Note 22 - Segmented Information

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

The Company reports segment information based on the "management" approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as a source of the Company’s reportable operating segments. The Company conducts its business through the following three reportable segments - Extended Warranty, Leased Real Estate and Kingsway Search Xcelerator.

Extended Warranty Segment

Extended Warranty includes the following subsidiaries of the Company: IWS, Geminus, PWI, PWSC and Trinity (collectively, "Extended Warranty").

IWS is a licensed motor vehicle service agreement company and is a provider of after-market vehicle protection services distributed by credit unions in 25 states and the District of Columbia to their members, with customers in all 50 states.

Geminus primarily sells vehicle service agreements to used car buyers across the United States, through its subsidiaries, Penn and Prime. Penn and Prime distribute these products in 32 and 40 states, respectively, via independent used car dealerships and franchised car dealerships.

PWI markets, sells and administers vehicle service agreements to used car buyers in all fifty states via independent used car and franchise network of approved automobile and motorcycle dealer partners. PWI’s business model is supported by an internal sales and operations team and partners with American Auto Shield in three states with a "white label" agreement.  PWI also has a "white label" agreement with a third-party that sells and administers a GAP product in certain states.

PWSC sells home warranty products and provides administration services to homebuilders and homeowners across the United States. PWSC distributes its products and services through an in house sales team and through insurance brokers and insurance carriers throughout all states except Alaska and Louisiana.

Trinity sells HVAC, standby generator, commercial LED lighting and commercial refrigeration warranty products and provides equipment breakdown and maintenance support services to companies across the United States. As a seller of warranty products, Trinity markets and administers product warranty contracts for certain new and used products in the HVAC, standby generator, commercial LED lighting and commercial refrigeration industries throughout the United States. Trinity acts as an agent on behalf of the third-party insurance companies that underwrite and guaranty these warranty contracts. Trinity does not guaranty the performance underlying the warranty contracts it sells. As a provider of equipment breakdown and maintenance support services, Trinity acts as a single point of contact to its clients for both certain equipment breakdowns and scheduled maintenance of equipment. Trinity will provide such repair and breakdown services by contracting with certain HVAC providers.

Leased Real Estate Segment

Leased Real Estate includes the Company's subsidiaries, CMC and RoeCo.

CMC owns the Real Property that is leased to a third-party pursuant to a long-term triple net lease with a single customer. For the year ended December 31, 2021, revenue of $13.4 million from this single customer represents more than 10% of the Company’s consolidated revenues. The Real Property is also subject to the Mortgage. When assessing and measuring the operational and financial performance of the Leased Real Estate segment, interest expense related to the Mortgage is included in Leased Real Estate's segment operating income.

RoeCo owns the LA Real Property that is leased to a third-party pursuant to a long-term lease with a single customer. The LA Real Property is also subject to the LA Mortgage. The Company acquired RoeCo on December 30, 2021, therefore the Leased Real Estate segment operating income does not include any financial results related to RoeCo for the year ended December 31, 2021.

Kingsway Search Xcelerator Segment

Kingsway Search Xcelerator includes the Company's subsidiary, Ravix.  Ravix provides outsourced financial services and human resources consulting for short or long duration engagements for customers in21 states and 5 countries. All services are delivered by employees who are located in the United States.

Revenues and Operating Income by Reportable Segment

Results for the Company's reportable segments are based on the Company's internal financial reporting systems and are consistent with those followed in the preparation of the consolidated financial statements. The following tables provide financial data used by management. Segment assets are not allocated for management use and, therefore, are not included in the segment disclosures below.

Revenues by reportable segment reconciled to consolidated revenues for the years ended December 31, 2021 and December 31, 2020 were:

(in thousands)	Years ended December 31,
	2021		2020
Revenues:
Extended Warranty:
Service fee and commission revenue	$	74,919	$	47,607
Total Extended Warranty		74,919		47,607
Leased Real Estate:
Rental revenue		13,365		13,365
Total Leased Real Estate		13,365		13,365
Kingsway Search Xcelerator:
Service fee and commission revenue		3,482		—
Total Kingsway Search Xcelerator		3,482		—
Total revenues	$	91,766	$	60,972

The operating income (loss) by reportable segment in the following table is before income taxes and includes revenues and direct segment costs. Total segment operating income reconciled to the consolidated income (loss) from continuing operations for the years ended December 31, 2021 and December 31, 2020 were:

(in thousands)	Years ended December 31,
	2021			2020
Segment operating income (loss)
Extended Warranty (a)	$	12,636		$	6,604
Leased Real Estate (b)		909			(504	)
Kingsway Search Xcelerator		484			—
Total segment operating income		14,029			6,100
Net investment income		1,575			2,625
Net realized gains		1,809			580
(Loss) gain on change in fair value of equity investments		(242	)		1,267
Gain on change in fair value of limited liability investments, at fair value		2,391			4,046
Net change in unrealized loss on private company investments		—			(744	)
Other-than-temporary impairment loss		—			(117	)
Interest expense not allocated to segments		(6,161	)		(7,719	)
Other revenue and expenses not allocated to segments, net		(11,395	)		(10,606	)
Amortization of intangible assets		(4,900	)		(2,291	)
(Loss) gain on change in fair value of debt		(3,201	)		1,173
Gain (loss) on extinguishment of debt not allocated to segments		311			(851	)
Loss from continuing operations before income tax benefit		(5,784	)		(6,537	)
Income tax benefit		(7,644	)		(1,115	)
Income (loss) from continuing operations	$	1,860		$	(5,422	)

(a) For the years ended December 31, 2021 and December 31, 2020, Extended Warranty segment operating income includes gain on extinguishment of debt of $2.2 million and $0.4 million, respectively, related to PPP loan forgiveness directly associated with the respective warranty businesses. The gain of $0.4 million for the year ended December 31, 2020 was reclassified to segment operating income from gain (loss) on extinguishment of debt not allocated to segments to be consistent with current year presentation. Extended Warranty segment operating income before the gain on extinguishment of debt totaled $10.5 million and $6.2 million for the years ended December 31, 2021 and December 31, 2020, respectively. See Note 12, "Debt," for further discussion.

(b) For the year ended December 31, 2021, includes $2.9 million expense due to the release of an indemnification receivable, which is exactly offset in net income (loss) (not shown here) by an income tax benefit of $2.9 million for the release of a liability that had been included in income taxes payable in the consolidated balance sheets.