☒ |
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2016
|
☐ |
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _______ to _______
|
Delaware
|
98-0664337
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification Number)
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
Non-accelerated filer ☒
|
Smaller reporting company ☐
|
(Do not check if a smaller reporting company)
|
Page
|
||
PART I. FINANCIAL INFORMATION
|
||
Item 1.
|
Financial Statements
|
|
2
|
||
3
|
||
4
|
||
5
|
||
6
|
||
Item 2.
|
25
|
|
Item 3.
|
48
|
|
Item 4.
|
49
|
|
PART II. OTHER INFORMATION
|
||
Item 1.
|
50
|
|
Item IA.
|
50
|
|
Item 2.
|
50
|
|
Item 6.
|
50
|
|
51
|
||
52
|
Item 1. |
Financial Statements
|
September 30,
2016
|
December 31,
2015
|
|||||||
(in thousands, except share and per
share data)
|
||||||||
Assets
|
||||||||
Fixed maturity securities available-for-sale, at fair value (amortized cost: $391,659 in 2016; $326,953 in 2015)
|
$
|
398,779
|
$
|
327,602
|
||||
Equity securities available-for-sale, at fair value (cost: $14,487 in 2016; $12,184 in 2015)
|
17,788
|
14,240
|
||||||
Short-term investments
|
254
|
2,299
|
||||||
Total investments
|
416,821
|
344,141
|
||||||
Cash and cash equivalents
|
103,757
|
24,544
|
||||||
Investment income due and accrued
|
1,833
|
1,844
|
||||||
Premiums receivable, net
|
15,483
|
15,550
|
||||||
Receivable from reinsurers
|
7,306
|
11,928
|
||||||
Reinsurance recoverables
|
77,610
|
95,670
|
||||||
Ceded unearned premiums
|
24,143
|
39,329
|
||||||
Deferred policy acquisition costs, net of ceding commissions
|
5,558
|
—
|
||||||
Intangible assets
|
3,538
|
3,538
|
||||||
Deferred income tax asset, net
|
4,940
|
6,822
|
||||||
Other assets
|
2,282
|
1,912
|
||||||
Total assets
|
$
|
663,271
|
$
|
545,278
|
||||
Liabilities and Stockholders’ Equity
|
||||||||
Reserves for unpaid losses and loss adjustment expenses
|
$
|
253,458
|
$
|
219,629
|
||||
Unearned premiums
|
88,276
|
81,713
|
||||||
Funds held for reinsurers
|
52,545
|
87,206
|
||||||
Payable to reinsurers
|
3,914
|
3,833
|
||||||
Accounts payable and accrued expenses
|
6,239
|
7,410
|
||||||
Deferred policy acquisition costs, net of ceding commissions
|
—
|
1,696
|
||||||
Note payable
|
27,223
|
29,603
|
||||||
Other liabilities
|
21,732
|
737
|
||||||
Total liabilities
|
453,387
|
431,827
|
||||||
Stockholders’ equity:
|
||||||||
Class A common stock, $0.0001 par value, none authorized, issued or outstanding as of September 30, 2016; 15,000,000 shares authorized; 13,803,183 shares issued and outstanding as December 31, 2015
|
—
|
1
|
||||||
Class B common stock, $0.0001 par value, none authorized, issued or outstanding as of September 30, 2016; 3,333,333 shares authorized; 1,513,592 shares issued and outstanding as of December 31, 2015
|
—
|
—
|
||||||
Common stock, $0.01 par value, 400,000,000 shares authorized, 20,968,707 shares issued and outstanding as of September 30, 2016; none authorized, issued or outstanding as of December 31, 2015
|
210
|
—
|
||||||
Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued or outstanding as of September 30, 2016; none authorized, issued or outstanding as of December 31, 2015
|
—
|
—
|
||||||
Additional paid-in capital
|
153,189
|
80,229
|
||||||
Retained earnings
|
47,818
|
29,570
|
||||||
Accumulated other comprehensive income
|
8,667
|
3,651
|
||||||
Stockholders’ equity
|
209,884
|
113,451
|
||||||
Total liabilities and stockholders’ equity
|
$
|
663,271
|
$
|
545,278
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
(in thousands, except share and per share data)
|
||||||||||||||||
Revenues:
|
||||||||||||||||
Gross written premiums
|
$
|
47,823
|
$
|
45,798
|
$
|
141,012
|
$
|
131,840
|
||||||||
Ceded written premiums
|
(14,177
|
)
|
(26,919
|
)
|
(23,910
|
)
|
(77,137
|
)
|
||||||||
Net written premiums
|
33,646
|
18,879
|
117,102
|
54,703
|
||||||||||||
Change in unearned premiums
|
(672
|
)
|
(600
|
)
|
(21,748
|
)
|
(2,967
|
)
|
||||||||
Net earned premiums
|
32,974
|
18,279
|
95,354
|
51,736
|
||||||||||||
Net investment income
|
1,894
|
1,436
|
5,389
|
4,027
|
||||||||||||
Net realized investment (losses) gains
|
—
|
(8
|
)
|
383
|
8
|
|||||||||||
Other income
|
—
|
128
|
136
|
443
|
||||||||||||
Total revenues
|
34,868
|
19,835
|
101,262
|
56,214
|
||||||||||||
Expenses:
|
||||||||||||||||
Losses and loss adjustment expenses
|
15,949
|
10,369
|
51,526
|
27,648
|
||||||||||||
Underwriting, acquisition and insurance expenses
|
6,302
|
46
|
19,031
|
408
|
||||||||||||
Other expenses
|
523
|
468
|
1,469
|
1,481
|
||||||||||||
Total expenses
|
22,774
|
10,883
|
72,026
|
29,537
|
||||||||||||
Income before income taxes
|
12,094
|
8,952
|
29,236
|
26,677
|
||||||||||||
Total income tax expense
|
4,112
|
3,008
|
9,940
|
9,008
|
||||||||||||
Net income
|
$
|
7,982
|
$
|
5,944
|
$
|
19,296
|
$
|
17,669
|
||||||||
Other comprehensive income:
|
||||||||||||||||
Unrealized gains (losses), net of taxes of $(1) and $2,700 in 2016 and $63 and $(590) in 2015
|
(1
|
) |
118
|
5,016
|
(1,095
|
)
|
||||||||||
Total comprehensive income
|
$
|
7,981
|
$
|
6,062
|
$
|
24,312
|
$
|
16,574
|
Earnings per share:
|
||||||||||||||||
Basic:
|
||||||||||||||||
Common Stock
|
$
|
0.24
|
$
|
—
|
$
|
0.24
|
$
|
—
|
||||||||
Class A common stock
|
$
|
0.19
|
$
|
0.40
|
$
|
0.98
|
$
|
1.20
|
||||||||
Class B common stock
|
$
|
0.21
|
$
|
0.27
|
$
|
0.48
|
$
|
0.83
|
||||||||
Diluted:
|
||||||||||||||||
Common Stock
|
$
|
0.24
|
$
|
—
|
$
|
0.24
|
$
|
—
|
||||||||
Class A common stock
|
$
|
0.19
|
$
|
0.40
|
$
|
0.98
|
$
|
1.20
|
||||||||
Class B common stock
|
$
|
0.20
|
$
|
0.27
|
$
|
0.46
|
$
|
0.81
|
||||||||
Weighted average common shares outstanding:
|
||||||||||||||||
Basic:
|
||||||||||||||||
Common Stock
|
20,656,207
|
—
|
20,656,207
|
—
|
||||||||||||
Class A common stock
|
14,110,967
|
13,795,530
|
13,844,221
|
13,795,530
|
||||||||||||
Class B common stock
|
1,681,685
|
1,477,800
|
1,573,702
|
1,381,055
|
||||||||||||
Diluted:
|
||||||||||||||||
Common Stock
|
20,741,400
|
—
|
20,741,400
|
—
|
||||||||||||
Class A common stock
|
14,110,967
|
13,795,530
|
13,844,221
|
13,795,530
|
||||||||||||
Class B common stock
|
1,817,679
|
1,477,800
|
1,643,618
|
1,408,661
|
||||||||||||
Cash dividends paid per common share
|
$
|
0.05
|
$
|
—
|
$
|
0.05
|
$
|
—
|
Class A
Common
Stock
|
Class B
Common
Stock
|
Common
Stock
|
Additional
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other
Compre-
hensive
Income
|
Total
Stock-
holders’
Equity
|
||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||
Balance at December 31, 2014
|
$
|
1
|
$
|
—
|
$
|
—
|
$
|
80,074
|
$
|
7,297
|
$
|
5,214
|
$
|
92,586
|
||||||||||||||
Stock-based compensation
|
—
|
—
|
—
|
60
|
—
|
—
|
60
|
|||||||||||||||||||||
Other comprehensive loss, net of tax
|
—
|
—
|
—
|
—
|
—
|
(1,095
|
)
|
(1,095
|
)
|
|||||||||||||||||||
Net income
|
—
|
—
|
—
|
—
|
17,669
|
—
|
17,669
|
|||||||||||||||||||||
Balance at September 30, 2015
|
$
|
1
|
$
|
—
|
$
|
—
|
$
|
80,134
|
$
|
24,966
|
$
|
4,119
|
$
|
109,220
|
||||||||||||||
Balance at December 31, 2015
|
$
|
1
|
$
|
—
|
$
|
—
|
$
|
80,229
|
$
|
29,570
|
$
|
3,651
|
$
|
113,451
|
||||||||||||||
Reclassification of capital structure
|
(1
|
)
|
—
|
160
|
(159
|
)
|
—
|
—
|
—
|
|||||||||||||||||||
Common stock issuance, net of transaction costs
|
—
|
—
|
50
|
72,791
|
—
|
—
|
72,841
|
|||||||||||||||||||||
Stock-based compensation
|
—
|
—
|
—
|
328
|
—
|
—
|
328
|
|||||||||||||||||||||
Dividends
|
—
|
—
|
—
|
—
|
(1,048
|
)
|
—
|
(1,048
|
)
|
|||||||||||||||||||
Other comprehensive income, net of tax
|
—
|
—
|
—
|
—
|
—
|
5,016
|
5,016
|
|||||||||||||||||||||
Net income
|
—
|
—
|
—
|
—
|
19,296
|
—
|
19,296
|
|||||||||||||||||||||
Balance at September 30, 2016
|
$
|
—
|
$
|
—
|
$
|
210
|
$
|
153,189
|
$
|
47,818
|
$
|
8,667
|
$
|
209,884
|
Nine Months Ended September 30,
|
||||||||
2016
|
2015
|
|||||||
(in thousands)
|
||||||||
Operating activities:
|
||||||||
Net cash provided by operating activities
|
$
|
56,603
|
$
|
58,408
|
||||
Investing activities:
|
||||||||
Purchase of property and equipment
|
(376
|
)
|
(176
|
)
|
||||
Change in short-term investments, net
|
2,045
|
1,959
|
||||||
Securities available-for-sale:
|
||||||||
Purchases – fixed maturity securities
|
(89,921
|
)
|
(88,053
|
)
|
||||
Purchases – equity securities
|
(2,303
|
)
|
(223
|
)
|
||||
Sales – fixed maturity securities
|
13,541
|
7,767
|
||||||
Maturities and calls – fixed maturity securities
|
30,441
|
24,641
|
||||||
Net cash used in investing activities
|
(46,573
|
)
|
(54,085
|
)
|
||||
Financing activities:
|
||||||||
Common stock issued, net of transaction costs
|
72,841
|
—
|
||||||
Repayment of note payable
|
(2,500
|
)
|
—
|
|||||
Dividends paid
|
(1,048
|
)
|
—
|
|||||
Payments on capital lease
|
(110
|
)
|
(99
|
)
|
||||
Net cash provided by (used in) financing activities
|
69,183
|
(99
|
)
|
|||||
Net change in cash and cash equivalents
|
79,213
|
4,224
|
||||||
Cash and cash equivalents at beginning of year
|
24,544
|
23,958
|
||||||
Cash and cash equivalents at end of period
|
$
|
103,757
|
$
|
28,182
|
1. |
Summary of significant accounting policies
|
• |
net incurred and paid claims development information by accident year for the number of years for which claims incurred typically remain outstanding, but need not exceed 10 years;
|
• |
a reconciliation of incurred and paid claims development information to the aggregate carrying amount of the liability for unpaid claims and claim adjustment expenses, with separate disclosure of reinsurance recoverable on unpaid claims for each period presented in the statement of financial position;
|
• |
for each accident year presented, the total of incurred-but-not-reported liabilities plus expected development on reported claims included in the liability for unpaid claims and claim adjustment expenses;
|
• |
for each accident year presented, quantitative information about claim frequency accompanied by a qualitative description of methodologies used for determining claim frequency information; and
|
• |
for all claims, the average annual percentage payout of incurred claims by age.
|
2. |
Investments
|
September 30, 2016
|
||||||||||||||||
Amortized
Cost
|
Gross
Unrealized
Holding
Gains
|
Gross
Unrealized
Holding
Losses
|
Estimated
Fair Value
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Fixed maturities:
|
||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
$
|
12,407
|
$
|
32
|
$
|
—
|
$
|
12,439
|
||||||||
Obligations of states, municipalities and political subdivisions
|
87,059
|
4,011
|
(126
|
)
|
90,944
|
|||||||||||
Corporate and other securities
|
128,387
|
1,165
|
(193
|
)
|
129,359
|
|||||||||||
Asset-backed securities
|
74,906
|
829
|
(78
|
)
|
75,657
|
|||||||||||
Residential mortgage-backed securities
|
88,900
|
1,519
|
(39
|
)
|
90,380
|
|||||||||||
Total fixed maturities
|
391,659
|
7,556
|
(436
|
)
|
398,779
|
|||||||||||
Equity securities:
|
||||||||||||||||
Exchange traded funds
|
14,487
|
3,501
|
(200
|
)
|
17,788
|
|||||||||||
Total available-for-sale investments
|
$
|
406,146
|
$
|
11,057
|
$
|
(636
|
)
|
$
|
416,567
|
December 31, 2015
|
||||||||||||||||
Amortized
Cost
|
Gross
Unrealized
Holding
Gains
|
Gross
Unrealized
Holding
Losses
|
Estimated
Fair Value
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Fixed maturities:
|
||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
$
|
3,422
|
$
|
13
|
$
|
(2
|
)
|
$
|
3,433
|
|||||||
Obligations of states, municipalities and political subdivisions
|
69,997
|
2,562
|
(46
|
)
|
72,513
|
|||||||||||
Corporate and other securities
|
130,758
|
306
|
(1,543
|
)
|
129,521
|
|||||||||||
Asset-backed securities
|
58,680
|
58
|
(431
|
)
|
58,307
|
|||||||||||
Residential mortgage-backed securities
|
64,096
|
760
|
(1,028
|
)
|
63,828
|
|||||||||||
Total fixed maturities
|
326,953
|
3,699
|
(3,050
|
)
|
327,602
|
|||||||||||
Equity securities:
|
||||||||||||||||
Exchange traded funds
|
12,184
|
2,392
|
(336
|
)
|
14,240
|
|||||||||||
Total available-for-sale investments
|
$
|
339,137
|
$
|
6,091
|
$
|
(3,386
|
)
|
$
|
341,842
|
September 30, 2016
|
||||||||||||||||||||||||
Less than 12 Months
|
12 Months or Longer
|
Total
|
||||||||||||||||||||||
Estimated
Fair Value
|
Gross
Unrealized
Holding
Losses
|
Estimated
Fair Value
|
Gross
Unrealized
Holding
Losses
|
Estimated
Fair Value
|
Gross
Unrealized
Holding
Losses
|
|||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
Fixed maturities:
|
||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||||||
Obligations of states, municipalities and political subdivisions
|
17,331
|
(126
|
)
|
—
|
—
|
17,331
|
(126
|
)
|
||||||||||||||||
Corporate and other securities
|
13,543
|
(12
|
)
|
15,340
|
(181
|
)
|
28,883
|
(193
|
)
|
|||||||||||||||
Asset-backed securities
|
3,749
|
(7
|
)
|
11,423
|
(71
|
)
|
15,172
|
(78
|
)
|
|||||||||||||||
Residential mortgage-backed securities
|
7,721
|
(20
|
)
|
6,811
|
(19
|
)
|
14,532
|
(39
|
)
|
|||||||||||||||
Total fixed maturities
|
42,344
|
(165
|
)
|
33,574
|
(271
|
)
|
75,918
|
(436
|
)
|
|||||||||||||||
Equity securities:
|
||||||||||||||||||||||||
Exchange traded funds
|
—
|
—
|
2,759
|
(200
|
)
|
2,759
|
(200
|
)
|
||||||||||||||||
Total
|
$
|
42,344
|
$
|
(165
|
)
|
$
|
36,333
|
$
|
(471
|
)
|
$
|
78,677
|
$
|
(636
|
)
|
December 31, 2015
|
||||||||||||||||||||||||
Less than 12 Months
|
12 Months or Longer
|
Total
|
||||||||||||||||||||||
Estimated
Fair Value
|
Gross
Unrealized
Holding
Losses
|
Estimated
Fair Value
|
Gross
Unrealized
Holding
Losses
|
Estimated
Fair Value
|
Gross
Unrealized
Holding
Losses
|
|||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
Fixed maturities:
|
||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
$
|
2,999
|
$
|
(2
|
)
|
$
|
—
|
$
|
—
|
$
|
2,999
|
$
|
(2
|
)
|
||||||||||
Obligations of states, municipalities and political subdivisions
|
844
|
(2
|
)
|
2,550
|
(44
|
)
|
3,394
|
(46
|
)
|
|||||||||||||||
Corporate and other securities
|
89,334
|
(1,515
|
)
|
6,978
|
(28
|
)
|
96,312
|
(1,543
|
)
|
|||||||||||||||
Asset-backed securities
|
30,002
|
(209
|
)
|
13,070
|
(222
|
)
|
43,072
|
(431
|
)
|
|||||||||||||||
Residential mortgage-backed securities
|
30,243
|
(434
|
)
|
16,072
|
(594
|
)
|
46,315
|
(1,028
|
)
|
|||||||||||||||
Total fixed maturities
|
153,422
|
(2,162
|
)
|
38,670
|
(888
|
)
|
192,092
|
(3,050
|
)
|
|||||||||||||||
Equity securities:
|
||||||||||||||||||||||||
Exchange traded funds
|
3,256
|
(331
|
)
|
26
|
(5
|
)
|
3,282
|
(336
|
)
|
|||||||||||||||
Total
|
$
|
156,678
|
$
|
(2,493
|
)
|
$
|
38,696
|
$
|
(893
|
)
|
$
|
195,374
|
$
|
(3,386
|
)
|
Amortized
Cost
|
Estimated
Fair Value
|
|||||||
(in thousands)
|
||||||||
Due in one year or less
|
$
|
48,080
|
$
|
48,139
|
||||
Due after one year through five years
|
92,148
|
92,970
|
||||||
Due after five years through ten years
|
25,375
|
26,793
|
||||||
Due after ten years
|
62,250
|
64,840
|
||||||
Asset-backed securities
|
74,906
|
75,657
|
||||||
Residential mortgage-backed securities
|
88,900
|
90,380
|
||||||
Total fixed maturities
|
$
|
391,659
|
$
|
398,779
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Interest:
|
||||||||||||||||
Municipal bonds (tax exempt)
|
$
|
1,606
|
$
|
1,091
|
$
|
4,519
|
$
|
3,175
|
||||||||
Taxable bonds
|
384
|
454
|
1,165
|
1,148
|
||||||||||||
Dividends on equity securities
|
101
|
86
|
303
|
266
|
||||||||||||
Cash, cash equivalents, and short-term investments
|
32
|
1
|
52
|
5
|
||||||||||||
Gross investment income
|
2,123
|
1,632
|
6,039
|
4,594
|
||||||||||||
Investment expenses
|
(229
|
)
|
(196
|
)
|
(650
|
)
|
(567
|
)
|
||||||||
Net investment income
|
$
|
1,894
|
$
|
1,436
|
$
|
5,389
|
$
|
4,027
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Change in net unrealized gains (losses):
|
||||||||||||||||
Fixed maturities
|
$
|
(545
|
)
|
$
|
1,339
|
$
|
6,471
|
$
|
(584
|
)
|
||||||
Equity securities
|
544
|
(1,158
|
)
|
1,245
|
(1,101
|
)
|
||||||||||
Net increase (decrease)
|
$
|
(1
|
)
|
$
|
181
|
$
|
7,716
|
$
|
(1,685
|
)
|
3. |
Fair value measurements
|
September 30, 2016
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Assets
|
||||||||||||||||
Fixed maturities:
|
||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
$
|
12,439
|
$
|
—
|
$
|
—
|
$
|
12,439
|
||||||||
Obligations of states, municipalities and political subdivisions
|
—
|
90,944
|
—
|
90,944
|
||||||||||||
Corporate and other securities
|
—
|
129,359
|
—
|
129,359
|
||||||||||||
Asset-backed securities
|
—
|
75,657
|
—
|
75,657
|
||||||||||||
Residential mortgage-backed securities
|
—
|
90,380
|
—
|
90,380
|
||||||||||||
Total fixed maturities
|
12,439
|
386,340
|
—
|
398,779
|
||||||||||||
Equity securities:
|
||||||||||||||||
Exchange traded funds
|
17,788
|
—
|
—
|
17,788
|
||||||||||||
Short-term investments
|
—
|
254
|
—
|
254
|
||||||||||||
Total
|
$
|
30,227
|
$
|
386,594
|
$
|
—
|
$
|
416,821
|
December 31, 2015
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Assets
|
||||||||||||||||
Fixed maturities:
|
||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
$
|
3,433
|
$
|
—
|
$
|
—
|
$
|
3,433
|
||||||||
Obligations of states, municipalities and political subdivisions
|
—
|
72,513
|
—
|
72,513
|
||||||||||||
Corporate and other securities
|
—
|
129,521
|
—
|
129,521
|
||||||||||||
Asset-backed securities
|
—
|
58,307
|
—
|
58,307
|
||||||||||||
Residential mortgage-backed securities
|
—
|
63,828
|
—
|
63,828
|
||||||||||||
Total fixed maturities
|
3,433
|
324,169
|
—
|
327,602
|
||||||||||||
Equity securities:
|
||||||||||||||||
Exchange traded funds
|
14,240
|
—
|
—
|
14,240
|
||||||||||||
Short-term investments
|
—
|
2,299
|
—
|
2,299
|
||||||||||||
Total
|
$
|
17,673
|
$
|
326,468
|
$
|
—
|
$
|
344,141
|
4. |
Deferred policy acquisition costs
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Balance, beginning of period
|
$
|
5,515
|
$
|
(4,050
|
)
|
$
|
(1,696
|
)
|
$
|
(3,763
|
)
|
|||||
Policy acquisition costs deferred:
|
||||||||||||||||
Direct commissions
|
7,119
|
6,765
|
20,967
|
19,534
|
||||||||||||
Ceding commissions
|
(4,918
|
)
|
(10,138
|
)
|
(7,122
|
)
|
(28,876
|
)
|
||||||||
Other underwriting and policy acquisition costs
|
830
|
833
|
2,256
|
2,435
|
||||||||||||
Policy acquisition costs deferred
|
3,031
|
(2,540
|
)
|
16,101
|
(6,907
|
)
|
||||||||||
Amortization of net policy acquisition costs
|
(2,988
|
)
|
2,309
|
(8,847
|
)
|
6,389
|
||||||||||
Balance, end of period
|
$
|
5,558
|
$
|
(4,281
|
)
|
$
|
5,558
|
$
|
(4,281
|
)
|
5. |
Underwriting, acquisition and insurance expenses
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Underwriting, acquisition and insurance expenses incurred:
|
||||||||||||||||
Gross commissions
|
$
|
6,839
|
$
|
6,558
|
$
|
19,913
|
$
|
18,606
|
||||||||
Ceding commissions
|
(6,473
|
)
|
(11,616
|
)
|
(17,099
|
)
|
(32,513
|
)
|
||||||||
Other operating expenses
|
5,936
|
5,104
|
16,217
|
14,315
|
||||||||||||
Total
|
$
|
6,302
|
$
|
46
|
$
|
19,031
|
$
|
408
|
6. |
Stockholders’ Equity
|
• |
the number of shares of common stock equal to the amount of accrued and unpaid dividends based on a reclassification date of July 28, 2016, or $90.3 million, divided by the IPO price of $16.00 per share, plus
|
• |
the number of shares of common stock equal to a conversion ratio of 0.65485975, calculated based on the IPO price of $16.00 per share.
|
Class A
Common Stock
|
Class B
Common Stock
|
Common Stock
|
||||||||||
Shares outstanding at beginning of year
|
13,803,183
|
1,513,592
|
—
|
|||||||||
Share dividend
|
8,617,963
|
—
|
—
|
|||||||||
Reclassification of capital structure
|
(22,421,146
|
)
|
(1,783,858
|
)
|
15,968,707
|
|||||||
Common stock issuance, net of transaction costs
|
—
|
—
|
5,000,000
|
|||||||||
Stock-based compensation
|
—
|
270,266
|
—
|
|||||||||
Shares outstanding at September 30, 2016
|
—
|
—
|
20,968,707
|
Risk-free rate of return
|
1.26
|
%
|
||
Dividend yield
|
1.25
|
%
|
||
Expected share price volatility (1)
|
18.50
|
%
|
||
Expected life (2)
|
6.3 years
|
7. |
Earnings per share
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
(in thousands, except share and per share data)
|
||||||||||||||||
Earnings allocable to Common stockholders
|
$
|
4,911
|
$
|
—
|
$
|
4,911
|
$
|
—
|
||||||||
Earnings allocable to Class A stockholders
|
$
|
2,716
|
$
|
5,551
|
$
|
13,625
|
$
|
16,522
|
||||||||
Earnings allocable to Class B stockholders
|
$
|
355
|
$
|
393
|
$
|
760
|
$
|
1,147
|
||||||||
Basic earnings per share:
|
||||||||||||||||
Common stock
|
$
|
0.24
|
$
|
—
|
$
|
0.24
|
$
|
—
|
||||||||
Class A common stock
|
$
|
0.19
|
$
|
0.40
|
$
|
0.98
|
$
|
1.20
|
||||||||
Class B common stock
|
$
|
0.21
|
$
|
0.27
|
$
|
0.48
|
$
|
0.83
|
||||||||
Diluted earnings per share:
|
||||||||||||||||
Common stock
|
$
|
0.24
|
$
|
—
|
$
|
0.24
|
$
|
—
|
||||||||
Class A common stock
|
$
|
0.19
|
$
|
0.40
|
$
|
0.98
|
$
|
1.20
|
||||||||
Class B common stock
|
$
|
0.20
|
$
|
0.27
|
$
|
0.46
|
$
|
0.81
|
||||||||
Basic weighted average shares outstanding:
|
||||||||||||||||
Common stock
|
20,656,207
|
—
|
20,656,207
|
—
|
||||||||||||
Class A common stock
|
14,110,967
|
13,795,530
|
13,844,221
|
13,795,530
|
||||||||||||
Class B common stock
|
1,681,685
|
1,477,800
|
1,573,702
|
1,381,055
|
||||||||||||
Dilutive effect of shares issued under stock compensation arrangements:
|
||||||||||||||||
Common stock
|
85,193
|
—
|
85,193
|
—
|
||||||||||||
Class A common stock
|
—
|
—
|
—
|
—
|
||||||||||||
Class B common stock
|
135,994
|
—
|
69,916
|
27,606
|
||||||||||||
Diluted weighted average shares outstanding:
|
||||||||||||||||
Common stock
|
20,741,400
|
—
|
20,741,400
|
—
|
||||||||||||
Class A common stock
|
14,110,967
|
13,795,530
|
13,844,221
|
13,795,530
|
||||||||||||
Class B common stock
|
1,817,679
|
1,477,800
|
1,643,618
|
1,408,661
|
8.
|
Reserves for unpaid losses and loss adjustment expenses
|
Nine Months Ended
September 30,
|
||||||||
2016
|
2015
|
|||||||
(in thousands)
|
||||||||
Net reserves for unpaid losses and loss adjustment expenses, beginning of year
|
$
|
124,126
|
$
|
91,970
|
||||
Commutation of MLQS
|
24,296
|
8,587
|
||||||
Adjusted net reserves for losses and loss adjustment expenses, beginning of year
|
148,422
|
100,557
|
||||||
Incurred losses and loss adjustment expenses:
|
||||||||
Current year
|
60,392
|
36,172
|
||||||
Prior years
|
(8,866
|
)
|
(8,524
|
)
|
||||
Total net losses and loss adjustment expenses incurred
|
51,526
|
27,648
|
||||||
Payments:
|
||||||||
Current year
|
2,260
|
1,275
|
||||||
Prior years
|
21,693
|
12,208
|
||||||
Total payments
|
23,953
|
13,483
|
||||||
Net reserves for unpaid losses and loss adjustment expenses, end of period
|
175,995
|
114,722
|
||||||
Reinsurance recoverable on unpaid losses
|
77,463
|
87,369
|
||||||
Gross reserves for unpaid losses and loss adjustment expenses, end of period
|
$
|
253,458
|
$
|
202,091
|
9. |
Reinsurance
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Written:
|
||||||||||||||||
Direct
|
$
|
47,823
|
$
|
45,798
|
$
|
140,974
|
$
|
131,696
|
||||||||
Assumed
|
—
|
—
|
38
|
144
|
||||||||||||
Ceded
|
(14,177
|
)
|
(26,919
|
)
|
(23,910
|
)
|
(77,137
|
)
|
||||||||
Net written
|
$
|
33,646
|
$
|
18,879
|
$
|
117,102
|
$
|
54,703
|
||||||||
Earned:
|
||||||||||||||||
Direct
|
$
|
46,418
|
$
|
44,082
|
$
|
134,405
|
$
|
125,287
|
||||||||
Assumed
|
10
|
36
|
44
|
111
|
||||||||||||
Ceded
|
(13,454
|
)
|
(25,839
|
)
|
(39,095
|
)
|
(73,662
|
)
|
||||||||
Net earned
|
$
|
32,974
|
$
|
18,279
|
$
|
95,354
|
$
|
51,736
|
10. |
Credit Agreement
|
11. |
Other comprehensive income (loss)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Unrealized gains (losses) arising during the period, before income taxes
|
$
|
(2
|
)
|
$
|
177
|
$
|
8,077
|
$
|
(1,673
|
)
|
||||||
Income taxes
|
1
|
(61
|
)
|
(2,826
|
)
|
586
|
||||||||||
Unrealized gains (losses) arising during the period, net of income taxes
|
(1
|
)
|
116
|
5,251
|
(1,087
|
)
|
||||||||||
Less reclassification adjustment:
|
||||||||||||||||
Net realized investment gains (losses)
|
—
|
(4
|
)
|
361
|
12
|
|||||||||||
Income taxes
|
—
|
2
|
(126
|
)
|
(4
|
)
|
||||||||||
Reclassification adjustment included in net income
|
—
|
(2
|
)
|
235
|
8
|
|||||||||||
Other comprehensive income (loss)
|
$
|
(1
|
)
|
$
|
118
|
$
|
5,016
|
$
|
(1,095
|
)
|
Three Months Ended September 30, 2016
|
Three Months Ended September 30, 2015
|
|||||||||||||||||||||||
($ in thousands)
|
Including
Quota
Share
|
Effect of
Quota
Share
|
Excluding
Quota
Share
|
Including
Quota
Share
|
Effect of
Quota
Share
|
Excluding
Quota
Share
|
||||||||||||||||||
Gross written premiums
|
$
|
47,823
|
$
|
—
|
$
|
47,823
|
$
|
45,798
|
$
|
—
|
$
|
45,798
|
||||||||||||
Ceded written premiums
|
(14,177
|
)
|
(6,000
|
)
|
(8,177
|
)
|
(26,919
|
)
|
(19,572
|
)
|
(7,347
|
)
|
||||||||||||
Net written premiums
|
$
|
33,646
|
$
|
(6,000
|
)
|
$
|
39,646
|
$
|
18,879
|
$
|
(19,572
|
)
|
$
|
38,451
|
||||||||||
Net retention (1)
|
70.4
|
%
|
82.9
|
%
|
41.2
|
%
|
84.0
|
%
|
||||||||||||||||
Net earned premiums
|
$
|
32,974
|
$
|
(5,872
|
)
|
$
|
38,846
|
$
|
18,279
|
$
|
(18,618
|
)
|
$
|
36,897
|
||||||||||
Losses and loss adjustment expenses
|
(15,949
|
)
|
1,402
|
(17,351
|
)
|
(10,369
|
)
|
8,303
|
(18,672
|
)
|
||||||||||||||
Underwriting, acquisition and insurance expenses
|
(6,302
|
)
|
4,234
|
(10,536
|
)
|
(46
|
)
|
9,571
|
(9,617
|
)
|
||||||||||||||
Underwriting income (2)
|
$
|
10,723
|
$
|
(236
|
)
|
$
|
10,959
|
$
|
7,864
|
$
|
(744
|
)
|
$
|
8,608
|
||||||||||
Loss ratio
|
48.4
|
%
|
23.9
|
%
|
—
|
56.7
|
%
|
44.6
|
%
|
—
|
||||||||||||||
Expense ratio
|
19.1
|
%
|
72.1
|
%
|
—
|
0.3
|
%
|
51.4
|
%
|
—
|
||||||||||||||
Combined ratio
|
67.5
|
%
|
96.0
|
%
|
—
|
57.0
|
%
|
96.0
|
%
|
—
|
||||||||||||||
Adjusted loss ratio (3)
|
—
|
—
|
44.7
|
%
|
—
|
—
|
50.6
|
%
|
||||||||||||||||
Adjusted expense ratio (3)
|
—
|
—
|
27.1
|
%
|
—
|
—
|
26.1
|
%
|
||||||||||||||||
Adjusted combined ratio (3)
|
—
|
—
|
71.8
|
%
|
—
|
—
|
76.7
|
%
|
Nine Months Ended September 30, 2016
|
Nine Months Ended September 30, 2015
|
|||||||||||||||||||||||
($ in thousands)
|
Including
Quota
Share
|
Effect of
Quota
Share
|
Excluding
Quota
Share
|
Including
Quota
Share
|
Effect of
Quota
Share
|
Excluding
Quota
Share
|
||||||||||||||||||
Gross written premiums
|
$
|
141,012
|
$
|
—
|
$
|
141,012
|
$
|
131,840
|
$
|
—
|
$
|
131,840
|
||||||||||||
Ceded written premiums
|
(23,910
|
)
|
(774
|
)
|
(23,136
|
)
|
(77,137
|
)
|
(55,482
|
)
|
(21,655
|
)
|
||||||||||||
Net written premiums
|
$
|
117,102
|
$
|
(774
|
)
|
$
|
117,876
|
$
|
54,703
|
$
|
(55,482
|
)
|
$
|
110,185
|
||||||||||
Net retention (1)
|
83.0
|
%
|
83.6
|
%
|
41.5
|
%
|
83.6
|
%
|
||||||||||||||||
Net earned premiums
|
$
|
95,354
|
$
|
(16,996
|
)
|
$
|
112,350
|
$
|
51,736
|
$
|
(52,612
|
)
|
$
|
104,348
|
||||||||||
Losses and loss adjustment expenses
|
(51,526
|
)
|
5,597
|
(57,123
|
)
|
(27,648
|
)
|
23,778
|
(51,426
|
)
|
||||||||||||||
Underwriting, acquisition and insurance expenses
|
(19,031
|
)
|
10,719
|
(29,750
|
)
|
(408
|
)
|
26,730
|
(27,138
|
)
|
||||||||||||||
Underwriting income (2)
|
$
|
24,797
|
$
|
(680
|
)
|
$
|
25,477
|
$
|
23,680
|
$
|
(2,104
|
)
|
$
|
25,784
|
||||||||||
Loss ratio
|
54.0
|
%
|
32.9
|
%
|
—
|
53.4
|
%
|
45.2
|
%
|
—
|
||||||||||||||
Expense ratio
|
20.0
|
%
|
63.1
|
%
|
—
|
0.8
|
%
|
50.8
|
%
|
—
|
||||||||||||||
Combined ratio
|
74.0
|
%
|
96.0
|
%
|
—
|
54.2
|
%
|
96.0
|
%
|
—
|
||||||||||||||
Adjusted loss ratio (3)
|
—
|
—
|
50.8
|
%
|
—
|
—
|
49.3
|
%
|
||||||||||||||||
Adjusted expense ratio (3)
|
—
|
—
|
26.5
|
%
|
—
|
—
|
26.0
|
%
|
||||||||||||||||
Adjusted combined ratio (3)
|
—
|
—
|
77.3
|
%
|
—
|
—
|
75.3
|
%
|
• |
New business submissions;
|
• |
Binding of new business submissions into policies;
|
• |
Renewals of existing policies; and
|
• |
Average size and premium rate of new and existing policies.
|
• |
Frequency of claims associated with the particular types of insurance contracts that we write;
|
• |
Trends in the average size of losses incurred on a particular type of business;
|
• |
Mix of business written by us;
|
• |
Changes in the legal or regulatory environment related to the business we write;
|
• |
Trends in legal defense costs;
|
• |
Wage inflation; and
|
• |
Inflation in medical costs.
|
Three Months Ended September 30,
|
||||||||||||
($ in thousands)
|
2016
|
2015
|
Change
|
|||||||||
Gross written premiums
|
$
|
47,823
|
$
|
45,798
|
$
|
2,025
|
||||||
Ceded written premiums
|
(14,177
|
)
|
(26,919
|
)
|
12,742
|
|||||||
Net written premiums
|
$
|
33,646
|
$
|
18,879
|
$
|
14,767
|
||||||
Net earned premiums
|
$
|
32,974
|
$
|
18,279
|
$
|
14,695
|
||||||
Losses and loss adjustment expenses
|
15,949
|
10,369
|
5,580
|
|||||||||
Underwriting, acquisition and insurance expenses
|
6,302
|
46
|
6,256
|
|||||||||
Underwriting income (1)
|
10,723
|
7,864
|
2,859
|
|||||||||
Other expenses, net
|
(523
|
)
|
(340
|
)
|
(183
|
)
|
||||||
Net investment income
|
1,894
|
1,436
|
458
|
|||||||||
Net investment losses
|
—
|
(8
|
)
|
8
|
||||||||
Income before income taxes
|
12,094
|
8,952
|
3,142
|
|||||||||
Income tax expense
|
4,112
|
3,008
|
1,104
|
|||||||||
Net income
|
$
|
7,982
|
$
|
5,944
|
$
|
2,038
|
||||||
Return on equity
|
18.8
|
%
|
22.4
|
%
|
||||||||
Loss ratio
|
48.4
|
%
|
56.7
|
%
|
||||||||
Expense ratio
|
19.1
|
%
|
0.3
|
%
|
||||||||
Combined ratio
|
67.5
|
%
|
57.0
|
%
|
Three Months Ended September 30,
|
||||||||||||||||
2016
|
2015
|
|||||||||||||||
($ in thousands)
|
Losses and loss
adjustment
expenses
|
% of Earned
Premiums
|
Losses and loss
adjustment
expenses
|
% of Earned
Premiums
|
||||||||||||
Loss ratio:
|
||||||||||||||||
Current accident year
|
$
|
19,408
|
58.9
|
%
|
$
|
12,078
|
66.0
|
%
|
||||||||
Effect of prior year development
|
(3,459
|
)
|
(10.5
|
)
|
(1,709
|
)
|
(9.3
|
)
|
||||||||
$
|
15,949
|
48.4
|
%
|
$
|
10,369
|
56.7
|
%
|
|
Three Months Ended September 30,
|
|||||||||||||||
2016
|
2015
|
|||||||||||||||
($ in thousands)
|
Losses and loss
adjustment
expenses
|
% of Earned
Premiums
|
Losses and loss
adjustment
expenses
|
% of Earned
Premiums
|
||||||||||||
Adjusted loss ratio:
|
||||||||||||||||
Current accident year
|
$
|
22,384
|
57.6
|
%
|
$
|
21,641
|
58.6
|
%
|
||||||||
Effect of prior year development
|
(5,033
|
)
|
(12.9
|
)
|
(2,969
|
)
|
(8.0
|
)
|
||||||||
$
|
17,351
|
44.7
|
%
|
$
|
18,672
|
50.6
|
%
|
Three Months Ended September 30,
|
||||||||||||||||
2016
|
2015
|
|||||||||||||||
($ in thousands)
|
Underwriting
Expenses
|
% of Earned
Premiums
|
Underwriting
Expenses
|
% of Earned
Premiums
|
||||||||||||
Commissions incurred:
|
||||||||||||||||
Direct
|
$
|
6,839
|
20.7
|
%
|
$
|
6,558
|
35.9
|
%
|
||||||||
Ceding - MLQS
|
(4,234
|
)
|
(12.8
|
)%
|
(9,571
|
)
|
(52.3
|
)%
|
||||||||
Ceding - other
|
(2,239
|
)
|
(6.8
|
)%
|
(2,045
|
)
|
(11.2
|
)%
|
||||||||
Net commissions incurred
|
366
|
1.1
|
%
|
(5,058
|
)
|
(27.6
|
)%
|
|||||||||
Other underwriting expenses
|
5,936
|
18.0
|
%
|
5,104
|
27.9
|
%
|
||||||||||
Underwriting, acquisition, and insurance expenses
|
$
|
6,302
|
19.1
|
%
|
$
|
46
|
0.3
|
%
|
Three Months Ended September 30,
|
||||||||||||
($ in thousands)
|
2016
|
2015
|
Change
|
|||||||||
Interest from fixed maturity securities
|
$
|
1,990
|
$ |
1,545
|
$
|
445
|
||||||
Dividends on equity securities
|
101
|
86
|
15
|
|||||||||
Other
|
32
|
1
|
31
|
|||||||||
Gross investment income
|
2,123
|
1,632
|
491
|
|||||||||
Investment expenses
|
(229
|
)
|
(196
|
)
|
(33
|
)
|
||||||
Net investment income
|
1,894
|
1,436
|
458
|
|||||||||
Net realized investment losses
|
—
|
(8
|
)
|
8
|
||||||||
Total
|
$
|
1,894
|
$
|
1,428
|
$
|
466
|
Nine Months Ended September 30,
|
||||||||||||
($ in thousands)
|
2016
|
2015
|
Change
|
|||||||||
Gross written premiums
|
$
|
141,012
|
$
|
131,840
|
$
|
9,172
|
||||||
Ceded written premiums
|
(23,910
|
)
|
(77,137
|
)
|
53,227
|
|||||||
Net written premiums
|
$
|
117,102
|
$
|
54,703
|
$
|
62,399
|
||||||
Net earned premiums
|
$
|
95,354
|
$
|
51,736
|
$
|
43,618
|
||||||
Losses and loss adjustment expenses
|
51,526
|
27,648
|
23,878
|
|||||||||
Underwriting, acquisition and insurance expenses
|
19,031
|
408
|
18,623
|
|||||||||
Underwriting income (1)
|
24,797
|
23,680
|
1,117
|
|||||||||
Other expenses, net
|
(1,333
|
)
|
(1,038
|
)
|
(295
|
)
|
||||||
Net investment income
|
5,389
|
4,027
|
1,362
|
|||||||||
Net investment gains
|
383
|
8
|
375
|
|||||||||
Income before income taxes
|
29,236
|
26,677
|
2,559
|
|||||||||
Income tax expense
|
9,940
|
9,008
|
932
|
|||||||||
Net income
|
$
|
19,296
|
$
|
17,669
|
$
|
1,627
|
||||||
Return on equity
|
15.9
|
%
|
23.3
|
%
|
||||||||
Loss ratio
|
54.0
|
%
|
53.4
|
%
|
||||||||
Expense ratio
|
20.0
|
%
|
0.8
|
%
|
||||||||
Combined ratio
|
74.0
|
%
|
54.2
|
%
|
Nine Months Ended September 30,
|
||||||||||||||||
2016
|
2015
|
|||||||||||||||
($ in thousands)
|
Losses and loss
adjustment
expenses
|
% of Earned
Premiums
|
Losses and loss
adjustment
expenses
|
% of Earned
Premiums
|
||||||||||||
Loss ratio:
|
||||||||||||||||
Current accident year
|
$
|
60,392
|
63.3
|
%
|
$
|
36,172
|
69.9
|
%
|
||||||||
Effect of prior year development
|
(8,866
|
)
|
(9.3
|
)
|
(8,524
|
)
|
(16.5
|
)
|
||||||||
$
|
51,526
|
54.0
|
%
|
$
|
27,648
|
53.4
|
%
|
Nine Months Ended September 30,
|
||||||||||||||||
2016
|
2015
|
|||||||||||||||
($ in thousands)
|
Losses and loss
adjustment
expenses
|
% of Earned
Premiums
|
Losses and loss
adjustment
expenses
|
% of Earned
Premiums
|
||||||||||||
Adjusted loss ratio:
|
||||||||||||||||
Current accident year
|
$
|
69,731
|
62.0
|
%
|
$
|
64,813
|
62.1
|
%
|
||||||||
Effect of prior year development
|
(12,608
|
)
|
(11.2
|
)
|
(13,387
|
)
|
(12.8
|
)
|
||||||||
$
|
57,123
|
50.8
|
%
|
$
|
51,426
|
49.3
|
%
|
Nine Months Ended September 30,
|
||||||||||||||||
2016
|
2015
|
|||||||||||||||
($ in thousands)
|
Underwriting
Expenses
|
% of Earned
Premiums
|
Underwriting
Expenses
|
% of Earned
Premiums
|
||||||||||||
Commissions incurred:
|
||||||||||||||||
Direct
|
$
|
19,913
|
20.9
|
%
|
$
|
18,606
|
36.0
|
%
|
||||||||
Ceding - MLQS
|
(10,719
|
)
|
(11.2
|
)%
|
(26,730
|
)
|
(51.7
|
)%
|
||||||||
Ceding - other
|
(6,380
|
)
|
(6.7
|
)%
|
(5,783
|
)
|
(11.2
|
)%
|
||||||||
Net commissions incurred
|
2,814
|
3.0
|
%
|
(13,907
|
)
|
(26.9
|
)%
|
|||||||||
Other underwriting expenses
|
16,217
|
17.0
|
%
|
14,315
|
27.7
|
%
|
||||||||||
Underwriting, acquisition, and insurance expenses
|
$
|
19,031
|
20.0
|
%
|
$
|
408
|
0.8
|
%
|
Nine Months Ended September 30,
|
||||||||||||
($ in thousands)
|
2016
|
2015
|
Change
|
|||||||||
Interest from fixed maturity securities
|
$
|
5,684
|
$ |
4,323
|
$
|
1,361
|
||||||
Dividends on equity securities
|
303
|
266
|
37
|
|||||||||
Other
|
52
|
5
|
47
|
|||||||||
Gross investment income
|
6,039
|
4,594
|
1,445
|
|||||||||
Investment expenses
|
(650
|
)
|
(567
|
)
|
(83
|
)
|
||||||
Net investment income
|
5,389
|
4,027
|
1,362
|
|||||||||
Net realized investment gains
|
383
|
8
|
375
|
|||||||||
Total
|
$
|
5,772
|
$
|
4,035
|
$
|
1,737
|
Nine Months Ended September 30,
|
||||||||
2016
|
2015
|
|||||||
(in thousands)
|
||||||||
Cash and cash equivalents provided by (used in):
|
||||||||
Operating activities, net
|
$
|
56,603
|
$
|
58,408
|
||||
Investing activities, net
|
(46,573
|
)
|
(54,085
|
)
|
||||
Financing activities, net
|
69,183
|
(99
|
)
|
|||||
Change in cash and cash equivalents
|
$
|
79,213
|
$
|
4,224
|
Line of Business Covered
|
Company Policy Limit
|
Reinsurance Coverage
|
Company Retention
|
|||
Property
|
Up to $5.0 million per risk
|
$4.0 million excess of $1.0 million
|
$1.0 million per risk
|
|||
Property - catastrophe (1)
|
Up to $5.0 million per occurrence
|
$40.0 million excess of $5.0 million
|
$5.0 million per occurrence
|
|||
Excess casualty (2)
|
Up to $5.0 million per occurrence
|
Variable quota share
|
$750,000 per occurrence except as described in note (2) below
|
(1) |
Our property catastrophe reinsurance reduces the financial impact of a catastrophe event involving multiple claims and policyholders. Our property catastrophe reinsurance includes a reinstatement provision which requires us to pay reinstatement premiums after a loss has occurred in order to preserve coverage. Including the reinstatement provision, the maximum aggregate loss recovery limit is $80 million and is in addition to the per-occurrence coverage provided by our facultative and other treaty coverages.
|
(2) |
Reinsurance is not applicable to any individual policy with a per occurrence limit of less than $1.0 million. For policies with a per occurrence limit of $1.0 million or higher, the quota share ceding percentage varies such that the retention is always $750,000. For example, for a $1.0 million limit excess policy, our retention would be 75%, whereas for a $5.0 million limit excess policy, our retention would be 15%. For policies for which we also write an underlying primary limit, the retention on the excess policy will never exceed $1,175,000.
|
September 30, 2016
|
December 31, 2015
|
|||||||
|
(in thousands)
|
|||||||
Tangible stockholders’ equity
|
$
|
207,584
|
$
|
111,151
|
||||
Intangible assets, net of deferred taxes
|
2,300
|
2,300
|
||||||
Stockholders’ equity
|
$
|
209,884
|
$
|
113,451
|
• |
the number of shares of common stock equal to the amount of accrued and unpaid dividends based on a reclassification date of July 28, 2016, or $90.3 million, divided by the IPO price of $16.00 per share, plus
|
• |
the number of shares of common stock equal to a conversion ratio of 0.65485975, calculated based on the IPO price of $16.00 per share.
|
September 30, 2016
|
December 31, 2015
|
|||||||||||||||||||||||
Amortized
Cost
|
Estimated
Fair Value
|
% of Total
Fair Value
|
Amortized
Cost
|
Estimated
Fair Value
|
% of Total
Fair Value
|
|||||||||||||||||||
($ in thousands)
|
||||||||||||||||||||||||
Fixed maturities:
|
||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
$
|
12,407
|
$
|
12,439
|
3.0
|
%
|
$
|
3,422
|
$
|
3,433
|
1.0
|
%
|
||||||||||||
Obligations of states, municipalities and political subdivisions
|
87,059
|
90,944
|
21.8
|
%
|
69,997
|
72,513
|
21.2
|
%
|
||||||||||||||||
Corporate and other securities
|
128,387
|
129,359
|
31.0
|
%
|
130,758
|
129,521
|
37.9
|
%
|
||||||||||||||||
Asset-backed securities
|
74,906
|
75,657
|
18.2
|
%
|
58,680
|
58,307
|
17.0
|
%
|
||||||||||||||||
Residential mortgage-backed securities
|
88,900
|
90,380
|
21.7
|
%
|
64,096
|
63,828
|
18.7
|
%
|
||||||||||||||||
Total fixed maturities
|
391,659
|
398,779
|
95.7
|
%
|
326,953
|
327,602
|
95.8
|
%
|
||||||||||||||||
Equity securities:
|
||||||||||||||||||||||||
Exchange traded funds
|
14,487
|
17,788
|
4.3
|
%
|
12,184
|
14,240
|
4.2
|
%
|
||||||||||||||||
Total investments available for sale
|
$
|
406,146
|
$
|
416,567
|
100.0
|
%
|
$
|
339,137
|
$
|
341,842
|
100.0
|
%
|
September 30, 2016
|
December 31, 2015
|
|||||||||||||||||
Standard & Poor’s or Equivalent
Designation
|
Fair Value
|
% of Total
|
Estimated Fair
Value
|
% of Total
|
||||||||||||||
|
($ in thousands)
|
|||||||||||||||||
AAA
|
$
|
76,192
|
19.1
|
%
|
$
|
59,263
|
18.1
|
%
|
||||||||||
AA
|
168,682
|
42.3
|
%
|
122,154
|
37.3
|
%
|
||||||||||||
A
|
115,897
|
29.1
|
%
|
107,218
|
32.7
|
%
|
||||||||||||
BBB
|
32,525
|
8.1
|
%
|
35,164
|
10.7
|
%
|
||||||||||||
BB
|
3,124
|
0.8
|
%
|
1,006
|
0.3
|
%
|
||||||||||||
Below BB and unrated
|
2,359
|
0.6
|
%
|
2,797
|
0.9
|
%
|
||||||||||||
Total
|
$
|
398,779
|
100.0
|
%
|
$
|
327,602
|
100.0
|
%
|
September 30, 2016
|
December 31, 2015
|
|||||||||||||||||||||||
Amortized
Cost
|
Estimated Fair
Value
|
% of Fair
Value
|
Amortized
Cost
|
Estimated
Fair Value
|
% of Fair
Value
|
|||||||||||||||||||
($ in thousands)
|
||||||||||||||||||||||||
Due in one year or less
|
$
|
48,080
|
$
|
48,139
|
12.1
|
%
|
$
|
19,723
|
$
|
19,709
|
6.0
|
%
|
||||||||||||
Due after one year through five years
|
92,148
|
92,970
|
23.3
|
%
|
111,059
|
110,733
|
33.8
|
%
|
||||||||||||||||
Due after five years through ten years
|
25,375
|
26,793
|
6.7
|
%
|
27,383
|
27,335
|
8.3
|
%
|
||||||||||||||||
Due after ten years
|
62,250
|
64,840
|
16.2
|
%
|
46,012
|
47,690
|
14.6
|
%
|
||||||||||||||||
Asset-backed securities
|
74,906
|
75,657
|
19.0
|
%
|
58,680
|
58,307
|
17.8
|
%
|
||||||||||||||||
Residential mortgage-backed securities
|
88,900
|
90,380
|
22.7
|
%
|
64,096
|
63,828
|
19.5
|
%
|
||||||||||||||||
Total fixed maturities
|
$
|
391,659
|
$
|
398,779
|
100.0
|
%
|
$
|
326,953
|
$
|
327,602
|
100.0
|
%
|
Three Months Ended September
30,
|
Nine Months Ended September
30,
|
|||||||||||||||
(in thousands)
|
2016
|
2015
|
2016
|
2015
|
||||||||||||
Underwriting income
|
$
|
10,723
|
$
|
7,864
|
$
|
24,797
|
$
|
23,680
|
||||||||
Net investment income
|
1,894
|
1,436
|
5,389
|
4,027
|
||||||||||||
Net investment gains (losses)
|
—
|
(8
|
)
|
383
|
8
|
|||||||||||
Other income
|
—
|
128
|
136
|
443
|
||||||||||||
Other expenses
|
(523
|
)
|
(468
|
)
|
(1,469
|
)
|
(1,481
|
)
|
||||||||
Income before income taxes
|
12,094
|
8,952
|
29,236
|
26,677
|
||||||||||||
Income tax expense
|
4,112
|
3,008
|
9,940
|
9,008
|
||||||||||||
Net income
|
$
|
7,982
|
$
|
5,944
|
$
|
19,296
|
$
|
17,669
|
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk
|
KINSALE CAPITAL GROUP, INC.
|
|||
Date:
|
November 10, 2016
|
By:
|
/s/ Michael P. Kehoe
|
Michael P. Kehoe
|
|||
President and Chief Executive Officer
|
|||
Date:
|
November 10, 2016
|
By:
|
/s/ Bryan P. Petrucelli
|
Bryan P. Petrucelli
|
|||
Senior Vice President, Chief Financial Officer and Treasurer
|
Exhibit
Number
|
Description
|
Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
101.INS**
|
XBRL Instance Document
|
101.SCH**
|
XBRL Taxonomy Extension Schema Document
|
101.CAL**
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF**
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB**
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE**
|
XBRL Taxonomy Extension Presentation Linkbase Document |
1. |
I have reviewed this quarterly report on Form 10-Q of Kinsale Capital Group, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b. |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
c. |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5. |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
November 10, 2016
|
/s/ Michael P. Kehoe
|
Michael P. Kehoe
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
1. |
I have reviewed this quarterly report on Form 10-Q of Kinsale Capital Group, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b. |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
c. |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5. |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
November 10, 2016
|
/s/ Bryan P. Petrucelli
|
Bryan P. Petrucelli
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
|
(Principal Financial Officer)
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
November 10, 2016
|
/s/ Michael P. Kehoe
|
Michael P. Kehoe
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
November 10, 2016
|
/s/ Bryan P. Petrucelli
|
Bryan P. Petrucelli
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
|
(Principal Financial Officer)
|
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Nov. 08, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Kinsale Capital Group, Inc. | |
Entity Central Index Key | 0001669162 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 20,968,707 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes |
Consolidated Statements of Income and Comprehensive Income (unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Other comprehensive income: | ||||
Unrealized gains (losses), taxes | $ (1) | $ 63 | $ 2,700 | $ (590) |
Consolidated Statements of Changes in Stockholders' Equity (unaudited) - USD ($) $ in Thousands |
Common Stock [Member] |
Common Stock [Member]
Class A Common Stock [Member]
|
Common Stock [Member]
Class B Common Stock [Member]
|
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
Accumulated Other Comprehensive Income [Member] |
Total |
---|---|---|---|---|---|---|---|
Balance at Dec. 31, 2014 | $ 0 | $ 1 | $ 0 | $ 80,074 | $ 7,297 | $ 5,214 | $ 92,586 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation | 0 | 0 | 0 | 60 | 0 | 0 | 60 |
Other comprehensive income (loss), net of tax | 0 | 0 | 0 | 0 | 0 | (1,095) | (1,095) |
Net income | 0 | 0 | 0 | 0 | 17,669 | 0 | 17,669 |
Balance at Sep. 30, 2015 | 0 | 1 | 0 | 80,134 | 24,966 | 4,119 | 109,220 |
Balance at Dec. 31, 2015 | 0 | 1 | 0 | 80,229 | 29,570 | 3,651 | 113,451 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Reclassification of capital structure | 160 | (1) | 0 | (159) | 0 | 0 | 0 |
Common stock issuance, net of transaction costs | 50 | 0 | 0 | 72,791 | 0 | 0 | 72,841 |
Stock-based compensation | 0 | 0 | 0 | 328 | 0 | 0 | 328 |
Dividends | 0 | 0 | 0 | 0 | (1,048) | 0 | (1,048) |
Other comprehensive income (loss), net of tax | 0 | 0 | 0 | 0 | 0 | 5,016 | 5,016 |
Net income | 0 | 0 | 0 | 0 | 19,296 | 0 | 19,296 |
Balance at Sep. 30, 2016 | $ 210 | $ 0 | $ 0 | $ 153,189 | $ 47,818 | $ 8,667 | $ 209,884 |
Summary of significant accounting policies |
9 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||
Summary of significant accounting policies [Abstract] | |||||||||||||
Summary of Significant Accounting Policies |
Basis of presentation The accompanying condensed consolidated financial statements and notes have been prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP") for interim financial information and do not contain all of the information and footnotes required by U.S. GAAP for complete financial statements. For a more complete description of the Company’s business and accounting policies, these condensed consolidated interim financial statements should be read in conjunction with the 2015 audited consolidated financial statements of Kinsale Capital Group, Inc. and its wholly owned subsidiaries (the "Company") included in the final prospectus filed with the SEC on July 29, 2016. In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. Such adjustments consist only of normal recurring items. All significant intercompany balances and transactions have been eliminated in consolidation. Interim results are not necessarily indicative of results of operations for the full year. On August 2, 2016, the Company completed its IPO of 7,590,000 shares of common stock at a price to the public of $16.00 per share. The Company issued 5,000,000 shares of common stock and the selling stockholders sold 2,590,000 shares of common stock, which included 990,000 shares sold to the underwriters pursuant to their option to purchase additional shares. See Note 6, "Stockholders' Equity," for further discussion. Use of estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management periodically reviews its estimates and assumptions. Adopted accounting pronouncements ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, "Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." This ASU was issued to simplify the accounting for share-based payment awards, including income tax consequences, statutory tax withholding requirements, forfeitures and classification in the statement of cash flows. ASU 2016-09 is effective for fiscal years, and interim reporting periods within those years, beginning after December 15, 2016. Early adoption is permitted in any interim or annual reporting period. The standard requires the guidance related to forfeitures and the timing of when excess tax benefits are recognized to be applied using a modified retrospective transition method, the guidance related to the accounting for income taxes to be applied prospectively, and the guidance related to the presentation of excess tax benefits on the statement of cash flows to be applied either prospectively or retrospectively. The Company early adopted ASU 2016-09 in the third quarter of 2016 and elected to account for forfeitures as they occur. The adoption of this standard did not have a significant impact on the consolidated financial statements and related disclosures. Prospective accounting pronouncements ASU 2015-09, Financial Services-Insurance (Topic 944): Disclosures about Short-Duration Contracts In May 2015, the FASB issued ASU 2015-09, "Insurance (Topic 944), Disclosures about Short-Duration Contracts." This ASU was issued to enhance disclosures about an entity’s insurance liabilities, including the nature, amount, timing and uncertainty of cash flows related to those liabilities. The new guidance requires the disclosure of the following information related to unpaid claims and claim adjustment expenses:
This ASU is effective for annual reporting periods beginning after December 15, 2015 and for interim periods beginning after December 15, 2016. Early adoption is permitted. The Company has not early-adopted this ASU and while disclosures will be increased, the Company does not believe adoption will have a material effect on its consolidated financial statements. ASU 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities In January 2016, the FASB issued ASU 2016-01, "Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities," which requires equity investments to be measured at fair value with changes in fair value recognized in net income, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The amendments in this ASU are effective for public companies for annual reporting periods beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact of the adoption on its consolidated financial statements. ASU 2016-02, Leases (Topic 842) In February 2016, the FASB issued ASU 2016-02,"Leases (Topic 842)" to improve the financial reporting of leasing transactions. Under this ASU, lessees will recognize a right-of-use asset and corresponding liability on the balance sheet for all leases, except for leases covering a period of fewer than 12 months. The liability is to be measured as the present value of the future minimum lease payments taking into account renewal options (if probable of exercise) plus initial incremental direct costs such as commissions. The minimum payments are discounted using the rate implicit in the lease or, if not known, the lessee’s incremental borrowing rate. The lessee’s income statement treatment for leases will vary depending on the nature of what is being leased. A financing type lease is present when, among other matters, the asset is being leased for a substantial portion of its economic life or has an end-of-term title transfer or a bargain purchase option. The payment of the liability set up for such leases will be apportioned between interest and principal; the right-of use asset will be generally amortized on a straight-line basis. If the lease does not qualify as a financing type lease, it will be accounted for on the income statement as rent on a straight-line basis. This ASU is effective for annual and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of the adoption on its consolidated financial statements. ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) On June 16, 2016, the FASB issued ASU 2016-13, "Financial Instruments – Credit Losses (Topic 326)" to provide more useful information about the expected credit losses on financial instruments. Current GAAP delays the recognition of credit losses until it is probable a loss has been incurred. The update will require a financial asset measured at amortized cost to be presented at the net amount expected to be collected by means of an allowance for credit losses that runs through net income. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses. However, the amendments would limit the amount of the allowance to the amount by which fair value is below amortized cost. The measurement of credit losses on available-for-sale securities is similar under current GAAP, but the update requires the use of the allowance account through which amounts can be reversed, rather than through an irreversible write-down. This ASU is effective for annual and interim reporting periods beginning after December 15, 2019. Early adoption is permitted beginning after December 15, 2018. Upon adoption, the update will be applied using the modified-retrospective approach, by which a cumulative-effect adjustment will be made to retained earnings as of the beginning of the first reporting period presented. The Company is currently evaluating the impact of the adoption on its consolidated financial statements. There are no other prospective accounting standards which, upon their effective date, would have a material impact on the Company's consolidated financial statements. |
Investments |
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments |
Available-for-sale investments The following tables summarize the Company’s available-for-sale investments:
Available-for-sale securities in a loss position The Company regularly reviews all securities with unrealized losses to assess whether the decline in the securities’ fair value is deemed to be an other-than-temporary impairment ("OTTI"). The Company considers a number of factors in completing its OTTI review, including the length of time and the extent to which fair value has been below cost and the financial condition of an issuer. In addition to specific issuer information, the Company also evaluates the current market and interest rate environment. Generally, a change in a security's value caused by a change in the market or interest rate environment does not constitute an OTTI, but rather a temporary decline in fair value. For fixed maturities, the Company considers whether it intends to sell the security or if it is more likely than not that it will be required to sell the security before recovery, the credit quality of the issuer and the ability to recover all amounts outstanding when contractually due. When assessing whether it intends to sell a fixed maturity or if it is likely to be required to sell a fixed maturity before recovery of its amortized cost, the Company evaluates facts and circumstances including, but not limited to, decisions to reposition the investment portfolio, potential sales of investments to meet cash flow needs and potential sales of investments to capitalize on favorable pricing. For equity securities, the Company considers the near-term prospects of an issuer and its ability and intent to hold the security for a period of time sufficient to allow for anticipated recovery. For fixed maturities where a decline in fair value is considered to be other-than-temporary and the Company intends to sell the security, or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost, an impairment is recognized in net income based on the fair value of the security at the time of assessment, resulting in a new cost basis for the security. If the decline in fair value of a fixed maturity security below its amortized cost is considered to be other-than-temporary based upon other considerations, the Company compares the estimated present value at the security's effective yield of the cash flows expected to be collected to the amortized cost of the security. The extent to which the estimated present value of the cash flows expected to be collected is less than the amortized cost of the security represents the credit-related portion of the OTTI, which is recognized in net income, resulting in a new cost basis for the security. Any remaining decline in fair value represents the noncredit portion of the OTTI, which is recognized in other comprehensive income (loss). For equity securities, a decline in fair value that is considered to be other-than-temporary is recognized in net income based on the fair value of the security at the time of assessment, resulting in a new cost basis for the security. The following tables summarize gross unrealized losses and fair value for available-for-sale securities by length of time that the securities have continuously been in an unrealized loss position:
As discussed above, the Company regularly reviews all securities within its investment portfolio to determine whether any impairment has occurred. At September 30, 2016, the Company held 84 fixed maturity securities with a total estimated fair value of $75.9 million and gross unrealized losses of $0.4 million. Of these securities, 28 were in a continuous unrealized loss position for greater than one year. Unrealized losses on these fixed maturity securities were caused by interest rate changes or other market factors and were not credit specific issues. At September 30, 2016, 90.5% of the Company's fixed maturity securities were rated "A-" or better and continue to pay the expected coupon payments under the contractual terms of the securities. At September 30, 2016, the Company held one exchange traded fund ("ETFs") with a total estimated fair value of $2.8 million and gross unrealized losses of $0.2 million, which was in a continuous unrealized loss position for greater than one year. Based on its review, the Company concluded that there were no OTTIs from fixed maturity or equity securities with unrealized losses for the nine months ended September 30, 2016.
At December 31, 2015, the Company held 156 fixed maturity securities with a total estimated fair value of $192.1 million and gross unrealized losses of $3.1 million. Of those securities, 36 were in a continuous unrealized loss position for greater than one year. Unrealized losses were caused by interest rate changes or other market factors and were not credit specific issues. Unrealized losses of $1.1 million at December 31, 2015 were related to corporate bonds in the energy sector. At December 31, 2015, 88.1% of the Company's fixed maturity securities were rated "A-" or better and made expected coupon payments under the contractual terms of the securities. At December 31, 2015, the Company held 5 ETFs in its equity portfolio with a total estimated fair value of $3.3 million and gross unrealized losses of $0.3 million. One of these securities was in a continuous unrealized loss position for greater than one year. Based on its review, the Company concluded that there were no OTTIs from fixed maturity or equity securities with unrealized losses at December 31, 2015. Contractual maturities of available-for-sale fixed maturity securities The amortized cost and estimated fair value of available-for-sale fixed maturity securities at September 30, 2016 are summarized, by contractual maturity, as follows:
Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties, and the lenders may have the right to put the securities back to the borrower. Net investment income The following table presents the components of net investment income:
Realized investment gains and losses There were no significant gross realized investment gains or losses for the three months ended September 30, 2016. Gross realized investment gains for the nine months ended September 30, 2016 of $0.4 million resulted from the sales of fixed maturity securities. There were no significant gross realized investment gains or losses for the three months or nine months ended September 30, 2015. Change in net unrealized gains (losses) on investments The following table presents the change in available-for-sale net unrealized gains (losses) by investment type:
Insurance – statutory deposits The Company had invested assets with a carrying value of $7.4 million and $7.2 million on deposit with state regulatory authorities at September 30, 2016 and December 31, 2015, respectively. Payable for investments purchased The Company recorded a payable for investments purchased, not yet settled, of $19.6 million at September 30, 2016. The payable was included in the "other liabilities" line item of the balance sheet and was treated as a non-cash transaction for purposes of cash flow presentation. There were no payables for investments purchased at December 31, 2015. |
Fair value measurements |
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Fair value measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements |
Fair value was estimated for each class of financial instrument for which it was practical to estimate fair value. Fair value is defined as the price in the principal market that would be received for an asset to facilitate an orderly transaction between market participants on the measurement date. Market participants are assumed to be independent, knowledgeable, able and willing to transact an exchange and not acting under duress. Fair value hierarchy disclosures are based on the quality of inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Adjustments to transaction prices or quoted market prices may be required in illiquid or disorderly markets in order to estimate fair value. The three levels of the fair value hierarchy are described below: The three levels of the fair value hierarchy are defined as follows: Level 1 - Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities traded in active markets. Level 2 - Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market-corroborated inputs. Level 3 - Inputs to the valuation methodology are unobservable for the asset or liability and are significant to the fair value measurement. Fair values of the Company's investment portfolio are estimated using unadjusted prices obtained by its investment manager from third party pricing services, where available. For securities where the Company is unable to obtain fair values from a pricing service or broker, fair values are estimated using information obtained from the Company's investment manager. Management performs several procedures to ascertain the reasonableness of investment values included in the condensed consolidated financial statements including 1) obtaining and reviewing internal control reports from the Company's investment manager that obtain fair values from third party pricing services, 2) discussing with the Company's investment manager its process for reviewing and validating pricing obtained from outside pricing services and 3) reviewing the security pricing received from the Company's investment manager and monitoring changes in unrealized gains and losses. The Company has evaluated the various types of securities in its investment portfolio to determine an appropriate fair value hierarchy level based upon trading activity and the observability of market inputs. The following tables present the balances of assets measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015, by level within the fair value hierarchy.
There were no transfers into or out of Level 1 and Level 2 during the three and nine months ended September 30, 2016. There were no assets or liabilities measured at fair value on a nonrecurring basis as of September 30, 2016 and December 31, 2015. Due to the relatively short-term nature of cash, cash equivalents, receivables and payables, their carrying amounts are reasonable estimates of fair value. Additionally, due to variable interest rates and no change in the Company's credit standing, the carrying value of the note payable approximates fair value as of September 30, 2016 and December 31, 2015. |
Deferred policy acquisition costs |
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Deferred policy acquisition costs [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred policy acquisition costs |
The following table presents the amounts of policy acquisition costs deferred and amortized for the three and nine months ended September 30, 2016 and 2015:
For the three and nine months ended September 30, 2016, the deferred ceding commissions decreased as a result of the change in the ceding percentage under the Company’s multi-line quota share reinsurance treaty ("MLQS"). The negative, or liability, balance at September 30, 2015 was also due to the effect of the deferred ceding commissions related to the MLQS. See Note 9 for further details regarding the MLQS. |
Underwriting, acquisition and insurance expenses |
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Underwriting, acquisition and insurance expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Underwriting, acquisition and insurance expenses |
Underwriting, acquisition and insurance expenses consist of the following:
Other operating expenses within underwriting, acquisition and insurance expenses include salaries, bonus and employee benefits expenses of $5.1 million and $4.2 million for the three months ended September 30, 2016 and 2015. Salaries, bonus and employee benefits expenses were $13.9 million and $11.8 million for the nine months ended September 30, 2016 and 2015. |
Stockholders' Equity |
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Stockholders' Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity |
Amendment of Certificate of Incorporation and Reclassification of Common Stock At December 31, 2015, the Company was authorized to issue 18,333,333 shares of Common Stock, $0.0001 par value per share ("Common Stock"), of which 15,000,000 shares were designated as Class A Common Voting Shares ("Class A Common Stock") and 3,333,333 were designated as Class B Common Non-Voting Shares ("Class B Common Stock"). On July 28, 2016, in connection with the initial public offering (the "IPO"), the Company amended and restated its certificate of incorporation to recapitalize the Company's authorized capital stock to consist of 400,000,000 shares of common stock, par value $0.01 per share, and 100,000,000 shares of preferred stock, par value $0.01 per share. In addition, the amended and restated certificate of incorporation provided for automatic reclassification of the Company's Class A Common Stock and Class B Common Stock into a single class of common stock. All shares of Class A Common Stock were reclassified into 14,682,671 shares of common stock, which were equal to the sum of:
On July 28, 2016, the Company had outstanding grants of 1,783,858 restricted shares of Class B Common Stock. At that date, all restricted shares of Class B Common Stock were reclassified into 1,286,036 shares of common stock equal to a conversion ratio of 0.72095061. The conversion ratio was calculated based on the IPO price of $16.00 per share. All fractional shares resulting from the reclassification of Class A Common Stock and Class B Common Stock into a single class of common stock were settled in cash. Initial Public Offering On August 2, 2016, the Company completed its IPO of 7,590,000 shares of common stock at a price to the public of $16.00 per share. The Company issued 5,000,000 shares of common stock and the selling stockholders sold 2,590,000 shares of common stock, which included 990,000 shares sold to the underwriters pursuant to the underwriter's option to purchase additional shares. After underwriter discounts and commissions and offering expenses, the Company received net proceeds from the offering of approximately $72.8 million. The Company did not receive any net proceeds from the sale of shares of common stock by the selling stockholders. The issuance of common stock by the Company and the related net proceeds were recorded in the consolidated financial statements on August 2, 2016, the closing date of the IPO. Changes in the shares of common stock for the nine months ended September 30, 2016 were as follows:
Equity-based Compensation On July 27, 2016, the Kinsale Capital Group, Inc. 2016 Omnibus Incentive Plan (the "2016 Incentive Plan"), became effective. The 2016 Incentive Plan provides for grants of stock options, stock appreciation rights, restricted stock, other stock-based awards and other cash-based awards to directors, officers and other employees, as well as independent contractors or consultants providing consulting or advisory services to the Company. The number of shares of common stock available for issuance under the 2016 Incentive Plan may not exceed 2,073,832. On July 27, 2016, the Board of Directors approved, and the Company granted, 1,036,916 stock options with an exercise price equal to the IPO price of $16.00 per share. The options have a maximum contractual term of 10 years and will vest in 4 equal annual installments following the date of the grant. The weighted average fair market value of options granted as of September 30, 2016 was $2.71 per share. The value of the options granted was estimated at the date of grant using the Black-Scholes pricing model using the following assumptions:
(1) Expected volatility was based on the Company's competitors within the industry. (2) Expected life was calculated using the simplified method, which is an average of the contractual term of the option and its ordinary vesting period, as the Company does not have sufficient historical data for determining the expected term of our stock option awards. As discussed above, prior to the IPO the Company had granted certain employees 1,783,858 shares of restricted Class B Common Stock under the 2010 Incentive Plan. In connection with the reclassification, all unvested shares of Class B Common Stock were immediately vested and reclassified into a single class of common stock. The 2010 Incentive Plan was then terminated upon the completion of the IPO. The Company recognized equity-based compensation of $0.3 million and $0.1 million during the nine months ended September 30, 2016 and 2015, respectively. As of September 30, 2016, total unrecognized compensation expense related to non-vested stock awards was $2.5 million. Dividend Declaration On August 30, 2016, the Company's Board of Directors declared a cash dividend of $0.05 per share of common stock. This dividend was payable on September 30, 2016 to all stockholders of record on September 15, 2016. On November 8, 2016, the Company's Board of Directors declared a cash dividend of $0.05 per share of common stock. This dividend is payable on December 15, 2016 to all stockholders of record on December 1, 2016. |
Earnings per share |
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Earnings per share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share |
The following represents a reconciliation of the numerator and denominator of the basic and diluted earnings per share computations contained in the consolidated financial statements:
Prior to the reclassification of common stock on July 28, 2016, all of the earnings of the Company were allocated to Class A and Class B common stock and earnings per share was calculated using the two-class method. Under the two-class method, earnings attributable to Class A and Class B common stockholders was determined by allocating undistributed earnings to each class of stock. The undistributed earnings attributable to common stockholders was allocated based on the contractual participation rights of the Class A common stock and Class B common stock as if those earnings for the period had been distributed. Earnings attributable to Class A common stockholders equaled the sum of dividends at the rate per annum of 12% compounding annually during the period ("Accruing Dividends") plus seventy-five percent of any remaining assets of the Company available for distribution to its stockholders in the event of a liquidation, dissolution, winding up or sale of the Company after payment of the Accruing Dividends ("Residual Proceeds"). Earnings attributable to Class B common stockholders equaled twenty-five percent of the Residual Proceeds. After the reclassification of common stock on July 28, 2016, all of the earnings of the Company were attributable to the single class of common stock. Basic earnings per share for each class of common stock was computed by dividing the earnings attributable to the common stockholders by the weighted average number of shares of each respective class of common stock outstanding during the period. Diluted earnings per share attributable to each class of common stock was computed by dividing earnings attributable to common stockholders by the weighted average shares outstanding for each respective class of common stock outstanding during the period, including potentially dilutive shares of common stock for the period determined using the treasury stock method. There were no potentially dilutive shares attributable to Class A common stockholders. For purposes of the diluted earnings per share attributable to Class B common stockholders calculation, unvested restricted grants of common stock were considered to be potentially dilutive shares of common stock. There were no material anti-dilutive Class B shares for the three months and nine months ended September 30, 2015. See Note 6 for details regarding changes to the Company's capital structure on July 28, 2016. There were no anti-dilutive stock options for the three months and nine months ended September 30, 2016. |
Reserves for unpaid losses and loss adjustment expenses |
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Reserves for unpaid losses and loss adjustment expenses |
The following table presents a reconciliation of consolidated beginning and ending reserves for unpaid losses and loss adjustment expenses:
During the nine months ended September 30, 2016, $8.9 million of redundancy developed on the reserves for unpaid losses and loss adjustment expenses held at December 31, 2015. This favorable development was primarily attributable to loss experience in the Company’s casualty lines for accident years 2014 and 2015, which was below the Company's initial expected loss ratios. During the nine months ended September 30, 2015, $8.5 million of redundancy developed on the reserves for unpaid losses and loss adjustment expenses held at December 31, 2014. The favorable development was attributable primarily to loss experience in the Company’s casualty lines for accident years 2013 and 2014, which was below the Company's initial expected loss ratios. See Note 9 for further details regarding the commutation of the MLQS. |
Reinsurance |
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Reinsurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance |
The following table summarizes the effect of reinsurance on premiums written and earned:
Incurred losses and loss adjustment expenses were net of reinsurance (ceded incurred losses and loss adjustment expenses) of $3.1 million and $10.2 million for the three months ended September 30, 2016 and 2015, respectively. Ceded incurred losses and loss adjustment expenses were $10.9 million and $31.8 million for the nine months ended September 30, 2016 and 2015 respectively. At September 30, 2016, reinsurance recoverables on paid and unpaid losses were $0.1 million and $77.5 million, respectively. At December 31, 2015, reinsurance recoverables on paid and unpaid losses were and $0.2 million and $95.5 million, respectively. Multi-line quota share reinsurance The Company participates in a MLQS treaty that transfers a proportion of the risk related to certain lines of business written by its subsidiary, Kinsale Insurance Company, an Arkansas insurance company ("Kinsale Insurance"), to reinsurers in exchange for a proportion of the direct written premiums on that business. Under the terms of the MLQS covering the period January 1, 2015 to December 31, 2015 (the "2015 MLQS"), Kinsale Insurance received a provisional ceding commission equal to 41% of ceded written premiums and paid a reinsurance margin equal to 4.00% of ceded written premium. The 2015 MLQS contract includes a sliding scale commission provision that can adjust the ceding commissions within a range of 25% to 41% based on the loss experience of the business ceded. The 2015 MLQS ceding percentage during the first nine months of 2015 was 50%. The ceding percentage remained at 50% until October 1, 2015, at which time the Company decreased the percentage to 40%. Effective January 1, 2016, the Company further reduced the ceding percentage from 40% to 15%. The change in the ceding percentage reduced ceded written premiums by $17.0 million at January 1, 2016, with a corresponding reduction to ceded unearned premiums. Effective January 1, 2016, the Company commuted the MLQS covering the period January 1, 2014 to December 31, 2014 (the "2014 MLQS"). The commutation reduced reinsurance recoverables on unpaid losses and receivable from reinsurers by $34.2 million at January 1, 2016, with a corresponding reduction to funds held for reinsurers. Effective January 1, 2015, the Company commuted 55% of the treaty covering the period July 1, 2012 to December 31, 2013 (the "2013 MLQS"). The commutation reduced reinsurance recoverables on unpaid losses and receivable from reinsurers by $11.9 million at January 1, 2015, with a corresponding reduction to funds held for reinsurers. The commutations did not have any effect on the Company's results of operations or cash flows for the applicable periods. Effective October 1, 2016, the Company terminated and commuted the MLQS covering the period January 1, 2016 to September 30, 2016 (the "2016 MLQS"). The commutation will reduce reinsurance recoverables on unpaid losses and receivable from reinsurers by approximately $15.5 million on October 1, 2016, with a corresponding reduction to funds held for reinsurers. |
Credit Agreement |
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Credit Agreement [Abstract] | |||
Credit Agreement |
The Company has a loan and security agreement (the "Credit Agreement") with The PrivateBank and Trust Company ("PrivateBank") with a five-year secured term loan in the amount of $30.0 million. Pursuant to the terms of the Credit Agreement, the applicable interest rate on the term loan accrues daily at a rate equal to the 3 month LIBOR plus a margin, and is payable on the last day of each calendar quarter. The term loan has a maturity of December 4, 2020. The Company's wholly-owned subsidiaries, Kinsale Management, Inc. ("Kinsale Management") and Aspera Insurance Services Inc. ("Aspera"), are guarantors of the term loan. The assets of Kinsale Management and the stock of Kinsale Insurance have been pledged as collateral to PrivateBank. On June 28, 2016, the Company amended and restated its Credit Agreement to, among other things, (1) increase the materiality thresholds and grace periods for events of default thereunder, (2) add additional permitted categories to the debt, lien, restricted payments, mergers, disposals, transactions with affiliates and investment covenants, as well as to increase the general permitted baskets under the debt, lien, restricted payments and investment covenants, (3) remove certain representations and warranties and affirmative covenants, (4) add materiality qualifiers to certain representations and warranties, (5) add reinvestment rights and a minimum threshold with respect to net cash proceeds of certain asset disposals (other than disposals of the stock of Kinsale Insurance, which has been pledged as collateral to PrivateBank) which must be used to prepay the outstanding term loans and (6) make the creation and perfection requirements with respect to collateral less onerous. On September 30, 2016, the Company repaid $2.5 million of the term loan. |
Other comprehensive income (loss) |
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Other comprehensive income (loss) |
The following table summarizes the components of other comprehensive income (loss):
The sale of an available-for-sale security results in amounts being reclassified from accumulated other comprehensive income to realized gains or losses in current period earnings. The related tax effect of the reclassification adjustment is recorded in income tax expense in current period earnings. See Note 2 for additional information. |
Summary of significant accounting policies (Policies) |
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Summary of significant accounting policies [Abstract] | |||||||||||
Basis of presentation | Basis of presentation The accompanying condensed consolidated financial statements and notes have been prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP") for interim financial information and do not contain all of the information and footnotes required by U.S. GAAP for complete financial statements. For a more complete description of the Company’s business and accounting policies, these condensed consolidated interim financial statements should be read in conjunction with the 2015 audited consolidated financial statements of Kinsale Capital Group, Inc. and its wholly owned subsidiaries (the "Company") included in the final prospectus filed with the SEC on July 29, 2016. In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. Such adjustments consist only of normal recurring items. All significant intercompany balances and transactions have been eliminated in consolidation. Interim results are not necessarily indicative of results of operations for the full year. On August 2, 2016, the Company completed its IPO of 7,590,000 shares of common stock at a price to the public of $16.00 per share. The Company issued 5,000,000 shares of common stock and the selling stockholders sold 2,590,000 shares of common stock, which included 990,000 shares sold to the underwriters pursuant to their option to purchase additional shares. See Note 6, "Stockholders' Equity," for further discussion. |
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Use of estimates | Use of estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management periodically reviews its estimates and assumptions. |
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Adopted accounting pronouncements | Adopted accounting pronouncements ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, "Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." This ASU was issued to simplify the accounting for share-based payment awards, including income tax consequences, statutory tax withholding requirements, forfeitures and classification in the statement of cash flows. ASU 2016-09 is effective for fiscal years, and interim reporting periods within those years, beginning after December 15, 2016. Early adoption is permitted in any interim or annual reporting period. The standard requires the guidance related to forfeitures and the timing of when excess tax benefits are recognized to be applied using a modified retrospective transition method, the guidance related to the accounting for income taxes to be applied prospectively, and the guidance related to the presentation of excess tax benefits on the statement of cash flows to be applied either prospectively or retrospectively. The Company early adopted ASU 2016-09 in the third quarter of 2016 and elected to account for forfeitures as they occur. The adoption of this standard did not have a significant impact on the consolidated financial statements and related disclosures. |
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Prospective accounting pronouncements | Prospective accounting pronouncements ASU 2015-09, Financial Services-Insurance (Topic 944): Disclosures about Short-Duration Contracts In May 2015, the FASB issued ASU 2015-09, "Insurance (Topic 944), Disclosures about Short-Duration Contracts." This ASU was issued to enhance disclosures about an entity’s insurance liabilities, including the nature, amount, timing and uncertainty of cash flows related to those liabilities. The new guidance requires the disclosure of the following information related to unpaid claims and claim adjustment expenses:
This ASU is effective for annual reporting periods beginning after December 15, 2015 and for interim periods beginning after December 15, 2016. Early adoption is permitted. The Company has not early-adopted this ASU and while disclosures will be increased, the Company does not believe adoption will have a material effect on its consolidated financial statements. ASU 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities In January 2016, the FASB issued ASU 2016-01, "Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities," which requires equity investments to be measured at fair value with changes in fair value recognized in net income, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The amendments in this ASU are effective for public companies for annual reporting periods beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact of the adoption on its consolidated financial statements. ASU 2016-02, Leases (Topic 842) In February 2016, the FASB issued ASU 2016-02,"Leases (Topic 842)" to improve the financial reporting of leasing transactions. Under this ASU, lessees will recognize a right-of-use asset and corresponding liability on the balance sheet for all leases, except for leases covering a period of fewer than 12 months. The liability is to be measured as the present value of the future minimum lease payments taking into account renewal options (if probable of exercise) plus initial incremental direct costs such as commissions. The minimum payments are discounted using the rate implicit in the lease or, if not known, the lessee’s incremental borrowing rate. The lessee’s income statement treatment for leases will vary depending on the nature of what is being leased. A financing type lease is present when, among other matters, the asset is being leased for a substantial portion of its economic life or has an end-of-term title transfer or a bargain purchase option. The payment of the liability set up for such leases will be apportioned between interest and principal; the right-of use asset will be generally amortized on a straight-line basis. If the lease does not qualify as a financing type lease, it will be accounted for on the income statement as rent on a straight-line basis. This ASU is effective for annual and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of the adoption on its consolidated financial statements. ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) On June 16, 2016, the FASB issued ASU 2016-13, "Financial Instruments – Credit Losses (Topic 326)" to provide more useful information about the expected credit losses on financial instruments. Current GAAP delays the recognition of credit losses until it is probable a loss has been incurred. The update will require a financial asset measured at amortized cost to be presented at the net amount expected to be collected by means of an allowance for credit losses that runs through net income. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses. However, the amendments would limit the amount of the allowance to the amount by which fair value is below amortized cost. The measurement of credit losses on available-for-sale securities is similar under current GAAP, but the update requires the use of the allowance account through which amounts can be reversed, rather than through an irreversible write-down. This ASU is effective for annual and interim reporting periods beginning after December 15, 2019. Early adoption is permitted beginning after December 15, 2018. Upon adoption, the update will be applied using the modified-retrospective approach, by which a cumulative-effect adjustment will be made to retained earnings as of the beginning of the first reporting period presented. The Company is currently evaluating the impact of the adoption on its consolidated financial statements. There are no other prospective accounting standards which, upon their effective date, would have a material impact on the Company's consolidated financial statements. |
Investments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Available-for-sale Investments | The following tables summarize the Company’s available-for-sale investments:
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Available-for-sale Securities in a Loss Position | The following tables summarize gross unrealized losses and fair value for available-for-sale securities by length of time that the securities have continuously been in an unrealized loss position:
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Contractual Maturities of Available-for-sale Fixed Maturity Securities | The amortized cost and estimated fair value of available-for-sale fixed maturity securities at September 30, 2016 are summarized, by contractual maturity, as follows:
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Net Investment Income | The following table presents the components of net investment income:
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Change in Unrealized Gains (Losses) on Investments | The following table presents the change in available-for-sale net unrealized gains (losses) by investment type:
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Fair value measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Measured at Fair Value on a Recurring Basis | The following tables present the balances of assets measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015, by level within the fair value hierarchy.
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Deferred policy acquisition costs (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred policy acquisition costs [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Policy Acquisition Costs | The following table presents the amounts of policy acquisition costs deferred and amortized for the three and nine months ended September 30, 2016 and 2015:
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Underwriting, acquisition and insurance expenses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Underwriting, acquisition and insurance expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Underwriting, Acquisition and Insurance Expenses | Underwriting, acquisition and insurance expenses consist of the following:
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Stockholders' Equity (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Shares of Common Stock | Changes in the shares of common stock for the nine months ended September 30, 2016 were as follows:
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Assumptions Used in Estimating Fair Value of Options Granted | The value of the options granted was estimated at the date of grant using the Black-Scholes pricing model using the following assumptions:
(1) Expected volatility was based on the Company's competitors within the industry. (2) Expected life was calculated using the simplified method, which is an average of the contractual term of the option and its ordinary vesting period, as the Company does not have sufficient historical data for determining the expected term of our stock option awards. |
Earnings per share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings per share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | The following represents a reconciliation of the numerator and denominator of the basic and diluted earnings per share computations contained in the consolidated financial statements:
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Reserves for unpaid losses and loss adjustment expenses (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reserves for unpaid losses and loss adjustment expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unpaid Losses and Loss Adjustment Expenses | The following table presents a reconciliation of consolidated beginning and ending reserves for unpaid losses and loss adjustment expenses:
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Reinsurance (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effects of Reinsurance on Premiums Written and Earned | The following table summarizes the effect of reinsurance on premiums written and earned:
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Other comprehensive income (loss) (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss) | The following table summarizes the components of other comprehensive income (loss):
|
Summary of significant accounting policies (Details) - $ / shares |
Aug. 02, 2016 |
Jul. 28, 2016 |
---|---|---|
Class of Stock [Line Items] | ||
Common stock shares issued (in shares) | 5,000,000 | |
Share price (in dollars per share) | $ 16.00 | |
Common stock sold by selling stockholders (in shares) | 2,590,000 | |
IPO [Member] | ||
Class of Stock [Line Items] | ||
Common stock shares issued (in shares) | 7,590,000 | |
Share price (in dollars per share) | $ 16.00 | |
Underwriters Option [Member] | ||
Class of Stock [Line Items] | ||
Common stock sold by selling stockholders (in shares) | 990,000 |
Investments, Net Investment Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Interest [Abstract] | ||||
Municipal bonds (tax exempt) | $ 1,606 | $ 1,091 | $ 4,519 | $ 3,175 |
Taxable bonds | 384 | 454 | 1,165 | 1,148 |
Dividends on equity securities | 101 | 86 | 303 | 266 |
Cash, cash equivalents, and short-term investments | 32 | 1 | 52 | 5 |
Gross investment income | 2,123 | 1,632 | 6,039 | 4,594 |
Investment expenses | (229) | (196) | (650) | (567) |
Net investment income | $ 1,894 | $ 1,436 | $ 5,389 | $ 4,027 |
Investments, Unrealized Gain (Losses) on Investments (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Schedule of Available-for-sale Securities [Line Items] | |||||
Gross realized investment gains (losses) | $ 400 | ||||
Change in net unrealized gains (losses) [Abstract] | |||||
Net increase (decrease) | $ (1) | $ 181 | 7,716 | $ (1,685) | |
Carrying value on deposits with state regulatory authorities | 7,400 | 7,400 | $ 7,200 | ||
Payable for investments purchased | 19,600 | 19,600 | $ 0 | ||
Fixed Maturities [Member] | |||||
Change in net unrealized gains (losses) [Abstract] | |||||
Net increase (decrease) | (545) | 1,339 | 6,471 | (584) | |
Equity Securities [Member] | |||||
Change in net unrealized gains (losses) [Abstract] | |||||
Net increase (decrease) | $ 544 | $ (1,158) | $ 1,245 | $ (1,101) |
Deferred policy acquisition costs (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Movement analysis of deferred policy acquisition costs [Roll Forward] | ||||
Balance, beginning of period | $ (4,050) | $ (1,696) | $ (3,763) | |
Balance, beginning of period | $ 5,515 | 0 | ||
Policy acquisition costs deferred [Abstract] | ||||
Direct commissions | 7,119 | 6,765 | 20,967 | 19,534 |
Ceding commissions | (4,918) | (10,138) | (7,122) | (28,876) |
Other underwriting and policy acquisition costs | 830 | 833 | 2,256 | 2,435 |
Policy acquisition costs deferred | 3,031 | (2,540) | 16,101 | (6,907) |
Amortization of net policy acquisition costs | (2,988) | 2,309 | (8,847) | 6,389 |
Balance, end of period | 0 | $ (4,281) | 0 | $ (4,281) |
Balance, end of period | $ 5,558 | $ 5,558 |
Underwriting, acquisition and insurance expenses (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Underwriting, acquisition and insurance expenses [Abstract] | ||||
Gross commissions | $ 6,839 | $ 6,558 | $ 19,913 | $ 18,606 |
Ceding commissions | (6,473) | (11,616) | (17,099) | (32,513) |
Other operating expenses | 5,936 | 5,104 | 16,217 | 14,315 |
Total | 6,302 | 46 | 19,031 | 408 |
Salaries, bonuses and employee benefits | $ 5,100 | $ 4,200 | $ 13,900 | $ 11,800 |
Stockholders' Equity, Dividend Declaration (Details) - $ / shares |
9 Months Ended | ||
---|---|---|---|
Nov. 08, 2016 |
Sep. 30, 2016 |
Aug. 30, 2016 |
|
Dividend Declared 2016 Q3 [Member] | |||
Dividends Payable [Line Items] | |||
Cash dividend declared per share (in dollars per share) | $ 0.05 | ||
Dividends payable, declared date | Aug. 30, 2016 | ||
Dividends payable, payable date | Sep. 30, 2016 | ||
Dividends payable, record date | Sep. 15, 2016 | ||
Dividend Declared 2016 Q4 [Member] | Subsequent Event [Member] | |||
Dividends Payable [Line Items] | |||
Cash dividend declared per share (in dollars per share) | $ 0.05 | ||
Dividends payable, declared date | Nov. 08, 2016 | ||
Dividends payable, payable date | Dec. 15, 2016 | ||
Dividends payable, record date | Dec. 01, 2016 |
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 |
|
Basic earnings per share [Abstract] | ||||
Basic earnings per share (in dollars per share) | $ 0.24 | $ 0 | $ 0.24 | $ 0 |
Diluted earnings per share [Abstract] | ||||
Diluted earnings per share (in dollars per share) | $ 0.24 | $ 0 | $ 0.24 | $ 0 |
Basic weighted average shares outstanding [Abstract] | ||||
Basic weighted average shares outstanding (in shares) | 20,656,207 | 0 | 20,656,207 | 0 |
Diluted weighted average shares outstanding [Abstract] | ||||
Diluted weighted average shares outstanding (in shares) | 20,741,400 | 0 | 20,741,400 | 0 |
Antidilutive securities (in shares) | 0 | 0 | ||
Class A Common Stock [Member] | ||||
Reconciliation of numerator and denominator of the basic and diluted earnings per share computations [Abstract] | ||||
Earnings allocable | $ 2,716 | $ 5,551 | $ 13,625 | $ 16,522 |
Basic earnings per share [Abstract] | ||||
Basic earnings per share (in dollars per share) | $ 0.19 | $ 0.40 | $ 0.98 | $ 1.20 |
Diluted earnings per share [Abstract] | ||||
Diluted earnings per share (in dollars per share) | $ 0.19 | $ 0.40 | $ 0.98 | $ 1.20 |
Basic weighted average shares outstanding [Abstract] | ||||
Basic weighted average shares outstanding (in shares) | 14,110,967 | 13,795,530 | 13,844,221 | 13,795,530 |
Dilutive effect of shares issued under stock compensation arrangements [Abstract] | ||||
Dilutive effect of shares issued under stock compensation arrangements (in shares) | 0 | 0 | 0 | 0 |
Diluted weighted average shares outstanding [Abstract] | ||||
Diluted weighted average shares outstanding (in shares) | 14,110,967 | 13,795,530 | 13,844,221 | 13,795,530 |
Common stock, dividend rate | 12.00% | |||
Percentage of residual proceeds | 75.00% | 75.00% | ||
Class B Common Stock [Member] | ||||
Reconciliation of numerator and denominator of the basic and diluted earnings per share computations [Abstract] | ||||
Earnings allocable | $ 355 | $ 393 | $ 760 | $ 1,147 |
Basic earnings per share [Abstract] | ||||
Basic earnings per share (in dollars per share) | $ 0.21 | $ 0.27 | $ 0.48 | $ 0.83 |
Diluted earnings per share [Abstract] | ||||
Diluted earnings per share (in dollars per share) | $ 0.20 | $ 0.27 | $ 0.46 | $ 0.81 |
Basic weighted average shares outstanding [Abstract] | ||||
Basic weighted average shares outstanding (in shares) | 1,681,685 | 1,477,800 | 1,573,702 | 1,381,055 |
Dilutive effect of shares issued under stock compensation arrangements [Abstract] | ||||
Dilutive effect of shares issued under stock compensation arrangements (in shares) | 135,994 | 0 | 69,916 | 27,606 |
Diluted weighted average shares outstanding [Abstract] | ||||
Diluted weighted average shares outstanding (in shares) | 1,817,679 | 1,477,800 | 1,643,618 | 1,408,661 |
Percentage of residual proceeds | 25.00% | 25.00% | ||
Common Stock [Member] | ||||
Reconciliation of numerator and denominator of the basic and diluted earnings per share computations [Abstract] | ||||
Earnings allocable | $ 4,911 | $ 0 | $ 4,911 | $ 0 |
Basic earnings per share [Abstract] | ||||
Basic earnings per share (in dollars per share) | $ 0.24 | $ 0 | $ 0.24 | $ 0 |
Diluted earnings per share [Abstract] | ||||
Diluted earnings per share (in dollars per share) | $ 0.24 | $ 0 | $ 0.24 | $ 0 |
Basic weighted average shares outstanding [Abstract] | ||||
Basic weighted average shares outstanding (in shares) | 20,656,207 | 0 | 20,656,207 | 0 |
Dilutive effect of shares issued under stock compensation arrangements [Abstract] | ||||
Dilutive effect of shares issued under stock compensation arrangements (in shares) | 85,193 | 0 | 85,193 | 0 |
Diluted weighted average shares outstanding [Abstract] | ||||
Diluted weighted average shares outstanding (in shares) | 20,741,400 | 0 | 20,741,400 | 0 |
Reserves for unpaid losses and loss adjustment expenses (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Reconciliation of consolidated beginning and ending reserves for unpaid losses and loss adjustment expenses [Roll Forward] | ||
Net reserves for unpaid losses and loss adjustment expenses, beginning of year | $ 124,126 | $ 91,970 |
Commutation of MLQS | 24,296 | 8,587 |
Adjusted net reserves for losses and loss adjustment expenses, beginning of year | 148,422 | 100,557 |
Incurred losses and loss adjustment expenses [Abstract] | ||
Current year | 60,392 | 36,172 |
Prior years | (8,866) | (8,524) |
Total net losses and loss adjustment expenses incurred | 51,526 | 27,648 |
Payments [Abstract] | ||
Current year | 2,260 | 1,275 |
Prior years | 21,693 | 12,208 |
Total payments | 23,953 | 13,483 |
Net reserves for unpaid losses and loss adjustment expenses, end of period | 175,995 | 114,722 |
Reinsurance recoverable on unpaid losses | 77,463 | 87,369 |
Gross reserves for unpaid losses and loss adjustment expenses, end of period | $ 253,458 | $ 202,091 |
Reinsurance, Effects of Reinsurance on Premiums Written and Earned (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Written [Abstract] | |||||
Direct | $ 47,823 | $ 45,798 | $ 140,974 | $ 131,696 | |
Assumed | 0 | 0 | 38 | 144 | |
Ceded | (14,177) | (26,919) | (23,910) | (77,137) | |
Net written premiums | 33,646 | 18,879 | 117,102 | 54,703 | |
Earned [Abstract] | |||||
Direct | 46,418 | 44,082 | 134,405 | 125,287 | |
Assumed | 10 | 36 | 44 | 111 | |
Ceded | (13,454) | (25,839) | (39,095) | (73,662) | |
Net earned premiums | 32,974 | 18,279 | 95,354 | 51,736 | |
Ceded incurred losses and loss adjustment expenses | 3,100 | $ 10,200 | 10,900 | $ 31,800 | |
Reinsurance recoverables on paid losses | 100 | 100 | $ 200 | ||
Reinsurance recoverables on unpaid losses | $ 77,500 | $ 77,500 | $ 95,500 |
Reinsurance Multi-line Quota Share Reinsurance (Details) - USD ($) $ in Millions |
9 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jan. 01, 2016 |
Oct. 02, 2015 |
Sep. 30, 2015 |
Dec. 31, 2015 |
Oct. 01, 2016 |
Jan. 02, 2016 |
Jan. 02, 2015 |
|
Multi Line Quota Share Treaty - 2013 [Member] | |||||||
Reinsurance Retention Policy [Line Items] | |||||||
Effect of commutation | $ 11.9 | ||||||
Commutation percent | 55.00% | ||||||
Multi Line Quota Share Treaty - 2014 [Member] | |||||||
Reinsurance Retention Policy [Line Items] | |||||||
Effect of commutation | $ 34.2 | ||||||
Multi Line Quota Share Treaty - 2015 [Member] | |||||||
Reinsurance Retention Policy [Line Items] | |||||||
Provisional ceding commission rate | 41.00% | ||||||
Reinsurance margin | 4.00% | ||||||
Ceding percentage | 15.00% | 40.00% | 50.00% | ||||
Effect of change in ceding rate | $ 17.0 | ||||||
Multi Line Quota Share Treaty - 2015 [Member] | Minimum [Member] | |||||||
Reinsurance Retention Policy [Line Items] | |||||||
Sliding scale commission | 25.00% | ||||||
Multi Line Quota Share Treaty - 2015 [Member] | Maximum [Member] | |||||||
Reinsurance Retention Policy [Line Items] | |||||||
Sliding scale commission | 41.00% | ||||||
Multi Line Quota Share Treaty - 2016 [Member] | Subsequent Event [Member] | |||||||
Reinsurance Retention Policy [Line Items] | |||||||
Effect of commutation | $ 15.5 |
Credit Agreement (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
| |
Debt Instrument [Line Items] | |
Repayment of term loan | $ 2.5 |
PrivateBank [Member] | Secured Term Loan [Member] | LIBOR [Member] | |
Debt Instrument [Line Items] | |
Description of variable rate basis | 3 month LIBOR |
PrivateBank [Member] | Credit Agreement [Member] | Secured Term Loan [Member] | |
Debt Instrument [Line Items] | |
Term of loan | 5 years |
Amount of loan commitment | $ 30.0 |
Maturity date | Dec. 04, 2020 |
Other comprehensive income (loss) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Other comprehensive income (loss) [Abstract] | ||||
Unrealized gains (losses) arising during the period, before income taxes | $ (2) | $ 177 | $ 8,077 | $ (1,673) |
Income taxes | 1 | (61) | (2,826) | 586 |
Unrealized gains (losses) arising during the period, net of income taxes | (1) | 116 | 5,251 | (1,087) |
Less reclassification adjustment [Abstract] | ||||
Net realized investment gains (losses) | 0 | (4) | 361 | 12 |
Income taxes | 0 | 2 | (126) | (4) |
Reclassification adjustment included in net income | 0 | (2) | 235 | 8 |
Other comprehensive income (loss) | $ (1) | $ 118 | $ 5,016 | $ (1,095) |
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