☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
KINSALE CAPITAL GROUP, INC. (Exact name of registrant as specified in its charter) | ||
Delaware (State or other jurisdiction of incorporation or organization) | 98-0664337 (I.R.S. Employer Identification Number) | |
2221 Edward Holland Drive Suite 600 Richmond, Virginia (Address of principal executive offices) | 23230 (Zip Code) | |
Registrant’s telephone number, including area code: (804) 289-1300 |
Securities registered pursuant to Section 12(b) of the Act: Common Stock, par value $0.01 per share (Title of each class) | ||
Nasdaq Global Select Market (Name of each exchange on which registered) | ||
Securities registered pursuant to Section 12(g) of the Act: None |
Large accelerated filer ☒ | Accelerated filer ☐ | Non-accelerated filer ☐ (Do not check if a smaller reporting company) |
Smaller reporting company ☐ | Emerging growth company ☐ |
Page | ||
PART I | ||
Item 1. | ||
Item 1A. | ||
Item 1B. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II | ||
Item 5. | ||
Item 6. | ||
Item 7. | ||
Item 7A. | ||
Item 8. | ||
Item 9. | ||
Item 9A. | ||
Item 9B. | ||
PART III | ||
Item 10. | ||
Item 11. | ||
Item 12. | ||
Item 13. | ||
Item 14. | ||
PART IV | ||
Item 15. | ||
Item 16. |
• | the possibility that our loss reserves may be inadequate to cover our actual losses, which could have a material adverse effect on our financial condition, results of operations and cash flows; |
• | the inherent uncertainty of models resulting in actual losses that are materially different than our estimates; |
• | adverse economic factors, including recession, inflation, periods of high unemployment or lower economic activity resulting in the sale of fewer policies than expected or an increase in frequency or severity of claims and premium defaults or both, affecting our growth and profitability; |
• | a decline in our financial strength rating adversely affecting the amount of business we write; |
• | the potential loss of one or more key executives or an inability to attract and retain qualified personnel adversely affecting our results of operations; |
• | our reliance on a select group of brokers; |
• | the failure of any of the loss limitations or exclusions we employ, or change in other claims or coverage issues, having a material adverse effect on our financial condition or results of operations; |
• | the performance of our investment portfolio adversely affecting our financial results; |
• | the changing market conditions of our excess and surplus lines ("E&S") insurance operations, as well as the cyclical nature of our business, affecting our financial performance; |
• | extensive regulation adversely affecting our ability to achieve our business objectives or the failure to comply with these regulations adversely affecting our financial condition and results of operations; |
• | the ability to pay dividends being dependent on our ability to obtain cash dividends or other permitted payments from our insurance subsidiary; |
• | being forced to sell investments to meet our liquidity requirements; |
• | the inability to obtain reinsurance coverage at reasonable prices and on terms that adequately protect us; |
• | our employees taking excessive risks; |
• | the possibility that severe weather conditions and other catastrophes may result in an increase in the number and amount of claims filed against us; |
• | the inability to manage our growth effectively; |
• | the intense competition for business in our industry; |
• | the effects of litigation having an adverse effect on our business; |
• | the failure to maintain effective internal controls in accordance with the Sarbanes-Oxley of 2002 (the "Sarbanes-Oxley Act"); and |
• | the other risks and uncertainties discussed in Part I, Item 1A of this Annual Report on Form 10-K. |
Kinsale Capital Group, Inc. (Delaware corporation) | ||||||||
Kinsale Management, Inc. (Delaware corporation; management services company) | Kinsale Insurance Company (Arkansas domiciled corporation; stock insurance company) | Aspera Insurance Services, Inc. (Virginia corporation; insurance broker) |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
($ in thousands) | ||||||||||||
Gross written premium by division: | ||||||||||||
Commercial: | ||||||||||||
Construction | $ | 48,587 | $ | 42,234 | $ | 36,932 | ||||||
Small business | 34,896 | 27,333 | 21,468 | |||||||||
Energy | 22,898 | 16,157 | 19,022 | |||||||||
Excess casualty | 20,260 | 17,799 | 16,194 | |||||||||
General casualty | 15,865 | 16,162 | 20,511 | |||||||||
Products liability | 14,288 | 10,140 | 9,480 | |||||||||
Professional liability | 12,956 | 14,212 | 14,636 | |||||||||
Life sciences | 12,408 | 10,897 | 11,935 | |||||||||
Allied health | 10,645 | 9,344 | 8,644 | |||||||||
Healthcare | 6,235 | 6,594 | 6,579 | |||||||||
Commercial property | 5,609 | 4,835 | 6,181 | |||||||||
Management liability | 4,123 | 2,244 | 420 | |||||||||
Environmental | 2,692 | 1,931 | 1,005 | |||||||||
Public entity | 1,265 | 875 | — | |||||||||
Inland marine | 967 | 910 | 195 | |||||||||
Commercial insurance | 816 | 459 | — | |||||||||
Total commercial | 214,510 | 182,126 | 173,202 | |||||||||
Personal: | ||||||||||||
Personal insurance | 8,681 | 6,352 | 3,807 | |||||||||
Total personal | 8,681 | 6,352 | 3,807 | |||||||||
Total | $ | 223,191 | $ | 188,478 | $ | 177,009 |
Year Ended December 31, | |||||||||||||||||||||
2017 | % of Total | 2016 | % of Total | 2015 | % of Total | ||||||||||||||||
($ in thousands) | |||||||||||||||||||||
Gross written premiums by state: | |||||||||||||||||||||
California | $ | 60,632 | 27.2 | % | $ | 51,619 | 27.4 | % | $ | 43,473 | 24.6 | % | |||||||||
Texas | 31,732 | 14.2 | % | 26,060 | 13.8 | % | 26,607 | 15.0 | % | ||||||||||||
Florida | 24,964 | 11.2 | % | 19,873 | 10.5 | % | 16,199 | 9.2 | % | ||||||||||||
Washington | 11,454 | 5.1 | % | 8,892 | 4.7 | % | 7,199 | 4.1 | % | ||||||||||||
New York | 10,378 | 4.6 | % | 9,680 | 5.2 | % | 11,549 | 6.6 | % | ||||||||||||
New Jersey | 7,208 | 3.2 | % | 6,801 | 3.6 | % | 7,119 | 4.0 | % | ||||||||||||
Nevada | 4,871 | 2.2 | % | 4,894 | 2.6 | % | 3,673 | 2.1 | % | ||||||||||||
Arizona | 4,587 | 2.1 | % | 4,093 | 2.2 | % | 3,788 | 2.1 | % | ||||||||||||
Illinois | 4,404 | 2.0 | % | 3,438 | 1.8 | % | 3,062 | 1.7 | % | ||||||||||||
Pennsylvania | 4,383 | 2.0 | % | 4,016 | 2.1 | % | 3,960 | 2.2 | % | ||||||||||||
All other states | 58,578 | 26.2 | % | 49,112 | 26.1 | % | 50,380 | 28.4 | % | ||||||||||||
$ | 223,191 | 100.0 | % | $ | 188,478 | 100.0 | % | $ | 177,009 | 100.0 | % |
Line of Business Covered | Company Policy Limit | Reinsurance Coverage | Company Retention | |||
Property - per risk | Up to $10.0 million per occurrence | $9.0 million excess of $1.0 million | $1.0 million per occurrence | |||
Property - catastrophe (1) | N/A | $45.0 million excess of $5.0 million | $5.0 million per catastrophe | |||
Primary casualty (2) | Up to $10.0 million per occurrence | $9.0 million excess of $1.0 million | $1.0 million per occurrence | |||
Excess casualty (3) | Up to $10.0 million per occurrence | Variable quota share | $1.5 million per occurrence except as described in note (3) 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 $90 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 $1.0 million or less. |
(3) | For policies with a per occurrence limit higher than $1.0 million, the quota share ceding percentage varies such that the retention is always $1.5 million or less. For example, for a $2.0 million limit excess policy, our retention would be 75%, whereas for a $10.0 million limit excess policy, our retention would be 15%. For policies for which we also write an underlying primary limit, the retention on the primary and excess policy combined would not exceed $1.5 million. |
Reinsurers | A.M. Best Rating | Reinsurance Recoverable | ||||||
($ in thousands) | ||||||||
Swiss Reinsurance America Corp. | A+ | $ | 22,104 | |||||
Munich Reinsurance America, Inc. | A+ | 9,776 | ||||||
SCOR Reinsurance Co. | A | 6,384 | ||||||
Arch Reinsurance Co. | A+ | 4,516 | ||||||
Odyssey America Reinsurance Corp. | A | 3,452 | ||||||
Total for Top Five | 46,232 | |||||||
All others | 3,361 | |||||||
Total | $ | 49,593 |
December 31, 2017 | December 31, 2016 | |||||||||||||
Fair Value | % of Portfolio | Fair Value | % of Portfolio | |||||||||||
($ in thousands) | ||||||||||||||
Fixed maturities: | ||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies | $ | 9,098 | 1.6 | % | $ | 12,098 | 2.5 | % | ||||||
Obligations of states, municipalities and political subdivisions | 164,326 | 29.3 | % | 123,238 | 25.7 | % | ||||||||
Corporate and other securities | 71,631 | 12.8 | % | 118,790 | 24.7 | % | ||||||||
Asset-backed securities | 95,360 | 17.0 | % | 73,294 | 15.3 | % | ||||||||
Residential mortgage-backed securities | 84,776 | 15.1 | % | 83,803 | 17.4 | % | ||||||||
Total fixed maturities | 425,191 | 75.8 | % | 411,223 | 85.6 | % | ||||||||
Equity securities: | ||||||||||||||
Exchange traded funds | 34,380 | 6.1 | % | 18,374 | 3.8 | % | ||||||||
Nonredeemable preferred stock | 19,752 | 3.5 | % | — | — | |||||||||
Total equity securities | 54,132 | 9.6 | % | 18,374 | 3.8 | % | ||||||||
Cash and cash equivalents | 81,747 | 14.6 | % | 50,752 | 10.6 | % | ||||||||
Total | $ | 561,070 | 100.0 | % | $ | 480,349 | 100.0 | % |
AAA | AA | A | BBB | Below BBB | Total | |||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies | $ | — | $ | 9,098 | $ | — | $ | — | $ | — | $ | 9,098 | ||||||||||||
Obligations of states, municipalities and political subdivisions | 10,972 | 94,272 | 58,976 | 106 | — | 164,326 | ||||||||||||||||||
Corporate and other securities | — | 6,733 | 42,120 | 15,722 | 7,056 | 71,631 | ||||||||||||||||||
Asset-backed securities | 70,717 | 8,264 | 11,033 | 5,346 | — | 95,360 | ||||||||||||||||||
Residential mortgage-backed securities | 3,510 | 71,677 | — | 7,541 | 2,048 | 84,776 | ||||||||||||||||||
Total fixed maturities | $ | 85,199 | $ | 190,044 | $ | 112,129 | $ | 28,715 | $ | 9,104 | $ | 425,191 |
December 31, 2017 | |||||||
Estimated | % of | ||||||
Fair Value | Fair Value | ||||||
($ in thousands) | |||||||
Due in one year or less | $ | 49,973 | 11.8 | % | |||
Due after one year through five years | 29,299 | 6.9 | % | ||||
Due after five years through ten years | 29,800 | 7.0 | % | ||||
Due after ten years | 135,983 | 32.0 | % | ||||
Asset-backed securities | 95,360 | 22.4 | % | ||||
Residential mortgage-backed securities | 84,776 | 19.9 | % | ||||
Total fixed maturities | $ | 425,191 | 100.0 | % |
December 31, 2017 | |||||||
Industry | Fair Value | % of Total | |||||
($ in thousands) | |||||||
Industrials and other | $ | 47,950 | 66.9 | % | |||
Financial | 20,015 | 28.0 | % | ||||
Utilities | 3,666 | 5.1 | % | ||||
Total | $ | 71,631 | 100.0 | % |
December 31, 2017 | |||||||
Fund | Fair Value | % of Total | |||||
($ in thousands) | |||||||
Domestic stock market fund | $ | 16,088 | 46.8 | % | |||
Foreign stock market fund | 9,297 | 27.0 | % | ||||
Dividend yield equity fund | 8,010 | 23.3 | % | ||||
Intermediate-term corporate bond fund | 985 | 2.9 | % | ||||
Total | $ | 34,380 | 100.0 | % |
December 31, 2017 | |||||||
Industry | Fair Value | % of Total | |||||
($ in thousands) | |||||||
Financial | $ | 15,859 | 80.3 | % | |||
Utilities | 2,120 | 10.7 | % | ||||
Industrials and other | 1,773 | 9.0 | % | ||||
Total | $ | 19,752 | 100.0 | % |
• | claims inflation, which is the sustained increase in cost of raw materials, labor, medical services and other components of claims cost; |
• | claims development patterns by line of business and by "claims made" versus "occurrence" policies; |
• | legislative activity; |
• | social and economic patterns; and |
• | litigation, judicial and regulatory trends. |
• | When we write "occurrence" policies, we are obligated to pay covered claims, up to the contractually agreed amount, for any covered loss that occurs while the policy is in force. Accordingly, claims may arise many years after a policy has lapsed. Approximately 81.2% of our net casualty loss reserves were associated with "occurrence" policies as of December 31, 2017. |
• | Even when a claim is received (irrespective of whether the policy is a "claims made" or "occurrence" basis form), it may take considerable time to fully appreciate the extent of the covered loss suffered by the insured and, consequently, estimates of loss associated with specific claims can increase over time. |
• | New theories of liability are enforced retroactively from time to time by courts. See also "—The failure of any of the loss limitations or exclusions we employ, or changes in other claims or coverage issues, could have a material adverse effect on our financial condition or results of operations." |
• | Volatility in the financial markets, economic events and other external factors may result in an increase in the number of claims and/or severity of the claims reported. In addition, elevated inflationary conditions would, among other things, cause loss costs to increase. See also "—Adverse economic factors, including recession, inflation, periods of high unemployment or lower economic activity could result in the sale of fewer policies than expected or an increase in frequency or severity of claims and premium defaults or both, which, in turn, could affect our growth and profitability." |
• | If claims were to become more frequent, even if we had no liability for those claims, the cost of evaluating such potential claims could escalate beyond the amount of the reserves we have established. As we enter new lines of business, or as a result of new theories of claims, we may encounter an increase in claims frequency and greater claims handling costs than we had anticipated. |
• | The models do not address all the possible hazard characteristics of a catastrophe peril (e.g. the precise path and wind speed of a hurricane); |
• | The models may not accurately reflect the true frequency of events; |
• | The models may not accurately reflect a risk's vulnerability or susceptibility to damage for a given event characteristic; |
• | The models may not accurately represent loss potential to insurance or reinsurance contract coverage limits, terms |
• | The models may not accurately reflect the impact on the economy of the area affected or the financial, judicial, political, or regulatory impact on insurance claim payments during or following a catastrophe event. |
• | if we change our business practices from our organizational business plan in a manner that no longer supports A.M. Best’s rating; |
• | if unfavorable financial, regulatory or market trends affect us, including excess market capacity; |
• | if our losses exceed our loss reserves; |
• | if we have unresolved issues with government regulators; |
• | if we are unable to retain our senior management or other key personnel; |
• | if our investment portfolio incurs significant losses; or |
• | if A.M. Best alters its capital adequacy assessment methodology in a manner that would adversely affect our rating. |
• | causing our current and future brokers and insureds to choose other, more highly-rated competitors; |
• | increasing the cost or reducing the availability of reinsurance to us; or |
• | severely limiting or preventing us from writing new and renewal insurance contracts. |
• | Asbestos liability applied to manufacturers of products and contractors who installed those products. |
• | Apportionment of liability arising from subsidence claims assigned to subcontractors who may have been involved in mundane tasks (such as installing sheetrock in a home). |
• | Court decisions, such as the 1995 Montrose decision in California, that read policy exclusions narrowly so as to expand coverage, thereby requiring insurers to create and write new exclusions. |
• | An increase in capital-raising by companies in our lines of business, which could result in new entrants to our markets and an excess of capital in the industry; |
• | The deregulation of commercial insurance lines in certain states and the possibility of federal regulatory reform of the insurance industry, which could increase competition from standard carriers; and |
• | Changing practices caused by the internet, including shifts in the way in which E&S insurance is purchased. We currently depend largely on the wholesale distribution model. If the wholesale distribution model were to be significantly altered by changes in the way E&S insurance were marketed, including, without limitation, through use of the Internet, it could have a material adverse effect on our premiums, underwriting results and profits. |
• | collect and properly analyze a substantial volume of data from our insureds; |
• | develop, test and apply appropriate actuarial projections and ratings formulas; |
• | closely monitor and timely recognize changes in trends; and |
• | project both frequency and severity of our insureds’ losses with reasonable accuracy. |
• | insufficient or unreliable data; |
• | incorrect or incomplete analysis of available data; |
• | uncertainties generally inherent in estimates and assumptions; |
• | our failure to implement appropriate actuarial projections and ratings formulas or other pricing methodologies; |
• | regulatory constraints on rate increases; |
• | our failure to accurately estimate investment yields and the duration of our liability for loss and loss adjustment expenses; and |
• | unanticipated court decisions, legislation or regulatory action. |
2016 Period | High | Low | ||||||
Third Quarter (beginning July 28, 2016) | $ | 22.65 | $ | 18.00 | ||||
Fourth Quarter | $ | 34.91 | $ | 20.81 |
2017 Period | High | Low | ||||||
First Quarter | $ | 35.08 | $ | 27.19 | ||||
Second Quarter | $ | 38.32 | $ | 30.78 | ||||
Third Quarter | $ | 47.78 | $ | 34.70 | ||||
Fourth Quarter | $ | 46.19 | $ | 39.38 |
July 28, 2016 | December 31, 2017 | |||||||
Kinsale Capital Group, Inc. | $ | 100.00 | $ | 247.91 | ||||
Nasdaq Composite Index | $ | 100.00 | $ | 136.14 | ||||
Nasdaq Insurance Index | $ | 100.00 | $ | 133.66 |
Year Ended December 31, | ||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
($ in thousands, except for per share data) | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Gross written premiums | $ | 223,191 | $ | 188,478 | $ | 177,009 | $ | 158,523 | $ | 125,267 | ||||||||||
Ceded written premiums | (33,719 | ) | (21,214 | ) | (92,991 | ) | (97,012 | ) | (80,870 | ) | ||||||||||
Net written premiums | $ | 189,472 | $ | 167,264 | $ | 84,018 | $ | 61,511 | $ | 44,397 | ||||||||||
Net earned premiums | $ | 176,053 | $ | 133,816 | $ | 74,322 | $ | 58,996 | $ | 45,122 | ||||||||||
Net investment income | 10,569 | 7,487 | 5,643 | 4,070 | 3,344 | |||||||||||||||
Net investment gains | 151 | 176 | 59 | 201 | 8 | |||||||||||||||
Other income | 3 | 136 | 572 | 409 | 10 | |||||||||||||||
Total revenues | 186,776 | 141,615 | 80,596 | 63,676 | 48,484 | |||||||||||||||
Expenses: | ||||||||||||||||||||
Losses and loss adjustment expenses | 103,680 | 70,961 | 42,238 | 41,108 | 28,890 | |||||||||||||||
Underwriting, acquisition and insurance expenses | 44,146 | 28,551 | 2,809 | 1,451 | 6,894 | |||||||||||||||
Other expenses | 429 | 2,567 | 1,992 | 1,644 | 597 | |||||||||||||||
Total expenses | 148,255 | 102,079 | 47,039 | 44,203 | 36,381 | |||||||||||||||
Income before income taxes | 38,521 | 39,536 | 33,557 | 19,473 | 12,103 | |||||||||||||||
Income tax expense (benefit) | 13,620 | 13,369 | 11,284 | 6,500 | (164 | ) | ||||||||||||||
Net income | $ | 24,901 | $ | 26,167 | $ | 22,273 | $ | 12,973 | $ | 12,267 | ||||||||||
Underwriting income (1) | $ | 28,227 | $ | 34,304 | $ | 29,275 | $ | 16,437 | $ | 9,338 | ||||||||||
Per common share data: | ||||||||||||||||||||
Basic earnings per share: | ||||||||||||||||||||
Common stock | $ | 1.19 | $ | 0.57 | $ | — | $ | — | $ | — | ||||||||||
Class A common stock | — | 0.98 | 1.53 | 0.94 | 0.89 | |||||||||||||||
Class B common stock | — | 0.48 | 0.84 | — | — | |||||||||||||||
Diluted earnings per share: | ||||||||||||||||||||
Common stock | $ | 1.16 | $ | 0.56 | $ | — | $ | — | $ | — | ||||||||||
Class A common stock | — | 0.98 | 1.53 | 0.94 | 0.89 | |||||||||||||||
Class B common stock | — | 0.46 | 0.81 | — | — | |||||||||||||||
Cash dividends declared and paid | 0.24 | 0.10 | — | — | — |
At December 31, | ||||||||||||||||
2017 | 2016 | 2015 | 2014 | |||||||||||||
($ in thousands) | ||||||||||||||||
Balance sheet data: | ||||||||||||||||
Cash and invested assets | $ | 561,070 | $ | 480,349 | $ | 368,685 | $ | 292,285 | ||||||||
Premiums receivable, net | 19,787 | 16,984 | 15,550 | 14,226 | ||||||||||||
Reinsurance recoverables | 49,593 | 70,317 | 95,670 | 70,348 | ||||||||||||
Ceded unearned premiums | 13,858 | 13,512 | 39,329 | 42,565 | ||||||||||||
Intangible assets | 3,538 | 3,538 | 3,538 | 3,538 | ||||||||||||
Total assets | 667,849 | 614,389 | 545,278 | 437,604 | ||||||||||||
Reserves for unpaid losses and loss adjustment expenses | 315,717 | 264,801 | 219,629 | 162,210 | ||||||||||||
Unearned premiums | 103,110 | 89,344 | 81,713 | 75,253 | ||||||||||||
Funds held for reinsurers | — | 36,497 | 87,206 | 63,932 | ||||||||||||
Note payable | — | — | 29,603 | 27,484 | ||||||||||||
Total liabilities | 429,660 | 404,175 | 431,827 | 345,018 | ||||||||||||
Total stockholders' equity | 238,189 | 210,214 | 113,451 | 92,586 | ||||||||||||
Other data: | ||||||||||||||||
Tangible stockholders' equity (2) | $ | 235,394 | $ | 207,914 | $ | 111,151 | $ | 90,286 | ||||||||
Debt to total capitalization ratio (3) | — | % | — | % | 20.8 | % | 23.1 | % | ||||||||
Statutory capital and surplus (4) | $ | 213,833 | $ | 193,387 | $ | 127,675 | $ | 104,101 |
Year Ended December 31, | |||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||
Underwriting and other ratios: | |||||||||||||||
Loss ratio (5) | 58.9 | % | 53.0 | % | 56.8 | % | 69.7 | % | 64.0 | % | |||||
Expense ratio (6) | 25.1 | % | 21.3 | % | 3.8 | % | 2.4 | % | 15.3 | % | |||||
Combined ratio (7) | 84.0 | % | 74.3 | % | 60.6 | % | 72.1 | % | 79.3 | % | |||||
Adjusted loss ratio (8) | 58.9 | % | 50.0 | % | 51.5 | % | 59.4 | % | 58.5 | % | |||||
Adjusted expense ratio (8) | 25.1 | % | 26.8 | % | 26.0 | % | 24.7 | % | 26.9 | % | |||||
Adjusted combined ratio (8) | 84.0 | % | 76.8 | % | 77.5 | % | 84.1 | % | 85.4 | % | |||||
Return on equity (9) | 11.1 | % | 16.2 | % | 21.6 | % | 15.3 | % | 17.0 | % | |||||
(1) | Underwriting income is a non-GAAP financial measure. See "Management’s Discussion and Analysis of Financial Condition and Results of Operations — Reconciliation of Non-GAAP Financial Measures" for a reconciliation of net income to underwriting income in accordance with GAAP. |
(2) | Tangible stockholders’ equity is a non-GAAP financial measure. See "Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Financial Condition" for a reconciliation of stockholders’ equity to tangible stockholders’ equity. |
(3) | The ratio, expressed as a percentage, of total indebtedness for borrowed money, including capitalized lease obligations, to the sum of total indebtedness for borrowed money, including capitalized lease obligations, and stockholders’ equity. |
(4) | For our insurance subsidiary, the excess of assets over liabilities as determined in accordance with statutory accounting principles as determined by the NAIC. |
(5) | The loss ratio is the ratio, expressed as a percentage, of losses and loss adjustment expenses to net earned premiums, net of the effects of reinsurance. |
(6) | The expense ratio is the ratio, expressed as a percentage, of underwriting, acquisition and insurance expenses to net earned premiums. |
(7) | The combined ratio is the sum of the loss ratio and the expense ratio. A combined ratio under 100% generally indicates an underwriting profit. A combined ratio over 100% generally indicates an underwriting loss. |
(8) | The adjusted loss ratio, adjusted expense ratio and adjusted combined ratio are non-GAAP financial measures. See "Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors Affecting Our Results of Operations — The MLQS." |
(9) | Return on equity represents net income expressed on an annualized basis as a percentage of average beginning and ending stockholders’ equity during the period. |
Year Ended December 31, 2017 | Year Ended December 31, 2016 | Year Ended December 31, 2015 | ||||||||||||||||||||||||||||||||||
($ in thousands) | Including Quota Share | Effect of Quota Share | Excluding Quota Share | Including Quota Share | Effect of Quota Share | Excluding Quota Share | Including Quota Share | Effect of Quota Share | Excluding Quota Share | |||||||||||||||||||||||||||
Gross written premiums | $ | 223,191 | $ | — | $ | 223,191 | $ | 188,478 | $ | — | $ | 188,478 | $ | 177,009 | $ | — | $ | 177,009 | ||||||||||||||||||
Ceded written premiums | (33,719 | ) | — | (33,719 | ) | (21,214 | ) | 10,269 | (31,483 | ) | (92,991 | ) | (63,991 | ) | (29,000 | ) | ||||||||||||||||||||
Net written premiums | $ | 189,472 | $ | — | $ | 189,472 | $ | 167,264 | $ | 10,269 | $ | 156,995 | $ | 84,018 | $ | (63,991 | ) | $ | 148,009 | |||||||||||||||||
Net retention (1) | 84.9 | % | 84.9 | % | 88.7 | % | 83.3 | % | 47.5 | % | 83.6 | % | ||||||||||||||||||||||||
Net earned premiums | $ | 176,053 | $ | — | $ | 176,053 | $ | 133,816 | $ | (16,996 | ) | $ | 150,812 | $ | 74,322 | $ | (67,950 | ) | $ | 142,272 | ||||||||||||||||
Losses and loss adjustment expenses | (103,680 | ) | — | (103,680 | ) | (70,961 | ) | 4,380 | (75,341 | ) | (42,238 | ) | 30,978 | (73,216 | ) | |||||||||||||||||||||
Underwriting, acquisition and insurance expenses | (44,146 | ) | — | (44,146 | ) | (28,551 | ) | 11,936 | (40,487 | ) | (2,809 | ) | 34,254 | (37,063 | ) | |||||||||||||||||||||
Underwriting income (2) | $ | 28,227 | $ | — | $ | 28,227 | $ | 34,304 | $ | (680 | ) | $ | 34,984 | $ | 29,275 | $ | (2,718 | ) | $ | 31,993 | ||||||||||||||||
Loss ratio | 58.9 | % | — | % | — | 53.0 | % | 25.8 | % | — | 56.8 | % | 45.6 | % | — | |||||||||||||||||||||
Expense ratio | 25.1 | % | — | % | — | 21.3 | % | 70.2 | % | — | 3.8 | % | 50.4 | % | — | |||||||||||||||||||||
Combined ratio | 84.0 | % | — | % | — | 74.3 | % | 96.0 | % | — | 60.6 | % | 96.0 | % | — | |||||||||||||||||||||
Adjusted loss ratio (3) | — | — | 58.9 | % | — | — | 50.0 | % | — | — | 51.5 | % | ||||||||||||||||||||||||
Adjusted expense ratio (3) | — | — | 25.1 | % | — | — | 26.8 | % | — | — | 26.0 | % | ||||||||||||||||||||||||
Adjusted combined ratio (3) | — | — | 84.0 | % | — | — | 76.8 | % | — | — | 77.5 | % |
• | New business submissions; |
• | Binding of new business submissions into policies; |
• | Renewals of existing policies; and |
• | Average size and premium rate of bound 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. |
Year Ended December 31, | |||||||||||||||
($ in thousands) | 2017 | 2016 | Change | Percent | |||||||||||
Gross written premiums | $ | 223,191 | $ | 188,478 | $ | 34,713 | 18.4 | % | |||||||
Ceded written premiums | (33,719 | ) | (21,214 | ) | (12,505 | ) | 58.9 | % | |||||||
Net written premiums | $ | 189,472 | $ | 167,264 | $ | 22,208 | 13.3 | % | |||||||
Net earned premiums | $ | 176,053 | $ | 133,816 | $ | 42,237 | 31.6 | % | |||||||
Losses and loss adjustment expenses | 103,680 | 70,961 | 32,719 | 46.1 | % | ||||||||||
Underwriting, acquisition and insurance expenses | 44,146 | 28,551 | 15,595 | 54.6 | % | ||||||||||
Underwriting income (1) | 28,227 | 34,304 | (6,077 | ) | (17.7 | )% | |||||||||
Other expenses, net | (426 | ) | (2,431 | ) | 2,005 | (82.5 | )% | ||||||||
Net investment income | 10,569 | 7,487 | 3,082 | 41.2 | % | ||||||||||
Net investment gains | 151 | 176 | (25 | ) | (14.2 | )% | |||||||||
Income before taxes | 38,521 | 39,536 | (1,015 | ) | (2.6 | )% | |||||||||
Income tax expense | 13,620 | 13,369 | 251 | 1.9 | % | ||||||||||
Net income | $ | 24,901 | $ | 26,167 | $ | (1,266 | ) | (4.8 | )% | ||||||
Return on equity | 11.1 | % | 16.2 | % | |||||||||||
Loss ratio | 58.9 | % | 53.0 | % | |||||||||||
Expense ratio | 25.1 | % | 21.3 | % | |||||||||||
Combined ratio | 84.0 | % | 74.3 | % |
• | Small business, which represented approximately 15.6% of our gross written premiums in 2017, increased by $7.6 million, or 27.7%, for the year ended December 31, 2017 over the prior year; |
• | Energy, which represented approximately 10.3% of our gross written premiums in 2017, increased by $6.7 million, or 41.7%, for the year ended December 31, 2017 over the prior year; |
• | Construction, which represented approximately 21.8% of our gross written premiums in 2017, increased by $6.4 million, or 15.0%, for the year ended December 31, 2017 over the prior year, and |
• | Products liability, which represented approximately 6.4% of our gross written premiums in 2017, increased by $4.1 million, or 40.9%, for the year ended December 31, 2017 over the prior year. |
Year Ended December 31, | ||||||||||||||
2017 | 2016 | |||||||||||||
($ in thousands) | Losses and Loss Adjustment Expenses | % of Earned Premiums | Losses and Loss Adjustment Expenses | % of Earned Premiums | ||||||||||
Loss ratio: | ||||||||||||||
Current accident year | $ | 105,958 | 60.2 | % | $ | 82,576 | 61.7 | % | ||||||
Current accident year - catastrophe losses | 9,002 | 5.1 | % | 1,099 | 0.8 | % | ||||||||
Effect of prior year development | (11,280 | ) | (6.4 | )% | (12,714 | ) | (9.5 | )% | ||||||
Total | $ | 103,680 | 58.9 | % | $ | 70,961 | 53.0 | % |
Year Ended December 31, | ||||||||||||||
2017 | 2016 | |||||||||||||
($ in thousands) | Losses and Loss Adjustment Expenses | % of Earned Premiums | Losses and Loss Adjustment Expenses | % of Earned Premiums | ||||||||||
Adjusted loss ratio: | ||||||||||||||
Current accident year | $ | 105,958 | 60.2 | % | $ | 91,915 | 61.0 | % | ||||||
Current accident year - catastrophe losses | 9,002 | 5.1 | % | 1,099 | 0.7 | % | ||||||||
Effect of prior year development | (11,280 | ) | (6.4 | )% | (17,673 | ) | (11.7 | )% | ||||||
Total | $ | 103,680 | 58.9 | % | $ | 75,341 | 50.0 | % |
Year Ended December 31, | ||||||||||||||
2017 | 2016 | |||||||||||||
($ in thousands) | Underwriting Expenses | % of Earned Premiums | Underwriting Expenses | % of Earned Premiums | ||||||||||
Commissions incurred: | ||||||||||||||
Direct | $ | 31,001 | 17.6 | % | $ | 26,715 | 20.0 | % | ||||||
Ceding - MLQS | — | — | % | (11,936 | ) | (8.9 | )% | |||||||
Ceding - other | (9,799 | ) | (5.5 | )% | (8,632 | ) | (6.5 | )% | ||||||
Net commissions incurred | 21,202 | 12.1 | % | 6,147 | 4.6 | % | ||||||||
Other underwriting expenses | 22,944 | 13.0 | % | 22,404 | 16.7 | % | ||||||||
Underwriting, acquisition, and insurance expenses | $ | 44,146 | 25.1 | % | $ | 28,551 | 21.3 | % |
Year Ended December 31, | ||||||||||||
($ in thousands) | 2017 | 2016 | Change | |||||||||
Interest from fixed-maturity securities | $ | 9,852 | $ | 7,839 | $ | 2,013 | ||||||
Dividends on equity securities | 1,041 | 442 | 599 | |||||||||
Other | 678 | 93 | 585 | |||||||||
Gross investment income | 11,571 | 8,374 | 3,197 | |||||||||
Investment expenses | (1,002 | ) | (887 | ) | (115 | ) | ||||||
Net investment income | 10,569 | 7,487 | 3,082 | |||||||||
Net capital gains | 151 | 452 | (301 | ) | ||||||||
Other-than-temporary losses | — | (276 | ) | 276 | ||||||||
Net investment gains | 151 | 176 | (25 | ) | ||||||||
Total | $ | 10,720 | $ | 7,663 | $ | 3,057 |
Year Ended December 31, | |||||||||||||||
($ in thousands) | 2016 | 2015 | Change | Percent | |||||||||||
Gross written premiums | $ | 188,478 | $ | 177,009 | $ | 11,469 | 6.5 | % | |||||||
Ceded written premiums | (21,214 | ) | (92,991 | ) | 71,777 | (77.2 | )% | ||||||||
Net written premiums | $ | 167,264 | $ | 84,018 | $ | 83,246 | 99.1 | % | |||||||
Net earned premiums | $ | 133,816 | $ | 74,322 | $ | 59,494 | 80.0 | % | |||||||
Losses and loss adjustment expenses | 70,961 | 42,238 | 28,723 | 68.0 | % | ||||||||||
Underwriting, acquisition, and insurance expenses | 28,551 | 2,809 | 25,742 | 916.4 | % | ||||||||||
Underwriting income (1) | 34,304 | 29,275 | 5,029 | 17.2 | % | ||||||||||
Other expenses, net | (2,431 | ) | (1,420 | ) | (1,011 | ) | 71.2 | % | |||||||
Net investment income | 7,487 | 5,643 | 1,844 | 32.7 | % | ||||||||||
Net investment gains | 176 | 59 | 117 | 198.3 | % | ||||||||||
Income before taxes | 39,536 | 33,557 | 5,979 | 17.8 | % | ||||||||||
Income tax expense | 13,369 | 11,284 | 2,085 | 18.5 | % | ||||||||||
Net income | $ | 26,167 | $ | 22,273 | $ | 3,894 | 17.5 | % | |||||||
Return on equity | 16.2 | % | 21.6 | % | |||||||||||
Loss ratio | 53.0 | % | 56.8 | % | |||||||||||
Expense ratio | 21.3 | % | 3.8 | % | |||||||||||
Combined ratio | 74.3 | % | 60.6 | % |
• | Small business, which represented approximately 14.5% of our gross written premiums in 2016, increased by $5.9 million, or 27.3%, for the year ended December 31, 2016 over the prior year; |
• | Construction, which represented approximately 22.4% of our gross written premiums in 2016, increased by $5.3 million, or 14.4%, for the year ended December 31, 2016 over the prior year, and |
• | General casualty, which represented approximately 8.6% of our gross written premiums in 2016, decreased by $4.3 million, or 21.2%, for the year ended December 31, 2016 over the prior year. |
Year Ended December 31, | ||||||||||||||
2016 | 2015 | |||||||||||||
($ in thousands) | Losses and Loss Adjustment Expenses | % of Earned Premiums | Losses and Loss Adjustment Expenses | % of Earned Premiums | ||||||||||
Loss ratio: | ||||||||||||||
Current accident year | $ | 83,675 | 62.5 | % | $ | 51,434 | 69.2 | % | ||||||
Effect of prior year development | (12,714 | ) | (9.5 | )% | (9,196 | ) | (12.4 | )% | ||||||
$ | 70,961 | 53.0 | % | $ | 42,238 | 56.8 | % |
Year Ended December 31, | ||||||||||||||
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 | $ | 93,014 | 61.7 | % | $ | 88,229 | 62.0 | % | ||||||
Effect of prior year development | (17,673 | ) | (11.7 | )% | (15,013 | ) | (10.5 | )% | ||||||
$ | 75,341 | 50.0 | % | $ | 73,216 | 51.5 | % |
Year Ended December 31, | ||||||||||||||
2016 | 2015 | |||||||||||||
($ in thousands) | Underwriting Expenses | % of Earned Premiums | Underwriting Expenses | % of Earned Premiums | ||||||||||
Commissions incurred: | ||||||||||||||
Direct | $ | 26,715 | 20.0 | % | $ | 25,241 | 34.0 | % | ||||||
Ceding - MLQS | (11,936 | ) | (8.9 | )% | (34,254 | ) | (46.1 | )% | ||||||
Ceding - other | (8,632 | ) | (6.5 | )% | (7,827 | ) | (10.5 | )% | ||||||
Net commissions incurred | 6,147 | 4.6 | % | (16,840 | ) | (22.6 | )% | |||||||
Other underwriting expenses | 22,404 | 16.7 | % | 19,649 | 26.4 | % | ||||||||
Underwriting, acquisition, and insurance expenses | $ | 28,551 | 21.3 | % | $ | 2,809 | 3.8 | % |
Year Ended December 31, | ||||||||||||
($ in thousands) | 2016 | 2015 | Change | |||||||||
Interest from fixed-maturity securities | $ | 7,839 | $ | 6,023 | $ | 1,816 | ||||||
Dividends on equity securities | 442 | 372 | 70 | |||||||||
Other | 93 | 9 | 84 | |||||||||
Gross investment income | 8,374 | 6,404 | 1,970 | |||||||||
Investment expenses | (887 | ) | (761 | ) | (126 | ) | ||||||
Net investment income | 7,487 | 5,643 | 1,844 | |||||||||
Net capital gains | 452 | 59 | 393 | |||||||||
Other-than temporary losses | (276 | ) | — | (276 | ) | |||||||
Net investment gains | 176 | 59 | 117 | |||||||||
Total | $ | 7,663 | $ | 5,702 | $ | 1,961 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Cash and cash equivalents provided by (used in): | ||||||||||||
Operating activities | $ | 77,398 | $ | 73,741 | $ | 78,702 | ||||||
Investing activities | (42,432 | ) | (88,144 | ) | (80,047 | ) | ||||||
Financing activities | (3,971 | ) | 40,611 | 1,931 | ||||||||
Change in cash and cash equivalents | $ | 30,995 | $ | 26,208 | $ | 586 |
Payments Due by Period | ||||||||||||||||||||
Total | Less Than One Year | One Year to Less Than Three Years | Three Years to Less Than Five Years | More Than Five Years | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Reserves for losses and loss adjustment expenses | $ | 315,717 | $ | 64,706 | $ | 108,534 | $ | 60,343 | $ | 82,134 | ||||||||||
Operating lease obligations | 1,304 | 529 | 775 | — | — | |||||||||||||||
Total | $ | 317,021 | $ | 65,235 | $ | 109,309 | $ | 60,343 | $ | 82,134 |
December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
| | (in thousands) | ||||||||||
Stockholders' equity | $ | 238,189 | $ | 210,214 | $ | 113,451 | ||||||
Less: Intangible assets, net of deferred taxes | 2,795 | 2,300 | 2,300 | |||||||||
Tangible stockholders' equity | $ | 235,394 | $ | 207,914 | $ | 111,151 |
• | 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 $16.00 per share. |
December 31, 2017 | |||||||||||
Amortized Cost | Estimated Fair Value | % of Total Fair Value | |||||||||
($ in thousands) | |||||||||||
Fixed maturities: | |||||||||||
U.S. Treasury securities and obligations of U.S. government agencies | $ | 9,108 | $ | 9,098 | 1.9 | % | |||||
Obligations of states, municipalities and political subdivisions | 161,012 | 164,326 | 34.3 | % | |||||||
Corporate and other securities | 71,224 | 71,631 | 14.9 | % | |||||||
Asset-backed securities | 95,223 | 95,360 | 19.9 | % | |||||||
Residential mortgage-backed securities | 85,688 | 84,776 | 17.7 | % | |||||||
Total fixed maturities | 422,255 | 425,191 | 88.7 | % | |||||||
Equity securities: | |||||||||||
Exchange traded funds | 26,041 | 34,380 | 7.2 | % | |||||||
Nonredeemable preferred stock | 19,875 | 19,752 | 4.1 | % | |||||||
Total equity securities | 45,916 | 54,132 | 11.3 | % | |||||||
Total investments available for sale | $ | 468,171 | $ | 479,323 | 100.0 | % |
December 31, 2017 | |||||||
Standard & Poor’s or Equivalent Designation | Estimated Fair Value | % of Total | |||||
| | ($ in thousands) | |||||
AAA | $ | 85,199 | 20.0 | % | |||
AA | 190,044 | 44.7 | % | ||||
A | 112,129 | 26.4 | % | ||||
BBB | 28,715 | 6.8 | % | ||||
Below BBB | 9,104 | 2.1 | % | ||||
Total | $ | 425,191 | 100.0 | % |
December 31, 2017 | |||||||||||
Amortized Cost | Estimated Fair Value | % of Fair Value | |||||||||
($ in thousands) | |||||||||||
Due in one year or less | $ | 50,020 | $ | 49,973 | 11.8 | % | |||||
Due after one year through five years | 28,979 | 29,299 | 6.9 | % | |||||||
Due after five years through ten years | 28,733 | 29,800 | 7.0 | % | |||||||
Due after ten years | 133,612 | 135,983 | 32.0 | % | |||||||
Asset-backed securities | 95,223 | 95,360 | 22.4 | % | |||||||
Residential mortgage-backed securities | 85,688 | 84,776 | 19.9 | % | |||||||
Total fixed maturities | $ | 422,255 | $ | 425,191 | 100.0 | % |
Year Ended December 31, | ||||||||||||
($ in thousands) | 2017 | 2016 | 2015 | |||||||||
Net income | $ | 24,901 | $ | 26,167 | $ | 22,273 | ||||||
Income tax expense | 13,620 | 13,369 | 11,284 | |||||||||
Income before taxes | 38,521 | 39,536 | 33,557 | |||||||||
Other expenses | 429 | 2,567 | 1,992 | |||||||||
Net investment income | (10,569 | ) | (7,487 | ) | (5,643 | ) | ||||||
Net investment gains | (151 | ) | (176 | ) | (59 | ) | ||||||
Other income | (3 | ) | (136 | ) | (572 | ) | ||||||
Underwriting income | $ | 28,227 | $ | 34,304 | $ | 29,275 |
December 31, 2017 | ||||||||||||||
Gross | % of Total | Net | % of Total | |||||||||||
($ in thousands) | ||||||||||||||
Case reserves | $ | 59,246 | 18.8 | % | $ | 50,664 | 18.9 | % | ||||||
IBNR | 256,471 | 81.2 | 216,827 | 81.1 | ||||||||||
Total | $ | 315,717 | 100.0 | % | $ | 267,491 | 100.0 | % |
December 31, 2016 | ||||||||||||||
Gross | % of Total | Net | % of Total | |||||||||||
($ in thousands) | ||||||||||||||
Case reserves | $ | 48,826 | 18.4 | % | $ | 35,751 | 18.4 | % | ||||||
IBNR | 215,975 | 81.6 | 158,851 | 81.6 | ||||||||||
Total | $ | 264,801 | 100.0 | % | $ | 194,602 | 100.0 | % |
December 31, 2017 | Potential Impact on 2017 | ||||||||||||||||||||
Sensitivity | Accident Year | Net Ultimate Loss and LAE Sensitivity Factor | Net Ultimate Incurred Losses and LAE | Net Loss and LAE Reserve | Pre-tax income | Stockholders' Equity | |||||||||||||||
($ in thousands) | |||||||||||||||||||||
Sample increases | 2017 | 10.0 | % | $ | 114,960 | $ | 101,168 | $ | (11,496 | ) | $ | (7,472 | ) | ||||||||
2016 | 5.0 | % | 74,246 | 68,697 | (3,712 | ) | (2,413 | ) | |||||||||||||
2015 | 2.5 | % | 41,142 | 48,754 | (1,029 | ) | (669 | ) | |||||||||||||
Prior | 2.5 | % | 48,873 | (1,222 | ) | (794 | ) | ||||||||||||||
Sample decreases | 2017 | (10.0 | )% | 114,960 | 101,168 | 11,496 | 7,472 | ||||||||||||||
2016 | (5.0 | )% | 74,246 | 68,697 | 3,712 | 2,413 | |||||||||||||||
2015 | (2.5 | )% | 41,142 | 48,754 | 1,029 | 669 | |||||||||||||||
Prior | (2.5 | )% | 48,873 | 1,222 | 794 |
December 31, 2017 | December 31, 2016 | |||||||||||||||||||||
Estimated Fair Value | Estimated Change in Fair Value | Estimated % Increase (Decrease) in Fair Value | Estimated Fair Value | Estimated Change in Fair Value | Estimated % Increase (Decrease) in Fair Value | |||||||||||||||||
($ in thousands) | ||||||||||||||||||||||
200 basis points increase | $ | 387,646 | $ | (37,545 | ) | (8.8 | )% | $ | 379,236 | $ | (31,987 | ) | (7.8 | )% | ||||||||
100 basis points increase | $ | 406,036 | $ | (19,155 | ) | (4.5 | )% | $ | 394,824 | $ | (16,399 | ) | (4.0 | )% | ||||||||
No change | $ | 425,191 | $ | — | — | % | $ | 411,223 | $ | — | — | % | ||||||||||
100 basis points decrease | $ | 443,836 | $ | 18,645 | 4.4 | % | $ | 427,145 | $ | 15,922 | 3.9 | % | ||||||||||
200 basis points decrease | $ | 460,394 | $ | 35,203 | 8.3 | % | $ | 438,775 | $ | 27,552 | 6.7 | % |
Page | ||
Audited Consolidated Financial Statements | ||
Management's Report on Internal Control Over Financial Reporting | ||
Report of Independent Registered Public Accounting Firm | ||
Consolidated Balance Sheets as of December 31, 2017 and 2016 | ||
Consolidated Statements of Income and Comprehensive Income for the Years Ended December 31, 2017, 2016 and 2015 | ||
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 2017, 2016 and 2015 | ||
Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016 and 2015 | ||
Notes to Consolidated Financial Statements | ||
Schedule II - Condensed Financial Information of Registrant - Parent Company Only | ||
Schedule V - Valuation and Qualifying Accounts |
December 31, | ||||||||
2017 | 2016 | |||||||
(in thousands, except share amounts) | ||||||||
Assets | ||||||||
Fixed maturity securities available-for-sale, at fair value (amortized cost: $422,255 in 2017; $413,526 in 2016) | $ | 425,191 | $ | 411,223 | ||||
Equity securities available-for-sale, at fair value (cost: $45,916 in 2017; $14,350 in 2016) | 54,132 | 18,374 | ||||||
Total investments | 479,323 | 429,597 | ||||||
Cash and cash equivalents | 81,747 | 50,752 | ||||||
Investment income due and accrued | 3,077 | 2,293 | ||||||
Premiums receivable, net | 19,787 | 16,984 | ||||||
Receivable from reinsurers | — | 8,567 | ||||||
Reinsurance recoverables | 49,593 | 70,317 | ||||||
Ceded unearned premiums | 13,858 | 13,512 | ||||||
Deferred policy acquisition costs, net of ceding commissions | 11,775 | 10,150 | ||||||
Intangible assets | 3,538 | 3,538 | ||||||
Deferred income tax asset, net | 2,492 | 6,605 | ||||||
Other assets | 2,659 | 2,074 | ||||||
Total assets | $ | 667,849 | $ | 614,389 | ||||
Liabilities and Stockholders' Equity | ||||||||
Reserves for unpaid losses and loss adjustment expenses | $ | 315,717 | $ | 264,801 | ||||
Unearned premiums | 103,110 | 89,344 | ||||||
Payable to reinsurers | 3,226 | 4,090 | ||||||
Funds held for reinsurers | — | 36,497 | ||||||
Accounts payable and accrued expenses | 6,519 | 8,752 | ||||||
Other liabilities | 1,088 | 691 | ||||||
Total liabilities | 429,660 | 404,175 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Common stock, $0.01 par value, 400,000,000 shares authorized, 21,036,087 shares issued and outstanding as of December 31, 2017; 20,968,707 shares issued and outstanding as of December 31, 2016 | 210 | 210 | ||||||
Additional paid-in capital | 155,082 | 153,353 | ||||||
Retained earnings | 73,502 | 53,640 | ||||||
Accumulated other comprehensive income | 9,395 | 3,011 | ||||||
Stockholders’ equity | 238,189 | 210,214 | ||||||
Total liabilities and stockholders’ equity | $ | 667,849 | $ | 614,389 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(in thousands, except per share data) | ||||||||||||
Revenues: | ||||||||||||
Gross written premiums | $ | 223,191 | $ | 188,478 | $ | 177,009 | ||||||
Ceded written premiums | (33,719 | ) | (21,214 | ) | (92,991 | ) | ||||||
Net written premiums | 189,472 | 167,264 | 84,018 | |||||||||
Change in unearned premiums | (13,419 | ) | (33,448 | ) | (9,696 | ) | ||||||
Net earned premiums | 176,053 | 133,816 | 74,322 | |||||||||
Net investment income | 10,569 | 7,487 | 5,643 | |||||||||
Net investment gains (losses): | ||||||||||||
Net realized investment gains, excluding other-than-temporary impairment losses | 151 | 452 | 59 | |||||||||
Other-than-temporary impairment losses | — | (276 | ) | — | ||||||||
Net investment gains | 151 | 176 | 59 | |||||||||
Other income | 3 | 136 | 572 | |||||||||
Total revenues | 186,776 | 141,615 | 80,596 | |||||||||
Expenses: | ||||||||||||
Losses and loss adjustment expenses | 103,680 | 70,961 | 42,238 | |||||||||
Underwriting, acquisition and insurance expenses | 44,146 | 28,551 | 2,809 | |||||||||
Other expenses | 429 | 2,567 | 1,992 | |||||||||
Total expenses | 148,255 | 102,079 | 47,039 | |||||||||
Income before income taxes | 38,521 | 39,536 | 33,557 | |||||||||
Income tax expense | 13,620 | 13,369 | 11,284 | |||||||||
Net income | 24,901 | 26,167 | 22,273 | |||||||||
Other comprehensive income (loss): | ||||||||||||
Unrealized gains (losses), net of taxes of $3,047 in 2017, $(344) in 2016, and $(841) in 2015 | 6,384 | (640 | ) | (1,563 | ) | |||||||
Total comprehensive income | $ | 31,285 | $ | 25,527 | $ | 20,710 |
Earnings per share - Basic: | ||||||||||||
Common stock | $ | 1.19 | $ | 0.57 | $ | — | ||||||
Class A common stock | $ | — | $ | 0.98 | $ | 1.53 | ||||||
Class B common stock | $ | — | $ | 0.48 | $ | 0.84 | ||||||
Earnings per share - Diluted: | ||||||||||||
Common stock | $ | 1.16 | $ | 0.56 | $ | — | ||||||
Class A common stock | $ | — | $ | 0.98 | $ | 1.53 | ||||||
Class B common stock | $ | — | $ | 0.46 | $ | 0.81 | ||||||
Weighted-average common shares outstanding - Basic: | ||||||||||||
Common stock | 20,992 | 20,841 | — | |||||||||
Class A common stock | — | 13,844 | 13,796 | |||||||||
Class B common stock | — | 1,574 | 1,413 | |||||||||
Weighted-average common shares outstanding - Diluted: | ||||||||||||
Common stock | 21,498 | 21,073 | — | |||||||||
Class A common stock | — | 13,844 | 13,796 | |||||||||
Class B common stock | — | 1,644 | 1,452 |
Class A Common Stock (1) | Class B Common Stock (1) | Common Stock (1) | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income | Total Stockholders' Equity | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
Balance at December 31, 2014 | $ | 1 | $ | — | $ | — | $ | 80,074 | $ | 7,297 | $ | 5,214 | $ | 92,586 | ||||||||||||||
Class A shares issued | — | — | — | 90 | — | — | 90 | |||||||||||||||||||||
Stock-based compensation | — | — | — | 65 | — | — | 65 | |||||||||||||||||||||
Other comprehensive loss, net of income taxes | — | — | — | — | — | (1,563 | ) | (1,563 | ) | |||||||||||||||||||
Net income | — | — | — | — | 22,273 | — | 22,273 | |||||||||||||||||||||
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 | — | — | — | 492 | — | — | 492 | |||||||||||||||||||||
Dividends declared and paid | — | — | — | — | (2,097 | ) | — | (2,097 | ) | |||||||||||||||||||
Other comprehensive loss, net of income taxes | — | — | — | — | — | (640 | ) | (640 | ) | |||||||||||||||||||
Net income | — | — | — | — | 26,167 | — | 26,167 | |||||||||||||||||||||
Balance at December 31, 2016 | — | — | 210 | 153,353 | 53,640 | 3,011 | 210,214 | |||||||||||||||||||||
Issuance of common stock under stock-based compensation plan | — | — | — | 1,077 | — | — | 1,077 | |||||||||||||||||||||
Stock-based compensation | — | — | — | 652 | — | — | 652 | |||||||||||||||||||||
Dividends declared and paid | — | — | — | — | (5,039 | ) | — | (5,039 | ) | |||||||||||||||||||
Other comprehensive income, net of income taxes | — | — | — | — | — | 6,384 | 6,384 | |||||||||||||||||||||
Net income | — | — | — | — | 24,901 | — | 24,901 | |||||||||||||||||||||
Balance at December 31, 2017 | $ | — | $ | — | $ | 210 | $ | 155,082 | $ | 73,502 | $ | 9,395 | $ | 238,189 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Operating activities: | ||||||||||||
Net income | $ | 24,901 | $ | 26,167 | $ | 22,273 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Net investment gains | (151 | ) | (176 | ) | (59 | ) | ||||||
Deferred tax expense (benefit) | 1,065 | 561 | (879 | ) | ||||||||
Depreciation and amortization | 515 | 636 | 642 | |||||||||
Stock compensation expense | 652 | 492 | 65 | |||||||||
Change in operating assets and liabilities: | ||||||||||||
Investment income due and accrued | (784 | ) | (449 | ) | (447 | ) | ||||||
Premiums receivable, net | (2,803 | ) | (1,434 | ) | (1,324 | ) | ||||||
Reserves for unpaid loss and loss adjustment expenses | 50,916 | 45,172 | 57,418 | |||||||||
Unearned premiums | 13,766 | 7,631 | 6,460 | |||||||||
Reinsurance balances, net | 28,081 | 54,788 | (29,501 | ) | ||||||||
Funds held for reinsurers | (36,497 | ) | (50,709 | ) | 23,274 | |||||||
Deferred policy acquisition costs | (1,625 | ) | (11,846 | ) | (2,067 | ) | ||||||
Income taxes payable | (922 | ) | (482 | ) | (1,393 | ) | ||||||
Accounts payable and accrued expenses | (2,299 | ) | 1,342 | 2,506 | ||||||||
Other | 2,583 | 2,048 | 1,734 | |||||||||
Net cash provided by operating activities | 77,398 | 73,741 | 78,702 | |||||||||
Investing activities: | ||||||||||||
Purchase of property and equipment | (179 | ) | (565 | ) | (231 | ) | ||||||
Change in short-term investments, net | — | 2,299 | 1,957 | |||||||||
Securities available-for-sale: | ||||||||||||
Purchases – fixed maturity securities | (111,580 | ) | (149,572 | ) | (128,204 | ) | ||||||
Purchases – equity securities | (31,608 | ) | (2,442 | ) | (372 | ) | ||||||
Sales – fixed maturity securities | 12,040 | 13,541 | 14,328 | |||||||||
Maturities and calls – fixed maturity securities | 88,895 | 48,595 | 32,475 | |||||||||
Net cash used in investing activities | (42,432 | ) | (88,144 | ) | (80,047 | ) | ||||||
Financing activities: | ||||||||||||
Common stock issued, net of transaction costs | — | 72,841 | — | |||||||||
Common stock issued, stock options exercised | 1,077 | — | — | |||||||||
Class A common shares issued | — | — | 90 | |||||||||
Proceeds from note payable | — | — | 2,000 | |||||||||
Repayment of note payable | — | (30,000 | ) | — | ||||||||
Debt issuance costs | — | — | (30 | ) | ||||||||
Dividends paid | (5,039 | ) | (2,097 | ) | — | |||||||
Payments on capital lease | (9 | ) | (133 | ) | (129 | ) | ||||||
Net cash (used in) provided by financing activities | (3,971 | ) | 40,611 | 1,931 | ||||||||
Net change in cash and cash equivalents | 30,995 | 26,208 | 586 | |||||||||
Cash and cash equivalents at beginning of year | 50,752 | 24,544 | 23,958 | |||||||||
Cash and cash equivalents at end of year | $ | 81,747 | $ | 50,752 | $ | 24,544 |
1. | Summary of significant accounting policies |
December 31, 2017 | ||||||||||||||||
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 | $ | 9,108 | $ | 4 | $ | (14 | ) | $ | 9,098 | |||||||
Obligations of states, municipalities and political subdivisions | 161,012 | 3,726 | (412 | ) | 164,326 | |||||||||||
Corporate and other securities | 71,224 | 579 | (172 | ) | 71,631 | |||||||||||
Asset-backed securities | 95,223 | 405 | (268 | ) | 95,360 | |||||||||||
Residential mortgage-backed securities | 85,688 | 466 | (1,378 | ) | 84,776 | |||||||||||
Total fixed maturities | 422,255 | 5,180 | (2,244 | ) | 425,191 | |||||||||||
Equity securities: | ||||||||||||||||
Exchange traded funds | 26,041 | 8,339 | — | 34,380 | ||||||||||||
Nonredeemable preferred stock | 19,875 | 108 | (231 | ) | 19,752 | |||||||||||
Total equity securities | 45,916 | 8,447 | (231 | ) | 54,132 | |||||||||||
Total available-for-sale investments | $ | 468,171 | $ | 13,627 | $ | (2,475 | ) | $ | 479,323 |
December 31, 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 | $ | 12,106 | $ | 8 | $ | (16 | ) | $ | 12,098 | |||||||
Obligations of states, municipalities and political subdivisions | 124,728 | 1,470 | (2,960 | ) | 123,238 | |||||||||||
Corporate and other securities | 118,473 | 550 | (233 | ) | 118,790 | |||||||||||
Asset-backed securities | 73,317 | 241 | (264 | ) | 73,294 | |||||||||||
Residential mortgage-backed securities | 84,902 | 585 | (1,684 | ) | 83,803 | |||||||||||
Total fixed maturities | 413,526 | 2,854 | (5,157 | ) | 411,223 | |||||||||||
Equity securities: | ||||||||||||||||
Exchange traded funds | 14,350 | 4,026 | (2 | ) | 18,374 | |||||||||||
Total available-for-sale investments | $ | 427,876 | $ | 6,880 | $ | (5,159 | ) | $ | 429,597 |
December 31, 2017 | ||||||||||||||||||||||||
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 | $ | 3,497 | $ | (2 | ) | $ | 5,488 | $ | (12 | ) | $ | 8,985 | $ | (14 | ) | |||||||||
Obligations of states, municipalities and political subdivisions | 7,258 | (36 | ) | 38,143 | (376 | ) | 45,401 | (412 | ) | |||||||||||||||
Corporate and other securities | 30,944 | (98 | ) | 13,444 | (74 | ) | 44,388 | (172 | ) | |||||||||||||||
Asset-backed securities | 27,609 | (108 | ) | 10,706 | (160 | ) | 38,315 | (268 | ) | |||||||||||||||
Residential mortgage-backed securities | 9,081 | (83 | ) | 57,262 | (1,295 | ) | 66,343 | (1,378 | ) | |||||||||||||||
Total fixed maturities | 78,389 | (327 | ) | 125,043 | (1,917 | ) | 203,432 | (2,244 | ) | |||||||||||||||
Equity securities: | ||||||||||||||||||||||||
Exchange traded funds | 130 | — | — | — | 130 | — | ||||||||||||||||||
Nonredeemable preferred stock | 10,649 | (231 | ) | — | — | 10,649 | (231 | ) | ||||||||||||||||
Total equity securities | 10,779 | (231 | ) | — | — | 10,779 | (231 | ) | ||||||||||||||||
Total available-for-sale securities | $ | 89,168 | $ | (558 | ) | $ | 125,043 | $ | (1,917 | ) | $ | 214,211 | $ | (2,475 | ) |
December 31, 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 | $ | 8,980 | $ | (16 | ) | $ | — | $ | — | $ | 8,980 | $ | (16 | ) | ||||||||||
Obligations of states, municipalities and political subdivisions | 70,727 | (2,960 | ) | — | — | 70,727 | (2,960 | ) | ||||||||||||||||
Corporate and other securities | 50,274 | (145 | ) | 12,375 | (88 | ) | 62,649 | (233 | ) | |||||||||||||||
Asset-backed securities | 14,750 | (232 | ) | 9,961 | (32 | ) | 24,711 | (264 | ) | |||||||||||||||
Residential mortgage-backed securities | 65,439 | (1,403 | ) | 7,186 | (281 | ) | 72,625 | (1,684 | ) | |||||||||||||||
Total fixed maturities | 210,170 | (4,756 | ) | 29,522 | (401 | ) | 239,692 | (5,157 | ) | |||||||||||||||
Equity securities: | ||||||||||||||||||||||||
Exchange traded funds | 388 | (2 | ) | — | — | 388 | (2 | ) | ||||||||||||||||
Total available-for-sale securities | $ | 210,558 | $ | (4,758 | ) | $ | 29,522 | $ | (401 | ) | $ | 240,080 | $ | (5,159 | ) |
Amortized | Estimated | |||||||
Cost | Fair Value | |||||||
(in thousands) | ||||||||
Due in one year or less | $ | 50,020 | $ | 49,973 | ||||
Due after one year through five years | 28,979 | 29,299 | ||||||
Due after five years through ten years | 28,733 | 29,800 | ||||||
Due after ten years | 133,612 | 135,983 | ||||||
Asset-backed securities | 95,223 | 95,360 | ||||||
Residential mortgage-backed securities | 85,688 | 84,776 | ||||||
Total fixed maturities | $ | 422,255 | $ | 425,191 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Interest: | ||||||||||||
Taxable bonds | $ | 6,233 | $ | 6,031 | $ | 4,509 | ||||||
Municipal bonds (tax exempt) | 3,619 | 1,808 | 1,514 | |||||||||
Dividends on equity securities | 1,041 | 442 | 372 | |||||||||
Cash equivalents and short-term investments | 678 | 93 | 9 | |||||||||
Gross investment income | 11,571 | 8,374 | 6,404 | |||||||||
Investment expenses | (1,002 | ) | (887 | ) | (761 | ) | ||||||
Net investment income | $ | 10,569 | $ | 7,487 | $ | 5,643 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Realized gains: | ||||||||||||
Sales of fixed maturities | $ | 220 | $ | 479 | $ | 63 | ||||||
Sales of short-term and other | — | 2 | 6 | |||||||||
Total realized gains | 220 | 481 | 69 | |||||||||
Realized losses: | ||||||||||||
Sales of fixed maturities | (69 | ) | (29 | ) | (10 | ) | ||||||
Other-than-temporary impairments | — | (276 | ) | — | ||||||||
Total realized losses | (69 | ) | (305 | ) | (10 | ) | ||||||
Net investment gains | $ | 151 | $ | 176 | $ | 59 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Change in net unrealized gains (losses): | ||||||||||||
Fixed maturities | $ | 5,239 | $ | (2,952 | ) | $ | (1,937 | ) | ||||
Equity securities | 4,192 | 1,968 | (468 | ) | ||||||||
Net increase (decrease) | $ | 9,431 | $ | (984 | ) | $ | (2,405 | ) |
December 31, 2017 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(in thousands) | ||||||||||||||||
Assets | ||||||||||||||||
Fixed maturities: | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies | $ | 9,098 | $ | — | $ | — | $ | 9,098 | ||||||||
Obligations of states, municipalities and political subdivisions | — | 164,326 | — | 164,326 | ||||||||||||
Corporate and other securities | — | 71,631 | — | 71,631 | ||||||||||||
Asset-backed securities | — | 95,360 | — | 95,360 | ||||||||||||
Residential mortgage-backed securities | — | 84,776 | — | 84,776 | ||||||||||||
Total fixed maturities | 9,098 | 416,093 | — | 425,191 | ||||||||||||
Equity securities: | ||||||||||||||||
Exchange traded funds | 34,380 | — | — | 34,380 | ||||||||||||
Nonredeemable preferred stock | — | 19,752 | — | 19,752 | ||||||||||||
Total equity securities | 34,380 | 19,752 | — | 54,132 | ||||||||||||
Total | $ | 43,478 | $ | 435,845 | $ | — | $ | 479,323 |
December 31, 2016 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(in thousands) | ||||||||||||||||
Assets | ||||||||||||||||
Fixed maturities: | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies | $ | 12,098 | $ | — | $ | — | $ | 12,098 | ||||||||
Obligations of states, municipalities and political subdivisions | — | 123,238 | — | 123,238 | ||||||||||||
Corporate and other securities | — | 118,790 | — | 118,790 | ||||||||||||
Asset-backed securities | — | 73,294 | — | 73,294 | ||||||||||||
Residential mortgage-backed securities | — | 83,803 | — | 83,803 | ||||||||||||
Total fixed maturities | 12,098 | 399,125 | — | 411,223 | ||||||||||||
Equity securities: | ||||||||||||||||
Exchange traded funds | 18,374 | — | — | 18,374 | ||||||||||||
Total | $ | 30,472 | $ | 399,125 | $ | — | $ | 429,597 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Balance, beginning of year | $ | 10,150 | $ | (1,696 | ) | $ | (3,763 | ) | ||||
Policy acquisition costs deferred: | ||||||||||||
Direct commissions | 32,927 | 28,027 | 26,142 | |||||||||
Ceding commissions | (9,984 | ) | (9,213 | ) | (34,478 | ) | ||||||
Other underwriting and policy acquisition costs | 2,827 | 2,999 | 3,013 | |||||||||
Policy acquisition costs deferred | 25,770 | 21,813 | (5,323 | ) | ||||||||
Amortization of net policy acquisition costs | (24,145 | ) | (9,967 | ) | 7,390 | |||||||
Balance, end of year | $ | 11,775 | $ | 10,150 | $ | (1,696 | ) |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Underwriting, acquisition and insurance expenses incurred: | ||||||||||||
Direct commissions | $ | 31,001 | $ | 26,715 | $ | 25,241 | ||||||
Ceding commissions | (9,799 | ) | (20,568 | ) | (42,081 | ) | ||||||
Other operating expenses | 22,944 | 22,404 | 19,649 | |||||||||
Total | $ | 44,146 | $ | 28,551 | $ | 2,809 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Current federal income tax expense | $ | 12,555 | $ | 12,808 | $ | 12,163 | ||||||
Deferred federal income tax expense (benefit) | 1,065 | 561 | (879 | ) | ||||||||
Income tax expense | $ | 13,620 | $ | 13,369 | $ | 11,284 |
Year ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Income tax expense at federal income tax rate of 35% | $ | 13,482 | $ | 13,837 | $ | 11,745 | ||||||
Tax-exempt investment income | (1,064 | ) | (528 | ) | (436 | ) | ||||||
Stock options exercised | (471 | ) | — | — | ||||||||
Effect of tax rate change | 1,915 | — | — | |||||||||
Other | (242 | ) | 60 | (25 | ) | |||||||
Total | $ | 13,620 | $ | 13,369 | $ | 11,284 |
December 31, | ||||||||
2017 | 2016 | |||||||
(in thousands) | ||||||||
Deferred tax assets: | ||||||||
Unpaid losses and loss adjustment expenses | $ | 7,001 | $ | 4,528 | ||||
Unearned premiums | 3,748 | 5,308 | ||||||
Organizational costs | 230 | 1,513 | ||||||
State operating loss carryforwards | 645 | 476 | ||||||
Allowance for doubtful accounts | 449 | 693 | ||||||
Other | 431 | 438 | ||||||
Deferred tax assets before allowance | 12,504 | 12,956 | ||||||
Less: valuation allowance | (690 | ) | (623 | ) | ||||
Total deferred tax assets | 11,814 | 12,333 | ||||||
Deferred tax liabilities: | ||||||||
Unrealized gain on investments | 2,375 | 620 | ||||||
Deferred policy acquisition costs, net of ceding commissions | 2,473 | 3,553 | ||||||
Intangible assets | 743 | 1,238 | ||||||
Transition adjustment for loss reserve discount | 3,524 | — | ||||||
Other | 207 | 317 | ||||||
Total deferred tax liabilities | 9,322 | 5,728 | ||||||
Net deferred tax asset | $ | 2,492 | $ | 6,605 |
December 31, | ||||||||
2017 | 2016 | |||||||
(in thousands) | ||||||||
Balance at beginning of year | $ | 1,003 | $ | 1,125 | ||||
Deductions for tax positions taken during prior years | (1,003 | ) | (122 | ) | ||||
Balance at end of year | $ | — | $ | 1,003 |
December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Net reserves for unpaid losses and loss adjustment expenses, beginning of year | $ | 194,602 | $ | 124,126 | $ | 91,970 | ||||||
Commutation of MLQS: | ||||||||||||
2016 MLQS | — | 9,109 | — | |||||||||
2015 MLQS | 27,929 | — | — | |||||||||
2014 MLQS | — | 24,296 | — | |||||||||
2012 MLQS | — | — | 8,587 | |||||||||
27,929 | 33,405 | 8,587 | ||||||||||
Adjusted net reserves for losses and loss adjustment expenses | 222,531 | 157,531 | 100,557 | |||||||||
Incurred losses and loss adjustment expenses: | ||||||||||||
Current year | 114,960 | 83,675 | 51,434 | |||||||||
Prior year | (11,280 | ) | (12,714 | ) | (9,196 | ) | ||||||
Total net losses and loss adjustment expenses incurred | 103,680 | 70,961 | 42,238 | |||||||||
Payments: | ||||||||||||
Current year | 13,792 | 5,494 | 2,226 | |||||||||
Prior year | 44,926 | 28,396 | 16,443 | |||||||||
Total payments | 58,718 | 33,890 | 18,669 | |||||||||
Net reserves for unpaid losses and loss adjustment expenses, end of year | 267,493 | 194,602 | 124,126 | |||||||||
Reinsurance recoverable on unpaid losses | 48,224 | 70,199 | 95,503 | |||||||||
Gross reserves for unpaid losses and loss adjustment expenses, end of year | $ | 315,717 | $ | 264,801 | $ | 219,629 |
Incurred Claims and Claim Adjustment Expenses, Net of Reinsurance | |||||||||||||||||||||||||||
For the Years Ended December 31, | As of December 31, 2017 | ||||||||||||||||||||||||||
Accident Year | 2013 Unaudited | 2014 Unaudited | 2015 Unaudited | 2016 Unaudited | 2017 | Total of IBNR Liabilities Plus Expected Development on Reported Claims | Cumulative Number of Reported Claims | ||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||
2013 | $ | 417 | $ | 205 | $ | 103 | $ | 88 | $ | 81 | $ | — | 7 | ||||||||||||||
2014 | 1,561 | 1,344 | 1,240 | 1,222 | 5 | 28 | |||||||||||||||||||||
2015 | 1,394 | 880 | 857 | 26 | 63 | ||||||||||||||||||||||
2016 | 4,177 | 3,392 | 85 | 282 | |||||||||||||||||||||||
2017 | 12,473 | 624 | 998 | ||||||||||||||||||||||||
Total | $ | 18,025 |
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | ||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||
Accident Year | 2013 Unaudited | 2014 Unaudited | 2015 Unaudited | 2016 Unaudited | 2017 | |||||||||||||||
($ in thousands) | ||||||||||||||||||||
2013 | $ | 99 | $ | 81 | $ | 81 | $ | 81 | $ | 81 | ||||||||||
2014 | 169 | 1,217 | 1,217 | 1,217 | ||||||||||||||||
2015 | 584 | 706 | 832 | |||||||||||||||||
2016 | 1,867 | 3,257 | ||||||||||||||||||
2017 | 9,938 | |||||||||||||||||||
Total | 15,325 | |||||||||||||||||||
All outstanding liabilities before 2013, net of reinsurance | — | |||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance | $ | 2,700 |
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance | |||||||||||||||
Years | 1 | 2 | 3 | 4 | 5 | ||||||||||
Property | 67.9 | % | 29.6 | % | 4.9 | % | — | % | — | % |
Incurred Claims and Claim Adjustment Expenses, Net of Reinsurance | |||||||||||||||||||||||||||||||||||||||
For the Years Ended December 31, | As of December 31, 2017 | ||||||||||||||||||||||||||||||||||||||
Accident Year | 2010 Unaudited | 2011 Unaudited | 2012 Unaudited | 2013 Unaudited | 2014 Unaudited | 2015 Unaudited | 2016 Unaudited | 2017 | Total of IBNR Liabilities Plus Expected Development on Reported Claims | Cumulative Number of Reported Claims | |||||||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||||||||||||||
2010 | $ | 778 | $ | 805 | $ | 679 | $ | 737 | $ | 946 | $ | 916 | $ | 894 | $ | 883 | $ | 24 | 14 | ||||||||||||||||||||
2011 | 4,246 | 3,844 | 3,646 | 3,609 | 3,560 | 3,374 | 3,261 | 199 | 76 | ||||||||||||||||||||||||||||||
2012 | 7,913 | 5,749 | 4,205 | 3,102 | 2,845 | 2,477 | 576 | 138 | |||||||||||||||||||||||||||||||
2013 | 15,238 | 11,639 | 9,113 | 7,917 | 7,002 | 1,519 | 226 | ||||||||||||||||||||||||||||||||
2014 | 18,847 | 14,289 | 11,748 | 11,217 | 3,247 | 271 | |||||||||||||||||||||||||||||||||
2015 | 18,883 | 16,777 | 14,896 | 5,412 | 252 | ||||||||||||||||||||||||||||||||||
2016 | 19,170 | 14,694 | 9,162 | 303 | |||||||||||||||||||||||||||||||||||
2017 | 18,116 | 15,373 | 335 | ||||||||||||||||||||||||||||||||||||
Total | $ | 72,546 |
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | ||||||||||||||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||||||||||||||
Accident Year | 2010 Unaudited | 2011 Unaudited | 2012 Unaudited | 2013 Unaudited | 2014 Unaudited | 2015 Unaudited | 2016 Unaudited | 2017 | ||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||||||
2010 | $ | — | $ | 79 | $ | 368 | $ | 393 | $ | 862 | $ | 859 | $ | 859 | $ | 859 | ||||||||||||||||
2011 | 139 | 1,037 | 1,392 | 2,116 | 3,044 | 3,042 | 3,042 | |||||||||||||||||||||||||
2012 | 153 | 475 | 877 | 1,024 | 1,090 | 1,882 | ||||||||||||||||||||||||||
2013 | 499 | 1,915 | 4,436 | 5,070 | 5,320 | |||||||||||||||||||||||||||
2014 | 435 | 1,865 | 5,039 | 6,384 | ||||||||||||||||||||||||||||
2015 | 217 | 4,496 | 7,562 | |||||||||||||||||||||||||||||
2016 | 1,158 | 3,015 | ||||||||||||||||||||||||||||||
2017 | 340 | |||||||||||||||||||||||||||||||
Total | 28,404 | |||||||||||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance | $ | 44,142 |
Incurred Claims and Claim Adjustment Expenses, Net of Reinsurance | |||||||||||||||||||||||||||||||||||||||
For the Years Ended December 31, | As of December 31, 2017 | ||||||||||||||||||||||||||||||||||||||
Accident Year | 2010 Unaudited | 2011 Unaudited | 2012 Unaudited | 2013 Unaudited | 2014 Unaudited | 2015 Unaudited | 2016 Unaudited | 2017 | Total of IBNR Liabilities Plus Expected Development on Reported Claims | Cumulative Number of Reported Claims | |||||||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||||||||||||||
2010 | $ | 843 | $ | 771 | $ | 531 | $ | 460 | $ | 458 | $ | 404 | $ | 406 | $ | 429 | $ | 76 | 47 | ||||||||||||||||||||
2011 | 5,839 | 5,940 | 5,757 | 7,340 | 7,613 | 8,142 | 8,375 | 641 | 214 | ||||||||||||||||||||||||||||||
2012 | 16,977 | 17,436 | 18,803 | 20,401 | 20,579 | 22,001 | 2,416 | 554 | |||||||||||||||||||||||||||||||
2013 | 30,616 | 28,771 | 28,037 | 29,039 | 31,731 | 6,371 | 784 | ||||||||||||||||||||||||||||||||
2014 | 47,805 | 40,668 | 38,049 | 36,678 | 13,822 | 1,059 | |||||||||||||||||||||||||||||||||
2015 | 59,717 | 51,739 | 49,122 | 25,959 | 1,130 | ||||||||||||||||||||||||||||||||||
2016 | 61,440 | 55,680 | 39,527 | 938 | |||||||||||||||||||||||||||||||||||
2017 | 71,126 | 63,393 | 712 | ||||||||||||||||||||||||||||||||||||
Total | $ | 275,142 |
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | ||||||||||||||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||||||||||||||
Accident Year | 2010 Unaudited | 2011 Unaudited | 2012 Unaudited | 2013 Unaudited | 2014 Unaudited | 2015 Unaudited | 2016 Unaudited | 2017 | ||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||||||
2010 | $ | 4 | $ | 37 | $ | 59 | $ | 113 | $ | 263 | $ | 261 | $ | 273 | $ | 309 | ||||||||||||||||
2011 | 207 | 1,596 | 2,519 | 3,788 | 4,575 | 6,363 | 6,868 | |||||||||||||||||||||||||
2012 | 757 | 4,441 | 7,850 | 11,238 | 14,382 | 16,474 | ||||||||||||||||||||||||||
2013 | 1,099 | 4,469 | 7,957 | 14,890 | 21,348 | |||||||||||||||||||||||||||
2014 | 698 | 3,081 | 8,489 | 17,576 | ||||||||||||||||||||||||||||
2015 | 941 | 3,161 | 12,685 | |||||||||||||||||||||||||||||
2016 | 1,099 | 6,015 | ||||||||||||||||||||||||||||||
2017 | 1,581 | |||||||||||||||||||||||||||||||
Total | 82,856 | |||||||||||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance | $ | 192,286 |
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance | ||||||||||||||||||||||||
Years | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | ||||||||||||||||
Casualty - claims made | 4.1 | % | 17.7 | % | 24.1 | % | 10.4 | % | 21.9 | % | 10.5 | % | — | % | — | % | ||||||||
Casualty - occurrence | 2.3 | % | 10.2 | % | 12.8 | % | 18.0 | % | 19.8 | % | 10.1 | % | 4.4 | % | 8.5 | % |
(in thousands) | December 31, 2017 | |||
Net outstanding liabilities | ||||
Property | $ | 2,700 | ||
Casualty - claims made | 44,142 | |||
Casualty - occurrence | 192,286 | |||
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 239,128 | |||
Reinsurance recoverable on unpaid claims | ||||
Property | 2,018 | |||
Casualty - claims made | 7,092 | |||
Casualty - occurrence | 39,114 | |||
Total reinsurance recoverable on unpaid claims | 48,224 | |||
Unallocated claims adjustment expenses | 28,365 | |||
Gross liability for unpaid claims and claim adjustment expense | $ | 315,717 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Written: | ||||||||||||
Direct | $ | 223,191 | $ | 188,440 | $ | 176,865 | ||||||
Assumed | — | 38 | 144 | |||||||||
Ceded | (33,719 | ) | (21,214 | ) | (92,991 | ) | ||||||
Net written | $ | 189,472 | $ | 167,264 | $ | 84,018 | ||||||
Earned: | ||||||||||||
Direct | $ | 209,426 | $ | 180,794 | $ | 170,401 | ||||||
Assumed | — | 53 | 148 | |||||||||
Ceded | (33,373 | ) | (47,031 | ) | (96,227 | ) | ||||||
Net earned | $ | 176,053 | $ | 133,816 | $ | 74,322 |
Years Ended December 31, | ||||||||
2016 | 2015 | |||||||
(in thousands) | ||||||||
Ceded earned premiums | $ | 16,996 | $ | 67,950 | ||||
Ceded losses and loss adjustment expenses | 4,380 | 30,978 | ||||||
Ceding commissions earned | 11,936 | 34,254 | ||||||
Reinsurers' margin incurred | $ | 680 | $ | 2,718 |
• | 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. |
Year Ended December 31, | |||||||||
2017 | 2016 | 2015 | |||||||
Common Shares Outstanding: | |||||||||
Balance at beginning of year | 20,968,707 | — | — | ||||||
Shares issued from equity-based compensation | 67,380 | — | — | ||||||
Reclassification | — | 15,968,707 | — | ||||||
Shares issued | — | 5,000,000 | — | ||||||
Balance at end of year | 21,036,087 | 20,968,707 | — | ||||||
Class A Common Stock Outstanding: | |||||||||
Shares outstanding at beginning of year | — | 13,803,183 | 13,795,530 | ||||||
Share dividend | — | 8,617,963 | — | ||||||
Reclassification | — | (22,421,146 | ) | — | |||||
Other | — | — | 7,653 | ||||||
Shares outstanding at end of year | — | — | 13,803,183 | ||||||
Class B Common Stock Outstanding: | |||||||||
Shares outstanding at beginning of year | — | 1,513,592 | 1,287,696 | ||||||
Restricted stock grants vested | — | 270,266 | 225,896 | ||||||
Reclassification | — | (1,783,858 | ) | — | |||||
Shares outstanding at end of year | — | — | 1,513,592 |
Risk-free rate of return | 1.26 | % | |
Dividend yield | 1.25 | % | |
Expected share price volatility(1) | 18.50 | % | |
Expected life in years(2) | 6.3 years |
(1) | Expected volatility was based on the Company’s competitors within the industry. |
(2) | Expected life was calculated using the simplified method, which was an average of the contractual term of the option and its ordinary vesting period, as the Company did not have sufficient historical data for determining the expected term of our stock option awards. |
Number of Shares | Weighted-average exercise price | Weighted-average remaining years of contractual life | Aggregate intrinsic value (in thousands) | ||||||||||
Outstanding at January 1, 2017 | 1,018,942 | $ | 16.00 | ||||||||||
Granted | — | — | |||||||||||
Forfeited | (21,122 | ) | 16.00 | ||||||||||
Exercised | (67,380 | ) | 16.00 | ||||||||||
Outstanding at December 31, 2017 | 930,440 | $ | 16.00 | 8.5 years | $ | 26,983 | |||||||
Exercisable at December 31, 2017 | 219,063 | $ | 16.00 | 8.5 years | $ | 6,353 |
December 31, 2017 | |||||||
Number of Awards | Weighted Average Grant-Date Fair Value | ||||||
Nonvested awards, beginning of year | 970,942 | $ | 16.00 | ||||
Granted | — | — | |||||
Vested | (239,043 | ) | 16.00 | ||||
Forfeited | (21,122 | ) | 16.00 | ||||
Nonvested awards, end of year | 710,777 | $ | 16.00 |
Year ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(in thousands, except per share data) | ||||||||||||
Earnings allocable to Common stockholders | $ | 24,901 | $ | 11,782 | $ | — | ||||||
Earnings allocable to Class A stockholders | $ | — | $ | 13,625 | $ | 21,092 | ||||||
Earnings allocable to Class B stockholders | $ | — | $ | 760 | $ | 1,181 | ||||||
Basic earnings per share: | ||||||||||||
Common stock | $ | 1.19 | $ | 0.57 | $ | — | ||||||
Class A common stock | $ | — | $ | 0.98 | $ | 1.53 | ||||||
Class B common stock | $ | — | $ | 0.48 | $ | 0.84 | ||||||
Diluted earnings per share: | ||||||||||||
Common stock | $ | 1.16 | $ | 0.56 | $ | — | ||||||
Class A common stock | $ | — | $ | 0.98 | $ | 1.53 | ||||||
Class B common stock | $ | — | $ | 0.46 | $ | 0.81 | ||||||
Basic weighted average shares outstanding: | ||||||||||||
Common stock | 20,992 | 20,841 | — | |||||||||
Class A common stock | — | 13,844 | 13,796 | |||||||||
Class B common stock | — | 1,574 | 1,413 | |||||||||
Dilutive effect of shares issued under stock compensation arrangements: | ||||||||||||
Common stock - stock options | 506 | 232 | — | |||||||||
Class B common stock - unvested restricted stock grants | — | 70 | 39 | |||||||||
Diluted weighted average shares outstanding: | ||||||||||||
Common stock | 21,498 | 21,073 | — | |||||||||
Class A common stock | — | 13,844 | 13,796 | |||||||||
Class B common stock | — | 1,644 | 1,452 |
Year ending December 31: | ||||
2018 | $ | 529 | ||
2019 | 545 | |||
2020 | 230 | |||
Total minimum rental payments | $ | 1,304 |
Year Ending December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Unrealized gains (losses) arising during the period, before income taxes | $ | 9,563 | $ | (830 | ) | $ | (2,347 | ) | ||||
Income taxes | (3,094 | ) | 290 | 821 | ||||||||
Unrealized gains (losses) arising during the period, net of income taxes | 6,469 | (540 | ) | (1,526 | ) | |||||||
Less reclassification adjustment: | ||||||||||||
Net realized investment gains | 132 | 154 | 57 | |||||||||
Income taxes | (47 | ) | (54 | ) | (20 | ) | ||||||
Reclassification adjustment included in net income | 85 | 100 | 37 | |||||||||
Other comprehensive income (loss) | $ | 6,384 | $ | (640 | ) | $ | (1,563 | ) |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Commercial: | ||||||||||||
Construction | $ | 48,587 | $ | 42,234 | $ | 36,932 | ||||||
Small business | 34,896 | 27,333 | 21,468 | |||||||||
Energy | 22,898 | 16,157 | 19,022 | |||||||||
Excess casualty | 20,260 | 17,799 | 16,194 | |||||||||
General casualty | 15,865 | 16,162 | 20,511 | |||||||||
Product liability | 14,288 | 10,140 | 9,480 | |||||||||
Professional liability | 12,956 | 14,212 | 14,636 | |||||||||
Life sciences | 12,408 | 10,897 | 11,935 | |||||||||
Allied health | 10,645 | 9,344 | 8,644 | |||||||||
Health care | 6,235 | 6,594 | 6,579 | |||||||||
Commercial property | 5,609 | 4,835 | 6,181 | |||||||||
Management liability | 4,123 | 2,244 | 420 | |||||||||
Environmental | 2,692 | 1,931 | 1,005 | |||||||||
Public entity | 1,265 | 875 | — | |||||||||
Inland marine | 967 | 910 | 195 | |||||||||
Commercial insurance | 816 | 459 | — | |||||||||
Total commercial | 214,510 | 182,126 | 173,202 | |||||||||
Personal: | ||||||||||||
Personal insurance | 8,681 | 6,352 | 3,807 | |||||||||
Total personal | 8,681 | 6,352 | 3,807 | |||||||||
Total | $ | 223,191 | $ | 188,478 | $ | 177,009 |
Year ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Statutory net income | $ | 23,841 | $ | 22,850 | $ | 21,972 | ||||||
Statutory capital and surplus | 213,833 | 193,387 | 127,675 |
| 2017 Quarter | |||||||||||||||
(in thousands, except per share data) | First | Second | | Third | Fourth | |||||||||||
Gross written premiums | $ | 52,862 | $ | 57,753 | | $ | 55,633 | $ | 56,943 | |||||||
Total revenues | 42,687 | 45,508 | | 47,839 | 50,742 | |||||||||||
Net income | 6,281 | 8,495 | | 4,201 | 5,924 | |||||||||||
Comprehensive income | 7,354 | 10,669 | | 5,840 | 7,422 | |||||||||||
Earnings per share - basic | $ | 0.30 | $ | 0.41 | $ | 0.20 | $ | 0.28 | ||||||||
Earnings per share - diluted | $ | 0.29 | $ | 0.40 | $ | 0.20 | $ | 0.27 |
| 2016 Quarter | |||||||||||||||
(in thousands, except per share data) | First | Second | | Third | Fourth | |||||||||||
Gross written premiums | $ | 43,082 | $ | 50,107 | | $ | 47,823 | $ | 47,466 | |||||||
Total revenues | 32,718 | 33,676 | | 34,868 | 40,353 | |||||||||||
Net income | 5,257 | 6,057 | | 7,982 | 6,871 | |||||||||||
Comprehensive income | 7,383 | 8,947 | | 7,981 | 1,216 | |||||||||||
Earnings per share - basic: | | | | |||||||||||||
Common stock | $ | — | $ | — | $ | 0.24 | $ | 0.33 | ||||||||
Class A common stock | 0.37 | 0.42 | 0.19 | — | ||||||||||||
Class B common stock | 0.07 | 0.19 | 0.21 | — | ||||||||||||
Earnings per share - diluted: | | | | |||||||||||||
Common stock | $ | — | $ | — | $ | 0.24 | $ | 0.32 | ||||||||
Class A common stock | 0.37 | 0.42 | 0.19 | — | ||||||||||||
Class B common stock | 0.07 | 0.18 | 0.20 | — |
December 31, | ||||||||
2017 | 2016 | |||||||
(in thousands) | ||||||||
Assets | ||||||||
Cash and cash equivalents | $ | 1,502 | $ | 1,868 | ||||
Due from subsidiaries | 665 | 218 | ||||||
Investment in subsidiaries | 235,091 | 207,905 | ||||||
Deferred tax assets | 198 | 627 | ||||||
Income taxes recoverable | 805 | — | ||||||
Other assets | 164 | 141 | ||||||
Total assets | $ | 238,425 | $ | 210,759 | ||||
Liabilities and Stockholders' Equity | ||||||||
Liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 236 | $ | 428 | ||||
Income taxes payable | — | 117 | ||||||
Total liabilities | 236 | 545 | ||||||
Stockholders’ equity: | ||||||||
Common stock | 210 | 210 | ||||||
Additional paid-in capital | 155,082 | 153,353 | ||||||
Retained earnings | 73,502 | 53,640 | ||||||
Accumulated other comprehensive income | 9,395 | 3,011 | ||||||
Stockholders’ equity | 238,189 | 210,214 | ||||||
Total liabilities and stockholders’ equity | $ | 238,425 | $ | 210,759 |
Years Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Revenues: | ||||||||||||
Management fees from subsidiaries | $ | 2,037 | $ | 1,815 | $ | 636 | ||||||
Total revenues | 2,037 | 1,815 | 636 | |||||||||
Expenses: | ||||||||||||
Other operating expenses | 2,526 | 2,395 | 640 | |||||||||
Other expenses | 652 | 492 | 66 | |||||||||
Interest expense | — | 1,339 | 1,230 | |||||||||
Total expenses | 3,178 | 4,226 | 1,936 | |||||||||
Loss before income taxes | (1,141 | ) | (2,411 | ) | (1,300 | ) | ||||||
Income tax benefit | (739 | ) | (844 | ) | (432 | ) | ||||||
Loss before equity in net income of subsidiaries | (402 | ) | (1,567 | ) | (868 | ) | ||||||
Equity in net income of subsidiaries | 25,303 | 27,734 | 23,141 | |||||||||
Net income | 24,901 | 26,167 | 22,273 | |||||||||
Other comprehensive income (loss): | ||||||||||||
Equity in other comprehensive earnings (losses) of subsidiaries | 6,384 | (640 | ) | (1,563 | ) | |||||||
Total comprehensive income | $ | 31,285 | $ | 25,527 | $ | 20,710 |
Years Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Operating activities | ||||||||||||
Net income | $ | 24,901 | $ | 26,167 | $ | 22,273 | ||||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||||||
Deferred tax expense (benefit) | 429 | (65 | ) | 61 | ||||||||
Stock compensation expense | 652 | 492 | 65 | |||||||||
Equity in undistributed earnings of subsidiaries | (25,303 | ) | (27,734 | ) | (23,141 | ) | ||||||
Changes in operating assets and liabilities | (1,583 | ) | 520 | (286 | ) | |||||||
Net cash used in operating activities | (904 | ) | (620 | ) | (1,028 | ) | ||||||
Investing activities | ||||||||||||
Dividends paid from subsidiary | 4,500 | — | — | |||||||||
Contributions to subsidiary | — | (40,000 | ) | (2,000 | ) | |||||||
Net cash provided by (used in) investing activities | 4,500 | (40,000 | ) | (2,000 | ) | |||||||
Financing activities | ||||||||||||
Common stock issued, net of transaction costs | — | 72,841 | — | |||||||||
Common stock issued, stock options exercised | 1,077 | — | — | |||||||||
Class A common stock issued | — | — | 90 | |||||||||
Dividends paid | (5,039 | ) | (2,097 | ) | — | |||||||
Proceeds from note payable | — | — | 2,000 | |||||||||
Repayment of note payable | — | (30,000 | ) | — | ||||||||
Debt issuance costs | — | — | (30 | ) | ||||||||
Net cash (used in) provided by financing activities | (3,962 | ) | 40,744 | 2,060 | ||||||||
Net change in cash and cash equivalents | (366 | ) | 124 | (968 | ) | |||||||
Cash and cash equivalents at beginning of year | 1,868 | 1,744 | 2,712 | |||||||||
Cash and cash equivalents at end of year | $ | 1,502 | $ | 1,868 | $ | 1,744 |
Additions | Deductions | |||||||||||||||
(in thousands) | Balance at Beginning of Period | Amounts Charged to Expense | Amounts Written Off or Disposals | Balance at End of Period | ||||||||||||
Year Ended December 31, 2017: | ||||||||||||||||
Allowance for premiums receivable | $ | 1,977 | $ | 488 | $ | 353 | $ | 2,112 | ||||||||
Valuation allowance for deferred tax assets | 623 | 68 | — | 691 | ||||||||||||
Year Ended December 31, 2016: | ||||||||||||||||
Allowance for premiums receivable | 2,088 | 276 | 387 | 1,977 | ||||||||||||
Valuation allowance for deferred tax assets | 529 | 94 | — | 623 | ||||||||||||
Year Ended December 31, 2015: | ||||||||||||||||
Allowance for premiums receivable | 595 | 1,493 | — | 2,088 | ||||||||||||
Valuation allowance for deferred tax assets | 489 | 40 | — | 529 |
Page | ||
1. Audited Consolidated Financial Statements | ||
Management's Report on Internal Control Over Financial Reporting | ||
Report of Independent Registered Public Accounting Firm | ||
Consolidated Balance Sheets as of December 31, 2017 and 2016 | ||
Consolidated Statements of Income and Comprehensive Income for the Years Ended December 31, 2017, 2016 and 2015 | ||
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 2017, 2016 and 2015 | ||
Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016 and 2015 | ||
Notes to Consolidated Financial Statements | ||
2. Financial Statement Schedules | ||
Schedule II - Condensed Financial Information of Registrant - Parent Company Only | ||
Schedule V - Valuation and Qualifying Accounts |
Exhibit Number | Description | |
3.1 | ||
3.2 | ||
10.1 | . | |
10.2+ | ||
10.3a+ | ||
10.3b+ | ||
10.4+ | ||
10.5+ | ||
10.6 | ||
21.1 | ||
23.1 | ||
31.1 | ||
31.2 | ||
32.1* | ||
32.2* | ||
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 |
* | This certification is deemed not filed for purposes of section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act. |
** | Furnished with this Annual Report. Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933 and are deemed not filed for purposes of section 18 of the Exchange Act. |
+ | Compensatory plan or arrangement |
KINSALE CAPITAL GROUP, INC. | |
By: /s/ Michael P. Kehoe Michael P. Kehoe President and Chief Executive Officer |
Signature | Title | Date | ||
/s/ Michael P. Kehoe | ||||
Michael P. Kehoe | President, Chief Executive Officer and Director | March 1, 2018 | ||
(Principal Executive Officer) | ||||
/s/ Bryan P. Petrucelli | ||||
Bryan P. Petrucelli | Senior Vice President, Chief Financial Officer and Treasurer | March 1, 2018 | ||
(Principal Financial and Accounting Officer) | ||||
/s/ Steven J. Bensinger | ||||
Steven J. Bensinger | Director | March 1, 2018 | ||
/s/ Anne C. Kronenberg | ||||
Anne C. Kronenberg | Director | March 1, 2018 | ||
/s/ Robert Lippincott III | ||||
Robert Lippincott III | Director | March 1, 2018 | ||
/s/ James J. Ritchie | ||||
James J. Ritchie | Director | March 1, 2018 | ||
/s/ Frederick L. Russell, Jr. | ||||
Frederick L. Russell, Jr. | Director | March 1, 2018 | ||
/s/ Gregory M. Share | ||||
Gregory M. Share | Director | March 1, 2018 |
Grantee: | ||
Date of Grant: | ||
Number of Restricted Shares: | ||
Vesting Commencement Date: | ||
Time-Vested Stock: | ||
Time-Vesting Period: | ||
Performance-Vested Stock: | ||
Performance-Vesting Period: | ||
Performance-Vesting Period: | ||
Performance-Vesting Criteria: |
Subsidiary | Jurisdiction of Incorporation or Formation | |
Kinsale Insurance Company | Arkansas | |
Kinsale Management, Inc. | Delaware | |
Aspera Insurance Services, Inc. | Virginia |
1. | I have reviewed this annual report on Form 10-K 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f), for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(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. |
March 1, 2018 | /s/ Michael P. Kehoe | |
Michael P. Kehoe | ||
President and Chief Executive Officer | ||
(Principal Executive Officer) |
1. | I have reviewed this annual report on Form 10-K 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f), for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(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. |
March 1, 2018 | /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. |
March 1, 2018 | /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. |
March 1, 2018 | /s/ Bryan P. Petrucelli | |
Bryan P. Petrucelli | ||
Senior Vice President, Chief Financial Officer and Treasurer | ||
(Principal Financial Officer) |
Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Feb. 23, 2018 |
Jun. 30, 2017 |
|
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 | Large Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Year Focus | 2017 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 21,047,452 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 706,063,693 |
Consolidated Balance Sheets - FY (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Investments: | ||
Fixed maturity securities available-for-sale, amortized cost | $ 422,255 | $ 413,526 |
Equity securities available-for-sale, cost | $ 45,916 | $ 14,350 |
Stockholders' equity: | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 400,000,000 | 400,000,000 |
Common stock, shares issued (in shares) | 21,036,087 | 20,968,707 |
Common stock, shares outstanding (in shares) | 21,036,087 | 20,968,707 |
Consolidated Statements of Income and Comprehensive Income (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Other comprehensive income (loss): | |||
Unrealized gains (losses), taxes | $ 3,047 | $ (344) | $ (841) |
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands |
Total |
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] |
---|---|---|---|---|---|---|---|
Balance at Dec. 31, 2014 | $ 92,586 | $ 0 | $ 1 | $ 0 | $ 80,074 | $ 7,297 | $ 5,214 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Common stock issuance, net of transaction costs | 90 | 0 | 0 | 0 | 90 | 0 | 0 |
Stock-based compensation | 65 | 0 | 0 | 0 | 65 | 0 | 0 |
Other comprehensive income (loss), net of tax | (1,563) | 0 | 0 | 0 | 0 | 0 | (1,563) |
Net income | 22,273 | 0 | 0 | 0 | 0 | 22,273 | 0 |
Balance at Dec. 31, 2015 | 113,451 | 0 | 1 | 0 | 80,229 | 29,570 | 3,651 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Reclassification of capital structure | 0 | 160 | (1) | 0 | (159) | 0 | 0 |
Common stock issuance, net of transaction costs | 72,841 | 50 | 0 | 0 | 72,791 | 0 | 0 |
Stock-based compensation | 492 | 0 | 0 | 0 | 492 | 0 | 0 |
Dividends declared and paid | (2,097) | 0 | 0 | 0 | 0 | (2,097) | 0 |
Other comprehensive income (loss), net of tax | (640) | 0 | 0 | 0 | 0 | 0 | (640) |
Net income | 26,167 | 0 | 0 | 0 | 0 | 26,167 | 0 |
Balance at Dec. 31, 2016 | 210,214 | 210 | 0 | 0 | 153,353 | 53,640 | 3,011 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock under stock-based compensation plan | 1,077 | 1,077 | |||||
Stock-based compensation | 652 | 652 | |||||
Dividends declared and paid | (5,039) | (5,039) | |||||
Other comprehensive income (loss), net of tax | 6,384 | 6,384 | |||||
Net income | 24,901 | 24,901 | |||||
Balance at Dec. 31, 2017 | $ 238,189 | $ 210 | $ 0 | $ 0 | $ 155,082 | $ 73,502 | $ 9,395 |
Description of business |
12 Months Ended |
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Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of business | Description of business Kinsale Capital Group, Inc., an insurance holding company, is a Delaware corporation that was formed in 2009 and conducts its operations through its wholly-owned subsidiaries. Kinsale Capital Group Inc. writes excess and surplus lines insurance on a non-admitted basis principally through its insurance subsidiary, Kinsale Insurance Company ("Kinsale Insurance"), which is authorized to write business in 50 states, the District of Columbia, the Commonwealth of Puerto Rico and the U.S. Virgin Islands. Kinsale Capital Group, Inc. also markets certain products through its subsidiary, Aspera Insurance Services, Inc. ("Aspera"), an insurance broker. Aspera is authorized to conduct business in Alabama, California, Connecticut, Delaware, Florida, Georgia, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Texas and Virginia. |
Summary of significant accounting policies |
12 Months Ended |
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Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of significant accounting policies | Summary of significant accounting policies Principles of consolidation The accompanying consolidated financial statements include the accounts of Kinsale Capital Group, Inc. and its wholly-owned subsidiaries (referred to as "Kinsale" or, with its subsidiaries, the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation. Use of estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles ("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 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. These reviews include evaluating the adequacy of reserves for unpaid losses and loss adjustment expenses, allowance for doubtful accounts and uncollectible reinsurance, fair value of investments, as well as evaluating the investment portfolio for other-than-temporary declines in fair value. Cash and cash equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Short-term investments Short-term investments are carried at cost, which approximates fair value. Short-term investments have maturities greater than three months but less than one year at the date of purchase. There were no short-term investments at December 31, 2017 or December 31, 2016. Fixed maturity and equity securities Fixed maturity securities and equity securities are classified as available-for-sale and reported at fair value. Unrealized gains and losses on these securities are excluded from net earnings but are recorded as a separate component of comprehensive income (loss) and stockholders’ equity, net of deferred income taxes. The Company regularly evaluates its fixed maturity securities and equity securities using both quantitative and qualitative criteria to determine impairment losses for other-than-temporary declines in the fair value of the investments. See Note 2 for further discussion of other-than-temporary impairments ("OTTI"). Interest on fixed maturity securities is credited to earnings as it accrues. Premiums and discounts are amortized or accreted over the lives of the related fixed maturities. Dividends on equity securities are included in earnings on the ex-dividend date. Realized gains and losses on disposition of investments are based on specific identification of the investments sold on the trade date. Reinsurance Reinsurance premiums, commissions, and ceded unearned premiums on reinsured business are accounted for on a basis consistent with that used in accounting for the original policies issued and the terms of the reinsurance contracts. The Company receives ceding commissions in connection with certain ceded reinsurance. The ceding commissions are capitalized and amortized as a reduction of underwriting, acquisition and insurance expenses. Reinsurance recoverables represent paid losses and loss adjustment expenses and reserves for unpaid losses and loss adjustment expenses ceded to reinsurers that are subject to reimbursement under reinsurance treaties. The method for determining reinsurance recoverables for unpaid losses and loss adjustment expenses involves reviewing actuarial estimates of gross unpaid losses and loss adjustment expenses to determine the Company's ability to cede unpaid losses and loss adjustment expenses under the Company's existing reinsurance contracts. This method is continually reviewed and updated and any resulting adjustments are reflected in earnings in the period identified. See Note 8 for a further discussion of the Company's reinsurance program. Premiums receivable, net Premiums receivable balances are carried at face value, net of any allowance for doubtful accounts. The allowance for doubtful accounts represents an estimate of amounts considered uncollectible based on the Company’s assessment of the collectability of receivables that are past due. The Company recorded an allowance for doubtful accounts of $2.1 million and $2.0 million at December 31, 2017 and 2016, respectively, and believes that all other amounts due are collectible. Deferred policy acquisition costs, net of ceding commissions The Company defers commissions, net of ceding commissions, and certain other costs that are directly related to the successful acquisition of insurance contracts. All eligible costs are capitalized and charged to expense in proportion to premium earned over the estimated policy life. To the extent that unearned premiums on existing policies are not adequate to cover the related costs and expenses, deferred policy acquisition costs are charged to earnings. The Company considers anticipated investment income in determining whether a premium deficiency exists. Property and equipment, net Property and equipment are stated at cost less accumulated depreciation. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives range from seven to ten years for furniture and equipment, three to seven years for electronic data processing hardware and software, and from two to six years for leasehold improvements, which is the shorter of the estimated useful life or the lease term. Property and equipment is included in "other assets" in the accompanying consolidated balance sheets. Intangible assets Intangible assets are recorded at fair value at the date of acquisition. The Company's intangible assets are comprised solely of indefinite-lived intangible assets, which arise from regulatory approvals granted by the various state insurance departments to write insurance business in the respective states on a non-admitted basis. In accordance with U.S. GAAP, amortization of indefinite-lived intangible assets is not permitted. Indefinite-lived intangible assets are tested for impairment during the fourth quarter on an annual basis, or earlier if there is reason to suspect that their values may have been diminished or impaired. There were no impairments recognized in 2017, 2016, or 2015. In addition, as of December 31, 2017, no triggering events occurred that suggested an updated review was necessary. Reserves for unpaid losses and loss adjustment expenses Reserves for unpaid losses and loss adjustment expenses represent management's best estimate of ultimate unpaid cost of all reported and unreported losses and loss adjustment expenses incurred prior to the financial statement date. The estimates are based on an actuarial method that uses management’s initial expected loss ratio, expected reporting patterns for losses based on industry data and the Company’s actual reported losses and loss adjustment expenses. All estimates are regularly reviewed and, as experience develops and new information becomes known, the reserves for unpaid losses and loss adjustment expenses are adjusted as necessary. Such adjustments are reflected in the results of operations in the period in which they are determined. Although management believes that the reserves for losses and loss adjustment expenses are reasonable, due to the inherent uncertainty in estimating reserves for unpaid losses and loss adjustment expenses, it is possible that the Company’s actual incurred losses and loss adjustment expenses will not develop in a manner consistent with the assumptions inherent in the determination of these reserves. If actual liabilities do exceed recorded amounts, there will be an adverse effect. Furthermore, we may determine that recorded reserves are more than adequate to cover expected losses which will result in a reduction to the reserves. The Company believes that the reserves for unpaid losses and loss adjustment expenses at December 31, 2017 are adequate and represent a reasonable estimate of the Company's future obligations. See Note 7 for a further discussion of reserves for unpaid losses and loss adjustment expenses. Revenue recognition Premiums are recognized as revenue ratably over the term of the insurance contracts, net of ceded reinsurance. Unearned premiums are calculated on a daily pro rata basis. Income taxes Deferred income tax assets and liabilities are determined based on the difference between the financial statement and the tax bases of assets and liabilities, using enacted tax rates expected to be in effect during the year in which the basis differences reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are recorded when it is more likely than not that some portion, or all, of the deferred tax assets will not be realizable. Management evaluates the realizability of the deferred tax assets and assesses the need for any valuation allowance adjustment. Valuation allowances on deferred tax assets are estimated based on the Company's assessment of the realizability of such amounts. The Company provides for uncertain tax positions, and the related interest and penalties, based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. To the extent that the anticipated tax outcome of these uncertain tax positions changes, such changes in estimate will impact the income tax provision in the period in which such determination is made. The Company recognizes accrued interest and penalties related to uncertain tax positions as a component of income tax expense. Commitments and contingencies Liabilities for loss contingencies, arising from noninsurance policy claims, assessments, litigation, fines, and penalties and other sources, are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. Fair value of financial instruments The fair values of certain financial instruments are determined based on the fair value hierarchy. U.S. GAAP guidance requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance also describes three levels of inputs that may be used to measure fair value. The following was considered in the estimation of fair value for each class of financial instruments for which it was practicable to estimate that value. The Company’s investment manager uses independent pricing vendors to estimate the fair value of fixed maturity securities and the Company’s management reviews these prices for reasonableness. U.S. Treasury Securities that have quoted prices in active markets are included in the amounts disclosed as Level 1. For other fixed maturity securities, the pricing vendors use a pricing methodology involving the market approach, including pricing models which use prices and relevant market information regarding a particular security or securities with similar characteristics to establish a valuation. The estimates of fair value of these fixed maturity investments are included in the amounts disclosed as Level 2. For those bonds where significant inputs are unobservable, Level 3 inputs, the Company's investment manager obtains valuations from pricing vendors using the market approach and income approach valuation techniques. For equity securities, the Company’s investment manager uses prices from independent pricing vendors to estimate fair value. The fair value estimates of exchange traded funds are based on quoted prices in an active market and are disclosed as Level 1.The fair value estimates of preferred stock are based on observable market data and, as a result, are disclosed as Level 2. Fair value disclosures for investments are included in Notes 2 and 3. Stock-based compensation Stock-based compensation is expensed based upon the estimated fair value of employee stock awards. Compensation cost for awards of equity instruments to employees is measured based on the grant-date fair value of those awards and compensation expense is recognized over the service period that the awards vest. Forfeitures of stock-based compensation awards are recognized as they occur. See Note 9 for further discussion and related disclosures regarding stock-based compensation. Prospective accounting pronouncements 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. Upon adoption, a cumulative-effect adjustment to the balance sheet will be made as of the beginning of the fiscal year of adoption. For the year ended December 31, 2017, accumulated other comprehensive income included $6.5 million of net unrealized gains on equity securities, net of taxes. Adoption of this ASU is not expected to have a material impact on the Company's financial position or cash flows, but may have a material impact on the Company's results of operations in the future as changes in the fair value of equity instruments will be presented in net income rather than other comprehensive income. 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 applicable 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 as in today’s practice. 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. ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities On March 30, 2017, the FASB issued ASU 2017-08, "Premium Amortization on Purchased Callable Debt Securities," which shortens the amortization period of the premium for certain callable debt securities, from the contractual maturity date to the earliest call date. This ASU is effective in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted, including in an interim period. Upon adoption, the update will be applied on a modified retrospective basis, with a cumulative-effect adjustment 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 |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | 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 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 security or if it is likely to be required to sell a fixed maturity security 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 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. 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:
At December 31, 2017, the Company held 195 fixed maturity securities with a total estimated fair value of $203.4 million and gross unrealized losses of $2.2 million. Of those securities, 126 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. At December 31, 2017, 91.1% of the Company’s fixed maturity securities were rated "A-" or better and all of Company's fixed-maturity securities made expected coupon payments under the contractual terms of the securities. At December 31, 2017, the Company held 13 securities in its equity portfolio with a total estimated fair value of $10.8 million and gross unrealized losses of $0.2 million. None of these securities were in a continuous unrealized loss position for greater than one year. Based on its review, the Company concluded that there were no other-than-temporary impairments from fixed maturity or equity securities with unrealized losses for the year ended December 31, 2017.
At December 31, 2016, the Company held 231 fixed maturity securities with a total estimated fair value of $239.7 million and gross unrealized losses of $5.2 million. Of these securities, 24 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. At December 31, 2016, 92.6% of the Company’s fixed maturity securities were rated "A-" or better and all of Company's fixed-maturity securities made expected coupon payments under the contractual terms of the securities. Based on its review, the Company concluded that none of the fixed maturity securities with an unrealized loss at December 31, 2016 experienced an other-than-temporary impairment. Within its equity security portfolio, the Company holds an ETF with exposure across developed and emerging non-U.S. equity markets around the world. This ETF had been in an unrealized loss position for greater than one year and, management concluded based upon its review, it was other-than-temporarily impaired. The Company recognized an impairment loss of $0.3 million on this fund for the year ended December 31, 2016. Contractual maturities of available-for-sale fixed maturity securities The amortized cost and estimated fair value of available-for-sale fixed maturity securities at December 31, 2017 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:
Net investment gains and losses The following table presents net investment gains on investments:
Change in unrealized gains (losses) of investments The following table presents the change in available-for-sale gross unrealized gains or losses by investment type:
Insurance – statutory deposits The Company had invested assets with a carrying value of $7.1 million and $7.0 million on deposit with state regulatory authorities at December 31, 2017 and 2016, respectively. Payable for investments purchased The Company recorded a payable for investments purchased, not yet settled, of $1.0 million at December 31, 2017 and $0.6 million at December 31, 2016. These payable were included in the "other liabilities" line item of the balance sheet and were treated as a non-cash transaction for purposes of cash flow presentation. |
Fair value measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements | 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 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 nationally recognized 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 consolidated financial statements at December 31, 2017, including 1) obtaining and reviewing internal control reports from the Company's investment manager that assess fair values from third party pricing services, 2) discussing with the Company's investment manager its process for reviewing and validating pricing obtained from third party pricing services and 3) reviewing the security pricing received from the Company's investment manager and monitoring changes in unrealized gains and losses at the individual security level. 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 December 31, 2017 and 2016, by level within the fair value hierarchy.
There were no transfers into or out of Level 1 and Level 2 during the years ended December 31, 2017 or 2016. There were no assets or liabilities measured at fair value on a nonrecurring basis as of December 31, 2017 or 2016. Due to the relatively short-term nature of cash, cash equivalents, receivables and payables, their carrying amounts are reasonable estimates of fair value. |
Deferred policy acquisition costs |
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Deferred Policy Acquisition Costs Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred policy acquisition costs | Deferred policy acquisition costs The following table presents the amounts of policy acquisition costs deferred and amortized for the years ended:
For the year ended December 31, 2016, the decrease in the deferred ceding commissions and the change in the amortization of net policy acquisition costs were the result of the commutation of the MLQS effective October 1, 2016. The MLQS was not renewed for calendar year 2017. The negative, or liability, balances at December 31, 2015 and 2014 were also due to the effect of the deferred ceding commissions related to the MLQS. See Note 8 for further details regarding the MLQS. |
Underwriting, acquisition and insurance expenses |
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Underwriting, acquisition and insurance expenses | Underwriting, acquisition and insurance expenses Underwriting, acquisition and insurance expenses consist of the following:
Other operating expenses within underwriting, acquisition and insurance expenses included salaries, employee benefits and bonus expense of $17.7 million, $18.7 million and $15.5 million, for the years ended December 31, 2017, 2016 and 2015, respectively. |
Income taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income taxes | Income taxes The Company’s subsidiaries file a consolidated U.S. federal income tax return. Under a tax sharing agreement, KCGI collects from or refunds to its subsidiaries the amount of taxes determined as if KCGI and the subsidiaries filed separate returns. The Company is no longer subject to income tax examination by tax authorities for the years ended before January 1, 2014. Income tax expense includes the following components for the years ending December 31, 2017, 2016 and 2015:
The Company paid $13.5 million, $13.3 million and $13.6 million in federal income taxes during the years ended December 31, 2017, 2016 and 2015, respectively. Current income taxes receivable was $0.8 million at December 31, 2017 and income taxes payable was $0.1 million at December 31, 2016, and were included in "other assets" and "other liabilities" in the accompanying consolidated balance sheets. On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act of 2017 (the "TCJA"). The legislation significantly changes U.S. tax law by, among other things, lowering corporate income tax rates from 35% to 21%, effective January 1, 2018, and modifying the manner in which property and casualty insurance loss reserves are computed for federal income tax purposes. In computing its taxable income, the Company records a deduction for unpaid losses and loss adjustment expenses. The deduction is discounted using interest rates and loss payment patterns prescribed by the U.S. Treasury. The TCJA changes the prescribed interest rates, which are now based on corporate bond yield curves, and extends the applicable time periods for the loss payment pattern period for long-tailed lines of business. The changes are effective for tax years beginning after 2017 with a transition rule that spreads adjustments related to pre-effective-date losses and loss adjustment expenses over the next eight years beginning in 2018. The Company measures deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid. Accordingly, the Company’s deferred tax assets and liabilities were remeasured to reflect the reduction in the U.S. corporate income tax rate from 35% to 21%, resulting in a $1.9 million increase in income tax expense and a corresponding decrease in net deferred tax assets as of the enactment date. U.S. GAAP requires companies to recognize the effect of tax law changes in the period of enactment. The SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the TCJA. The TCJA did not specify the application of certain elements of the legislation and the U.S. Treasury has yet to issue interpretive guidance to specify the loss payment patterns and the corporate bond yield curve under the new law for 2018. The Company has recognized the provisional tax impacts of $3.5 million related to the transition adjustment for loss discounting which has been included in its components of deferred tax assets and liabilities as part of its consolidated financial statements for the year ended December 31, 2017. The ultimate impact may differ from these provisional amounts due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the TCJA. The accounting is expected to be complete when the U.S. Treasury issues further guidance. The Company’s effective income tax rate on income before income taxes differs from the prevailing federal income tax rate and is summarized as follows:
The significant components of the net deferred tax asset are summarized as follows:
At December 31, 2017 and 2016, the Company had state net operating loss carryforwards ("NOLS") of $13.6 million and $12.2 million, respectively. The state NOLs are available to offset future taxable income or reduce taxes payable and begin expiring in 2029. Management evaluates the need for a valuation allowance related to its deferred tax assets. At December 31, 2017 and 2016, the Company recorded a tax valuation allowance equal to the state NOLs and the deferred tax assets, net of existing deferred tax liabilities that were expected to reverse in future periods, related to certain state jurisdictions. No other valuation allowances were established against the Company’s deferred tax assets at December 31, 2017 and 2016, as the Company believes that it is more likely than not that the remaining deferred tax assets will be realized given the carry back availability, reversal of existing temporary differences and future taxable income. A reconciliation of the beginning and ending amounts of unrecognized tax benefits for 2017 and 2016 was as follows:
The Company recognized the entire remaining uncertain tax position (UTP) of $1.0 million in the third quarter of 2017 due to lapse of the statute of limitations. The recognition of the UTP had no impact on the effective tax rate as it resulted in a decrease of current taxes and an offsetting increase to deferred taxes. |
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Liability for Unpaid Claims and Claims Adjustment Expense, Activity in Liability [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reserves for unpaid losses and loss adjustment expenses | Reserves for unpaid losses and loss adjustment expenses The reserves for unpaid losses and loss adjustment expenses represent the Company's estimated ultimate cost of all unreported and reported but unpaid insured claims and the cost to adjust these losses that have occurred as of or before the balance sheet date. Reserves are estimated using individual case-basis valuations of reported claims and statistical analyses. Case reserves are established for individual claims that have been reported to the Company, typically by the Company's insureds or their brokers. Based on the information provided, case reserves are established by estimating the ultimate losses from the claim, including defense costs associated with the ultimate settlement of the claim. Incurred-but-not-reported ("IBNR") reserves are determined using actuarial methods to estimate losses that have occurred but have not yet been reported to the Company. The incurred Bornhuetter-Ferguson actuarial method ("BF method") is used to arrive at the Company's loss reserve estimates for each line of business. This method estimates the reserves based on the initial expected loss ratio and expected reporting patterns for losses. Because the Company has a limited number of years of loss experience compared to the period over which losses are expected to be reported, the Company uses industry and peer-group data as a basis for selecting its expected reporting patterns. As part of the reserving process, the Company reviews historical data and considers the effect of various factors on claims development patterns including polices written on a "claims made" versus "occurrence" basis. Policies written on a claims made basis provide coverage to the insured only for losses incurred during the coverage period, and only if the claim was reported during a specified reporting period. Policies written on an occurrence basis provide coverage to the insured for liabilities arising from events occurring during the term of the policy, regardless of when a claim is actually made. Accordingly, claims related to policies written on an occurrence basis may arise many years after a policy has lapsed. Property losses, while written on an occurrence basis, are generally reported within a short time from the date of loss, and in most instances, property claims are settled and paid within a relatively short period of time. The following table presents a reconciliation of consolidated beginning and ending reserves for unpaid losses and loss adjustment expenses:
During the year ended December 31, 2017, our net incurred losses for accident years 2016 and prior developed favorably by $11.3 million. This favorable development included $9.4 million for the 2016 accident year, $4.2 million for the 2015 accident year and $1.8 million for accident year 2014. This favorable development was primarily due to reported losses emerging at a lower level than expected, across most lines of business. The favorable development was offset in part by adverse development of $2.1 million for the 2013 accident year, $1.3 million for the 2012 accident year and $0.7 million for the 2011 accident year. The unfavorable development was primarily attributable to claims on the other liability occurrence line of business. During the year ended December 31, 2016, our net incurred losses for accident years 2015 and prior developed favorably by $12.7 million. This favorable development included $6.1 million for the 2015 accident year and $6.6 million of favorable development for accident years 2014 and prior. The favorable development was primarily due to reported losses emerging at a lower level than expected, across most lines of business. During the year ended December 31, 2015, our net incurred losses for accident years 2014 and prior developed favorably by $9.2 million. This favorable development included $6.5 million for the 2014 accident year and $2.7 million of favorable development for accident years 2013 and prior. The favorable development was primarily due to reported losses emerging at a lower level than expected, particularly on the medical malpractice and professional liability lines of business. Incurred and Paid Claims Development The following is information about incurred and paid claims development as of December 31, 2017, net of reinsurance, as well as cumulative claim frequency and the total of IBNR liabilities plus expected development on reported claims included within the net incurred claims amounts. The development and claims duration tables below exclude the commuted MLQS contracts, which would distort development patterns related to those transactions. See Note 8 for further details regarding the commutation of the MLQS. Cumulative number of reported claims is reported on a per claim basis. The information about incurred and paid claims development for the years ended December 31, 2016 to December 31, 2010, is presented as unaudited supplementary information. Property
Historical Claims Duration The following is supplementary information about average historical claims duration as of December 31, 2017:
Casualty - Claims Made
Casualty - Occurrence
Historical Claims Duration The following is supplementary information about average historical claims duration as of December 31, 2017:
Reconciliation of Incurred and Paid Claims Development to the Liability for Unpaid Claims and Claim Adjustment Expenses The reconciliation of the net incurred and paid claims development tables to the liability for claims and claim adjustment expenses in the consolidated statement of financial position is as follows:
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Reinsurance |
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Reinsurance Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance | Reinsurance The Company purchases reinsurance from other insurance companies ("reinsurers") in order to limit its exposure to large losses and enable it to underwrite policies with sufficient limits to meet policyholder needs. In a reinsurance transaction, an insurance company transfers, or cedes, part or all of its exposure to the reinsurer that receives a portion of the premium. The ceding of insurance does not legally discharge the Company from its primary liability for the full amount of the policy coverage, and therefore the Company will be required to pay the loss and bear collection risk if the reinsurer fails to meet its obligations under the reinsurance agreement. The following table summarizes the effect of reinsurance on premiums written and earned:
Incurred losses and loss adjustment expenses were net of reinsurance recoverables (ceded incurred losses and loss adjustment expenses) of $12.2 million, $13.7 million and $41.2 million for the years ended December 31, 2017, 2016 and 2015, respectively. Multi-line quota share reinsurance The Company participated in a MLQS treaty that transferred a proportion of the risk related to certain lines of business written by its subsidiary, Kinsale Insurance, to reinsurers that received a proportion of the direct written premiums on that business. The Company's MLQS contract also reduced the amount of capital required to support the insurance operations of Kinsale Insurance. Under the terms of the MLQS contract, the Company received a provisional ceding commission and paid a reinsurance margin, as long as the reinsurers were not in a loss position on the contract. The MLQS contract included a sliding scale commission provision that reduced or increased the ceding commission based on the loss experience of the business ceded. Under the contract, the Company was entitled to an additional contingent profit commission up to an amount equal to all of the reinsurers’ profits above the margin based on the underwriting results of the business ceded, upon commutation of the contract. The contracts had a loss ratio cap of 110%, which restricted the Company from ceding any losses in excess of 110% of ceded earned premiums to the reinsurers. As a result of the initial public offering, the Company did not renew the MLQS treaty for calendar year 2017. Under the terms of the MLQS covering the period January 1, 2015 to December 31, 2015 (the "2015 MLQS"), the Company 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 included 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 was 50% until October 1, 2015, at which time the Company decreased the percentage to 40%. The change in the ceding percentage reduced ceded written premiums by $6.8 million at October 1, 2015, with a corresponding reduction to ceded unearned premiums. The terms of the MLQS covering the period January 1, 2016 to December 31, 2016 (the "2016 MLQS") were largely consistent with the 2015 MLQS. However, 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. The following table summarizes the amounts related to the MLQS contracts:
Commutations of the MLQS Effective December 31, 2014, 45% of the contract covering the period July 1, 2012 to December 31, 2013 (the "2012 MLQS") was commuted, and the remaining 55% of this contract was commuted effective January 1, 2015. The commutation reduced reinsurance recoverables on unpaid losses and receivable from reinsurers by $9.7 million at December 31, 2014 and $11.9 million at January 1, 2015, with a corresponding reduction to funds held for reinsurers, respectively. Effective January 1, 2016, the Company commuted the 2014 MLQS, which reduced reinsurance recoverables on unpaid losses and receivable from reinsurers by $34.2 million, with a corresponding reduction to funds held for reinsurers. Effective October 1, 2016, the Company terminated and commuted the 2016 MLQS. The commutation reduced reinsurance recoverables on unpaid losses and receivable from reinsurers by approximately $15.5 million with a corresponding reduction to funds held for reinsurers. Effective January 1, 2017, the Company commuted the 2015 MLQS. The commutation reduced reinsurance recoverables on unpaid losses and receivable from reinsurers by approximately $36.5 million, with a corresponding reduction to funds held for reinsurers. There are no remaining MLQS contracts outstanding as of January 1, 2017. Funds-Held Account The Company maintained a funds-held account for the reinsurers who were a party to the MLQS contracts, which was credited with interest at a rate equal to the 10 year U.S. Treasury rate plus a spread (150 basis points), subject to a 4% minimum. The funds-held account represented the excess of the ceded written premium and interest credited over ceded paid losses and LAE, the Company’s ceding commission and the reinsurers’ margin. Assets supporting the funds-held liability were not segregated or restricted. The funds-held account, shown as a liability on the accompanying consolidated balance sheets, was $36.5 million at December 31, 2016. Reinsurance balances Credit risk exists with reinsurance ceded to the extent that any reinsurer is unable to meet the obligations assumed under the reinsurance agreements. Reinsurance recoverables for unpaid losses were $48.2 million and $70.2 million, at December 31, 2017 and 2016, respectively. Reinsurance recoverables for paid losses were $1.4 million at December 31, 2017. There were no significant reinsurance recoverables for paid losses at December 31, 2016. Ceded unearned premiums related to reinsurance were $13.9 million and $13.5 million, at December 31, 2017 and 2016, respectively. Allowances are established for amounts deemed uncollectible. The Company evaluates the financial condition of its reinsurers and monitors concentration of credit risk arising from its exposure to individual reinsurers. All reinsurance receivables are from companies with A.M. Best ratings of "A" (Excellent) or better. To further reduce credit exposure to reinsurance recoverable balances, the Company has received letters of credit from certain reinsurers that are not authorized as reinsurers under U.S. state insurance regulations. The Company has not recorded an allowance for doubtful accounts related to its reinsurance balances at December 31, 2017 and 2016 and believes this to be appropriate after consideration of all currently available information; however, the deterioration in the credit quality of existing reinsurers or disputes over reinsurance agreements could result in future charges. At December 31, 2017, the net reinsurance receivable, defined as the sum of paid and unpaid reinsurance recoverables and ceded unearned premiums less reinsurance payables, from five reinsurers represented 92.4% of the total balance. |
Stockholders' Equity |
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Stockholders' equity | Stockholders’ equity Amendment of Certificate of Incorporation and Reclassification of Common Stock At January 1, 2016, 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 IPO as discussed below, 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. There were no shares of preferred stock issued or outstanding at December 31, 2017 or December 31, 2016. 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 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 the closing date of the IPO. On December 6, 2016, the Company completed a follow-on offering of 3,864,000 shares of common stock at a price of $27.50 per share, which included 504,000 shares sold to the underwriters pursuant to their over-allotment option. All of the shares in the offering were offered by the selling stockholders. The Company did not receive any proceeds from the offering. On May 17, 2017, the Company completed a second follow-on offering of 4,557,774 shares of common stock at a price of $33.00 per share, which included 594,492 shares sold to the underwriters pursuant to their over-allotment option. All of the shares in the offering were offered by the selling stockholders. The Company did not receive any proceeds from the offering. Changes in the shares of outstanding common stock were as follows:
Dividend Declaration On February 1, 2017, the Company’s Board of Directors declared a cash dividend of $0.06 per share of common stock. This dividend was paid on March 15, 2017 to all stockholders of record on February 15, 2017. On May 25, 2017, the Company’s Board of Directors declared a cash dividend of $0.06 per share of common stock. This dividend was paid on June 15, 2017 to all stockholders of record on June 5, 2017. On August 10, 2017, the Company’s Board of Directors declared a cash dividend of $0.06 per share of common stock. This dividend was paid on September 15, 2017 to all stockholders of record on August 31, 2017. On November 8, 2017, the Company’s Board of Directors declared a cash dividend of $0.06 per share of common stock. This dividend was paid on December 15, 2017 to all stockholders of record on November 30, 2017. On February 12, 2018, the Company’s Board of Directors declared a cash dividend of $0.07 per share of common stock. This dividend is payable on March 15, 2018 to all stockholders of record on February 28, 2018. Equity-based Compensation Stock Options 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 value of the options granted was estimated at the date of grant using the Black-Scholes pricing model using the following assumptions:
A summary of option activity under the employee share option plan as of December 31, 2017, and changes during the year then ended is presented below:
The weighted average grant date fair value of options granted during 2016 was $2.71 per share. The total intrinsic value of options exercised during the year ended December 31, 2017 was $1.5 million. There were no options exercised during 2016. The following table summarizes nonvested share-based awards under the 2016 Incentive Plan as of December 31, 2017:
As of December 31, 2017, the Company had $1.7 million of unrecognized share-based compensation expense expected to be charged to earnings over a weighted-average period of 2.5 years. The total fair value of shares vested during the years ended December 31, 2017 and 2016 was $6.9 million and $0.9 million, respectively. Restricted Stock Grants Prior to the IPO, under the Kinsale Capital Group, Inc. 2010 Incentive Plan (the "2010 Incentive Plan"), the Company granted shares of restricted Class B Common Stock to certain directors, executive officers, and employees. In connection with the reclassification on July 28, 2016, 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. In 2015, pursuant to the 2010 Incentive Plan, the Compensation Committee awarded restricted stock grants of 33,500 to certain directors, executive officers, and employees, which had a total grant-date fair value of $40 in 2015. The fair value of the Company’s share-based awards that vested was $0.1 million in each of the years ended December 31, 2016 and 2015. The fair value of the Company’s restricted stock grants was determined based on a valuation of Class B Common Stock on the grant date using a binomial lattice option pricing model. The model the Company used to value the Class B Common Stock, like any option pricing model for a nonpublic security, required the input of highly subjective assumptions including the underlying security price, strike price, risk-free rate of return, expected term and expected stock price volatility. The underlying security price was based on the Company’s book value of equity and the application of a multiple of tangible equity. The strike price was based on the liquidation preference of the Company’s Class A Common Stock at the grant date. The risk-free interest rate was based on the U.S. Treasury rate at the date of the grant. The expected term was based on an equal chance for a liquidity event at any time between 0 years and 0.50 years from the grant date. The expected stock volatility was based on stock price volatility using a set of comparable publicly traded companies. The Company recognized total equity-based compensation expense of $0.7 million, $0.5 million and $0.1 million for the years ended December 31, 2017, 2016 and 2015, respectively. Subsequent Event The Board of Directors granted 6,666 shares of restricted stock on January 1, 2018 under the 2016 Incentive Plan to the Company’s non-employee directors. The restricted stock had a fair value on the date of grant of $45.00 per share and will vest over a 1 year period. |
Earnings per share |
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Earnings per share | Earnings per share The following table 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 were determined by allocating undistributed earnings to each class of stock. The undistributed earnings attributable to common stockholders were 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 years ended December 31, 2016 and 2015. See Note 9, "Stockholders' Equity," for details regarding changes to the Company’s capital structure on July 28, 2016. There were no anti-dilutive stock options for the years ended December 31, 2017 and 2016. |
Credit Agreement |
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Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Credit Agreement | Credit agreement In June 2013, KCGI entered into a loan and security agreement (as amended, the "Credit Agreement") with The PrivateBank and Trust Company ("PrivateBank") to obtain a five-year secured term loan in the amount of $17.5 million. Pursuant to the terms of the Credit Agreement, the applicable interest rate was 3-month LIBOR plus a margin. The term loan had initial maturity of June 30, 2018. KCGI's wholly-owned subsidiaries, KMI and Aspera, were guarantors of the term loan. The assets of KMI and the stock of Kinsale Insurance were pledged as collateral to PrivateBank. On March 10, 2014 and September 29, 2014, the Company amended the Credit Agreement with PrivateBank to increase the term loan commitment to $25.0 million and $28.0 million, respectively. On December 4, 2015, the Company amended the Credit Agreement to increase the term loan commitment to $30.0 million and extended the term loan maturity to December 4, 2020. On September 30, 2016, the Company repaid $2.5 million of the term loan and, on December 8, 2016, repaid the total remaining amount outstanding of $27.5 million plus accrued interest of $0.2 million. In connection with the repayment of the term loan, the Company wrote off $0.3 million of debt issue costs, which was included in interest expense for the year ended December 31, 2016. There were no credit agreements outstanding at December 31, 2017. Interest on the term loan accrued daily at a rate equal to the 3-month LIBOR plus a margin. The margin was 2.75% as of December 31, 2016 and 2015. Total interest expense on the Credit Agreement was $1.3 million for the year ended December 31, 2016 and $1.2 million for the year ended December 31, 2015. Interest expense was included in "other expenses" on the accompanying statements of income and comprehensive income. Interest paid was $1.0 million for the year ending December 31, 2016, and $1.1 million for the year ending December 31, 2015. |
Commitments and contingencies |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||
Commitments and contingencies | Commitments and contingencies The Company has an operating lease for office space, which expires in 2020. In addition, the Company had a capital lease related to a software license that expired in 2017. Expenses associated with these leases totaled $0.3 million in 2017, $0.4 million in 2016, and $0.5 million in 2015. Minimum future rental payments, excluding taxes, insurance and other operating expenses, under the noncancelable operating leases in effect at December 31, 2017 are as follows (in thousands):
Contingencies arise in the normal conduct of the Company’s operations and are not expected to have a material effect on the Company’s financial condition or results of operations. However, adverse outcomes are possible and could negatively affect the Company’s financial condition and results of operations. |
Employee benefit plan |
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Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
Employee benefit plan | Employee benefit plan The Company has established a defined contribution employee retirement plan ("Plan") in accordance with Section 401(k) of the Internal Revenue Code. Expenses related to the Plan were $1.0 million, $0.9 million and $0.8 million in 2017, 2016 and 2015, respectively. |
Other comprehensive income (loss) |
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Other comprehensive income (loss) | 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. |
Underwriting information |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Underwriting information | Underwriting information The Company has one reportable segment, the Excess and Surplus Lines Insurance segment, which primarily offers commercial excess and surplus lines liability and property insurance products through its underwriting divisions. Gross written premiums by underwriting division are presented below:
The Company does business with three unaffiliated insurance brokers that generated $26.4 million, $24.4 million and $23.1 million of gross written premiums for the year ended December 31, 2017, representing 11.8%, 10.9% and 10.4% of gross written premiums, respectively. No other broker generated 10.0% or more of the gross written premiums for the year ended December 31, 2017. |
Statutory financial information |
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Statutory financial information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Statutory financial information | Statutory financial information Kinsale Insurance maintains its accounts in conformity with accounting practices prescribed or permitted by state regulatory authorities that vary in certain respects from GAAP. In converting from statutory accounting principles to GAAP, typical adjustments include deferral of policy acquisition costs, the inclusion of statutory nonadmitted assets and the inclusion of net unrealized gains or losses relating to fixed maturities in stockholders’ equity. The Company does not use any permitted practices that are different from prescribed statutory accounting practices. Statutory net income and statutory capital and surplus for Kinsale Insurance as of December 31, 2017, 2016, and 2015 and for the years then ended are summarized as follows:
Kinsale Insurance is subject to risk-based capital ("RBC") requirements. RBC is a method developed by the NAIC to determine the minimum amount of statutory capital appropriate for an insurance company to support its overall business operations in consideration of its size and risk profile. The formula for determining the amount of RBC is calculated using various factors, weighted based on the perceived degree of risk, which are applied to certain financial balances and financial activity. The adequacy of a company’s actual capital is evaluated by a comparison to the RBC results, as determined by the formula. Companies that do not maintain statutory capital and surplus at a level in excess of the company action level RBC are required to take specified actions. At December 31, 2017 and 2016, actual statutory capital and surplus for Kinsale Insurance substantially exceeded the regulatory requirements. Dividend payments to Kinsale from Kinsale Insurance are restricted by state insurance laws as to the amount that may be paid without prior approval of the regulatory authorities of Arkansas. The maximum dividend distribution is limited by Arkansas law to the greater of 10% of policyholder surplus as of December 31 of the previous year or net income, not including realized capital gains, for the previous calendar year. Dividend payments are further limited to that part of available policyholder surplus which is derived from net profits on its business. The maximum dividend distribution that can be paid by Kinsale Insurance during 2018 without prior approval is $23.7 million. |
Unaudited Selected Quarterly Financial Data |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information | 17. Unaudited selected quarterly financial data The following is a summary of the unaudited quarterly results of operations:
Due to differences in weighted average common shares outstanding, quarterly earnings per share may not add up to the totals reported for the full year. |
Schedule II - Condensed Financial Information of Registrant |
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information of Parent Company Only Disclosure | Schedule II KINSALE CAPITAL GROUP, INC. AND SUBSIDIARIES Condensed Financial Information of Registrant Balance Sheets
See accompanying notes. See accompanying Report of Independent Registered Public Accounting Firm. Schedule II KINSALE CAPITAL GROUP, INC. AND SUBSIDIARIES Condensed Financial Information of Registrant Statements of Income and Comprehensive Income (Loss)
See accompanying notes. See accompanying Report of Independent Registered Public Accounting Firm. Schedule II KINSALE CAPITAL GROUP, INC. AND SUBSIDIARIES Condensed Financial Information of Registrant Statements of Cash Flows
See accompanying notes. See accompanying Report of Independent Registered Public Accounting Firm. KINSALE CAPITAL GROUP, INC. Condensed Financial Information of Registrant Notes to Condensed Financial Information 1. Accounting policies Organization Kinsale Capital Group, Inc., a Delaware domiciled insurance holding company, was formed on June 3, 2009 for the purpose of acquiring and managing insurance entities. Basis of presentation The accompanying condensed financial statements have been prepared using the equity method. Under the equity method, the investment in consolidated subsidiaries is stated at cost plus equity in undistributed earnings of consolidated subsidiaries since the date of acquisition. These condensed financial statements should be read in conjunction with the Company’s consolidated financial statements. Certain prior year amounts have been reclassified to conform to the current year's presentation. Estimates and assumptions Preparation of the condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed financial statements and accompanying disclosures. Those estimates are inherently subject to change, and actual results may ultimately differ from those estimates. Dividends from subsidiaries On June 9, 2017, cash dividends of $4.5 million were paid to Kinsale Capital Group, Inc. by its wholly-owned subsidiary, Kinsale Insurance Company. |
Schedule V - Valuation and Qualifying Accounts |
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Valuation and Qualifying Accounts [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule V - Valuation and Qualifying Accounts | Schedule V KINSALE CAPITAL GROUP, INC. AND SUBSIDIARIES Valuation and Qualifying Accounts
See accompanying Report of Independent Registered Public Accounting Firm. |
Summary of significant accounting policies (Policies) |
12 Months Ended |
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Accounting Policies [Abstract] | |
Principles of consolidation | Principles of consolidation The accompanying consolidated financial statements include the accounts of Kinsale Capital Group, Inc. and its wholly-owned subsidiaries (referred to as "Kinsale" or, with its subsidiaries, the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation. |
Use of estimates | Use of estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles ("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 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. These reviews include evaluating the adequacy of reserves for unpaid losses and loss adjustment expenses, allowance for doubtful accounts and uncollectible reinsurance, fair value of investments, as well as evaluating the investment portfolio for other-than-temporary declines in fair value. |
Cash and cash equivalents | Cash and cash equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. |
Short-term investments | Short-term investments Short-term investments are carried at cost, which approximates fair value. Short-term investments have maturities greater than three months but less than one year at the date of purchase. |
Fixed maturity and equity securities | Fixed maturity and equity securities Fixed maturity securities and equity securities are classified as available-for-sale and reported at fair value. Unrealized gains and losses on these securities are excluded from net earnings but are recorded as a separate component of comprehensive income (loss) and stockholders’ equity, net of deferred income taxes. The Company regularly evaluates its fixed maturity securities and equity securities using both quantitative and qualitative criteria to determine impairment losses for other-than-temporary declines in the fair value of the investments. See Note 2 for further discussion of other-than-temporary impairments ("OTTI"). Interest on fixed maturity securities is credited to earnings as it accrues. Premiums and discounts are amortized or accreted over the lives of the related fixed maturities. Dividends on equity securities are included in earnings on the ex-dividend date. Realized gains and losses on disposition of investments are based on specific identification of the investments sold on the trade date. |
Reinsurance | Reinsurance Reinsurance premiums, commissions, and ceded unearned premiums on reinsured business are accounted for on a basis consistent with that used in accounting for the original policies issued and the terms of the reinsurance contracts. The Company receives ceding commissions in connection with certain ceded reinsurance. The ceding commissions are capitalized and amortized as a reduction of underwriting, acquisition and insurance expenses. Reinsurance recoverables represent paid losses and loss adjustment expenses and reserves for unpaid losses and loss adjustment expenses ceded to reinsurers that are subject to reimbursement under reinsurance treaties. The method for determining reinsurance recoverables for unpaid losses and loss adjustment expenses involves reviewing actuarial estimates of gross unpaid losses and loss adjustment expenses to determine the Company's ability to cede unpaid losses and loss adjustment expenses under the Company's existing reinsurance contracts. This method is continually reviewed and updated and any resulting adjustments are reflected in earnings in the period identified. See Note 8 for a further discussion of the Company's reinsurance program. |
Premiums receivable, net | Premiums receivable, net Premiums receivable balances are carried at face value, net of any allowance for doubtful accounts. The allowance for doubtful accounts represents an estimate of amounts considered uncollectible based on the Company’s assessment of the collectability of receivables that are past due. The Company recorded an allowance for doubtful accounts of $2.1 million and $2.0 million at December 31, 2017 and 2016, respectively, and believes that all other amounts due are collectible. |
Deferred policy acquisition costs, net of ceding commissions | Deferred policy acquisition costs, net of ceding commissions The Company defers commissions, net of ceding commissions, and certain other costs that are directly related to the successful acquisition of insurance contracts. All eligible costs are capitalized and charged to expense in proportion to premium earned over the estimated policy life. To the extent that unearned premiums on existing policies are not adequate to cover the related costs and expenses, deferred policy acquisition costs are charged to earnings. The Company considers anticipated investment income in determining whether a premium deficiency exists. |
Property and equipment, net | Property and equipment, net Property and equipment are stated at cost less accumulated depreciation. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives range from seven to ten years for furniture and equipment, three to seven years for electronic data processing hardware and software, and from two to six years for leasehold improvements, which is the shorter of the estimated useful life or the lease term. Property and equipment is included in "other assets" in the accompanying consolidated balance sheets. |
Intangible assets | Intangible assets Intangible assets are recorded at fair value at the date of acquisition. The Company's intangible assets are comprised solely of indefinite-lived intangible assets, which arise from regulatory approvals granted by the various state insurance departments to write insurance business in the respective states on a non-admitted basis. In accordance with U.S. GAAP, amortization of indefinite-lived intangible assets is not permitted. Indefinite-lived intangible assets are tested for impairment during the fourth quarter on an annual basis, or earlier if there is reason to suspect that their values may have been diminished or impaired. There were no impairments recognized in 2017, 2016, or 2015. In addition, as of December 31, 2017, no triggering events occurred that suggested an updated review was necessary. |
Reserves for unpaid losses and loss adjustment expenses | Reserves for unpaid losses and loss adjustment expenses Reserves for unpaid losses and loss adjustment expenses represent management's best estimate of ultimate unpaid cost of all reported and unreported losses and loss adjustment expenses incurred prior to the financial statement date. The estimates are based on an actuarial method that uses management’s initial expected loss ratio, expected reporting patterns for losses based on industry data and the Company’s actual reported losses and loss adjustment expenses. All estimates are regularly reviewed and, as experience develops and new information becomes known, the reserves for unpaid losses and loss adjustment expenses are adjusted as necessary. Such adjustments are reflected in the results of operations in the period in which they are determined. Although management believes that the reserves for losses and loss adjustment expenses are reasonable, due to the inherent uncertainty in estimating reserves for unpaid losses and loss adjustment expenses, it is possible that the Company’s actual incurred losses and loss adjustment expenses will not develop in a manner consistent with the assumptions inherent in the determination of these reserves. If actual liabilities do exceed recorded amounts, there will be an adverse effect. Furthermore, we may determine that recorded reserves are more than adequate to cover expected losses which will result in a reduction to the reserves. The Company believes that the reserves for unpaid losses and loss adjustment expenses at December 31, 2017 are adequate and represent a reasonable estimate of the Company's future obligations. See Note 7 for a further discussion of reserves for unpaid losses and loss adjustment expenses. |
Revenue recognition | Revenue recognition Premiums are recognized as revenue ratably over the term of the insurance contracts, net of ceded reinsurance. Unearned premiums are calculated on a daily pro rata basis. |
Income taxes | Income taxes Deferred income tax assets and liabilities are determined based on the difference between the financial statement and the tax bases of assets and liabilities, using enacted tax rates expected to be in effect during the year in which the basis differences reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are recorded when it is more likely than not that some portion, or all, of the deferred tax assets will not be realizable. Management evaluates the realizability of the deferred tax assets and assesses the need for any valuation allowance adjustment. Valuation allowances on deferred tax assets are estimated based on the Company's assessment of the realizability of such amounts. The Company provides for uncertain tax positions, and the related interest and penalties, based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. To the extent that the anticipated tax outcome of these uncertain tax positions changes, such changes in estimate will impact the income tax provision in the period in which such determination is made. The Company recognizes accrued interest and penalties related to uncertain tax positions as a component of income tax expense. |
Commitments and contingencies | Commitments and contingencies Liabilities for loss contingencies, arising from noninsurance policy claims, assessments, litigation, fines, and penalties and other sources, are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. |
Fair value of financial instruments | Fair value of financial instruments The fair values of certain financial instruments are determined based on the fair value hierarchy. U.S. GAAP guidance requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance also describes three levels of inputs that may be used to measure fair value. The following was considered in the estimation of fair value for each class of financial instruments for which it was practicable to estimate that value. The Company’s investment manager uses independent pricing vendors to estimate the fair value of fixed maturity securities and the Company’s management reviews these prices for reasonableness. U.S. Treasury Securities that have quoted prices in active markets are included in the amounts disclosed as Level 1. For other fixed maturity securities, the pricing vendors use a pricing methodology involving the market approach, including pricing models which use prices and relevant market information regarding a particular security or securities with similar characteristics to establish a valuation. The estimates of fair value of these fixed maturity investments are included in the amounts disclosed as Level 2. For those bonds where significant inputs are unobservable, Level 3 inputs, the Company's investment manager obtains valuations from pricing vendors using the market approach and income approach valuation techniques. For equity securities, the Company’s investment manager uses prices from independent pricing vendors to estimate fair value. The fair value estimates of exchange traded funds are based on quoted prices in an active market and are disclosed as Level 1.The fair value estimates of preferred stock are based on observable market data and, as a result, are disclosed as Level 2. Fair value disclosures for investments are included in Notes 2 and 3. |
Stock-based compensation | Stock-based compensation Stock-based compensation is expensed based upon the estimated fair value of employee stock awards. Compensation cost for awards of equity instruments to employees is measured based on the grant-date fair value of those awards and compensation expense is recognized over the service period that the awards vest. Forfeitures of stock-based compensation awards are recognized as they occur. See Note 9 for further discussion and related disclosures regarding stock-based compensation. |
Prospective accounting pronouncements | Prospective accounting pronouncements 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. Upon adoption, a cumulative-effect adjustment to the balance sheet will be made as of the beginning of the fiscal year of adoption. For the year ended December 31, 2017, accumulated other comprehensive income included $6.5 million of net unrealized gains on equity securities, net of taxes. Adoption of this ASU is not expected to have a material impact on the Company's financial position or cash flows, but may have a material impact on the Company's results of operations in the future as changes in the fair value of equity instruments will be presented in net income rather than other comprehensive income. 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 applicable 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 as in today’s practice. 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. ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities On March 30, 2017, the FASB issued ASU 2017-08, "Premium Amortization on Purchased Callable Debt Securities," which shortens the amortization period of the premium for certain callable debt securities, from the contractual maturity date to the earliest call date. This ASU is effective in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted, including in an interim period. Upon adoption, the update will be applied on a modified retrospective basis, with a cumulative-effect adjustment 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) |
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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 December 31, 2017 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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Schedule of Realized Gain (Loss) | The following table presents net investment gains on investments:
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Change in Unrealized Gains (Losses) on Investments | The following table presents the change in available-for-sale gross unrealized gains or losses by investment type:
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Fair value measurements (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [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 December 31, 2017 and 2016, by level within the fair value hierarchy.
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Deferred policy acquisition costs (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Policy Acquisition Costs Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Policy Acquisition Costs | The following table presents the amounts of policy acquisition costs deferred and amortized for the years ended:
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Underwriting, acquisition and insurance expenses (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Underwriting, Acquisition and Insurance Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Underwriting, Acquisition and Insurance Expenses | Underwriting, acquisition and insurance expenses consist of the following:
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Income taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Income Tax Expense (Benefit) | Income tax expense includes the following components for the years ending December 31, 2017, 2016 and 2015:
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Effective Income Tax Rate Reconciliation | The Company’s effective income tax rate on income before income taxes differs from the prevailing federal income tax rate and is summarized as follows:
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Deferred Tax Assets and Liabilities | The significant components of the net deferred tax asset are summarized as follows:
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Unrecognized Tax Benefits | A reconciliation of the beginning and ending amounts of unrecognized tax benefits for 2017 and 2016 was as follows:
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Reserves for unpaid losses and loss adjustment expenses (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liability for Unpaid Claims and Claims Adjustment Expense, Activity in Liability [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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Reserves for unpaid losses and loss adjustment expenses Reserve Development (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Claims Development | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability | The reconciliation of the net incurred and paid claims development tables to the liability for claims and claim adjustment expenses in the consolidated statement of financial position is as follows:
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Property [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Claims Development | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-duration Insurance Contracts, Claims Development | Property
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-duration Insurance Contracts, Schedule of Historical Claims Duration | The following is supplementary information about average historical claims duration as of December 31, 2017:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Casualty - claims made [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Claims Development | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-duration Insurance Contracts, Claims Development | Casualty - Claims Made
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Casualty - occurrence [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Claims Development | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-duration Insurance Contracts, Claims Development | Casualty - Occurrence
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Casualty [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Claims Development | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-duration Insurance Contracts, Schedule of Historical Claims Duration | The following is supplementary information about average historical claims duration as of December 31, 2017:
|
Reinsurance (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effects of Reinsurance on Premiums Written and Earned | The following table summarizes the effect of reinsurance on premiums written and earned:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Amounts Related to MLQS Contracts | The following table summarizes the amounts related to the MLQS contracts:
|
Stockholders' Equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Common Stock Outstanding Roll Forward | Changes in the shares of outstanding common stock were as follows:
|
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Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions | The value of the options granted was estimated at the date of grant using the Black-Scholes pricing model using the following assumptions:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation, Stock Options, Activity | :
|
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Schedule of Nonvested Share Activity | The following table summarizes nonvested share-based awards under the 2016 Incentive Plan as of December 31, 2017:
|
Earnings per share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | The following table represents a reconciliation of the numerator and denominator of the basic and diluted earnings per share computations contained in the consolidated financial statements:
|
Commitments and contingencies (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||
Minimum Future Rental Payments | Minimum future rental payments, excluding taxes, insurance and other operating expenses, under the noncancelable operating leases in effect at December 31, 2017 are as follows (in thousands):
|
Other comprehensive income (loss) (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss) | The following table summarizes the components of other comprehensive income (loss):
|
Underwriting information (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross Written Premiums by Underwriting Division | Gross written premiums by underwriting division are presented below:
|
Statutory financial information (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Statutory financial information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Statutory Net Income and Statutory Capital and Surplus | Statutory net income and statutory capital and surplus for Kinsale Insurance as of December 31, 2017, 2016, and 2015 and for the years then ended are summarized as follows:
|
Unaudited Seleted Quarterly Financial Data (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information [Table Text Block] | The following is a summary of the unaudited quarterly results of operations:
|
Schedule II - Condensed Financial Information of Registrant Schedule II - Condensed Financial Information of Registrant, Balance Sheets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Balance Sheet |
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Schedule II - Condensed Financial Information of Registrant Schedule II - Condensed Financial Information of Registrant, Statements of Income and Comprehensive Income (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Income Statement |
|
Schedule II - Condensed Financial Information of Registrant Schedule II - Condensed Financial Information of Registrant, Statements of Cash Flows (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Cash Flow Statement |
|
Description of business - (Details) |
Dec. 31, 2017 |
---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of states in which company is authorized to write business | 50 |
Summary of significant accounting policies Intangible assets (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Excess and surplus lines insurance authorization [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Impairment indefinite-lived intangible asset | $ 0 | $ 0 | $ 0 |
Investments, Net Investment Income (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Interest [Abstract] | |||
Taxable bonds | $ 6,233 | $ 6,031 | $ 4,509 |
Municipal bonds (tax exempt) | 3,619 | 1,808 | 1,514 |
Dividends on equity securities | 1,041 | 442 | 372 |
Cash, cash equivalents, and short-term investments | 678 | 93 | 9 |
Gross investment income | 11,571 | 8,374 | 6,404 |
Investment expenses | (1,002) | (887) | (761) |
Net investment income | $ 10,569 | $ 7,487 | $ 5,643 |
Investments Realized Investment Gains and Losses (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Realized Gains [Abstract] | |||
Sales of fixed maturities | $ 220 | $ 479 | $ 63 |
Sales of short-term and other securities | 0 | 2 | 6 |
Total realized gains | 220 | 481 | 69 |
Realized Losses [Abstract] | |||
Sales of fixed maturities | (69) | (29) | (10) |
Other-than-temporary impairments | 0 | (276) | 0 |
Total realized losses | (69) | (305) | (10) |
Net investment gains | $ 151 | $ 176 | $ 59 |
Investments, Unrealized Gain (Losses) on Investments (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Change in net unrealized gains (losses) [Abstract] | |||
Change in unrealized gains (losses) | $ 9,431 | $ (984) | $ (2,405) |
Fixed Maturities [Member] | |||
Change in net unrealized gains (losses) [Abstract] | |||
Change in unrealized gains (losses) | 5,239 | (2,952) | (1,937) |
Equity Securities [Member] | |||
Change in net unrealized gains (losses) [Abstract] | |||
Change in unrealized gains (losses) | $ 4,192 | $ 1,968 | $ (468) |
Investments Investment Deposits and Payables (Details) - USD ($) $ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Invested assets on deposit with state regulatory authorities | $ 7.1 | $ 7.0 |
Payable for investments purchased | $ 1.0 | $ 0.6 |
Fair value measurements Fair value measurements 2 (Details) - USD ($) |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Transfers from Level 1 to Level 2 | $ 0 | $ 0 |
Transfers from Level 2 to Level 1 | 0 | 0 |
Assets measured at fair value on a nonrecurring basis | 0 | 0 |
Liabilities measured at fair value on a nonrecurring basis | $ 0 | $ 0 |
Deferred policy acquisition costs (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Movement analysis of deferred policy acquisition costs [Roll Forward] | |||
Balance, beginning of period | $ 10,150 | ||
Balance, beginning of period | $ (1,696) | $ (3,763) | |
Policy acquisition costs deferred: | |||
Direct commissions deferred | 32,927 | 28,027 | 26,142 |
Ceding commissions deferred | (9,984) | (9,213) | (34,478) |
Other underwriting and policy acquisition costs deferred | 2,827 | 2,999 | 3,013 |
Policy acquisition costs deferred | 25,770 | 21,813 | (5,323) |
Amortization of net policy acquisition costs | (24,145) | (9,967) | (7,390) |
Balance, end of period | $ 11,775 | $ 10,150 | |
Balance, end of period | $ (1,696) |
Underwriting, acquisition and insurance expenses (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Underwriting, Acquisition and Insurance Expenses [Abstract] | |||
Direct commissions | $ 31,001 | $ 26,715 | $ 25,241 |
Ceding commissions | (9,799) | (20,568) | (42,081) |
Other expenses | 22,944 | 22,404 | 19,649 |
Total | 44,146 | 28,551 | 2,809 |
Salaries, employee benefits and bonus expense | $ 17,700 | $ 18,700 | $ 15,500 |
Income taxes (Details) - USD ($) |
12 Months Ended | |||
---|---|---|---|---|
Jan. 01, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Abstract] | ||||
Federal income taxes paid | $ 13,500,000 | $ 13,300,000 | $ 13,600,000 | |
Income taxes receivable | $ 800,000 | |||
Income taxes payable | 100,000 | |||
Statutory income tax rate, percent | 21.00% | 35.00% | ||
Transition adjustment for loss discounting | $ 3,524,000 | 0 | ||
Components of income tax expense | ||||
Current federal income tax expense | 12,555,000 | 12,808,000 | 12,163,000 | |
Deferred federal income tax benefit | 1,065,000 | 561,000 | (879,000) | |
Income tax expense (benefit) | 13,620,000 | 13,369,000 | 11,284,000 | |
Effective income tax rate reconciliation, amount [Abstract] | ||||
Income tax expense at federal income tax rate of 35% | 13,482,000 | 13,837,000 | 11,745,000 | |
Tax-exempt investment income | (1,064,000) | (528,000) | (436,000) | |
Stock options exercised | (471,000) | 0 | 0 | |
Effect of tax rate change | 1,915,000 | 0 | 0 | |
Other | (242,000) | 60,000 | (25,000) | |
Income tax expense (benefit) | $ 13,620,000 | $ 13,369,000 | $ 11,284,000 |
Income taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Deferred tax assets [Abstract] | ||
Unpaid losses and loss adjustment expenses | $ 7,001 | $ 4,528 |
Unearned premiums | 3,748 | 5,308 |
Organizational costs | 230 | 1,513 |
State operating loss carryforwards | 645 | 476 |
Allowance for doubtful accounts | 449 | 693 |
Other | 431 | 438 |
Deferred tax assets before allowance | 12,504 | 12,956 |
Less: valuation allowance | (690) | (623) |
Total deferred tax assets | 11,814 | 12,333 |
Deferred tax liabilities [Abstract] | ||
Unrealized gain on investments | 2,375 | 620 |
Deferred policy acquisition costs | 2,473 | 3,553 |
Intangible assets | 743 | 1,238 |
Transition adjustment for loss discounting | 3,524 | 0 |
Other | 207 | 317 |
Total deferred tax liabilities | 9,322 | 5,728 |
Net deferred tax assets | 2,492 | 6,605 |
State Jurisdiction [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | $ 13,600 | $ 12,200 |
Income taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Sep. 30, 2017 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Reconciliation of the beginning and ending amounts of unrecognized tax benefits [Roll Forward] | |||
Balance at beginning of year | $ 1,003 | $ 1,125 | |
Decreases for tax positions taken during prior years | (1,003) | (122) | |
Balance at end of year | $ 0 | $ 1,003 | |
Reduction in unrecognized tax benefits resulting from lapse of statute of limitations | $ 1,000 |
Reinsurance, Effects of Reinsurance on Premiums Written and Earned (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Written [Abstract] | |||
Direct | $ 223,191 | $ 188,440 | $ 176,865 |
Assumed | 0 | 38 | 144 |
Ceded | (33,719) | (21,214) | (92,991) |
Net written premiums | 189,472 | 167,264 | 84,018 |
Earned [Abstract] | |||
Direct | 209,426 | 180,794 | 170,401 |
Assumed | 0 | 53 | 148 |
Ceded | (33,373) | (47,031) | (96,227) |
Net earned premiums | 176,053 | 133,816 | 74,322 |
Ceded incurred losses and loss adjustment expenses | $ 12,200 | $ 13,700 | $ 41,200 |
Reinsurance Reinsurance Balances (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
|
Concentration Risk [Line Items] | |||
Reinsurance recoverable for unpaid losses | $ 48,224 | $ 70,199 | $ 95,503 |
Reinsurance recoverable for paid losses | 1,400 | ||
Ceded unearned premiums | $ 13,858 | $ 13,512 | |
Reinsurance Receivable, Net [Member] | Major Reinsurers [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 92.40% | ||
Number of Major Reinsurers | 5 |
Stockholders' Equity, Initial Pubic Offering (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||||||
---|---|---|---|---|---|---|---|
May 17, 2017 |
Dec. 06, 2016 |
Aug. 02, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Jul. 28, 2016 |
|
Class of Stock [Line Items] | |||||||
Share price (in dollars per share) | $ 33.00 | $ 27.50 | |||||
Stock issued | 7,590,000 | ||||||
Common stock sold by selling stockholders (in shares) | 4,557,774 | 3,864,000 | 2,590,000 | ||||
Net proceeds from IPO, net of discounts, commissions and other offering costs | $ 72,800 | $ 0 | $ 0 | $ 90 | |||
IPO [Member] | |||||||
Class of Stock [Line Items] | |||||||
Share price (in dollars per share) | $ 16.00 | $ 16.00 | |||||
Stock issued | 5,000,000 | ||||||
Underwriters Option [Member] | |||||||
Class of Stock [Line Items] | |||||||
Stock issued | 990,000 | ||||||
Common stock sold by selling stockholders (in shares) | 594,492 | 504,000 |
Stockholders' Equity - Equity-based Compensation, Restricted Stock (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
2010 Stock Incentive Plan [Member] | Restricted Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Restricted stock grants | 33,500 | ||
Total grant date fair value | $ 40 | ||
Fair value of share-based awards vested | $ 100 | $ 100 | |
Minimum [Member] | Class B Common Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term for liquidity event | 0 months | ||
Maximum [Member] | Class B Common Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term for liquidity event | 6 months |
Stockholders' Equity Stockholders' Equity - Subsequent Event (Details) - Subsequent Event [Member] |
Jan. 01, 2018
$ / shares
shares
|
---|---|
Subsequent Event [Line Items] | |
Restricted stock granted (in shares) | shares | 6,666 |
Award vesting period | 1 year |
2016 Omnibus Incentive Plan [Member] | |
Subsequent Event [Line Items] | |
Granted (in dollars per share) | $ / shares | $ 45.00 |
Credit Agreement (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Dec. 08, 2016 |
Sep. 30, 2016 |
Jun. 21, 2013 |
Dec. 31, 2016 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 04, 2015 |
Sep. 29, 2014 |
Mar. 10, 2014 |
|
Debt Instrument [Line Items] | |||||||||
Interest paid | $ 1.0 | $ 1.1 | |||||||
Interest expense | $ 1.3 | $ 1.2 | |||||||
PrivateBank [Member] | Secured Term Loan [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Write off of debt issuance costs | $ 0.3 | ||||||||
PrivateBank [Member] | Secured Term Loan [Member] | LIBOR [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Margin on variable rate | 2.75% | 2.75% | |||||||
Description of variable rate basis | 3-month LIBOR | ||||||||
PrivateBank [Member] | Credit Agreement [Member] | Secured Term Loan [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest paid | $ 0.2 | ||||||||
Term of loan | 5 years | ||||||||
Amount of loan commitment | $ 17.5 | $ 30.0 | $ 28.0 | $ 25.0 | |||||
Maturity date | Jun. 30, 2018 | ||||||||
Repayment of term loan | $ 2.5 | ||||||||
Repayment of term loan, final | $ 27.5 |
Commitments and contingencies (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Commitments and Contingencies Disclosure [Abstract] | |||
Expenses on lease obligation | $ 300 | $ 400 | $ 500 |
Minimum future rental payments [Abstract] | |||
2018 | 529 | ||
2019 | 545 | ||
2020 | 230 | ||
Total minimum rental payments | $ 1,304 |
Employee benefit plan (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Retirement Benefits [Abstract] | |||
Expenses related to employee benefit plan | $ 1.0 | $ 0.9 | $ 0.8 |
Other comprehensive income (loss) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||
Unrealized gains (losses) arising during the period, before income taxes | $ 9,563 | $ (830) | $ (2,347) |
Income taxes | (3,094) | 290 | 821 |
Unrealized gains (losses) arising during the period, net of income tax | 6,469 | (540) | (1,526) |
Less reclassification adjustment [Abstract] | |||
Net realized investment gains (losses) | 132 | 154 | 57 |
Income taxes | (47) | (54) | (20) |
Reclassification adjustment included in net income | 85 | 100 | 37 |
Other comprehensive income (loss) | $ 6,384 | $ (640) | $ (1,563) |
Statutory financial information (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Statutory net income and statutory capital surplus [Abstract] | |||
Statutory net income | $ 23,841 | $ 22,850 | $ 21,972 |
Statutory capital and surplus | $ 213,833 | $ 193,387 | $ 127,675 |
Percentage of policyholder surplus as of end of prior year used in determining maximum dividend distribution | 10.00% | ||
Maximum dividend distribution that can be paid without prior approval | $ 23,700 |
Unaudited Quarterly Financial Data (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Gross written premiums | $ 56,943 | $ 55,633 | $ 57,753 | $ 52,862 | $ 47,466 | $ 47,823 | $ 50,107 | $ 43,082 | $ 223,191 | $ 188,478 | $ 177,009 |
Revenues | 50,742 | 47,839 | 45,508 | 42,687 | 40,353 | 34,868 | 33,676 | 32,718 | 186,776 | 141,615 | 80,596 |
Net income | 5,924 | 4,201 | 8,495 | 6,281 | 6,871 | 7,982 | 6,057 | 5,257 | 24,901 | 26,167 | 22,273 |
Comprehensive income | $ 7,422 | $ 5,840 | $ 10,669 | $ 7,354 | $ 1,216 | $ 7,981 | $ 8,947 | $ 7,383 | $ 31,285 | $ 25,527 | $ 20,710 |
Earnings Per Share, Basic [Abstract] | |||||||||||
Earnings per share - basic (in dollars per share) | $ 0.28 | $ 0.20 | $ 0.41 | $ 0.30 | $ 0.33 | $ 0.24 | $ 0.00 | $ 0.00 | |||
Basic earnings per share - Class A common stock | 0.00 | 0.19 | 0.42 | 0.37 | |||||||
Basic earnings per share - Class B common stock | 0.00 | 0.21 | 0.19 | 0.07 | |||||||
Diluted earnings per share [Abstract] | |||||||||||
Earnings per share - diluted (in dollars per share) | $ 0.27 | $ 0.20 | $ 0.40 | $ 0.29 | 0.32 | 0.24 | 0.00 | 0.00 | |||
Diluted earnings per share - Class A common stock | 0.00 | 0.19 | 0.42 | 0.37 | |||||||
Diluted earnings per share - Class B common stock | $ 0.00 | $ 0.20 | $ 0.18 | $ 0.07 |
Schedule II - Condensed Financial Information of Registrant, Statements of Income and Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Revenues: | |||||||||||
Total revenues | $ 50,742 | $ 47,839 | $ 45,508 | $ 42,687 | $ 40,353 | $ 34,868 | $ 33,676 | $ 32,718 | $ 186,776 | $ 141,615 | $ 80,596 |
Expenses [Abstract] | |||||||||||
Other expenses | 429 | 2,567 | 1,992 | ||||||||
Interest expense | 1,300 | 1,200 | |||||||||
Total expenses | 148,255 | 102,079 | 47,039 | ||||||||
Income before income taxes | 38,521 | 39,536 | 33,557 | ||||||||
Income tax benefit | 13,620 | 13,369 | 11,284 | ||||||||
Net income | 5,924 | 4,201 | 8,495 | 6,281 | 6,871 | 7,982 | 6,057 | 5,257 | 24,901 | 26,167 | 22,273 |
Other Comprehensive Income (Loss) [Abstract] | |||||||||||
Total comprehensive income | $ 7,422 | $ 5,840 | $ 10,669 | $ 7,354 | $ 1,216 | $ 7,981 | $ 8,947 | $ 7,383 | 31,285 | 25,527 | 20,710 |
Parent Company [Member] | |||||||||||
Revenues: | |||||||||||
Management fees from subsidiaries | 2,037 | 1,815 | 636 | ||||||||
Total revenues | 2,037 | 1,815 | 636 | ||||||||
Expenses [Abstract] | |||||||||||
Other operating expenses | 2,526 | 2,395 | 640 | ||||||||
Other expenses | 652 | 492 | 66 | ||||||||
Interest expense | 0 | 1,339 | 1,230 | ||||||||
Total expenses | 3,178 | 4,226 | 1,936 | ||||||||
Loss before equity in net income of subsidiaries | (1,141) | (2,411) | (1,300) | ||||||||
Income tax benefit | (739) | (844) | (432) | ||||||||
Loss before equity in net income of subsidiaries | (402) | (1,567) | (868) | ||||||||
Equity in net income of subsidiaries | 25,303 | 27,734 | 23,141 | ||||||||
Net income | 24,901 | 26,167 | 22,273 | ||||||||
Other Comprehensive Income (Loss) [Abstract] | |||||||||||
Equity in other comprehensive earnings (losses) of subsidiaries | 6,384 | (640) | (1,563) | ||||||||
Total comprehensive income | $ 31,285 | $ 25,527 | $ 20,710 |
Schedule II - Condensed Financial Information of Registrant Schedule II - Condensed Financial Information of Registrant, Notes (Details) $ in Millions |
Jun. 02, 2017
USD ($)
|
---|---|
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Cash dividends paid to parent company by consolidated subsidiaries | $ 4.5 |
Schedule V - Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Allowance for Premiums Receivable [Member] | |||
Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Balance at beginning of period | $ 1,977 | $ 2,088 | $ 595 |
Additions amounts charged to expense | 488 | 276 | 1,493 |
Deductions amounts written off or disposals | (353) | (387) | 0 |
Balance at end of period | 2,112 | 1,977 | 2,088 |
Valuation Allowance for Deferred Tax Assets [Member] | |||
Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Balance at beginning of period | 623 | 529 | 489 |
Additions amounts charged to expense | 68 | 94 | 40 |
Deductions amounts written off or disposals | 0 | 0 | 0 |
Balance at end of period | $ 691 | $ 623 | $ 529 |
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