Senior Debt

The Company's senior debt facility is comprised of three notes: a $17.5 million revolving line of credit ("Revolver"); a $5.0 million five-year term note ("Term Note") which commenced in October 2013; and a $7.5 million five-year term note which commenced in September 2014 ("2014 Term Note"). A summary of the outstanding senior debt at December 31, 2015 is as follows (in thousands):



	December 31,
	2015		2014
Revolver	$	3,500	$	16,562
Term Note	2,750		3,500
2014 Term Note	6,500		7,500
Total	12,750		27,562

The obligations under the Amended Credit Agreement bear interest at LIBOR rate plus 2.75%, or the lender’s prime rate plus 1.0%, except for the 2014 Term Note. Interest on the 2014 Term Note is at LIBOR plus 3.25% or the lender’s prime rate plus 1.50%. The weighted average interest rate was 3.4% and 3.3% for the years ended December 31, 2015 and 2014, respectively. The Company is required to pay quarterly commitment fees on the unused portion of the Credit Facility equal to 0.2% per annum.

The aggregate maturities under the Amended Credit Agreement for each of the five years subsequent to December 31, 2015 are as follows: $5.5 million in 2016, $2.5 million in 2017, $2.8 million in 2018, $2.0 million in 2019 and $0.0 million in 2020.

The Company entered into various amendments since it last refinanced on September 29, 2014, which, among other things, included the following key changes to the credit facility agreement:


•	During 2015, a number of amendments reduced the required ownership interest of the Company’s Chairman from not less than 50% to not less 15% upon the consummation of an IPO.


•	On January 26, 2016, revised the formula for the fixed-charge coverage ratio by reducing one of the amounts included in the denominator. Originally, this amount was 20% of the total Revolver facility and was reduced to 16.67%

All outstanding borrowings under the Revolver were repaid from the proceeds received from the Company’s IPO, in August 2015; another $3.5 million was then drawn down in the fourth quarter of 2015. The undrawn portion of the Revolver, which was $14.0 million as of December 31, 2015, and is available to finance working capital, fund other general corporate purposes and provide surplus contributions to its Insurance Company Subsidiaries to support premium growth or strategic acquisitions.

The Credit Facility contains various restrictive covenants that relate to the Company’s shareholders’ equity, premiums-to-capital and surplus ratios, fixed-charge coverage ratio, risk-based capital ratios, and A.M. Best ratings of its Insurance Company Subsidiaries. At December 31, 2015, the Company was in compliance with all of its Credit Facility covenants except for the fixed-charge coverage ratio which fell below 1.20-to-1.0, to 0.9-to-1.0. The Company received a waiver for this covenant breach as of December 31, 2015. The Company is expected to meet this debt covenant requirement going forward based upon a combination of the January 26, 2016 amendment and improved cash flows from operations.

Interest Rate Swap Agreement

In order to reduce its interest rate risk, the Company entered into an interest rate swap agreement for a notional amount of $5.0 million in September 2014, at the same time it refinanced the five year Term Note, and the notional amount decreases in proportion with the amortization of the Term Note. Under this swap agreement, the Company pays the fixed rate of 1.04% on the $5.0 million notional amount on a quarterly basis, and receives the LIBOR rate on a quarterly basis. Payments are settled on a net basis, and the Company has effectively converted its variable‑rate debt into fixed‑rate debt with an effective interest rate of 3.79%. Payments made or received on the swap are recorded as interest expense. The changes in fair value of the interest rate swap are recorded as other income or expense. At December 31, 2015 and 2014, the fair value of the interest rate swap of $4,000 and $9,000, respectively (notional amounts of $2.8 million and $3.8 million, respectively), was recorded in other assets in the consolidated balance sheets.