DISPOSAL, DISCONTINUED OPERATIONS AND LIQUIDATION

(a) Disposal

On June 1, 2018, the Company disposed of its subsidiary, Itasca Real Estate Investors, LLC ("Itasca Real Estate"). As a result of the disposal, the Company recognized a gain of $0.0 million during the year ended December 31, 2018. The earnings of Itasca Real Estate are included in the consolidated statements of operations through the June 1, 2018 disposal date.

(b) Discontinued Operations

Mendota Insurance Company, Mendakota Insurance Company and Mendakota Casualty Company:

On July 16, 2018, the Company announced it had entered into a definitive agreement to sell its non-standard automobile insurance companies Mendota Insurance Company, Mendakota Insurance Company and Mendakota Casualty Company (collectively "Mendota"). On October 18, 2018, the Company completed the previously announced sale of Mendota. The final aggregate purchase price of $28.6 million was redeployed primarily to acquire equity investments, limited liability investments, limited liability investment, at fair value and other investments, which were owned by Mendota at the time of the closing, and to fund $5.0 million into an escrow account to be used to satisfy potential indemnity obligations under the definitive stock purchase agreement. As part of the transaction, the Company will indemnify the buyer for any loss and loss adjustment expenses with respect to open claims and certain specified claims in excess of Mendota's carried unpaid loss and loss adjustment expenses at June 30, 2018. The maximum obligation to the Company with respect to the open claims is $2.5 million. There is no maximum obligation to the Company with respect to the specified claims. During the first quarter of 2019, Mendota settled one of the two specified claims for no loss to the Company. During the fourth quarter of 2019, Mendota notified the Company that it had entered into an agreement to settle the remaining specified claim. The Company estimates it will incur a net loss of approximately $1.6 million related to the settlement of the remaining specified claim, which the Company will report in its consolidated statement of operations for the year ended December 31, 2019.

As a result of this announcement, Mendota, which was previously disclosed as part of the Insurance Underwriting segment, has been classified as a discontinued operation and the results of their operations are reported separately for all periods presented. The Company recognized a loss on disposal of Mendota of $8.5 million for the year ended December 31, 2018. The assets and liabilities of Mendota are presented as held for sale in the consolidated balance sheets at December 31, 2017.

Assigned Risk Solutions Ltd.:

On April 1, 2015, the Company closed on the sale of its subsidiary, Assigned Risk Solutions Ltd. ("ARS"). The terms of the sale provided for receipt by the Company of future earnout payments equal to 1.25% of ARS' written premium and fee income during the earnout periods. The earnout payments were payable in three annual installments beginning in April 2016 through April 2018. During 2018, the Company received cash consideration, before expenses, of $1.7 million for the third annual installment earnout payment. During 2017, the Company received cash consideration, before expenses, of $1.3 million for the second annual installment earnout payment. Net of expenses, the Company recorded an additional gain on disposal of ARS of $1.3 million and $1.0 million for the years ended December 31, 2018 and December 31, 2017, respectively. As a result of the sale, ARS, previously disclosed as part of the Extended Warranty segment, has been classified as a discontinued operation.

Summary financial information for Mendota and ARS included in (loss) income from discontinued operations, net of taxes in the statements of operations for the years ended December 31, 2018 and December 31, 2017 is presented below:



(in thousands)	Years ended December 31,
	2018			2017
Income (loss) from discontinued operations, net of taxes:
Revenues:
Net premiums earned	$	71,182		$	130,443
Net investment income (loss)	733			(353		)
Net realized (losses) gains	(5		)	3,465
Other-than temporary impairment loss	—			(316		)
Gain on change in fair value of equity investments	28			—
Other income	7,486			9,938
Total revenues	79,424			143,177
Expenses:
Loss and loss adjustment expenses	58,706			120,387
Commissions and premium taxes	7,172			20,682
General and administrative expenses	12,482			19,231
Impairment of intangible assets	—			250
Total expenses	78,360			160,550
Income (loss) from discontinued operations before income tax benefit	1,064			(17,373		)
Income tax benefit	—			(1,067		)
Income (loss) from discontinued operations, net of taxes	1,064			(16,306		)
(Loss) gain on disposal of discontinued operations before income tax expense	(7,136		)	1,017
Income tax expense	—			—
(Loss) gain on disposal of discontinued operations, net of taxes	(7,136		)	1,017
Total loss from discontinued operations, net of taxes	$	(6,072	)	$	(15,289	)

The assets and liabilities of Mendota are presented as held for sale in the consolidated balance sheets at December 31, 2017. The carrying amounts of the major classes of assets and liabilities of Mendota at December 31, 2017 are as follows:



(in thousands)	December 31, 2017
Assets
Investments:
Fixed maturities, at fair value	$	38,673
Equity investments, at fair value	4,405
Total investments	43,078
Cash and cash equivalents	23,512
Accrued investment income	195
Premiums receivable, net	27,855
Other receivables	603
Deferred acquisition costs, net	6,720
Property and equipment, net	222
Intangible assets, net	7,553
Other assets	407
Assets held for sale	$	110,145
Liabilities
Unpaid loss and loss adjustment expenses	$	62,323
Unearned premiums	36,686
Net deferred income tax liabilities	1,586
Accrued expenses and other liabilities	5,305
Liabilities held for sale	$	105,900

During 2017, the Company's subsidiary, Kingsway ROC GP ("ROC GP"), was liquidated. As a result of the liquidation of this subsidiary, the Company realized a net after-tax loss of $0.5 million for the year ended December 31, 2017. This loss represents the foreign exchange loss previously recorded in accumulated other comprehensive loss and now recognized in the statements of operations as a result of the liquidation of ROC GP. Summarized financial information for liquidation of subsidiary is shown below:



(in thousands)	Years ended December 31,
	2018		2017
Liquidation:
Loss on liquidation before income taxes	$	—	$	(494	)
Income tax benefit	—		$	—
Loss on liquidation of subsidiary, net of taxes	$	—	$	(494	)