INDIANA
(State or other jurisdiction of
Incorporation or organization
|
35-0160330
(I.R.S. Employer
Identification Number)
|
1099 N. Meridian Street, Indianapolis, Indiana
(Address of principal executive offices)
|
46204
(Zip Code)
|
Unaudited Consolidated Balance Sheets
|
||||||||
(in thousands, except share data)
|
||||||||
June 30
|
December 31
|
|||||||
2013
|
2012
|
|||||||
Assets
|
||||||||
Investments:
|
||||||||
Fixed maturities
|
$ | 379,103 | $ | 445,669 | ||||
Equity securities
|
120,946 | 107,582 | ||||||
Limited partnerships
|
60,474 | 59,954 | ||||||
Short-term
|
4,226 | 4,201 | ||||||
564,749 | 617,406 | |||||||
Cash and cash equivalents
|
115,920 | 71,549 | ||||||
Accounts receivable
|
86,313 | 83,400 | ||||||
Reinsurance recoverable
|
181,584 | 175,191 | ||||||
Other assets
|
56,631 | 32,232 | ||||||
Current federal income taxes
|
2,523 | 3,246 | ||||||
$ | 1,007,720 | $ | 983,024 | |||||
Liabilities and shareholders' equity
|
||||||||
Reserves for losses and loss expenses
|
$ | 458,342 | $ | 455,454 | ||||
Reserves for unearned premiums
|
34,710 | 37,273 | ||||||
Short-term borrowings
|
10,000 | 10,000 | ||||||
Accounts payable and accrued expenses
|
139,253 | 125,007 | ||||||
Deferred federal income taxes
|
8,175 | 8,578 | ||||||
650,480 | 636,312 | |||||||
Shareholders' equity:
|
||||||||
Common stock-no par value:
|
||||||||
Class A voting -- authorized 3,000,000 shares;
|
||||||||
outstanding -- 2013 - 2,623,109; 2012 - 2,623,109
|
112 | 112 | ||||||
Class B non-voting -- authorized 20,000,000 shares;
|
||||||||
outstanding -- 2013 - 12,295,137; 2012 - 12,290,035
|
525 | 524 | ||||||
Additional paid-in capital
|
50,374 | 50,275 | ||||||
Unrealized net gains on investments
|
34,038 | 35,467 | ||||||
Foreign exchange adjustment
|
1,495 | 1,976 | ||||||
Retained earnings
|
270,696 | 258,358 | ||||||
357,240 | 346,712 | |||||||
$ | 1,007,720 | $ | 983,024 |
Baldwin & Lyons, Inc. and Subsidiaries
|
||||||||||||||||
Unaudited Consolidated Statements of Operations
|
||||||||||||||||
(in thousands, except per share data)
|
||||||||||||||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30
|
June 30
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Revenues
|
||||||||||||||||
Net premiums earned
|
$ | 61,775 | $ | 59,655 | $ | 122,873 | $ | 121,206 | ||||||||
Net investment income
|
1,985 | 2,431 | 4,395 | 4,853 | ||||||||||||
Commissions and other income
|
1,539 | 1,623 | 2,922 | 3,128 | ||||||||||||
Net realized gains (losses) on investments, excluding
|
||||||||||||||||
impairment losses
|
787 | (5,108 | ) | 15,140 | 272 | |||||||||||
Total other-than-temporary impairment losses on investments
|
(68 | ) | (345 | ) | (74 | ) | (345 | ) | ||||||||
Net realized gains (losses) on investments
|
719 | (5,453 | ) | 15,066 | (73 | ) | ||||||||||
66,018 | 58,256 | 145,256 | 129,114 | |||||||||||||
Expenses
|
||||||||||||||||
Losses and loss expenses incurred
|
38,343 | 33,739 | 72,876 | 68,643 | ||||||||||||
Other operating expenses
|
20,413 | 19,257 | 42,439 | 38,213 | ||||||||||||
58,756 | 52,996 | 115,315 | 106,856 | |||||||||||||
Income before federal income taxes
|
7,262 | 5,260 | 29,941 | 22,258 | ||||||||||||
Federal income taxes
|
2,355 | 1,210 | 10,091 | 6,702 | ||||||||||||
Net income
|
$ | 4,907 | $ | 4,050 | $ | 19,850 | $ | 15,556 | ||||||||
Per share data:
|
||||||||||||||||
Basic and diluted earnings
|
$ | .33 | $ | .27 | $ | 1.33 | $ | 1.05 | ||||||||
Dividends paid to shareholders
|
$ | .25 | $ | .25 | $ | .50 | $ | .50 | ||||||||
Reconciliation of shares outstanding:
|
||||||||||||||||
Average shares outstanding - basic
|
14,910 | 14,837 | 14,894 | 14,832 | ||||||||||||
Dilutive effect of share equivalents
|
8 | 23 | 24 | 24 | ||||||||||||
Average shares outstanding - diluted
|
14,918 | 14,860 | 14,918 | 14,856 |
Baldwin & Lyons, Inc. and Subsidiaries
|
||||||||||||||||
Unaudited Consolidated Statements of Comprehensive Income
|
||||||||||||||||
(in thousands)
|
||||||||||||||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30
|
June 30
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Net income
|
$ | 4,907 | $ | 4,050 | $ | 19,850 | $ | 15,556 | ||||||||
Other comprehensive income, net of tax:
|
||||||||||||||||
Unrealized net gains (losses) on securities:
|
||||||||||||||||
Unrealized net gains (losses) arising during the period
|
(1,024 | ) | (4,635 | ) | 6,779 | 3,003 | ||||||||||
Less: reclassification adjustment for net gains (losses)
|
||||||||||||||||
included in net income
|
1,296 | (370 | ) | 8,208 | (397 | ) | ||||||||||
(2,320 | ) | (4,265 | ) | (1,429 | ) | 3,400 | ||||||||||
Foreign currency translation adjustments
|
(294 | ) | (223 | ) | (481 | ) | (19 | ) | ||||||||
Other comprehensive income (loss)
|
(2,614 | ) | (4,488 | ) | (1,910 | ) | 3,381 | |||||||||
Comprehensive income (loss)
|
$ | 2,293 | $ | (438 | ) | $ | 17,940 | $ | 18,937 |
Baldwin & Lyons, Inc. and Subsidiaries
|
||||||||
Unaudited Consolidated Statements of Cash Flows
|
||||||||
(in thousands)
|
||||||||
Six Months Ended
|
||||||||
June 30
|
||||||||
2013
|
2012
|
|||||||
Net cash provided by operating activities
|
$ | 10,862 | $ | 22,445 | ||||
Investing activities:
|
||||||||
Purchases of available-for-sale investments
|
(160,345 | ) | (165,890 | ) | ||||
Purchases of limited partnership interests
|
- | (1,538 | ) | |||||
Proceeds from sales or maturities
|
||||||||
of available-for-sale investments
|
219,268 | 147,345 | ||||||
Net sales (purchases) of short-term investments
|
(25 | ) | 329 | |||||
Other investing activities
|
(17,396 | ) | 2,701 | |||||
Net cash provided by (used in) investing activities
|
41,502 | (17,053 | ) | |||||
Financing activities:
|
||||||||
Dividends paid to shareholders
|
(7,512 | ) | (7,474 | ) | ||||
Net cash used in financing activities
|
(7,512 | ) | (7,474 | ) | ||||
Effect of foreign exchange rates on cash and cash equivalents
|
(481 | ) | (19 | ) | ||||
Increase (decrease) in cash and cash equivalents
|
44,371 | (2,101 | ) | |||||
Cash and cash equivalents at beginning of period
|
71,549 | 89,726 | ||||||
Cash and cash equivalents at end of period
|
$ | 115,920 | $ | 87,625 |
June 30, 2013
|
December 31, 2012
|
|||||||||||||||||||||||
Number of Securities
|
Fair Value
|
Gross Unrealized Loss
|
Number of Securities
|
Fair Value
|
Gross Unrealized Loss
|
|||||||||||||||||||
Fixed maturity securities:
|
||||||||||||||||||||||||
12 months or less
|
489 | $ | 151,419 | $ | (3,655 | ) | 170 | $ | 90,607 | $ | (483 | ) | ||||||||||||
Greater than 12 months
|
47 | 19,545 | (654 | ) | 58 | 19,283 | (799 | ) | ||||||||||||||||
Total fixed maturities
|
536 | 170,964 | (4,309 | ) | 228 | 109,890 | (1,282 | ) | ||||||||||||||||
Equity securities:
|
||||||||||||||||||||||||
12 months or less
|
23 | 7,516 | (1,272 | ) | 20 | 6,955 | (842 | ) | ||||||||||||||||
Greater than 12 months
|
4 | 2,541 | (397 | ) | 11 | 6,640 | (813 | ) | ||||||||||||||||
Total equity securities
|
27 | 10,057 | (1,669 | ) | 31 | 13,595 | (1,655 | ) | ||||||||||||||||
Total fixed maturity and equity securities
|
563 | $ | 181,021 | $ | (5,978 | ) | 259 | $ | 123,485 | $ | (2,937 | ) |
Fair Value
|
Cost or Amortized Cost
|
|||||||
One year or less
|
$ | 95,838 | $ | 95,614 | ||||
Excess of one year to five years
|
186,069 | 187,129 | ||||||
Excess of five years to ten years
|
28,815 | 29,173 | ||||||
Excess of ten years
|
2,803 | 2,561 | ||||||
Contractual maturities
|
313,525 | 314,477 | ||||||
Asset-backed securities
|
65,578 | 64,984 | ||||||
Total
|
$ | 379,103 | $ | 379,461 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30
|
June 30
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Fixed maturities:
|
||||||||||||||||
Gross gains
|
$ | 2,233 | $ | 792 | $ | 3,652 | $ | 1,342 | ||||||||
Gross losses
|
(883 | ) | (1,181 | ) | (2,220 | ) | (2,152 | ) | ||||||||
Net realized gains (losses)
|
1,350 | (389 | ) | 1,432 | (810 | ) | ||||||||||
Equity securities:
|
||||||||||||||||
Gross gains
|
893 | 152 | 12,605 | 675 | ||||||||||||
Gross losses
|
(249 | ) | (333 | ) | (1,409 | ) | (475 | ) | ||||||||
Net realized gains (losses)
|
644 | (181 | ) | 11,196 | 200 | |||||||||||
Limited partnerships - net gain (loss)
|
(1,275 | ) | (4,883 | ) | 2,438 | 537 | ||||||||||
Totals
|
$ | 719 | $ | (5,453 | ) | $ | 15,066 | $ | (73 | ) |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30
|
June 30
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Realized net gains (losses) on the disposal of securities
|
$ | 1,554 | $ | (109 | ) | $ | 10,798 | $ | (205 | ) | ||||||
Mark-to-market adjustment
|
195 | (369 | ) | 405 | (313 | ) | ||||||||||
Equity in gains (losses) of limited partnership
|
||||||||||||||||
investments - realized and unrealized
|
(1,275 | ) | (4,883 | ) | 2,438 | 537 | ||||||||||
Impairment:
|
||||||||||||||||
Write-downs based upon objective criteria
|
(68 | ) | (345 | ) | (74 | ) | (345 | ) | ||||||||
Recovery of prior write-downs
|
||||||||||||||||
upon sale or disposal
|
313 | 253 | 1,499 | 253 | ||||||||||||
Totals
|
$ | 719 | $ | (5,453 | ) | $ | 15,066 | $ | (73 | ) |
2013
|
2012
|
|||||||
Quarter ended June 30:
|
||||||||
Premiums ceded to reinsurers
|
$ | 29,398 | $ | 24,472 | ||||
Losses and loss expenses
|
||||||||
ceded to reinsurers
|
19,397 | 11,333 | ||||||
Commissions from reinsurers
|
5,214 | 3,137 | ||||||
Six months ended June 30:
|
||||||||
Premiums ceded to reinsurers
|
56,411 | 49,220 | ||||||
Losses and loss expenses
|
||||||||
ceded to reinsurers
|
41,531 | 19,137 | ||||||
Commissions from reinsurers
|
9,251 | 6,973 |
2013
|
2012
|
|||||||||||||||||||||||
Direct and Assumed Premium Written
|
Net Premium Earned
|
Segment Profit
|
Direct and Assumed Premium Written
|
Net Premium Earned
|
Segment Profit (Loss)
|
|||||||||||||||||||
Three months ended June 30:
|
||||||||||||||||||||||||
Property and Casualty Insurance
|
$ | 80,756 | $ | 49,803 | $ | 5,405 | $ | 64,760 | $ | 48,167 | $ | 6,872 | ||||||||||||
Reinsurance
|
12,074 | 11,972 | 2,910 | 14,094 | 11,488 | 5,314 | ||||||||||||||||||
Totals
|
$ | 92,830 | $ | 61,775 | $ | 8,315 | $ | 78,854 | $ | 59,655 | $ | 12,186 | ||||||||||||
Six months ended June 30:
|
||||||||||||||||||||||||
Property and Casualty Insurance
|
$ | 150,945 | $ | 97,663 | $ | 10,641 | $ | 139,986 | $ | 96,076 | $ | 13,795 | ||||||||||||
Reinsurance
|
25,776 | 25,210 | 7,679 | 28,920 | 25,130 | 11,461 | ||||||||||||||||||
Totals
|
$ | 176,721 | $ | 122,873 | $ | 18,320 | $ | 168,906 | $ | 121,206 | $ | 25,256 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30
|
June 30
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Profit:
|
||||||||||||||||
Segment profit
|
$ | 8,315 | $ | 12,186 | $ | 18,320 | $ | 25,256 | ||||||||
Net investment income
|
1,985 | 2,431 | 4,395 | 4,853 | ||||||||||||
Net gains (losses) on investments
|
719 | (5,453 | ) | 15,066 | (73 | ) | ||||||||||
Corporate expenses
|
(3,757 | ) | (3,904 | ) | (7,840 | ) | (7,778 | ) | ||||||||
Income before federal income taxes
|
$ | 7,262 | $ | 5,260 | $ | 29,941 | $ | 22,258 |
As of June 30, 2013:
|
||||||||||||||||
Description
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
U.S. government obligations
|
$ | 68,021 | $ | 68,021 | $ | - | $ | - | ||||||||
Residential mortgage-backed securities
|
16,535 | - | 16,535 | - | ||||||||||||
Commercial mortgage-backed securities
|
25,391 | - | 25,391 | - | ||||||||||||
State and municipal obligations
|
113,251 | - | 113,251 | - | ||||||||||||
Corporate securities
|
131,826 | - | 124,605 | 7,221 | ||||||||||||
Options embedded in convertible securities
|
2,137 | - | 2,137 | - | ||||||||||||
Foreign government obligations
|
21,942 | - | 21,942 | - | ||||||||||||
Total fixed maturities
|
379,103 | 68,021 | 303,861 | 7,221 | ||||||||||||
Equity securities
|
120,946 | 120,946 | - | - | ||||||||||||
Short term
|
4,226 | 4,226 | - | - | ||||||||||||
Cash equivalents
|
111,781 | - | 111,781 | - | ||||||||||||
$ | 616,056 | $ | 193,193 | $ | 415,642 | $ | 7,221 |
As of December 31, 2012:
|
||||||||||||||||
Description
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
U.S. government obligations
|
$ | 70,742 | $ | 70,742 | $ | - | $ | - | ||||||||
Residential mortgage-backed securities
|
25,040 | - | 25,040 | - | ||||||||||||
Commercial mortgage-backed securities
|
11,828 | - | 11,828 | - | ||||||||||||
State and municipal obligations
|
194,865 | - | 194,865 | - | ||||||||||||
Corporate securities
|
118,945 | - | 107,263 | 11,682 | ||||||||||||
Options embedded in convertible securities
|
1,651 | - | 1,651 | - | ||||||||||||
Foreign government obligations
|
22,598 | - | 22,598 | - | ||||||||||||
Total fixed maturities
|
445,669 | 70,742 | 363,245 | 11,682 | ||||||||||||
Equity securities
|
107,582 | 107,582 | - | - | ||||||||||||
Short term
|
4,201 | 4,201 | - | - | ||||||||||||
Cash equivalents
|
64,450 | - | 64,450 | - | ||||||||||||
$ | 621,902 | $ | 182,525 | $ | 427,695 | $ | 11,682 |
Level Input:
|
|
Input Definition:
|
Level 1
|
|
Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
|
Level 2
|
|
Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data at the measurement date.
|
Level 3
|
|
Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.
|
2013
|
2012
|
|||||||
Beginning of period balance
|
$ | 11,682 | $ | 17,050 | ||||
Net realized and unrealized gain included in
|
||||||||
earnings or changes in net assets
|
602 | 1,653 | ||||||
Purchases
|
1,000 | 400 | ||||||
Settlements
|
(6,063 | ) | (7,421 | ) | ||||
End of period balance
|
$ | 7,221 | $ | 11,682 |
Carrying
|
Fair Value
|
|||||||||||||||||||
Value
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||||||
June 30, 2013
|
||||||||||||||||||||
Assets: Limited partnerships
|
$ | 60,474 | $ | - | $ | - | $ | 60,474 | $ | 60,474 | ||||||||||
Liabilities: Short-term borrowings
|
10,000 | - | 10,000 | - | 10,000 | |||||||||||||||
December 31, 2012
|
||||||||||||||||||||
Assets: Limited partnerships
|
59,954 | - | - | 59,954 | 59,954 | |||||||||||||||
Liabilities: Short-term borrowings
|
10,000 | - | 10,000 | - | 10,000 |
Effective
|
Number of Shares
|
Vesting
|
Service
|
Value
|
||||
Date
|
Issued
|
Date
|
Period
|
Per Share
|
||||
5/8/2012
|
20,119
|
5/8/2013
|
7/1/2012 - 6/30/2013
|
$21.87
|
||||
5/7/2013
|
18,106
|
5/7/2014
|
7/1/2013 - 6/30/2014
|
$24.30
|
Unrealized
|
||||||||||||
holding gains on
|
||||||||||||
Foreign
|
available-for-sale
|
|||||||||||
Currency
|
securities
|
Total
|
||||||||||
Beginning balance
|
$ | 1,976 | $ | 35,467 | $ | 37,443 | ||||||
Other comprehensive income
|
||||||||||||
before reclassifications
|
(481 | ) | 6,779 | 6,298 | ||||||||
Amounts reclassified from
|
||||||||||||
accumulated other
|
||||||||||||
comprehensive income
|
- | (8,208 | ) | (8,208 | ) | |||||||
Net current-period other
|
||||||||||||
comprehensive income
|
(481 | ) | (1,429 | ) | (1,910 | ) | ||||||
Ending balance
|
$ | 1,495 | $ | 34,038 | $ | 35,533 |
Direct and Assumed Premium Written
|
Net Premium Written
|
Net Premium Earned
|
||||||||||
2013
|
||||||||||||
Property & Casualty Insurance
|
$ | 80,756 | $ | 50,703 | $ | 49,803 | ||||||
Reinsurance
|
12,074 | 11,411 | 11,972 | |||||||||
Totals
|
$ | 92,830 | $ | 62,114 | $ | 61,775 | ||||||
2012
|
||||||||||||
Property & Casualty Insurance
|
$ | 64,760 | $ | 42,458 | $ | 48,167 | ||||||
Reinsurance
|
14,094 | 13,515 | 11,488 | |||||||||
Totals
|
$ | 78,854 | $ | 55,973 | $ | 59,655 |
2013
|
2012
|
||
Property and Casualty Insurance
|
68.7%
|
64.5%
|
|
Reinsurance
|
34.9
|
23.1
|
|
Total
|
62.1
|
56.5
|
Direct and Assumed Premium Written
|
Net Premium Written
|
Net Premium Earned
|
||||||||||
2013
|
||||||||||||
Property & Casualty Insurance
|
$ | 150,945 | $ | 96,168 | $ | 97,663 | ||||||
Reinsurance
|
25,776 | 24,451 | 25,210 | |||||||||
Totals
|
$ | 176,721 | $ | 120,619 | $ | 122,873 | ||||||
2012
|
||||||||||||
Property & Casualty Insurance
|
$ | 139,986 | $ | 92,165 | $ | 96,076 | ||||||
Reinsurance
|
28,920 | 27,763 | 25,130 | |||||||||
Totals
|
$ | 168,906 | $ | 119,928 | $ | 121,206 |
2013
|
2012
|
||
Property and Casualty Insurance
|
67.2%
|
65.0%
|
|
Reinsurance
|
28.7
|
24.7
|
|
Total
|
59.3
|
56.6
|
WITHHOLD
|
||||||||||||
FOR
|
AGAINST
|
(ABSTAIN)
|
||||||||||
Advisory vote to approve executive compensation
|
1,972,897 | 3,984 | 24,932 | |||||||||
To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2013
|
1,996,705 | 4,318 | 468 | |||||||||
To approve the 2013 Baldwin & Lyons, Inc. Book Value Appreciation Rights Plan
|
1,974,897 | 22,932 | 3,662 |
(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.
|
Subsequent Events
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Subsequent Events [Abstract] | |
Subsequent Events | (11) Subsequent Events: We have evaluated subsequent events for recognition or disclosure in the consolidated financial statements filed on Form 10-Q with the SEC and no events have occurred during the period which require recognition or disclosure. |
Unaudited Consolidated Statements of Operations (USD $)
In Thousands, except Per Share data, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
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Revenues | ||||
Net premiums earned | $ 61,775 | $ 59,655 | $ 122,873 | $ 121,206 |
Net investment income | 1,985 | 2,431 | 4,395 | 4,853 |
Commissions and other income | 1,539 | 1,623 | 2,922 | 3,128 |
Net realized gains on investments, excluding impairment losses | 787 | (5,108) | 15,140 | 272 |
Total other-than-temporary impairment losses on investments | (68) | (345) | (74) | (345) |
Net realized gains (losses) on investments | 719 | (5,453) | 15,066 | (73) |
Total revenue | 66,018 | 58,256 | 145,256 | 129,114 |
Expenses | ||||
Losses and loss expenses incurred | 38,343 | 33,739 | 72,876 | 68,643 |
Other operating expenses | 20,413 | 19,257 | 42,439 | 38,213 |
Total expenses | 58,756 | 52,996 | 115,315 | 106,856 |
Income before federal income taxes | 7,262 | 5,260 | 29,941 | 22,258 |
Federal income taxes | 2,355 | 1,210 | 10,091 | 6,702 |
Net income | $ 4,907 | $ 4,050 | $ 19,850 | $ 15,556 |
Per share data: | ||||
Basic and diluted earnings (in dollars per share) | $ 0.33 | $ 0.27 | $ 1.33 | $ 1.05 |
Dividends paid to shareholders (in dollars per share) | $ 0.25 | $ 0.25 | $ 0.50 | $ 0.50 |
Reconciliation of shares outstanding: | ||||
Average shares outstanding - basic (in shares) | 14,910 | 14,837 | 14,894 | 14,832 |
Dilutive effect of share equivalents (in shares) | 8 | 23 | 24 | 24 |
Average shares outstanding - diluted (in shares) | 14,918 | 14,860 | 14,918 | 14,856 |
Reportable Segments
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Reportable Segments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable Segments | (4) Reportable Segments: The Company has two reportable business segments in its operations: Property and Casualty Insurance and Reinsurance. The Property and Casualty Insurance segment provides multiple line insurance coverage primarily to fleet transportation companies as well as to independent contractors who contract with fleet transportation companies. In addition, the Company provides private passenger automobile products to individuals, workers’ compensation coverage to small businesses and professional liability products on a selective basis. The Reinsurance segment accepts property and casualty cessions from other insurance companies as well as retrocessions from carefully chosen reinsurance companies, principally reinsuring against catastrophes. In addition, the Reinsurance segment accepts professional liability cessions from other insurance companies. The following table provides certain revenue and profit and loss information for each reportable segment. All amounts presented are computed based upon U.S. generally accepted accounting principles. Segment profit for Property and Casualty Insurance includes the direct marketing agency operations conducted by the parent company for this segment and is computed after elimination of inter-company commissions.
The following table reconciles reportable segment income to the Company’s consolidated income before federal income taxes.
Segment profit includes both net premiums earned and fees and other income associated with the business conducted by the segment. Management does not identify or allocate assets to reportable segments when evaluating segment performance and depreciation expense is not material for any of the reportable segments. |
Accumulated Other Comprehensive Income (Tables)
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Jun. 30, 2013
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Accumulated Other Comprehensive Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Accumulated Other Comprehensive Income by Component | The following table illustrates changes in accumulated other comprehensive income by component for the six months ending June 30, 2013:
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Summary of Significant Accounting Policies (Policies)
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6 Months Ended |
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Jun. 30, 2013
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Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and notes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the year ended December 31, 2013. Interim financial statements should be read in conjunction with the Company’s annual audited financial statements and other disclosures included in the Company’s most recent Form 10-K. |
Investments | Investments: Carrying amounts for fixed maturity securities represent fair value and are based on quoted market prices, where available, or broker/dealer quotes for specific securities where quoted market prices are not available. Equity securities are carried at quoted market prices (fair value). The Company accounts for investments in limited partnerships using the equity method of accounting, which requires an investor in a limited partnership to record its proportionate share of the limited partnership’s net income. To the extent that the limited partnership investees include both realized and unrealized investment gains or losses in the determination of net income or loss, then the Company would also recognize, through its consolidated statements of operations, its proportionate share of the investee’s unrealized as well as realized investment gains or losses. Other investments, if any, are carried at either fair value or cost, depending on the nature of the investment. Short-term investments are carried at cost which approximates their fair values. Realized gains and losses on disposals of investments are determined by specific identification of the cost of investments sold and are included in income. All fixed maturity and equity securities are considered to be available for sale; the related unrealized net gains or losses (net of applicable tax effect) are reflected directly in shareholders’ equity. Included within available for sale fixed maturity securities are insurance-linked securities and convertible debt securities. The changes in fair values of insurance-linked securities and portions of the changes in fair values of convertible debt securities are reflected as a component of net realized gains (losses). With respect to other–than-temporary impairment of investments, if a fixed maturity security is in an unrealized loss position and the Company has the intent to sell the fixed maturity security, or it is more likely than not that the Company will have to sell the fixed maturity security before recovery of its amortized cost basis, the decline in value is deemed to be other-than-temporary and is recorded to net realized losses on investments in the consolidated statements of operations. For impaired fixed maturity securities that the Company does not intend to sell or it is more likely than not that the Company will not have to sell such securities, but the Company expects that it will not fully recover the amortized cost basis, the credit component of the other-than-temporary impairment is recognized in net realized losses on investments in the consolidated statements of operations and the non-credit component of the other-than-temporary impairment is recognized directly in shareholders’ equity (accumulated other comprehensive income). The credit component of an other-than-temporary impairment is determined by comparing the net present value of projected future cash flows with the amortized cost basis of the fixed maturity security. Furthermore, unrealized losses caused by non-credit related factors related to fixed maturity securities for which the Company expects to fully recover the amortized cost basis continue to be recognized in accumulated other comprehensive income. The unrealized net gains or losses (net of applicable tax effect) related to equity securities are reflected directly in shareholders’ equity, unless a decline in value is determined to be other-than-temporary, in which case the loss is charged to income. In determining if and when a decline in market value below cost is other-than-temporary, an objective analysis is made of each individual security where current market value is less than cost. For any equity security where the unrealized loss exceeds 20% of original or adjusted cost, and where that decline has existed for a period of at least six months, the decline is treated as an other-than-temporary impairment, subject to an evaluation as to possible future recovery. Additionally, the Company takes into account any known subjective information in evaluating for impairment without consideration to the Company’s quantitative criteria defined above. |
Reinsurance (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Reinsurance [Abstract] | ||||
Premiums ceded to reinsurers | $ 29,398 | $ 24,472 | $ 56,411 | $ 49,220 |
Losses and loss expenses ceded to reinsurers | 19,397 | 11,333 | 41,531 | 19,137 |
Commissions from reinsurers | $ 5,214 | $ 3,137 | $ 9,251 | $ 6,973 |
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