OXBRIDGE RE HOLDINGS LIMITED
|
||
(Exact
name of registrant as specified in its charter)
|
Cayman
Islands
|
|
98-1150254
|
(State
or other jurisdiction of incorporation or
organization)
|
|
(I.R.S.
Employer Identification
No.)
|
Strathvale
House, 2nd
Floor90 North Church Street, Georgetown P.O. Box 469
Grand
Cayman, Cayman Islands
|
|
KY1-9006
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
Large accelerated
filer
|
☐
|
Accelerated
filer
|
☐
|
Non-accelerated
filer
|
☐
|
Smaller reporting
company
|
☑
|
PART I – FINANCIAL INFORMATION
|
Page
|
|
|
|
|
Item
1.
|
Financial
Statements
|
|
|
|
|
|
Consolidated
Balance Sheets September 30, 2016
(unaudited) and December 31, 2015
|
3
|
|
|
|
|
Consolidated
Statements of Income Three and Nine
months Ended September 30, 2016 and 2015 (unaudited)
|
4
|
|
|
|
|
Consolidated
Statements of Comprehensive Income Three and Nine
months Ended September 30, 2016 and 2015 (unaudited)
|
5
|
|
|
|
|
Consolidated
Statements of Cash Flows Nine months Ended
September 30, 2016 and 2015 (unaudited)
|
6
|
|
|
|
|
Consolidated
Statements of Changes in Shareholders’ Equity
Nine
months Ended September 30, 2016 and 2015 (unaudited)
|
8
|
|
|
|
|
Notes
to Consolidated Financial Statements (unaudited)
|
9
|
|
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
31
|
|
|
|
Item
3.
|
Quantitative and
Qualitative Disclosures About Market Risk
|
42
|
|
|
|
Item
4.
|
Controls and
Procedures
|
42
|
|
|
|
PART II – OTHER INFORMATION
|
|
|
|
|
|
Item
1.
|
Legal
Proceedings
|
43
|
|
|
|
Item
1A.
|
Risk
Factors
|
43
|
|
|
|
Item
2.
|
Unregistered Sales
of Equity Securities and Use of Proceeds
|
43
|
|
|
|
Item
3.
|
Defaults Upon
Senior Securities
|
44
|
|
|
|
Item
4.
|
Mine
Safety Disclosures
|
44
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|
|
|
Item
5.
|
Other
Information
|
44
|
|
|
|
Item
6.
|
Exhibits
|
44
|
|
|
|
|
Signatures
|
45
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|
|
|
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
|
||
Consolidated Balance Sheets
|
||
(expressed in thousands of U.S. Dollars, except per share and share
amounts)
|
||
|
|
|
|
|
|
|
At
September 30, 2016
|
At
December 31, 2015
|
|
(Unaudited)
|
|
Assets
|
|
|
Investments:
|
|
|
Fixed-maturity
securities, available for sale, at fair value (amortized cost:
$6,081 and $3,080, respectively)
|
$6,074
|
3,096
|
Equity
securities, available for sale, at fair value (cost: $6,801 and
$7,742, respectively)
|
6,359
|
6,252
|
Total
investments
|
12,433
|
9,348
|
Cash
and cash equivalents
|
9,478
|
8,584
|
Restricted
cash and cash equivalents
|
26,296
|
30,368
|
Accrued
interest and dividend receivable
|
26
|
25
|
Premiums
receivable
|
9,448
|
4,117
|
Deferred
policy acquisition costs
|
162
|
90
|
Prepayment
and other receivables
|
95
|
91
|
Property
and equipment, net
|
59
|
64
|
Total
assets
|
$57,997
|
52,687
|
|
|
|
Liabilities and Shareholders’ Equity
|
|
|
Liabilities:
|
|
|
Reserve
for losses and loss adjustment expenses
|
$972
|
-
|
Loss
experience refund payable
|
6,818
|
9,913
|
Unearned
premiums reserve
|
9,526
|
5,571
|
Accounts
payable and other liabilities
|
212
|
176
|
Total
liabilities
|
17,528
|
15,660
|
|
|
|
Shareholders’
equity:
|
|
|
Ordinary
share capital, (par value $0.001, 50,000,000 shares authorized;
5,981,613 and 6,060,000 shares issued and outstanding at September
30, 2016 and December 31, 2015, respectively)
|
6
|
6
|
Additional
paid-in capital
|
33,348
|
33,657
|
Retained
earnings
|
7,564
|
4,838
|
Accumulated
other comprehensive loss
|
(449)
|
(1,474)
|
Total
shareholders’ equity
|
40,469
|
37,027
|
Total
liabilities and shareholders’ equity
|
$57,997
|
52,687
|
|
|
|
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
|
||||
Consolidated Statements of Income (unaudited)
|
||||
(expressed in thousands of U.S. Dollars, except per share and share
amounts)
|
||||
|
||||
|
||||
|
Three Months Ended
|
Nine Months Ended
|
||
|
September 30,
|
September 30,
|
||
|
2016
|
2015
|
2016
|
2015
|
|
(Unaudited)
|
(Unaudited)
|
||
|
|
|
|
|
Revenue
|
|
|
|
|
Assumed
premiums
|
$-
|
-
|
$15,065
|
14,888
|
Change
in loss experience refund payable
|
(2,089)
|
(2,089)
|
(4,465)
|
(6,204)
|
Change
in unearned premiums reserve
|
4,007
|
3,881
|
(3,955)
|
(3,708)
|
|
|
|
|
|
Net
premiums earned
|
1,918
|
1,792
|
6,645
|
4,976
|
Net
realized investment gain / (loss)
|
122
|
(303)
|
256
|
673
|
Net
investment income
|
126
|
90
|
327
|
262
|
Other-than-temporary
impairment losses
|
-
|
(399)
|
-
|
(399)
|
|
|
|
|
|
Total
revenue
|
2,166
|
1,180
|
7,228
|
5,512
|
|
|
|
|
|
Expenses
|
|
|
|
|
Losses
and loss adjustment expenses (credit)
|
(1,248)
|
-
|
1,030
|
-
|
Policy
acquisition costs and underwriting expenses
|
83
|
85
|
211
|
259
|
General
and administrative expenses
|
346
|
353
|
1,087
|
1,024
|
|
|
|
|
|
Total
expenses (credit)
|
(819)
|
438
|
2,328
|
1,283
|
|
|
|
|
|
Net
income
|
$2,985
|
742
|
$4,900
|
4,229
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
Basic
and Diluted
|
$0.50
|
0.12
|
$0.81
|
0.70
|
|
|
|
|
|
|
|
|
|
|
Dividends paid per share
|
$0.12
|
0.12
|
$0.36
|
0.36
|
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
|
||||
Consolidated Statements of Comprehensive Income (unaudited)
|
||||
(expressed in thousands of U.S. Dollars)
|
||||
|
||||
|
Three Months Ended
|
Nine Months Ended
|
||
|
September 30,
|
September 30,
|
||
|
2016
|
2015
|
2016
|
2015
|
|
(Unaudited)
|
(Unaudited)
|
||
|
|
|
|
|
|
|
|
|
|
Net
income
|
$2,985
|
742
|
$4,900
|
4,229
|
Other
comprehensive income:
|
|
|
|
|
Change
in unrealized gain on investments:
|
|
|
|
|
Unrealized
gain / (loss) arising during the period
|
304
|
(1,209)
|
1,281
|
(1,967)
|
Other-than-temporary
impairment losses
|
-
|
399
|
-
|
399
|
Reclassification
adjustment for net realized (gain) / loss included in net
income
|
(122)
|
303
|
(256)
|
(673)
|
|
|
|
|
|
Net
change in unrealized gain / (loss)
|
182
|
(507)
|
1,025
|
(2,241)
|
|
|
|
|
|
Total
other comprehensive income / (loss)
|
182
|
(507)
|
1,025
|
(2,241)
|
|
|
|
|
|
Comprehensive
income
|
3,167
|
235
|
5,925
|
1,988
|
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
|
||
Consolidated Statements of Cash Flows (unaudited)
|
||
(expressed in thousands of U.S. Dollars)
|
||
|
|
|
|
Nine
Months Ended
|
|
|
September
30,
|
|
|
2016
|
2015
|
Operating activities
|
|
|
Net
income
|
$4,900
|
4,229
|
Adjustments to reconcile net
income to net cash provided by operating activities:
|
|
|
Stock-based
compensation
|
90
|
88
|
Depreciation
and amortization
|
16
|
12
|
Net
realized investment gains
|
(256)
|
(673)
|
Other-than-temporary
impairment losses
|
-
|
399
|
Change
in operating assets and liabilities:
|
|
|
Accrued
interest and dividend receivable
|
(1)
|
(6)
|
Premiums
receivable
|
(5,331)
|
(2,648)
|
Deferred
policy acquisition costs
|
(72)
|
(43)
|
Prepayment
and other receivables
|
(4)
|
(41)
|
Reserve
for loss and loss adjustment expenses
|
972
|
-
|
Loss
experience refund payable
|
(3,095)
|
691
|
Unearned
premiums reserve
|
3,955
|
3,708
|
Accounts
payable and other liabilities
|
36
|
(6)
|
|
|
|
Net
cash provided by operating activities
|
$1,210
|
5,710
|
|
|
|
Investing activities
|
|
|
Change
in restricted cash and cash equivalents
|
4,072
|
(1,974)
|
Purchase
of fixed-maturity securities
|
(3,111)
|
(1,101)
|
Purchase
of equity securities
|
(8,030)
|
(10,814)
|
Proceeds
from sale of fixed-maturity and equity securities
|
9,337
|
11,477
|
Purchase
of property and equipment
|
(11)
|
(25)
|
|
|
|
Net
cash provided by / (used in) investing activities
|
$2,257
|
(2,437)
|
|
|
|
Financing activities
|
|
|
Repurchases
of common stock under share repurchase plan
|
(399)
|
-
|
Cash
dividends paid
|
(2,174)
|
(2,182)
|
|
|
|
Net
cash used in financing activities
|
$(2,573)
|
(2,182)
|
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
|
||
Consolidated Statements of Cash Flows
|
||
(expressed in thousands of U.S. Dollars)
|
||
|
|
|
|
Nine
Months Ended
|
|
|
September
30,
|
|
|
2016
|
2015
|
|
|
|
Net
change in cash and cash equivalents
|
894
|
1,091
|
Cash
and cash equivalents at beginning of period
|
8,584
|
5,317
|
|
|
|
Cash
and cash equivalents at end of period
|
$9,478
|
6,408
|
|
|
|
Supplemental disclosure of cash flow information
|
|
|
Interest
paid
|
-
|
-
|
Income
taxes paid
|
-
|
-
|
|
|
|
Non-cash investing activities
|
|
|
Net
change in unrealized gain (loss) on securities available for
sale
|
1,025
|
(2,241)
|
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
|
||||||
Consolidated Statements of Changes in Shareholders' Equity
|
||||||
Nine Months Ended September 30, 2016 and 2015 (unaudited)
|
||||||
(expressed in thousands of U.S. Dollars, except number of shares
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary Share Capital
|
Additional Paid-in
|
Retained
|
Accumulated Other
|
Total Shareholders'
|
|
|
Shares
|
Amount
|
Capital
|
Earnings
|
Comprehensive
Loss
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2014
|
6,000,000
|
6
|
33,540
|
3,145
|
17
|
36,708
|
Cash
dividends
|
-
|
-
|
-
|
(2,182)
|
-
|
(2,182)
|
Net
income for the period
|
-
|
-
|
-
|
4,229
|
-
|
4,229
|
Issuance
of restricted stock
|
60,000
|
-
|
-
|
-
|
-
|
-
|
Stock-based
compensation
|
|
-
|
88
|
-
|
-
|
88
|
Total
other comprehensive loss
|
-
|
-
|
-
|
-
|
(2,241)
|
(2,241)
|
Balance
at September 30, 2015
|
6,060,000
|
6
|
33,628
|
5,192
|
(2,224)
|
36,602
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2015
|
6,060,000
|
6
|
33,657
|
4,838
|
(1,474)
|
37,027
|
Cash
dividends
|
-
|
-
|
-
|
(2,174)
|
-
|
(2,174)
|
Repurchase
and retirement of common stock under share repurchase
plan
|
(78,387)
|
-
|
(399)
|
-
|
-
|
(399)
|
Net
income for the period
|
-
|
-
|
-
|
4,900
|
-
|
4,900
|
Stock-based
compensation
|
-
|
-
|
90
|
-
|
-
|
90
|
Total
other comprehensive income
|
-
|
-
|
-
|
-
|
1,025
|
1,025
|
Balance
at September 30, 2016
|
5,981,613
|
6
|
33,348
|
7,564
|
(449)
|
40,469
|
Level
1
|
Inputs
that reflect unadjusted quoted prices in active markets for
identical assets or liabilities that the Company has the ability to
access at the measurement date;
|
|
|
Level
2
|
Inputs
other than quoted prices that are observable for the asset or
liability either directly or indirectly, including inputs in
markets that are not considered to be active; and
|
|
|
Level
3
|
Inputs
that are unobservable.
|
|
At
September 30,
|
At
December 31,
|
|
2016
|
2015
|
|
(in thousands)
|
|
|
|
|
Cash
on deposit
|
$5,649
|
$3,567
|
Cash
held with custodians
|
3,829
|
5,017
|
Restricted
cash held in trust
|
26,296
|
30,368
|
|
|
|
Total
|
35,774
|
38,952
|
|
|
|
|
Cost
or
|
Gross
|
Gross
|
Estimated
|
|
Amortized
|
Unrealized
|
Unrealized
|
Fair
|
|
Cost
|
Gain
|
Loss
|
Value ($000)
|
|
($ in thousands)
|
|||
As of September 30, 2016
|
|
|
|
|
Fixed-maturity securities
|
|
|
|
|
U.S.
Treasury and agency securities
|
$6,081
|
$29
|
$(36)
|
$6,074
|
|
|
|
|
|
|
|
|
|
|
Total
fixed-maturity securities
|
6,081
|
29
|
(36)
|
6,074
|
|
|
|
|
|
Mutual
funds
|
400
|
-
|
(10)
|
390
|
Preferred
stocks
|
963
|
25
|
(11)
|
977
|
Common
stocks
|
5,438
|
233
|
(679)
|
4,992
|
|
|
|
|
|
Total
equity securities
|
6,801
|
258
|
(700)
|
6,359
|
|
|
|
|
|
|
|
|
|
|
Total
available for sale securities
|
$12,882
|
$287
|
$(736)
|
$12,433
|
|
|
|
|
|
As of December 31, 2015
|
|
|
|
|
Fixed-maturity securities
|
|
|
|
|
U.S.
Treasury and agency securities
|
$2,969
|
$12
|
$-
|
$2,981
|
Exchange-traded
debt securities
|
111
|
4
|
-
|
115
|
|
|
|
|
|
Total
fixed-maturity securities
|
3,080
|
16
|
-
|
3,096
|
|
|
|
|
|
Preferred
stocks
|
1,674
|
15
|
(174)
|
1,515
|
Common
stocks
|
6,068
|
158
|
(1,489)
|
4,737
|
|
|
|
|
|
Total
equity securities
|
7,742
|
173
|
(1,663)
|
6,252
|
|
|
|
|
|
Total
available for sale securities
|
$10,822
|
$189
|
$(1,663)
|
$9,348
|
|
Amortized
|
Estimated
|
|
Cost
|
Fair
Value
|
|
($ in
thousands)
|
|
As of September 30, 2016
|
|
|
Available for sale
|
|
|
Due
after one year through five years
|
$6,081
|
$6,074
|
|
|
|
|
|
|
|
$6,081
|
$6,074
|
|
|
|
|
|
|
As of December 31, 2015
|
|
|
Available for sale
|
|
|
Due
after one year through five years
|
$2,969
|
$2,981
|
Due
after ten years
|
111
|
115
|
|
|
|
|
$3,080
|
$3,096
|
|
Gross proceeds |
Gross
|
Gross
|
|
from
|
Realized
|
Realized
|
|
sales
|
Gains
|
Losses
|
|
($ in thousands)
|
||
Three Months Ended September 30, 2016
|
|
|
|
Fixed-maturity
securities
|
$-
|
$-
|
$-
|
|
|
|
|
Equity
securities
|
$4,099
|
$368
|
$(246)
|
|
|
|
|
Nine Months Ended September 30, 2016
|
|
|
|
Fixed-maturity
securities
|
$119
|
$8
|
$-
|
|
|
|
|
Equity
securities
|
$9,218
|
$867
|
$(619)
|
|
|
|
|
Three Months Ended September 30, 2015
|
|
|
|
Fixed-maturity
securities
|
$-
|
$-
|
$-
|
|
|
|
|
Equity
securities
|
$773
|
$5
|
$(308)
|
|
|
|
|
Nine Months Ended September 30, 2015
|
|
|
|
Fixed-maturity
securities
|
$775
|
$75
|
$-
|
|
|
|
|
Equity
securities
|
$10,702
|
$914
|
$(316)
|
|
Less Than Twelve
|
Twelve Months or
|
|
|||
|
Months
|
Greater
|
Total
|
|||
As of September 30, 2016
|
Gross
|
Estimated
|
Gross
|
Estimated
|
Gross
|
Estimated
|
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
|
Loss
|
Value
|
Loss
|
Value
|
Loss
|
Value
|
|
($ in thousands)
|
($ in thousands)
|
($ in thousands)
|
|||
|
|
|
|
|
|
|
U.S.
Treasury and agency securities
|
36
|
3,075
|
-
|
-
|
36
|
3,075
|
|
|
|
|
|
|
|
Total
fixed-maturity securities
|
36
|
3,075
|
-
|
-
|
36
|
3,075
|
|
|
|
|
|
|
|
Equity securities
|
|
|
|
|
|
|
Mutual
funds
|
10
|
390
|
-
|
-
|
10
|
390
|
Preferred
stocks
|
11
|
465
|
-
|
-
|
11
|
465
|
All
other common stocks
|
225
|
2,008
|
454
|
1,080
|
679
|
3,088
|
|
|
|
|
|
|
|
Total
equity securities
|
246
|
2,863
|
454
|
1,080
|
700
|
3,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
available for sale securities $
|
282
|
$5,938
|
$454
|
$1,080
|
$736
|
$7,018
|
|
|
|
|
|
|
|
|
Less Than Twelve
|
Twelve Months or
|
|
|||
|
Months
|
Greater
|
Total
|
|||
As of December 31, 2015
|
Gross
|
Estimated
|
Gross
|
Estimated
|
Gross
|
Estimated
|
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
|
Loss
|
Value
|
Loss
|
Value
|
Loss
|
Value
|
|
($ in thousands)
|
($ in thousands)
|
($ in thousands)
|
|||
Equity securities
|
|
|
|
|
|
|
Preferred
stocks
|
174
|
1,054
|
-
|
-
|
174
|
1,054
|
All
other common stocks
|
1,405
|
3,274
|
84
|
316
|
1,489
|
3,590
|
|
|
|
|
|
|
|
Total
equity securities
|
1,579
|
4,328
|
84
|
316
|
1,663
|
4,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
available for sale securities $
|
1,579
|
$4,328
|
$84
|
$316
|
$1,663
|
$4,644
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|
||
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
As of September 30, 2016
|
($ in thousands)
|
|||
Financial
Assets:
|
|
|
|
|
Cash and cash equivalents
|
$9,478
|
$-
|
$-
|
$9,478
|
|
|
|
|
|
Restricted cash and cash equivalents
|
$26,296
|
$-
|
$-
|
$26,296
|
|
|
|
|
|
Fixed-maturity securities:
|
|
|
|
|
U.S.
Treasury and agency securities
|
6,074
|
-
|
-
|
6,074
|
|
|
|
|
|
|
|
|
|
|
Total
fixed-maturity securities
|
6,074
|
-
|
-
|
6,074
|
|
|
|
|
|
Mutual
funds
|
390
|
-
|
-
|
390
|
Preferred
stocks
|
977
|
-
|
-
|
977
|
All
other common stocks
|
4,992
|
-
|
-
|
4,992
|
|
|
|
|
|
Total
equity securities
|
6,359
|
-
|
-
|
6,359
|
|
|
|
|
|
Total
available for sale securities
|
12,433
|
-
|
-
|
12,433
|
|
|
|
|
|
Total
|
$48,207
|
$-
|
$-
|
$48,207
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|
||
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
As of December 31, 2015
|
($ in thousands)
|
|||
Financial
Assets:
|
|
|
|
|
Cash and cash equivalents
|
$8,584
|
$-
|
$-
|
$8,584
|
|
|
|
|
|
Restricted cash and cash equivalents
|
$30,368
|
$-
|
$-
|
$30,368
|
|
|
|
|
|
Fixed-maturity securities:
|
|
|
|
|
U.S.
Treasury and agency securities
|
2,981
|
-
|
-
|
2,981
|
Exchange-traded
debt securities
|
115
|
-
|
-
|
115
|
|
|
|
|
|
Total
fixed-maturity securities
|
3,096
|
-
|
-
|
3,096
|
|
|
|
|
|
|
|
|
|
|
Preferred
stocks
|
1,515
|
-
|
-
|
1,515
|
All
other common stocks
|
4,737
|
-
|
-
|
4,737
|
|
|
|
|
|
Total
equity securities
|
6,252
|
-
|
-
|
6,252
|
|
|
|
|
|
Total
available for sale securities
|
9,348
|
-
|
-
|
9,348
|
|
|
|
|
|
Total
|
$48,300
|
$-
|
$-
|
$48,300
|
|
|
|
|
|
|
Three Months Ended
|
Nine Months Ended
|
||
|
September 30,
|
September 30,
|
||
|
2016
|
2015
|
2016
|
2015
|
|
($ in thousands)
|
($ in thousands)
|
||
|
|
|
|
|
|
|
|
|
|
Balance,
beginning of period
|
$2,250
|
-
|
$-
|
-
|
Incurred
related to:
|
|
|
|
|
Current
period
|
(1,248)
|
-
|
1,030
|
-
|
Prior
period
|
-
|
-
|
-
|
-
|
Total
incurred
|
(1,248)
|
-
|
1,030
|
-
|
Paid
related to:
|
|
|
|
|
Current
period
|
(30)
|
-
|
(58)
|
-
|
Prior
period
|
-
|
-
|
-
|
-
|
Total
paid
|
(30)
|
-
|
(58)
|
-
|
Balance,
end of period
|
$972
|
-
|
$972
|
-
|
|
Three Months Ended
|
Nine Months Ended
|
||
|
September 30,
|
September 30,
|
||
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
Net
earnings
|
$2,985
|
742
|
$4,900
|
4,229
|
|
|
|
|
|
Denominator:
|
|
|
|
|
Weighted
average shares - basic
|
6,026,172
|
6,060,000
|
6,048,163
|
6,054,945
|
Effect
of dilutive securities - Stock options
|
-
|
-
|
-
|
-
|
Shares
issuable upon conversion of warrants
|
-
|
-
|
-
|
-
|
Weighted
average shares - diluted
|
6,026,172
|
6,060,000
|
6,048,163
|
6,054,945
|
Earnings
per shares - basic
|
$0.50
|
0.12
|
$0.81
|
0.70
|
Earnings
per shares - diluted
|
$0.50
|
0.12
|
$0.81
|
0.70
|
|
|
|
Weighted-
|
|
|
|
Weighted-
|
Average
|
|
|
Number
|
Average
|
Remaining
|
Aggregate
|
|
of
|
Exercise
|
Contractual
|
Intrinsic
|
|
Options
|
Price
|
Term
|
Value ($000)
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at January 1, 2016
|
180,000
|
|
|
|
Granted
|
35,000
|
|
|
|
Outstanding
at March 31, 2016
|
215,000
|
$6
|
8.9
years
|
$-
|
Outstanding
at June 30, 2016
|
215,000
|
$6
|
8.7
years
|
$-
|
Outstanding
at September 30, 2016
|
215,000
|
$6
|
8.4
years
|
$-
|
Exercisable
at September 30, 2016
|
85,312
|
$6
|
8.4
years
|
$-
|
|
|
|
|
|
Outstanding
at January 1, 2015
|
-
|
|
|
|
Granted
|
180,000
|
$6
|
|
|
Outstanding
at March 31, 2015
|
180,000
|
$6
|
9.75
years
|
$-
|
Outstanding
at June 30, 2015
|
180,000
|
$6
|
9.5
years
|
$9,000
|
Outstanding
at September 30, 2015
|
180,000
|
$6
|
9.25
years
|
$-
|
Exercisable
at September 30, 2015
|
33,750
|
$6
|
9.25
years
|
$-
|
|
2016
|
2015
|
|
|
|
Expected
dividend yield
|
9.6%
|
8%
|
Expected
volatility
|
35%
|
35%
|
Risk-free
interest rate
|
2.03%
|
1.81%
|
Expected
life (in years)
|
10
|
10
|
Per
share grant date fair value of options issued
|
$0.34
|
$0.64
|
|
Weighted-
|
|
|
Number of
|
Weighted-
|
|
Restricted
|
Average
|
|
Stock
|
Grant Date
|
|
Awards
|
Fair Value
|
|
|
|
Nonvested
at January 1, 2016
|
45,000
|
$5.86
|
Vested
|
(3,750)
|
|
Nonvested
at March 31, 2016
|
41,250
|
$5.86
|
|
|
|
Vested
|
(3,750)
|
|
Nonvested
at June 30, 2016
|
37,500
|
$5.86
|
|
|
|
Vested
|
(3,750)
|
|
Nonvested
at September 30, 2016
|
33,750
|
$5.86
|
|
|
|
|
|
|
Nonvested
at January 1, 2015
|
-
|
|
Granted
|
60,000
|
$5.86
|
Vested
|
(3,750)
|
|
Nonvested
at March 31, 2015
|
56,250
|
$5.86
|
|
|
|
Vested
|
(3,750)
|
|
Nonvested
at June 30, 2015
|
52,500
|
$5.86
|
|
|
|
Vested
|
(3,750)
|
|
Nonvested
at September 30, 2015
|
48,750
|
$5.86
|
|
|
|
12. COMMITMENTS AND CONTINGENCIES
|
|
At
September 30, 2016
|
At
December 31, 2015
|
|
|
|
|
(in
thousands)
|
|
|
|
|
Loss
experience refund payable
|
$840
|
$6,510
|
Unearned
premiums reserve
|
$2,267
|
$1,392
|
|
Three Months Ended
|
Nine
Months Ended
|
||
|
September 30,
|
September 30,
|
||
|
2016
|
2015
|
2016
|
2015
|
|
(in
thousands)
|
(in
thousands)
|
||
|
|
|
|
|
Revenue
|
|
|
|
|
Assumed
premiums
|
|
-
|
3,400
|
3,340
|
Change
in loss experience refund payable
|
(630)
|
(630)
|
(1,890)
|
(1,964)
|
Change
in unearned premiums reserve
|
850
|
835
|
(875)
|
(114)
|
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
|
||||
Consolidated Statements of Income (unaudited)
|
||||
(expressed in thousands of U.S. Dollars, except per share and share
amounts)
|
||||
|
||||
|
Three Months Ended
|
Nine Months Ended
|
||
|
September 30,
|
September 30,
|
||
|
2016
|
2015
|
2016
|
2015
|
|
(Unaudited)
|
(Unaudited)
|
||
|
|
|
|
|
Revenue
|
|
|
|
|
Assumed
premiums
|
$-
|
-
|
$15,065
|
14,888
|
Change
in loss experience refund payable
|
(2,089)
|
(2,089)
|
(4,465)
|
(6,204)
|
Change
in unearned premiums reserve
|
4,007
|
3,881
|
(3,955)
|
(3,708)
|
|
|
|
|
|
Net
premiums earned
|
1,918
|
1,792
|
6,645
|
4,976
|
Net
realized investment gain / (loss)
|
122
|
(303)
|
256
|
673
|
Net
investment income
|
126
|
90
|
327
|
262
|
Other-than-temporary
impairment losses
|
-
|
(399)
|
-
|
(399)
|
|
|
|
|
|
Total
revenue
|
2,166
|
1,180
|
7,228
|
5,512
|
|
|
|
|
|
Expenses
|
|
|
|
|
Losses
and loss adjustment expenses (credit)
|
(1,248)
|
-
|
1,030
|
-
|
Policy
acquisition costs and underwriting expenses
|
83
|
85
|
211
|
259
|
General
and administrative expenses
|
346
|
353
|
1,087
|
1,024
|
|
|
|
|
|
Total
expenses (credit)
|
(819)
|
438
|
2,328
|
1,283
|
|
|
|
|
|
Net
income
|
2,985
|
742
|
$4,900
|
4,229
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
Basic
and Diluted
|
$0.50
|
0.12
|
$0.81
|
0.70
|
|
|
|
|
|
|
|
|
|
|
Dividends paid per share
|
$0.12
|
0.12
|
$0.36
|
0.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance ratios to net premiums earned:
|
|
|
|
|
Loss
ratio
|
-65.1%
|
0.0%
|
15.5%
|
0.0%
|
Acquisition
cost ratio
|
4.3%
|
4.7%
|
3.2%
|
5.2%
|
Expense
ratio
|
22.4%
|
24.4%
|
19.5%
|
25.8%
|
Combined
ratio
|
-42.7%
|
24.4%
|
35.0%
|
25.8%
|
|
|
|
Maximum Dollar
|
|
Total Number of
|
|
Value of Shares That
|
|
Shares Purchased as
|
|
May Yet
Be
|
|
Part of
Publicly
|
Average
|
Purchased
Under
|
|
Announced
Plans
|
Price Paid
|
The
Plans
|
For the Month Ended
|
or Programs (a)
|
Per Share
|
or
Programs (b)
|
|
|
|
|
31-Jul-16
|
10,700
|
$5.06
|
1,885,694
|
31-Aug-16
|
14,133
|
$5.06
|
1,814,230
|
30-Sep-16
|
42,024
|
$5.07
|
1,601,208
|
|
|
|
|
|
66,857
|
$5.06
|
|
|
|
|
|
Exhibit No.
|
Document
|
|
|
Certifications
of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under the
Securities Exchange Act of 1934.
|
|
|
|
Certifications
of the Financial Controller pursuant to Section 302 of the
Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under the
Securities Exchange Act of 1934.
|
|
|
|
Written
Statement of the Chief Executive Officer and Financial Controller
pursuant to 18 U.S.C. §1350.
|
|
|
|
101
|
The
following materials from Oxbridge Re Holdings Limited’s
Quarterly Report on Form 10-Q for the quarter ended September 30,
2016 are filed herewith, formatted in XBRL (Extensible Business
Reporting Language): (i) the Consolidated Balance Sheets, (ii) the
Consolidated Statements of Income, (iii) the Consolidated
Statements of Comprehensive Income, (iv) the Consolidated
Statements of Cash Flows, (v) the Consolidated Statements of
Changes in Shareholders’ Equity and (vi) the Notes to
Consolidated Financial Statements.
|
|
|
|
|
|
|
|
|
|
OXBRIDGE
RE HOLDINGS LIMITED
|
|
|
Date:
November 14, 2016
|
By: /s/ JAY
MADHU
|
|
Jay
MadhuChief Executive Officer and President(Principal Executive
Officer)
|
|
|
Date:
November 14, 2016
|
By: /s/ WRENDON
TIMOTHY
|
|
Wrendon
TimothyFinancial Controller and Secretary(Principal Financial
Officer and PrincipalAccounting Officer)
|
|
|
|
|
|
By:
|
/s/ JAY
MADHU
|
|
|
|
Jay
Madhu
|
|
|
|
Chief
Executive Officer and President
(Principal
Executive Officer)
|
|
|
|
|
|
|
By:
|
/s/
WRENDON
TIMOTHY
|
|
|
|
Name
Wrendon
Timothy
|
|
|
|
Title
Financial
Controller and Secretary
(Principal
Financial Officer and Principal Accounting
Officer)
|
|
|
By:
|
/s/ JAY
MADHU
|
|
|
|
Jay
Madhu
|
|
|
|
Chief
Executive Officer and President
(Principal
Executive Officer)
|
|
|
By:
|
/s/
WRENDON
TIMOTHY
|
|
|
|
Name
Wrendon
Timothy
|
|
|
|
Title
Financial
Controller and Secretary
(Principal
Financial Officer and Principal Accounting
Officer)
|
|
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Oct. 24, 2016 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | OXBR | |
Entity Registrant Name | OXBRIDGE RE HOLDINGS Ltd | |
Entity Central Index Key | 0001584831 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 5,960,324 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
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Statement of Financial Position [Abstract] | ||
Fixed-maturity securities, available for sale, at fair value amortized cost | $ 6,081 | $ 3,080 |
Equity securities, available for sale, at fair value cost | $ 6,801 | $ 7,742 |
Ordinary share, par value | $ 0.001 | $ 0.001 |
Ordinary shares, authorized | 50,000,000 | 50,000,000 |
Ordinary shares, issued | 5,981,613 | 6,060,000 |
Ordinary shares, outstanding | 5,981,613 | 6,060,000 |
Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
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Revenue | ||||
Assumed premiums | $ 0 | $ 0 | $ 15,065 | $ 14,888 |
Change in loss experience refund payable | (2,089) | (2,089) | (4,465) | (6,204) |
Change in unearned premiums reserve | 4,007 | 3,881 | (3,955) | (3,708) |
Net premiums earned | 1,918 | 1,792 | 6,645 | 4,976 |
Net realized investment gains | 122 | (303) | 256 | 673 |
Net investment income | 126 | 90 | 327 | 262 |
Other-than-temporary impairment losses | 0 | (399) | 0 | (399) |
Total revenue | 2,166 | 1,180 | 7,228 | 5,512 |
Expenses | ||||
Losses and loss adjustment expenses | (1,248) | 0 | 1,030 | 0 |
Policy acquisition costs and underwriting expenses | 83 | 85 | 211 | 259 |
General and administrative expenses | 346 | 353 | 1,087 | 1,024 |
Total expenses | (819) | 438 | 2,328 | 1,283 |
Net income | $ 2,985 | $ 742 | $ 4,900 | $ 4,229 |
Earnings per share | ||||
Basic and Diluted | $ 0.50 | $ 0.12 | $ 0.81 | $ 0.70 |
Weighted-average shares outstanding | ||||
Dividends paid per share | $ 0.12 | $ 0.12 | $ 0.36 | $ 0.36 |
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
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Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 2,985 | $ 742 | $ 4,900 | $ 4,229 |
Change in unrealized gain on investments: | ||||
Unrealized (loss) gain arising during the period | 304 | (1,209) | 1,281 | (1,967) |
Other-than-temporary impairment losses | 0 | 399 | 0 | 399 |
Reclassification adjustment for net realized gains included in net income | (122) | 303 | (256) | (673) |
Net change in unrealized gain / (loss) | 182 | (507) | 1,025 | (2,241) |
Total other comprehensive income / (loss) | 182 | (507) | 1,025 | (2,241) |
Comprehensive income | $ 3,167 | $ 235 | $ 5,925 | $ 1,988 |
Organization and Basis of Presentation |
9 Months Ended | ||||
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Sep. 30, 2016 | |||||
Accounting Policies [Abstract] | |||||
Organization and Basis of Presentation |
Oxbridge Re Holdings Limited was incorporated as an exempted company on April 4, 2013 under the laws of the Cayman Islands. Oxbridge Re Holdings Limited owns 100% of the equity interest in Oxbridge Reinsurance Limited (the “Subsidiary”), an entity incorporated on April 23, 2013 under the laws of the Cayman Islands and for which a Class “C” Insurer’s license was granted on April 29, 2013 under the provisions of the Cayman Islands Insurance Law. Oxbridge Re Holdings Limited and the Subsidiary (collectively, the “Company”) have their registered offices at P.O. Box 309, Ugland House, Grand Cayman, Cayman Islands.
The Company’s ordinary shares and warrants are listed on The NASDAQ Capital Market under the symbols “OXBR” and “OXBRW,” respectively.
The Company operates as a single business segment through the Subsidiary, which provides collateralized reinsurance to cover excess of loss catastrophe risks of various affiliated and nonaffiliated ceding insurers, including Claddaugh Casualty Insurance Company, Ltd. (“Claddaugh”) and Homeowners Choice Property & Casualty Insurance Company (“HCPCI”), which are related-party entities domiciled in Bermuda and Florida, respectively.
The accompanying unaudited, consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, and the Securities and Exchange Commission (“SEC”) rules for interim financial reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. However, in the opinion of management, the accompanying interim consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the Company’s consolidated financial position as of September 30, 2016 and the consolidated results of operations and cash flows for the periods presented. The consolidated results of operations for interim periods are not necessarily indicative of the results of operations to be expected for any subsequent interim period or for the fiscal year ended December 31, 2016. The accompanying unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2015 included in the Company’s Form 10-K, which was filed with the SEC on March 17, 2016.
In preparing the interim unaudited consolidated financial statements, management was required to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the financial reporting date and throughout the periods being reported upon. Certain of the estimates result from judgments that can be subjective and complex and consequently actual results may differ from these estimates, which would be reflected in future periods.
Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the reserve for losses and loss adjustment expenses, which include amounts estimated for claims incurred but not yet reported. The Company uses various assumptions and actuarial data it believes to be reasonable under the circumstances to make these estimates. In addition, accounting policies specific to valuation of investments, assessment of other-than-temporary impairment (“OTTI”) and loss experience refund payable involve significant judgments and estimates material to the Company’s consolidated financial statements. Although considerable variability is likely to be inherent in these estimates, management believes that the amounts provided are reasonable. These estimates are continually reviewed and adjusted if necessary. Such adjustments are reflected in current operations.
All significant intercompany balances and transactions have been eliminated. |
Significant Accounting Policies |
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Sep. 30, 2016 | |||||||||||
Accounting Policies [Abstract] | |||||||||||
Significant Accounting Policies | Cash and cash equivalents: Cash and cash equivalents are comprised of cash and short term investments with original maturities of three months or less.
Restricted cash and cash equivalents: Restricted cash and cash equivalents represent funds held in accordance with the Company’s trust agreements with ceding insurers and trustees, which require the Company to maintain collateral with a market value greater than or equal to the limit of liability, less unpaid premium.
Investments: The Company’s investments consist of fixed-maturity securities and equity securities, and are classified as available-for-sale. The Company’s investments are carried at fair value with changes in fair value included as a separate component of accumulated other comprehensive loss in shareholders’ equity.
Unrealized gains or losses are determined by comparing the fair market value of the securities with their cost or amortized cost. Realized gains and losses on investments are recorded on the trade date and are included in the consolidated statements of income. The cost of securities sold is based on the specified identification method. Investment income is recognized as earned and discounts or premiums arising from the purchase of debt securities are recognized in investment income using the interest method over the remaining term of the security.
The Company reviews all securities for other-than-temporary impairment ("OTTI") on a quarterly basis and more frequently when economic or market conditions warrant such review. When the fair value of any investment is lower than its cost, an assessment is made to see whether the decline is temporary of other-than-temporary. If the decline is determined to be other-than-temporary the investment is written down to fair value and an impairment charge is recognized in income in the period in which the Company makes such determination. For a debt security that the Company does not intend to sell nor is it more likely than not that the Company will be required to sell before recovery of its amortized cost, only the credit loss component is recognized in income, while impairment related to all other factors is recognized in other comprehensive income (loss). The Company considers various factors in determining whether an individual security is other-than-temporarily impaired (see Note 4).
Fair value measurement: GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under GAAP are as follows:
Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk. For debt securities, inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, broker quotes for similar securities and other factors. The fair value of investments in common stocks and exchange-traded funds is based on the last traded price. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by the Company’s investment custodians. The investment custodians consider observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant markets. The categorization of a financial instrument within the hierarchy is based upon the pricing transparency of the instrument.
Deferred policy acquisition costs (“DAC”): Policy acquisition costs consist of brokerage fees, federal excise taxes and other costs related directly to the successful acquisition of new or renewal insurance contracts, and are deferred and amortized over the terms of the reinsurance agreements to which they relate. The Company evaluates the recoverability of DAC by determining if the sum of future earned premiums and anticipated investment income is greater than the expected future claims and expenses. If a loss is probable on the unexpired portion of policies in force, a premium deficiency loss is recognized. At September 30, 2016, the DAC was considered fully recoverable and no premium deficiency loss was recorded.
Property and equipment: Property and equipment are recorded at cost when acquired. Property and equipment are comprised of motor vehicles, furniture and fixtures, computer equipment and leasehold improvements and are depreciated, using the straight-line method, over their estimated useful lives, which are five years for furniture and fixtures and computer equipment and four years for motor vehicles. Leasehold improvements are amortized over the lesser of the estimated useful lives of the assets or remaining lease term. The Company periodically reviews property and equipment that have finite lives, and that are not held for sale, for impairment by comparing the carrying value of the assets to their estimated future undiscounted cash flows. For the three-month and nine-month periods ended September 30, 2016, there were no impairments in property and equipment.
Allowance for uncollectible receivables: Management evaluates credit quality by evaluating the exposure to individual counterparties; where warranted management also considers the credit rating or financial position, operating results and/or payment history of the counterparty. Management establishes an allowance for amounts for which collection is considered doubtful. Adjustments to previous assessments are recognized as income in the year in which they are determined. At September 30, 2016, no receivables were determined to be overdue or impaired and, accordingly, no allowance for uncollectible receivables has been established.
Reserves for losses and loss adjustment expenses: The Company determines its reserves for losses and loss adjustment expenses on the basis of the claims reported by the Company’s ceding insurers. Incurred but not reported (“IBNR”) reserves are estimated by management using various actuarial methods in addition to the ceding insurer’s estimated IBNR, historical industry loss experience and management’s professional judgment. The reserves for losses and loss adjustment expenses represent management’s best estimate of the ultimate settlement costs of all losses and loss adjustment expenses. Management believes that the amounts are adequate; however, the inherent impossibility of predicting future events with precision, results in uncertainty as to the amount which will ultimately be required for the settlement of losses and loss expenses, and the differences could be material. Adjustments are reflected in the consolidated statements of income in the period in which they are determined.
Loss experience refund payable: Certain contracts include retrospective provisions that adjust premiums or result in profit commissions in the event losses are minimal or zero. In accordance with GAAP, the Company will recognize a liability in the period in which the absence of loss experience obligates the Company to pay cash or other consideration under the contracts. On the contrary, the Company will derecognize such liability in the period in which a loss experience arises. Such adjustments to the liability, which accrue throughout the contract terms, will reduce the liability should a catastrophic loss event covered by the Company occur.
Premiums assumed: The Company records premiums assumed, net of loss experience refunds, as earned pro-rata over the terms of the reinsurance agreements and the unearned portion at the balance sheet date is recorded as unearned premiums reserve. A reserve is made for estimated premium deficiencies to the extent that estimated losses and loss adjustment expenses exceed related unearned premiums. Investment income is not considered in determining whether or not a deficiency exists.
Certain contracts allow for reinstatement premiums in the event of a full limit loss prior to the expiration of the contract. A reinstatement premium is not due until there is a full limit loss event and therefore, in accordance with GAAP, the Company records a reinstatement premium as written only in the event that the reinsured incurs a full limit loss on the contract and the contract allows for a reinstatement of coverage upon payment of an additional premium. For catastrophe contracts which contractually require the payment of a reinstatement premium equal to or greater than the original premium upon the occurrence of a full limit loss, the reinstatement premiums are earned over the original contract period. Reinstatement premiums that are contractually calculated on a pro-rata basis of the original premiums are earned over the remaining coverage period.
Uncertain income tax positions: The authoritative GAAP guidance on accounting for, and disclosure of, uncertainty in income tax positions requires the Company to determine whether an income tax position of the Company is more likely than not to be sustained upon examination by the relevant tax authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. For income tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements, if any, is reduced by the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authority. The application of this authoritative guidance has had no effect on the Company’s consolidated financial statements because the Company had no uncertain tax positions at September 30, 2016.
Earnings per share: Basic earnings per share has been computed on the basis of the weighted-average number of ordinary shares outstanding during the periods presented. Diluted earnings per share is computed based on the weighted-average number of ordinary shares outstanding and reflects the assumed exercise or conversion of diluted securities, such as stock options and warrants, computed using the treasury stock method. Stock-Based Compensation: The Company accounts for stock-based compensation under the fair value recognition provisions of GAAP 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. The Company measures compensation for restricted stock based on the price of the Company’s ordinary shares at the grant date. Determining the fair value of share purchase options at the grant date requires significant estimation and judgment. The Company uses an option-pricing model (Black-Scholes option pricing model) to assist in the calculation of fair value for share purchase options. The Company's shares have not been publicly traded for a sufficient length of time to solely use the Company's performance to reasonably estimate the expected volatility. Therefore, when estimating the expected volatility, the Company takes into consideration the historical volatility of similar entities. The Company considers factors such as an entity's industry, stage of life cycle, size and financial leverage when selecting similar entities. The Company uses a sample peer group of companies in the reinsurance industry as well as the Company’s own historical volatility in determining the expected volatility. Additionally, the Company uses the full life of the options, ten years, as the estimated term of the options, and has assumed no forfeitures during the life of the options. The Company uses the straight-line attribution method for all grants that include only a service condition. Compensation expense related to all awards is included in general and administrative expenses.
Recent accounting pronouncements:
Accounting Standards Update No. 2016-09. In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-09 (“ASU 2016-09”), Compensation-Stock Compensation (Topic 718), which affects all entities that issue share-based awards to their employees. Among the amendments affecting share-based payment transactions are their income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for all public entities for reporting periods beginning after December 15, 2016 and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2017, and for interim periods within fiscal years beginning after December 15, 2018. Early adoption is permitted for all entities. The Company is currently evaluating the impact of this guidance on the Company’s consolidated financial statements.
Accounting Standards Update No. 2016-02. In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (“ASU 2016-02”), Leases (Topic 842), which supersedes Topic 840 and creates the new lease accounting standards for lessees and lessors, primarily related to the recognition of lease assets and liabilities by lessees for leases classified as operating leases. ASU 2016-02 is effective for all public entities for reporting periods beginning after December 15, 2018 and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and for interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities. The Company is currently evaluating the impact of this guidance on the Company’s consolidated financial statements.
Accounting Standards Update No. 2016-01. In January 2016, the FASB issued Accounting Standards Update No. 2016-01 (“ASU 2016-01”), Financial Instruments (Subtopic 825-10), which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. One of the changes is to require certain equity investments to be measured at fair value with changes in fair value recognized in net income. ASU 2016-01 is effective for all public entities for reporting periods beginning after December 15, 2017 and interim periods within those fiscal years. For all other entities, the amendments in ASU 2016-01 are effective for fiscal years beginning after December 15, 2018, and for interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted for financial statements that have not been previously issued. The Company is currently evaluating the impact of this guidance on the Company’s consolidated financial statements.
Reclassifications: Certain reclassifications of prior period amounts have been made to conform to the current period presentation. |
Cash and Cash Equivalents and Restricted Cash and Cash Equivalents |
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Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents and Restricted Cash and Cash Equivalents |
Cash and cash equivalents are held by large and reputable counterparties in the United States of America and in the Cayman Islands. Restricted cash held in trust is custodied with Bank of New York Mellon and Wells Fargo Bank and is held in accordance with the Company’s trust agreements with the ceding insurers and trustees, which require that the Company provide collateral having a market value greater than or equal to the limit of liability, less unpaid premium. |
Investments |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | The Company holds investments in fixed-maturity securities and equity securities that are classified as available-for-sale. At September 30, 2016 and December 31, 2015, the cost or amortized cost, gross unrealized gains and losses, and estimated fair value of the Company’s available-for-sale securities by security type were as follows:
At September 30, 2016 and December 31, 2015, available-for-sale securities with fair value of $3,524,000 and $3,638,000, respectively, are held in trust accounts as collateral under reinsurance contacts with the Company’s ceding insurers.
Expected maturities will differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without penalties. The scheduled contractual maturities of fixed-maturity securities at September 30, 2016 and December 31, 2015 are as follows:
Proceeds received, and the gross realized gains and losses from sales of available-for-sale securities, for the three and nine-month periods ended September 30, 2016 and 2015 were as follows:
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:
Securities with gross unrealized loss positions at September 30, 2016 and December 31, 2015, aggregated by investment category and length of time the individual securities have been in a continuous loss position, are as follows:
At September 30, 2016, there were 22 securities in an unrealized loss position of which 5 of these positions had been in an unrealized loss position for 12 months or greater.
At December 31, 2015, there were 24 securities in an unrealized loss position of which 2 of these positions had been in an unrealized loss position for 12 months or greater.
The Company believes there were no fundamental issues such as credit losses or other factors with respect to its fixed-maturity securities. It is expected that the securities would not be settled at a price less than the par value of the investments and because the Company has the ability and intent to hold these securities and it is probable that the Company will not be required to sell these securities until a market price recovery or maturity, the Company does not consider any of its fixed-maturity securities to be other-than-temporarily impaired at September 30, 2016 and December 31, 2015.
In determining whether equity securities are other than temporarily impaired, the Company considers its intent and ability to hold a security for a period of time sufficient to allow for the recovery of cost, along with factors including the length of time each security had been in an unrealized loss position, the extent of the decline and the near term prospect for recovery. In the three and nine months ended September 30, 2015, the Company determined that two equity securities were other-than-temporarily impaired after considering factors such as the length of time each security had been in an unrealized loss position, the extent of the decline and the near term prospect for recovery alongside other factors. As a result, the Company recognized impairment losses of $399,000 for the three and nine months ended September 30, 2015. There were no impairment losses recorded in the three and nine months ended September 30, 2016. Based on management’s evaluation, the Company does not consider any of its equity securities to be other-than-temporarily impaired at September 30, 2016 and December 31, 2015.
Assets Measured at Estimated Fair Value on a Recurring Basis
The following table presents information about the Company’s financial assets measured at estimated fair value on a recurring basis that is reflected in the consolidated balance sheets at carrying value. The table indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as of September 30, 2016 and December 31, 2015:
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Taxation |
9 Months Ended |
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Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Taxation | Under current Cayman Islands law, no corporate entity, including the Company and the Subsidiary, is obligated to pay taxes in the Cayman Islands on either income or capital gains. The Company and the Subsidiary have an undertaking from the Governor-in-Cabinet of the Cayman Islands, pursuant to the provisions of the Tax Concessions Law, as amended, that, in the event that the Cayman Islands enacts any legislation that imposes tax on profits, income, gains or appreciations, or any tax in the nature of estate duty or inheritance tax, such tax will not be applicable to the Company and the Subsidiary or their operations, or to the ordinary shares or related obligations, until April 23, 2033 and May 17, 2033, respectively.
The Company and its subsidiary intend to conduct substantially all of their operations in the Cayman Islands in a manner such that they will not be engaged in a trade or business in the U.S. However, because there is no definitive authority regarding activities that constitute being engaged in a trade or business in the U.S. for federal income tax purposes, the Company cannot assure that the U.S. Internal Revenue Service will not contend, perhaps successfully, that the Company or its subsidiary is engaged in a trade or business in the U.S. A foreign corporation deemed to be so engaged would be subject to U.S. federal income tax, as well as branch profits tax, on its income that is treated as effectively connected with the conduct of that trade or business unless the corporation is entitled to relief under an applicable tax treaty. |
Losses and Loss Adjustment Expenses |
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Losses and Loss Adjustment Expenses | The following table summarizes the Company’s loss and loss adjustment expenses (“LAE”) and the reserve for loss and LAE reserve movements for the three and nine-month periods ending September 30, 2016 and 2015:
The reserves for losses and LAE are comprised of case reserves (which are based on claims that have been reported) and incurred but not reported ("IBNR") reserves (which are based on losses that are believed to have occurred but for which claims have not yet been reported and may include a provision for expected future development on existing case reserves).
The uncertainties inherent in the reserving process and potential delays by cedants and brokers in the reporting of loss information, together with the potential for unforeseen adverse developments, may result in the reserve for losses and LAE ultimately being significantly greater or less than the reserve provided at the end of any given reporting period. The degree of uncertainty is further increased when a significant loss event takes place near the end of a reporting period. Reserve for losses and LAE estimates are reviewed periodically on a contract by contract basis and updated as new information becomes known. Any resulting adjustments are reflected in income in the period in which they become known.
The Company’s reserving process is highly dependent on the timing of loss information received from its cedants and related brokers. |
Earnings Per Share |
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Earnings Per Share | A summary of the numerator and denominator of the basic and diluted earnings per share is presented below (dollars in thousands except per share amounts):
For the three and nine-month periods ended September 30, 2016 and 2015, 215,000 options to purchase 215,000 ordinary shares and 180,000 options to purchase 180,000 ordinary shares, respectively, were anti-dilutive as the sum of the proceeds, including unrecognized compensation expense, exceeded the average market price of the Company’s ordinary share during the periods presented.
For the three and nine-month periods ended September 30, 2016 and 2015, 8,230,700 warrants to purchase an aggregate of 8,230,700 ordinary shares were not dilutive because the exercise price of $7.50 exceeded the average market price of the Company’s ordinary share during the periods presented.
GAAP requires the Company to use the two-class method in computing basic earnings per share since holders of the Company’s restricted stock have the right to share in dividends, if declared, equally with common stockholders. These participating securities effect the computation of both basic and diluted earnings per share during periods of net income. |
Shareholders' Equity |
9 Months Ended |
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Sep. 30, 2016 | |
Equity [Abstract] | |
Shareholders' Equity | On February 28, 2014, the Company’s Registration Statement on Form S-1, as amended, relating to the initial public offering of the Company’s units was declared effective by the SEC. The Registration Statement covered the offer and sale by the Company of 4,884,650 units, each consisting of one ordinary share and one warrant (“Unit”), which were sold to the public on March 26, 2014 at a price of $6.00 per Unit. The ordinary shares and warrants comprising the Units began separate trading on May 9, 2014. The ordinary shares and warrants are traded on the Nasdaq Capital Market under the symbols “OXBR” and “OXBRW,” respectively. One warrant may be exercised to acquire one ordinary share at an exercise price equal to $7.50 per share on or before March 26, 2019. At any time after September 26, 2014 and before the expiration of the warrants, the Company at its option may cancel the warrants in whole or in part, provided that the closing price per ordinary share has exceeded $9.38 for at least ten trading days within any period of twenty consecutive trading days, including the last trading day of the period. The initial public offering resulted in aggregate gross proceeds to the Company of approximately $29.3 million (of which approximately $5 million related to the fair value proceeds on the warrants issued) and net proceeds of approximately $26.9 million after deducting underwriting commissions and offering expenses.
The fair value of the warrants issued in the initial public offering and initial private placement offering of $1.04 per warrant was determined by the Black-Scholes pricing model using the following assumptions: volatility of 48%, an expected life of 5 years, expected dividend yield of 8% and a risk-free interest rate of 1.69%. There were 8,230,700 warrants outstanding at September 30, 2016 and 2015. No warrants were exercised during the three and nine-month periods ended September 30, 2016 and 2015. On January 20, 2016, our Board of Directors declared a quarterly cash dividend of $0.12 per share payable on March 30, 2016 to shareholders of record on March 1, 2016. On May 12, 2016, our Board of Directors declared a quarterly cash dividend of $0.12 per share payable on September 30, 2016 to shareholders of record on June 20, 2016. On August 13, 2016, our Board of Directors declared a quarterly cash dividend of $0.12 per share payable on September 30, 2016 to shareholders of record on September 23, 2016. On November 12, 2016, our Board of Directors declared a quarterly cash dividend of $0.12 per share payable on December 30, 2016 to shareholders of record on December 23, 2016.
In May 2016, the Company’s Board of Directors authorized a plan to repurchase up to $2,000,000 of the Company’s common shares, inclusive of commissions and fees. During the three months ended September 30, 2016, the Company repurchased and retired a total of 66,857 shares at a weighted average price per share of $5.06 under this authorized repurchase plan. The total cost of shares repurchased, inclusive of fees and commissions, during the three months ended September 30, 2016 was $338,000, or $5.06 per share. As of September 30, 2016, none of the Company’s retained earnings were restricted from payment of dividends to the Company’s shareholders. However, since most of the Company’s capital and retained earnings may be invested in the Subsidiary, a dividend from the Subsidiary would likely be required in order to fund a dividend to the Company’s shareholders and would require notification to the Cayman Islands Monetary Authority (“CIMA”). Under Cayman Islands law, the use of additional paid-in capital is restricted, and the Company will not be allowed to pay dividends out of additional paid-in capital if such payments result in breaches of the prescribed and minimum capital requirement. See also Note 10. |
Share-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | The Company currently has outstanding stock-based awards granted under the 2014 Omnibus Incentive Plan (the “Plan”). Under the Plan, the Company has discretion to grant equity and cash incentive awards to eligible individuals, including the issuance of up to 1,000,000 of the Company’s ordinary shares. At September 30, 2016, there were 725,000 shares available for grant under the Plan.
Stock options
The Company accounts for share-based compensation under the fair value recognition provisions of ASC Topic 718 – “Compensation – Stock Compensation.” Stock options granted and outstanding under the Plan vests quarterly over four years, and are exercisable over the contractual term of ten years.
A summary of the stock option activity for the three and nine-month periods ended September 30, 2016 and 2015 is as follows (option amounts not in thousands):
Compensation expense recognized for the three-month periods ended September 30, 2016 and 2015 totaled $8,000 and $7,000, respectively, and for the nine-month periods ended September 30, 2016 and 2015 totaled $24,000 and $21,000, respectively. Compensation expense is included in general and administrative expenses. At September 30, 2016 and 2015, there was approximately $75,000 and $94,000, respectively, of unrecognized compensation expense related to non-vested stock options granted under the Plan, which the Company expects to recognize over a weighted-average period of twenty nine (29) months. During the nine-month periods ended September 30, 2016 and 2015, 35,000 options and 180,000 options, respectively, were granted with fair value estimated on the date of grant using the following assumptions and the Black-Scholes option pricing model:
Restricted Stock Awards The Company has granted and may grant restricted stock awards to eligible individuals in connection with their service to the Company. The terms of the Company’s outstanding restricted stock grants may include service, performance and market-based conditions. The fair value of the awards with market-based conditions is determined using a Monte Carlo simulation method, which calculates many potential outcomes for an award and then establishes fair value based on the most likely outcome. The determination of fair value with respect to the awards with only performance or service-based conditions is based on the value of the Company’s stock on the grant date.
Information with respect to the activity of unvested restricted stock awards during the three and nine-month periods ended September 30, 2016 and 2015 is as follows (share amounts not in thousands):
Compensation expense recognized for the three-month periods ended September 30, 2016 and 2015 totaled $22,000, and for the nine-month periods ended September 30, 2016 and 2015, totaled $66,000, and is included in general and administrative expenses. At September 30, 2016, there was approximately $198,000 unrecognized compensation expense related to nonvested restricted stock granted under the Plan, which the Company expects to recognize over a weighted-average period of twenty seven (27) months. |
Net Worth for Regulatory Purposes |
9 Months Ended |
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Sep. 30, 2016 | |
Text Block [Abstract] | |
Net Worth for Regulatory Purposes | The Subsidiary is subject to a minimum and prescribed capital requirement as established by CIMA. Under the terms of its license, the Subsidiary is required to maintain a minimum and prescribed capital requirement of $500 in accordance with the Subsidiary’s approved business plan filed with CIMA. At September 30, 2016, the Subsidiary’s net worth of $26.5 million exceeded the minimum and prescribed capital requirement. For the three and nine-month periods ended September 30, 2016, the Subsidiary’s net income was approximately $2.6 million and $4.0 million, respectively. The Subsidiary is not required to prepare separate statutory financial statements for filing with CIMA, and there were no material differences between the Subsidiary’s GAAP capital, surplus and net income, and its statutory capital, surplus and net income as of September 30, 2016 or for the periods then ended.
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Fair Value and Certain Risks and Uncertainties |
9 Months Ended |
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Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value and Certain Risks and Uncertainties | Fair values
With the exception of balances with respect of insurance contracts (which are specifically excluded from fair value disclosures under GAAP) and investment securities as disclosed in Note 4 of these consolidated financial statements, the carrying amounts of all other financial instruments, which consist of cash and cash equivalents, restricted cash and cash equivalents, accrued interest and dividends receivable, premiums receivable and other receivables and accounts payable and accruals, approximate their fair values due to their short-term nature.
Concentration of underwriting risk
A substantial portion of the Company’s current reinsurance business ultimately relates to the risks of two entities domiciled in Florida in the United States, one of which is under common directorship; accordingly the Company’s underwriting risks are not significantly diversified.
Credit risk
The Company is exposed to credit risk in relation to counterparties that may default on their obligations to the Company. The amount of counterparty credit risk predominantly relates to premiums receivable and assets held with counterparties. The Company mitigates its counterparty credit risk by using several counterparties, with strong credit ratings, which decreases the likelihood of any significant concentration of credit risk with any one counterparty. In addition, the Company is exposed to credit risk on fixed-maturity debt instruments to the extent that the debtors may default on their debt obligations.
Market risk
Market risk exists to the extent that the values of the Company’s monetary assets fluctuate as a result of changes in market prices. Changes in market prices can arise from factors specific to individual securities or their respective issuers, or factors affecting all securities traded in a particular market. Relevant factors for the Company are both volatility and liquidity of specific securities and markets in which the Company holds investments. The Company has established investment guidelines that seek to mitigate significant exposure to market risk. |
Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | The Company has an operating lease for office space located at Strathvale House, 2nd Floor, 90 North Church Street, Grand Cayman, Cayman Islands. The term of the lease is thirty-eight months and commenced on April 17, 2015. Rent expense under this lease for the three and nine-month periods ended September 30, 2016 was $17,200 and $43,940, respectively and lease commitments at September 30, 2016 were $101,180.
The Company also has an operating lease for residential space at Britannia Villas #616, Grand Cayman, Cayman Islands that runs through October 31, 2017. Rent expense under this lease for the three and nine-month periods ended September 30, 2016 was $12,900 and $38,700, respectively, and lease commitments at September 30, 2016 were $55,900. |
Related Party Transactions |
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Related Party Transactions | The Company has entered into reinsurance agreements with Claddaugh and HCPCI, both of which are related entities through common directorships. At September 30, 2016 and December 31, 2015, included within loss experience refund payable and unearned premiums reserve on the consolidated balance sheets are the following related-party amounts:
During the three and nine-month periods ended September 30, 2016 and 2015, included within assumed premiums, change in loss experience refund payable and change in unearned premiums reserve on the consolidated statements of income are the following related-party amounts:
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Subsequent Events |
9 Months Ended |
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Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | We evaluate all subsequent events and transactions for potential recognition or disclosure in our financial statements.
Except as disclosed in Note 8 of these consolidated financial statements, there were no other events subsequent to September 30, 2016 for which disclosure was required. |
Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||
Cash and cash equivalents | Cash and cash equivalents: Cash and cash equivalents are comprised of cash and short term investments with original maturities of three months or less. |
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Restricted cash and cash equivalents | Restricted cash and cash equivalents: Restricted cash and cash equivalents represent funds held in accordance with the Company’s trust agreements with ceding insurers and trustees, which require the Company to maintain collateral with a market value greater than or equal to the limit of liability, less unpaid premium. |
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Investments | Investments: The Company’s investments consist of fixed-maturity securities and equity securities, and are classified as available-for-sale. The Company’s investments are carried at fair value with changes in fair value included as a separate component of accumulated other comprehensive loss in shareholders’ equity.
Unrealized gains or losses are determined by comparing the fair market value of the securities with their cost or amortized cost. Realized gains and losses on investments are recorded on the trade date and are included in the consolidated statements of income. The cost of securities sold is based on the specified identification method. Investment income is recognized as earned and discounts or premiums arising from the purchase of debt securities are recognized in investment income using the interest method over the remaining term of the security.
The Company reviews all securities for other-than-temporary impairment ("OTTI") on a quarterly basis and more frequently when economic or market conditions warrant such review. When the fair value of any investment is lower than its cost, an assessment is made to see whether the decline is temporary of other-than-temporary. If the decline is determined to be other-than-temporary the investment is written down to fair value and an impairment charge is recognized in income in the period in which the Company makes such determination. For a debt security that the Company does not intend to sell nor is it more likely than not that the Company will be required to sell before recovery of its amortized cost, only the credit loss component is recognized in income, while impairment related to all other factors is recognized in other comprehensive income (loss). The Company considers various factors in determining whether an individual security is other-than-temporarily impaired (see Note 4). |
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Fair value measurement | Fair value measurement: GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under GAAP are as follows:
Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk. For debt securities, inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, broker quotes for similar securities and other factors. The fair value of investments in common stocks and exchange-traded funds is based on the last traded price. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by the Company’s investment custodians. The investment custodians consider observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant markets. The categorization of a financial instrument within the hierarchy is based upon the pricing transparency of the instrument. |
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Deferred policy acquisition costs ("DAC") | Deferred policy acquisition costs (“DAC”): Policy acquisition costs consist of brokerage fees, federal excise taxes and other costs related directly to the successful acquisition of new or renewal insurance contracts, and are deferred and amortized over the terms of the reinsurance agreements to which they relate. The Company evaluates the recoverability of DAC by determining if the sum of future earned premiums and anticipated investment income is greater than the expected future claims and expenses. If a loss is probable on the unexpired portion of policies in force, a premium deficiency loss is recognized. At September 30, 2016, the DAC was considered fully recoverable and no premium deficiency loss was recorded.
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Property and equipment | Property and equipment: Property and equipment are recorded at cost when acquired. Property and equipment are comprised of motor vehicles, furniture and fixtures, computer equipment and leasehold improvements and are depreciated, using the straight-line method, over their estimated useful lives, which are five years for furniture and fixtures and computer equipment and four years for motor vehicles. Leasehold improvements are amortized over the lesser of the estimated useful lives of the assets or remaining lease term. The Company periodically reviews property and equipment that have finite lives, and that are not held for sale, for impairment by comparing the carrying value of the assets to their estimated future undiscounted cash flows. For the three-month and nine-month periods ended September 30, 2016, there were no impairments in property and equipment. |
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Allowance for uncollectible receivables | Allowance for uncollectible receivables: Management evaluates credit quality by evaluating the exposure to individual counterparties; where warranted management also considers the credit rating or financial position, operating results and/or payment history of the counterparty. Management establishes an allowance for amounts for which collection is considered doubtful. Adjustments to previous assessments are recognized as income in the year in which they are determined. At September 30, 2016, no receivables were determined to be overdue or impaired and, accordingly, no allowance for uncollectible receivables has been established. |
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Reserves for losses and loss adjustment expenses | Reserves for losses and loss adjustment expenses: The Company determines its reserves for losses and loss adjustment expenses on the basis of the claims reported by the Company’s ceding insurers. Incurred but not reported (“IBNR”) reserves are estimated by management using various actuarial methods in addition to the ceding insurer’s estimated IBNR, historical industry loss experience and management’s professional judgment. The reserves for losses and loss adjustment expenses represent management’s best estimate of the ultimate settlement costs of all losses and loss adjustment expenses. Management believes that the amounts are adequate; however, the inherent impossibility of predicting future events with precision, results in uncertainty as to the amount which will ultimately be required for the settlement of losses and loss expenses, and the differences could be material. Adjustments are reflected in the consolidated statements of income in the period in which they are determined. |
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Loss experience refund payable | Loss experience refund payable: Certain contracts include retrospective provisions that adjust premiums or result in profit commissions in the event losses are minimal or zero. In accordance with GAAP, the Company will recognize a liability in the period in which the absence of loss experience obligates the Company to pay cash or other consideration under the contracts. On the contrary, the Company will derecognize such liability in the period in which a loss experience arises. Such adjustments to the liability, which accrue throughout the contract terms, will reduce the liability should a catastrophic loss event covered by the Company occur. |
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Premiums assumed | Premiums assumed: The Company records premiums assumed, net of loss experience refunds, as earned pro-rata over the terms of the reinsurance agreements and the unearned portion at the balance sheet date is recorded as unearned premiums reserve. A reserve is made for estimated premium deficiencies to the extent that estimated losses and loss adjustment expenses exceed related unearned premiums. Investment income is not considered in determining whether or not a deficiency exists.
Certain contracts allow for reinstatement premiums in the event of a full limit loss prior to the expiration of the contract. A reinstatement premium is not due until there is a full limit loss event and therefore, in accordance with GAAP, the Company records a reinstatement premium as written only in the event that the reinsured incurs a full limit loss on the contract and the contract allows for a reinstatement of coverage upon payment of an additional premium. For catastrophe contracts which contractually require the payment of a reinstatement premium equal to or greater than the original premium upon the occurrence of a full limit loss, the reinstatement premiums are earned over the original contract period. Reinstatement premiums that are contractually calculated on a pro-rata basis of the original premiums are earned over the remaining coverage period. |
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Uncertain income tax positions | Uncertain income tax positions: The authoritative GAAP guidance on accounting for, and disclosure of, uncertainty in income tax positions requires the Company to determine whether an income tax position of the Company is more likely than not to be sustained upon examination by the relevant tax authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. For income tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements, if any, is reduced by the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authority. The application of this authoritative guidance has had no effect on the Company’s consolidated financial statements because the Company had no uncertain tax positions at September 30, 2016. |
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Earnings per share | Earnings per share: Basic earnings per share has been computed on the basis of the weighted-average number of ordinary shares outstanding during the periods presented. Diluted earnings per share is computed based on the weighted-average number of ordinary shares outstanding and reflects the assumed exercise or conversion of diluted securities, such as stock options and warrants, computed using the treasury stock method. |
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Stock-Based Compensation | Stock-Based Compensation: The Company accounts for stock-based compensation under the fair value recognition provisions of GAAP 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. The Company measures compensation for restricted stock based on the price of the Company’s ordinary shares at the grant date. Determining the fair value of share purchase options at the grant date requires significant estimation and judgment. The Company uses an option-pricing model (Black-Scholes option pricing model) to assist in the calculation of fair value for share purchase options. The Company's shares have not been publicly traded for a sufficient length of time to solely use the Company's performance to reasonably estimate the expected volatility. Therefore, when estimating the expected volatility, the Company takes into consideration the historical volatility of similar entities. The Company considers factors such as an entity's industry, stage of life cycle, size and financial leverage when selecting similar entities. The Company uses a sample peer group of companies in the reinsurance industry as well as the Company’s own historical volatility in determining the expected volatility. Additionally, the Company uses the full life of the options, ten years, as the estimated term of the options, and has assumed no forfeitures during the life of the options. The Company uses the straight-line attribution method for all grants that include only a service condition. Compensation expense related to all awards is included in general and administrative expenses. |
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Recent accounting pronouncements | Accounting Standards Update No. 2016-09. In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-09 (“ASU 2016-09”), Compensation-Stock Compensation (Topic 718), which affects all entities that issue share-based awards to their employees. Among the amendments affecting share-based payment transactions are their income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for all public entities for reporting periods beginning after December 15, 2016 and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2017, and for interim periods within fiscal years beginning after December 15, 2018. Early adoption is permitted for all entities. The Company is currently evaluating the impact of this guidance on the Company’s consolidated financial statements.
Accounting Standards Update No. 2016-02. In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (“ASU 2016-02”), Leases (Topic 842), which supersedes Topic 840 and creates the new lease accounting standards for lessees and lessors, primarily related to the recognition of lease assets and liabilities by lessees for leases classified as operating leases. ASU 2016-02 is effective for all public entities for reporting periods beginning after December 15, 2018 and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and for interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities. The Company is currently evaluating the impact of this guidance on the Company’s consolidated financial statements.
Accounting Standards Update No. 2016-01. In January 2016, the FASB issued Accounting Standards Update No. 2016-01 (“ASU 2016-01”), Financial Instruments (Subtopic 825-10), which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. One of the changes is to require certain equity investments to be measured at fair value with changes in fair value recognized in net income. ASU 2016-01 is effective for all public entities for reporting periods beginning after December 15, 2017 and interim periods within those fiscal years. For all other entities, the amendments in ASU 2016-01 are effective for fiscal years beginning after December 15, 2018, and for interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted for financial statements that have not been previously issued. The Company is currently evaluating the impact of this guidance on the Company’s consolidated financial statements. |
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Reclassifications | Reclassifications: Certain reclassifications of prior period amounts have been made to conform to the current period presentation. |
Cash and Cash Equivalents and Restricted Cash and Cash Equivalents (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Cash and Cash Equivalents and Restricted Cash and Cash Equivalents |
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Investments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Available-for-sale Securities |
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Schedule of Contractual Maturities of Fixed-maturity Securities |
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Summary of Proceeds Received, and Gross Realized Gains and Losses from Sales of Available-for-sale Securities |
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Summary of Securities with Gross Unrealized Loss Positions |
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Fair Value of Assets Measured on Recurring Basis |
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Losses and Loss Adjustment Expenses (Tables) |
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of loss and loss adjustment expenses |
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Earnings Per Share (Tables) |
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Earnings per share | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Basic and Diluted Earnings Per Share |
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Share-Based Compensation (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock Option Activity |
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Estimated Fair Value of Options Granted using Black-Scholes Option-Pricing Model with Weighted-Average Assumptions |
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Summary of Unvested Restricted Stock Awards |
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Related Party Transactions (Tables) |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Premium Receivable, Loss Experience Refund Repayable and Unearned Premiums |
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Summary of Related Party Transactions |
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Organization and Basis of Presentation (Details Narrative) |
9 Months Ended |
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Sep. 30, 2016
Segment
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Equity Method Investment, Ownership Percentage | 100.00% |
Number of business operating segments | 1 |
Cash and Cash Equivalents and Restricted Cash and Cash Equivalents (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Cash and Cash Equivalents [Abstract] | ||
Cash on deposit | $ 5,649 | $ 3,567 |
Cash held with custodians | 3,829 | 5,017 |
Restricted cash held in trust | 26,296 | 30,368 |
Total | $ 35,774 | $ 38,952 |
Investments (Details 1) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Cost or Amortized Cost, Total available-for-sale securities | $ 12,882 | $ 10,822 |
Total estimated fair value available for sale | 6,074 | 3,096 |
Fixed Maturities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Due after one year through five years | 6,081 | 2,969 |
Due after ten years | 111 | |
Cost or Amortized Cost, Total available-for-sale securities | 6,081 | 3,080 |
Due after one year through five years | 6,074 | 2,981 |
Due after ten years | 115 | |
Total estimated fair value available for sale | $ 6,074 | $ 3,096 |
Investments (Details 2) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
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Fixed Maturities [Member] | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Proceeds | $ 0 | $ 0 | $ 119 | $ 775 |
Gross Realized Gains | 0 | 0 | 8 | 75 |
Gross Realized Losses | 0 | 0 | 0 | 0 |
Equity Securities [Member] | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Proceeds | 4,099 | 773 | 9,218 | 10,702 |
Gross Realized Gains | 368 | 5 | 867 | 914 |
Gross Realized Losses | $ (246) | $ 308 | $ (619) | $ 316 |
Investments (Details Narrative) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016
USD ($)
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Sep. 30, 2015
USD ($)
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Sep. 30, 2016
USD ($)
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Sep. 30, 2015
USD ($)
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Dec. 31, 2015
USD ($)
|
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Amortized Cost and Fair Value Debt Securities [Abstract] | |||||
Fair value of securities held in trust accounts | $ 3,524,000 | $ 3,524,000 | $ 3,637,628 | ||
Number of securities in unrealized loss position | 22 | 22 | 24 | ||
Number of positions held for greater than twelve months | 5 | 5 | 2 | ||
Other-than-temporary impairment losses | $ 0 | $ 399,000 | $ 0 | $ 399,000 |
Losses and Loss Adjustment Expenses (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
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Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||||
Balance, beginning of period | $ 2,250 | $ 0 | $ 0 | |
Incurred related to: Current period | (1,249) | 0 | $ 1,030 | 0 |
Incurred related to: Prior period | 0 | 0 | 0 | 0 |
Total incurred | (1,249) | 0 | 1,030 | 0 |
Paid related to: Current period | (29) | 0 | (58) | 0 |
Paid related to: Prior period | 0 | 0 | 0 | 0 |
Total paid | (29) | 0 | (58) | 0 |
Balance, end of period | $ 972 | $ 0 | $ 972 | $ 0 |
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
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Numerator: | ||||
Net earnings | $ 2,985 | $ 742 | $ 4,900 | $ 4,229 |
Denominator: | ||||
Weighted average shares-basic | 6,026,172 | 6,060,000 | 6,048,163 | 6,054,945 |
Effect of dilutive securities-Stock options | 0 | 0 | 0 | 0 |
Shares issuable upon conversion of warrants | 0 | 0 | 0 | 0 |
Weighted average shares-diluted | 6,026,172 | 6,060,000 | 6,048,163 | 6,054,945 |
Earnings per shares-basic | $ 0.50 | $ 0.12 | $ 0.81 | $ 0.70 |
Earnings per shares-diluted | $ 0.50 | $ 0.12 | $ 0.81 | $ 0.70 |
Earnings Per Share (Details Narrative) - $ / shares |
3 Months Ended | 9 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
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Earnings per share | ||||||||||
Number of Options, Granted | 215,000 | 180,000 | 215,000 | 180,000 | 215,000 | 215,000 | 180,000 | 180,000 | 180,000 | 0 |
Anti-dilutive shares | 215,000 | 180,000 | 215,000 | 180,000 | ||||||
Warrant outstanding | 8,230,700 | 8,230,700 | 8,230,700 | 8,230,700 | ||||||
Number of ordinary shares which can be purchased by the exercise of warrants | 8,230,700 | 8,230,700 | 8,230,700 | 8,230,700 | ||||||
Warrants exercise price | $ 7.50 | $ 7.50 | $ 7.50 | $ 7.50 |
Share-Based Compensation (Details 1) - Employee Stock Option [Member] - $ / shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected dividend yield | 9.60% | 8.00% |
Expected volatility | 35.00% | 35.00% |
Risk-free interest rate | 2.03% | 1.81% |
Expected life (in years) | 10 years | 10 years |
Per share grant date fair value of options issued | $ .34 | $ .64 |
Share-Based Compensation (Details 2) - $ / shares |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
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Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||||
Weighted Number of Restricted Stock Awards, Nonvested Beginning Balance | 37,500 | 41,250 | 45,000 | 52,500 | 56,250 | 0 |
Weighted Number of Restricted Stock Awards, Granted | 60,000 | |||||
Weighted Number of Restricted Stock Awards, Vested | (3,750) | (3,750) | (3,750) | (3,750) | (3,750) | (3,750) |
Weighted Number of Restricted Stock Awards, Nonvested Ending Balance | 33,750 | 37,500 | 41,250 | 48,750 | 52,500 | 56,250 |
Weighted Average Grant Date Fair Value, Nonvested Beginning Balance | $ 5.86 | $ 5.86 | $ 5.86 | $ 5.86 | $ 5.86 | $ 5.86 |
Weighted Average Grant Date Fair Value, Nonvested Ending Balance | $ 5.86 | $ 5.86 | $ 5.86 | $ 5.86 | $ 5.86 | $ 5.86 |
Net Worth for Regulatory Purposes (Details Narrative) |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2016
USD ($)
|
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Regulated Operations [Abstract] | ||
Minimum prescribed capital requirement | $ 500 | $ 500 |
Subsidiary net worth | 26,500,000 | 26,500,000 |
Subsidiary's net income | $ 2,600,000 | $ 4,000,000 |
Commitments and Contingencies (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2016 |
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Operating Lease One [Member] | ||
Other Commitments [Line Items] | ||
Lease term | 38 months | |
Rent expense | $ 17,200 | $ 43,940 |
Lease commitments | $ 101,180 | |
Lease Commencement date | Apr. 17, 2015 | |
Operating Lease Two [Member] | ||
Other Commitments [Line Items] | ||
Rent expense | $ 12,900 | $ 38,700 |
Lease commitments | $ 55,900 | |
Lease Commencement date | Oct. 31, 2017 |
Related Party Transactions (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Related Party Transaction [Line Items] | ||
Loss experience refund payable | $ 6,818 | $ 9,913 |
Unearned premiums reserve | 9,526 | 5,571 |
Claddaugh And Hcpci [Member] | ||
Related Party Transaction [Line Items] | ||
Loss experience refund payable | 840 | 6,510 |
Unearned premiums reserve | $ 2,267 | $ 1,392 |
Related Party Transactions (Details 1) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Revenue | ||||
Assumed premiums | $ 0 | $ 0 | $ 15,065 | $ 14,888 |
Change in loss experience refund payable | 2,089 | 2,089 | 4,465 | 6,204 |
Change in unearned premiums reserve | 4,007 | 3,881 | (3,955) | (3,708) |
Expenses | ||||
Policy acquisition costs and underwriting expenses | 83 | 85 | 211 | 259 |
Claddaugh And Hcpci [Member] | ||||
Revenue | ||||
Assumed premiums | 0 | 0 | 3,400 | 3,340 |
Change in loss experience refund payable | (630) | (630) | (1,890) | (1,964) |
Change in unearned premiums reserve | $ 850 | $ 835 | $ (875) | $ (114) |
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