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Schedule II - Condensed Financial Information of Registrant
 12 Months Ended
Dec. 31, 2021
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, 2021 and 2020

December 31,
20212020
(In thousands)
ASSETS
Investments in subsidiaries (1)$237,872 $225,568 
Investment securities, available-for-sale, at fair value151 20,646 
Equity securities, at fair value2,049 1,881 
Cash and cash equivalents4,632 18,170 
Deferred income taxes, net— 868 
Income taxes receivable5,142 7,969 
Note receivable and accrued interest to subsidiary (1)— 19,517 
Right-of-use assets6,441 7,108 
Other assets1,719 1,991 
Total assets$258,006 $303,718 
  
LIABILITIES AND SHAREHOLDERS’ EQUITY  
Liabilities
Due to subsidiaries, net (1)$68,349 $31,686 
Long-term debt118,805 98,683 
Lease liabilities6,441 7,108 
Other liabilities5,025 8,081 
Total liabilities198,620 145,558 
  
Shareholders' Equity
Preferred stock— — 
Common stock174 137 
Additional paid-in capital186,007 169,298 
Accumulated other comprehensive income (loss)(1,034)11,386 
Retained earnings (deficit)(125,761)(22,661)
Total shareholders’ equity59,386 158,160 
Total liabilities and shareholders' equity$258,006 $303,718 

(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,
202120202019
(In thousands)
Revenues:
Management fees (1)$2,667 $2,660 $2,160 
Interest from subsidiaries (1)1,515 1,410 107 
Net investment income378 477 1,757 
Net realized and unrealized investment gains (losses)506 972 448 
Equity in income (loss) of consolidated subsidiaries(81,924)(94,363)20,909 
Total revenue(76,858)(88,844)25,381 
   
Costs and expenses:
General and administrative expenses17,168 15,149 13,892 
Interest expense8,758 7,661 10,776 
Total costs and expenses25,926 22,810 24,668 
   
Income (loss) before income taxes(102,784)(111,654)713 
Income tax expense (benefit)316 (33,496)(298)
Net income (loss)$(103,100)$(78,158)$1,011 

(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,
202120202019
(In thousands)
Cash flow from operating activities:
Net income (loss)$(103,100)$(78,158)$1,011 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Net realized and unrealized investment (gains) losses(506)(972)(448)
Equity in undistributed income (loss) of consolidated subsidiaries (1)81,924 94,363 (20,909)
Amortization of investment premium or discount, depreciation and amortization555 430 369 
Loss (gain) on early extinguishment of debt— — 3,575 
Share-based compensation581 790 1,050 
Changes in operating assets and liabilities:
Note receivable and accrued interest to subsidiary (1)(1,515)(1,410)(107)
Income taxes, net3,730 6,900 (5,379)
Due to subsidiaries, net (1)40,254 (21,891)3,044 
Other, net755 4,974 1,105 
Net cash provided by (used in) operating activities22,678 5,026 (16,689)
Cash flow from investing activities:
Capital contributions to consolidated subsidiaries (1)(65,271)(11,000)— 
Sales, maturities and redemptions of investments securities8,458 31,300 11,276 
Purchases of investment securities(14,768)(25,089)(15,617)
Payment for acquisition— — (25,566)
Issuance of note receivable to subsidiary (1)— — (18,000)
Purchases of property and equipment(35)(21)(289)
Net cash provided by (used in) investing activities(71,616)(4,810)(48,196)
Cash flow from financing activities:
Proceeds from issuance of long-term debt, net of issuance costs19,818 — 98,390 
Payment of long-term debt and prepayment penalties— — (48,000)
Issuance of common stock 15,571 — — 
Issuance of common stock for share-based awards11 42 1 
Purchases of FedNat Holding Company common stock— (10,418)(3,449)
Dividends from consolidated subsidiaries— 12,376 39,174 
Dividends paid— (5,077)(4,309)
Net cash provided by (used in) financing activities35,400 (3,077)81,807 
Net increase (decrease) in cash and cash equivalents(13,538)(2,861)16,922 
Cash and cash equivalents at beginning of period18,170 21,031 4,109 
Cash and cash equivalents at end of period$4,632 $18,170 $21,031 

(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.