage, less an estimated allowance for return commissions based upon historical experience, since no significant performance obligation remains in these arrangements after coverage is bound and the control of the underlying insurance policy is transferred to the customer. Approximately 25% of these revenues are in the form of commissions paid by a third-party entity on the sales of ancillary insurance products that are earned on a pro-rata basis over the life of the underlying contracts, since the Company has a contractual performance obligation for these contracts. Approximately 35% of these revenues are derived from various fees related to insurance contracts that are recognized into income as the related services are performed and costs are incurred.     

The Company has not finalized the impact, if any, on our consolidated financial statements at this time. However, based on our initial evaluation of this guidance, including contract reviews, the Company does not expect the future impacts to be material.

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments – Overall (Subtopic 825-20): Recognition and Measure of Financial Assets and Financial Liabilities” which requires entities to measure many equity investments at fair value and recognize changes in fair value in net income (loss), as opposed to the current practice of other comprehensive income (loss). The guidance provides a new measurement alternative for equity investments that do not have readily determinable fair values and do not qualify for the net asset value practical expedient. Under this alternative, these investments can be measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The guidance is effective for public business entities for annual periods beginning after December 15, 2017, and interim periods within those years. The Company has not determined the impact on future consolidated financial statements once this is adopted.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” which requires lessees to record most leases on their balance sheets as lease liabilities with corresponding right-of-use assets, but recognize expense in a manner similar to the current accounting treatment. The guidance is effective for public business entities for annual periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in their financial statements. The Company’s lease arrangements fall under this guidance and will be required to be shown on its consolidated balance sheet. The Company is currently evaluating controls and processes to ensure this guidance is reflected properly on future consolidated financial statements and expects to adopt this guidance in its consolidated balance sheet as of March 31 2019 along with a corresponding restatement of its consolidated balance sheet as of March 31, 2018, As detailed in Note 8 of the 2016 10-K, the undiscounted contractual cash payments remaining on leased properties was $16.8 million as of December 31, 2017.  

In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting” which addressed the recognition, presentation and classification of awards, forfeitures and shares withheld for tax purposes. The standard was effective for fiscal periods beginning after December 15, 2016, with each provision having a different application method. The adoption of this standard effective January 1, 2017 did not have a material impact on our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326)” which requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses will be based on relevant information, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The expected increases and decreases in the credit loss will be reflected on the consolidated statement of comprehensive income (loss). The guidance is effective for public business entities for annual periods beginning after December 15, 2019, and interim periods within those years. Early adoption is permitted. The Company has not determined the impact on future consolidated financial statements once this is adopted.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” which clarifies how entities should classify certain cash receipts and cash payments, including how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. Entities will have to apply the guidance retrospectively, but if it is impracticable to do so for an issue, the amendments related to that issue would be applied prospectively. The Company has not determined the impact on future consolidated financial statements once this is adopted.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” which eliminates the requirement to calculate the implied fair value of goodwill to measure an impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. The standard will be applied prospectively. The guidance is effective for annual and interim impairment tests performed by public business entities for periods beginning after December 15, 2019. Early adoption is permitted for impairment testing dates after January 1, 2017. The Company believes that it will be reasonably able to comply with these requirements.

In April 2017, the FASB issued ASU No. 2017-08, “Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities” which shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date instead of the current practice of amortizing the premium as a yield adjustment over the contractual life of the security. The guidance is effective for public business entities for periods beginning after December 15, 2018. Early adoption is permitted. The guidance calls for a modified retrospective transition approach under which a cumulative-effect adjustment will be made to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Company believes that it will be reasonably able to comply with these requirements and has not determined the impact on future consolidated financial statements once this is adopted.

In May 2017, the FASB issued ASU No. 2017-09, “Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting” that clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The new guidance will provide relief to entities that make non-substantive changes to their share-based payment awards. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The Company currently has no intentions to modify any of its currently outstanding share-based payment awards, however, it would likely consider early adoption of this guidance upon any such occurrence.

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Related Parties

6 Months Ended

Jun. 30, 2017

Related Party Transactions [Abstract]

Related Parties

10. Related Parties

On June 29, 2015, to finance the acquisition of the Titan Agencies, the Company borrowed the full amount under a $30 million Loan Agreement (the “Loan Agreement”) with Diamond Family Investments, LP, an affiliate of Gerald J. Ford, the Company’s controlling stockholder.  The Loan Agreement provided a $30 million interest-only senior term loan facility, maturing in full on June 29, 2025. Commencing June 29, 2016, the Company has the right to prepay the loan in whole or in part, in cash, without premium or penalty, upon written notice to the lender. Amounts prepaid under the Loan Agreement may not be reborrowed. The term loan outstanding under the Loan Agreement bears interest at a rate of 8% per annum. The Loan Agreement contains certain representations, warranties and covenants. The Loan Agreement also contains customary events of default, including but not limited to: nonpayment; material inaccuracy of representations and warranties; violations of covenants; cross-default to material indebtedness; certain material judgments; certain bankruptcies and liquidations; invalidity of the loan documents and related events; and a change of control (as defined in the Loan Agreement).

In April 2016, the Company entered into standard agreements for treasury and investment custodial services with a bank in which our principal shareholder has a 15% indirect ownership interest. The fees under these agreements for the three and six months ended June 30, 2017 were $42 thousand and $91 thousand, respectively, and $32 thousand for the three months ended June 30, 2016.

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Current Liquidity and Statutory Capital and Surplus

6 Months Ended

Jun. 30, 2017

Current Liquidity And Statutory Capital And Surplus [Abstract]

Current Liquidity and Statutory Capital and Surplus

11. Current Liquidity and Statutory Capital and Surplus

The Company has $70.0 million in long-term borrowings of which $40.0 million matures in 2037 and $30.0 million matures in 2025. At June 30, 2017, the Company was in compliance with the covenants related to these borrowings. Such borrowings are not obligations of the Company’s regulated insurance company subsidiaries who at June 30, 2017 had combined statutory capital and surplus of $60.6 million. The Company believes that it has sufficient liquidity to meet its current obligations in the foreseeable future, including the payment of interest on its long-term borrowings which it currently funds through the cash flows of its agency operations which are generated outside the Company’s regulated insurance company subsidiaries and are not subject to any limitation on the payment of dividends to the holding company.

The Company has three insurance company subsidiaries that are organized and domiciled under the insurance statutes of Texas, Georgia, and Tennessee. The insurance company subsidiaries operate under licenses issued by various state insurance authorities. Such licenses may be of perpetual duration or periodically renewable, provided the insurance company subsidiaries continue to meet applicable regulatory requirements.

The National Association of Insurance Commissioners (“NAIC”) Model Act for risk-based capital provides formulas to determine each December 31 on an annual basis the amount of statutory capital and surplus that an insurance company needs to ensure that it has an acceptable expectation of not becoming financially impaired. Failure to meet applicable risk-based capital requirements could subject our insurance company subsidiaries to further examination or corrective action imposed by state regulators, including limitations on their writing of additional business, state supervision, or even liquidation. Although statutory risk-based capital calculations are only made as of each December 31, the Company estimated that the three insurance company subsidiaries are above the regulatory company action levels as of June 30, 2017. There are also statutory guidelines that suggest that on an annual calendar year basis an insurance company should not exceed a ratio of net premiums written to statutory capital and surplus of 3-to-1. On a combined basis, the ratio for our insurance company subsidiaries of net premiums written for the last twelve months to statutory capital and surplus was 4.7-to-1 at June 30, 2017 which is in excess of the suggested guidelines. Management is currently operating under a business plan to reduce premium writings and increase statutory capital and surplus to address the net premiums written to statutory capital and surplus guidelines.

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Fair Value (Tables)

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Presentation of Carrying Values and Fair Values of Certain Financial Instruments

The carrying values and fair values of certain financial instruments were as follows (in thousands).

	June 30, 2017				December 31, 2016
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Assets:
Investments, available-for-sale	$	116,012	$	116,012	$	117,212	$	117,212
Other investments		10,468		10,468		9,994		9,994
Liabilities:
Debentures payable		40,324		17,266		40,302		11,488
Term loan from principal stockholder		29,792		22,126		29,779		15,000

Presentation of Fair-Value Measurements for Each Major Category of Assets Measured on Recurring Basis

The following tables present the fair-value measurements for each major category of assets that are measured on a recurring basis (in thousands). Other investments are carried at net asset value which approximates fair value.

			Fair Value Measurements Using
			Quoted Prices		Significant
			in Active		Other		Significant		Proportionate
			Markets for		Observable		Unobservable		Share of
			Identical Assets		Inputs		Inputs		Net Assets
June 30, 2017	Total		(Level 1)		(Level 2)		(Level 3)		(NAV)
Fixed maturities, available-for-sale:
U.S. government and agencies	$	19,499	$	19,499	$	—	$	—	$	—
Political subdivisions		4,183		—		4,183		—		—
Revenue and assessment		5,463		—		5,463		—		—
Corporate bonds		44,829		—		44,829		—		—
Collateralized mortgage obligations:
Agency backed		21,610		—		21,610		—		—
Non-agency backed – residential		2,765		—		2,765		—		—
Non-agency backed – commercial		1,710		—		1,710		—		—
Total fixed maturities, available-for-sale		100,059		19,499		80,560		—		—
Preferred stocks, available-for-sale		3,266		3,266		—		—		—
Mutual funds, available-for-sale		12,687		12,687	—			—		—
Total investments, available-for-sale		116,012		35,452		80,560		—		—
Other investments		10,468		—		—		5,252		5,216
Cash, cash equivalents, and restricted cash		125,530		125,530		—		—		—
Total	$	252,010	$	160,982	$	80,560	$	5,252	$	5,216

			Fair Value Measurements Using
			Quoted Prices		Significant
			in Active		Other		Significant		Proportionate
			Markets for		Observable		Unobservable		Share of
			Identical Assets		Inputs		Inputs		Net Assets
December 31, 2016	Total		(Level 1)		(Level 2)		(Level 3)		(NAV)
Fixed maturities, available-for-sale:
U.S. government and agencies	$	18,951	$	18,951	$	—	$	—	$	—
Political subdivisions		4,165		—		4,165		—		—
Revenue and assessment		5,683		—		5,683		—		—
Corporate bonds		45,540		—		45,540		—		—
Collateralized mortgage obligations:
Agency backed		22,422		—		22,422		—		—
Non-agency backed – residential		2,933		—		2,933		—		—
Non-agency backed – commercial		1,895		—		1,895		—		—
Total fixed maturities, available-for-sale		101,589		18,951		82,638		—		—
Preferred stocks, available-for-sale		3,112		3,112		—		—		—
Mutual funds, available-for-sale		12,511		12,511	—			—		—
Total investments, available-for-sale		117,212		34,574		82,638		—		—
Other investment		9,994		—		—		4,858		5,136
Cash, cash equivalents, and restricted cash		118,681		118,681		—		—		—
Total	$	245,887	$	153,255	$	82,638	$	4,858	$	5,136

Quantitative Disclosure for Assets Classified as Level 3

The following table represents the quantitative disclosure for the asset classified as Level 3 during the six months ended June 30, 2017 (in thousands).

	Fair Value
	Measurements Using
	Significant Unobservable
	Inputs (Level 3)
	Common Stock
	at Fair Value
Balance at December 31, 2016	$	4,858
Gains included in net loss		—
Gains included in comprehensive income (loss)		317
Investments and capital calls		77
Distributions received		—
Transfers into and out of Level 3		—
Balance at June 30, 2017	$	5,252

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Investments (Tables)

6 Months Ended

Jun. 30, 2017

Investments Debt And Equity Securities [Abstract]

Summary of Company's Investment Securities

The following tables summarize the Company’s investment securities (in thousands).

		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
June 30, 2017	Cost	Gains	Losses	Value
U.S. government and agencies	$       19,641	$                 96	$              (238)	$          19,499
Political subdivisions	4,173	10	—	4,183
Revenue and assessment	5,255	208	—	5,463
Corporate bonds	45,908	67	(1,146)	44,829
Collateralized mortgage obligations:
Agency backed	22,149	68	(607)	21,610
Non-agency backed – residential	2,213	560	(8)	2,765
Non-agency backed – commercial	1,056	654	—	1,710
Total fixed maturities, available-for-sale	100,395	1,663	(1,999)	100,059
Preferred stocks, available-for-sale	3,025	281	(40)	3,266
Mutual funds, available-for-sale	11,813	874		12,687
	$        115,233	$            2,818	$           (2,039)	$        116,012

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2016	Cost		Gains		Losses			Value
U.S. government and agencies	$	19,142	$	112	$	(303	)	$	18,951
Political subdivisions		4,233		—		(68	)		4,165
Revenue and assessment		5,539		185		(41	)		5,683
Corporate bonds		47,238		107		(1,805	)		45,540
Collateralized mortgage obligations:
Agency backed		23,093		73		(744	)		22,422
Non-agency backed – residential		2,411		529		(7	)		2,933
Non-agency backed – commercial		1,408		487		—			1,895
Total fixed maturities, available-for-sale		103,064		1,493		(2,968	)		101,589
Preferred stocks, available-for-sale		3,025		198		(111	)		3,112
Mutual funds, available-for-sale		11,813		698		—			12,511
	$	117,902	$	2,389	$	(3,079	)	$	117,212

Scheduled Maturities of Company's Fixed Maturity Securities Based on their Fair Values

The following table sets forth the scheduled maturities of the Company’s fixed maturity securities based on their fair values (in thousands). Actual maturities may differ from contractual maturities because certain securities may be called or prepaid by the issuers.

					Securities
	Securities		Securities		with No		All
	with		with		Unrealized		Fixed
	Unrealized		Unrealized		Gains or		Maturity
June 30, 2017	Gains		Losses		Losses		Securities
One year or less	$	1,779	$	3,574	$	—	$	5,353
After one through five years		12,802		17,345		—		30,147
After five through ten years		2,844		30,879		—		33,723
After ten years		4,751		—		—		4,751
No single maturity date		4,818		21,267		—		26,085
	$	26,994	$	73,065	$	—	$	100,059

Number of Fixed Maturity Securities with Gross Unrealized Gains and Losses

The following table reflects the number of fixed maturity securities with gross unrealized gains and losses. Gross unrealized losses are further segregated by the length of time that individual securities have been in a continuous unrealized loss position.

	Gross Unrealized Losses
	Less than		Greater		Gross
	or equal to		than 12		Unrealized
At:	12 months		months		Gains
June 30, 2017		36		1		39
December 31, 2016		37		—		40

Fair Value and Gross Unrealized Losses of Fixed Maturity Securities in Continuous Unrealized Loss Position for Greater than 12 Months

The following table reflects the fair value and gross unrealized losses of those fixed maturity securities in a continuous unrealized loss position for greater than 12 months at June 30, 2017. There were no securities meeting these criteria at December 31, 2016. Gross unrealized losses are further segregated by the percentage of amortized cost (in thousands, except number of securities).

	Number				Gross
Gross Unrealized Losses	of		Fair		Unrealized
at June 30, 2017:	Securities		Value		Losses
Less than or equal to 10%		1	$	108	$	(4	)
Greater than 10%		—		—		—
		1	$	108	$	(4	)

Gross Unrealized Losses by Current Severity and Length of Time that Individual Securities have been in Continuous Unrealized Loss Position

The following tables set forth the amount of gross unrealized losses by current severity (as compared to amortized cost) and length of time that individual securities have been in a continuous unrealized loss position (in thousands).

	Fair Value of
	Securities with
Length of	Gross		Gross			Severity of Gross Unrealized Losses
Gross Unrealized Losses	Unrealized		Unrealized			Less			5% to			Greater
at June 30, 2017:	Losses		Losses			than 5%				10%		than 10%
Less than or equal to:
Three months	$	12,453	$	(39	)	$	(39	)	$	—		$	—
Six months		299		(3	)		(3	)		—			—
Nine months		34,834		(983	)		(983	)		—			—
Twelve months		27,008		(1,010	)		(839	)		(171	)		—
Greater than twelve months		108		(4	)		(4	)		—			—
Total	$	74,702	$	(2,039	)	$	(1,868	)	$	(171	)	$	—

	Fair Value of
	Securities with
Length of	Gross		Gross			Severity of Gross Unrealized Losses
Gross Unrealized Losses	Unrealized		Unrealized			Less			5% to			Greater
at December 31, 2016:	Losses		Losses			than 5%				10%		than 10%
Less than or equal to:
Three months	$	58,550	$	(1,886	)	$	(1,461	)	$	(425	)	$	—
Six months		27,193		(1,186	)		(232	)		(954	)		—
Nine months		152		—			—			—
Twelve months		105		(7	)		—			(7	)		—
Greater than twelve months		—		—			—			—			—
Total	$	86,000	$	(3,079	)	$	(1,693	)	$	(1,386	)	$	-

Major Categories of Investment Income

The major categories of investment income follow (in thousands).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Fixed maturities, available-for-sale	$	616		$	981		$	1,239		$	1,951
Mutual funds, available-for-sale		158			160			320			366
Preferred stocks		44			25			89			49
Other investments		194			525			343			355
Cash and cash equivalents		217			66			376			107
Other		17			14			31			27
Investment expenses		(123	)		(125	)		(242	)		(247	)
	$	1,123		$	1,646		$	2,156		$	2,608

Components of Net Realized Gains (Losses) on Investments, Available-For-Sale at Fair Value

The components of net realized gains (losses) on investments, available-for-sale at fair value follow (in thousands).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Gains	$	8		$	—		$	8		$	—
Losses		(3	)		(15	)		(8	)		(17	)
Other-than-temporary impairment		—			(147	)		—			(147	)
	$	5		$	(162	)	$	-		$	(164	)

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Net Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Computation of Basic and Diluted Net Loss Per Share

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share data).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Net loss	$	(903	)	$	(19,899	)	$	(173	)	$	(25,404	)
Weighted average common basic shares		41,164			41,064			41,162			41,062
Effect of dilutive securities		—			—			—			—
Weighted average common dilutive shares		41,164			41,064			41,162			41,062
Basic and diluted net loss per share	$	(0.02	)	$	(0.48	)	$	(0.00	)	$	(0.62	)

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Losses and Loss Adjustment Expenses Incurred and Paid (Tables)

6 Months Ended

Jun. 30, 2017

Insurance [Abstract]

Information Regarding the Reserve for Unpaid Losses and Loss Adjustment Expenses

Information regarding the reserve for unpaid losses and loss adjustment expenses (“LAE”) is as follows (in thousands).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Liability for unpaid losses and LAE at beginning of period, gross	$	156,410		$	132,650		$	161,079		$	122,071
Reinsurance balances receivable		(763	)		(491	)		(769	)		(464	)
Liability for unpaid losses and LAE at beginning of period, net		155,647			132,159			160,310			121,607
Add: Provision for losses and LAE:
Current period		62,599			74,974			119,665			143,173
Prior periods		207			25,791			(579	)		31,011
Net losses and LAE incurred		62,806			100,765			119,086			174,184
Less: Losses and LAE paid:
Current period		30,182			40,345			46,319			58,750
Prior periods		26,833			27,241			71,639			71,703
Net losses and LAE paid		57,015			67,586			117,958			130,453
Liability for unpaid losses and LAE at end of period, net		161,438			165,338			161,438			165,338
Reinsurance balances receivable		794			674			794			674
Liability for unpaid losses and LAE at end of period, gross	$	162,232		$	166,012		$	162,232		$	166,012

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2017

Income Tax Disclosure [Abstract]

(Benefit) Provision for Income Taxes

The (benefit) provision for income taxes consisted of the following (in thousands).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017		2016
Federal:
Current	$	(92	)	$	—		$	30	$	—
Deferred		(398	)		(10,665	)		229		(13,627	)
		(490	)		(10,665	)		259		(13,627	)
State:
Current		(70	)		60			10		159
Deferred		(17	)		(103	)		—		(109	)
		(87	)		(43	)		10		50
	$	(577	)	$	(10,708	)	$	269	$	(13,577	)

(Benefit) Provision for Income Taxes Differs from Amounts Computed by Applying Statutory Federal Corporate Tax Rate

The (benefit) provision for income taxes differs from the amounts computed by applying the statutory federal corporate tax rate of 35% to loss before income taxes as a result of the following (in thousands).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017		2016
(Benefit) provision for income taxes at statutory rate	$	(518	)	$	(10,712	)	$	34	$	(13,643	)
Tax effect of:
Tax-exempt investment income		—			(10	)		—		(20	)
Stock option expirations		—			13			229		17
State income taxes, net of federal income tax benefit    and state valuation allowance		(63	)		(65	)		6		(6	)
Other		4			66			—		75
	$	(577	)	$	(10,708	)	$	269	$	(13,577	)

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Selected Financial Data by Business Segment

The following table presents selected financial data by business segment (in thousands).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Revenues:
Insurance	$	91,394		$	101,501		$	179,447		$	198,434
Real estate and corporate		17			1,253			33			1,268
Consolidated total	$	91,411		$	102,754		$	179,480		$	199,702
(Loss) income before income taxes:
Insurance	$	(26	)	$	(30,434	)	$	2,942		$	(37,455	)
Real estate and corporate		(1,454	)		(173	)		(2,846	)		(1,526	)
Consolidated total	$	(1,480	)	$	(30,607	)	$	96		$	(38,981	)

	June 30,		December 31,
	2017		2016
Total assets:
Insurance	$	369,700	$	354,008
Real estate and corporate		45,128		46,066
Consolidated total	$	414,828	$	400,074

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General - Additional Information (Detail) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Assets [Abstract]
Maximum maturity period of cash equivalents included in investments	3 months
Restricted cash equivalents	$ 17.3	$ 18.6

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Fair Value - Presentation of Carrying Values and Fair Values of Certain Financial Instruments (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Assets:
Investments, available-for-sale	$ 116,012	$ 117,212
Other investments	10,468	9,994
Carrying Value
Assets:
Investments, available-for-sale	116,012	117,212
Other investments	10,468	9,994
Liabilities:
Debentures payable	40,324	40,302
Term loan from principal stockholder	29,792	29,779
Fair Value
Assets:
Investments, available-for-sale	116,012	117,212
Other investments	10,468	9,994
Liabilities:
Debentures payable	17,266	11,488
Term loan from principal stockholder	$ 22,126	$ 15,000

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Fair Value - Presentation of Fair-Value Measurements for Each Major Category of Assets Measured on Recurring Basis (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	$ 116,012	$ 117,212
Other investments	10,468	9,994
Cash, cash equivalents, and restricted cash	125,530	118,681
Total	252,010	245,887
Other investments, proportionate share of net assets	5,216	5,136
Total, proportionate share of net assets	5,216	5,136
Fixed Maturities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	100,059	101,589
Fixed Maturities | U.S. government and agencies
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	19,499	18,951
Fixed Maturities | Political subdivisions
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	4,183	4,165
Fixed Maturities | Revenue and assessment
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	5,463	5,683
Fixed Maturities | Corporate bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	44,829	45,540
Fixed Maturities | Collateralized mortgage obligations: Agency Backed
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	21,610	22,422
Fixed Maturities | Collateralized mortgage obligations: Non-agency backed - residential
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	2,765	2,933
Fixed Maturities | Collateralized mortgage obligations: Non-agency backed - commercial
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	1,710	1,895
Preferred stocks, available-for-sale
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	3,266	3,112
Mutual funds, available-for-sale
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	12,687	12,511
Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	35,452	34,574
Cash, cash equivalents, and restricted cash	125,530	118,681
Total	160,982	153,255
Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed Maturities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	19,499	18,951
Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed Maturities | U.S. government and agencies
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	19,499	18,951
Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1) | Preferred stocks, available-for-sale
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	3,266	3,112
Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1) | Mutual funds, available-for-sale
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	12,687	12,511
Fair Value Measurements Using Significant Other Observable Inputs (Level 2)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	80,560	82,638
Total	80,560	82,638
Fair Value Measurements Using Significant Other Observable Inputs (Level 2) | Fixed Maturities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	80,560	82,638
Fair Value Measurements Using Significant Other Observable Inputs (Level 2) | Fixed Maturities | Political subdivisions
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	4,183	4,165
Fair Value Measurements Using Significant Other Observable Inputs (Level 2) | Fixed Maturities | Revenue and assessment
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	5,463	5,683
Fair Value Measurements Using Significant Other Observable Inputs (Level 2) | Fixed Maturities | Corporate bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	44,829	45,540
Fair Value Measurements Using Significant Other Observable Inputs (Level 2) | Fixed Maturities | Collateralized mortgage obligations: Agency Backed
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	21,610	22,422
Fair Value Measurements Using Significant Other Observable Inputs (Level 2) | Fixed Maturities | Collateralized mortgage obligations: Non-agency backed - residential
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	2,765	2,933
Fair Value Measurements Using Significant Other Observable Inputs (Level 2) | Fixed Maturities | Collateralized mortgage obligations: Non-agency backed - commercial
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments, available-for-sale	1,710	1,895
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Other investments	5,252	4,858
Total	$ 5,252	$ 4,858

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Fair Value - Additional Information (Detail) - USD ($)	Jun. 30, 2017	Jun. 30, 2016
Fair Value Disclosures [Abstract]
Transfers between level 1 and level 2	$ 0	$ 0
Transfers between level 2 and level 1	$ 0	$ 0

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Fair Value - Quantitative Disclosure for Assets Classified as Level 3 (Detail) - Common Stock at Fair Value $ in Thousands	6 Months Ended
	Jun. 30, 2017 USD ($)
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Balance at December 31, 2016	$ 4,858
Gains included in comprehensive income (loss)	317
Investments and capital calls	77
Balance at June 30, 2017	$ 5,252

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Investments - Summary of Company's Investment Securities (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Investment Securities [Line Items]
Amortized Cost	$ 115,233	$ 117,902
Gross Unrealized Gains	2,818	2,389
Gross Unrealized Losses	(2,039)	(3,079)
Fair Value	116,012	117,212
Fixed Maturities
Investment Securities [Line Items]
Amortized Cost	100,395	103,064
Gross Unrealized Gains	1,663	1,493
Gross Unrealized Losses	(1,999)	(2,968)
Fair Value	100,059	101,589
Fixed Maturities | U.S. government and agencies
Investment Securities [Line Items]
Amortized Cost	19,641	19,142
Gross Unrealized Gains	96	112
Gross Unrealized Losses	(238)	(303)
Fair Value	19,499	18,951
Fixed Maturities | Political subdivisions
Investment Securities [Line Items]
Amortized Cost	4,173	4,233
Gross Unrealized Gains	10
Gross Unrealized Losses		(68)
Fair Value	4,183	4,165
Fixed Maturities | Revenue and assessment
Investment Securities [Line Items]
Amortized Cost	5,255	5,539
Gross Unrealized Gains	208	185
Gross Unrealized Losses		(41)
Fair Value	5,463	5,683
Fixed Maturities | Corporate bonds
Investment Securities [Line Items]
Amortized Cost	45,908	47,238
Gross Unrealized Gains	67	107
Gross Unrealized Losses	(1,146)	(1,805)
Fair Value	44,829	45,540
Fixed Maturities | Collateralized mortgage obligations: Agency Backed
Investment Securities [Line Items]
Amortized Cost	22,149	23,093
Gross Unrealized Gains	68	73
Gross Unrealized Losses	(607)	(744)
Fair Value	21,610	22,422
Fixed Maturities | Collateralized mortgage obligations: Non-agency backed - residential
Investment Securities [Line Items]
Amortized Cost	2,213	2,411
Gross Unrealized Gains	560	529
Gross Unrealized Losses	(8)	(7)
Fair Value	2,765	2,933
Fixed Maturities | Collateralized mortgage obligations: Non-agency backed - commercial
Investment Securities [Line Items]
Amortized Cost	1,056	1,408
Gross Unrealized Gains	654	487
Fair Value	1,710	1,895
Preferred stocks, available-for-sale
Investment Securities [Line Items]
Amortized Cost	3,025	3,025
Gross Unrealized Gains	281	198
Gross Unrealized Losses	(40)	(111)
Fair Value	3,266	3,112
Mutual funds, available-for-sale
Investment Securities [Line Items]
Amortized Cost	11,813	11,813
Gross Unrealized Gains	874	698
Fair Value	$ 12,687	$ 12,511

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Investments - Scheduled Maturities of Company's Fixed Maturity Securities Based on their Fair Values (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Securities with Unrealized Losses, Total	$ 74,702	$ 86,000
Fixed Maturities
Schedule of Available-for-sale Securities [Line Items]
Securities with Unrealized Gains, One year or less	1,779
Securities with Unrealized Gains, After one through five years	12,802
Securities with Unrealized Gains, After five through ten years	2,844
Securities with Unrealized Gains, After ten years	4,751
Securities with Unrealized Gains, No single maturity date	4,818
Securities with Unrealized Gains, Total	26,994
Securities with Unrealized Losses, One year or less	3,574
Securities with Unrealized Losses, After one through five years	17,345
Securities with Unrealized Losses, After five through ten years	30,879
Securities with Unrealized Losses, No single maturity date	21,267
Securities with Unrealized Losses, Total	73,065
All Fixed Maturity Securities, One year or less	5,353
All Fixed Maturity Securities, After one through five years	30,147
All Fixed Maturity Securities, After five through ten years	33,723
All Fixed Maturity Securities, After ten years	4,751
All Fixed Maturity Securities, No single maturity date	26,085
All Fixed Maturity Securities, Total	$ 100,059

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Investments - Number of Fixed Maturity Securities with Gross Unrealized Gains and Losses (Detail) - Security	Jun. 30, 2017	Dec. 31, 2016
Investments Debt And Equity Securities [Abstract]
Number of Securities with Gross Unrealized Losses Less than or equal to 12 months	36	37
Number of Securities with Gross Unrealized Losses Greater than 12 months	1	0
Number of Securities with Gross Unrealized Gains	39	40

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Investments - Additional Information (Detail)	3 Months Ended	6 Months Ended		12 Months Ended
	Jun. 30, 2016 USD ($)	Jun. 30, 2017 USD ($) Security Fund	Jun. 30, 2016 USD ($)	Dec. 31, 2016 USD ($) Security
Investments Debt And Equity Securities [Abstract]
Number of securities | Security		1		0
OTTI charges recognized in net income (loss)	$ 147,000	$ 0	$ 147,000
Number of investment funds | Fund		3
Unfunded commitments		$ 2,500,000
Fixed maturities and cash equivalents on deposit with various insurance departments at fair value and amortized cost		6,400,000
Cash equivalents on deposit with another insurance company at fair value and amortized cost		17,200,000
Non credit other than temporary impairment for securities		$ 1,100,000		$ 1,100,000

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Investments - Fair Value and Gross Unrealized Losses of Fixed Maturity Securities in Continuous Unrealized Loss Position for Greater than 12 Months (Detail) $ in Thousands	Jun. 30, 2017 USD ($) Security	Dec. 31, 2016 Security
Schedule of Available-for-sale Securities [Line Items]
Number of Securities | Security	1	0
Fair Value	$ 108
Gross Unrealized Losses	$ (4)
Percentage of amortized cost less than or equal to 10%
Schedule of Available-for-sale Securities [Line Items]
Number of Securities | Security	1
Fair Value	$ 108
Gross Unrealized Losses	$ (4)

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Investments - Gross Unrealized Losses by Current Severity and Length of Time that Individual Securities have been in Continuous Unrealized Loss Position (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Investment Maturity Date [Line Items]
Fair Value of Securities with Gross Unrealized Losses	$ 74,702	$ 86,000
Gross Unrealized Losses	(2,039)	(3,079)
Percentage of amortized cost less than 5%
Investment Maturity Date [Line Items]
Gross Unrealized Losses	(1,868)	(1,693)
Percentage of amortized cost 5% to 10%
Investment Maturity Date [Line Items]
Gross Unrealized Losses	(171)	(1,386)
Less than or equals to three months
Investment Maturity Date [Line Items]
Fair Value of Securities with Gross Unrealized Losses	12,453	58,550
Gross Unrealized Losses	(39)	(1,886)
Less than or equals to three months | Percentage of amortized cost less than 5%
Investment Maturity Date [Line Items]
Gross Unrealized Losses	(39)	(1,461)
Less than or equals to three months | Percentage of amortized cost 5% to 10%
Investment Maturity Date [Line Items]
Gross Unrealized Losses		(425)
Less than or equals to six months
Investment Maturity Date [Line Items]
Fair Value of Securities with Gross Unrealized Losses	299	27,193
Gross Unrealized Losses	(3)	(1,186)
Less than or equals to six months | Percentage of amortized cost less than 5%
Investment Maturity Date [Line Items]
Gross Unrealized Losses	(3)	(232)
Less than or equals to six months | Percentage of amortized cost 5% to 10%
Investment Maturity Date [Line Items]
Gross Unrealized Losses		(954)
Less than or equals to nine months
Investment Maturity Date [Line Items]
Fair Value of Securities with Gross Unrealized Losses	34,834	152
Gross Unrealized Losses	(983)
Less than or equals to nine months | Percentage of amortized cost less than 5%
Investment Maturity Date [Line Items]
Gross Unrealized Losses	(983)
Less than or equals to twelve months
Investment Maturity Date [Line Items]
Fair Value of Securities with Gross Unrealized Losses	27,008	105
Gross Unrealized Losses	(1,010)	(7)
Less than or equals to twelve months | Percentage of amortized cost less than 5%
Investment Maturity Date [Line Items]
Gross Unrealized Losses	(839)
Less than or equals to twelve months | Percentage of amortized cost 5% to 10%
Investment Maturity Date [Line Items]
Gross Unrealized Losses	(171)	$ (7)
Greater than 12 months
Investment Maturity Date [Line Items]
Fair Value of Securities with Gross Unrealized Losses	108
Gross Unrealized Losses	(4)
Greater than 12 months | Percentage of amortized cost less than 5%
Investment Maturity Date [Line Items]
Gross Unrealized Losses	$ (4)

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Investments - Major Categories of Investment Income (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Net Investment Income [Line Items]
Investment expenses	$ (123)	$ (125)	$ (242)	$ (247)
Net investment income	1,123	1,646	2,156	2,608
Fixed Maturities
Net Investment Income [Line Items]
Gross investment income	616	981	1,239	1,951
Mutual funds, available-for-sale
Net Investment Income [Line Items]
Gross investment income	158	160	320	366
Preferred stocks
Net Investment Income [Line Items]
Gross investment income	44	25	89	49
Other investments
Net Investment Income [Line Items]
Gross investment income	194	525	343	355
Cash and cash equivalents
Net Investment Income [Line Items]
Gross investment income	217	66	376	107
Other
Net Investment Income [Line Items]
Gross investment income	$ 17	$ 14	$ 31	$ 27

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Investments - Components of Net Realized Gains (Losses) on Investments, Available-for-Sale at Fair Value (Detail) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Investments Debt And Equity Securities [Abstract]
Gains	$ 8,000		$ 8,000
Losses	(3,000)	$ (15,000)	(8,000)	$ (17,000)
Other-than-temporary impairment		(147,000)	$ 0	(147,000)
Net realized gains (losses) on investments, available-for-sale	$ 5,000	$ (162,000)		$ (164,000)

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Net Loss Per Share - Computation of Basic and Diluted Net Loss Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Earnings Per Share [Abstract]
Net loss	$ (903)	$ (19,899)	$ (173)	$ (25,404)
Weighted average common basic shares	41,164	41,064	41,162	41,062
Weighted average common dilutive shares	41,164	41,064	41,162	41,062
Basic and diluted net loss per share	$ (0.02)	$ (0.48)	$ 0.00	$ (0.62)

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Net Loss Per Share - Additional Information (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands		3 Months Ended		6 Months Ended
	May 09, 2017	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Earnings Per Share [Line Items]
Stock-based compensation		$ 74	$ 68	$ 113	$ 105
Equity option
Earnings Per Share [Line Items]
Exercisable options outstanding that enable to purchase shares			825		825
Shares with dilutive effect and included in computation of diluted income (loss) per share			180		180
Options excluded from computation of diluted income (loss) per share due to anti-dilutive effect		120	240	120	240
Restricted stock
Earnings Per Share [Line Items]
Exercisable options outstanding that enable to purchase shares		576	270	576	270
Shares with dilutive effect and included in computation of diluted income (loss) per share		37	237	39	237
Options excluded from computation of diluted income (loss) per share due to anti-dilutive effect		93		93
Restricted stock | Executive Officer
Earnings Per Share [Line Items]
Compensation awarded restricted stock units	500
Stock-based compensation	$ 590
Closing market price of the common stock	$ 1.18

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Losses and Loss Adjustment Expenses Incurred and Paid - Information Regarding the Reserve for Unpaid Losses and Loss Adjustment Expenses (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Insurance [Abstract]
Liability for unpaid losses and LAE at beginning of period, gross	$ 156,410	$ 132,650	$ 161,079	$ 122,071
Reinsurance balances receivable, beginning balance	(763)	(491)	(769)	(464)
Liability for unpaid losses and LAE at beginning of period, net	155,647	132,159	160,310	121,607
Add: Provision for losses and LAE:
Current period	62,599	74,974	119,665	143,173
Prior periods	207	25,791	(579)	31,011
Net losses and LAE incurred	62,806	100,765	119,086	174,184
Less: Losses and LAE paid:
Current period	30,182	40,345	46,319	58,750
Prior periods	26,833	27,241	71,639	71,703
Net losses and LAE paid	57,015	67,586	117,958	130,453
Liability for unpaid losses and LAE at end of period, net	161,438	165,338	161,438	165,338
Reinsurance balances receivable, ending balance	794	674	794	674
Liability for unpaid losses and LAE at end of period, gross	$ 162,232	$ 166,012	$ 162,232	$ 166,012

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Income Taxes - (Benefit) Provision for Income Taxes (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Federal:
Current	$ (92)		$ 30
Deferred	(398)	$ (10,665)	229	$ (13,627)
Gross Federal	(490)	(10,665)	259	(13,627)
State:
Current	(70)	60	10	159
Deferred	(17)	(103)		(109)
Gross State	(87)	(43)	10	50
Income tax expense (benefit)	$ (577)	$ (10,708)	$ 269	$ (13,577)

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Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Income Tax Disclosure [Abstract]
Statutory federal corporate tax rate			35.00%
Valuation allowance	$ 1,800		$ 1,800		$ 1,800
Pre-tax loss	(1,480)	$ (30,607)	96	$ (38,981)	$ (45,100)
DTA related to net operating loss carryforwards	23,800		$ 23,800
DTA related to operating loss carryforwards expiration, description			do not expire until 2031 through 2036
AMT carryforwards	$ 2,000		$ 2,000

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Income Taxes - (Benefit) Provision for Income Taxes Differs from Amounts Computed by Applying Statutory Federal Corporate Tax Rate (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Tax Disclosure [Abstract]
(Benefit) provision for income taxes at statutory rate	$ (518)	$ (10,712)	$ 34	$ (13,643)
Tax effect of:
Tax-exempt investment income		(10)		(20)
Stock option expirations		13	229	17
State income taxes, net of federal income tax benefit and state valuation allowance	(63)	(65)	6	(6)
Other	4	66		75
Income tax expense (benefit)	$ (577)	$ (10,708)	$ 269	$ (13,577)

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Segment Information - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2017 Segment
Segment Reporting [Abstract]
Number of business segments	2

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Segment Information - Selected Financial Data by Business Segment (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Segment Reporting Information [Line Items]
Revenues	$ 91,411	$ 102,754	$ 179,480	$ 199,702
(Loss) income before income taxes	(1,480)	(30,607)	96	(38,981)	$ (45,100)
Total assets	414,828		414,828		400,074
Insurance
Segment Reporting Information [Line Items]
Revenues	91,394	101,501	179,447	198,434
(Loss) income before income taxes	(26)	(30,434)	2,942	(37,455)
Total assets	369,700		369,700		354,008
Real estate and Corporate
Segment Reporting Information [Line Items]
Revenues	17	1,253	33	1,268
(Loss) income before income taxes	(1,454)	$ (173)	(2,846)	$ (1,526)
Total assets	$ 45,128		$ 45,128		$ 46,066

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Recent Accounting Pronouncements - Additional Information (Detail) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2017
ASU No. 2014-09
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Percentage of total revenue subject to guidance	20.00%
Percentage of revenue related to commissions paid by third party insurance carriers	40.00%
Percentage of revenue related to commissions paid by third party ancillary insurance products	25.00%
Percentage of revenue from billing fees related to insurance contracts	35.00%
ASU No. 2016-02 | Scenario, Forecast
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Undiscounted contractual cash payments remaining on leased properties		$ 16.8

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Related Parties - Additional Information (Detail) - USD ($) $ in Thousands		1 Months Ended	3 Months Ended		6 Months Ended
	Jun. 29, 2015	Apr. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017
Related Party Transaction [Line Items]
Percentage of indirect ownership by principal stockholder		15.00%
Treasury And Custodial Services Agreements
Related Party Transaction [Line Items]
Fees for related party services			$ 42	$ 32	$ 91
Senior Term Loan Facility | Diamond Family Investments L P | Loan Agreement
Related Party Transaction [Line Items]
Term loan borrowed	$ 30,000
Term loan outstanding, interest rate	8.00%
Maturity date	Jun. 29, 2025

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Current Liquidity and Statutory Capital and Surplus - Additional Information (Detail) $ in Millions	6 Months Ended
	Jun. 30, 2017 USD ($)
Current Liquidity And Statutory Capital And Surplus [Line Items]
Long-term debt obligations	$ 70.0
Statutory capital and surplus balance	$ 60.6
Ratio of net premiums to statutory capital and surplus	4.70%
Minimum
Current Liquidity And Statutory Capital And Surplus [Line Items]
Ratio of net premiums to statutory capital and surplus	3.00%
Long-term debt matures on 2037
Current Liquidity And Statutory Capital And Surplus [Line Items]
Long-term debt obligations	$ 40.0
Long-term debt matures on 2025
Current Liquidity And Statutory Capital And Surplus [Line Items]
Long-term debt obligations	$ 30.0