10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

 TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ________________ to ________________

Commission file number 333-189686

HOMEOWNERS OF AMERICA HOLDING CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	57-1219329
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1333 Corporate Drive, Suite 325, Irving, TX 75038

(Address of principal executive offices)(Zip Code)

(972) 607-4241

(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer  Accelerated filer  Non-accelerated filer  Smaller Reporting Company 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No 

The number of shares of the registrant's common stock, $0.0001 par value, outstanding as of November 13, 2014 was 16,168,852.

INDEX

		Page No.
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Balance Sheets at September 30, 2014 (unaudited) and December 31, 2013	1
	Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2014 and 2013	2
	Consolidated Statements of Comprehensive Income (unaudited) for the three and nine months ended September 30, 2014 and 2013	3
	Consolidated Statement of Stockholders' Equity (unaudited) for the nine months ended September 30, 2014	4
	Consolidated Statement of Stockholders' Equity (unaudited) for the nine months ended September 30, 2013	5
	Consolidated Statement of Cash Flows (unaudited) for the nine months ended September 30, 2014 and 2013 (Restated)	6
	Notes to Consolidated Financial Statements (unaudited)	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II	OTHER INFORMATION	26
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 6.	Exhibits	27
SIGNATURES		28

All other items called for by the instructions to Form 10-Q have been omitted because the items are not applicable or the relevant information is not material.

i

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

Homeowners of America Holding Corporation

CONSOLIDATED BALANCE SHEETS

September 30, 2014 and December 31, 2013

	September 30, 2014			December 31, 2013
	(Unaudited)
Assets:
Cash and cash equivalents	$	8,944,973		$	8,104,310
Short-term investments		3,581,429			4,151,011
Restricted cash and investments		2,800,000			1,000,000
Restricted fixed-maturity securities, available-for-sale, at fair value (amortized cost $539,518)		539,435			-
Fixed-maturity securities, available-for-sale, at fair value (amortized cost $3,163,792)		3,173,039			-
Long-term investments		1,470,000			1,960,000
Accrued investment income		55,045			8,853
Due and deferred premiums		4,490,889			4,169,824
Balance due from reinsurers		61,384,130			46,281,756
Property, equipment and software, net		355,344			244,516
Deferred policy acquisition costs		7,768,160			6,214,334
Prepaid expenses and other		276,241			128,195
Deferred tax assets, net		1,482,849			933,221
Total assets	$	96,321,534		$	73,196,020
Liabilities:
Loss and loss adjustment expenses	$	17,738,009		$	15,884,062
Advance premiums		137,786			90,854
Ceded reinsurance premiums payable		8,812,245			3,271,858
Unearned premiums		39,337,398			31,297,118
Unearned ceding commissions		11,010,825			8,067,162
Commissions payable, reinsurers and agents		2,923,426			3,716,423
General and other accrued expenses payable		5,342,986			1,906,265
Income tax payable		192,833			211,198
Taxes, licenses and other fees payable		351,597			474,503
Total liabilities		85,847,105			64,919,443
Stockholders' equity:
Preferred stock, convertible; 12.5% cumulative; $0.0001 par value per share; 20,500,000 shares authorized; no shares issued and outstanding as of September 30, 2014 and December 31, 2013		-			-
Common stock, $0.0001 par value per share; 40,000,000 shares authorized;17,479,852 shares issued and 16,168,852 shares outstanding as of September 30, 2014 and 17,181,140 shares issued and 15,831,140 shares outstanding as of December 31, 2013		1,617			1,583
Treasury stock, $0.0001 par value per share; 1,311,000 common shares as of September 30, 2014 and 1,350,000 common shares as of December 31, 2013		(131	)		(135	)
Additional paid-in-capital		6,200,529			5,969,550
Accumulated other comprehensive income		9,164			-
Retained earnings		4,263,250			2,305,579
Total stockholders' equity		10,474,429			8,276,577
Total liabilities and stockholders' equity	$	96,321,534		$	73,196,020

See accompanying notes to the consolidated financial statements.

1

Homeowners of America Holding Corporation

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

September 30, 2014 and 2013

	Three Months Ended September 30,						Nine Months Ended September 30,
Revenues:	2014			2013			2014			2013
Premiums earned	$	16,893,086		$	13,643,436		$	46,933,714		$	39,037,947
Ceded premiums		(16,046,107	)		(12,390,289	)		(43,539,301	)		(35,494,253	)
Net premiums earned		846,979			1,253,147			3,394,413			3,543,694
Policy fees		1,578,900			1,286,995			4,188,500			3,497,765
Ceding commissions and reinsurance profit share		5,078,682			3,044,488			12,375,912			8,143,900
Investment income, net of investment expenses		10,647			9,339			19,888			31,684
Loss adjustment and other fee income		334,277			288,289			1,159,478			984,384
Total revenue		7,849,485			5,882,258			21,138,191			16,201,427
Expenses:
Losses and loss adjustment expenses		554,486			547,080			1,990,625			1,967,627
Policy acquisition and other underwriting expenses		4,521,009			3,300,522			11,939,855			9,370,086
General and administrative expenses		1,246,887			1,057,808			4,197,353			3,071,369
Total expenses		6,322,382			4,905,410			18,127,833			14,409,082
Income before income taxes		1,527,103			976,848			3,010,358			1,792,345
Provision (benefit)for income taxes:
Current		680,040			374,639			1,602,315			725,531
Deferred		(149,527	)		(58,710	)		(549,628	)		(117,277	)
Total income taxes		530,513			315,929			1,052,687			608,254
Net income	$	996,590		$	660,919		$	1,957,671		$	1,184,091
Cumulative preferred stock dividends		-			(255,215	)		-			(974,179	)
Net income available to common stockholders	$	996,590		$	405,704		$	1,957,671		$	209,912
Basic income per common share	$	0.06		$	0.06		$	0.12		$	0.06
Diluted income per common share	$	0.06		$	0.04		$	0.11		$	0.06
Cash dividend declared per common share	$	-		$	-		$	-		$	-

See accompanying notes to the consolidated financial statements.

2

Homeowners of America Holding Corporation

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

September 30, 2014 and 2013

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Net income	$	996,590	$	660,919	$	1,957,671	$	1,184,091
Other comprehensive income:
Change in unrealized gain on investments:
Unrealized gain arising from the period		4,012		-		9,164		-
Deferred income taxes on above change		-		-		-		-
Total other comprehensive income, net of income taxes		4,012		-		9,164		-
Comprehensive income	$	1,000,602	$	660,919	$	1,966,835	$	1,184,091

See accompanying notes to the consolidated financial statements.

3

Homeowners of America Holding Corporation

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)

For the Nine Months Ended

September 30, 2014

											Additional		Accumulated				Total
	Common Stock				Treasury Stock						Paid-In		Other Comprehensive		Retained		Shareholders'
	Shares		Amount		Shares			Amount			Capital		Income, net of Tax		Earnings		Equity
Balance December 31, 2013		15,831,140	$	1,583		1,350,000		$	(135	)	$	5,969,550	$	-	$	2,305,579	$	8,276,577
Net income		-		-		-			-			-		-		1,957,671		1,957,671
Total other comprehensive income, net of income taxes		-		-		-			-			-		9,164		-		9,164
Stock options exercised		10,250		1		-			-			7,849		-		-		7,850
Common stock issued		327,462		33		(39,000	)		4			170,243		-		-		170,280
Stock-based compensation		-		-		-			-			52,887		-		-		52,887
Balance September 30, 2014		16,168,852	$	1,617		1,311,000		$	(131	)	$	6,200,529	$	9,164	$	4,263,250	$	10,474,429

See accompanying notes to the consolidated financial statements.

4

Homeowners of America Holding Corporation

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)

For the Nine Months Ended

September 30, 2013

																									Accumulated
																						Additional			Other				Total
	Preferred Stock Series A						Preferred Stock Series B						Common Stock				Treasury Stock					Paid-In			Comprehensive		Retained		Shareholders'
	Shares			Amount			Shares			Amount			Shares		Amount		Shares		Amount			Capital			Income, net of Tax		Earnings		Equity
Balance December 31, 2012		4,500,000		$	450			500,000		$	50			900,000	$	90		-	$	-		$	4,906,000		$	-	$	336,816	$	5,243,406
Net income		-			-			-			-			-		-		-		-			-			-		1,184,091		1,184,091
Conversion of series A preferred stock		(4,500,000	)		(450	)		-			-			11,250,000		1,125		-		-			-			-		-		675
Conversion of series B preferred stock		-			-			(500,000	)		(50	)		1,250,000		125		-		-			-			-		-		75
Conversion of convertible note payable		-			-			-			-			2,158,875		216		-		-			950,000			-		-		950,216
Conversion of interest on convertible note payable		-			-			-			-			147,277		15		-		-			64,716			-		-		64,731
Repurchase of common stock		-			-			-			-			-		-		1,350,000		(135	)		(5,265	)		-		-		(5,400	)
Adjustment of par value to reflect forward stock split		-			-			-			-			-		-		-		-			(889	)		-		-		(889	)
Balance September 30, 2013		-		$	-			-		$	-			15,706,152	$	1,571		1,350,000	$	(135	)	$	5,914,562		$	-	$	1,520,907	$	7,436,905

See accompanying notes to the consolidated financial statements.

5

Homeowners of America Holding Corporation

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the Nine Months Ended

September 30, 2014 and 2013

	September 30, 2014			September 30, 2013
				(Restated)
Cash flows from operating activities:
Net income	$	1,957,671		$	1,184,091
Adjustments to reconcile net income to net cash provided by (used in) by operating activities:
Depreciation & amortization		89,159			63,573
Accounting charge related to stock-based compensation expense		52,887			-
Common stock compensation for management services		150,000			-
Other stock issuance expense		20,280			-
Amortization of premium/accretion of discount, net		41,707			-
Deferred tax assets		(549,628	)		(117,277	)
(Increase) decrease in:
Accrued investment income		(46,192	)		(6,422	)
Due and deferred premiums		(321,065	)		(202,786	)
Balance due from reinsurers		(15,102,374	)		(10,509,618	)
Deferred policy acquisition costs		(1,553,826	)		(875,320	)
Deferred ceding commissions		-			682,421
TWIA assessments		-			80,040
Prepaid and other		(148,046	)		(81,548	)
Increase (decrease) in:
Losses and loss adjustment expenses		1,853,947			3,958,780
Advance premiums		46,932			66,488
Ceded reinsurance premiums payable		5,540,387			4,229,758
Unearned premiums		8,040,280			4,332,432
Ceded deferred premiums		-			(2,381,906	)
Unearned ceding commissions		2,943,663			1,142,418
Commissions payable, reinsurance & agents		(792,997	)		(4,112,204	)
General and other accrued expenses		3,436,721			1,838,850
Interest on notes convertible		-			68,630
Income tax payable		(18,365	)		(109,690	)
Taxes, licenses and other fees payable		(122,906	)		(277,785	)
Net cash provided by (used in) operating activities		5,518,235			(1,027,075	)
Cash flows from investing activities:
Purchases of long-term certificate of deposit		(1,605,000	)		(2,703,305	)
Maturities of long-term certificate of deposit		1,960,000			1,452,000
Purchases of short-term investments		(3,136,612	)		(1,440,195	)
Maturities of short-term investments		2,041,194			1,862,181
Purchases of fixed-maturity securities, available-for-sale		(3,995,017	)		-
Call or maturity of fixed-maturity securities, available-for-sale		250,000			-
Additions to furniture, equipment and software		(199,987	)		(51,180	)
Net cash used in investing activities		(4,685,422	)		(880,499	)
Cash flows from financing activities:
Repurchase of common stock		-			(5,400	)
Proceeds from stock options exercised		7,850			-
Net cash provided by (used in) financing activities		7,850			(5,400	)
Net increase (decrease) in cash and cash equivalents		840,663			(1,912,974	)
Cash and cash equivalents, beginning of period		8,104,310			10,194,375
Cash and cash equivalents, end of the period	$	8,944,973		$	8,281,401
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	1,620,681		$	801,274
Non cash investing from financing activities:
Repayment of debt on convertible note and conversion to common stock	$	-		$	950,000
Conversion of interest on convertible note	$	-		$	64,808

See accompanying notes to the consolidated financial statements.

6

Homeowners of America Holding Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Homeowners of America Holding Corporation ("HAHC") is an insurance holding company established to hold insurance entities for the purpose of marketing homeowners insurance products on a national basis. HAHC owns 100% of Homeowners of America Insurance Company ("HAIC"). HAIC is domiciled in Texas, licensed in multiple states and is authorized to write various forms of homeowners and auto insurance. Coverage is concentrated in Texas. HAHC also owns 100% of Homeowners of America MGA, Inc. ("MGA"), a Texas Corporation, formed as a captive managing general agency to produce business in Texas and to provide various claims and administration services for HAIC. HAHC, along with its subsidiaries HAIC and MGA, are collectively referred to as "the Company".

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Homeowners of America Holding Corporation and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). Certain reclassifications of prior year amounts have been made to conform to the current year presentation.

Restatement of Prior Year Amounts

In conjunction with our Annual Report on Form 10-K for the year ended December 31, 2013 filed with the Securities and Exchange Commission on March 31, 2014, we restated the unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2013.  These restatements resulted in money market mutual fund accounts held at financial institutions which were previously classified as short-term investments to be now classified as cash and cash equivalents. In addition, checks issued in excess of cash book balances, not yet presented for payment, which were previously classified as cash and cash equivalents are now classified as general and other accrued expenses payable.

	Nine Months Ended September 30, 2013
	As Previously Reported			Adjustment		As Restated
Consolidated Statements of Cash Flows:
Cash flows from operating activities
General and other accrued expenses	$	52,117		$	1,786,733	$	1,838,850
Net cash used in operating activities		(2,813,808	)		1,786,733		(1,027,075	)
Cash flows from investing activities
Purchases of short term investments		(5,932,051	)		4,491,856		(1,440,195	)
Net cash used in investing activities		(5,372,355	)		4,491,856		(880,499	)
Net decrease in cash and cash equivalents		(8,191,563	)		6,278,589		(1,912,974	)
Cash and cash equivalents, beginning of period		10,194,375			-		10,194,375
Cash and cash equivalents, end of period	$	2,002,812		$	6,278,589	$	8,281,401

Cash and Cash Equivalents

Cash and cash equivalents include cash and highly liquid short-term investments, with original maturities of three months or less. The amount is carried at cost, which approximates fair value. At September 30, 2014 and December 31, 2013, cash and cash equivalents consist of cash on deposit with financial institutions, as well as money market mutual funds.

General and other accrued expenses payable as of September 30, 2014 and December 31, 2013, include $4.7 million and $1.2 million, respectively, of checks issued in excess of cash book balances, not yet presented for payment.

Investments

The Company's investments are comprised of short-term, restricted, and long-term investments and fixed-maturity securities classified as available-for-sale as of September 30, 2014 and short-term, restricted, and long-term investments as of December 31, 2013. Restricted investments and long-term investments are described below. Short-term investments include certificates of deposit with original maturities greater than three months and maturities of one year or less. Due to the short-term nature of these investments, significant changes in prevailing interest rates and economic conditions should not adversely affect the timing and amount of cash flows on such investments or their related values. Accordingly, certificates of deposit are carried at cost, which approximates fair value. Fixed-maturity securities are classified as available-for-sale when it is not management's intent to make profits by buying and selling the securities within a short period of time or when it is not management's intent to hold the securities to maturity.  Fixed-maturity securities classified as available-for-sale are carried at fair value. The unrealized holding gains and losses, net of applicable deferred income taxes, are shown as a separate component of stockholders' equity as a part of accumulated other comprehensive income (loss) and, as such, are not included in the determination of net income (loss).

As of September 30, 2014 and December 31, 2013, the Company has pledged to the Department of Insurance in certain states as a condition of its Certificate of Authority for the purpose of meeting obligations to policyholders and creditors $3.3 million and $1.0 million, respectively. Restricted assets are shown separately in the accompanying consolidated balance sheets as "Restricted cash and investments" and include money market accounts and certificates of deposits. "Restricted fixed-maturity securities, classified as available-for-sale" are shown separately in the accompanying consolidated balance sheets and recorded at fair value. With the approval of the Departments of Insurance, the Company may exchange the investments with other funds or investments. In respect to certificates of deposit, management intends to hold the portion of these restricted investments to their maturity. As such, these restricted certificates of deposit are carried at cost, which approximates fair value. Interest earned on these investments inures to the benefit of the Company.

The following table provides the Company's restricted cash and investments as of September 30, 2014 and December 31, 2013.

Restricted cash and investments	September 30, 2014		December 31, 2013
Money Market	$	300,000	$	215,000
Certificates of Deposit		2,500,000		785,000
US Treasury Bond		539,435		-
	$	3,339,435	$	1,000,000

As of September 30, 2014 and December 31, 2013, the Company's investments also included certificates of deposit that mature more than one year after the balance sheet date and are reflected on the consolidated balance sheets as Long-term investments. Based on management's intent to hold to maturity, this investment is carried at cost. Cost approximates fair value based on the rates currently offered for deposits of similar remaining maturities.

The Company's investments in certificates of deposits and money market accounts do not qualify as securities as defined in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 320, Investment – Debt and Equity Securities. Accordingly, the fair value disclosures required by FASB ASC Topic 820, Fair Value Measurements and Disclosures are not provided. The Company's fixed-maturity securities classified as available-for-sale are "marked to market" as of the end of each calendar quarter.  As of that date, unrealized gains and losses are recorded to Accumulated Other Comprehensive Income, except where such securities are deemed to be other-than-temporarily impaired. Where applicable, the Company assesses investments of an issuer currently carrying a net unrealized loss. If in management's judgment, the decline in value is other than temporary, the cost of the investment is written down to fair value with a corresponding charge to earnings. Factors considered in determining whether an impairment exists include financial condition, business prospects and creditworthiness of the issuer, the length of time and magnitude that the asset value has been less than cost, and the ability and intent to hold such investments until the fair value recovers.

Comprehensive Income

FASB ASC Topic 220 - Comprehensive Income, requires that recognized revenues, expenses, gains and losses be included in net income (loss). Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the consolidated balance sheet, these items, along with net income (loss), are components of comprehensive income. The Company characterizes their fixed income portfolio as available-for-sale securities when it is not management's intent to make profits by buying and selling the securities within a short period of time or when it is not management's intent to hold the securities to maturity, with appropriate adjustments to other comprehensive income. For the three and nine months ended September 30, 2014, the Company recorded $4,012 and $9,164, respectively of unrealized gains on available-for-sale securities in other comprehensive income.  There were no qualifying items reported in other comprehensive income for the three and nine months ended September 30, 2013.

7

Homeowners of America Holding Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Recognition of Premium Revenues

Premiums are recognized as revenue on a daily pro rata basis over the policy term. The portion of premiums related to the unexpired term of policies in force as of the end of the measurement period and to be earned over the remaining term of those polices, is deferred and reported as unearned premiums.

Ceding Commissions and Reinsurance Profit Share

Ceding commissions represent acquisition costs associated with insurance risk ceded to reinsurers and is earned on a pro-rata basis over the life of the associated policy. Reinsurance profit share is additional ceding commissions payable to the Company based upon attaining specified loss ratios within individual treaty years.  Reinsurance profit share income is recognized when earned, which includes adjustments to earned reinsurance profit share based on changes in incurred losses.

Policy Fees

Policy fee income includes application fees which are intended to reimburse the Company for a portion of the costs incurred in establishing the insurance. Policy fees on policies where premium is traditionally paid in full upon inception of the policy are recognized when written, while fees charged on policies where premiums are paid in installments, are recognized when collected.

Loss Adjustment and Other Fee Income

Loss adjustment and other fee income is recognized as income when collected. There is no amount over 5% of total revenue within this classification on the consolidated statements of operations for the three months ended September 30, 2014 and 2013 and for the nine months ended September 30, 2014. Loss adjustment fee income for the nine months ended September 30, 2013 was in excess of 5%, of total revenue within this classification on the consolidated statements of operations.

Property, Equipment and Software

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets, which range from three to five years. The cost and related accumulated depreciation of assets sold or disposed are removed from the accounts and the resulting gain or loss is included in the consolidated statements of operations. Maintenance and repairs are expensed as incurred.

Software installation and development is stated at cost, net of accumulated amortization. Amortization is calculated on a straight-line basis method over three years.

Impairment of Long-Lived Assets

Long-lived assets, such as property, equipment and software, are reviewed for impairment whenever business events or circumstances could lead to or indicate that the value of the asset may not be recoverable. The assessment of possible impairment is based on whether the carrying amount of the assets exceeds its fair value. The Company uses estimates of undiscounted future cash flows in determining the recoverability of long-lived assets. As of September 30, 2014 and December 31, 2013, no impairment has been recorded.

Deferred Policy and Acquisition Costs

Deferred policy acquisitions costs ("DAC") as of September 30, 2014 and December 31, 2013, consist of commissions, premium taxes and policy underwriting and production expenses which are incurred through and vary directly with, the level of production of new and renewal insurance business and are amortized over the terms of the policies they relate to. The method used in calculating DAC limits the amount of the deferred cost to their estimated realizable value, which gives effect to allocating their expense along with other period costs associated with the insurance business, in relation to the amount of gross premium earned on policies to which they relate and investment income. DAC is reviewed to determine if it is recoverable from future income, including investment income. The amount of DAC considered recoverable could be reduced in the near term if estimates of future premium income from their related lines of insurance are revised.

Reserve for Losses and Loss Adjustment Expenses

The liability for losses and loss adjustment expenses ("LAE") are estimates of the amounts required to cover known incurred losses and LAE, developed through the review and assessment of loss reports, along with the development of known claims. In addition, loss and loss adjustment expense reserves include management's estimate of an amount for losses incurred but not reported ("IBNR"), determined from reviewing overall loss reporting patterns as well as the loss development cycles of individual claim cases. Such liabilities are necessarily based on estimates and while management believes that the amount is adequate, the ultimate liability may be more or less than the amounts provided. The approach and methods for making such estimates and for establishing the resulting liability are continually reviewed and any adjustments are reflected in current earnings.

Due and Deferred Premiums

Due and deferred premiums consist of uncollateralized premiums and agents' balances in the course of collection as well as premiums booked but not yet due.

Reinsurance

In the normal course of business, the Company seeks to reduce the overall exposure to losses that may arise from catastrophes or other events that cause unfavorable underwriting results by reinsuring certain levels of risk with other insurance enterprises or reinsurers. The Company uses only quality, financially rated reinsurers and continually monitors the financial ratings of these companies through its brokers. The amount and type of reinsurance purchased each year is based on management's estimate of its probable maximum loss and the conditions within the reinsurance market. The Company continually monitors its risk exposure through the use of the AIR modeling system and other modeling tools provided by its reinsurance brokers. Reinsurance premiums, expense reimbursements, and reserves related to reinsured business are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Premiums paid for reinsurance are reported as reductions of earned premium income.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss carryforwards, and liabilities are measured using enacted tax rates expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  In assessing the realizable value of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

Uncertain Tax Positions

The Company recognizes uncertain tax positions in the consolidated financial statements when it is more-likely-than-not the position will be sustained upon examination by the tax authorities. Such tax positions are initially and subsequently measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. The Company believes that it has appropriate support for the income tax positions taken and to be taken on its tax returns, and that its accruals for tax liabilities are adequate for all open tax years based on an assessment of many factors including experience and interpretations of tax laws applied to the facts of each matter. At September 30, 2014, the Company's tax years from 2010 through 2013 remain subject to examination.

8

Homeowners of America Holding Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company's primary areas of estimate are for liabilities for unpaid losses and loss adjustment expenses, deferred policy acquisition costs, deferred tax asset valuation, and reinsurance. Actual results could differ significantly from those estimates.

Fair Value of Cash, Cash Equivalents and Short-term Investments

The carrying value for the Company's cash and cash equivalents and short-term investments approximate fair values as of September 30, 2014 and December 31, 2013 due to their short-term nature. Fair value for securities are based on the framework for measuring fair value established by FASB ASC Topic 820, Fair Value Measurements and Disclosures.

Fair Value Fixed-Maturity Securities held as Available-for-Sale

The Company's fixed-maturity securities held as available-for-sale are carried at fair value as of September 30, 2014. Fair value for securities are based on the framework for measuring fair value established by FASB ASC Topic 820, Fair Value Measurements and Disclosures.

Convertible Notes Payable

The Company accounts for convertible notes payable under FASB ASC Topic 470-20 – Debt with Conversion and Other Options, which requires issuers to assess whether or not an embedded conversion feature is required to be separately accounted for as a derivative liability for liability and equity components and if the conversion feature is beneficial to the holder. See Note 9 on Convertible Notes Payable for additional disclosure.

Stock Based Compensation

The Company accounts for stock-based compensation under the fair value recognition provisions of FASB ASC Topic 718 – Compensation – Stock Compensation, which requires the measurement and recognition of compensation for all stock-based awards made to employees and directors including stock options and restricted stock issuances based on estimated fair values. In accordance with FASB ASC Topic 718, the Company recognizes stock-based compensation, if any, in the consolidated statements of operations on a straight line basis over the vesting period of the stock award.  For those stock awards vesting 100% at the issue date, the Company recognizes stock-based compensation immediately.

Earnings (Loss) Per Share

Basic earnings (loss) per share of common stock is computed by dividing net income or loss, less cumulative preferred stock dividends for the period whether or not earned or paid, by the weighted-average number of common shares during the period.

Diluted earnings (loss) per share of common stock is computed by dividing net income or loss attributable to common stockholders, adjusted for the effect of potentially dilutive securities, by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include convertible notes payable, outstanding convertible preferred stock and common stock options.

9

Homeowners of America Holding Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

2.RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Standards Update No. 2014-09. On May 28, 2014, the FASB issued Accounting Standards Update No. 2014-09 ("ASU 2014-09"), Revenue from Contracts with Customers, which modifies the guidance for revenue recognition.  While insurance contracts are not within the scope of this updated guidance, the Company's fee income may be subject to this updated guidance.  The Company is in the process of evaluating the new guidance, however, the adoption of this guidance is not expected to have a material effect on the Company's consolidated financial statements. ASU 2014-09 is effective for annual and interim reporting periods beginning after December 15, 2016.

Accounting Standards Update No. 2014-12. On June 19, 2014, the FASB issued Accounting Standards Update No. 2014-12 ("ASU 2014-12"), Compensation-Stock Compensation: Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. ASU 2014-12 requires that a performance target that affects the vesting and that can be achieved after the requisite service period be treated as a performance condition.  As of June 30, 2014, the Company has not issued stock options with performance targets under the 2005 Management Incentive Plan or the 2013 Equity Compensation Plan. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements. The effective date of ASU 2014-12 is for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted.

3.RELATED PARTY TRANSACTIONS

In December 2012, HAHC entered into a Convertible Promissory Note with Inter-Atlantic Fund, L.P. and Phoenix Associates, Inc., (companies controlled by a shareholder and former director, respectively). See Note 9 Convertible Notes Payable for additional disclosure.

In August 2013, HAHC entered into an agreement or the "Advisory Agreement", with Inter-Atlantic Advisors III, Ltd., or "Inter-Atlantic", under which Inter-Atlantic agrees to perform certain management services for the Company. A number of our directors are among the beneficial owners of Inter-Atlantic.  The Advisory Agreement has an initial term of six years, to be automatically renewed from year-to-year thereafter, unless terminated by either party upon 60 days notice prior to the termination of the initial or any renewal term.  For its services, the Company will pay Inter-Atlantic an annual fee of $300,000, as well as, an annual grant of shares of our common stock with an aggregate fair market value of $150,000 at the time of grant, plus reimburse Inter-Atlantic's expenses incurred in connection with the performance of its service. As long as the Advisory Agreement is in effect and the fees and expense reimbursements are paid, the directors of the Company that are affiliated with Inter-Atlantic have agreed to waive any other compensation for their service as our directors.

For the three and nine months ended September 30, 2014, the Company incurred an expense of $75,000 and $375,000 (of which $150,000 is represented by the issuance of 288,462 shares of common stock), respectively, for services performed under the Advisory Agreement.

For the three and nine months ended September 30, 2013, the Company incurred an expense of $50,000, respectively, for services performed under the Advisory Agreement.

4.INVESTMENTS

Investment income, net of investment expenses totaled $10,647 and $9,339 for the three months ended September 30, 2014 and 2013, respectively.

Investment income, net of investment expenses totaled $19,888 and $31,684 for the nine months ended September 30, 2014 and 2013, respectively.

For the three and nine months ended September 30, 2014, there were $4,012 and $9,164, respectively in unrealized gains/(losses) on fixed-maturity securities held as available-for-sale.  There were no realized gains or losses recognized for the three and nine months ended September 30, 2014 and 2013.  The intent is to hold to maturity certificates of deposit carried at amortized cost.

The following table provides the Company's short-term, restricted and long-term investment holdings by type of financial instruments that were used to estimate the fair value disclosures for financial instruments as of September 30, 2014 and December 31, 2013, respectively:

	September 30, 2014						December 31, 2013
	Book Value			Fair Value / Carrying Value			Book Value			Fair Value / Carrying Value
Financial Assets:
Restricted certificates of deposit		$	2,500,000		$	2,500,000		$	785,000		$	785,000
Restricted money markets			300,000			300,000			215,000			215,000
Long-term investments			1,470,000			1,470,000			1,960,000			1,960,000
Short-term investments			3,581,429			3,581,429			4,151,011			4,151,011
Total		$	7,851,429		$	7,851,429		$	7,111,011		$	7,111,011

	September 30, 2014				December 31, 2013
	Range of Maturities		Interest Rates		Range of Maturities		Interest Rates
Restricted certificates of deposit		Less than 1 year		0.10% - 0.40%		Less than 1 year		0.10% - 0.25%
Restricted money markets		Less than 1 year		-		Less than 1 year		-
Long-term investments		More than 1 year		0.75% - 1.40%		More than 1 year		0.30% - 0.70%
Short-term investments		Less than 1 year		0.35% - 0.80%		Less than 1 year		0.20% - 1.24%

The following table provides the Company's fixed-maturity securities classified as available-for-sale which are carried at fair value as of September 30, 2014:

	September 30, 2014
			Gross Unrealized
	Amortized Cost		Gains		Losses			Fair Value
Fixed Maturities:
Obligations of states, municipalities and political subdivisions	$	3,163,792	$	11,548	$	(2,301	)	$	3,173,039
U.S. Treasury- held as restricted		539,518		231		(314	)		539,435
Total Fixed Maturities	$	3,703,310	$	11,779	$	(2,615	)	$	3,712,474

The amortized cost and fair value of available-for-sale fixed-maturity securities at September 30, 2014, by contractual maturity, are shown in the following table.  Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2014
Remaining Time to Maturity	Amortized Cost Basis		Fair Value
Less than one year	$	418,771	$	420,174
One to five years		1,454,913		1,458,595
Five to ten years		757,413		757,855
More than ten years		1,072,213		1,075,850
Total	$	3,703,310	$	3,712,474

Other-than-temporary Impairment ("OTTI")

The Company regularly reviews its individual investment securities for OTTI.  The Company considers various factors in determining whether each individual security is other-than-temporarily-impaired, including:

· the financial condition and near-term prospects of the issuer, including any specific events that may affect its operations or earnings;

· the length of time and the extent to which the market value of the security has been below its cost or amortized cost;

· general market conditions and industry or sector specific factors;

· nonpayment by the issuer of its contractually obligated interest and principal payments; and

· the Company's intent and ability to hold the investment for a period of time sufficient to allow for the recovery of costs.

Securities with gross unrealized loss positions at September 30, 2014 were immaterial. The Company believes there were no fundamental issues such as credit losses or other factors with respect to any of its available-for-sale securities.  The unrealized losses on investments in fixed-maturity securities were caused primarily by interest rate changes.  It is expected that the securities would not be settled at a price less than par value of the investments.  Because the declines in fair value are attributable to changes in interest rates or market conditions and not credit quality, and because the Company has the ability and intent to hold its available-for-sale investments until a market price recovery or maturity, the Company does not consider any of its investments to be other-than-temporarily impaired at September 30, 2014.

10

Homeowners of America Holding Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5.FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial assets carried at fair value have been classified, for disclosure purposes, based on the hierarchy established within FASB ASC 820-10 – Fair Value Measurements and Disclosures. When market prices are not available, fair value is generally estimated utilizing valuation techniques that vary by asset class and incorporate available trade, bid and other market information, when available. The acceptable valuation techniques include (a) market approach, which uses prices or relevant information derived from market transactions for identical or comparable assets or liabilities, (b) the Income Approach, which converts future amounts such as cash flows or earnings to a single present value amount based on current market expectations about those future amounts, and (c) the Cost Approach, which is based on the amount that currently would be required to replace the service capacity of an asset. In certain circumstances, these valuation techniques may involve some level of management estimation and judgment which becomes significant with increasingly complex instruments or pricing models. Where appropriate, adjustments are included to reflect the risk premium inherent in a particular methodology, model or input used.

The fair value hierarchy is used to prioritize valuation inputs into three levels:

● Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities. These inputs are considered to be the most reliable evidence of fair value.

● Level 2 – quoted prices for similar assets in active markets, quoted prices from those willing to trade in markets that are not active, or other inputs that are observable or can be corroborated by market data for the term of the investment. Such inputs include market interest rates and volatilities, spreads and yield curves.

● Level 3 – termed unobservable inputs which are utilized in situations where there is little or no market activity for the asset or liability at the measurement date. The approach typically involves a significant subjective management judgment toward the pricing of the security.

The Company's short-term investments comprised of certificates of deposit held at financial institutions which are not measured at fair value on a recurring basis. A portion of the Company's cash and cash equivalents include money market mutual fund accounts held at financial institutions which are measured at fair value on a recurring basis. Fixed-maturity securities held as available-for-sale are carried at fair value in our consolidated financial statements. The following tables provide information as of September 30, 2014 and December 31, 2013, about the Company's financial assets measured at fair value on a recurring basis:

	Fair Value Measurements Using
	Level 1			Level 2			Level 3			Total
As of September 30, 2014
Money market mutual funds		$	5,640,249		$	-		$	-		$	5,640,249
Restricted money market mutual funds			300,000			-			-			300,000
Securities-available-for-sale fixed-maturity:
Obligations of states, municipalities and political subdivisions			-			3,173,039			-			3,173,039
U.S. Treasury			-			539,435			-			539,435
Total		$	5,940,249		$	3,712,474		$	-		$	9,652,723
	Fair Value Measurements Using
	Level 1			Level 2			Level 3			Total
As of December 31, 2013
Money market mutual funds		$	5,903,478		$	-		$	-		$	5,903,478
Securities-available-for-sale fixed-maturity:
Obligations of states, municipalities and political subdivisions			-			-			-			-
U.S. Treasury			-			-			-			-
Total		$	5,903,478		$	-		$	-		$	5,903,478

The following methods and assumptions were used to estimate the fair value disclosures for financial instruments:

Money market mutual funds are valued at the closing price reported by the fund sponsor from an actively traded exchange. As the funds are generally maintained at a net asset value which does not fluctuate, cost approximates fair value. These are included as a Level 1 measurement in the table above. The fair values for available-for-sale fixed-maturity securities are based upon prices provided by an independent pricing service.  The Company has reviewed these prices for reasonableness and has not adjusted any prices received from the independent provider.  Level 2 securities represent assets whose fair value is determined using observable market information such as previous day trade prices, quotes from less active markets or quoted prices of securities with similar characteristics.  There were no transfers between Level 1 and Level 2 during the nine months ended September 30, 2014.

11

Homeowners of America Holding Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

6.PROPERTY, EQUIPMENT, AND SOFTWARE NET

Property, equipment, and software net consist of the following as of September 30, 2014 and December 31, 2013, respectively:

	September 30, 2014			December 31, 2013			Useful Life
Computer equipment	$	231,860		$	222,225		3 years
Office equipment		17,409			13,999		5 years
Furniture and fixtures		142,450			106,524		5 years
Software installation and development		901,216			750,200		3 years
Total, at cost		1,292,935			1,092,948
Less accumulated depreciation and amortization		(937,591	)		(848,432	)
Property and equipment, net	$	355,344		$	244,516

Depreciation and amortization expense for property, equipment and software totaled $35,187 and $22,769 for the three months ended September 30, 2014 and 2013, respectively.

Depreciation and amortization expense for property, equipment and software totaled $89,159 and $63,573 for the nine months ended September 30, 2014 and 2013, respectively.

7.DEFERRED POLICY ACQUISITION COSTS AND CEDING COMMISSIONS

Total capitalized deferred policy acquisition costs as of September 30, 2014 and September 30, 2013, comprised of commissions, premium taxes and costs associated with underwriting and issuing policies were $7,768,160 and $6,149,835, respectively.

Changes in deferred policy acquisition costs for the three and nine months ended September 30, 2014 and September 30, 2013, are as follows:

	Three Months Ended						Nine Months Ended
	September 30, 2014			September 30, 2013			September 30, 2014			September 30, 2013
Deferred policy acquisition charges, beginning of the period	$	6,977,702		$	5,570,771		$	6,214,334		$	5,274,515
Capitalized costs		4,107,806			3,112,886			10,766,212			8,211,996
Amortized costs		(3,317,348	)		(2,533,822	)		(9,212,386	)		(7,336,676	)
Deferred policy acquisition charges, end of the period	$	7,768,160		$	6,149,835		$	7,768,160		$	6,149,835

Deferred ceding commissions, which represent acquisition costs associated with insurance risk ceded to other reinsurance partners, as of September 30, 2014 and September 30, 2013 were $0 and $1,493, respectively.  The decrease of $1,493 is due to a change in quota share reinsurance settlement procedures, from what was previously on a collected premium basis to what is currently on a written premium basis.

Changes in deferred ceding commissions for the three and nine months ended September 30, 2014 and September 30, 2013 are as follows:

	Three Months Ended					Nine Months Ended
	September 30, 2014		September 30, 2013			September 30, 2014		September 30, 2013
Deferred ceding commission, beginning of the period	$	-	$	1,493		$	-	$	683,914
Capitalized commissions		-		4,246,185			-		11,205,306
Amortized commissions		-		(4,246,185	)		-		(11,887,727	)
Deferred ceding commission, end of the period	$	-	$	1,493		$	-	$	1,493

12

Homeowners of America Holding Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

8.UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES

Losses and loss adjustment expenses (LAE), less related reinsurance and deductibles, are charged to operations as incurred. Unpaid losses and LAE are based on claims adjusters' estimates of the cost of settlement plus an estimate for losses IBNR based upon historical experience, industry loss experience, and management's estimates.  Loss reserves reflect Company management's best estimate of the total cost of (i) claims that have been incurred but not yet paid, and (ii) claims that have been incurred, but not yet reported (IBNR).  Loss reserves that are established by Company management are not an exact calculation of our liability, but rather loss reserves represent management's best estimate for our Company's liability based on the application of actuarial techniques and other projection methodology, taking into consideration other facts and circumstances known as of the balance sheet date.  The process of setting reserves is complex and necessarily imprecise. The impact of both internal and external variables on ultimate loss and LAE costs is difficult to estimate.  To arrive as its best estimate for losses, the Company uses damage estimating software developed and owned by acknowledged industry leader, Insurance Service Office.  Reserves factors for IBNR are reviewed quarterly by an independent actuarial consultant.  In addition, our appointed independent actuary attests to the adequacy of our unpaid claim reserve, including IBNR at calendar year end.

Losses and Loss Adjustment Expenses

The following table provides the reconciliation of the beginning and ending reserve balances for losses and LAE, gross of reinsurance for the three and nine months ended September 30, 2014 and for September 30, 2013:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Reserve for losses and LAE, beginning of period	$	21,873,167		$	15,019,644		$	15,884,062		$	11,641,296
Reinsurance recoverables on losses and LAE		(21,025,809	)		(13,943,102	)		(15,090,175	)		(10,618,032	)
Reserve for losses and LAE, net of reinsurance recoverables at beginning of year		847,358			1,076,542			793,887			1,023,264
Add provision for claims and LAE occurring in:
Current year		157,986			437,080			1,293,220			1,958,627
Prior years		396,500			110,000			697,405			9,000
Net incurred losses and LAE during the current period		554,486			547,080			1,990,625			1,967,627
Deduct payments for claims and LAE occurring in:
Current year		419,573			569,658			1,432,689			1,430,927
Prior years		144,171			13,000			513,723			519,000
Net claim and LAE payments during the current period		563,744			582,658			1,946,412			1,949,927
Reserve for losses and LAE, net of reinsurance recoverables, at end of period		838,100			1,040,964			838,100			1,040,964
Reinsurance recoverables on losses and LAE		16,899,909			14,559,112			16,899,909			14,559,112
Reserve for losses and LAE, end of period	$	17,738,009		$	15,600,076		$	17,738,009		$	15,600,076

As a result of additional information on claims occurring in prior years becoming available to management, changes in estimates of provisions of claims and claim adjustment expenses were made resulting in an increase of $396,500 and $110,000 for the three months ended September 30, 2014 and 2013, respectively.

The changes in estimates of provisions of claims and claim adjustment expenses for the nine months ended September 30, 2014 and 2013 resulted in an increase of $697,405 and $9,000, respectively.

9.CONVERTIBLE NOTES PAYABLE

As of December 31, 2013, the Convertible Promissory Note agreements with Inter-Atlantic Fund, L.P. and Phoenix Associates, Inc. (companies controlled by a shareholder and former director, respectively) in the amounts of $950,000 and $50,000, respectively, with an interest rate equal to 10% per annum (accelerating to 12.5% per annum in the event of default) were converted into 2,306,152 and 124,988 common shares, respectively.

During the three months ended September 30, 2013, interest expense on these notes totaled $17,397.

During the nine months ended September 30, 2013, interest expense on these notes totaled $68,630.

13

Homeowners of America Holding Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

10.STOCKHOLDERS' EQUITY

Preferred Stock

As of September 30, 2014 and December 31, 2013, the Company has 20,500,000 shares of preferred stock, convertible, 12.50% cumulative, $0.0001 par value per share, authorized and none issued and outstanding.

Common Stock

As of September 30, 2014, the Company has 40,000,000 shares authorized and 17,479,852 shares issued and 16,168,852 shares outstanding of $0.0001 par value common stock. Holders of common stock are entitled to one (1) vote for each share of common stock held at all meetings of stockholders, unless restricted by the Company's Amended and Restated Certificate of Incorporation.

On April 15, 2014, the Company issued 39,000 shares by way of common stock held in Treasury at $0.52 per share under the Company's 2013 Equity Compensation Plan as a stock award to certain employees of the Company.

On February 1, 2014, the Company issued 288,462 shares of common stock at $0.52 per share, to Inter-Atlantic Management Inc.  Per the terms of the Advisory Agreement dated August 1, 2013, Inter-Atlantic Management Inc. will be issued annually on February 1st, a grant of the Company's common stock which in aggregate had a fair market value of $150,000 at the time of the grant.

As of December 31, 2013, the Company has 40,000,000 shares of authorized and 17,181,140 shares issued and 15,831,140 shares outstanding of $0.0001 par value common stock.  Holders of common stock are entitled to one (1) vote for each share of common stock held at all meetings of stockholders, unless restricted by the Company's Amended and Restated Certificate of Incorporation.

There were no common stock warrants issued during the three and nine months ended September 30, 2014 and September 30, 2013.

14

Homeowners of America Holding Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

11.  EARNINGS (LOSS) PER SHARE

The following table represents the reconciliation of the Company's basic earnings per common share and diluted earnings per common share computations reported on the Consolidated Statements of Operations for the three and nine months ended September 30, 2014 and 2013:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2014		2013			2014		2013
Basic earnings per common share
Net income	$	996,590	$	660,919		$	1,957,671	$	1,184,091
Cumulative dividend		-		(255,215	)		-		(974,179	)
Adjusted net income	$	996,590	$	405,704		$	1,957,671	$	209,912
Weighted average common shares outstanding		16,162,352		6,735,384			16,112,634		3,745,128
Basic earnings per common share	$	0.06	$	0.06		$	0.12	$	0.06
	Three Months Ended					Nine Months Ended
	September 30,					September 30,
		2014		2013			2014		2013
Diluted earnings per common share
Net income	$	996,590	$	660,919		$	1,957,671	$	1,184,091
Add interest expense on convertible promissory notes		-		11,482			-		-
Adjusted net income	$	996,590	$	672,401		$	1,957,671	$	1,184,091
Weighted average common shares outstanding		16,162,352		16,728,462			16,112,634		3,745,128
Effect of diluted securities:
Stock options		942,250		702,500			942,250		-
Diluted common shares outstanding		17,104,602		17,430,962			17,054,884		3,745,128
Diluted earnings per common share	$	0.06	$	0.04		$	0.11	$	0.06

For the nine months ended September 30, 2013, all of the Company's potentially dilutive securities and interest expense on convertible promissory notes of $44,211 were excluded from the computation of diluted earnings per share as they were anti-dilutive. The total number of potentially dilutive shares of common stock that were excluded totaled 13,985,834.

15

Homeowners of America Holding Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

12.STOCK BASED COMPENSATION

The Company accounts for stock-based compensation under the fair value recognition provision of FASB ASC Topic 718 – Compensation – Stock Compensation.

Incentive Plans

The Company's 2005 Management Incentive Plan (the "2005 Plan") provides for granting of stock options to enable the Company to obtain and retain the services of selected persons, both employees and directors, considered to be essential to the long-range success of the Company.  Under the 2005 Plan, options may be granted to purchase a total not to exceed 789,475 shares of common stock in the aggregate, made up of original issue shares, treasury shares or a combination of the two.  At September 30, 2014 and 2013, options to purchase 783,750 shares of common stock have been granted under the 2005 Plan.

The Company's 2013 Equity Compensation Plan (the "2013 Plan") provides for granting of stock options, incentive stock options, stock awards, and restricted stock units to enable the Company to obtain and retain the services of selected persons, both employees and directors, considered to be essential to the long-range success of the Company. Under the 2013 Plan, options may be granted to purchase a total not to exceed 2,925,000 shares of common stock, made up of original issue shares, treasury shares or a combination of the two. At September 30, 2014, options to purchase 1,965,000 shares of common stock and 39,000 shares of common stock in the form of a stock award have been granted under the 2013 Plan.

A summary of the activity of the Company's stock option plan for the three and nine months ended September 30, 2014 and September 30, 2013 is as follows:

	Number of Options		Weighted Avg Exercise Price		Weighted Avg Remaining Cont. Term		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2013		2,708,750	$	0.58		8.41	$	4
Outstanding at March 31, 2014		2,708,750	$	0.58		8.16	$	21
Outstanding at June 30, 2014		2,708,750	$	0.58		7.91	$	22
Outstanding at September 30, 2014		2,738,500	$	0.59		7.57	$	21
Exercisable at September 30, 2014		942,250	$	0.73		5.14	$	5
Outstanding at December 31, 2012		783,750	$	0.78		5.91	$	-
Outstanding at March 31, 2013		783,750	$	0.78		5.66	$	-
Outstanding at June 30, 2013		783,750	$	0.78		5.41	$	-
Outstanding at September 30, 2013		783,750	$	0.78		5.16	$	-
Exercisable at September 30, 2013		702,500	$	0.80		4.90	$	-

During the three and nine months ended September 30, 2014, the Company granted 40,000 stock options.  The Company did not grant any stock options during the three and nine months ended September 30, 2013. The fair value of the stock options granted during the three and nine months ended September 30, 2014 was $0.0165.

The Company records stock-based compensation expense related to granting stock options in general and administrative expenses. The Company recognized compensation expense as follows for the three and nine months ended September 30, 2014 and 2013:

	Three Months Ended September 30,							Nine Months Ended September 30,
	2014				2013			2014				2013
Total gross compensation expense		$	8,719			$	-		$	52,887			$	-
Total tax benefit associated with compensation expense			(172	)			-			(7,507	)			-
Total net compensation expense		$	8,547			$	-		$	45,380			$	-

As of September 30, 2014, the Company expects to record compensation expense in the future as follows:

	Three			Year ending December 31,
	months
	ending
	December 31, 2014			2015			2016			2017			2018			2019
Total gross unrecognized compensation expense	$	8,736		$	34,944		$	34,944		$	34,944		$	28,365		$	81
Tax benefit associated with unrecognized compensation expense		(172	)		(686	)		(686	)		(686	)		(556	)		-
Total net unrecognized compensation expense	$	8,564		$	34,258		$	34,258		$	34,258		$	27,809		$	81

16

Homeowners of America Holding Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

13.INCOME TAXES

During the three and nine months ended September 30, 2014, the Company recorded $530,513 and $1,052,687 respectively, of income tax expense which resulted in estimated annual effective tax rate of 34.22% and 34.25%.  The effective tax rate was primarily impacted as a result of permanent tax differences on meals and entertainment and stock-based compensation.

During the three and nine months ended September 30, 2013, the Company recorded $315,929 and $608,254 respectively, of income tax expense which resulted in estimated annual effective tax rate of 32.3% and 33.9%. The effective tax rate was primarily impacted as a result of permanent tax differences on meals and entertainment.

The Company's federal income tax return is consolidated with HAIC and MGA. Allocation of tax expense or refunds among the consolidated group is based on separate return calculations.

14.REINSURANCE

Certain premiums and benefits are ceded to other insurance companies under various reinsurance agreements. The reinsurance agreements provide HAIC with increased capacity to write larger risks and maintain its exposure to loss within its capital resources. Ceded reinsurance contracts do not relieve HAIC from its obligations to policyholders. HAIC remains liable to its policyholders for the portion reinsured to the extent that any reinsurer does not meet the obligations assumed under the reinsurance agreements. To minimize its exposure to significant losses from reinsurer insolvencies, HAIC evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities, or economic characteristics of the reinsurers.

Commencing April 1, 2014 and ending March 31, 2015, the Company reinsured its property and casualty risk under quota share reinsurance treaties with third party reinsurers.  The treaties cover 80% of its risk under property coverage on any one loss occurrence not to exceed $110,000,000; 10% of its risk under property coverage on any one loss occurrence not to exceed $4,000,000 and approximately 64% of its risk under casualty coverages.

Property catastrophe treaties, which went into effect on the same day and having the same term as the quota share treaties, develop over four layers and 20% of our risk on property coverage on a gross loss of $110,000,000 excess of $4,000,000 per occurrence. The Company's net retention is $400,000 per loss occurrence.

Commencing August 1, 2014 and ending November 30, 2014, the Company purchased a fifth layer of property catastrophe reinsurance with third party reinsurers to cover its potential maximum loss during the 2014 hurricane season.  The layer will extend the Company's coverage to $140,000,000, excess of $4,000,000 of ultimate net loss arising out of each loss occurrence.  The Company's net retention on each loss occurrence remains at $400,000.

For the 12 month period commencing April 1, 2013 and ending March 31, 2014, the Company reinsured with various third party reinsurers under residential quota share reinsurance treaties, 90% of its risk. The reinsurers' liability under the quota share arrangement beginning in respect to any one loss occurrence shall not exceed $80,000,000. Property catastrophe treaties, which went into effect on the same day and have the same term as the quota share treaties, develop over four layers and cover a gross loss of $76,000,000 excess of $4,000,000 per occurrence. The Company's net retention is $400,000 per occurrence.

The Company also purchases reinsurance covering non-weather losses (two occurrences) in excess of a gross loss of $500,000 per occurrence for all coverage lines (a net loss of $50,000). This coverage which was in force during 2014 and 2013 has been obtained principally to protect the Company in the event of a large fire loss.

The effects of reinsurance on premiums written and earned were as follows, for the three and nine months ended September 30, 2014 and September 30, 2013:

	Three Months Ended September 30, 2014								Three Months Ended September 30, 2013
	Written				Earned				Written				Earned
Direct premiums		$	21,057,409			$	16,893,086			$	16,398,118			$	13,643,436
Ceded premiums			(18,648,417	)			(16,046,107	)			(14,641,816	)			(12,390,289	)
Net Premiums		$	2,408,992			$	846,979			$	1,756,302			$	1,253,147

	Nine Months Ended September 30, 2014								Nine Months Ended September 30, 2013
	Written				Earned				Written				Earned
Direct premiums		$	54,973,994			$	46,933,714			$	43,370,380			$	39,037,947
Ceded premiums			(48,567,557	)			(43,539,301	)			(38,659,828	)			(35,494,253	)
Net Premiums		$	6,406,437			$	3,394,413			$	4,710,552			$	3,543,694

Following is a summary of HAIC's reinsurance balances under the above described reinsurance treaties as of and for the three and nine months ended September 30, 2014 and December 31, 2013:

	September 30, 2014		December 31, 2013
Ceded premiums payable	$	8,812,245	$	3,271,858
Ceded loss and loss adjustment expense reserve	$	16,899,909	$	15,090,175
Ceded unearned premium reserve	$	34,836,484	$	27,924,037

	Three Months Ended						Nine Months Ended
	September 30, 2014			September 30, 2013			September 30, 2014			September 30, 2013
Ceded loss adjustment expenses		$	746,877		$	1,125,971		$	3,394,533		$	3,560,184
Ceded earned premiums		$	16,046,107		$	12,390,289		$	43,539,301		$	35,494,253

17

Homeowners of America Holding Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

15.CONCENTRATION OF CREDIT RISK

The Company has exposure and remains liable in the event of an insolvency of one of its primary reinsurers. Management and its reinsurance intermediary regularly assess the credit quality and ratings of its reinsurer base companies.

Financial instruments which potentially subject the Company to credit risk consist principally of cash and money market accounts on deposit with financial institutions, money market funds, certificates of deposit and premium balance in the course of collection.  At times, the Company's bank deposits may exceed the FDIC limit.

The concentration of credit risk with respect to premium balances in the course of collection is limited, due to the large number of insureds comprising the Company's customer base. However, substantially all of the Company's revenues are derived from customers in Texas, which could be adversely affected by economic conditions, an increase in competition, or other environmental changes.

16.COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases its corporate office space and certain office equipment under non-cancelable operating leases which expire at various dates through 2019. Future minimum lease payments required under the non-cancelable operating leases are as follows for the years ending December 31:

2014        (3 months)	$	41,712
2015		166,848
2016		174,709
2017		91,284
2018		22,188
2019		12,519
	$	509,260

Lease expense under such leases for the three months ended September 30, 2014 and September 30, 2013 was $47,776 and $33,961, respectively.

Lease expense under such leases for the nine months ended September 30, 2014 and September 30, 2013 was $125,341 and $100,396, respectively.

Litigation

The Company is the defendant in routine litigation involving matters that are incidental to the claims aspect of the Company's business for which estimated losses are included in unpaid loss and loss adjustment expense reserves in the Company's consolidated financial statements. It is management's opinion that these lawsuits are not material individually or in the aggregate to the Company's financial position, results of operations, or cash flow.

17.REGULATORY REQUIREMENTS AND RESTRICTIONS

HAIC is subject to the laws and regulations of the State of Texas and the regulations of any other states in which HAIC conducts business. State regulations cover all aspects of HAIC's business and are generally designed to protect the interests of insurance policyholders, as opposed to the interests of stockholders. The Texas Insurance Code requires all property and casualty insurers to have a minimum of $2.5 million in capital stock and $2.5 million in surplus.

As of December 31, 2013, HAIC's total statutory surplus was $8,963,573 (capital stock of $2,500,000 and surplus of $6,463,573).

As of September 30, 2014, HAIC's total statutory surplus was $12,118,313 (capital stock of $3,000,000 and surplus of $9,118,313).

As of September 30, 2014 and December 31, 2013, HAIC had restricted cash and investments totaling $3.3 million and $1.0 million, respectively, pledged to the Departments of Insurance in certain states as a condition of its Certificate of Authority for the purpose of meeting obligations to policyholders and creditors. See Note 1 Organization and Summary of Significant Accounting Policies, Investments for additional disclosure.

The Texas Insurance Code limits dividends from insurance companies to their stockholders to net income accumulated in the Company's surplus account, or "earned surplus".

The maximum dividend that may be paid without approval of the Insurance Commissioner is limited to the greater of 10% of the statutory surplus at the end of the preceding calendar year or the statutory net income of the preceding calendar year. No dividends were paid by HAIC in 2014 or 2013.

HAIC prepares its statutory-based financial statements in conformity with accounting practices prescribed or permitted by the Texas Department of Insurance. Prescribed statutory accounting practices primarily include those published as statements of SAP by the NAIC, as well as state laws, regulations and general administrative rules. Permitted statutory accounting practices encompass all accounting practice not so prescribed. As of September 30, 2014 and December 31, 2013, there were no material permitted statutory accounting practice utilized by HAIC.

18

ITEM 2 – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

In addition to historical information, this quarterly report contains forward-looking statements as defined under federal securities laws. Such statements involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements. Typically, forward-looking statements can be identified by terminology such as "anticipate," "estimate," "plan," "project," "continuing," "ongoing," "expect," "believe," "intend," "may," "will," "should," "could," and similar expressions. The important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include but are not limited to the effect of governmental regulation; changes in insurance regulations; the frequency and extent of claims; uncertainties inherent in reserve estimates; catastrophic events; a change in the demand for, pricing of, availability of or collectability of reinsurance; restrictions on our ability to change premium rates; increased rate pressure on premiums; and other risks and uncertainties detailed herein and from time to time in our publicly available filings with the Securities and Exchange Commission (the " SEC").

You should read the following discussion in conjunction with our consolidated financial statements and related notes and information included under this Item 2 and elsewhere in this quarterly report on Form 10-Q and in our Form 10-K filed with the SEC on March 31, 2014. Unless the context requires otherwise, as used in this Form 10-Q, the terms "HAHC," "we," "us," "our," "the Company," "our company," and similar references refer to Homeowners of America Holding Corporation and its subsidiaries.

OVERVIEW

General

HAHC is a property and casualty insurance holding company incorporated in Delaware in 2005.  In May 2006, we began selling property and casualty insurance products in Texas and beginning April, 2014, we began offering property and casualty insurance products in Arizona through our subsidiary, Homeowners of America Insurance Company.  Through the use of highly automated underwriting tools, we currently offer homeowners, dwelling fire and extended coverage, tenant and condominium owners policies, within market segments which have proven to have long term profitability.  Using internet-enabled applications, our products are offered to the public through independent insurance agents.

We have applied for licenses to write business in thirty-two additional states.  To date, we have received certificates of authority from twenty-three including Alabama, Arkansas, Colorado, Delaware, Georgia, Indiana, Iowa, Kentucky, Louisiana, Michigan, Missouri, Montana, Nebraska, Nevada, North Carolina, North Dakota, South Carolina, South Dakota, Tennessee, Utah, Virginia, Washington and Wyoming to offer homeowners, dwelling fire and extended coverage, tenant and condominium owners policies.  Our current plan is to offer homeowners insurance products in two additional states within the next twelve months.

As mentioned previously, the Company sells insurance policies predominately in Texas.  As such, the health of the Texas economy and housing market has a direct impact on the Company's business activity.  The following selected statistics published monthly by the Real Estate Center at Texas A&M University are key indicators that management monitors when evaluating the Company's current financial condition and operating results:

· Texas seasonally adjusted unemployment was 5.2% at September month end, as compared to the national U.S. of 5.9%.

· Single family building permits were up 17.9% year over year as of September month end and single family home sales were up 7.3% year over year as of September month end.

· Texas nonfarm employment rate increased 3.7% at September month end, as compared to an increase of the national U.S. rate of 2.0%.

These favorable employment and housing economic trends, along with our competitive pricing in our target markets have resulted in improved premium production during 2014. The resulting increase in earned premium, along with improved reinsurance terms for the 2014 - 2015 treaty year are all factors which aided in the positive results recorded by the Company for the quarter ended September 30, 2014.

The Company's private passenger automobile book of business, written in support of its homeowners program in Texas, was terminated with our last policy expiring in October, 2013.  The Texas private passenger automobile program was discontinued as we were unable to capture a sufficient portion of the market at pricing which we deemed adequate to cover our expenses and provide a margin for profits.

Our principal revenues are earned premiums (which are reported net of reinsurance costs), ceding commissions and policy fees.  We cede a substantial portion of our earned premium to reinsurers under a quota share program to mitigate high frequency risks as well as protect us from catastrophic events and under an excess of loss contract program to mitigate losses from catastrophic events.  Our principal expenses are claims from policyholders, policy acquisition and other underwriting expenses, and general and administrative expenses.  Our net income for the three and nine months ended September 30, 2014 was $996,590 and $1,957,671, respectively.

Net income available to common stockholders was $996,590 and $1,957,671, respectively, for the three and nine months ended September 30, 2014.  As of September 30, 2014 we had total assets of $96.3 million and stockholders' equity of $10.5 million.

At the end of 2013, our market share of the approximately $7.2 billion Texas homeowners insurance market was estimated to be 0.66% by SNL Financial, making us the 20^th largest Texas homeowners company in terms of Texas premium.  As of September 30, 2014, our property insurance policy in force count of 71,010 represents annualized premiums of approximately $70.2 million as compared to the same time last year when our policy in force count was 59,300 and our in force premium was approximately $55.9 million as of September 30, 2013. Our policy growth year over year was 19.75 %, while our in force premium grew 25.73 %.

19

RESULTS OF OPERATIONS

The following table summarizes our results of operations for the three and nine months ended September 30, 2014 and 2013:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Revenues:	2014			2013			2014			2013
Premiums earned	$	16,893,086		$	13,643,436		$	46,933,714		$	39,037,947
Ceded premiums		(16,046,107	)		(12,390,289	)		(43,539,301	)		(35,494,253	)
Net premiums earned		846,979			1,253,147			3,394,413			3,543,694
Policy fees		1,578,900			1,286,995			4,188,500			3,497,765
Ceding commissions and reinsurance profit share		5,078,682			3,044,488			12,375,912			8,143,900
Investment income, net of investment expenses		10,647			9,339			19,888			31,684
Loss adjustment and other fee income		334,277			288,289			1,159,478			984,384
Total revenue		7,849,485			5,882,258			21,138,191			16,201,427
Expenses:
Losses and loss adjustment expenses		554,486			547,080			1,990,625			1,967,627
Policy acquisition and other underwriting expenses		4,521,009			3,300,522			11,939,855			9,370,086
General and administrative expenses		1,246,887			1,057,808			4,197,353			3,071,369
Total expenses		6,322,382			4,905,410			18,127,833			14,409,082
Income before income taxes		1,527,103			976,848			3,010,358			1,792,345
Provision (benefit) for income taxes:
Current		680,040			374,639			1,602,315			725,531
Deferred		(149,527	)		(58,710	)		(549,628	)		(117,277	)
Total income taxes		530,513			315,929			1,052,687			608,254
Net income	$	996,590		$	660,919		$	1,957,671		$	1,184,091
Cumulative preferred stock dividends		-			(255,215	)		-			(974,179	)
Net income available to common stockholders	$	996,590		$	405,704		$	1,957,671		$	209,912
Basic income per common share	$	0.06		$	0.06		$	0.12		$	0.06
Diluted income per common share	$	0.06		$	0.04		$	0.11		$	0.06
Cash dividend declared per common share	$	0		$	0		$	0		$	0
Losses and loss adjustment expenses  to net earned premium		65.47	%		43.66	%		58.64	%		55.52	%
Expenses to direct earned premium		34.14	%		31.94	%		34.38	%		31.87	%
Acquisition & underwriting and other operating expenses to fee income		82.49	%		94.34	%		91.05	%		98.54	%
Combined loss & expense to total earned revenue		80.65	%		83.53	%		85.84	%		89.11	%

20

Net income for the three and nine months ended September 30, 2014 was $996,590 and $1,957,671, respectively, as compared to net income of $660,919 and $1,184,091 for the three and nine months ended September 30, 2013, respectively. Results for the three months ended September 30, 2014, improved over the same time frame last year primarily as a result of enhanced fee income from policy production and ceding commissions coming from our quota share reinsurance program. This was also the leading factor in our improved results for the nine months ended September 30, 2014.

Commencing April 1, 2014 and ending March 31, 2015, the Company reinsured its property and casualty risk under quota share reinsurance treaties with third party reinsurers.  The treaties cover 80% of its risk under property coverage on any one loss occurrence not to exceed $110,000,000; 10% of its risk under property coverage on any one loss occurrence not to exceed $4,000,000 and approximately 64% of its risk under casualty coverages.

Property catastrophe treaties, which went into effect on the same day and having the same term as the quota share treaties, develop over four layers and 20% of our risk on property coverage on a gross loss of $110,000,000 excess of $4,000,000 per occurrence. The Company's net retention is $400,000 per loss occurrence.

Commencing August 1, 2014 and ending November 30, 2014, the Company increased its catastrophe coverage through fifth layer reinsurance with third party reinsurers.  This layer will extend the Company's coverage to $140,000,000, excess of $4,000,000 of ultimate net loss arising out of each loss occurrence.  The Company considered this increased coverage limit during the Atlantic hurricane season to be a prudent risk management decision, given the growth in both the number of policy holders as well as total insured values.  The Company's net retention on each loss occurrence remains at $400,000.

For the three and nine months ended September 30, 2014, the cost of the additional catastrophe coverage mentioned above was $407,500, which along with the Company's 24% increase in premiums earned, led to our nearly 30%  increase in ceded earned premiums for the period.

Three Months ended September 30, 2014 compared to the Three Months ended September 30, 2013

Our results of operations for the three months ended September 30, 2014 reflect income available to common stockholders of $996,590, or $0.06 earnings per diluted common share, compared to income available to common stockholders of $405,704, or $0.04 earnings per diluted common share, for the three months ended September 30, 2013.

Net income was $996,590 for the three months ended September 30, 2014, as compared to net income of $660,919 for the three months ended September 30, 2013.  Improved results for the three months ended September 30, 2014, was primarily the result of increased fee income, the result of an increase in the number of policies written and the increased ceding commission on ceded earned premium, the direct result of improved reinsurance terms for the current treaty year.

Revenue

Premium production for the three months ended September 30, 2014 was $21.1 million, an increase of $4.7 million or 28.41% over the same period in 2013.  The Company attributes this growth to the effects of an increased number of insured properties, increased pricing in selected markets and maintaining persistency on policies subject to renewal in its target markets.

Gross Premiums Earned for the three months ended September 30, 2014 and 2013 were $16.9 million and $13.6 million, respectively.  The $3.2 million increase or 23.82%, is primarily the result of increased property insurance premium, which increased $4.7 million or 28.40%.

Premiums Ceded for the three months ended September 30, 2014 and 2013 were approximately $16.0 million and $12.4 million, respectively. Premiums ceded were 94.99% and 90.82% of gross premiums earned during the three months ended September 30, 2014 and 2013, respectively, the result of our 90% quota share reinsurance program and our excess of loss reinsurance program.  We expect our reinsurance premiums applicable to the current fiscal year, as well as the reinsurance treaty year, to remain in excess of 90% of direct earned premium, trending slightly upward reflecting our increase in in-force premium and extended excess of loss limits.

Net Premiums Earned for the three months ended September 30, 2014 and 2013 were $0.8 million and $1.3 million, respectively, and reflect the gross premiums earned less the appropriate reinsurance costs as described above.

Ceding Commission, Reinsurance Profit Sharing and Other Fee Income for the three months ended September 30, 2014 was $7.0 million compared to $4.6 million for the three months ended September 30, 2013.  The primary factors for this improvement include increased earned premium, further supported by improved reinsurance terms for the 2014 - 2015 treaty year.

Net Premiums Written during the three months ended September 30, 2014 and 2013 totaled $2.4millionand $1.8 million, respectively. Net premiums written represent the premiums charged on policies issued during a fiscal period less any applicable quota share reinsurance costs.

21

The following is a reconciliation of our total net premiums written to net premiums earned for the three months ended September 30, 2014 and 2013 (values in thousands):

	Three Months Ended
	September 30,
	2014			2013
Net premiums written	$	2,409		$	1,756
Change in unearned premium		(476	)		(278	)
Catastrophe & EXOL premium		(1,086	)		(225	)
Net premiums earned	$	847		$	1,253

Investment Income, Net of Investment Expenses increased approximately 14.01% in the three months ended September 30, 2014 as compared to the three months ended September 30, 2013, reflecting the Company's change in its investment policy, beginning June 1, 2014.  This change included the decision to invest a portion of its excess cash in high quality municipal bonds.

Expenses

Our Losses and Loss Adjustment Expenses remained relatively flat at$554,486 and $547,080, respectively, during the three months ended September 30, 2014 and 2013 due to similar patterns of spring convectional thunderstorm events occurring during the periods. Our liability for losses and loss adjustment expense ("Reserves") is more fully described below under "Critical Accounting Policies and Estimates".  These Reserves include both case reserves on reported claims and our reserves for IBNR losses. At each period-end date, the balance of our Reserves is based on our best estimate of the ultimate cost of each claim for those known cases and the IBNR loss reserves are estimated based primarily on our historical experience.

Policy Acquisition and Other Underwriting Expenses for the three months ended September 30, 2014 and 2013 of $4.5 million and $3.3 million, respectively, primarily reflect the amortization of deferred acquisition costs including commissions payable to agents for production and renewal of policies, premium taxes and other costs associated with the acquisition of insurance policies.The net increase from the corresponding period in 2013 is primarily attributable to the increase in our premium production.

General and Administrative Expenses for the three months ended September 30, 2014 and 2013 were $1.2 million and $1.1 million, respectively.The $189,079 increase is primarily attributable to increases in compensation and compensation-related costs, a direct result of our increase in head count from 37 employees as of September 30, 2013 to 41 employees as of September 30, 2014, in support of our premium growth and other administrative costs, which include a variety of professional service fees and other general expenses.

Income Taxes for the three months ended September 30, 2014 and 2013 were $530,513and $315,929, respectively, for state and federal taxes resulting in an effective tax rate of 34.22% for 2014 and 32.30% for 2013.  The effective tax rate for the three months ended September 30, 2014 was impacted as a result of permanent tax differences on meals and entertainment and stock-based compensation.

Ratios:

The loss ratio applicable to the three months ended September 30, 2014 (losses and loss adjustment expenses incurred related to net premiums earned) was 65.47% compared to 43.66% for the three months ended September 30, 2013. The primary factor contributing to our increased loss ratio is the increase in ceded earned premiums, discussed previously.

Our expenses  (policy acquisition, underwriting, and other operating expenses), as a percentage of direct earned premium was 34.14% for the three months ended September 30, 2014,  compared to 31.94% for the three months ended September 30, 2013. The increase in our expense ratio is primarily attributable to higher property inspections, the result of an increase in quoting the Company's product by its agency force, and other underwriting expenses, including an increase in agent's compensation, employee compensation and compensation-related costs.

 Another important measurement of operational effectiveness of the Company is the margin between our fee income and acquisition, underwriting, and other operating expenses due to our reliance on quota share reinsurance, under which approximately 90% of our property insurance premium is ceded to reinsurers. The Company receives a ceding commission from reinsurers for the production of the business.  This fee income, along with other policy related fees that the Company charges, are used to offset the underwriting and other operating expenses it incurs in the production of premium.  For the three months ended September 30, 2014 our acquisition and underwriting and other operating expenses were 82.49%, of policy related fee income, as compared to 94.34% for the three months ending September 30, 2013.

Due to the impact our reinsurance costs have on net premiums earned from period to period, our management believes the combined loss and expense ratio measured to total earned revenues is more relevant in assessing overall performance. The combined loss and expense ratio to total earned revenue for the three months ended September 30, 2014 was 80.65% compared to 83.53% for the three months ended September 30, 2013.

These improved margins are a direct result of the enhanced ceding commission rates which were negotiated as part of our current treaties and higher policy fee income.

22

Nine Months ended September 30, 2014 compared to the Nine Months ended September 30, 2013

Our results of operations for the nine months ended September 30, 2014 reflect income available to common stockholders of $1,957,671, or $0.11 earnings per diluted common share, compared to income available to common stockholders of $209,912, or $0.06 earnings per diluted common share, for the nine months ended September 30, 2013.

Net income was $1,957,671 for the nine months ended September 30, 2014, as compared to net income of $1,184,091 for the nine months ended September 30, 2013.  Improved results for the nine months ended September 30, 2014, was primarily the result of increased fee income, the result of an increase in the number of policies written and the increased ceding commission on ceded earned premium, the direct result of improved reinsurance terms for the current treaty year.

Revenue

Premium production for the nine months ended September 30, 2014 was $55.0 million, an increase of $11.6 million or 26.76% over the same period in 2013.  The Company attributes this growth to the effects of an increased number of insured properties, increased pricing in selected markets and maintaining persistency on policies subject to renewal in its target markets.

Gross Premiums Earned for the nine months ended September 30, 2014 and 2013 were $46.9 million and $39.0 million, respectively.  The $7.9 million increase or 20.23%, is primarily the result of increased property insurance premium, which increased $11.7 million or 27.15%.  The increase in property insurance premium is partially offset by a reduction of $0.1 million in our discontinued private passenger auto insurance written premium year over year.  The Company made the strategic decision to exit the private passenger auto insurance business, with the last policy expiring in October 2013.

Premiums Ceded for the nine months ended September 30, 2014 and 2013 were approximately $43.5 million and $35.5 million, respectively. Our premiums ceded represent amounts paid to reinsurers to cover losses under both our quota share and catastrophe excess of loss reinsurance treaties.  Premiums ceded were 92.77% and  90.92% of gross premiums earned during the nine months ended September 30, 2014 and 2013, respectively,primarily the result of our  90% quota share reinsurance program and our enhanced limits of our catastrophe excess of loss program, previously discussed.  We expect our reinsurance premiums applicable to the current fiscal year, as well as the reinsurance treaty year, to remain in excess of 90% of direct earned premium, trending slightly upward reflecting our increase in in-force premium.

Net Premiums Earned for the nine months ended September 30, 2014 and 2013 were $3.4 million and $3.5 million, respectively, and reflect the gross premiums earned less the appropriate reinsurance costs as described above.

Ceding Commission, Reinsurance Profit Sharing and Other Fee Incomefor the nine months ended September 30, 2014 was $17.7 million compared to $12.7 million for the nine months ended September 30, 2013.  The primary factors for this improvement include increased earned premium, further supported by improved reinsurance terms for the 2014 - 2015 treaty year.

Net Premiums Written during the nine months ended September 30, 2014 and 2013 totaled $6.4millionand $4.7 million, respectively. Net premiums written represent the premiums charged on policies issued during a fiscal period less any applicable quota share reinsurance costs.

The following is a reconciliation of our total net premiums written to net premiums earned for the nine months ended September 30, 2014 and 2013 (values in thousands):

	Nine Months Ended
	September 30,
	2014			2013
Net premiums written	$	6,406		$	4,711
Change in unearned premium		(1,128	)		(340	)
Catastrophe & EXOL premium		(1,884	)		(827	)
Net premiums earned	$	3,394		$	3,544

Investment Income, Net of Investment Expenses decreased approximately (37.23)% in the nine months ended September 30, 2014 as compared to the nine months ended September 30, 2013.  This is primarily the result of lower effective yields on the Company's invested assets.

23

Expenses

Our Losses and Loss Adjustment Expenses remained relatively flat at$2.0 million during the nine months ended September 30, 2014 and 2013 due to similar patterns of spring convectional thunderstorm events occurring during the periods.Our liability for losses and loss adjustment expense ("Reserves") is more fully described below under "Critical Accounting Policies and Estimates".  These Reserves include both case reserves on reported claims and our reserves for IBNR losses. At each period-end date, the balance of our Reserves is based on our best estimate of the ultimate cost of each claim for those known cases and the IBNR loss reserves are estimated based primarily on our historical experience.

Policy Acquisition and Other Underwriting Expenses for the nine months ended September 30, 2014 and 2013 of $11.9 million and $9.4 million, respectively, primarily reflect the amortization of deferred acquisition costs including commissions payable to agents for production and renewal of policies, premium taxes and other costs associated with the acquisition of insurance policies.The net increase from the corresponding period in 2013 is primarily attributable to the increase in our overall production.

General and Administrative Expenses for the nine months ended September 30, 2014 and 2013 were $4.2 million and $3.1 million, respectively.The $1.1 million increase includes increases of $600,000 in employee related costs as our head count grew to support our growth in production, an increase of approximately $160,000 in professional expenses related to being a public company as well as increases in technology, and other administrative costs. As of September 30, 2014, we had 41 employees, compared to 37 employees as of September 30, 2013.

Income Taxes for the nine months ended September 30, 2014 and 2013 were $1,052,687and $608,254, respectively, for state and federal taxes resulting in an effective tax rate of 34.25% for 2014 and 33.90% for 2013.  The effective tax rate for the nine months ended September 30, 2014 was impacted as a result of permanent tax differences on meals and entertainment and stock-based compensation.

Ratios:

The loss ratio applicable to the nine months ended September 30, 2014 (losses and loss adjustment expenses incurred related to net premiums earned) was 58.64% compared to 55.52% for the nine months ended September 30, 2013. The primary factor contributing to our increased loss ratio is the increase in ceded earned premium, discussed previously.

Our expenses  (policy acquisition, underwriting, and other operating expenses), as a percentage of direct earned premium was 34.38% for the nine months ended September 30, 2014,  compared to 31.87% for the nine months ended September 30, 2013. The increase in our expense ratio is primarily attributable to higher property inspections, the result of an increase in quoting the Company's product by its agency force, and other underwriting expenses, including an increase in agent's compensation, employee compensation and compensation-related costs.

Another important measurement of operational effectiveness of the Company is the margin between our fee income and acquisition, underwriting, and other operating expenses due to our reliance on quota share reinsurance, under which approximately 90% of our property insurance premium is ceded to reinsurers. The Company receives a ceding commission from reinsurers for the production of the business.  This fee income, along with other policy related fees that the Company charges, are used to offset the underwriting and other operating expenses it incurs in the production of premium.  For the nine months ended September 30, 2014 our acquisition and underwriting and other operating expenses were 91.05%, of policy related fee income, as compared to 98.54% for the nine months ending September 30, 2013.

Due to the impact our reinsurance costs have on net premiums earned from period to period, our management believes the combined loss and expense ratio measured to total earned revenues is more relevant in assessing overall performance. The combined loss and expense ratio to total earned revenue for the nine months ended September 30, 2014 was 85.84% compared to 89.11% for the nine months ended September 30, 2013.

24

Seasonality of Our Business

Trends within our insurance business are seasonal, both as they relate to premium production and as they relate to incurred losses.  Premium production tends to increase during the late spring and summer due to increased home purchases, while our claims activity increase with the occurrence of convectional thunderstorms producing strong winds, tornadoes and hail typically during the period from March 1 through June 30 each year. With the commencement of our reinsurance treaty year on April 1, any variation in reinsurance costs, whether due to changes in rates or in total values insured will be reflected in our financial results beginning April 1 each year.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, we have financed our cash flow requirements through net premiums received and investment income.  We believe our cash flow from net premiums and investment income will be sufficient to cover our cash outflows for at least the next 12 months.  Beyond the next 12 months, our primary cash flow sources will continue to be from premiums and investment income.

In the insurance industry cash collected for premium from policies written is invested, interest and dividends earned thereon.   Our primary cash outflows are claim payments and operating expense.  In regard to claim payments, while the substantial portion of our claims are paid out within 90 – 180 days, the period of time payments are made varies by the circumstances of the claim, and loss settlement expenses can be paid over periods of  more than one year.  Additional cash outflow occurs through payments of underwriting costs such as commissions, taxes, payroll, and overhead expenses.

We believe that we maintain sufficient liquidity to pay claims and expense obligations of HAIC as well as to satisfy any unforeseen events including inadequate premium rates and reserve deficiencies.  The Company maintains substantial reinsurance through reinsurers with superior financial ratings to provide sufficient liquidity in the case disasters impact the business we underwrite.

Cash Flows

Our cash flows from operating and investing activities for the nine months ended September 30, 2014 and 2013 are summarized below.

Summary of Cash Flows

	Nine Months Ended
	September 30,
	2014				2013
Net cash provided by (used in) operating activities		$	5,518,235			$	(1,027,075	)
Net cash used in investing activities		$	(4,685,422	)		$	(880,499	)
Net cash provided by (used in) financing activities		$	7,850			$	(5,400	)

We restated the unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2013. These restatements resulted in money market mutual fund accounts held at financial institutions, which were previously classified as short-term investments to be now classified as cash and cash equivalents. In addition, checks issued in excess of cash book balances, not yet presented for payment, which were previously classified as cash and cash equivalents are now classified as general and other accrued expenses payable. This correction resulted in a $6.3 million decrease in short-term investments included in cash flows used in investing activities and a corresponding increase in cash and cash equivalents, along with a $1.8 million increase in general and other accrued expenses payable in net cash provided by operating activities and a corresponding increase in cash flows used in investing activities. See Note 1 Organization and Summary of Significant Accounting Policies for additional disclosure.

Cash Flows for the nine months ended September 30, 2014

Net cash provided by operating activities for the nine months ended September 30, 2014 was approximately $5.5 million.  Significant factors in this movement consisted primarily of cash received from net written premiums and policy related fees less cash disbursed for operating expenses and losses and loss adjustment expenses.  Net cash used by investing activities of $4.7 million was primarily due to purchases of fixed-maturities, available-for-sale of $4.0 million, purchases of short-term investments of $3.3 million, purchases of long-term investments of $1.5 million, and purchases of furniture, equipment, and software of $0.2 million, offset by redemptions of short-term and long-term investments of $2.0 million and $2.0 million, respectively and $0.3 million from an early call of a fixed-maturity, available for sale.

Cash Flows for the nine months ended September 30, 2013

Net cash used by operating activities for the nine months ended September 30, 2013 was approximately $1.0 million.  Significant factors in this movement consisted primarily of cash received from net written premiums and policy related fees less cash disbursed for operating expenses and losses and loss adjustment expenses.  Net cash used in investing activities of $0.9 million was primarily due to purchases of short-term and long-term investments of $1.4 million and $2.7 million, respectively, offset by redemptions of short-term and long-term investments of $1.8 million and $1.4 million, respectively.

25

OFF-BALANCE SHEET ARRANGEMENTS

As of September 30, 2014, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our consolidated financial statements have been prepared in accordance with U.S. GAAP.  In the preparation of these consolidated statements, Company management has made estimates and judgments to develop amounts reported as part of our results.  Material estimates that are particularly susceptible to changes over time are primarily related to our claim reserves.  These include estimates for known claims, claims incurred but not yet reported and income taxes.

Reserves for Losses and Loss Adjustment Expenses

We establish reserves for the estimated total unpaid cost of losses including loss adjustment expenses, or LAE.  Loss reserves reflect Company management's best estimate of the total cost of (i) claims that have been incurred but not yet paid, and (ii) claims that have been incurred, but not yet reported (IBNR).  Loss reserves that are established by Company management are not an exact calculation of our liability, but rather loss reserves represent management's best estimate for our Company's liability based on the application of actuarial techniques and other projection methodology, taking into consideration other facts and circumstances known as of the balance sheet date.  The process of setting reserves is complex and necessarily imprecise.  The impact of both internal and external variables on ultimate loss and LAE costs is difficult to estimate.  To arrive at its best estimate for reserves for losses and loss adjustment expenses, the Company uses damage estimating software developed and owned by acknowledged industry leader, Insurance Service Office.

Item 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

Item 4 – CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer) the Company has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report.   Based on this evaluation our Chief Executive Officer and our Chief Financial Officer have concluded these disclosure controls and procedures are effective as of September 30, 2014.

Previously Reported Material Weakness

Our management concluded that our internal control over financial reporting was ineffective as of December 31, 2013.  The material weakness in internal control over financial reporting identified by management related to the incorrect classification of cash and cash equivalents, short-term investments, and general and other accrued expenses payable during the first, second, and third quarters of 2013.  See Note 1 Organization and Summary of Significant Accounting Policies for additional disclosure.

Changes in Internal Control Over Financial Reporting

The Company does not have any changes in our internal controls over financial reporting to report for the quarter ended September 30, 2014 which have materially affected or would likely materially affect our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosures and procedures, we recognize that any controls and procedures no matter how well designed and operated can produce only reasonable assurance of achieving the desired control objectives.  In addition, implementation of possible controls and procedures depends on management's judgment in evaluation of their benefits relative to cost.

PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

The Company is party to a number of legal actions as a result of claims filed by policyholders.  These legal actions routinely arise in the ordinary course of our insurance business.  Although we cannot predict with certainty the ultimate resolution of the lawsuits asserted against us, we do not believe that any currently pending legal proceedings to which we are a party will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

ITEM 1a – RISK FACTORS

There have been no material changes to the risk factors previously disclosed in the section entitled, "Risk Factors", in our Form 10-K which was filed with the SEC on March 31, 2014.

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Sales of Unregistered Securities

None.

(b) Use of Proceeds

None.

(c) Repurchase of Securities

None.

26

ITEM 6 – EXHIBITS

10.1*	Top Layer Property Catastrophe Excess of Loss Reinsurance Contract between Homeowners of America Insurance Company and participants American Standard Insurance Company of Wisconsin, Everest Reinsurance Company, Hamilton Re, Ltd., Hannover Re Ltd., Shelter Reinsurance Company, XL Re Ltd., Fubon Insurance Co., Ltd., Sirius International Insurance Corporation for and on behalf of P.R.A.M., Taiping Reinsurance Co. Ltd., and Lloyd's Underwriters, effective August 1, 2014.
31.1*	Certification of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002
32*	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	XBRL INSTANCE DOCUMENT
101.SCH*	XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
101.CAL*	XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT
101.DEF*	XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT
101.LAB*	XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT
101.PRE*	XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT

* Filed herewith

27

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		HOMEOWNERS OF AMERICA HOLDING CORPORATION
November 14, 2014	By:	/s/ Spencer Tucker
		Spencer Tucker
		Chief Executive Officer
November 14, 2014	By:	/s/ Michael C. Rosentraub
		Michael C. Rosentraub
		Chief Financial Officer

28

EX-10.1

Exhibit 10.1

Top Layer Property Catastrophe Excess of Loss

Reinsurance Contract

Effective:  August 1, 2014

Homeowners of America Insurance Company

Irving, Texas

14\H00H1058  

Table of Contents

Article Page

Preamble

1Classes of Business Reinsured

2Commencement and Termination

3Territory (BRMA 51A)

4Exclusions

5Special Acceptances

6Retention and Limit

7Reinstatement

8Definitions

9Other Reinsurance

10Loss Occurrence

11Loss Notices and Settlements

12Salvage and Subrogation

13Reinsurance Premium

14Sanctions

15Late Payments

16Offset (BRMA 36C)

17Access to Records

18Liability of the Reinsurer

19Net Retained Lines (BRMA 32E)

20Errors and Omissions

21Currency (BRMA 12A)

22Taxes (BRMA 50B)

23Federal Excise Tax (BRMA 17D)

24Foreign Account Tax Compliance Act

25Reserves

26Insolvency

27Arbitration

28Service of Suit (BRMA 49G)

29Confidentiality

30Agency Agreement

31Governing Law (BRMA 71B)

32Severability (BRMA 72E)

33Entire Agreement

34Notices and Contract Execution

35Intermediary

14\H00H1058  

Top Layer Property Catastrophe Excess of Loss

Reinsurance Contract

Effective:  August 1, 2014

entered into by and between

Homeowners of America Insurance Company

Irving, Texas

and

The Subscribing Reinsurer(s) Executing the

Interests and Liabilities Agreement(s)

Attached Hereto

(hereinafter referred to as the "Reinsurer")

Preamble

Whenever the word "Company" is used in this Contract, such term shall be held to include any or all of the affiliated insurance companies of Homeowners of America Insurance Company, which are or may hereafter be under common control, provided that notice be given to the Reinsurer of any such newly affiliated insurance companies which may hereafter come under common control as soon as practicable with full particulars as to how such affiliation is likely to affect this Contract.  In the event of either party maintaining that such affiliation calls for alteration in existing terms, and an agreement for alteration not being arrived at, then the business of such newly affiliated insurance company is covered at existing terms only for a period of 45 days after notice by either party that it does not wish to cover such business.

Article 1 - Classes of Business Reinsured

By this Contract the Reinsurer agrees to reinsure the excess liability which may accrue to the Company under its policies in force at the effective date hereof or issued or renewed on or after that date, and classified by the Company as Dwelling and Homeowners business (property coverages only, including Dwelling coverage, Personal Property coverage and Extensions of Coverage as defined in the Company's policies), subject to the terms, conditions and limitations hereinafter set forth.

Article 2 - Commencement and Termination

A. This Contract shall become effective at 12:01 a.m., Central Standard Time, August 1, 2014, with respect to losses arising out of loss occurrences commencing at or after that time and date, and shall remain in force until 12:01 a.m., Central Standard Time, December 1, 2014.

B. Notwithstanding the provisions of paragraph A above, the Company may terminate a Subscribing Reinsurer's percentage share in this Contract in the event any of the following circumstances occur as clarified by public announcement or upon discovery:

1. The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) after the earlier of:  (a) the inception of this Contract, or (b) the date lines are bound for this Contract, has been reduced by more than 20.0% of the amount of surplus (or the applicable equivalent) 12 months prior to that date; or

2. The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at any time between the earlier of:  (a) the inception of this Contract, or (b) the date lines are bound for this Contract, and the date of termination of this Contract has been reduced by more than 20.0% of the amount of surplus (or the applicable equivalent) at the date of the Subscribing Reinsurer's most recent financial statement filed with regulatory authorities and available to the public as of the date lines are bound; or

3. A State Insurance Department or other legal authority has ordered the Subscribing Reinsurer to cease assuming business; or

4. The Subscribing Reinsurer has become insolvent or has been placed into liquidation, receivership, supervision, administration, winding-up or under a scheme of arrangement, or similar proceedings (whether voluntary or involuntary) or proceedings have been instituted against the Subscribing Reinsurer for the appointment of a receiver, liquidator, rehabilitator, supervisor, administrator, conservator or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations; or

5. The Subscribing Reinsurer has reinsured its entire liability under this Contract without the Company's prior written consent; or

6. The A.M. Best's rating for the Subscribing Reinsurer has been assigned or downgraded below A- (inclusive of "Not Rated" ratings), or the published rating issued by Standard & Poor's has been downgraded below BBB+ (inclusive of "Not Rated" ratings); or

7. The Subscribing Reinsurer has become merged with, acquired by or controlled by any other entity or individual(s) not controlling the Subscribing Reinsurer's operations previously; or

8. The Subscribing Reinsurer has ceased assuming new or renewal property or casualty treaty reinsurance business.

C. In the event a Subscribing Reinsurer experiences one or more of the circumstances specified in paragraph B above, the Subscribing Reinsurer shall notify the Company as promptly as possible and shall hereinafter be referred to as a "Special Circumstance Reinsurer."  To terminate a Special Circumstance Reinsurer's percentage share in this Contract, the Company must provide the Special Circumstance Reinsurer with written notice as set forth in the Notices and Contract Execution Article.  Such notice shall include the effective date of termination as selected by the Company and shall be one of the following:

1. The date of written notice provided by the Special Circumstance Reinsurer; or

2. The last day of the month prior to the date of written notice provided by the Special Circumstance Reinsurer; or

3. The last day of any month after the date of written notice provided by the Special Circumstance Reinsurer; or

4. The date of the Company's written notice to the Special Circumstance Reinsurer advising of the termination.

In the event the Subscribing Reinsurer fails to immediately provide written notice to the Company of any event outlined in subparagraphs 1 through 8 of paragraph B above, the Company may elect to substitute the date of public announcement or discovery as the equivalent of written notice.

D. If any Subscribing Reinsurer's percentage share in this Contract is terminated or if this Contract expires while a loss occurrence covered hereunder is in progress, the Reinsurer's liability hereunder shall, subject to the other terms and conditions of this Contract, be determined as if the entire loss occurrence had occurred prior to the termination or expiration of this Contract, provided that no part of such loss occurrence is claimed against any renewal or replacement of this Contract.

Article 3 - Territory (BRMA 51A)

The territorial limits of this Contract shall be identical with those of the Company's policies.

Article 4 - Exclusions

A. This Contract does not apply to and specifically excludes the following:

1. Financial guarantee and insolvency.

2. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance (U.S.A.)" attached to and forming part of this Contract.

3. Loss or damage caused by or resulting from war, invasion, hostilities, acts of foreign enemies, civil war, rebellion, insurrection, military or usurped power, or martial law or confiscation by order of any government or public authority, but this exclusion shall not apply to loss or damage covered under a standard policy with a standard War Exclusion Clause.

4. Loss or liability excluded under the provisions of the "Pools, Associations and Syndicates Exclusion Clause" attached to and forming part of this Contract.

5. All liability of the Company arising by contract, operation of law, or otherwise, from its participation or membership, whether voluntary or involuntary, in any insolvency fund.  "Insolvency fund" includes any guaranty fund, insolvency fund, plan, pool, association, fund or other arrangement, however denominated, established or governed, which provides for any assessment of or payment or assumption by the Company of part or all of any claim, debt, charge, fee or other obligation of an insurer, or its successors or assigns, which has been declared by any competent authority to be insolvent, or which is otherwise deemed unable to meet any claim, debt, charge, fee or other obligation in whole or in part.

6. All third party liability, including Section II of Homeowners.

7. Loss or damage to growing or standing crops.

8. Pollution and seepage coverages excluded under the provisions of the "Pollution and Seepage Exclusion Clause (BRMA 39A)" attached to and forming part of this Contract.

9. Terrorism, as described in the provisions of the "Terrorism Exclusion (NMA 2930c)" attached to and forming part of this Contract.

10. Flood and/or earthquake when written as such.

11. Loss, damage, cost or expense arising from fungi unless directly or indirectly caused by or contributed to by or arising from a covered peril under the Company's original policy.  Losses arising from fungi shall not in and of themselves constitute an event for the purposes of recovery hereunder.  For the purposes of this Contract, "fungi" means any type or form of fungus, including mold or mildew and any mycotoxins, spores, scents or by products produced or released by "fungi."

12. Reinsurance assumed.

13. Growing, standing or drying crops or timber.

B. Any exclusion set forth in paragraph A (except exclusions set forth in subparagraphs 1, 2, 3, 5, 6 and 9) shall be waived automatically when, in the opinion of the Company, the exposure excluded therein is incidental to the principal exposure on the risk in question.

C. If the Company is bound, without the knowledge and contrary to the instructions of the Company's supervisory underwriting personnel, on any business falling within the scope of one or more of the exclusions set forth in paragraph A (except exclusions set forth in subparagraphs 1, 2, 3, 5, 6 and 9), the exclusion shall be suspended with respect to such business until 30 days after an underwriting supervisor of the Company acquires knowledge thereof or until the minimum amount of time required by the applicable statute or regulatory authority to cancel such a policy has elapsed, whichever is greater.

D. If the Company is required to accept an assigned risk which conflicts with one or more of the exclusions set forth in paragraph A (except exclusions set forth in subparagraphs 1, 2, 3, 5, 6 and 9), reinsurance shall apply, but only for the difference between the Company's retention and the minimum limit required by the applicable state statute, and in no event shall the Reinsurer's liability exceed the applicable limits set forth in the Retention and Limit and Reinstatement Articles.

Article 5 - Special Acceptances

A. From time to time the Company may request a special acceptance of reinsurance falling outside the scope of the provisions of this Contract (except as respects the exclusions set forth in subparagraphs 1, 2, 3, 5, 6 and 9 of the Exclusions Article).  Within 10 days of receipt of such a request, each Subscribing Reinsurer shall accept such request, ask for additional information, or reject the request.  Any reinsurance that is specially accepted by the Reinsurer shall be covered under this Contract and shall be subject to the terms hereof, except as such terms shall be modified by the special acceptance.

B. In the event a reinsurer becomes a party to this Contract subsequent to one or more special acceptances hereunder, the new reinsurer shall automatically accept such special acceptance(s) as being covered hereunder.  Further, if one or more Subscribing Reinsurers under this Contract agreed to special acceptance(s) under the contract being replaced by this Contract, such special acceptance(s) shall be automatically covered hereunder with respect to the interests and liabilities of such Subscribing Reinsurer(s).

Article 6 - Retention and Limit

A. The Company shall retain and be liable for the first $110,000,000 of ultimate net loss arising out of each loss occurrence.  The Reinsurer shall then be liable for the amount by which such ultimate net loss exceeds the Company's retention, but the liability of the Reinsurer shall not exceed $30,000,000 as respects any one loss occurrence.

B. No claim shall be made hereunder in any one loss occurrence unless at least two risks insured by the Company are involved in such loss occurrence.  For the purposes of this Contract, the Company shall be the sole judge of what constitutes "one risk."

Article 7 - Reinstatement

A. In the event all or any portion of the reinsurance hereunder is exhausted by loss, the amount so exhausted shall be reinstated immediately from the time the loss occurrence commences hereon.  For each amount so reinstated, the Company agrees to pay additional premium in accordance with the provisions of the Reinsurance Premium Article.

B. Notwithstanding anything stated herein, the liability of the Reinsurer hereunder shall not exceed $30,000,000 as respects loss or losses arising out of any one loss occurrence, nor shall it exceed $60,000,000 as respects all losses arising out of loss occurrences commencing during the term of this Contract.

Article 8 - Definitions

A. "Loss adjustment expense" as used herein shall mean costs and expenses assignable to the investigation, appraisal, adjustment, settlement, litigation, defense and/or appeal of specific claims, regardless of how such expenses are classified for statutory reporting purposes.  Loss adjustment expense shall include, but not be limited to:

1. Interest on judgments (including post-judgment interest and pre-judgment interest unless included as part of an award or judgment);

2. Expenses of outside adjusters and adjuster expenses incurred by Homeowners of America MGA, Inc.;

3. Expenses and a pro rata share of salaries of the Company's field employees, calculated in accordance with the time occupied in adjusting such loss, and expenses of other employees of the Company who have been temporarily diverted from their normal and customary duties and assigned to the adjustment of losses covered by this Contract;

4. Declaratory judgment expenses or other legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto;

5. Court costs;

6. Costs of supersedeas and appeal bonds;

7. Monitoring counsel expenses.

However, loss adjustment expense shall not include normal office expenses and salaries of the Company's regular employees, except as provided for in subparagraph 3 above.

B. "Loss in excess of policy limits" and "extra contractual obligations" as used herein shall mean:

1. "Loss in excess of policy limits" shall mean 90.0% of any amount paid or payable by the Company in excess of its policy limits, but otherwise within the terms of its policy, such loss in excess of the Company's policy limits having been incurred because of, but not limited to, failure by the Company to settle within the policy limits or by reason of the Company's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of an action against its insured or in the preparation or prosecution of an appeal consequent upon such an action.

2. "Extra contractual obligations" shall mean 90.0% of any punitive, exemplary, compensatory or consequential damages paid or payable by the Company, not covered by any other provision of this Contract and which arise from the handling of any claim on business subject to this Contract, such liabilities arising because of, but not limited to, failure by the Company to settle within the policy limits or by reason of the Company's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of an action against its insured or in the preparation or prosecution of an appeal consequent upon such an action.  An extra contractual obligation shall be deemed, in all circumstances, to have occurred on the same date as the loss covered or alleged to be covered under the policy.

However, loss in excess of policy limits and extra contractual obligations arising out of each loss occurrence shall not exceed an amount equal to 25.0% of the Company's indemnity loss hereunder.

Notwithstanding anything stated herein, this Contract shall not apply to any loss in excess of policy limits or any extra contractual obligation incurred by the Company as a result of any fraudulent and/or criminal act by any officer or director of the Company acting individually or collectively or in collusion with any individual or corporation or any other organization or party involved in the presentation, defense or settlement of any claim covered hereunder.

Savings Clause (Applicable only if the Subscribing Reinsurer is domiciled in the State of New York):  In no event shall coverage be provided to the extent that such coverage is not permitted under New York law.

C. "Policies" as used herein shall mean all policies, contracts and binders of insurance, whether held covered provisionally or otherwise.

D. "Term of this Contract" as used herein shall mean the period from 12:01 a.m., Central Standard Time, August 1, 2014, to 12:01 a.m., Central Standard Time, December 1, 2014.  However, if this Contract or the participation of a Subscribing Reinsurer is terminated, "term of this Contract" as used herein shall mean the period from 12:01 a.m., Central Standard Time, August 1, 2014, to the effective time and date of termination.

E. "Ultimate net loss" as used herein shall mean the sum or sums (including loss in excess of policy limits, extra contractual obligations and loss adjustment expense, as defined herein) paid or payable by the Company in settlement of claims and in satisfaction of judgments rendered on account of such claims, after deduction of all claims on inuring reinsurance, whether collectible or not, and all salvage and other recoveries.  Nothing herein shall be construed to mean that losses under this Contract are not recoverable until the Company's ultimate net loss has been ascertained.

Article 9 - Other Reinsurance

A. The Company shall maintain in force property per risk excess of loss treaty reinsurance, recoveries under which shall inure to the benefit of this Contract.

B. The Company shall be permitted to carry other reinsurance, recoveries under which shall inure solely to the benefit of the Company and be entirely disregarded in applying all of the provisions of this Contract.

Article 10 - Loss Occurrence

A. "Loss occurrence" as used herein shall mean the sum of all individual losses directly occasioned by any one disaster, accident or loss or series of disasters, accidents or losses arising out of one event which occurs within the area of one state of the United States or province of Canada and states or provinces contiguous thereto and to one another.  However, the duration and extent of any one "loss occurrence" shall be limited to all individual losses sustained by the Company occurring during any period of 168 consecutive hours arising out of and directly occasioned by the same event, except that the term "loss occurrence" shall be further defined as follows:

1. As regards windstorm, hail, tornado, hurricane, cyclone, including ensuing collapse and water damage, all individual losses sustained by the Company occurring during any period of 72 consecutive hours arising out of and directly occasioned by the same event.  However, the event need not be limited to one state or province or states or provinces contiguous thereto.

2. As regards riot, riot attending a strike, civil commotion, vandalism and malicious mischief, all individual losses sustained by the Company occurring during any period of 72 consecutive hours within the area of one municipality or county and the municipalities or counties contiguous thereto arising out of and directly occasioned by the same event.  The maximum duration of 72 consecutive hours may be extended in respect of individual losses which occur beyond such 72 consecutive hours during the continued occupation of an assured's premises by strikers, provided such occupation commenced during the aforesaid period.

3. As regards earthquake (the epicenter of which need not necessarily be within the territorial confines referred to in the introductory portion of this paragraph) and fire following directly occasioned by the earthquake, only those individual fire losses which commence during the period of 168 consecutive hours may be included in the Company's "loss occurrence."

4. As regards "freeze," only individual losses directly occasioned by collapse, breakage of glass and water damage (caused by bursting of frozen pipes and tanks or freezing and/or melting snow or sleet) may be included in the Company's "loss occurrence."

5. As regards firestorms, brush fires and any other fires or series of fires, irrespective of origin (except as provided in subparagraphs 2 and 3 above), all individual losses sustained by the Company which commence during any period of 168 consecutive hours within a 150-mile radius of any fixed point selected by the Company may be included in the Company's "loss occurrence."  However, an individual loss subject to this subparagraph cannot be included in more than one "loss occurrence."

B. For all those "loss occurrences" other than those referred to in subparagraph 2 above, the Company may choose the date and time when any such period of consecutive hours commences, provided that it is not earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss, and provided that only one such period of 168 consecutive hours shall apply with respect to one event, except for any "loss occurrence" referred to in subparagraph 1 of paragraph A above where only one such period of 72 consecutive hours shall apply with respect to one event, regardless of the duration of the event.

C. As respects those "loss occurrences" referred to in subparagraph 2 of paragraph A above, if the disaster, accident or loss occasioned by the event is of greater duration than 72 consecutive hours, then the Company may divide that disaster, accident or loss into two or more "loss occurrences," provided no two periods overlap and no individual loss is included in more than one such period and provided that no period commences earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss.

D. It is understood that losses arising from a combination of two or more perils as a result of the same event shall be considered as having arisen from one "loss occurrence."  Notwithstanding the foregoing, the hourly limitations as stated in paragraph A shall not be exceeded as respects the applicable perils and no single "loss occurrence" shall encompass a time period greater than 168 consecutive hours.

Article 11 - Loss Notices and Settlements

A. Whenever losses paid or reserved by the Company appear likely, in the opinion of the Company, to result in a claim hereunder, the Company shall notify the Reinsurer, and the Company shall notify the Reinsurer of all subsequent developments that may materially affect the position of the Reinsurer.

B. The Company alone and at its full discretion shall adjust, settle or compromise all claims and losses subject to this Contract.  The Reinsurer shall be bound by the judgment of the Company as to the obligations and liabilities of the Company under any policy.

C. All loss settlements made by the Company, whether under strict policy terms or by way of compromise (including loss in excess of policy limits and extra contractual obligations) shall be binding upon the Reinsurer, and the Reinsurer agrees to pay or allow, as the case may be, all amounts for which it may be liable immediately upon receipt of reasonable evidence of the amount paid (or scheduled to be paid) by the Company.  The Company shall be the sole judge as to:

1. What constitutes a claim or loss covered under any policy;

2. The Company's liability thereunder;

3. The amount or amounts proper for the Company to pay thereunder.

D. A Special Circumstance Reinsurer shall not have the right to deny payment of a claim if the sum of the percentage shares of Active Subscribing Reinsurers that have paid the claim exceeds 50.0% of the sum of the percentage shares of all Active Subscribing Reinsurers.  "Active Subscribing Reinsurer" as used herein shall mean a Subscribing Reinsurer that is not a Special Circumstance Reinsurer as of the due date of the claim (as specified in the Late Payments Article).

Article 12 - Salvage and Subrogation

The Reinsurer shall be credited with salvage (i.e., reimbursement obtained or recovery made by the Company, less the actual cost, excluding salaries of officials and employees of the Company and sums paid to attorneys as retainer, of obtaining such reimbursement or making such recovery) on account of claims and settlements involving reinsurance hereunder.  Salvage thereon shall always be used to reimburse the excess carriers in the reverse order of their priority according to their participation before being used in any way to reimburse the Company for its primary loss.  The Company hereby agrees to enforce its rights to salvage or subrogation relating to any loss, a part of which loss was sustained by the Reinsurer, and to prosecute all claims arising out of such rights if, in the Company's opinion, it is reasonable to do so.

Article 13 - Reinsurance Premium

A. As premium for the reinsurance provided hereunder, the Company shall pay the Reinsurer 3.805% of the Company's net earned premium for the term of this Contract, subject to a minimum premium of $684,000.

B. The Company shall pay the Reinsurer a deposit premium of $855,000 in two equal installments of $427,500 on August 1 and October 1 of 2014.

C. Within 45 days after the expiration of this Contract, the Company shall provide a report to the Reinsurer setting forth the premium due hereunder, computed in accordance with paragraph A above, and any additional premium due the Reinsurer or return premium due the Company shall be remitted promptly.

D. For each amount of limit reinstated in accordance with the Reinstatement Article, the Company agrees to pay additional premium equal to the product of the following:

1. The percentage of the occurrence limit reinstated (based on the loss paid by the Reinsurer); times

2. The earned reinsurance premium, as calculated in accordance with paragraph C above, for the term of this Contract (exclusive of reinstatement premium).

E. Whenever the Company requests payment by the Reinsurer of any loss hereunder, the Company shall submit a statement to the Reinsurer of reinstatement premium due the Reinsurer.  If the earned reinsurance premium for the term of this Contract has not been finally determined as of the date of any such statement, the calculation of reinstatement premium due shall be based on the deposit premium and shall be readjusted when the earned reinsurance premium for the term of this Contract has been finally determined.  Any reinstatement premium shown to be due the Reinsurer as reflected by any such statement (less prior payments, if any) shall be payable by the Company concurrently with payment by the Reinsurer of the requested loss.  Any return reinstatement premium shown to be due the Company shall be remitted by the Reinsurer as promptly as possible after receipt and verification of the Company's statement.

F. In the event a Subscribing Reinsurer's participation in this Contract is terminated under the provisions of the Commencement and Termination Article, no deposit premium shall be due after the effective date of termination, the minimum premium shall be waived, and the reinsurance premium and reinstatement premium, if applicable, will be calculated in accordance with the following formulas:

1. Reinsurance premium shall be the number of days the Subscribing Reinsurer participates on this Contract divided by the number of days of the original term of this Contract and the quotient thereof shall be multiplied by the Subscribing Reinsurer's percentage share of the final adjusted premium reported in accordance with paragraph C above.

2. Reinstatement premium shall be the product of subparagraphs D(1) and F(1) above.

3. In the event the incurred loss is greater than the sum of subparagraphs F(1) and F(2) above, in lieu of the provisions of subparagraphs F(1) and F(2) above, the Subscribing Reinsurer will receive premium equal to the lesser of:

a. An amount equal to the Subscribing Reinsurer's percentage share of the full reinsurance premium calculated in accordance with paragraph A (without regard to the termination of the Subscribing Reinsurer's share in accordance with the provisions of the Commencement and Termination Article) plus any reinstatement premium calculated in accordance with subparagraph F(2) above; or

b. The Subscribing Reinsurer's percentage share of the incurred loss.

G. Within 45 days after the termination of this Contract, the Company shall provide a report to the Reinsurer setting forth the premium due hereunder, computed in accordance with paragraph F above, and any additional premium due the Reinsurer or return premium due the Company shall be remitted promptly.

H. "Net earned premium" as used herein shall mean gross earned premium of the Company for the classes of business reinsured hereunder, less the earned portion of premiums ceded by the Company for reinsurance which inures to the benefit of this Contract.

I. "Incurred loss" as used herein shall mean the Company's ceded ultimate net loss plus the Company's ceded outstanding loss and loss adjustment expense reserves (including all case reserves plus any reasonable amount estimated to be unreported from known loss occurrences as established by the Company).

Article 14 - Sanctions

Neither the Company nor any Subscribing Reinsurer shall be liable for premium or loss under this Contract if it would result in a violation of any mandatory sanction, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulations of the European Union, United Kingdom or United States of America that are applicable to either party.

Article 15 - Late Payments

A. The provisions of this Article shall not be implemented unless specifically invoked, in writing, by one of the parties to this Contract.

B. In the event any premium, loss or other payment due either party is not received by the intermediary named in the Intermediary Article (hereinafter referred to as the "Intermediary") by the payment due date, the party to which payment is due may, by notifying the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to pay, an interest charge on the amount past due calculated for each such payment on the last business day of each month as follows:

1. The number of full days which have expired since the due date or the last monthly calculation, whichever the lesser; times

2. 1/365th of the sum of 1.0% and the U.S. prime rate as quoted in The Wall Street Journal on the first business day of the month for which the calculation is made; times

3. The amount past due, including accrued interest.

It is agreed that interest shall accumulate until payment of the original amount due plus interest charges have been received by the Intermediary.

Notwithstanding the provisions of subparagraph 2 above and the immediately preceding sentence, the interest rate for a Special Circumstance Reinsurer will increase by 0.5% for every month that payment of the claim is past due, subject to a maximum annual interest rate of 7.0%.

C. If the interest rate provided under this Article exceeds the maximum interest rate allowed by any applicable law or is held unenforceable by a court of competent jurisdiction, such interest rate shall be modified to the highest rate permitted by the applicable law, and all remaining provisions of this Article and Contract shall remain in full force and effect without being impaired or invalidated in any way.

D. The establishment of the due date shall, for purposes of this Article, be determined as follows:

1. As respects the payment of routine deposits and premiums due the Reinsurer, the due date shall be as provided for in the applicable section of this Contract.  In the event a due date is not specifically stated for a given payment, it shall be deemed due 30 days after the date of transmittal by the Intermediary of the initial billing for each such payment.

2. Any claim or loss payment due the Company hereunder shall be deemed due 30 days after the proof of loss or demand for payment is transmitted to the Reinsurer.  If such loss or claim payment is not received within the 30 days, interest will accrue on the payment or amount overdue in accordance with paragraph B above, from the date the proof of loss or demand for payment was transmitted to the Reinsurer.

3. As respects any payment, adjustment or return due either party not otherwise provided for in subparagraphs 1 and 2 of this paragraph, the due date shall be as provided for in the applicable section of this Contract.  In the event a due date is not specifically stated for a given payment, it shall be deemed due 30 days following transmittal of written notification that the provisions of this Article have been invoked.

For purposes of interest calculations only, amounts due hereunder shall be deemed paid upon receipt by the Intermediary.

E. Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from contesting the validity of any claim, or from participating in the defense of any claim or suit, or prohibiting either party from contesting the validity of any payment or from initiating any arbitration or other proceeding in accordance with the provisions of this Contract.  If the debtor party prevails in an arbitration or other proceeding, then any interest charges due hereunder on the amount in dispute shall be null and void.  If the debtor party loses in such proceeding, then the interest charge on the amount determined to be due hereunder shall be calculated in accordance with the provisions set forth above unless otherwise determined by such proceedings.  If a debtor party advances payment of any amount it is contesting, and proves to be correct in its contestation, either in whole or in part, the other party shall reimburse the debtor party for any such excess payment made plus interest on the excess amount calculated in accordance with this Article.

F. Interest charges arising out of the application of this Article that are $250 or less from any party shall be waived unless there is a pattern of late payments consisting of three or more items over the course of any 12-month period.

Article 16 - Offset (BRMA 36C)

The Company and the Reinsurer shall have the right to offset any balance or amounts due from one party to the other under the terms of this Contract.  The party asserting the right of offset may exercise such right any time whether the balances due are on account of premiums or losses or otherwise.

Article 17 - Access to Records

A. Provided the Company has received at least five working days prior notice, the Reinsurer or its designated representatives shall have access during regular business hours to all records of the Company which pertain in any way to this reinsurance.  However, a Subscribing Reinsurer or its designated representatives shall not have any right of access to the records of the Company if it is not current in all undisputed payments due the Company.  "Undisputed" as used herein shall mean any amount that the Subscribing Reinsurer has not contested in writing to the Company specifying the reason(s) why the payments are disputed.

B. The provisions of this Article shall extend beyond the expiration or invalidation of this Contract, or the termination of a Subscribing Reinsurer's percentage share in this Contract, until all claims and losses hereunder are settled.

Article 18 - Liability of the Reinsurer

A. The liability of the Reinsurer shall follow that of the Company in every case, including judicial interpretation and policy reformation, and be subject in all respects to all the general and specific stipulations, clauses, waivers and modifications of the Company's policies and any endorsements thereon.  However, in no event shall this be construed in any way to provide coverage outside the terms and conditions set forth in this Contract.

B. Nothing herein shall in any manner create any obligations or establish any rights against the Reinsurer in favor of any third party or any persons not parties to this Contract.

Article 19 - Net Retained Lines (BRMA 32E)

A. This Contract applies only to that portion of any policy which the Company retains net for its own account (prior to deduction of any underlying reinsurance specifically permitted in this Contract), and in calculating the amount of any loss hereunder and also in computing the amount or amounts in excess of which this Contract attaches, only loss or losses in respect of that portion of any policy which the Company retains net for its own account shall be included.

B. The amount of the Reinsurer's liability hereunder in respect of any loss or losses shall not be increased by reason of the inability of the Company to collect from any other reinsurer(s), whether specific or general, any amounts which may have become due from such reinsurer(s), whether such inability arises from the insolvency of such other reinsurer(s) or otherwise.

Article 20 - Errors and Omissions

Inadvertent delays, errors or omissions made in complying with this Contract or any transaction hereunder shall not relieve either party from any liability which would have attached had such delay, error or omission not occurred, provided always that such error or omission is rectified as soon as possible after discovery.

Article 21 - Currency (BRMA 12A)

A. Whenever the word "Dollars" or the "$" sign appears in this Contract, they shall be construed to mean United States Dollars and all transactions under this Contract shall be in United States Dollars.

B. Amounts paid or received by the Company in any other currency shall be converted to United States Dollars at the rate of exchange at the date such transaction is entered on the books of the Company.

Article 22 - Taxes (BRMA 50B)

In consideration of the terms under which this Contract is issued, the Company will not claim a deduction in respect of the premium hereon when making tax returns, other than income or profits tax returns, to any state or territory of the United States of America or the District of Columbia.

Article 23 - Federal Excise Tax (BRMA 17D)

A. The Reinsurer has agreed to allow for the purpose of paying the Federal Excise Tax the applicable percentage of the premium payable hereon (as imposed under Section 4371 of the Internal Revenue Code) to the extent such premium is subject to the Federal Excise Tax.

B. In the event of any return of premium becoming due hereunder the Reinsurer will deduct the applicable percentage from the return premium payable hereon and the Company or its agent should take steps to recover the tax from the United States Government.

Article 24 - Foreign Account Tax Compliance Act

A. To the extent the Reinsurer is subject to the deduction and withholding of premium payable hereon as set forth in the Foreign Account Tax Compliance Act (Sections 1471-1474 of the Internal Revenue Code), the Reinsurer shall allow such deduction and withholding from the premium payable under this Contract.

B. In the event of any return of premium becoming due hereunder, the return premium will be determined and paid in full without regard to any amounts deducted or withheld under paragraph A of this Article.  In the event the Company or its agent recovers such premium deductions and withholdings on the return premium from the United States Government, the Company or its agent will reimburse the Reinsurer for such amounts.

Article 25 - Reserves

A. The Reinsurer agrees to fund its share of the Company's ceded outstanding loss and loss adjustment expense reserves (including all case reserves plus any reasonable amount estimated to be unreported from known loss occurrences as established by the Company), and any other outstanding balances which it shall be required by applicable regulation or law to set up under this Contract (the "funding obligation") by:

1. Clean, irrevocable and unconditional letters of credit issued and confirmed, if confirmation is required by the insurance regulatory authorities involved, by a bank or banks meeting the NAIC Securities Valuation Office credit standards for issuers of letters of credit and acceptable to said insurance regulatory authorities; and/or

2. Escrow accounts for the benefit of the Company; and/or

3. Cash advances;

if the Reinsurer:

1. Is unauthorized in any state of the United States of America or the District of Columbia and if, without such funding, a penalty would accrue to the Company on any financial statement it is required to file with the insurance regulatory authorities involved; or

2. Is a Special Circumstance Reinsurer.

The Reinsurer, at its sole option, may fund in other than cash if its method and form of funding are acceptable to the insurance regulatory authorities involved.

Notwithstanding the provisions of the Arbitration Article, if a Special Circumstance Reinsurer fails to fund its share of the funding obligation as set forth above, the Company retains its right to apply to a court of competent jurisdiction for equitable or interim relief.

B. With regard to funding in whole or in part by letters of credit, it is agreed that each letter of credit will be in a form acceptable to insurance regulatory authorities involved, will be issued for a term of at least one year and will include an "evergreen clause," which automatically extends the term for at least one additional year at each expiration date unless written notice of non-renewal is given to the Company not less than 30 days prior to said expiration date.  The Company and the Reinsurer further agree, notwithstanding anything to the contrary in this Contract, that said letters of credit may be drawn upon by the Company or its successors in interest at any time, without diminution because of the insolvency of the Company or the Reinsurer, but only for one or more of the following purposes:

1. To reimburse itself for the Reinsurer's share of losses and/or loss adjustment expense paid under the terms of policies reinsured hereunder, unless paid in cash by the Reinsurer;

2. To reimburse itself for the Reinsurer's share of any other amounts claimed to be due hereunder, unless paid in cash by the Reinsurer;

3. To fund a cash account in an amount equal to the Reinsurer's funding obligation funded by means of a letter of credit which is under non-renewal notice, if said letter of credit has not been renewed or replaced by the Reinsurer 10 days prior to its expiration date;

4. To refund to the Reinsurer any sum in excess of the actual amount required to fund the Reinsurer's funding obligation, if so requested by the Reinsurer.

In the event the amount drawn by the Company on any letter of credit is in excess of the actual amount required for B(1) or B(3), or in the case of B(2), the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn.

C. If a Subscribing Reinsurer fails to fulfill its funding obligation (if any) under this Article, the Company may, at its option, require the Subscribing Reinsurer to pay, and the Subscribing Reinsurer agrees to pay, an interest charge on the funding obligation calculated on the last business day of each month as follows:

1. The number of full days that have expired since the earliest of the applicable following dates:

a. As respects a Subscribing Reinsurer that is unauthorized in any state of the United States of America or District of Columbia having jurisdiction over the Company, December 31 of the calendar year in which the funding was required; or

b. As respects a Special Circumstance Reinsurer, the first date such reinsurer becomes a Special Circumstance Reinsurer;

times:

2. 1/365th of the sum of 4.0% and the U.S. prime rate as quoted in The Wall Street Journal on the first business day of the month for which the calculation is made; times

3. The greater of (a) the funding obligation, less the amount, if any, funded by the Subscribing Reinsurer prior to the applicable date determined in subparagraph 1 above or (b) $100,000.

It is agreed that interest shall accumulate until the full interest charge amount as provided for in this paragraph and the funding obligation are paid.

If the interest rate provided under this Article exceeds the maximum interest rate allowed by any applicable law or is held unenforceable by an arbitrator or a court of competent jurisdiction, such interest rate shall be modified to the highest rate permitted by the applicable law, and all remaining provisions of this Article and Contract shall remain in full force and effect without being impaired or invalidated in any way.

Article 26 - Insolvency

A. In the event of the insolvency of one or more of the reinsured companies, this reinsurance shall be payable directly to the company or to its liquidator, receiver, conservator or statutory successor on the basis of the liability of the company without diminution because of the insolvency of the company or because the liquidator, receiver, conservator or statutory successor of the company has failed to pay all or a portion of any claim.  It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the company shall give written notice to the Reinsurer of the pendency of a claim against the company indicating the policy or bond reinsured which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses that it may deem available to the company or its liquidator, receiver, conservator or statutory successor.  The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the Court, against the company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit which may accrue to the company solely as a result of the defense undertaken by the Reinsurer.

B. Where two or more reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this Contract as though such expense had been incurred by the company.

C. It is further understood and agreed that, in the event of the insolvency of one or more of the reinsured companies, the reinsurance under this Contract shall be payable directly by the Reinsurer to the company or to its liquidator, receiver or statutory successor, except as provided by Section 4118(a) of the New York Insurance Law or except (1) where this Contract specifically provides another payee of such reinsurance in the event of the insolvency of the company or (2) where the Reinsurer with the consent of the direct insured or insureds has assumed such policy obligations of the company as direct obligations of the Reinsurer to the payees under such policies and in substitution for the obligations of the company to such payees.

Article 27 - Arbitration

A. As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Contract, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration.  One Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's London Underwriters.  In the event that either party should fail to choose an Arbiter within 30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration.  If the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their appointment, the Umpire will be appointed within 10 days thereafter according to the ARIAS-U.S. (Association Internationale de Droit des Assurances (AIDA) Reinsurance and Insurance Arbitration Society) Umpire Appointment Procedure in effect at such time.  Notwithstanding the above, in the event the dispute or difference of opinion involves a Special Circumstance Reinsurer, the Company may, at its option, choose to forego arbitration and may bring an action in any court of competent jurisdiction.

B. Each party shall present its case to the Arbiters within 30 days following the date of appointment of the Umpire.  The Arbiters shall consider this Contract as an honorable engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law.  The decision of the Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties.  Judgment upon the final decision of the Arbiters may be entered in any court of competent jurisdiction and the Arbiters are empowered to grant interim relief as they may deem appropriate.

C. If more than one reinsurer is involved in the same dispute, all such reinsurers shall, at the option of the Company, constitute and act as one party for purposes of this Article and communications shall be made by the Company to each of the reinsurers constituting one party, provided, however, that nothing herein shall impair the rights of such reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the reinsurers participating under the terms of this Contract from several to joint.

D. Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with the other the expense of the Umpire and of the arbitration.  In the event that the two Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided between the two parties.

E. Any arbitration proceedings shall take place in Irving, Texas, or at a location mutually agreed upon by the parties to this Contract, but notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the law of the State of Texas.

Article 28 - Service of Suit (BRMA 49G)

(Applicable if the Reinsurer is not domiciled in the United States of America, and/or is not authorized in any State, Territory or District of the United States where authorization is required by insurance regulatory authorities)

A. This Article will not be read to conflict with or override the obligations of the parties to arbitrate their disputes as provided for in the Arbitration Article.  This Article is intended as an aid to compelling arbitration or enforcing such arbitration or arbitral award, not as an alternative to the Arbitration Article for resolving disputes arising out of this Contract.

B. In the event the Reinsurer fails to pay any amount claimed to be due hereunder, the Reinsurer, at the request of the Company, will submit to the jurisdiction of a court of competent jurisdiction within the United States.  Nothing in this Article constitutes or should be understood to constitute a waiver of the Reinsurer's rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States.  The Reinsurer, once the appropriate Court is accepted by the Reinsurer or is determined by removal, transfer or otherwise, as provided for above, will comply with all requirements necessary to give said Court jurisdiction and, in any suit instituted against any of the Subscribing Reinsurers upon this Contract, will abide by the final decision of such Court or of any Appellate Court in the event of an appeal.

C. Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefor, the Reinsurer hereby designates the party named in its Interests and Liabilities Agreement, or if no party is named therein, the Superintendent, Commissioner or Director of Insurance or other officer specified for that purpose in the statute, or his or her successor or successors in office, as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the Company or any beneficiary hereunder arising out of this Contract.

Article 29 - Confidentiality

A. The Reinsurer hereby acknowledges that the documents, information and data provided to it by the Company, whether directly or through an authorized agent, in connection with the placement and execution of this Contract ("Confidential Information") are proprietary and confidential to the Company.  Confidential Information shall not include documents, information or data that the Reinsurer can show:

1. Are publicly known or have become publicly known through no unauthorized act of the Reinsurer;

2. Have been rightfully received from a third person without obligation of confidentiality; or

3. Were known by the Reinsurer prior to the placement of this Contract without an obligation of confidentiality.

B. Absent the written consent of the Company, the Reinsurer shall not disclose any Confidential Information to any third parties, excluding any affiliated companies, except:

1. When required by retrocessionaires subject to the business ceded to this Contract;

2. When required by state regulators performing an audit of the Reinsurer's records and/or financial condition;

3. When required by external auditors performing an audit of the Reinsurer's records in the normal course of business; or

4. When required by attorneys or arbitrators in connection with an actual or potential dispute hereunder.

Further, the Reinsurer agrees not to use any Confidential Information for any purpose not related to the performance of its obligations or enforcement of its rights under this Contract.

C. Notwithstanding the above, in the event that the Reinsurer is required by court order, other legal process or any regulatory authority to release or disclose any or all of the Confidential Information, the Reinsurer agrees to provide the Company with written notice of same at least 10 days prior to such release or disclosure and to use its best efforts to assist the Company in maintaining the confidentiality provided for in this Article.

D. The provisions of this Article shall extend to the officers, directors and employees of the Reinsurer and its affiliates, and shall be binding upon their successors and assigns.

Article 30 - Agency Agreement

If more than one reinsured company is named as a party to this Contract, the first named company shall be deemed the agent of the other reinsured companies for purposes of sending or receiving notices required by the terms and conditions of this Contract, and for purposes of remitting or receiving any monies due any party.

Article 31 - Governing Law (BRMA 71B)

This Contract shall be governed by and construed in accordance with the laws of the State of Texas.

Article 32 - Severability (BRMA 72E)

If any provision of this Contract shall be rendered illegal or unenforceable by the laws, regulations or public policy of any state, such provision shall be considered void in such state, but this shall not affect the validity or enforceability of any other provision of this Contract or the enforceability of such provision in any other jurisdiction.

Article 33 - Entire Agreement

This written Contract constitutes the entire agreement between the parties hereto with respect to the business being reinsured hereunder, and there are no understandings between the parties hereto other than as expressed in this Contract.  Any change or modification to this Contract will be made by amendment to this Contract and signed by the parties hereto.

Article 34 - Notices and Contract Execution

A. Whenever a notice, statement, report or any other written communication is required by this Contract, unless otherwise specified, such notice, statement, report or other written communication may be transmitted by certified or registered mail, nationally or internationally recognized express delivery service, personal delivery, electronic mail, or facsimile.  With the exception of notices of termination, first class mail is also acceptable.

B. The use of any of the following shall constitute a valid execution of this Contract or any amendments thereto:

1. Paper documents with an original ink signature;

2. Facsimile or electronic copies of paper documents showing an original ink signature; and/or

3. Electronic records with an electronic signature made via an electronic agent.  For the purposes of this Contract, the terms "electronic record," "electronic signature" and "electronic agent" shall have the meanings set forth in the Electronic Signatures in Global and National Commerce Act of 2000 or any amendments thereto.

C. This Contract may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original.

Article 35 - Intermediary

Aon Benfield Inc., or one of its affiliated corporations duly licensed as a reinsurance intermediary, is hereby recognized as the Intermediary negotiating this Contract for all business hereunder.  All communications (including but not limited to notices, statements, premiums, return premiums, commissions, taxes, losses, loss adjustment expense, salvages and loss settlements) relating to this Contract will be transmitted to the Company or the Reinsurer through the Intermediary.  Payments by the Company to the Intermediary will be deemed payment to the Reinsurer.  Payments by the Reinsurer to the Intermediary will be deemed payment to the Company only to the extent that such payments are actually received by the Company.

In Witness Whereof, the Company by its duly authorized representative has executed this Contract as of the date specified below:

This ________________ day of ____________________________ in the year ____________.

Homeowners of America Insurance Company (for and on behalf of the "Company")

_______________________________________________________

14\H00H1058 Page

Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance (U.S.A.)

1. This Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or Nuclear Energy risks.

2. Without in any way restricting the operation of paragraph (1) of this Clause, this Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any insurance against Physical Damage (including business interruption or consequential loss arising out of such Physical Damage) to:

I. Nuclear reactor power plants including all auxiliary property on the site, or

II. Any other nuclear reactor installation, including laboratories handling radioactive materials in connection with reactor installations, and "critical facilities" as such, or

III. Installations for fabricating complete fuel elements or for processing substantial quantities of "special nuclear material," and for reprocessing, salvaging, chemically separating, storing or disposing of "spent" nuclear fuel or waste materials, or

IV. Installations other than those listed in paragraph (2) III above using substantial quantities of radioactive isotopes or other products of nuclear fission.

3. Without in any way restricting the operations of paragraphs (1) and (2) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance on property which is on the same site as a nuclear reactor power plant or other nuclear installation and which normally would be insured therewith except that this paragraph (3) shall not operate

(a) where Reassured does not have knowledge of such nuclear reactor power plant or nuclear installation, or

(b) where said insurance contains a provision excluding coverage for damage to property caused by or resulting from radioactive contamination, however caused.  However on and after 1st January 1960 this sub-paragraph (b) shall only apply provided the said radioactive contamination exclusion provision has been approved by the Governmental Authority having jurisdiction thereof.

4. Without in any way restricting the operations of paragraphs (1), (2) and (3) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, when such radioactive contamination is a named hazard specifically insured against.

5. It is understood and agreed that this Clause shall not extend to risks using radioactive isotopes in any form where the nuclear exposure is not considered by the Reassured to be the primary hazard.

6. The term "special nuclear material" shall have the meaning given it in the Atomic Energy Act of 1954 or by any law amendatory thereof.

7. Reassured to be sole judge of what constitutes:

(a) substantial quantities, and

(b) the extent of installation, plant or site.

Note.-Without in any way restricting the operation of paragraph (1) hereof, it is understood and agreed that

(a) all policies issued by the Reassured on or before 31st December 1957 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.

(b) with respect to any risk located in Canada policies issued by the Reassured on or before 31st December 1958 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.

12/12/57

N.M.A. 1119

BRMA 35B

14\H00H1058

Pools, Associations and Syndicates Exclusion Clause

Section A:

Excluding:

(a) All business derived directly or indirectly from any Pool, Association or Syndicate which maintains its own reinsurance facilities.

(b) Any Pool or Scheme (whether voluntary or mandatory) formed after March 1, 1968 for the purpose of insuring property whether on a country-wide basis or in respect of designated areas.  This exclusion shall not apply to so-called Automobile Insurance Plans or other Pools formed to provide coverage for Automobile Physical Damage.

Section B:

It is agreed that business written by the Company for the same perils, which is known at the time to be insured by, or in excess of underlying amounts, whether by way of insurance or reinsurance, by any Pool, Association or Syndicate formed for the purpose of writing:

Oil, Gas or Petro-Chemical Plants

Oil or Gas Drilling Rigs; and/or

Aviation Risks;

is excluded hereunder.

Section B does not apply:

(a) Where the Total Insured Value over all interests of the risk in question is less than $250,000,000.

(b) To interests traditionally underwritten as Inland Marine or stock and/or contents written on a blanket basis.

(c) To Contingent Business Interruption, except when the Company is aware that the key location is known at the time to be insured in any Pool, Association or Syndicate named above, other than as provided for under Section B(a).

(d) To risks as follows:

Offices, Hotels, Apartments, Hospitals, Educational Establishments, Public Utilities (other than railroad schedules) and builder's risks on the classes of risks specified in this subsection (d) only.

Where this clause attaches to Catastrophe Excesses, the following Sections C and D are added:

Section C:

Nevertheless the Reinsurer specifically agrees that liability accruing to the Company from its participation in residual market mechanisms including but not limited to:

(1) The following so-called "Coastal Pools":

Alabama Insurance Underwriting Association

Louisiana Citizens Property Insurance Corporation

Mississippi Windstorm Underwriting Association

North Carolina Insurance Underwriting Association

South Carolina Windstorm and Hail Underwriting Association

Texas Windstorm Insurance Association

AND

(2) All "Fair Plan" and "Rural Risk Plan" business

AND

(3) Citizens Property Insurance Corporation ("CPIC") and the California Earthquake Authority ("CEA")

for all perils otherwise protected hereunder shall not be excluded, except, however, that this reinsurance does not include any increase in such liability resulting from:

(i) The inability of any other participant in such "Coastal Pool" and/or "Fair Plan" and/or "Rural Risk Plan" and/or Residual Market Mechanisms to meet its liability.

(ii) Any claim against such "Coastal Pool" and/or "Fair Plan" and/or "Rural Risk Plan" and/or Residual Market Mechanisms, or any participant therein, including the Company, whether by way of subrogation or otherwise, brought by or on behalf of any insolvency fund.

Section D:

(1) Notwithstanding Section C above, in respect of the CEA, where an assessment is made against the Company by the CEA, the Company may include in its Ultimate Net Loss only that assessment directly attributable to each separate loss occurrence covered hereunder.  The Company's initial capital contribution to the CEA shall not be included in the Ultimate Net Loss.

(2) Notwithstanding Section C above, in respect of CPIC, where an assessment is made against the Company by CPIC, the maximum loss that the Company may include in the Ultimate Net Loss in respect of any loss occurrence hereunder shall not exceed the lesser of:

(a) The Company's assessment from CPIC for the accounting year in which the loss occurrence commenced, or

(b) The product of the following:

(i) The Company's percentage participation in CPIC for the accounting year in which the loss occurrence commenced; and

(ii) CPIC's total losses in such loss occurrence.

Notwithstanding Section C above, in respect of CPIC, the Ultimate Net Loss hereunder shall not include any monies expended to purchase or retire bonds as a consequence of being a member of CPIC.  For the purposes of this Contract, the Company may not include in the Ultimate Net Loss any assessment or any percentage assessment levied by CPIC to meet the obligations of an insolvent insurer member or other party, or to meet any obligations arising from the deferment by CPIC of the collection of monies.

NOTES: Wherever used herein the terms:

"Company" shall be understood to mean "Company," "Reinsured," "Reassured" or whatever other term is used in the attached reinsurance document to designate the reinsured company or companies.

"Agreement" shall be understood to mean "Agreement," "Contract," "Policy" or whatever other term is used to designate the attached reinsurance document.

"Reinsurers" shall be understood to mean "Reinsurers," "Underwriters" or whatever other term is used in the attached reinsurance document to designate the reinsurer or reinsurers.

14\H00H1058

Page of 2

Pollution and Seepage Exclusion Clause

This Contract excludes loss and/or damage and/or costs and/or expenses arising from seepage and/or pollution and/or contamination, other than contamination from smoke.  Nevertheless, this exclusion does not preclude payment of the cost of removing debris of property damaged by a loss otherwise covered hereunder, subject always to a limit of 25.0% of the Company's property loss under the applicable original policy.

BRMA 39A

14\H00H1058

Terrorism Exclusion

(Property Treaty Reinsurance)

Notwithstanding any provision to the contrary within this Contract or any amendment thereto, it is agreed that this Contract excludes loss, damage, cost or expense directly or indirectly caused by, contributed to by, resulting from, or arising out of or in connection with any act of terrorism, as defined herein, regardless of any other cause or event contributing concurrently or in any other sequence to the loss.

An act of terrorism includes any act, or preparation in respect of action, or threat of action designed to influence the government de jure or de facto of any nation or any political division thereof, or in pursuit of political, religious, ideological or similar purposes to intimidate the public or a section of the public of any nation by any person or group(s) of persons whether acting alone or on behalf of or in connection with any organization(s) or government(s) de jure or de facto, and which:

1. Involves violence against one or more persons; or

2. Involves damage to property; or

3. Endangers life other than that of the person committing the action; or

4. Creates a risk to health or safety of the public or a section of the public; or

5. Is designed to interfere with or to disrupt an electronic system.

This Contract also excludes loss, damage, cost, or expense directly or indirectly caused by, contributed to by, resulting from, or arising out of or in connection with any action in controlling, preventing, suppressing, retaliating against, or responding to any act of terrorism.

Notwithstanding the above and subject otherwise to the terms, conditions, and limitations of this Contract, in respect only of personal lines this Contract will pay actual loss or damage (but not related cost or expense) caused by any act of terrorism provided such act is not directly or indirectly caused by, contributed to by, resulting from, or arising out of or in connection with biological, chemical, radioactive or nuclear pollution or contamination or explosion.

N.M.A. 2930c

22/11/02

Form approved by Lloyd's Market Association [Non-Marine]

14\H00H1058

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO

SECTION 302 OF THE SARBANES OXLEY ACT OF 2002

I, Spencer Tucker, certify that:

1. I have reviewed this report on Form 10-Q for the quarter ended September 30, 2014 of Homeowners of America Holding Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

November 14, 2014

/s/ Spencer Tucker

Name: Spencer Tucker

Title: Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO

SECTION 302 OF THE SARBANES OXLEY ACT OF 2002

I, Michael C. Rosentraub, certify that:

1. I have reviewed this report on Form 10-Q for the quarter ended September 30, 2014 of Homeowners of America Holding Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

November 14, 2014

/s / Michael C. Rosentraub

Name: Michael C. Rosentraub

Title: Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Homeowners of America Corporation. (the "Company") on Form 10-Q for the fiscal period ended September 30, 2014 as filed with the Securities and Exchange Commission (the "Report"), the undersigned principal executive officer and principal financial officer of the Company, each hereby certify, solely for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

1.	The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Spencer Tucker		/s/ Michael C. Rosentraub
Spencer Tucker		Michael C. Rosentraub
Chief Executive Officer		Chief Financial Officer
November 14, 2014		November 14, 2014

The foregoing certification is being furnished (but not filed) solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

XML

RELATED PARTY TRANSACTIONS (Details) (USD $)	1 Months Ended	9 Months Ended	1 Months Ended	3 Months Ended		9 Months Ended	1 Months Ended	9 Months Ended
	Aug. 31, 2013 Inter-Atlantic Advisors III, Ltd. [Member]	Sep. 30, 2014 Inter-Atlantic Advisors III, Ltd. [Member]	Aug. 31, 2013 Inter-Atlantic Advisors III, Ltd. [Member] Annual Advisory Fee [Member]	Sep. 30, 2014 Inter-Atlantic Advisors III, Ltd. [Member] Annual Advisory Fee [Member]	Sep. 30, 2013 Inter-Atlantic Advisors III, Ltd. [Member] Annual Advisory Fee [Member]	Sep. 30, 2013 Inter-Atlantic Advisors III, Ltd. [Member] Annual Advisory Fee [Member]	Aug. 31, 2013 Inter-Atlantic Advisors III, Ltd. [Member] Annual Grant of Shares [Member]	Sep. 30, 2014 Directors [Member] Annual Grant of Shares [Member]	Sep. 30, 2014 Inter-Atlantic Advisors III, Ltd. and Directors [Member] Annual Advisory Fee [Member]
Related Party Transaction [Line Items]
Initial term of Advisory Agreement		6 years
Number of days notice required for termination of Advisory Agreement	60 days
Related party transaction amount			$ 300,000	$ 75,000	$ 50,000	$ 50,000	$ 150,000		$ 375,000
Common stock issued								$ 150,000
Shares of common stock issued (in shares)								288,462

XML

REINSURANCE, Reinsurance Agreements (Details) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2014 Occurence	Dec. 31, 2013 Occurence
Property Insurance Treaties on Any One Loss Occurrence not to Exceed $110,000,000 [Member] | Treaties from April 1, 2014 through March 31, 2015 [Member] | Maximum [Member]
Effects of Reinsurance [Line Items]
Percentage reinsured (in hundredths)	80.00%
Reinsurance recoverables on losses and LAE	$ 110,000,000
Property Insurance Treaties on Any One Loss Occurrence not to Exceed $40,000,000 [Member] | Treaties from April 1, 2014 through March 31, 2015 [Member] | Maximum [Member]
Effects of Reinsurance [Line Items]
Percentage reinsured (in hundredths)	10.00%
Reinsurance recoverables on losses and LAE	4,000,000
Casualty Insurance Treaties [Member] | Treaties from April 1, 2014 through March 31, 2015 [Member] | Maximum [Member]
Effects of Reinsurance [Line Items]
Percentage reinsured (in hundredths)	64.00%
Residential Quota Share Reinsurance Treaties [Member] | Treaties from April 1, 2013 through March 31, 2014 [Member]
Effects of Reinsurance [Line Items]
Percentage reinsured (in hundredths)	90.00%
Number of layers for reinsurance	4
Gross loss covered	76,000,000
Retention payable, total	4,000,000
Net retention amount under reinsurance liability	400,000
Residential Quota Share Reinsurance Treaties [Member] | Treaties from April 1, 2013 through March 31, 2014 [Member] | Maximum [Member]
Effects of Reinsurance [Line Items]
Reinsurance recoverables on losses and LAE	80,000,000
Property Catastrophe Treaties [Member] | Treaties from April 1, 2014 through March 31, 2015 [Member]
Effects of Reinsurance [Line Items]
Percentage reinsured (in hundredths)	20.00%
Number of layers for reinsurance	4
Gross loss covered	110,000,000
Retention payable, total	4,000,000
Net retention amount under reinsurance liability	400,000
Property Catastrophe Treaties [Member] | Treaties from August 1, 2014 through November 30, 2014 [Member]
Effects of Reinsurance [Line Items]
Gross loss covered	140,000,000
Retention payable, total	4,000,000
Net retention amount under reinsurance liability	400,000
Non-Weather Losses [Member]
Effects of Reinsurance [Line Items]
Gross loss covered	500,000	500,000
Net loss covered	$ 50,000	$ 50,000
Number of loss occurrences	2	2

XML

EARNINGS (LOSS) PER SHARE (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Basic earnings per common share [Abstract]
Net income	$ 996,590	$ 660,919	$ 1,957,671	$ 1,184,091
Cumulative dividend	0	(255,215)	0	(974,179)
Adjusted net income	996,590	405,704	1,957,671	209,912
Weighted average common shares outstanding (in shares)	16,162,352	6,735,384	16,112,634	3,745,128
Basic earnings per common share	$ 0.06	$ 0.06	$ 0.12	$ 0.06
Diluted earnings per common share [Abstract]
Net income	996,590	660,919	1,957,671	1,184,091
Add interest expense on covertible promissory notes	0	11,482	0	0
Adjusted net income	996,590	672,401	1,957,671	1,184,091
Weighted average common shares outstanding (in shares)	16,162,352	16,728,462	16,112,634	3,745,128
Effect of diluted securities [Abstract]
Stock Options (in shares)	942,250	702,500	942,250	0
Diluted common shares outstanding (in shares)	17,104,602	17,430,962	17,054,884	3,745,128
Diluted earnings per common share	$ 0.06	$ 0.04	$ 0.11	$ 0.06
Interest on convertible debt net of tax excluded from computation of diluted earnings per share				$ 44,211
Antidilutive securities excluded from computation of earnings per share (in shares)				13,985,834

XML

REINSURANCE, Effects of Reinsurance on Premiums Written and Earned (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
REINSURANCE [Abstract]
Direct premiums, Written	$ 21,057,409	$ 16,398,118	$ 54,973,994	$ 43,370,380
Ceded premiums, Written	(18,648,417)	(14,641,816)	(48,567,557)	(38,659,828)
Net Premiums, Written	2,408,992	1,756,302	6,406,437	4,710,552
Direct premiums, Earned	16,893,086	13,643,436	46,933,714	39,037,947
Ceded premiums, Earned	(16,046,107)	(12,390,289)	(43,539,301)	(35,494,253)
Net premiums earned	$ 846,979	$ 1,253,147	$ 3,394,413	$ 3,543,694

XML

CONVERTIBLE NOTES PAYABLE (Details) (USD $)	3 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2013	Sep. 30, 2013	Dec. 31, 2013	Dec. 31, 2013 Inter-Atlantic Fund, L.P [Member]	Dec. 31, 2013 Phoenix Associates, Inc [Member]
Debt Instrument [Line Items]
Convertible notes payable, total				$ 950,000	$ 50,000
Debt instrument, interest rate, stated percentage (in hundredths)			10.00%
Debt instrument interest rate on default (in hundredths)			12.50%
Debt conversion, converted instrument, shares issued (in shares)				2,306,152	124,988
Interest expense, debt, total	$ 17,397	$ 68,630

XML

STOCK BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2014

STOCK BASED COMPENSATION [Abstract]

Stock option plan activity

A summary of the activity of the Company's stock option plan for the three and nine months ended September 30, 2014 and September 30, 2013 is as follows:

	Number of Options		Weighted Avg Exercise Price		Weighted Avg Remaining Cont. Term		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2013		2,708,750	$	0.58		8.41	$	4
Outstanding at March 31, 2014		2,708,750	$	0.58		8.16	$	21
Outstanding at June 30, 2014		2,708,750	$	0.58		7.91	$	22
Outstanding at September 30, 2014		2,738,500	$	0.59		7.57	$	21
Exercisable at September 30, 2014		942,250	$	0.73		5.14	$	5
Outstanding at December 31, 2012		783,750	$	0.78		5.91	$	-
Outstanding at March 31, 2013		783,750	$	0.78		5.66	$	-
Outstanding at June 30, 2013		783,750	$	0.78		5.41	$	-
Outstanding at September 30, 2013		783,750	$	0.78		5.16	$	-
Exercisable at September 30, 2013		702,500	$	0.80		4.90	$	-

Stock-based compensation expense

The Company records stock-based compensation expense related to granting stock options in general and administrative expenses. The Company recognized compensation expense as follows for the three and nine months ended September 30, 2014 and 2013:

	Three Months Ended September 30,							Nine Months Ended September 30,
	2014				2013			2014				2013
Total gross compensation expense		$	8,719			$	-		$	52,887			$	-
Total tax benefit associated with compensation expense			(172	)			-			(7,507	)			-
Total net compensation expense		$	8,547			$	-		$	45,380			$	-

Future compensation expense

As of September 30, 2014, the Company expects to record compensation expense in the future as follows:

	Three			Year ending December 31,
	months
	ending
	December 31, 2014			2015			2016			2017			2018			2019
Total gross unrecognized compensation expense	$	8,736		$	34,944		$	34,944		$	34,944		$	28,365		$	81
Tax benefit associated with unrecognized compensation expense		(172	)		(686	)		(686	)		(686	)		(556	)		-
Total net unrecognized compensation expense	$	8,564		$	34,258		$	34,258		$	34,258		$	27,809		$	81

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COMMITMENTS AND CONTINGENCIES (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
COMMITMENTS AND CONTINGENCIES [Abstract]
Operating leases, rent expense	$ 47,776	$ 33,961	$ 125,341	$ 100,396
2014 (3 months)	41,712		41,712
2015	166,848		166,848
2016	174,709		174,709
2017	91,284		91,284
2018	22,188		22,188
2019	12,519		12,519
Total	$ 509,260		$ 509,260

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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2014

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Principles of consolidation

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Homeowners of America Holding Corporation and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). Certain reclassifications of prior year amounts have been made to conform to the current year presentation.

Restatement of Prior Year Amounts

Restatement of Prior Year Amounts

In conjunction with our Annual Report on Form 10-K for the year ended December 31, 2013 filed with the Securities and Exchange Commission on March 31, 2014, we restated the unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2013.  These restatements resulted in money market mutual fund accounts held at financial institutions which were previously classified as short-term investments to be now classified as cash and cash equivalents. In addition, checks issued in excess of cash book balances, not yet presented for payment, which were previously classified as cash and cash equivalents are now classified as general and other accrued expenses payable.

	Nine Months Ended September 30, 2013
	As Previously Reported			Adjustment		As Restated
Consolidated Statements of Cash Flows:
Cash flows from operating activities
General and other accrued expenses	$	52,117		$	1,786,733	$	1,838,850
Net cash used in operating activities		(2,813,808	)		1,786,733		(1,027,075	)
Cash flows from investing activities
Purchases of short term investments		(5,932,051	)		4,491,856		(1,440,195	)
Net cash used in investing activities		(5,372,355	)		4,491,856		(880,499	)
Net decrease in cash and cash equivalents		(8,191,563	)		6,278,589		(1,912,974	)
Cash and cash equivalents, beginning of period		10,194,375			-		10,194,375
Cash and cash equivalents, end of period	$	2,002,812		$	6,278,589	$	8,281,401

Cash and cash equivalents

Cash and Cash Equivalents

Cash and cash equivalents include cash and highly liquid short-term investments, with original maturities of three months or less. The amount is carried at cost, which approximates fair value. At September 30, 2014 and December 31, 2013, cash and cash equivalents consist of cash on deposit with financial institutions, as well as money market mutual funds.

General and other accrued expenses payable as of September 30, 2014 and December 31, 2013, include $4.7 million and $1.2 million, respectively, of checks issued in excess of cash book balances, not yet presented for payment.

Investments

Investments

The Company's investments are comprised of short-term, restricted, and long-term investments and fixed-maturity securities classified as available-for-sale as of September 30, 2014 and short-term, restricted, and long-term investments as of December 31, 2013. Restricted investments and long-term investments are described below. Short-term investments include certificates of deposit with original maturities greater than three months and maturities of one year or less. Due to the short-term nature of these investments, significant changes in prevailing interest rates and economic conditions should not adversely affect the timing and amount of cash flows on such investments or their related values. Accordingly, certificates of deposit are carried at cost, which approximates fair value. Fixed-maturity securities are classified as available-for-sale when it is not management's intent to make profits by buying and selling the securities within a short period of time or when it is not management's intent to hold the securities to maturity.  Fixed-maturity securities classified as available-for-sale are carried at fair value. The unrealized holding gains and losses, net of applicable deferred income taxes, are shown as a separate component of stockholders' equity as a part of accumulated other comprehensive income (loss) and, as such, are not included in the determination of net income (loss).

As of September 30, 2014 and December 31, 2013, the Company has pledged to the Department of Insurance in certain states as a condition of its Certificate of Authority for the purpose of meeting obligations to policyholders and creditors $3.3 million and $1.0 million, respectively. Restricted assets are shown separately in the accompanying consolidated balance sheets as "Restricted cash and investments" and include money market accounts and certificates of deposits. "Restricted fixed-maturity securities, classified as available-for-sale" are shown separately in the accompanying consolidated balance sheets and recorded at fair value. With the approval of the Departments of Insurance, the Company may exchange the investments with other funds or investments. In respect to certificates of deposit, management intends to hold the portion of these restricted investments to their maturity. As such, these restricted certificates of deposit are carried at cost, which approximates fair value. Interest earned on these investments inures to the benefit of the Company.

The following table provides the Company's restricted cash and investments as of September 30, 2014 and December 31, 2013.

Restricted cash and investments	September 30, 2014		December 31, 2013
Money Market	$	300,000	$	215,000
Certificates of Deposit		2,500,000		785,000
US Treasury Bond		539,435		-
	$	3,339,435	$	1,000,000

As of September 30, 2014 and December 31, 2013, the Company's investments also included certificates of deposit that mature more than one year after the balance sheet date and are reflected on the consolidated balance sheets as Long-term investments. Based on management's intent to hold to maturity, this investment is carried at cost. Cost approximates fair value based on the rates currently offered for deposits of similar remaining maturities.

The Company's investments in certificates of deposits and money market accounts do not qualify as securities as defined in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 320, Investment – Debt and Equity Securities. Accordingly, the fair value disclosures required by FASB ASC Topic 820, Fair Value Measurements and Disclosures are not provided. The Company's fixed-maturity securities classified as available-for-sale are "marked to market" as of the end of each calendar quarter.  As of that date, unrealized gains and losses are recorded to Accumulated Other Comprehensive Income, except where such securities are deemed to be other-than-temporarily impaired. Where applicable, the Company assesses investments of an issuer currently carrying a net unrealized loss. If in management's judgment, the decline in value is other than temporary, the cost of the investment is written down to fair value with a corresponding charge to earnings. Factors considered in determining whether an impairment exists include financial condition, business prospects and creditworthiness of the issuer, the length of time and magnitude that the asset value has been less than cost, and the ability and intent to hold such investments until the fair value recovers.

Comprehensive Income

Comprehensive Income

FASB ASC Topic 220 - Comprehensive Income, requires that recognized revenues, expenses, gains and losses be included in net income (loss). Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the consolidated balance sheet, these items, along with net income (loss), are components of comprehensive income. The Company characterizes their fixed income portfolio as available-for-sale securities when it is not management's intent to make profits by buying and selling the securities within a short period of time or when it is not management's intent to hold the securities to maturity, with appropriate adjustments to other comprehensive income. For the three and nine months ended September 30, 2014, the Company recorded $4,012 and $9,164, respectively of unrealized gains on available-for-sale securities in other comprehensive income.  There were no qualifying items reported in other comprehensive income for the three and nine months ended September 30, 2013.

Recognition of Premium Revenues

Recognition of Premium Revenues

Premiums are recognized as revenue on a daily pro rata basis over the policy term. The portion of premiums related to the unexpired term of policies in force as of the end of the measurement period and to be earned over the remaining term of those polices, is deferred and reported as unearned premiums.

Ceding Commission and Reinsurance Profit Share

Ceding Commissions and Reinsurance Profit Share

Ceding commissions represent acquisition costs associated with insurance risk ceded to reinsurers and is earned on a pro-rata basis over the life of the associated policy. Reinsurance profit share is additional ceding commissions payable to the Company based upon attaining specified loss ratios within individual treaty years.  Reinsurance profit share income is recognized when earned, which includes adjustments to earned reinsurance profit share based on changes in incurred losses.

Policy Fees

Policy Fees

Policy fee income includes application fees which are intended to reimburse the Company for a portion of the costs incurred in establishing the insurance. Policy fees on policies where premium is traditionally paid in full upon inception of the policy are recognized when written, while fees charged on policies where premiums are paid in installments, are recognized when collected.

Loss Adjustment and Other Fee Income

Loss Adjustment and Other Fee Income

Loss adjustment and other fee income is recognized as income when collected. There is no amount over 5% of total revenue within this classification on the consolidated statements of operations for the three months ended September 30, 2014 and 2013 and for the nine months ended September 30, 2014. Loss adjustment fee income for the nine months ended September 30, 2013 was in excess of 5%, of total revenue within this classification on the consolidated statements of operations.

Property, Equipment and Software

Property, Equipment and Software

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets, which range from three to five years. The cost and related accumulated depreciation of assets sold or disposed are removed from the accounts and the resulting gain or loss is included in the consolidated statements of operations. Maintenance and repairs are expensed as incurred.

Software installation and development is stated at cost, net of accumulated amortization. Amortization is calculated on a straight-line basis method over three years.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

Long-lived assets, such as property, equipment and software, are reviewed for impairment whenever business events or circumstances could lead to or indicate that the value of the asset may not be recoverable. The assessment of possible impairment is based on whether the carrying amount of the assets exceeds its fair value. The Company uses estimates of undiscounted future cash flows in determining the recoverability of long-lived assets. As of September 30, 2014 and December 31, 2013, no impairment has been recorded.

Deferred Policy and Acquisition Costs

Deferred Policy and Acquisition Costs

Deferred policy acquisitions costs ("DAC") as of September 30, 2014 and December 31, 2013, consist of commissions, premium taxes and policy underwriting and production expenses which are incurred through and vary directly with, the level of production of new and renewal insurance business and are amortized over the terms of the policies they relate to. The method used in calculating DAC limits the amount of the deferred cost to their estimated realizable value, which gives effect to allocating their expense along with other period costs associated with the insurance business, in relation to the amount of gross premium earned on policies to which they relate and investment income. DAC is reviewed to determine if it is recoverable from future income, including investment income. The amount of DAC considered recoverable could be reduced in the near term if estimates of future premium income from their related lines of insurance are revised.

Reserve for Losses and Loss Adjustment Expenses

Reserve for Losses and Loss Adjustment Expenses

The liability for losses and loss adjustment expenses ("LAE") are estimates of the amounts required to cover known incurred losses and LAE, developed through the review and assessment of loss reports, along with the development of known claims. In addition, loss and loss adjustment expense reserves include management's estimate of an amount for losses incurred but not reported ("IBNR"), determined from reviewing overall loss reporting patterns as well as the loss development cycles of individual claim cases. Such liabilities are necessarily based on estimates and while management believes that the amount is adequate, the ultimate liability may be more or less than the amounts provided. The approach and methods for making such estimates and for establishing the resulting liability are continually reviewed and any adjustments are reflected in current earnings.

Due and Deferred Premiums

Due and Deferred Premiums

Due and deferred premiums consist of uncollateralized premiums and agents' balances in the course of collection as well as premiums booked but not yet due.

Reinsurance

Reinsurance

In the normal course of business, the Company seeks to reduce the overall exposure to losses that may arise from catastrophes or other events that cause unfavorable underwriting results by reinsuring certain levels of risk with other insurance enterprises or reinsurers. The Company uses only quality, financially rated reinsurers and continually monitors the financial ratings of these companies through its brokers. The amount and type of reinsurance purchased each year is based on management's estimate of its probable maximum loss and the conditions within the reinsurance market. The Company continually monitors its risk exposure through the use of the AIR modeling system and other modeling tools provided by its reinsurance brokers. Reinsurance premiums, expense reimbursements, and reserves related to reinsured business are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Premiums paid for reinsurance are reported as reductions of earned premium income.

Income Taxes

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss carryforwards, and liabilities are measured using enacted tax rates expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  In assessing the realizable value of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

Uncertain Tax Positions

Uncertain Tax Positions

The Company recognizes uncertain tax positions in the consolidated financial statements when it is more-likely-than-not the position will be sustained upon examination by the tax authorities. Such tax positions are initially and subsequently measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. The Company believes that it has appropriate support for the income tax positions taken and to be taken on its tax returns, and that its accruals for tax liabilities are adequate for all open tax years based on an assessment of many factors including experience and interpretations of tax laws applied to the facts of each matter. At September 30, 2014, the Company's tax years from 2010 through 2013 remain subject to examination.

Estimates

Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company's primary areas of estimate are for liabilities for unpaid losses and loss adjustment expenses, deferred policy acquisition costs, deferred tax asset valuation, and reinsurance. Actual results could differ significantly from those estimates.

Fair Value Cash, Cash Equivalents and Short-term Investments

Fair Value of Cash, Cash Equivalents and Short-term Investments

The carrying value for the Company's cash and cash equivalents and short-term investments approximate fair values as of September 30, 2014 and December 31, 2013 due to their short-term nature. Fair value for securities are based on the framework for measuring fair value established by FASB ASC Topic 820, Fair Value Measurements and Disclosures.

Fair Value of Fixed-Maturity Securities held as Available-for-Sale

Fair Value Fixed-Maturity Securities held as Available-for-Sale

The Company's fixed-maturity securities held as available-for-sale are carried at fair value as of September 30, 2014. Fair value for securities are based on the framework for measuring fair value established by FASB ASC Topic 820, Fair Value Measurements and Disclosures.

Convertible Notes Payable

Convertible Notes Payable

The Company accounts for convertible notes payable under FASB ASC Topic 470-20 – Debt with Conversion and Other Options, which requires issuers to assess whether or not an embedded conversion feature is required to be separately accounted for as a derivative liability for liability and equity components and if the conversion feature is beneficial to the holder. See Note 9 on Convertible Notes Payable for additional disclosure.

Stock Based Compensation

Stock Based Compensation

The Company accounts for stock-based compensation under the fair value recognition provisions of FASB ASC Topic 718 – Compensation – Stock Compensation, which requires the measurement and recognition of compensation for all stock-based awards made to employees and directors including stock options and restricted stock issuances based on estimated fair values. In accordance with FASB ASC Topic 718, the Company recognizes stock-based compensation, if any, in the consolidated statements of operations on a straight line basis over the vesting period of the stock award.  For those stock awards vesting 100% at the issue date, the Company recognizes stock-based compensation immediately.

Earnings (Loss) Per Share

Earnings (Loss) Per Share

Basic earnings (loss) per share of common stock is computed by dividing net income or loss, less cumulative preferred stock dividends for the period whether or not earned or paid, by the weighted-average number of common shares during the period.

Diluted earnings (loss) per share of common stock is computed by dividing net income or loss attributable to common stockholders, adjusted for the effect of potentially dilutive securities, by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include convertible notes payable, outstanding convertible preferred stock and common stock options.

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STOCK BASED COMPENSATION, Stock Option Plan (Details) (Management Incentive Plan 2005 and Equity Compensation Plan 2013 [Member], Employee Stock Option [Member], USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended				6 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2014	Mar. 31, 2014	Sep. 30, 2013	Mar. 31, 2013	Jun. 30, 2014	Jun. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Dec. 31, 2012
Management Incentive Plan 2005 and Equity Compensation Plan 2013 [Member] | Employee Stock Option [Member]
Options [Roll Forward]
Number of options outstanding (in shares)	2,738,500	2,708,750	783,750	783,750	2,708,750	783,750	2,738,500	783,750	2,708,750	783,750
Number of options exercisable (in shares)	942,250		702,500				942,250	702,500
Weighted average exercise price, outstanding (in dollars per shares)	$ 0.59	$ 0.58	$ 0.78	$ 0.78	$ 0.58	$ 0.78	$ 0.59	$ 0.78	$ 0.58	$ 0.78
Weighted average exercise price, exercisable (in dollars per share)	$ 0.73		$ 0.80				$ 0.73	$ 0.80
Weighted average remaining contractual term, outstanding		8 years 1 month 28 days		5 years 7 months 28 days	7 years 10 months 28 days	5 years 4 months 28 days	7 years 6 months 25 days	5 years 1 month 28 days	8 years 4 months 28 days	5 years 10 months 28 days
Weighted average remaining contractual term, exercisable							5 years 1 month 20 days	4 years 10 months 24 days
Aggregate intrinsic value, outstanding	$ 21	$ 21	$ 0	$ 0	$ 22	$ 0	$ 21	$ 0	$ 4	$ 0
Aggregate intrinsic value, exercisable	$ 5		$ 0				$ 5	$ 0
Options granted	40,000		0				40,000	0
Fair value of options granted (in dollars per shares)	$ 0.0165						$ 0.0165

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PROPERTY, EQUIPMENT, AND SOFTWARE NET (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Property, Plant and Equipment [Line Items]
Total, at cost	$ 1,292,935		$ 1,292,935		$ 1,092,948
Less accumulated depreciation and amortization	(937,591)		(937,591)		(848,432)
Property and equipment, net	355,344		355,344		244,516
Depreciation, amortization and accretion, net	35,187	22,769	89,159	63,573
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Total, at cost	231,860		231,860		222,225
Useful life (in years)			3 years
Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Total, at cost	17,409		17,409		13,999
Useful life (in years)			5 years
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Total, at cost	142,450		142,450		106,524
Useful life (in years)			5 years
Software Installation and Development [Member]
Property, Plant and Equipment [Line Items]
Total, at cost	$ 901,216		$ 901,216		$ 750,200
Useful life (in years)			3 years

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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Restatement of Prior Year Amounts (Details) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities
General and other accrued expenses	$ 3,436,721	$ 1,838,850
Net cash provided by operating activities	5,518,235	(1,027,075)
Cash flows from investing activities
Purchases of short term investments	(3,136,612)	(1,440,195)
Net cash used in investing activities	(4,685,422)	(880,499)
Net increase (decrease) in cash and cash equivalents	840,663	(1,912,974)
Cash and cash equivalents, beginning of period		10,194,375
Cash and cash equivalents, end of period		8,281,401
As Previously Reported [Member]
Cash flows from operating activities
General and other accrued expenses		52,117
Net cash provided by operating activities		(2,813,808)
Cash flows from investing activities
Purchases of short term investments		(5,932,051)
Net cash used in investing activities		(5,372,355)
Net increase (decrease) in cash and cash equivalents		(8,191,563)
Cash and cash equivalents, beginning of period		10,194,375
Cash and cash equivalents, end of period		2,002,812
Adjustment [Member]
Cash flows from operating activities
General and other accrued expenses		1,786,733
Net cash provided by operating activities		1,786,733
Cash flows from investing activities
Purchases of short term investments		4,491,856
Net cash used in investing activities		4,491,856
Net increase (decrease) in cash and cash equivalents		6,278,589
Cash and cash equivalents, beginning of period		0
Cash and cash equivalents, end of period		$ 6,278,589
Homeowners of America Insurance Company [Member]
Organization, Consolidation and Presentation of Financial Statements [Line Items]
Noncontrolling interest, ownership percentage by Parent (in hundredths)	100.00%
Homeowners of America MGA Inc [Member]
Organization, Consolidation and Presentation of Financial Statements [Line Items]
Noncontrolling interest, ownership percentage by Parent (in hundredths)	100.00%

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STOCK BASED COMPENSATION, Future Compensation Expense (Details) (USD $)	Sep. 30, 2014
STOCK BASED COMPENSATION [Abstract]
Gross unrecognized compensation expense, remainder of 2014	$ 8,736
Tax benefit associated with unrecognized compensation expense, remainder of 2014	(172)
Net unrecognized compensation expense, remainder of 2014	8,564
Gross unrecognized compensation expense, Year ending December 31, 2015	34,944
Tax benefit associated with unrecognized compensation expense, Year ending December 31, 2015	(686)
Net unrecognized compensation expense, Year ending December 31, 2015	34,258
Gross unrecognized compensation expense, Year ending December 31, 2016	34,944
Tax benefit associated with unrecognized compensation expense, Year ending December 31, 2016	(686)
Net unrecognized compensation expense, Year ending December 31, 2016	34,258
Gross unrecognized compensation expense, Year ending December 31, 2017	34,944
Tax benefit associated with unrecognized compensation expense, Year ending December 31, 2017	(686)
Net unrecognized compensation expense, Year ending December 31, 2017	34,258
Gross unrecognized compensation expense, Year ending December 31, 2018	28,365
Tax benefit associated with unrecognized compensation expense, Year ending December 31, 2018	(556)
Net unrecognized compensation expense, Year ending December 31, 2018	27,809
Gross unrecognized compensation expense, Year ending December 31, 2019	81
Tax benefit associated with unrecognized compensation expense, Year ending December 31, 2019	0
Net unrecognized compensation expense, Year ending December 31, 2019	$ 81

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STOCKHOLDERS' EQUITY (Details) (USD $)	0 Months Ended		1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended	0 Months Ended		0 Months Ended		9 Months Ended
	Feb. 01, 2014	Aug. 31, 2013	Feb. 01, 2014	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Apr. 15, 2014 2013 Equity Compensation Plan [Member]	Apr. 15, 2014 2013 Equity Compensation Plan [Member]	Aug. 31, 2013 Mr. Tucker [Member]	Aug. 31, 2013 Mr. Backus [Member]	Sep. 30, 2014 Common Stock [Member]	Sep. 30, 2013 Common Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares authorized (in shares)				20,500,000		20,500,000		20,500,000
Preferred stock, convertible cumulative percentage (in hundredths)						12.50%		12.50%
Preferred stock, par value (in dollars per share)				$ 0.0001		$ 0.0001		$ 0.0001
Preferred stock, shares issued (in shares)				0		0		0
Preferred stock, shares outstanding (in shares)				0		0		0
Common stock, shares authorized (in shares)				40,000,000	40,000,000	40,000,000	40,000,000	40,000,000
Common stock, shares issued (in shares)				17,479,852	17,056,152	17,479,852	17,056,152	17,181,140
Common stock, shares outstanding (in shares)				16,168,852	15,706,152	16,168,852	15,706,152	15,831,140
Common stock, par value (in dollars per share)			$ 0.52	$ 0.0001	$ 0.0001	$ 0.0001	$ 0.0001	$ 0.0001		$ 0.52
Common stock, voting rights						1	1	1
Common stock, compensation for management services			$ 150,000	$ 0	$ 0	$ 150,000	$ 0
Common stock held in Treasury issued (in shares)									39,000
Common stock issued (in shares)	288,462												327,462
Repurchase of common stock (in shares)											480,000	60,000		0
Repurchase of common stock		5,400				0	5,400
Common stock warrants issued				$ 0	$ 0	$ 0	$ 0

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RECENT ACCOUNTING PRONOUNCEMENTS

9 Months Ended

Sep. 30, 2014

RECENT ACCOUNTING PRONOUNCEMENTS [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

2.RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Standards Update No. 2014-09. On May 28, 2014, the FASB issued Accounting Standards Update No. 2014-09 ("ASU 2014-09"), Revenue from Contracts with Customers, which modifies the guidance for revenue recognition.  While insurance contracts are not within the scope of this updated guidance, the Company's fee income may be subject to this updated guidance.  The Company is in the process of evaluating the new guidance, however, the adoption of this guidance is not expected to have a material effect on the Company's consolidated financial statements. ASU 2014-09 is effective for annual and interim reporting periods beginning after December 15, 2016.

Accounting Standards Update No. 2014-12. On June 19, 2014, the FASB issued Accounting Standards Update No. 2014-12 ("ASU 2014-12"), Compensation-Stock Compensation: Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. ASU 2014-12 requires that a performance target that affects the vesting and that can be achieved after the requisite service period be treated as a performance condition.  As of June 30, 2014, the Company has not issued stock options with performance targets under the 2005 Management Incentive Plan or the 2013 Equity Compensation Plan. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements. The effective date of ASU 2014-12 is for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted.

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DEFERRED POLICY ACQUISITION COSTS AND CEDING COMMISSIONS, Acquisition Costs (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
DEFERRED POLICY ACQUISITION COSTS AND CEDING COMMISSIONS [Abstract]
Deferred policy acquisition costs, net	$ 7,768,160	$ 6,149,835	$ 7,768,160	$ 6,149,835
Deferred Acquisition Costs and Ceding Commissions [Line Items]
Deferred policy acquisition charges, end of the period	7,768,160	6,149,835	7,768,160	6,149,835
Deferred Policy Acquisition Costs [Member]
DEFERRED POLICY ACQUISITION COSTS AND CEDING COMMISSIONS [Abstract]
Deferred policy acquisition costs, net	7,768,160	6,149,835	7,768,160	6,149,835
Deferred Acquisition Costs and Ceding Commissions [Line Items]
Deferred policy acquisition charges, beginning of the period	6,977,702	5,570,771	6,214,334	5,274,515
Capitalized costs	4,107,806	3,112,886	10,766,212	8,211,996
Amortized costs	(3,317,348)	(2,533,822)	(9,212,386)	(7,336,676)
Deferred policy acquisition charges, end of the period	$ 7,768,160	$ 6,149,835	$ 7,768,160	$ 6,149,835

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PROPERTY, EQUIPMENT, AND SOFTWARE NET (Tables)

9 Months Ended

Sep. 30, 2014

PROPERTY, EQUIPMENT, AND SOFTWARE NET [Abstract]

Property, equipment and software, net

Property, equipment, and software net consist of the following as of September 30, 2014 and December 31, 2013, respectively:

	September 30, 2014			December 31, 2013			Useful Life
Computer equipment	$	231,860		$	222,225		3 years
Office equipment		17,409			13,999		5 years
Furniture and fixtures		142,450			106,524		5 years
Software installation and development		901,216			750,200		3 years
Total, at cost		1,292,935			1,092,948
Less accumulated depreciation and amortization		(937,591	)		(848,432	)
Property and equipment, net	$	355,344		$	244,516

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2014

FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract]

Financial assets measured at fair value on a recurring basis

The Company's short-term investments comprised of certificates of deposit held at financial institutions which are not measured at fair value on a recurring basis. A portion of the Company's cash and cash equivalents include money market mutual fund accounts held at financial institutions which are measured at fair value on a recurring basis. Fixed-maturity securities held as available-for-sale are carried at fair value in our consolidated financial statements. The following tables provide information as of September 30, 2014 and December 31, 2013, about the Company's financial assets measured at fair value on a recurring basis:

	Fair Value Measurements Using
	Level 1			Level 2			Level 3			Total
As of September 30, 2014
Money market mutual funds		$	5,640,249		$	-		$	-		$	5,640,249
Restricted money market mutual funds			300,000			-			-			300,000
Securities-available-for-sale fixed-maturity:
Obligations of states, municipalities and political subdivisions			-			3,173,039			-			3,173,039
U.S. Treasury			-			539,435			-			539,435
Total		$	5,940,249		$	3,712,474		$	-		$	9,652,723
	Fair Value Measurements Using
	Level 1			Level 2			Level 3			Total
As of December 31, 2013
Money market mutual funds		$	5,903,478		$	-		$	-		$	5,903,478
Securities-available-for-sale fixed-maturity:
Obligations of states, municipalities and political subdivisions			-			-			-			-
U.S. Treasury			-			-			-			-
Total		$	5,903,478		$	-		$	-		$	5,903,478

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REINSURANCE, Reinsurance Balances (Details) (USD $)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
REINSURANCE [Abstract]
Ceded premiums payable			$ 8,812,245		$ 3,271,858
Ceded loss and loss adjustment expense reserve			16,899,909		15,090,175
Ceded unearned premium reserve			34,836,484		27,924,037
Ceded loss adjustment expenses	746,877	1,125,971	3,394,533	3,560,184
Ceded earned premiums	$ 16,046,107	$ 12,390,289	$ 43,539,301	$ 35,494,253

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DEFERRED POLICY ACQUISITION COSTS AND CEDING COMMISSIONS, Ceding Commissions (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
DEFERRED POLICY ACQUISITION COSTS AND CEDING COMMISSIONS [Abstract]
Deferred ceding commissions, net	$ 0	$ 1,493	$ 0	$ 1,493
Increase (decrease) to deferred policy acquisition costs, period	(1,493)
Deferred Acquisition Costs and Ceding Commissions [Line Items]
Deferred ceding commission, end of the period	0	1,493	0	1,493
Deferred Ceding Commissions [Member]
DEFERRED POLICY ACQUISITION COSTS AND CEDING COMMISSIONS [Abstract]
Deferred ceding commissions, net	0	1,493	0	1,493
Deferred Acquisition Costs and Ceding Commissions [Line Items]
Deferred ceding commission, beginning of the period	0	1,493	0	683,914
Capitalized commissions	0	4,246,185	0	11,205,306
Amortized commissions	0	(4,246,185)	0	(11,887,727)
Deferred ceding commission, end of the period	$ 0	$ 1,493	$ 0	$ 1,493

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DEFERRED POLICY ACQUISITION COSTS AND CEDING COMMISSIONS (Tables)

9 Months Ended

Sep. 30, 2014

DEFERRED POLICY ACQUISITION COSTS AND CEDING COMMISSIONS [Abstract]

Deferred policy acquisition costs

Changes in deferred policy acquisition costs for the three and nine months ended September 30, 2014 and September 30, 2013, are as follows:

	Three Months Ended						Nine Months Ended
	September 30, 2014			September 30, 2013			September 30, 2014			September 30, 2013
Deferred policy acquisition charges, beginning of the period	$	6,977,702		$	5,570,771		$	6,214,334		$	5,274,515
Capitalized costs		4,107,806			3,112,886			10,766,212			8,211,996
Amortized costs		(3,317,348	)		(2,533,822	)		(9,212,386	)		(7,336,676	)
Deferred policy acquisition charges, end of the period	$	7,768,160		$	6,149,835		$	7,768,160		$	6,149,835

Changes in deferred ceding commissions

Changes in deferred ceding commissions for the three and nine months ended September 30, 2014 and September 30, 2013 are as follows:

	Three Months Ended					Nine Months Ended
	September 30, 2014		September 30, 2013			September 30, 2014		September 30, 2013
Deferred ceding commission, beginning of the period	$	-	$	1,493		$	-	$	683,914
Capitalized commissions		-		4,246,185			-		11,205,306
Amortized commissions		-		(4,246,185	)		-		(11,887,727	)
Deferred ceding commission, end of the period	$	-	$	1,493		$	-	$	1,493

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UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES (Tables)

9 Months Ended

Sep. 30, 2014

UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES [Abstract]

Reserve balances for losses and LAE, gross of reinsurance

The following table provides the reconciliation of the beginning and ending reserve balances for losses and LAE, gross of reinsurance for the three and nine months ended September 30, 2014 and for September 30, 2013:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Reserve for losses and LAE, beginning of period	$	21,873,167		$	15,019,644		$	15,884,062		$	11,641,296
Reinsurance recoverables on losses and LAE		(21,025,809	)		(13,943,102	)		(15,090,175	)		(10,618,032	)
Reserve for losses and LAE, net of reinsurance recoverables at beginning of year		847,358			1,076,542			793,887			1,023,264
Add provision for claims and LAE occurring in:
Current year		157,986			437,080			1,293,220			1,958,627
Prior years		396,500			110,000			697,405			9,000
Net incurred losses and LAE during the current period		554,486			547,080			1,990,625			1,967,627
Deduct payments for claims and LAE occurring in:
Current year		419,573			569,658			1,432,689			1,430,927
Prior years		144,171			13,000			513,723			519,000
Net claim and LAE payments during the current period		563,744			582,658			1,946,412			1,949,927
Reserve for losses and LAE, net of reinsurance recoverables, at end of period		838,100			1,040,964			838,100			1,040,964
Reinsurance recoverables on losses and LAE		16,899,909			14,559,112			16,899,909			14,559,112
Reserve for losses and LAE, end of period	$	17,738,009		$	15,600,076		$	17,738,009		$	15,600,076

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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2014

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Homeowners of America Holding Corporation ("HAHC") is an insurance holding company established to hold insurance entities for the purpose of marketing homeowners insurance products on a national basis. HAHC owns 100% of Homeowners of America Insurance Company ("HAIC"). HAIC is domiciled in Texas, licensed in multiple states and is authorized to write various forms of homeowners and auto insurance. Coverage is concentrated in Texas. HAHC also owns 100% of Homeowners of America MGA, Inc. ("MGA"), a Texas Corporation, formed as a captive managing general agency to produce business in Texas and to provide various claims and administration services for HAIC. HAHC, along with its subsidiaries HAIC and MGA, are collectively referred to as "the Company".

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Homeowners of America Holding Corporation and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). Certain reclassifications of prior year amounts have been made to conform to the current year presentation.

Restatement of Prior Year Amounts

In conjunction with our Annual Report on Form 10-K for the year ended December 31, 2013 filed with the Securities and Exchange Commission on March 31, 2014, we restated the unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2013.  These restatements resulted in money market mutual fund accounts held at financial institutions which were previously classified as short-term investments to be now classified as cash and cash equivalents. In addition, checks issued in excess of cash book balances, not yet presented for payment, which were previously classified as cash and cash equivalents are now classified as general and other accrued expenses payable.

	Nine Months Ended September 30, 2013
	As Previously Reported			Adjustment		As Restated
Consolidated Statements of Cash Flows:
Cash flows from operating activities
General and other accrued expenses	$	52,117		$	1,786,733	$	1,838,850
Net cash used in operating activities		(2,813,808	)		1,786,733		(1,027,075	)
Cash flows from investing activities
Purchases of short term investments		(5,932,051	)		4,491,856		(1,440,195	)
Net cash used in investing activities		(5,372,355	)		4,491,856		(880,499	)
Net decrease in cash and cash equivalents		(8,191,563	)		6,278,589		(1,912,974	)
Cash and cash equivalents, beginning of period		10,194,375			-		10,194,375
Cash and cash equivalents, end of period	$	2,002,812		$	6,278,589	$	8,281,401

Cash and Cash Equivalents

Cash and cash equivalents include cash and highly liquid short-term investments, with original maturities of three months or less. The amount is carried at cost, which approximates fair value. At September 30, 2014 and December 31, 2013, cash and cash equivalents consist of cash on deposit with financial institutions, as well as money market mutual funds.

General and other accrued expenses payable as of September 30, 2014 and December 31, 2013, include $4.7 million and $1.2 million, respectively, of checks issued in excess of cash book balances, not yet presented for payment.

Investments

The Company's investments are comprised of short-term, restricted, and long-term investments and fixed-maturity securities classified as available-for-sale as of September 30, 2014 and short-term, restricted, and long-term investments as of December 31, 2013. Restricted investments and long-term investments are described below. Short-term investments include certificates of deposit with original maturities greater than three months and maturities of one year or less. Due to the short-term nature of these investments, significant changes in prevailing interest rates and economic conditions should not adversely affect the timing and amount of cash flows on such investments or their related values. Accordingly, certificates of deposit are carried at cost, which approximates fair value. Fixed-maturity securities are classified as available-for-sale when it is not management's intent to make profits by buying and selling the securities within a short period of time or when it is not management's intent to hold the securities to maturity.  Fixed-maturity securities classified as available-for-sale are carried at fair value. The unrealized holding gains and losses, net of applicable deferred income taxes, are shown as a separate component of stockholders' equity as a part of accumulated other comprehensive income (loss) and, as such, are not included in the determination of net income (loss).

As of September 30, 2014 and December 31, 2013, the Company has pledged to the Department of Insurance in certain states as a condition of its Certificate of Authority for the purpose of meeting obligations to policyholders and creditors $3.3 million and $1.0 million, respectively. Restricted assets are shown separately in the accompanying consolidated balance sheets as "Restricted cash and investments" and include money market accounts and certificates of deposits. "Restricted fixed-maturity securities, classified as available-for-sale" are shown separately in the accompanying consolidated balance sheets and recorded at fair value. With the approval of the Departments of Insurance, the Company may exchange the investments with other funds or investments. In respect to certificates of deposit, management intends to hold the portion of these restricted investments to their maturity. As such, these restricted certificates of deposit are carried at cost, which approximates fair value. Interest earned on these investments inures to the benefit of the Company.

The following table provides the Company's restricted cash and investments as of September 30, 2014 and December 31, 2013.

Restricted cash and investments	September 30, 2014		December 31, 2013
Money Market	$	300,000	$	215,000
Certificates of Deposit		2,500,000		785,000
US Treasury Bond		539,435		-
	$	3,339,435	$	1,000,000

As of September 30, 2014 and December 31, 2013, the Company's investments also included certificates of deposit that mature more than one year after the balance sheet date and are reflected on the consolidated balance sheets as Long-term investments. Based on management's intent to hold to maturity, this investment is carried at cost. Cost approximates fair value based on the rates currently offered for deposits of similar remaining maturities.

The Company's investments in certificates of deposits and money market accounts do not qualify as securities as defined in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 320, Investment – Debt and Equity Securities. Accordingly, the fair value disclosures required by FASB ASC Topic 820, Fair Value Measurements and Disclosures are not provided. The Company's fixed-maturity securities classified as available-for-sale are "marked to market" as of the end of each calendar quarter.  As of that date, unrealized gains and losses are recorded to Accumulated Other Comprehensive Income, except where such securities are deemed to be other-than-temporarily impaired. Where applicable, the Company assesses investments of an issuer currently carrying a net unrealized loss. If in management's judgment, the decline in value is other than temporary, the cost of the investment is written down to fair value with a corresponding charge to earnings. Factors considered in determining whether an impairment exists include financial condition, business prospects and creditworthiness of the issuer, the length of time and magnitude that the asset value has been less than cost, and the ability and intent to hold such investments until the fair value recovers.

Comprehensive Income

FASB ASC Topic 220 - Comprehensive Income, requires that recognized revenues, expenses, gains and losses be included in net income (loss). Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the consolidated balance sheet, these items, along with net income (loss), are components of comprehensive income. The Company characterizes their fixed income portfolio as available-for-sale securities when it is not management's intent to make profits by buying and selling the securities within a short period of time or when it is not management's intent to hold the securities to maturity, with appropriate adjustments to other comprehensive income. For the three and nine months ended September 30, 2014, the Company recorded $4,012 and $9,164, respectively of unrealized gains on available-for-sale securities in other comprehensive income.  There were no qualifying items reported in other comprehensive income for the three and nine months ended September 30, 2013.

Recognition of Premium Revenues

Premiums are recognized as revenue on a daily pro rata basis over the policy term. The portion of premiums related to the unexpired term of policies in force as of the end of the measurement period and to be earned over the remaining term of those polices, is deferred and reported as unearned premiums.

Ceding Commissions and Reinsurance Profit Share

Ceding commissions represent acquisition costs associated with insurance risk ceded to reinsurers and is earned on a pro-rata basis over the life of the associated policy. Reinsurance profit share is additional ceding commissions payable to the Company based upon attaining specified loss ratios within individual treaty years.  Reinsurance profit share income is recognized when earned, which includes adjustments to earned reinsurance profit share based on changes in incurred losses.

Policy Fees

Policy fee income includes application fees which are intended to reimburse the Company for a portion of the costs incurred in establishing the insurance. Policy fees on policies where premium is traditionally paid in full upon inception of the policy are recognized when written, while fees charged on policies where premiums are paid in installments, are recognized when collected.

Loss Adjustment and Other Fee Income

Loss adjustment and other fee income is recognized as income when collected. There is no amount over 5% of total revenue within this classification on the consolidated statements of operations for the three months ended September 30, 2014 and 2013 and for the nine months ended September 30, 2014. Loss adjustment fee income for the nine months ended September 30, 2013 was in excess of 5%, of total revenue within this classification on the consolidated statements of operations.

Property, Equipment and Software

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets, which range from three to five years. The cost and related accumulated depreciation of assets sold or disposed are removed from the accounts and the resulting gain or loss is included in the consolidated statements of operations. Maintenance and repairs are expensed as incurred.

Software installation and development is stated at cost, net of accumulated amortization. Amortization is calculated on a straight-line basis method over three years.

Impairment of Long-Lived Assets

Long-lived assets, such as property, equipment and software, are reviewed for impairment whenever business events or circumstances could lead to or indicate that the value of the asset may not be recoverable. The assessment of possible impairment is based on whether the carrying amount of the assets exceeds its fair value. The Company uses estimates of undiscounted future cash flows in determining the recoverability of long-lived assets. As of September 30, 2014 and December 31, 2013, no impairment has been recorded.

Deferred Policy and Acquisition Costs

Deferred policy acquisitions costs ("DAC") as of September 30, 2014 and December 31, 2013, consist of commissions, premium taxes and policy underwriting and production expenses which are incurred through and vary directly with, the level of production of new and renewal insurance business and are amortized over the terms of the policies they relate to. The method used in calculating DAC limits the amount of the deferred cost to their estimated realizable value, which gives effect to allocating their expense along with other period costs associated with the insurance business, in relation to the amount of gross premium earned on policies to which they relate and investment income. DAC is reviewed to determine if it is recoverable from future income, including investment income. The amount of DAC considered recoverable could be reduced in the near term if estimates of future premium income from their related lines of insurance are revised.

Reserve for Losses and Loss Adjustment Expenses

The liability for losses and loss adjustment expenses ("LAE") are estimates of the amounts required to cover known incurred losses and LAE, developed through the review and assessment of loss reports, along with the development of known claims. In addition, loss and loss adjustment expense reserves include management's estimate of an amount for losses incurred but not reported ("IBNR"), determined from reviewing overall loss reporting patterns as well as the loss development cycles of individual claim cases. Such liabilities are necessarily based on estimates and while management believes that the amount is adequate, the ultimate liability may be more or less than the amounts provided. The approach and methods for making such estimates and for establishing the resulting liability are continually reviewed and any adjustments are reflected in current earnings.

Due and Deferred Premiums

Due and deferred premiums consist of uncollateralized premiums and agents' balances in the course of collection as well as premiums booked but not yet due.

Reinsurance

In the normal course of business, the Company seeks to reduce the overall exposure to losses that may arise from catastrophes or other events that cause unfavorable underwriting results by reinsuring certain levels of risk with other insurance enterprises or reinsurers. The Company uses only quality, financially rated reinsurers and continually monitors the financial ratings of these companies through its brokers. The amount and type of reinsurance purchased each year is based on management's estimate of its probable maximum loss and the conditions within the reinsurance market. The Company continually monitors its risk exposure through the use of the AIR modeling system and other modeling tools provided by its reinsurance brokers. Reinsurance premiums, expense reimbursements, and reserves related to reinsured business are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Premiums paid for reinsurance are reported as reductions of earned premium income.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss carryforwards, and liabilities are measured using enacted tax rates expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  In assessing the realizable value of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

Uncertain Tax Positions

The Company recognizes uncertain tax positions in the consolidated financial statements when it is more-likely-than-not the position will be sustained upon examination by the tax authorities. Such tax positions are initially and subsequently measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. The Company believes that it has appropriate support for the income tax positions taken and to be taken on its tax returns, and that its accruals for tax liabilities are adequate for all open tax years based on an assessment of many factors including experience and interpretations of tax laws applied to the facts of each matter. At September 30, 2014, the Company's tax years from 2010 through 2013 remain subject to examination.

Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company's primary areas of estimate are for liabilities for unpaid losses and loss adjustment expenses, deferred policy acquisition costs, deferred tax asset valuation, and reinsurance. Actual results could differ significantly from those estimates.

Fair Value of Cash, Cash Equivalents and Short-term Investments

The carrying value for the Company's cash and cash equivalents and short-term investments approximate fair values as of September 30, 2014 and December 31, 2013 due to their short-term nature. Fair value for securities are based on the framework for measuring fair value established by FASB ASC Topic 820, Fair Value Measurements and Disclosures.

Fair Value Fixed-Maturity Securities held as Available-for-Sale

The Company's fixed-maturity securities held as available-for-sale are carried at fair value as of September 30, 2014. Fair value for securities are based on the framework for measuring fair value established by FASB ASC Topic 820, Fair Value Measurements and Disclosures.

Convertible Notes Payable

The Company accounts for convertible notes payable under FASB ASC Topic 470-20 – Debt with Conversion and Other Options, which requires issuers to assess whether or not an embedded conversion feature is required to be separately accounted for as a derivative liability for liability and equity components and if the conversion feature is beneficial to the holder. See Note 9 on Convertible Notes Payable for additional disclosure.

Stock Based Compensation

The Company accounts for stock-based compensation under the fair value recognition provisions of FASB ASC Topic 718 – Compensation – Stock Compensation, which requires the measurement and recognition of compensation for all stock-based awards made to employees and directors including stock options and restricted stock issuances based on estimated fair values. In accordance with FASB ASC Topic 718, the Company recognizes stock-based compensation, if any, in the consolidated statements of operations on a straight line basis over the vesting period of the stock award.  For those stock awards vesting 100% at the issue date, the Company recognizes stock-based compensation immediately.

Earnings (Loss) Per Share

Basic earnings (loss) per share of common stock is computed by dividing net income or loss, less cumulative preferred stock dividends for the period whether or not earned or paid, by the weighted-average number of common shares during the period.

Diluted earnings (loss) per share of common stock is computed by dividing net income or loss attributable to common stockholders, adjusted for the effect of potentially dilutive securities, by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include convertible notes payable, outstanding convertible preferred stock and common stock options.

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EARNINGS (LOSS) PER SHARE (Tables)

9 Months Ended

Sep. 30, 2014

EARNINGS (LOSS) PER SHARE [Abstract]

Basis and diluted earnings per share

The following table represents the reconciliation of the Company's basic earnings per common share and diluted earnings per common share computations reported on the Consolidated Statements of Operations for the three and nine months ended September 30, 2014 and 2013:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2014		2013			2014		2013
Basic earnings per common share
Net income	$	996,590	$	660,919		$	1,957,671	$	1,184,091
Cumulative dividend		-		(255,215	)		-		(974,179	)
Adjusted net income	$	996,590	$	405,704		$	1,957,671	$	209,912
Weighted average common shares outstanding		16,162,352		6,735,384			16,112,634		3,745,128
Basic earnings per common share	$	0.06	$	0.06		$	0.12	$	0.06
	Three Months Ended					Nine Months Ended
	September 30,					September 30,
		2014		2013			2014		2013
Diluted earnings per common share
Net income	$	996,590	$	660,919		$	1,957,671	$	1,184,091
Add interest expense on convertible promissory notes		-		11,482			-		-
Adjusted net income	$	996,590	$	672,401		$	1,957,671	$	1,184,091
Weighted average common shares outstanding		16,162,352		16,728,462			16,112,634		3,745,128
Effect of diluted securities:
Stock options		942,250		702,500			942,250		-
Diluted common shares outstanding		17,104,602		17,430,962			17,054,884		3,745,128
Diluted earnings per common share	$	0.06	$	0.04		$	0.11	$	0.06

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INVESTMENTS (Details) (USD $)	3 Months Ended		9 Months Ended			9 Months Ended				12 Months Ended	9 Months Ended	12 Months Ended	9 Months Ended	12 Months Ended	9 Months Ended	12 Months Ended	9 Months Ended	12 Months Ended	9 Months Ended	12 Months Ended	9 Months Ended	12 Months Ended	9 Months Ended	12 Months Ended	9 Months Ended	12 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Sep. 30, 2014 Obligations of States, Municipalities and Political Subdivisions [Member]	Sep. 30, 2014 U.S. Treasury - Held as Restricted [Member]	Sep. 30, 2014 Fixed Maturities [Member]	Sep. 30, 2014 Restricted certificates of deposit [Member]	Dec. 31, 2013 Restricted certificates of deposit [Member]	Sep. 30, 2014 Restricted certificates of deposit [Member] Maximum [Member]	Dec. 31, 2013 Restricted certificates of deposit [Member] Maximum [Member]	Sep. 30, 2014 Restricted certificates of deposit [Member] Minimum [Member]	Dec. 31, 2013 Restricted certificates of deposit [Member] Minimum [Member]	Sep. 30, 2014 Restricted cash [Member]	Dec. 31, 2013 Restricted cash [Member]	Sep. 30, 2014 Long-term investments [Member]	Dec. 31, 2013 Long-term investments [Member]	Sep. 30, 2014 Long-term investments [Member] Maximum [Member]	Dec. 31, 2013 Long-term investments [Member] Maximum [Member]	Sep. 30, 2014 Long-term investments [Member] Minimum [Member]	Dec. 31, 2013 Long-term investments [Member] Minimum [Member]	Sep. 30, 2014 Short-term investments [Member]	Dec. 31, 2013 Short-term investments [Member]	Sep. 30, 2014 Short-term investments [Member] Maximum [Member]	Dec. 31, 2013 Short-term investments [Member] Maximum [Member]	Sep. 30, 2014 Short-term investments [Member] Minimum [Member]	Dec. 31, 2013 Short-term investments [Member] Minimum [Member]
INVESTMENTS [Abstract]
Net Investment Income	$ 10,647	$ 9,339	$ 19,888	$ 31,684
Change in unrealized gain on investments:
Unrealized gain arising from the period	4,012	0	9,164	0
Schedule of Investments [Line Items]
Financial Assets Book Value	7,851,429		7,851,429		7,111,011				2,500,000	785,000					300,000	215,000	1,470,000	1,960,000					3,581,429	4,151,011
Financial Assets Fair Value / Carrying Value	7,851,429		7,851,429		7,111,011				2,500,000	785,000					300,000	215,000	1,470,000	1,960,000					3,581,429	4,151,011
Range of Maturities									Less than 1 year	Less than 1 year					Less than 1 year	Less than 1 year	More than 1 year	More than 1 year					Less than 1 year	Less than 1 year
Interest Rates (in hundredths)											0.40%	0.25%	0.10%	0.10%					1.40%	0.70%	0.75%	0.30%			0.80%	1.24%	0.35%	0.20%
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Debt Securities, Amortized Cost Basis	3,163,792		3,163,792		0	3,163,792	539,518	3,703,310
Gross Unrealized Gain						11,548	231	11,779
Gross Unrealized Losses						(2,301)	(314)	(2,615)
Available-for-sale Securities, Debt Securities, Current	3,173,039		3,173,039		0	3,173,039	539,435	3,712,474
Available-for-sale Securities, Debt Maturities, Single Maturity Date, Amortized Cost Basis [Abstract]
Less than one year, Amortized Cost Basis	418,771		418,771
One to five years, Amortized Cost Basis	1,454,913		1,454,913
Five to ten years, Amortized Cost Basis	757,413		757,413
More than ten years, Amortized Cost Basis	1,072,213		1,072,213
Total, Amortized Cost Basis	3,703,310		3,703,310
Fair value Rolling Maturity [Abstract]
Less than one year, Fair Value	420,174		420,174
One to five years, Fair Value	1,458,595		1,458,595
Five to ten years, Fair Value	757,855		757,855
More than ten years, Fair Value	1,075,850		1,075,850
Total, Fair Value	$ 3,712,474		$ 3,712,474

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INCOME TAXES (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
INCOME TAXES [Abstract]
Income tax expense (benefit)	$ 530,513	$ 315,929	$ 1,052,687	$ 608,254
Income tax rate (in hundredths)	34.22%	32.30%	34.25%	33.90%

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CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Assets:
Cash and cash equivalents	$ 8,944,973	$ 8,104,310
Short-term investments	3,581,429	4,151,011
Restricted cash and investments	2,800,000	1,000,000
Restricted fixed-maturity securities, available-for-sale, at fair value (amortized cost $539,518)	539,435	0
Fixed-maturity securities, available-for-sale, at fair value (amortized cost $3,163,792)	3,173,039	0
Long-term investments	1,470,000	1,960,000
Accrued investment income	55,045	8,853
Due and deferred premiums	4,490,889	4,169,824
Balance due from reinsurers	61,384,130	46,281,756
Property, equipment and software, net	355,344	244,516
Deferred policy acquisition costs	7,768,160	6,214,334
Prepaid expenses and other	276,241	128,195
Deferred tax assets, net	1,482,849	933,221
Total assets	96,321,534	73,196,020
Liabilities:
Loss and loss adjustment expenses	17,738,009	15,884,062
Advance premiums	137,786	90,854
Ceded reinsurance premiums payable	8,812,245	3,271,858
Unearned premiums	39,337,398	31,297,118
Unearned ceding commissions	11,010,825	8,067,162
Commissions payable, reinsurers and agents	2,923,426	3,716,423
General and other accrued expenses payable	5,342,986	1,906,265
Income tax payable	192,833	211,198
Taxes, licenses and other fees payable	351,597	474,503
Total liabilities	85,847,105	64,919,443
Stockholders' equity:
Preferred stock, convertible; 12.5% cumulative; $0.0001 par value per share; 20,500,000 shares authorized; no shares issued and outstanding as of September 30, 2014 and December 31, 2013	0	0
Common stock, $0.0001 par value per share; 40,000,000 shares authorized;17,479,852 shares issued and 16,168,852 shares outstanding as of September 30, 2014 and 17,181,140 shares issued and 15,831,140 shares outstanding as of December 31, 2013	1,617	1,583
Treasury stock, $0.0001 par value per share; 1,311,000 common shares as of September 30, 2014 and 1,350,000 common shares as of December 31, 2013	(131)	(135)
Additional paid-in-capital	6,200,529	5,969,550
Accumulated other comprehensive income	9,164	0
Retained earnings	4,263,250	2,305,579
Total stockholders' equity	10,474,429	8,276,577
Total liabilities and stockholders' equity	$ 96,321,534	$ 73,196,020

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UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES [Abstract]
Reserve for losses and LAE, beginning of period	$ 21,873,167	$ 15,019,644	$ 15,884,062	$ 11,641,296
Reinsurance recoverables on losses and LAE	(21,025,809)	(13,943,102)	(15,090,175)	(10,618,032)
Reserve for losses and LAE, net of reinsurance recoverables at beginning of year	847,358	1,076,542	793,887	1,023,264
Add provision for claims and LAE occurring in:
Current year	157,986	437,080	1,293,220	1,958,627
Prior years	396,500	110,000	697,405	9,000
Net incurred losses and LAE during the current period	554,486	547,080	1,990,625	1,967,627
Deduct payments for claims and LAE occurring in:
Current year	419,573	569,658	1,432,689	1,430,927
Prior years	144,171	13,000	513,723	519,000
Net claim and LAE payments during the current period	563,744	582,658	1,946,412	1,949,927
Reserve for losses and LAE, net of reinsurance recoverables, at end of period	838,100	1,040,964	838,100	1,040,964
Reinsurance recoverables on losses and LAE	16,899,909	14,559,112	16,899,909	14,559,112
Reserve for losses and LAE, end of period	17,738,009	15,600,076	17,738,009	15,600,076
Liability for unpaid claims and claims adjustment expense, incurred claims, prior years	$ 396,500	$ 110,000	$ 697,405	$ 9,000

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) (USD $)	Preferred Stock [Member] Series A Preferred Stock [Member]	Preferred Stock [Member] Series B Preferred Stock [Member]	Common Stock [Member]	Treasury Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Other Comprehensive Income, Net of Tax [Member]	Retained Earnings [Member]	Total
Balance at Dec. 31, 2012	$ 450	$ 50	$ 90	$ 0	$ 4,906,000	$ 0	$ 336,816	$ 5,243,406
Balance (in shares) at Dec. 31, 2012	4,500,000	500,000	900,000	0
Net income	0	0	0	0	0	0	1,184,091	1,184,091
Total other comprehensive income, net of income taxes								0
Conversion of series A preferred stock	(450)	0	1,125	0	0	0	0	675
Conversion of series A preferred stock (in shares)	(4,500,000)	0	11,250,000	0
Conversion of series B preferred stock	0	(50)	125	0	0	0	0	75
Conversion of series B preferred stock (in shares)	0	(500,000)	1,250,000	0
Conversion of convertible note payable	0	0	216	0	950,000	0	0	950,216
Conversion of convertible note payable (in shares)	0	0	2,158,875	0
Conversion of interest on convertible note payable	0	0	15	0	64,716	0	0	64,731
Conversion of interest on convertible note payable (in shares)	0	0	147,277	0
Repurchase of common stock	0	0	0	(135)	(5,265)	0	0	(5,400)
Repurchase of common stock (in shares)	0	0	0	1,350,000
Adjustment of par value to reflect forward stock split	0	0	0	0	(889)	0	0	(889)
Balance at Sep. 30, 2013	0	0	1,571	(135)	5,914,562	0	1,520,907	7,436,905
Balance (in shares) at Sep. 30, 2013	0	0	15,706,152	1,350,000
Balance at Dec. 31, 2013			1,583	(135)	5,969,550	0	2,305,579	8,276,577
Balance (in shares) at Dec. 31, 2013			15,831,140	1,350,000
Net income			0	0	0	0	1,957,671	1,957,671
Total other comprehensive income, net of income taxes			0	0	0	9,164	0	9,164
Stock options exercised			1	0	7,849	0	0	7,850
Stock options exercised (in shares)			10,250	0
Common stock issued			33	4	170,243	0	0	170,280
Common stock issued (in shares)			327,462	(39,000)
Stock-based compensation			0	0	52,887	0	0	52,887
Balance at Sep. 30, 2014			$ 1,617	$ (131)	$ 6,200,529	$ 9,164	$ 4,263,250	$ 10,474,429
Balance (in shares) at Sep. 30, 2014			16,168,852	1,311,000

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COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Sep. 30, 2014

COMMITMENTS AND CONTINGENCIES [Abstract]

Future minimum lease payments

The Company leases its corporate office space and certain office equipment under non-cancelable operating leases which expire at various dates through 2019. Future minimum lease payments required under the non-cancelable operating leases are as follows for the years ending December 31:

2014        (3 months)	$	41,712
2015		166,848
2016		174,709
2017		91,284
2018		22,188
2019		12,519
	$	509,260

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CONCENTRATION OF CREDIT RISK

9 Months Ended

Sep. 30, 2014

CONCENTRATION OF CREDIT RISK [Abstract]

CONCENTRATION OF CREDIT RISK

15.CONCENTRATION OF CREDIT RISK

The Company has exposure and remains liable in the event of an insolvency of one of its primary reinsurers. Management and its reinsurance intermediary regularly assess the credit quality and ratings of its reinsurer base companies.

Financial instruments which potentially subject the Company to credit risk consist principally of cash and money market accounts on deposit with financial institutions, money market funds, certificates of deposit and premium balance in the course of collection.  At times, the Company's bank deposits may exceed the FDIC limit.

The concentration of credit risk with respect to premium balances in the course of collection is limited, due to the large number of insureds comprising the Company's customer base. However, substantially all of the Company's revenues are derived from customers in Texas, which could be adversely affected by economic conditions, an increase in competition, or other environmental changes.

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REGULATORY REQUIREMENTS AND RESTRICTIONS (Tables)

9 Months Ended

Sep. 30, 2014

REGULATORY REQUIREMENTS AND RESTRICTIONS [Abstract]

Restricted cash and investments

The following table provides the Company's restricted cash and investments as of September 30, 2014 and December 31, 2013.

Restricted cash and investments	September 30, 2014		December 31, 2013
Money Market	$	300,000	$	215,000
Certificates of Deposit		2,500,000		785,000
US Treasury Bond		539,435		-
	$	3,339,435	$	1,000,000

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REGULATORY REQUIREMENTS AND RESTRICTIONS

9 Months Ended

Sep. 30, 2014

REGULATORY REQUIREMENTS AND RESTRICTIONS [Abstract]

REGULATORY REQUIREMENTS AND RESTRICTIONS

17.REGULATORY REQUIREMENTS AND RESTRICTIONS

HAIC is subject to the laws and regulations of the State of Texas and the regulations of any other states in which HAIC conducts business. State regulations cover all aspects of HAIC's business and are generally designed to protect the interests of insurance policyholders, as opposed to the interests of stockholders. The Texas Insurance Code requires all property and casualty insurers to have a minimum of $2.5 million in capital stock and $2.5 million in surplus.

As of December 31, 2013, HAIC's total statutory surplus was $8,963,573 (capital stock of $2,500,000 and surplus of $6,463,573).

As of September 30, 2014, HAIC's total statutory surplus was $12,118,313 (capital stock of $3,000,000 and surplus of $9,118,313).

As of September 30, 2014 and December 31, 2013, HAIC had restricted cash and investments totaling $3.3 million and $1.0 million, respectively, pledged to the Departments of Insurance in certain states as a condition of its Certificate of Authority for the purpose of meeting obligations to policyholders and creditors. See Note 1 Organization and Summary of Significant Accounting Policies, Investments for additional disclosure.

The Texas Insurance Code limits dividends from insurance companies to their stockholders to net income accumulated in the Company's surplus account, or "earned surplus".

The maximum dividend that may be paid without approval of the Insurance Commissioner is limited to the greater of 10% of the statutory surplus at the end of the preceding calendar year or the statutory net income of the preceding calendar year. No dividends were paid by HAIC in 2014 or 2013.

HAIC prepares its statutory-based financial statements in conformity with accounting practices prescribed or permitted by the Texas Department of Insurance. Prescribed statutory accounting practices primarily include those published as statements of SAP by the NAIC, as well as state laws, regulations and general administrative rules. Permitted statutory accounting practices encompass all accounting practice not so prescribed. As of September 30, 2014 and December 31, 2013, there were no material permitted statutory accounting practice utilized by HAIC.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities:
Net income	$ 1,957,671	$ 1,184,091
Adjustments to reconcile net income to net cash provided by (used in) by operating activities:
Depreciation & amortization	89,159	63,573
Accounting charge related to stock-based compensation expense	52,887	0
Common stock compensation for management services	150,000	0
Other stock issuance expense	20,280	0
Amortization of premium/accretion of discount, net	41,707	0
Deferred tax assets	(549,628)	(117,277)
(Increase) decrease in:
Accrued investment income	(46,192)	(6,422)
Due and deferred premiums	(321,065)	(202,786)
Balance due from reinsurers	(15,102,374)	(10,509,618)
Deferred policy acquisition costs	(1,553,826)	(875,320)
Deferred ceding commissions	0	682,421
TWIA assessments	0	80,040
Prepaid and other	(148,046)	(81,548)
Increase (decrease) in:
Losses and loss adjustment expenses	1,853,947	3,958,780
Advance premiums	46,932	66,488
Ceded reinsurance premiums payable	5,540,387	4,229,758
Unearned premiums	8,040,280	4,332,432
Ceded deferred premiums	0	(2,381,906)
Unearned ceding commissions	2,943,663	1,142,418
Commissions payable, reinsurance & agents	(792,997)	(4,112,204)
General and other accrued expenses	3,436,721	1,838,850
Interest on notes convertible	0	68,630
Income tax payable	(18,365)	(109,690)
Taxes, licenses and other fees payable	(122,906)	(277,785)
Net cash provided by (used in) operating activities	5,518,235	(1,027,075)
Cash flows from investing activities:
Purchases of long-term certificate of deposit	(1,605,000)	(2,703,305)
Maturities of long-term certificate of deposit	1,960,000	1,452,000
Purchases of short-term investments	(3,136,612)	(1,440,195)
Maturities of short-term investments	2,041,194	1,862,181
Purchases of fixed-maturity securities, available-for-sale	(3,995,017)	0
Call or maturity of fixed-maturity securities, available-for-sale	250,000	0
Additions to furniture, equipment and software	(199,987)	(51,180)
Net cash used in investing activities	(4,685,422)	(880,499)
Cash flows from financing activities:
Proceeds from stock options exercised	7,850	0
Repurchase of common stock	0	(5,400)
Net cash provided by (used in) financing activities	7,850	(5,400)
Net increase (decrease) in cash and cash equivalents	840,663	(1,912,974)
Cash and cash equivalents, beginning of period	8,104,310	10,194,375
Cash and cash equivalents, end of the period	8,944,973	8,281,401
Supplemental disclosure of cash flow information:
Cash paid for income taxes	1,620,681.00	801,274
Repayment of Debt on Convertible Note and Conversion to Common Stock [Member]
Non cash investing from financing activities:
Conversion to common stock	0	950,000
Conversion of Interest on Convertible Note [Member]
Non cash investing from financing activities:
Conversion to common stock	$ 0	$ 64,808

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CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Assets:
Restricted fixed-maturity securities, available for sale, amortized cost	$ 539,518	$ 0
Fixed-maturity securities, available for sale, amortized cost	$ 3,163,792	$ 0
Stockholders' equity:
Preferred stock, convertible cumulative percentage (in hundredths)	12.50%	12.50%
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	20,500,000	20,500,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	40,000,000	40,000,000
Common stock, shares issued (in shares)	17,479,852	17,181,140
Common stock, shares outstanding (in shares)	16,168,852	15,831,140
Treasury stock par value (in dollars per share)	$ 0.0001	$ 0.0001
Treasury stock (in shares)	1,311,000	1,350,000

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STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2014

STOCKHOLDERS' EQUITY [Abstract]

STOCKHOLDERS' EQUITY

10.STOCKHOLDERS' EQUITY

Preferred Stock

As of September 30, 2014 and December 31, 2013, the Company has 20,500,000 shares of preferred stock, convertible, 12.50% cumulative, $0.0001 par value per share, authorized and none issued and outstanding.

Common Stock

As of September 30, 2014, the Company has 40,000,000 shares authorized and 17,479,852 shares issued and 16,168,852 shares outstanding of $0.0001 par value common stock. Holders of common stock are entitled to one (1) vote for each share of common stock held at all meetings of stockholders, unless restricted by the Company's Amended and Restated Certificate of Incorporation.

On April 15, 2014, the Company issued 39,000 shares by way of common stock held in Treasury at $0.52 per share under the Company's 2013 Equity Compensation Plan as a stock award to certain employees of the Company.

On February 1, 2014, the Company issued 288,462 shares of common stock at $0.52 per share, to Inter-Atlantic Management Inc.  Per the terms of the Advisory Agreement dated August 1, 2013, Inter-Atlantic Management Inc. will be issued annually on February 1st, a grant of the Company's common stock which in aggregate had a fair market value of $150,000 at the time of the grant.

As of December 31, 2013, the Company has 40,000,000 shares of authorized and 17,181,140 shares issued and 15,831,140 shares outstanding of $0.0001 par value common stock.  Holders of common stock are entitled to one (1) vote for each share of common stock held at all meetings of stockholders, unless restricted by the Company's Amended and Restated Certificate of Incorporation.

There were no common stock warrants issued during the three and nine months ended September 30, 2014 and September 30, 2013.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 13, 2014
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Entity Common Stock, Shares Outstanding		16,168,852
Entity Registrant Name	Homeowners of America Holding Corp
Entity Central Index Key	0001346922
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company

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EARNINGS (LOSS) PER SHARE

9 Months Ended

Sep. 30, 2014

EARNINGS (LOSS) PER SHARE [Abstract]

EARNINGS (LOSS) PER SHARE

11.  EARNINGS (LOSS) PER SHARE

The following table represents the reconciliation of the Company's basic earnings per common share and diluted earnings per common share computations reported on the Consolidated Statements of Operations for the three and nine months ended September 30, 2014 and 2013:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2014		2013			2014		2013
Basic earnings per common share
Net income	$	996,590	$	660,919		$	1,957,671	$	1,184,091
Cumulative dividend		-		(255,215	)		-		(974,179	)
Adjusted net income	$	996,590	$	405,704		$	1,957,671	$	209,912
Weighted average common shares outstanding		16,162,352		6,735,384			16,112,634		3,745,128
Basic earnings per common share	$	0.06	$	0.06		$	0.12	$	0.06
	Three Months Ended					Nine Months Ended
	September 30,					September 30,
		2014		2013			2014		2013
Diluted earnings per common share
Net income	$	996,590	$	660,919		$	1,957,671	$	1,184,091
Add interest expense on convertible promissory notes		-		11,482			-		-
Adjusted net income	$	996,590	$	672,401		$	1,957,671	$	1,184,091
Weighted average common shares outstanding		16,162,352		16,728,462			16,112,634		3,745,128
Effect of diluted securities:
Stock options		942,250		702,500			942,250		-
Diluted common shares outstanding		17,104,602		17,430,962			17,054,884		3,745,128
Diluted earnings per common share	$	0.06	$	0.04		$	0.11	$	0.06

For the nine months ended September 30, 2013, all of the Company's potentially dilutive securities and interest expense on convertible promissory notes of $44,211 were excluded from the computation of diluted earnings per share as they were anti-dilutive. The total number of potentially dilutive shares of common stock that were excluded totaled 13,985,834.

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CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Revenues:
Premiums earned	$ 16,893,086	$ 13,643,436	$ 46,933,714	$ 39,037,947
Ceded premiums	(16,046,107)	(12,390,289)	(43,539,301)	(35,494,253)
Net premiums earned	846,979	1,253,147	3,394,413	3,543,694
Policy fees	1,578,900	1,286,995	4,188,500	3,497,765
Ceding commissions and reinsurance profit share	5,078,682	3,044,488	12,375,912	8,143,900
Investment income, net of investment expenses	10,647	9,339	19,888	31,684
Loss adjustment and other fee income	334,277	288,289	1,159,478	984,384
Total Revenue	7,849,485	5,882,258	21,138,191	16,201,427
Expenses:
Losses and loss adjustment expenses	554,486	547,080	1,990,625	1,967,627
Policy acquisition and other underwriting expenses	4,521,009	3,300,522	11,939,855	9,370,086
General and administrative expenses	1,246,887	1,057,808	4,197,353	3,071,369
Total Expenses	6,322,382	4,905,410	18,127,833	14,409,082
Income before income taxes	1,527,103	976,848	3,010,358	1,792,345
Provision (benefit) for income taxes:
Current	680,040	374,639	1,602,315	725,531
Deferred	(149,527)	(58,710)	(549,628)	(117,277)
Total income taxes	530,513	315,929	1,052,687	608,254
Net income	996,590	660,919	1,957,671	1,184,091
Cumulative preferred stock dividends	0	(255,215)	0	(974,179)
Adjusted net income	$ 996,590	$ 405,704	$ 1,957,671	$ 209,912
Basic income per common share (in dollars per share)	$ 0.06	$ 0.06	$ 0.12	$ 0.06
Diluted income per common share (in dollars per share)	$ 0.06	$ 0.04	$ 0.11	$ 0.06
Cash dividend declared per common share (in dollars per share)	$ 0	$ 0	$ 0	$ 0

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FAIR VALUE OF FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2014

FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

5.FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial assets carried at fair value have been classified, for disclosure purposes, based on the hierarchy established within FASB ASC 820-10 – Fair Value Measurements and Disclosures. When market prices are not available, fair value is generally estimated utilizing valuation techniques that vary by asset class and incorporate available trade, bid and other market information, when available. The acceptable valuation techniques include (a) market approach, which uses prices or relevant information derived from market transactions for identical or comparable assets or liabilities, (b) the Income Approach, which converts future amounts such as cash flows or earnings to a single present value amount based on current market expectations about those future amounts, and (c) the Cost Approach, which is based on the amount that currently would be required to replace the service capacity of an asset. In certain circumstances, these valuation techniques may involve some level of management estimation and judgment which becomes significant with increasingly complex instruments or pricing models. Where appropriate, adjustments are included to reflect the risk premium inherent in a particular methodology, model or input used.

The fair value hierarchy is used to prioritize valuation inputs into three levels:

● Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities. These inputs are considered to be the most reliable evidence of fair value.

● Level 2 – quoted prices for similar assets in active markets, quoted prices from those willing to trade in markets that are not active, or other inputs that are observable or can be corroborated by market data for the term of the investment. Such inputs include market interest rates and volatilities, spreads and yield curves.

● Level 3 – termed unobservable inputs which are utilized in situations where there is little or no market activity for the asset or liability at the measurement date. The approach typically involves a significant subjective management judgment toward the pricing of the security.

The Company's short-term investments comprised of certificates of deposit held at financial institutions which are not measured at fair value on a recurring basis. A portion of the Company's cash and cash equivalents include money market mutual fund accounts held at financial institutions which are measured at fair value on a recurring basis. Fixed-maturity securities held as available-for-sale are carried at fair value in our consolidated financial statements. The following tables provide information as of September 30, 2014 and December 31, 2013, about the Company's financial assets measured at fair value on a recurring basis:

	Fair Value Measurements Using
	Level 1			Level 2			Level 3			Total
As of September 30, 2014
Money market mutual funds		$	5,640,249		$	-		$	-		$	5,640,249
Restricted money market mutual funds			300,000			-			-			300,000
Securities-available-for-sale fixed-maturity:
Obligations of states, municipalities and political subdivisions			-			3,173,039			-			3,173,039
U.S. Treasury			-			539,435			-			539,435
Total		$	5,940,249		$	3,712,474		$	-		$	9,652,723
	Fair Value Measurements Using
	Level 1			Level 2			Level 3			Total
As of December 31, 2013
Money market mutual funds		$	5,903,478		$	-		$	-		$	5,903,478
Securities-available-for-sale fixed-maturity:
Obligations of states, municipalities and political subdivisions			-			-			-			-
U.S. Treasury			-			-			-			-
Total		$	5,903,478		$	-		$	-		$	5,903,478

The following methods and assumptions were used to estimate the fair value disclosures for financial instruments:

Money market mutual funds are valued at the closing price reported by the fund sponsor from an actively traded exchange. As the funds are generally maintained at a net asset value which does not fluctuate, cost approximates fair value. These are included as a Level 1 measurement in the table above. The fair values for available-for-sale fixed-maturity securities are based upon prices provided by an independent pricing service.  The Company has reviewed these prices for reasonableness and has not adjusted any prices received from the independent provider.  Level 2 securities represent assets whose fair value is determined using observable market information such as previous day trade prices, quotes from less active markets or quoted prices of securities with similar characteristics.  There were no transfers between Level 1 and Level 2 during the nine months ended September 30, 2014.

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INVESTMENTS

9 Months Ended

Sep. 30, 2014

INVESTMENTS [Abstract]

INVESTMENTS

4.INVESTMENTS

Investment income, net of investment expenses totaled $10,647 and $9,339 for the three months ended September 30, 2014 and 2013, respectively.

Investment income, net of investment expenses totaled $19,888 and $31,684 for the nine months ended September 30, 2014 and 2013, respectively.

For the three and nine months ended September 30, 2014, there were $4,012 and $9,164, respectively in unrealized gains/(losses) on fixed-maturity securities held as available-for-sale.  There were no realized gains or losses recognized for the three and nine months ended September 30, 2014 and 2013.  The intent is to hold to maturity certificates of deposit carried at amortized cost.

The following table provides the Company's short-term, restricted and long-term investment holdings by type of financial instruments that were used to estimate the fair value disclosures for financial instruments as of September 30, 2014 and December 31, 2013, respectively:

	September 30, 2014						December 31, 2013
	Book Value			Fair Value / Carrying Value			Book Value			Fair Value / Carrying Value
Financial Assets:
Restricted certificates of deposit		$	2,500,000		$	2,500,000		$	785,000		$	785,000
Restricted money markets			300,000			300,000			215,000			215,000
Long-term investments			1,470,000			1,470,000			1,960,000			1,960,000
Short-term investments			3,581,429			3,581,429			4,151,011			4,151,011
Total		$	7,851,429		$	7,851,429		$	7,111,011		$	7,111,011

	September 30, 2014				December 31, 2013
	Range of Maturities		Interest Rates		Range of Maturities		Interest Rates
Restricted certificates of deposit		Less than 1 year		0.10% - 0.40%		Less than 1 year		0.10% - 0.25%
Restricted money markets		Less than 1 year		-		Less than 1 year		-
Long-term investments		More than 1 year		0.75% - 1.40%		More than 1 year		0.30% - 0.70%
Short-term investments		Less than 1 year		0.35% - 0.80%		Less than 1 year		0.20% - 1.24%

The following table provides the Company's fixed-maturity securities classified as available-for-sale which are carried at fair value as of September 30, 2014:

	September 30, 2014
			Gross Unrealized
	Amortized Cost		Gains		Losses			Fair Value
Fixed Maturities:
Obligations of states, municipalities and political subdivisions	$	3,163,792	$	11,548	$	(2,301	)	$	3,173,039
U.S. Treasury- held as restricted		539,518		231		(314	)		539,435
Total Fixed Maturities	$	3,703,310	$	11,779	$	(2,615	)	$	3,712,474

The amortized cost and fair value of available-for-sale fixed-maturity securities at September 30, 2014, by contractual maturity, are shown in the following table.  Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2014
Remaining Time to Maturity	Amortized Cost Basis		Fair Value
Less than one year	$	418,771	$	420,174
One to five years		1,454,913		1,458,595
Five to ten years		757,413		757,855
More than ten years		1,072,213		1,075,850
Total	$	3,703,310	$	3,712,474

Other-than-temporary Impairment ("OTTI")

The Company regularly reviews its individual investment securities for OTTI.  The Company considers various factors in determining whether each individual security is other-than-temporarily-impaired, including:

· the financial condition and near-term prospects of the issuer, including any specific events that may affect its operations or earnings;

· the length of time and the extent to which the market value of the security has been below its cost or amortized cost;

· general market conditions and industry or sector specific factors;

· nonpayment by the issuer of its contractually obligated interest and principal payments; and

· the Company's intent and ability to hold the investment for a period of time sufficient to allow for the recovery of costs.

Securities with gross unrealized loss positions at September 30, 2014 were immaterial. The Company believes there were no fundamental issues such as credit losses or other factors with respect to any of its available-for-sale securities.  The unrealized losses on investments in fixed-maturity securities were caused primarily by interest rate changes.  It is expected that the securities would not be settled at a price less than par value of the investments.  Because the declines in fair value are attributable to changes in interest rates or market conditions and not credit quality, and because the Company has the ability and intent to hold its available-for-sale investments until a market price recovery or maturity, the Company does not consider any of its investments to be other-than-temporarily impaired at September 30, 2014.

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2014

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

16.COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases its corporate office space and certain office equipment under non-cancelable operating leases which expire at various dates through 2019. Future minimum lease payments required under the non-cancelable operating leases are as follows for the years ending December 31:

2014        (3 months)	$	41,712
2015		166,848
2016		174,709
2017		91,284
2018		22,188
2019		12,519
	$	509,260

Lease expense under such leases for the three months ended September 30, 2014 and September 30, 2013 was $47,776 and $33,961, respectively.

Lease expense under such leases for the nine months ended September 30, 2014 and September 30, 2013 was $125,341 and $100,396, respectively.

Litigation

The Company is the defendant in routine litigation involving matters that are incidental to the claims aspect of the Company's business for which estimated losses are included in unpaid loss and loss adjustment expense reserves in the Company's consolidated financial statements. It is management's opinion that these lawsuits are not material individually or in the aggregate to the Company's financial position, results of operations, or cash flow.

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STOCK BASED COMPENSATION

9 Months Ended

Sep. 30, 2014

STOCK BASED COMPENSATION [Abstract]

STOCK BASED COMPENSATION

12.STOCK BASED COMPENSATION

The Company accounts for stock-based compensation under the fair value recognition provision of FASB ASC Topic 718 – Compensation – Stock Compensation.

Incentive Plans

The Company's 2005 Management Incentive Plan (the "2005 Plan") provides for granting of stock options to enable the Company to obtain and retain the services of selected persons, both employees and directors, considered to be essential to the long-range success of the Company.  Under the 2005 Plan, options may be granted to purchase a total not to exceed 789,475 shares of common stock in the aggregate, made up of original issue shares, treasury shares or a combination of the two.  At September 30, 2014 and 2013, options to purchase 783,750 shares of common stock have been granted under the 2005 Plan.

The Company's 2013 Equity Compensation Plan (the "2013 Plan") provides for granting of stock options, incentive stock options, stock awards, and restricted stock units to enable the Company to obtain and retain the services of selected persons, both employees and directors, considered to be essential to the long-range success of the Company. Under the 2013 Plan, options may be granted to purchase a total not to exceed 2,925,000 shares of common stock, made up of original issue shares, treasury shares or a combination of the two. At September 30, 2014, options to purchase 1,965,000 shares of common stock and 39,000 shares of common stock in the form of a stock award have been granted under the 2013 Plan.

A summary of the activity of the Company's stock option plan for the three and nine months ended September 30, 2014 and September 30, 2013 is as follows:

	Number of Options		Weighted Avg Exercise Price		Weighted Avg Remaining Cont. Term		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2013		2,708,750	$	0.58		8.41	$	4
Outstanding at March 31, 2014		2,708,750	$	0.58		8.16	$	21
Outstanding at June 30, 2014		2,708,750	$	0.58		7.91	$	22
Outstanding at September 30, 2014		2,738,500	$	0.59		7.57	$	21
Exercisable at September 30, 2014		942,250	$	0.73		5.14	$	5
Outstanding at December 31, 2012		783,750	$	0.78		5.91	$	-
Outstanding at March 31, 2013		783,750	$	0.78		5.66	$	-
Outstanding at June 30, 2013		783,750	$	0.78		5.41	$	-
Outstanding at September 30, 2013		783,750	$	0.78		5.16	$	-
Exercisable at September 30, 2013		702,500	$	0.80		4.90	$	-

During the three and nine months ended September 30, 2014, the Company granted 40,000 stock options.  The Company did not grant any stock options during the three and nine months ended September 30, 2013. The fair value of the stock options granted during the three and nine months ended September 30, 2014 was $0.0165.

The Company records stock-based compensation expense related to granting stock options in general and administrative expenses. The Company recognized compensation expense as follows for the three and nine months ended September 30, 2014 and 2013:

	Three Months Ended September 30,							Nine Months Ended September 30,
	2014				2013			2014				2013
Total gross compensation expense		$	8,719			$	-		$	52,887			$	-
Total tax benefit associated with compensation expense			(172	)			-			(7,507	)			-
Total net compensation expense		$	8,547			$	-		$	45,380			$	-

As of September 30, 2014, the Company expects to record compensation expense in the future as follows:

	Three			Year ending December 31,
	months
	ending
	December 31, 2014			2015			2016			2017			2018			2019
Total gross unrecognized compensation expense	$	8,736		$	34,944		$	34,944		$	34,944		$	28,365		$	81
Tax benefit associated with unrecognized compensation expense		(172	)		(686	)		(686	)		(686	)		(556	)		-
Total net unrecognized compensation expense	$	8,564		$	34,258		$	34,258		$	34,258		$	27,809		$	81

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UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES

9 Months Ended

Sep. 30, 2014

UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES [Abstract]

UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES

8.UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES

Losses and loss adjustment expenses (LAE), less related reinsurance and deductibles, are charged to operations as incurred. Unpaid losses and LAE are based on claims adjusters' estimates of the cost of settlement plus an estimate for losses IBNR based upon historical experience, industry loss experience, and management's estimates.  Loss reserves reflect Company management's best estimate of the total cost of (i) claims that have been incurred but not yet paid, and (ii) claims that have been incurred, but not yet reported (IBNR).  Loss reserves that are established by Company management are not an exact calculation of our liability, but rather loss reserves represent management's best estimate for our Company's liability based on the application of actuarial techniques and other projection methodology, taking into consideration other facts and circumstances known as of the balance sheet date.  The process of setting reserves is complex and necessarily imprecise. The impact of both internal and external variables on ultimate loss and LAE costs is difficult to estimate.  To arrive as its best estimate for losses, the Company uses damage estimating software developed and owned by acknowledged industry leader, Insurance Service Office.  Reserves factors for IBNR are reviewed quarterly by an independent actuarial consultant.  In addition, our appointed independent actuary attests to the adequacy of our unpaid claim reserve, including IBNR at calendar year end.

Losses and Loss Adjustment Expenses

The following table provides the reconciliation of the beginning and ending reserve balances for losses and LAE, gross of reinsurance for the three and nine months ended September 30, 2014 and for September 30, 2013:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Reserve for losses and LAE, beginning of period	$	21,873,167		$	15,019,644		$	15,884,062		$	11,641,296
Reinsurance recoverables on losses and LAE		(21,025,809	)		(13,943,102	)		(15,090,175	)		(10,618,032	)
Reserve for losses and LAE, net of reinsurance recoverables at beginning of year		847,358			1,076,542			793,887			1,023,264
Add provision for claims and LAE occurring in:
Current year		157,986			437,080			1,293,220			1,958,627
Prior years		396,500			110,000			697,405			9,000
Net incurred losses and LAE during the current period		554,486			547,080			1,990,625			1,967,627
Deduct payments for claims and LAE occurring in:
Current year		419,573			569,658			1,432,689			1,430,927
Prior years		144,171			13,000			513,723			519,000
Net claim and LAE payments during the current period		563,744			582,658			1,946,412			1,949,927
Reserve for losses and LAE, net of reinsurance recoverables, at end of period		838,100			1,040,964			838,100			1,040,964
Reinsurance recoverables on losses and LAE		16,899,909			14,559,112			16,899,909			14,559,112
Reserve for losses and LAE, end of period	$	17,738,009		$	15,600,076		$	17,738,009		$	15,600,076

As a result of additional information on claims occurring in prior years becoming available to management, changes in estimates of provisions of claims and claim adjustment expenses were made resulting in an increase of $396,500 and $110,000 for the three months ended September 30, 2014 and 2013, respectively.

The changes in estimates of provisions of claims and claim adjustment expenses for the nine months ended September 30, 2014 and 2013 resulted in an increase of $697,405 and $9,000, respectively.

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PROPERTY, EQUIPMENT, AND SOFTWARE NET

9 Months Ended

Sep. 30, 2014

PROPERTY, EQUIPMENT, AND SOFTWARE NET [Abstract]

PROPERTY, EQUIPMENT, AND SOFTWARE NET

6.PROPERTY, EQUIPMENT, AND SOFTWARE NET

Property, equipment, and software net consist of the following as of September 30, 2014 and December 31, 2013, respectively:

	September 30, 2014			December 31, 2013			Useful Life
Computer equipment	$	231,860		$	222,225		3 years
Office equipment		17,409			13,999		5 years
Furniture and fixtures		142,450			106,524		5 years
Software installation and development		901,216			750,200		3 years
Total, at cost		1,292,935			1,092,948
Less accumulated depreciation and amortization		(937,591	)		(848,432	)
Property and equipment, net	$	355,344		$	244,516

Depreciation and amortization expense for property, equipment and software totaled $35,187 and $22,769 for the three months ended September 30, 2014 and 2013, respectively.

Depreciation and amortization expense for property, equipment and software totaled $89,159 and $63,573 for the nine months ended September 30, 2014 and 2013, respectively.

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DEFERRED POLICY ACQUISITION COSTS AND CEDING COMMISSIONS

9 Months Ended

Sep. 30, 2014

DEFERRED POLICY ACQUISITION COSTS AND CEDING COMMISSIONS [Abstract]

DEFERRED POLICY ACQUISITION COSTS AND CEDING COMMISSIONS

7.DEFERRED POLICY ACQUISITION COSTS AND CEDING COMMISSIONS

Total capitalized deferred policy acquisition costs as of September 30, 2014 and September 30, 2013, comprised of commissions, premium taxes and costs associated with underwriting and issuing policies were $7,768,160 and $6,149,835, respectively.

Changes in deferred policy acquisition costs for the three and nine months ended September 30, 2014 and September 30, 2013, are as follows:

	Three Months Ended						Nine Months Ended
	September 30, 2014			September 30, 2013			September 30, 2014			September 30, 2013
Deferred policy acquisition charges, beginning of the period	$	6,977,702		$	5,570,771		$	6,214,334		$	5,274,515
Capitalized costs		4,107,806			3,112,886			10,766,212			8,211,996
Amortized costs		(3,317,348	)		(2,533,822	)		(9,212,386	)		(7,336,676	)
Deferred policy acquisition charges, end of the period	$	7,768,160		$	6,149,835		$	7,768,160		$	6,149,835

Deferred ceding commissions, which represent acquisition costs associated with insurance risk ceded to other reinsurance partners, as of September 30, 2014 and September 30, 2013 were $0 and $1,493, respectively.  The decrease of $1,493 is due to a change in quota share reinsurance settlement procedures, from what was previously on a collected premium basis to what is currently on a written premium basis.

Changes in deferred ceding commissions for the three and nine months ended September 30, 2014 and September 30, 2013 are as follows:

	Three Months Ended					Nine Months Ended
	September 30, 2014		September 30, 2013			September 30, 2014		September 30, 2013
Deferred ceding commission, beginning of the period	$	-	$	1,493		$	-	$	683,914
Capitalized commissions		-		4,246,185			-		11,205,306
Amortized commissions		-		(4,246,185	)		-		(11,887,727	)
Deferred ceding commission, end of the period	$	-	$	1,493		$	-	$	1,493

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CONVERTIBLE NOTES PAYABLE

9 Months Ended

Sep. 30, 2014

CONVERTIBLE NOTES PAYABLE [Abstract]

CONVERTIBLE NOTES PAYABLE

9.CONVERTIBLE NOTES PAYABLE

As of December 31, 2013, the Convertible Promissory Note agreements with Inter-Atlantic Fund, L.P. and Phoenix Associates, Inc. (companies controlled by a shareholder and former director, respectively) in the amounts of $950,000 and $50,000, respectively, with an interest rate equal to 10% per annum (accelerating to 12.5% per annum in the event of default) were converted into 2,306,152 and 124,988 common shares, respectively.

During the three months ended September 30, 2013, interest expense on these notes totaled $17,397.

During the nine months ended September 30, 2013, interest expense on these notes totaled $68,630.

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REINSURANCE (Tables)

9 Months Ended

Sep. 30, 2014

REINSURANCE [Abstract]

Effects of reinsurance on premiums written and earned

The effects of reinsurance on premiums written and earned were as follows, for the three and nine months ended September 30, 2014 and September 30, 2013:

	Three Months Ended September 30, 2014								Three Months Ended September 30, 2013
	Written				Earned				Written				Earned
Direct premiums		$	21,057,409			$	16,893,086			$	16,398,118			$	13,643,436
Ceded premiums			(18,648,417	)			(16,046,107	)			(14,641,816	)			(12,390,289	)
Net Premiums		$	2,408,992			$	846,979			$	1,756,302			$	1,253,147

	Nine Months Ended September 30, 2014								Nine Months Ended September 30, 2013
	Written				Earned				Written				Earned
Direct premiums		$	54,973,994			$	46,933,714			$	43,370,380			$	39,037,947
Ceded premiums			(48,567,557	)			(43,539,301	)			(38,659,828	)			(35,494,253	)
Net Premiums		$	6,406,437			$	3,394,413			$	4,710,552			$	3,543,694

Summary of reinsurance balances

Following is a summary of HAIC's reinsurance balances under the above described reinsurance treaties as of and for the three and nine months ended September 30, 2014 and December 31, 2013:

	September 30, 2014		December 31, 2013
Ceded premiums payable	$	8,812,245	$	3,271,858
Ceded loss and loss adjustment expense reserve	$	16,899,909	$	15,090,175
Ceded unearned premium reserve	$	34,836,484	$	27,924,037

	Three Months Ended						Nine Months Ended
	September 30, 2014			September 30, 2013			September 30, 2014			September 30, 2013
Ceded loss adjustment expenses		$	746,877		$	1,125,971		$	3,394,533		$	3,560,184
Ceded earned premiums		$	16,046,107		$	12,390,289		$	43,539,301		$	35,494,253

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STOCK BASED COMPENSATION, Compensation Expense (Details) (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014	Sep. 30, 2013
Stock-Based Compensation Expense [Abstract]
Total gross compensation expense		$ 52,887	$ 0
Total tax benefit associated with compensation expense	(172)	(7,507)	0
Total net compensation expense	8,547	45,380	0
General and Administrative Expense [Member]
Stock-Based Compensation Expense [Abstract]
Total gross compensation expense	$ 8,719	$ 52,887	$ 0

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REINSURANCE

9 Months Ended

Sep. 30, 2014

REINSURANCE [Abstract]

REINSURANCE

14.REINSURANCE

Certain premiums and benefits are ceded to other insurance companies under various reinsurance agreements. The reinsurance agreements provide HAIC with increased capacity to write larger risks and maintain its exposure to loss within its capital resources. Ceded reinsurance contracts do not relieve HAIC from its obligations to policyholders. HAIC remains liable to its policyholders for the portion reinsured to the extent that any reinsurer does not meet the obligations assumed under the reinsurance agreements. To minimize its exposure to significant losses from reinsurer insolvencies, HAIC evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities, or economic characteristics of the reinsurers.

Commencing April 1, 2014 and ending March 31, 2015, the Company reinsured its property and casualty risk under quota share reinsurance treaties with third party reinsurers.  The treaties cover 80% of its risk under property coverage on any one loss occurrence not to exceed $110,000,000; 10% of its risk under property coverage on any one loss occurrence not to exceed $4,000,000 and approximately 64% of its risk under casualty coverages.

Property catastrophe treaties, which went into effect on the same day and having the same term as the quota share treaties, develop over four layers and 20% of our risk on property coverage on a gross loss of $110,000,000 excess of $4,000,000 per occurrence. The Company's net retention is $400,000 per loss occurrence.

Commencing August 1, 2014 and ending November 30, 2014, the Company purchased a fifth layer of property catastrophe reinsurance with third party reinsurers to cover its potential maximum loss during the 2014 hurricane season.  The layer will extend the Company's coverage to $140,000,000, excess of $4,000,000 of ultimate net loss arising out of each loss occurrence.  The Company's net retention on each loss occurrence remains at $400,000.

For the 12 month period commencing April 1, 2013 and ending March 31, 2014, the Company reinsured with various third party reinsurers under residential quota share reinsurance treaties, 90% of its risk. The reinsurers' liability under the quota share arrangement beginning in respect to any one loss occurrence shall not exceed $80,000,000. Property catastrophe treaties, which went into effect on the same day and have the same term as the quota share treaties, develop over four layers and cover a gross loss of $76,000,000 excess of $4,000,000 per occurrence. The Company's net retention is $400,000 per occurrence.

The Company also purchases reinsurance covering non-weather losses (two occurrences) in excess of a gross loss of $500,000 per occurrence for all coverage lines (a net loss of $50,000). This coverage which was in force during 2014 and 2013 has been obtained principally to protect the Company in the event of a large fire loss.

The effects of reinsurance on premiums written and earned were as follows, for the three and nine months ended September 30, 2014 and September 30, 2013:

	Three Months Ended September 30, 2014								Three Months Ended September 30, 2013
	Written				Earned				Written				Earned
Direct premiums		$	21,057,409			$	16,893,086			$	16,398,118			$	13,643,436
Ceded premiums			(18,648,417	)			(16,046,107	)			(14,641,816	)			(12,390,289	)
Net Premiums		$	2,408,992			$	846,979			$	1,756,302			$	1,253,147

	Nine Months Ended September 30, 2014								Nine Months Ended September 30, 2013
	Written				Earned				Written				Earned
Direct premiums		$	54,973,994			$	46,933,714			$	43,370,380			$	39,037,947
Ceded premiums			(48,567,557	)			(43,539,301	)			(38,659,828	)			(35,494,253	)
Net Premiums		$	6,406,437			$	3,394,413			$	4,710,552			$	3,543,694

Following is a summary of HAIC's reinsurance balances under the above described reinsurance treaties as of and for the three and nine months ended September 30, 2014 and December 31, 2013:

	September 30, 2014		December 31, 2013
Ceded premiums payable	$	8,812,245	$	3,271,858
Ceded loss and loss adjustment expense reserve	$	16,899,909	$	15,090,175
Ceded unearned premium reserve	$	34,836,484	$	27,924,037

	Three Months Ended						Nine Months Ended
	September 30, 2014			September 30, 2013			September 30, 2014			September 30, 2013
Ceded loss adjustment expenses		$	746,877		$	1,125,971		$	3,394,533		$	3,560,184
Ceded earned premiums		$	16,046,107		$	12,390,289		$	43,539,301		$	35,494,253

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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2014

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Restatement of prior year amounts

In conjunction with our Annual Report on Form 10-K for the year ended December 31, 2013 filed with the Securities and Exchange Commission on March 31, 2014, we restated the unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2013.  These restatements resulted in money market mutual fund accounts held at financial institutions which were previously classified as short-term investments to be now classified as cash and cash equivalents. In addition, checks issued in excess of cash book balances, not yet presented for payment, which were previously classified as cash and cash equivalents are now classified as general and other accrued expenses payable.

	Nine Months Ended September 30, 2013
	As Previously Reported			Adjustment		As Restated
Consolidated Statements of Cash Flows:
Cash flows from operating activities
General and other accrued expenses	$	52,117		$	1,786,733	$	1,838,850
Net cash used in operating activities		(2,813,808	)		1,786,733		(1,027,075	)
Cash flows from investing activities
Purchases of short term investments		(5,932,051	)		4,491,856		(1,440,195	)
Net cash used in investing activities		(5,372,355	)		4,491,856		(880,499	)
Net decrease in cash and cash equivalents		(8,191,563	)		6,278,589		(1,912,974	)
Cash and cash equivalents, beginning of period		10,194,375			-		10,194,375
Cash and cash equivalents, end of period	$	2,002,812		$	6,278,589	$	8,281,401

Restricted cash and investments

The following table provides the Company's restricted cash and investments as of September 30, 2014 and December 31, 2013.

Restricted cash and investments	September 30, 2014		December 31, 2013
Money Market	$	300,000	$	215,000
Certificates of Deposit		2,500,000		785,000
US Treasury Bond		539,435		-
	$	3,339,435	$	1,000,000

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STOCK BASED COMPENSATION, Incentive Plans (Details)			9 Months Ended
	Sep. 30, 2014 2005 Management Incentive Plan [Member]	Sep. 30, 2013 2005 Management Incentive Plan [Member]	Sep. 30, 2014 2013 Equity Compensation Plan [Member]
Incentive Awards [Abstract]
Shares authorized (in shares)	789,475		2,925,000
Total options granted to purchase shares of common stock (in shares)	783,750	783,750	1,965,000
Shares of common stock granted in the form of a stock award (in shares)			39,000

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Securities-available-for-sale fixed maturity [Abstract]
U.S. treasury	$ 539,435	$ 0
Fair Value Measured on a Recurring Basis [Member]
Fair Value of Financial Assets [Abstract]
Money market mutual funds	5,640,249	5,903,478
Restricted money market mutual funds	300,000
Securities-available-for-sale fixed maturity [Abstract]
Obligations of states, municipalities and political subdivisions	3,173,039	0
U.S. treasury	539,435	0
Total assets	9,652,723	5,903,478
Transfers Between Level 1 and Level 2 [Abstract]
Transfers from Level 1 to Level 2	0
Transfers from Level 2 to Level 1	0
Fair Value Measured on a Recurring Basis [Member] | Level 1 [Member]
Fair Value of Financial Assets [Abstract]
Money market mutual funds	5,640,249	5,903,478
Restricted money market mutual funds	300,000
Securities-available-for-sale fixed maturity [Abstract]
Obligations of states, municipalities and political subdivisions	0	0
U.S. treasury	0	0
Total assets	5,940,249	5,903,478
Fair Value Measured on a Recurring Basis [Member] | Level 2 [Member]
Fair Value of Financial Assets [Abstract]
Money market mutual funds	0	0
Restricted money market mutual funds	0
Securities-available-for-sale fixed maturity [Abstract]
Obligations of states, municipalities and political subdivisions	3,173,039	0
U.S. treasury	539,435	0
Total assets	3,712,474	0
Fair Value Measured on a Recurring Basis [Member] | Level 3 [Member]
Fair Value of Financial Assets [Abstract]
Money market mutual funds	0	0
Restricted money market mutual funds	0
Securities-available-for-sale fixed maturity [Abstract]
Obligations of states, municipalities and political subdivisions	0	0
U.S. treasury	0	0
Total assets	$ 0	$ 0

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 996,590	$ 660,919	$ 1,957,671	$ 1,184,091
Change in unrealized gain on investments:
Unrealized gain arising from the period	4,012	0	9,164	0
Deferred income taxes on above change	0	0	0	0
Total other comprehensive income, net of income taxes	4,012	0	9,164	0
Comprehensive income	$ 1,000,602	$ 660,919	$ 1,966,835	$ 1,184,091

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2014

RELATED PARTY TRANSACTIONS [Abstract]

RELATED PARTY TRANSACTIONS

3.RELATED PARTY TRANSACTIONS

In December 2012, HAHC entered into a Convertible Promissory Note with Inter-Atlantic Fund, L.P. and Phoenix Associates, Inc., (companies controlled by a shareholder and former director, respectively). See Note 9 Convertible Notes Payable for additional disclosure.

In August 2013, HAHC entered into an agreement or the "Advisory Agreement", with Inter-Atlantic Advisors III, Ltd., or "Inter-Atlantic", under which Inter-Atlantic agrees to perform certain management services for the Company. A number of our directors are among the beneficial owners of Inter-Atlantic.  The Advisory Agreement has an initial term of six years, to be automatically renewed from year-to-year thereafter, unless terminated by either party upon 60 days notice prior to the termination of the initial or any renewal term.  For its services, the Company will pay Inter-Atlantic an annual fee of $300,000, as well as, an annual grant of shares of our common stock with an aggregate fair market value of $150,000 at the time of grant, plus reimburse Inter-Atlantic's expenses incurred in connection with the performance of its service. As long as the Advisory Agreement is in effect and the fees and expense reimbursements are paid, the directors of the Company that are affiliated with Inter-Atlantic have agreed to waive any other compensation for their service as our directors.

For the three and nine months ended September 30, 2014, the Company incurred an expense of $75,000 and $375,000 (of which $150,000 is represented by the issuance of 288,462 shares of common stock), respectively, for services performed under the Advisory Agreement.

For the three and nine months ended September 30, 2013, the Company incurred an expense of $50,000, respectively, for services performed under the Advisory Agreement.

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REGULATORY REQUIREMENTS AND RESTRICTIONS (Details) (USD $)	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
REGULATORY REQUIREMENTS AND RESTRICTIONS [Abstract]
Minimum in capital stock requires by insurance regulator	$ 2,500,000
Minimum in surplus requires by insurance regulator	2,500,000
Statutory accounting practices, statutory capital and surplus, balance	12,118,313	8,963,573
Statutory accounting practices statutory capital balance	3,000,000	2,500,000
Statutory accounting practices statutory surplus balance	9,118,313	6,463,573
Statutory accounting practices, future dividend payments restrictions	The maximum dividend that may be paid without approval of the Insurance Commissioner is limited to the greater of 10% of the statutory surplus at the end of the preceding calendar year or the statutory net income of the preceding calendar year
Restricted cash and investments, current, total	3,300,000	1,000,000
Restricted Cash and Investments [Abstract]
Restricted cash and investments	3,339,435	1,000,000
Money Market [Member]
Restricted Cash and Investments [Abstract]
Restricted cash and investments	300,000	215,000
Certificates of Deposit [Member]
Restricted Cash and Investments [Abstract]
Restricted cash and investments	2,500,000	785,000
US Treasury Bond [Member]
Restricted Cash and Investments [Abstract]
Restricted cash and investments	$ 539,435	$ 0

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INVESTMENTS (Tables)

9 Months Ended

Sep. 30, 2014

INVESTMENTS [Abstract]

Short-term, restricted and long-term investment holdings

The following table provides the Company's short-term, restricted and long-term investment holdings by type of financial instruments that were used to estimate the fair value disclosures for financial instruments as of September 30, 2014 and December 31, 2013, respectively:

	September 30, 2014						December 31, 2013
	Book Value			Fair Value / Carrying Value			Book Value			Fair Value / Carrying Value
Financial Assets:
Restricted certificates of deposit		$	2,500,000		$	2,500,000		$	785,000		$	785,000
Restricted money markets			300,000			300,000			215,000			215,000
Long-term investments			1,470,000			1,470,000			1,960,000			1,960,000
Short-term investments			3,581,429			3,581,429			4,151,011			4,151,011
Total		$	7,851,429		$	7,851,429		$	7,111,011		$	7,111,011

	September 30, 2014				December 31, 2013
	Range of Maturities		Interest Rates		Range of Maturities		Interest Rates
Restricted certificates of deposit		Less than 1 year		0.10% - 0.40%		Less than 1 year		0.10% - 0.25%
Restricted money markets		Less than 1 year		-		Less than 1 year		-
Long-term investments		More than 1 year		0.75% - 1.40%		More than 1 year		0.30% - 0.70%
Short-term investments		Less than 1 year		0.35% - 0.80%		Less than 1 year		0.20% - 1.24%

Fixed-maturity securities classified as available-for-sale

The following table provides the Company's fixed-maturity securities classified as available-for-sale which are carried at fair value as of September 30, 2014:

	September 30, 2014
			Gross Unrealized
	Amortized Cost		Gains		Losses			Fair Value
Fixed Maturities:
Obligations of states, municipalities and political subdivisions	$	3,163,792	$	11,548	$	(2,301	)	$	3,173,039
U.S. Treasury- held as restricted		539,518		231		(314	)		539,435
Total Fixed Maturities	$	3,703,310	$	11,779	$	(2,615	)	$	3,712,474

Available-for-sale fixed-maturity securities by contractual maturity

The amortized cost and fair value of available-for-sale fixed-maturity securities at September 30, 2014, by contractual maturity, are shown in the following table.  Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2014
Remaining Time to Maturity	Amortized Cost Basis		Fair Value
Less than one year	$	418,771	$	420,174
One to five years		1,454,913		1,458,595
Five to ten years		757,413		757,855
More than ten years		1,072,213		1,075,850
Total	$	3,703,310	$	3,712,474

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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Other Information (Details) (USD $)	3 Months Ended				9 Months Ended			12 Months Ended
	Sep. 30, 2014		Sep. 30, 2013		Sep. 30, 2014		Sep. 30, 2013	Dec. 31, 2013
Cash and Cash Equivalents [Abstract]
Checks issued in excess of cash book balances not yet presented for payment	$ 4,700,000				$ 4,700,000			$ 1,200,000
Restricted Cash and Investments [Abstract]
Restricted cash and investments	3,339,435				3,339,435			1,000,000
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, before Tax	4,012		0		9,164		0
Loss Adjustment and Other Fee Income [Abstract]
Loss adjustment and other fee income as a percentage of total revenue, minimum (in hundredths)		[1]		[1]		[1]	5.00%
Impairment of Long-Lived Assets [Abstract]
Impairment charges					0			0
Uncertain Tax Positions [Abstract]
Percentage of settlement with tax authority (in hundredths)					50.00%
Stock Based Compensation [Abstract]
Vesting percentage of stock awards (in hundredths)					100.00%
EARNINGS (LOSS) PER SHARE [Abstract]
Net income attributable to common stockholders	996,590		405,704		1,957,671		209,912
Antidilutive securities excluded from computation of earnings per share (in shares)							13,985,834
Cumulative preferred stock dividends	0		255,215		0		974,179
Property and Equipment [Member] | Maximum [Member]
Property, Equipment and Software [Abstract]
Useful life (in years)					5 years
Property and Equipment [Member] | Minimum [Member]
Property, Equipment and Software [Abstract]
Useful life (in years)					3 years
Software Installation and Development [Member]
Property, Equipment and Software [Abstract]
Useful life (in years)					3 years
Money Market [Member]
Restricted Cash and Investments [Abstract]
Restricted cash and investments	300,000				300,000			215,000
Certificates of Deposit [Member]
Restricted Cash and Investments [Abstract]
Restricted cash and investments	2,500,000				2,500,000			785,000
US Treasury Bond [Member]
Restricted Cash and Investments [Abstract]
Restricted cash and investments	$ 539,435				$ 539,435			$ 0

[1] No amount over 5%.

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INCOME TAXES

9 Months Ended

Sep. 30, 2014

INCOME TAXES [Abstract]

INCOME TAXES

13.INCOME TAXES

During the three and nine months ended September 30, 2014, the Company recorded $530,513 and $1,052,687 respectively, of income tax expense which resulted in estimated annual effective tax rate of 34.22% and 34.25%.  The effective tax rate was primarily impacted as a result of permanent tax differences on meals and entertainment and stock-based compensation.

During the three and nine months ended September 30, 2013, the Company recorded $315,929 and $608,254 respectively, of income tax expense which resulted in estimated annual effective tax rate of 32.3% and 33.9%. The effective tax rate was primarily impacted as a result of permanent tax differences on meals and entertainment.

The Company's federal income tax return is consolidated with HAIC and MGA. Allocation of tax expense or refunds among the consolidated group is based on separate return calculations.