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Schedule II - Condensed Financial Information of Registrant
 12 Months Ended
Dec. 31, 2020
Condensed Financial Information Disclosure [Abstract]  
Condensed Financial Information of Registrant Condensed Balance Sheets
Schedule II – Condensed Financial Information of Registrant
Condensed Balance Sheets
FEDNAT HOLDING COMPANY (Parent Company Only)
December 31, 2020 and 2019

December 31,
20202019
(In thousands)
ASSETS
Investments in subsidiaries (1)$225,568 $268,767 
Investment securities, available-for-sale, at fair value20,646 24,951 
Equity securities, at fair value1,881 1,751 
Cash and cash equivalents18,170 21,031 
Deferred income taxes, net868 1,940 
Income taxes receivable7,969 13,850 
Note receivable and accrued interest to subsidiary (1)19,517 18,107 
Right-of-use assets7,108 7,716 
Other assets1,991 2,878 
Total assets$303,718 $360,991 
  
LIABILITIES AND SHAREHOLDERS’ EQUITY  
Liabilities
Due to subsidiaries, net (1)$31,686 $1,779 
Long-term debt98,683 98,522 
Lease liabilities7,108 7,716 
Other liabilities8,081 4,281 
Total liabilities145,558 112,298 
  
Shareholders' Equity
Preferred stock— — 
Common stock137 144 
Additional paid-in capital169,298 167,677 
Accumulated other comprehensive income (loss)11,386 10,281 
Retained earnings (deficit)(22,661)70,591 
Total shareholders’ equity158,160 248,693 
Total liabilities and shareholders' equity$303,718 $360,991 

(1)Eliminated in consolidation.

The accompanying note is an integral part of the condensed financial statements.
Schedule II – Condensed Financial Information of Registrant (Continued)
Condensed Statements of Earnings
FEDNAT HOLDING COMPANY (Parent Company Only)
 
Year Ended December 31,
202020192018
(In thousands)
Revenues:
Management fees (1)$2,660 $2,160 $2,608 
Interest from subsidiaries (1)1,410 107 — 
Net investment income477 1,757 843 
Net realized and unrealized investment gains (losses)972 448 (765)
Equity in income (loss) of consolidated subsidiaries(94,363)20,909 30,895 
Total revenue(88,844)25,381 33,581 
   
Costs and expenses:
General and administrative expenses15,149 13,892 9,296 
Interest expense7,661 10,776 4,077 
Total costs and expenses22,810 24,668 13,373 
   
Income (loss) before income taxes(111,654)713 20,208 
Income tax expense (benefit)(33,496)(298)5,498 
Net income (loss)(78,158)1,011 14,710 
Net income (loss) attributable to non-controlling interest— — (218)
Net income (loss) attributable to FedNat Holding Company shareholders$(78,158)$1,011 $14,928 

(1)Eliminated in consolidation.

The accompanying note is an integral part of the condensed financial statements.
Schedule II – Condensed Financial Information of Registrant (Continued)
Condensed Statements of Cash Flows
FEDNAT HOLDING COMPANY (Parent Company Only)
 
Year Ended December 31,
202020192018
(In thousands)
Cash flow from operating activities:
Net income (loss)$(78,158)$1,011 $14,710 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Net realized and unrealized investment (gains) losses(972)(448)765 
Equity in undistributed income (loss) of consolidated subsidiaries (1)94,363 (20,909)(30,895)
Amortization of investment premium or discount, depreciation and amortization430 369 141 
Loss (gain) on early extinguishment of debt— 3,575 — 
Share-based compensation790 1,050 1,183 
Changes in operating assets and liabilities:
Income taxes, net6,900 (5,379)(2,371)
Due to subsidiaries, net (1)(21,891)3,044 (9,317)
Other, net3,564 998 1,497 
Net cash provided by (used in) operating activities5,026 (16,689)(24,287)
Cash flow from investing activities:
Capital contributions to consolidated subsidiaries (1)(11,000)— (30,000)
Sales, maturities and redemptions of investments securities31,300 11,276 54,543 
Purchases of investment securities(25,089)(15,617)(61,009)
Payment for acquisition— (25,566)— 
Issuance of note receivable to subsidiary (1)— (18,000)— 
Purchases of property and equipment(21)(289)(639)
Net cash provided by (used in) investing activities(4,810)(48,196)(37,105)
Cash flow from financing activities:
Proceeds from issuance of long-term debt, net of issuance costs— 98,390 — 
Payment of long-term debt and prepayment penalties— (48,000)— 
Issuance of common stock for share-based awards42 1 39 
Purchases of FedNat Holding Company common stock(10,418)(3,449)(5,061)
Dividends from consolidated subsidiaries12,376 39,174 27,990 
Dividends paid(5,077)(4,309)(4,184)
Net cash provided by (used in) financing activities(3,077)81,807 18,784 
Net increase (decrease) in cash and cash equivalents(2,861)16,922 (42,608)
Cash and cash equivalents at beginning of period21,031 4,109 46,717 
Cash and cash equivalents at end of period$18,170 $21,031 $4,109 

(1)Eliminated in consolidation.

The accompanying note is an integral part of the condensed financial statements.
Schedule II – Condensed Financial Information of Registrant (Continued)
Note to Condensed Financial Statements
FEDNAT HOLDING COMPANY (Parent Company Only)

(1)   ORGANIZATION AND BASIS OF PRESENTATION

FedNat Holding Company (“FNHC”), the Parent Company, is an insurance holding company that controls substantially all steps in the insurance underwriting, distribution and claims processes through our subsidiaries and our contractual relationships with our independent agents and general agents.

The accompanying condensed financial statements include the activity of the Parent Company and on an equity basis, its consolidated subsidiaries. Accordingly, these condensed financial statements have been presented for the parent company only. These condensed financial statements should be read in conjunction with the consolidated financial statements and related notes of FNHC and subsidiaries set forth in Part II, Item 8 Financial Statements and Supplemental Data of this Annual Report.

In applying the equity method to our consolidated subsidiaries, we record the investment at cost and subsequently adjust for additional capital contributions, distributions and proportionate share of earnings or losses.