Note 17 - Segmented Information

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE 17 SEGMENTED INFORMATION

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 fifty 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 new home warranty products and provides administration services to home builders 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 VA Lafayette.

CMC owns the Real Property that is leased to a third party pursuant to a long-term triple net lease with a single customer. The Real Property is also subject to the Mortgage and Additional Mortgage. When assessing and measuring the operational and financial performance of the Leased Real Estate segment, interest expense related to the Mortgage and Additional Mortgage is included in Leased Real Estate's segment operating income.

VA Lafayette 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. When assessing and measuring the operational and financial performance of the Leased Real Estate segment, interest expense related to the LA Mortgage is included in Leased Real Estate's segment operating income.

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 in 20 states and 6 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 unaudited consolidated interim 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 three months ended March 31, 2022 and March 31, 2021 were:

(in thousands)	Three months ended March 31,
	2022		2021
Revenues:
Extended Warranty:
Service fee and commission revenue	$	18,286	$	18,574
Total Extended Warranty		18,286		18,574
Leased Real Estate:
Rental revenue		3,667		3,341
Total Leased Real Estate		3,667		3,341
Kingsway Search Xcelerator:
Service fee and commission revenue		4,170		—
Total Kingsway Search Xcelerator		4,170		—
Total revenues	$	26,123	$	21,915

The operating income 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 net (loss) income for the three months ended March 31, 2022 and March 31, 2021 were:

(in thousands)	Three months ended March 31,
	2022			2021
Segment operating income:
Extended Warranty (a)	$	1,723		$	5,310
Leased Real Estate		1,559			1,293
Kingsway Search Xcelerator		806			—
Total segment operating income		4,088			6,603
Net investment income		619			421
Net realized gains		54			51
Loss on change in fair value of equity investments		(10	)		(151	)
Gain (loss) on change in fair value of limited liability investments, at fair value		127			(202	)
Interest expense not allocated to segments		(1,364	)		(1,552	)
Other revenue and expenses not allocated to segments, net		(3,065	)		(3,491	)
Amortization of intangible assets		(1,494	)		(497	)
Loss on change in fair value of debt		(1,868	)		(1,019	)
Gain on extinguishment of debt not allocated to segments		—			311
(Loss) income before income tax benefit		(2,913	)		474
Income tax benefit		(409	)		(425	)
Net (loss) income	$	(2,504	)	$	899

(a) For the three months ended March 31, 2021, Extended Warranty segment operating income includes gain on extinguishment of debt of $2.2 million, related to PPP loan forgiveness directly associated with the respective warranty businesses. Extended Warranty segment operating income before the gain on extinguishment of debt totaled $3.1 million for the three months ended March 31, 2021.  See Note 10, "Debt," for further discussion.