Note 5 - Debt

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Debt Disclosure [Text Block]

5. DEBT

Debt Obligation

As of December 31, 2023, and 2022, the Company had $15,000,000 in outstanding debt, respectively.

The Company has borrowing capacity of $48.2 million with the Federal Home Loan Bank of Chicago (FHLBC), which is 25% of net admitted statutory assets of ICC as of year-end. As of  December 31, 2023, the Company has used $15.0 million of that capacity.

As a part of the Company's response to COVID-19, the Company obtained in March 2020 a $6.0 million loan from the FHLBC as a precautionary measure to increase its cash position, to provide increased liquidity, and to compensate for potential reductions in premium receivable collections. The term of the loan is five years bearing interest at 1.4%. The Company pledged $6.8 million of fixed income securities as collateral for this loan.

In May 2021, the Company entered into a $4.0 million, 0.74% fixed interest, five-year FHLBC loan.

In May 2022, the Company entered into a $5.0 million, 1.36%, fixed interest, five-year FHLBC loan.

The Company has $19.7 million in bonds pledged as collateral for all FHLBC loans.

Revolving Line of Credit

We increased our revolving line of credit with a commercial bank from $2.0 million to $4.0 million in July 2022. As of December 31, 2023, the balance on the line of credit was $0. The line of credit is priced at prime plus 0.5% with a floor of 6.0% and renews annually with a current expiration date of July 5, 2024. The Company pledged $4.0 million of business assets in the event the Company draws down on the line of credit. This agreement includes an annually calculated financial debt covenant requiring a minimum total adjusted capital of $21.0 million. Total adjusted capital is the sum of an insurer's statutory capital and surplus as determined in accordance with the statutory accounting applicable to the annual financial statements required to be filed with the Illinois Department of Insurance. As of  December 31, 2023, our total adjusted capital is $62.9 million. There was no interest paid on the line of credit during the years ended  December 31, 2023, and 2022.