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LONG-TERM DEBT
 12 Months Ended
Dec. 31, 2021
Debt Disclosure [Abstract]  
LONG-TERM DEBT
10. LONG-TERM DEBT

Long-term debt consisted of the following:
December 31,
20212020
(In thousands)
Senior unsecured fixed rate notes, due March 15, 2029, net of deferred financing costs of $1,170 and $1,317, respectively
$98,830 $98,683 
Convertible senior unsecured fixed rate notes, due April 19, 2026, net of deferred financing costs of $1,025
19,975 — 
Total long-term debt, net$118,805 $98,683 

As of December 31, 2021, the Company’s estimated annual aggregate amount of debt maturities (assuming the holders of the convertible debt do not convert into shares of the Company's common stock) includes the following:
Aggregate
Debt
For the Years Ending December 31,Maturities
(In thousands)
2022$— 
2023— 
2024— 
2025— 
202621,000 
Thereafter100,000 
Total debt maturities121,000 
Less: deferred financing costs2,195 
Total debt maturities, net$118,805 

Convertible Senior Unsecured Notes due 2026

On April 20, 2021, the Company closed an offering and issued $21.0 million in aggregate principal amount of Convertible Senior Unsecured Notes due 2026 (the “2026 Notes”) pursuant to an indenture dated as of April 19, 2021 (the "2021 Indenture"). This offering is part of an authorization by the Company’s Board of Directors to offer and issue from time to time up to $35.0 million of 2026 Notes under the 2021 Indenture. The 2026 Notes are not redeemable at the option of the Company, mature on April 19, 2026 and bear interest at a fixed rate of 5.0% per year, payable semi-annually in cash.

The 2026 Notes are convertible into shares of the Company’s common stock at an initial conversion rate of 166.6667 shares per $1,000 principal amount of 2026 Notes, which is equivalent to an initial conversion price of $6.00 per share of our common stock, an approximately 33% premium to the closing price of the Company's common stock on April 19, 2021. The conversion rate is subject to adjustment upon the occurrence of certain pro rata capital events, such as stock splits or dividends. The 2026 Notes are convertible at the option of the holder at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2026 Notes.

If a change in control of the Company, as defined in the 2021 Indenture, occurs, the holders of the 2026 Notes will have the right to require the Company to purchase all or a portion of their 2026 Notes at a price in cash equal to 101% of the principal amount thereof, plus any accrued but unpaid interest to, but excluding, the date of purchase.

The 2026 Notes are senior unsecured obligations of the Company and rank equally with the Senior Unsecured Notes due 2029 ("2029 Notes") and other future senior unsecured indebtedness of the Company. The 2021 Indenture includes customary covenants and events of default. Among other things, the covenants restrict the ability of the Company and its subsidiaries to incur additional indebtedness or make restricted payments, including dividends, require the Company to maintain certain levels of reinsurance coverage
while the 2026 Notes remain outstanding, and maintain certain financial covenants. These covenants are subject to important exceptions and qualifications set forth in the 2021 Indenture. Principal and interest on the 2026 Notes are subject to acceleration in the event of certain events of default, including a downgrade in the credit rating on the 2026 Notes down to the level of ‘BB-‘, being placed into receivership, failing to renew our excess-of-loss catastrophe reinsurance coverage, and certain bankruptcy-related events. The 2026 notes are currently rated ‘BBB,’ which is four notches higher than ‘BB-.’

The 2026 Notes fair value as of December 31, 2021 was $22.1 million. Refer to Note 4 for additional information.

Senior Unsecured Notes due 2029

On March 5, 2019, the Company completed a private placement offering and issued $100.0 million in principal amount of Senior Unsecured Fixed Rate Notes due 2029 (the "2029 Notes"), pursuant to an indenture dated as of March 5, 2029 (the "2019 Indenture"). The 2029 Notes mature on March 15, 2029 and at issuance bore interest at the annual fixed rate of 7.5% per year, payable semi-annually in arrears, subject to increases in the interest rate payable in the event of a downgrade below "BBB-" in the credit rating assigned to the 2029 Notes. In connection with the amendment of the indenture covenants to increase the maximum debt-to-capital ratio applicable to the incurrence of debt to 60% and decreasing the maximum debt-to-capital ratio applicable to restricted payments, including cash dividends on our common stock, to 20%, the interest rate was increased by 0.25% to 7.75% per annum beginning March 15, 2021. The 2029 Notes are not convertible or exchangeable for any equity securities, other securities or assets of the Company or any subsidiary. A portion of the cash from the offering was used to redeem all $45.0 million of the Company's Senior Unsecured Fixed Rate Notes Due 2022 and the Company's Senior Notes Due 2027. We recognized $3.6 million as interest expense in our consolidated statements of operations for the year ended 2019, for prepayment fees, including the write-off unamortized debt issuance costs on the repayment.

The Company may redeem the 2029 Notes under certain circumstances as set forth in the 2019 Indenture. Prior to March 15, 2024, the Company may redeem the 2029 Notes, in whole or in part, at a redemption price equal to 100.00% of the principal amount of the 2029 Notes to be redeemed, plus the “Applicable Premium,” plus accrued and unpaid interest on such 2029 Notes, if any, on any applicable redemption date, the greater of (1) 1.0% of the then-outstanding principal amount and (2) the excess (if any) of: (A) the present value at such redemption date of (i) the applicable redemption price at March 15, 2024 (excluding any accrued but unpaid interest), plus (ii) all required interest payments due through March 15, 2024 (excluding accrued but unpaid interest), computed using a discount rate equal to the Treasury Rate (as defined in the 2019 Indenture) on such redemption date plus 50 basis points; over (B) the then-outstanding principal amount.

On and after March 15, 2024, the Company may redeem the 2029 Notes, in whole or in part, at 103.750% in 2024, 101.875% in 2025, and 100% in 2026 and thereafter, together with any accrued and unpaid interest being redeemed to but excluding the date of redemption.

If a change in control of the Company, as defined in the 2019 Indenture, occurs, the holders of the Notes will have the right to require the Company to purchase all or a portion of their 2029 Notes at a price in cash equal to 101% of the principal amount thereof, plus any accrued but unpaid interest.

The 2029 Notes are senior unsecured obligations of the Company and will rank equally with all of the Company’s other future senior unsecured indebtedness. The 2019 Indenture includes customary covenants and events of default. Among other things, the covenants restrict the ability of the Company and its subsidiaries to incur additional indebtedness or make restricted payments, including dividends, and under certain circumstances, the Company is required to maintain certain levels of reinsurance coverage while the 2029 Notes remain outstanding, and maintain certain other financial covenants. These covenants are subject to important exceptions and qualifications set forth in the 2019 Indenture. Principal and interest on the 2029 Notes are subject to acceleration in the event of certain events of default, including a downgrade in the credit rating on the 2029 Notes down to the level of ‘BB-‘, being placed into receivership, failing to renew our excess-of-loss catastrophe reinsurance coverage, and certain bankruptcy-related events. The 2029 notes are currently rated ‘BBB,’ which is four notches higher than ‘BB-.’ The Company's debt to capital ratio exceeds 60%, therefore the Company is precluded from incurring additional debt (other than an incremental $10 million that is allowable under the Indenture), repurchasing shares of our common stock or paying common stock dividends. No acceleration of the related debt is mandated due to the fact that catastrophic weather events drove the ratio over 60% rather than specific actions taken by the Company. The Company's actual debt to capital ratio as of December 31, 2021 was approximately 66.7%.

The 2029 Notes fair values as of December 31, 2021 and December 31, 2020 was $106.5 million and $99.7 million, respectively. Refer to Note 4 for additional information.