10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission file number: 0-5534

PROTECTIVE INSURANCE CORPORATION

(Exact name of registrant as specified in its charter)

INDIANA	35-0160330
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
111 Congressional Boulevard, Carmel, Indiana	46032
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code:  (317) 636-9800

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ✓_     No ____

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ✓  No ____

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ____   Accelerated filer ✓   Non-accelerated filer ____  Smaller reporting company ____  Emerging growth company ____

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ____

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ____  No ✓_

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, No Par Value	PTVCA	The Nasdaq Stock Market LLC
Class B Common Stock, No Par Value	PTVCB	The Nasdaq Stock Market LLC

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of May 1, 2019:

Common Stock, No Par Value:	Class A (voting)	2,615,216
	Class B (non-voting)	12,076,998
		14,692,214

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Protective Insurance Corporation and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except share data)

	March 31 2019		December 31 2018
Assets
Investments:
Fixed income securities	$	671,973	$	592,645
Equity securities		68,956		66,422
Limited partnerships		38,239		55,044
Commercial mortgage loans		7,844		6,672
Short-term and other		1,000		1,000
		788,012		721,783
Cash and cash equivalents		117,418		163,996
Restricted cash and cash equivalents		15,888		6,815
Accounts receivable		108,974		102,972
Reinsurance recoverable		404,424		392,436
Other assets		95,572		88,426
Current federal income taxes recoverable		6,025		7,441
Deferred federal income taxes		3,478		6,262
	$	1,539,791	$	1,490,131
Liabilities and shareholders' equity
Reserves for losses and loss expenses	$	894,221	$	865,339
Reserves for unearned premiums		80,332		71,625
Reinsurance payable		62,802		66,632
Short-term borrowings		20,000		20,000
Accounts payable and other liabilities		116,366		110,453
		1,173,721		1,134,049
Shareholders' equity:
Common stock-no par value:
Class A voting -- authorized 3,000,000 shares; outstanding -- 2019 - 2,615,239; 2018 - 2,615,339		112		112
Class B non-voting -- authorized 20,000,000 shares; outstanding -- 2019 - 12,249,414; 2018 - 12,253,922		522		522
Additional paid-in capital		55,049		54,720
Accumulated other comprehensive income (loss)		1,416		(7,347	)
Retained earnings		308,971		308,075
		366,070		356,082
	$	1,539,791	$	1,490,131

See notes to condensed consolidated financial statements.

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Protective Insurance Corporation and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share data)

	Three Months Ended March 31
	2019			2018
Revenues
Net premiums earned	$	110,013		$	105,462
Net investment income		6,232			4,636
Commissions and other income		2,064			1,814
Net realized gains (losses) on investments, excluding impairment losses		(39	)		376
Other-than-temporary impairment losses on investments		(260	)		–
Net unrealized gains (losses) on equity securities and limited partnership investments		6,327			(4,909	)
Net realized and unrealized gains (losses) on investments		6,028			(4,533	)
		124,337			107,379
Expenses
Losses and loss expenses incurred		87,122			72,298
Other operating expenses		33,701			34,767
		120,823			107,065
Income before federal income tax expense (benefit)		3,514			314
Federal income tax expense (benefit)		766			(16	)
Net income	$	2,748		$	330
Per share data:
Basic and diluted earnings	$	.18		$	.02
Dividends paid to shareholders	$	.10		$	.28
Reconciliation of shares outstanding:
Average shares outstanding - basic		14,848			15,010
Dilutive effect of share equivalents		30			24
Average shares outstanding - diluted		14,878			15,034

See notes to condensed consolidated financial statements.

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Protective Insurance Corporation and Subsidiaries

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

	Three Months Ended March 31
	2019		2018
Net income	$	2,748	$	330
Other comprehensive income (loss), net of tax:
Unrealized net gains (losses) on fixed income securities		8,456		(3,121	)
Foreign currency translation adjustments		307		(223	)
Other comprehensive income (loss)		8,763		(3,344	)
Comprehensive income (loss)	$	11,511	$	(3,014	)

See notes to condensed consolidated financial statements.

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Protective Insurance Corporation and Subsidiaries

Unaudited Condensed Consolidated Statements of Shareholders' Equity

(in thousands)

	Common Stock										Additional			Accumulated Other
	Class A				Class B						Paid-in			Comprehensive			Retained
Description	Shares		Amount		Shares			Amount			Capital			Income			Earnings			Total Equity
Balance at December 31, 2018		2,615	$	112		12,254		$	522		$	54,720		$	(7,347	)	$	308,075		$	356,082
Net income		–		–		–			–			–			–			2,748			2,748
Foreign currency translation adjustment, net of tax		–		–		–			–			–			307			–			307
Change in unrealized gain (loss) on investments, net of tax		–		–		–			–			–			8,456			–			8,456
Common stock dividends		–		–		–			–			–			–			(1,493	)		(1,493	)
Repurchase of common stock		–		–		(25	)		(1	)		(108	)		–			(359	)		(468	)
Restricted stock grants		–		–		20			1			437			–			–			438
Balance at March 31, 2019		2,615	$	112		12,249		$	522			55,049		$	1,416		$	308,971		$	366,070

	Common Stock									Additional			Accumulated Other
	Class A				Class B					Paid-in			Comprehensive			Retained
Description	Shares		Amount		Shares			Amount		Capital			Loss			Earnings			Total Equity
Balance at December 31, 2017		2,623	$	112		12,424		$	530	$	55,078		$	46,391		$	316,700		$	418,811
Cumulative effect of adoption of ASU 2016-01, net of tax		–		–		–			–		–			(46,157	)		46,157			–
Cumulative effect of adoption of ASU 2018-02		–		–		–			–		–			117			(117	)		–
Net income		–		–		–			–		–			–			330			330
Foreign currency translation adjustment, net of tax		–		–		–			–		–			(223	)		–			(223	)
Change in unrealized gain (loss) on investments, net of tax		–		–		–			–		–			(3,121	)		–			(3,121	)
Common stock dividends		–		–		–			–		–			–			(4,229	)		(4,229	)
Repurchase of common stock		–		–		(11	)		–		(45	)		–			(190	)		(235	)
Restricted stock grants		–		–		5			–		478			–			–			478
Balance at March 31, 2018		2,623	$	112		12,418		$	530	$	55,511		$	(2,993	)	$	358,651		$	411,811

See notes to condensed consolidated financial statements.

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Protective Insurance Corporation and Subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

	Three Months Ended March 31
	2019			2018
Operating activities
Net income	$	2,748		$	330
Adjustments to reconcile net income to net cash provided by operating activities		8,657			7,697
Net cash provided by operating activities		11,405			8,027
Investing activities
Purchases of fixed income and equity securities		(140,645	)		(140,820	)
Purchases of limited partnership interests		–			(200	)
Distributions from limited partnerships		17,214			–
Proceeds from maturities		16,776			14,021
Proceeds from sales of fixed income securities		52,199			89,636
Proceeds from sales of equity securities		9,169			59,757
Purchase of insurance company-owned life insurance		–			(10,000	)
Purchase of commercial mortgage loans		(1,172	)		–
Purchases of property and equipment		(797	)		(1,218	)
Proceeds from disposals of property and equipment		–			4
Net cash provided by (used in) investing activities		(47,256	)		11,180
Financing activities
Dividends paid to shareholders		(1,493	)		(4,229	)
Repurchase of common shares		(468	)		(235	)
Net cash used in financing activities		(1,961	)		(4,464	)
Effect of foreign exchange rates on cash and cash equivalents		307			(223	)
Increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents		(37,505	)		14,520
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period		170,811			68,713
Cash, cash equivalents and restricted cash and cash equivalents at end of period	$	133,306		$	83,233

See notes to condensed consolidated financial statements.

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Notes to Unaudited Condensed Consolidated Financial Statements

(All dollar amounts presented in these notes are in thousands, except share and per share data)

(1)  Summary of Significant Accounting Policies:

Description of Business:  Protective Insurance Corporation (the "Company"), based in Carmel, Indiana, is a property-casualty insurer specializing in marketing and underwriting property, liability and workers' compensation coverage for trucking and public transportation fleets, as well as coverage for trucking industry independent contractors.  In addition, the Company offers workers' compensation coverage for a variety of operations outside the transportation industry.  The Company operates as one reportable property and casualty insurance segment, offering a range of products and services, the most significant being commercial automobile and workers' compensation insurance products.

The term “Insurance Subsidiaries,” as used throughout this document, refers to Protective Insurance Company, Protective Specialty Insurance Company, Sagamore Insurance Company and B&L Insurance, Ltd.

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.  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 Annual Report on Form 10-K.  Operating results for interim periods are not necessarily indicative of results that may be expected for the year ending December 31, 2019 or any other future period.

Investments: Carrying amounts for fixed income 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).  Commercial mortgage loans are carried primarily at amortized cost along with a valuation allowance for losses when necessary. These investments represent interests in commercial mortgage loans originated and serviced by a third party of which the Company shares, on a pro-rata basis, in all related cash flows of the underlying mortgage loans. There was no valuation allowance on the Company's commercial mortgage loans as of March 31, 2019.

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 the limited partnerships 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 condensed consolidated statements of operations, its proportionate share of the investee's unrealized, as well as realized, investment gains or losses within net unrealized gains (losses) on equity securities and limited partnership investments.

Short-term and other investments are carried at cost, which approximates their fair values.

Fixed income securities are considered to be available-for-sale. The related unrealized net gains or losses (net of applicable tax effects) on fixed income securities are reflected directly in shareholders' equity. Included within available-for-sale fixed income securities are convertible debt securities.  A portion of the changes in the fair values of convertible debt securities is reflected as a component of net realized gains (losses) on investments, excluding impairment losses within the condensed consolidated statements of operations.  Realized gains and losses on disposals of fixed income securities are recorded on the trade date.  Realized gains and losses on fixed income securities are determined by the specific identification of the cost of investments sold and are included in net realized gains (losses) on investments, excluding impairment losses.

Effective January 1, 2018, equity securities are recorded at fair value, with unrealized net gains or losses reflected as a component of net unrealized gains (losses) on equity securities and limited partnership investments within the condensed consolidated statements of operations.  Realized gains and losses on disposals of equity securities are recorded on the trade date and included in net realized gains (losses) on investments, excluding impairment losses.  Prior to adoption of the new accounting guidance, unrealized gains and losses related to equity securities were reflected directly in shareholders’ equity unless a decline in value was determined to be other-than-temporary, in which case the loss was charged to income.

In accordance with the Financial Accounting Standards Board's ("FASB") other-than-temporary impairment guidance, if a fixed income security is in an unrealized loss position and the Company has the intent to sell the fixed income security, or it is more likely than not that the Company will have to sell the fixed income security before recovery of its amortized cost basis, the decline in value is deemed to be other-than-temporary and is recorded to other-than-temporary impairment losses on investments in the condensed consolidated statements of operations.   For impaired fixed income securities that the Company does not intend to sell or in cases where 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 other-than-temporary impairment losses on investments in the condensed consolidated statements of operations and the non-credit component of the other-than-temporary impairment is recognized directly in shareholders' equity.

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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 income security.  The net present value is calculated by discounting the Company's best estimate of projected future cash flows at the appropriate effective interest rate.

Recognition of Revenue and Costs:  Premiums are earned over the period for which insurance protection is provided.  A reserve for unearned premiums, computed by the daily pro-rata method, is established to reflect amounts applicable to subsequent accounting periods.  Commissions to unaffiliated companies and premium taxes applicable to unearned premiums are deferred and expensed as the related premiums are earned.  The Company does not defer acquisition costs that are not directly variable with the production of premium.  If it is determined that expected losses and deferred expenses will likely exceed the related unearned premiums, the asset representing deferred policy acquisition costs is reduced and an expense is charged against current operations to reflect any such premium deficiency.  In the event that the expected premium deficiency exceeds deferred policy acquisition costs, an additional liability would be recorded with a corresponding expense to current operations for the amount of the excess premium deficiency.  Anticipated investment income is considered in determining recoverability of deferred acquisition costs.  The Company had no material contract assets, contract liabilities, or deferred contract costs recorded on its condensed consolidated balance sheet at March 31, 2019.

Recently Adopted Accounting Pronouncements:In February 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842), or ASU 2016-02. ASU 2016-02 superseded the current lease guidance in Accounting Standards Codification ("ASC") Topic 840, Leases.  Under the new guidance, lessees are required to recognize for all leases, with the exception of short-term leases, a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis.  Concurrently, lessees are required to recognize a right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term.  The guidance provides for a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative periods presented in the financial statements.  In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, or ASU 2018-11, which provided adopters an additional transition method by allowing entities to initially apply ASU 2016-02, and subsequent related standards, at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.   The Company adopted the new guidance on January 1, 2019 utilizing the transition method allowed per ASU 2018-11, and accordingly, comparative period financial information was not adjusted for the effects of the new guidance. No cumulative-effect adjustment was required to the opening balance of retained earnings on the adoption date. The Company's adoption of the new standard did not have any impact on the Company's condensed consolidated statements of operations or cash flows; however, the impact of adopting the new guidance resulted in a right-of-use asset and lease liability being recorded on the condensed consolidated balance sheet as of March 31, 2019 of approximately $400, which is included within other assets and accounts payable and other liabilities. 

In July 2018, the FASB issued ASU No. 2018-09, Codification Improvements. This update provides clarification, corrects errors in and makes minor improvements to various ASC topics. Many of the amendments in this update have transition guidance with effective dates for annual periods beginning after December 15, 2018 and some amendments in this update do not require transition guidance and were effective upon issuance of this update. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

Recently Issued Accounting Pronouncements:  In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, or ASU 2016-13. This update introduces a current expected credit loss model for measuring expected credit losses for certain types of financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. ASU 2016-13 replaces the current incurred loss model for measuring expected credit losses, requires expected losses on available-for-sale debt securities to be recognized through an allowance for credit losses rather than as reductions in the amortized cost of the securities, and provides for additional disclosure requirements. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2018. The Company is currently evaluating the effects the adoption of ASU 2016-13 will have on its consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, or ASU 2018-13. This update removes the disclosure requirements for the amounts of and the reasons for transfers between Level 1 and Level 2 and disclosure of the policy for timing of transfers between levels. This update also removes disclosure requirements for the valuation processes for Level 3 fair value measurements. Additionally, this update adds disclosure requirements for the changes in unrealized gains and losses for recurring Level 3 fair value measurements and quantitative information for certain unobservable inputs in Level 3 fair value measurements. ASU 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently evaluating the effects the adoption of ASU 2018-13 will have on its consolidated financial statements.

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(2)  Investments:

The following is a summary of available-for-sale securities at March 31, 2019 and December 31, 2018:

	Fair Value		Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Net Unrealized Gains (Losses)
March 31, 2019
Fixed income securities
Agency collateralized mortgage obligations	$	15,773	$	15,567	$	265	$	(59	)	$	206
Agency mortgage-backed securities		41,283		40,486		849		(52	)		797
Asset-backed securities		77,307		77,890		180		(763	)		(583	)
Bank loans		11,284		11,372		38		(126	)		(88	)
Certificates of deposit		2,835		2,835		–		–			–
Collateralized mortgage obligations		5,433		5,072		433		(72	)		361
Corporate securities		227,529		227,017		2,110		(1,598	)		512
Mortgage-backed securities		37,984		37,699		588		(303	)		285
Municipal obligations		30,357		30,056		383		(82	)		301
Non-U.S. government obligations		30,879		30,810		162		(93	)		69
U.S. government obligations		191,309		190,324		1,469		(484	)		985
Total fixed income securities	$	671,973	$	669,128	$	6,477	$	(3,632	)	$	2,845

	Fair Value		Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Net Unrealized Gains (Losses)
December 31, 2018
Fixed income securities
Agency collateralized mortgage obligations	$	10,687	$	10,636	$	145	$	(94	)	$	51
Agency mortgage-backed securities		37,385		37,168		371		(154	)		217
Asset-backed securities		64,422		66,241		14		(1,833	)		(1,819	)
Bank loans		9,750		10,208		27		(485	)		(458	)
Certificates of deposit		2,835		2,835		–		–			–
Collateralized mortgage obligations		5,423		5,095		376		(48	)		328
Corporate securities		190,450		196,925		127		(6,602	)		(6,475	)
Mortgage-backed securities		38,540		38,586		377		(423	)		(46	)
Municipal obligations		29,155		29,102		239		(186	)		53
Non-U.S. government obligations		25,180		25,339		6		(165	)		(159	)
U.S. government obligations		178,818		178,369		1,252		(803	)		449
Total fixed income securities	$	592,645	$	600,504	$	2,934	$	(10,793	)	$	(7,859	)

The following table summarizes, for available-for-sale fixed income securities in an unrealized loss position at March 31, 2019 and  December 31, 2018, the aggregate fair value and gross unrealized loss categorized by the duration individual securities have been continuously in an unrealized loss position.

	March 31, 2019							December 31, 2018
	Number of Securities		Fair Value		Gross Unrealized Loss			Number of Securities		Fair Value		Gross Unrealized Loss
Fixed income securities:
12 months or less		85	$	96,462	$	(1,570	)		275	$	282,646	$	(7,296	)
Greater than 12 months		253		208,253		(2,062	)		217		131,001		(3,497	)
Total fixed income securities		338	$	304,715	$	(3,632	)		492	$	413,647	$	(10,793	)

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The fair value and the cost or amortized costs of fixed income investments at March 31, 2019, organized by contractual maturity, are shown below.  Actual maturities may ultimately differ from contractual maturities because borrowers have, in some cases, the right to call or prepay obligations with or without call or prepayment penalties. Pre-refunded municipal bonds are classified based on their pre-refunded call dates.

	Fair Value		Cost or Amortized Cost
One year or less	$	95,201	$	95,347
Excess of one year to five years		315,983		314,909
Excess of five years to ten years		81,812		80,997
Excess of ten years		6,630		6,233
Contractual maturities		499,626		497,486
Asset-backed securities		172,347		171,642
Total	$	671,973	$	669,128

Following is a summary of the components of net realized and unrealized gains (losses) on investments for the periods presented in the accompanying condensed consolidated statements of operations.

	Three Months Ended March 31
	2019			2018
Gross gains on available-for-sale fixed income securities sold during the period	$	3,171		$	2,443
Gross losses on available-for-sale fixed income securities sold during the period		(3,527	)		(2,708	)
Other-than-temporary impairments		(260	)		–
Change in value of limited partnership investments		408			(2,603	)
Gains (losses) on equity securities:
Realized gains on equity securities sold during the period		317			641
Unrealized gains (losses) on equity securities held at the end of the period		5,919			(2,306	)
Realized and unrealized gains (losses) on equity securities during the period		6,236			(1,665	)
Net realized and unrealized gains (losses) on investments	$	6,028		$	(4,533	)

Shareholders' equity at March 31, 2019 included approximately $27,203, net of federal income tax expense, of reported earnings that remain undistributed by limited partnerships.

(3)  Reinsurance:

The following table summarizes the Company's transactions with reinsurers for the three months ended March 31, 2019 and 2018.

	2019		2018
Three months ended March 31:
Premiums ceded to reinsurers	$	30,173	$	32,442
Losses and loss expenses ceded to reinsurers		30,789		26,661
Commissions from reinsurers		7,233		7,880

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(4)  Loss and Loss Expense Reserves:

Activity in the reserves for losses and loss expenses for the three months ended March 31, 2019 and 2018 is summarized as follows.  All amounts are shown net of reinsurance, unless otherwise indicated.

	Three Months Ended March 31
	2019			2018
Reserves, gross of reinsurance recoverable, at the beginning of the year	$	865,339		$	680,274
Reinsurance recoverable on unpaid losses at the beginning of the year		375,935			308,143
Reserves at the beginning of the year		489,404			372,131
Provision for losses and loss expenses:
Claims occurring during the current period		88,180			73,899
Claims occurring during prior periods		(1,058	)		(1,601	)
Total incurred		87,122			72,298
Loss and loss expense payments:
Claims occurring during the current period		8,708			10,683
Claims occurring during prior periods		56,747			48,655
Total paid		65,455			59,338
Reserves at the end of the period		511,071			385,091
Reinsurance recoverable on unpaid losses at the end of the period		383,150			309,359
Reserves, gross of reinsurance recoverable, at the end of the period	$	894,221		$	694,450

The table above shows a reserve savings of $1,058 that developed during the three months ended March 31, 2019 in the settlement of claims occurring on or before December 31, 2018.  Losses incurred from claims occurring during prior years reflect the development from prior accident years, composed of individual claim savings and deficiencies which, in the aggregate, have resulted from the settlement of claims at amounts higher or lower than previously reserved and from changes in estimates of losses incurred but not reported.

The $1,058 prior accident year savings that developed during the three months ended March 31, 2019 was primarily due to favorable loss development in workers' compensation and independent contractor coverages.  This 2019 savings compares to a savings of $1,601 for the three months ended March 31, 2018, which was also related to favorable loss development from workers' compensation and independent contractor coverages.

(5)  Segment Information:

The Company has one reportable business segment in its operations: Property and Casualty Insurance.  The property and casualty insurance segment provides multiple lines of insurance coverage primarily to commercial automobile companies, as well as to independent contractors who contract with commercial automobile companies.  In addition, the Company provides workers' compensation coverage for a variety of operations outside the transportation industry.

The following table summarizes segment revenues for the three months ended March 31, 2019 and 2018:

	Three Months Ended March 31
	2019		2018
Revenues:
Net premiums earned	$	110,013	$	105,462
Net investment income		6,232		4,636
Net realized and unrealized gains (losses) on investments		6,028		(4,533	)
Commissions and other income		2,064		1,814
Total revenues	$	124,337	$	107,379

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(6)  Debt:

On August 9, 2018, the Company entered into a credit agreement providing a revolving credit facility with a $40,000 limit, with the option for up to an additional $35,000 in incremental loans at the discretion of the lenders.  This credit agreement has an expiration date of August 9, 2022.  Interest on this credit facility is referenced to the London Interbank Offered Rate and can be fixed for periods of up to one year at the Company's option.  Outstanding drawings on this revolving credit facility were $20,000 as of March 31, 2019.  At March 31, 2019, the effective interest rate was 3.59%, and the Company had $20,000 remaining under the revolving credit facility as of March 31, 2019.  The current outstanding borrowings were used to repay the Company's previous line of credit.  The Company's revolving credit facility has two financial covenants, each of which were met as of March 31, 2019, requiring the Company to have a minimum U.S. generally accepted accounting principles net worth and a maximum consolidated leverage ratio of 0.35 to 1.00.

(7)  Taxes:

The effective federal tax rate on consolidated income for the three months ended March 31, 2019 was 21.8% compared to (5.1%) for the three months ended March 31, 2018.  The effective federal income tax rate differs from the normal statutory rate in part as a result of tax-exempt investment income.  The effective tax rate for the three months ended March 31, 2018 was also impacted by the change in accounting for unrealized gains and losses on equity securities related to the Company's adoption of ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, where changes in unrealized gains and losses, and the corresponding tax effects, are now recorded in the condensed consolidated statement of operations.  The Company recorded an unrealized loss, and corresponding tax benefit, related to equity securities during the three months ended March 31, 2019.

As of March 31, 2019, the Company's calendar years 2017, 2016 and 2015 remain subject to examination by the Internal Revenue Service.

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(8)  Fair Value:

Assets and liabilities recorded at fair value in the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The following tables summarize fair value measurements by level for assets measured at fair value on a recurring basis:

As of March 31, 2019:

Description	Total		Level 1		Level 2		Level 3
Fixed income securities:
Agency collateralized mortgage obligations	$	15,773	$	–	$	15,773	$	–
Agency mortgage-backed securities		41,283		–		41,283		–
Asset-backed securities		77,307		–		77,307		–
Bank loans		11,284		–		11,284		–
Certificates of deposit		2,835		2,835		–		–
Collateralized mortgage obligations		5,433		–		5,433		–
Corporate securities		222,853		–		222,853		–
Options embedded in convertible securities		4,676		–		4,676		–
Mortgage-backed securities		37,984		–		37,984		–
Municipal obligations		30,357		–		30,357		–
Non-U.S. government obligations		30,879		–		30,879		–
U.S. government obligations		191,309		–		191,309		–
Total fixed income securities		671,973		2,835		669,138		–
Equity securities:
Consumer		15,862		15,862		–		–
Energy		3,534		3,534		–		–
Financial		24,814		24,814		–		–
Industrial		7,412		7,412		–		–
Technology		2,631		2,631		–		–
Funds (e.g. mutual funds, closed end funds, ETFs)		6,324		6,324		–		–
Other		8,379		8,379		–		–
Total equity securities		68,956		68,956		–		–
Short-term		1,000		1,000		–		–
Cash equivalents		113,377		504		112,873		–
Total	$	855,306	$	73,295	$	782,011	$	–

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As of December 31, 2018:

Description	Total		Level 1		Level 2		Level 3
Fixed income securities:
Agency collateralized mortgage obligations	$	10,687	$	–	$	10,687	$	–
Agency mortgage-backed securities		37,385		–		37,385		–
Asset-backed securities		64,422		–		64,422		–
Bank loans		9,750		–		9,750		–
Certificates of deposit		2,835		2,835		–		–
Collateralized mortgage obligations		5,423		–		5,423		–
Corporate securities		186,651		–		186,651		–
Options embedded in convertible securities		3,799		–		3,799		–
Mortgage-backed securities		38,540		–		38,540		–
Municipal obligations		29,155		–		29,155		–
Non-U.S. government obligations		25,180		–		25,180		–
U.S. government obligations		178,818		–		178,818		–
Total fixed income securities		592,645		2,835		589,810		–
Equity securities:
Consumer		17,945		17,945		–		–
Energy		3,179		3,179		–		–
Financial		25,253		25,253		–		–
Industrial		6,920		6,920		–		–
Technology		2,303		2,303		–		–
Funds (e.g. mutual funds, closed end funds, ETFs)		5,489		5,489		–		–
Other		5,333		5,333		–		–
Total equity securities		66,422		66,422		–		–
Short-term		1,000		1,000		–		–
Cash equivalents		156,855		–		156,855		–
Total	$	816,922	$	70,257	$	746,665	$	–

Level inputs, as defined by the FASB guidance, are as follows:

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.

The Company did not have any Level 3 assets at March 31, 2019 or December 31, 2018.  Level 3 assets, when present, are valued using various unobservable inputs including extrapolated data, proprietary models and indicative quotes. 

Quoted market prices are obtained whenever possible.  Where quoted market prices are not available, fair values are estimated using broker/dealer quotes for specific securities.  These techniques are significantly affected by the Company's assumptions, including discount rates and estimates of future cash flows.  Potential taxes and other transaction costs have not been considered in estimating fair values.

Transfers between levels, if any, are recorded as of the beginning of the reporting period.  There were no significant transfers of assets between Level 1 and Level 2 during the three months ended March 31, 2019 and 2018.

In addition to the preceding disclosures on assets recorded at fair value in the condensed consolidated balance sheets, FASB guidance also requires the disclosure of fair values for certain other financial instruments for which it is practicable to estimate fair value, whether or not such values are recognized in the condensed consolidated balance sheets.

Non-financial instruments such as real estate, property and equipment, other assets, deferred income taxes and intangible assets, and certain financial instruments such as policy reserve liabilities are excluded from the fair value disclosures.  Therefore, the fair value amounts cannot be aggregated to determine the underlying economic value of the Company.  The following methods, assumptions and inputs were used to estimate the fair value of each class of financial instrument:

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Limited partnerships: The Company accounts for investments in limited partnerships using the equity method of accounting, which requires an investor in a limited partnership to carry the investment at its proportionate share of the limited partnership's equity.   The underlying assets of the Company's investments in limited partnerships are carried primarily at fair value, and, therefore, the Company's carrying value of limited partnerships approximates fair value.  As these investments are not actively traded and the corresponding inputs are based on data provided by the investees, they are classified as Level 3.

Commercial mortgage loans:  Commercial mortgage loans are carried primarily at amortized cost along with a valuation allowance for losses when necessary. These investments represent interests in commercial mortgage loans originated and serviced by a third party of which the Company shares, on a pro-rata basis, in all related cash flows of the underlying mortgage loans.  The fair value of the Company’s investment in these commercial mortgage loans is based on expected future cash flows discounted at the current interest rate for origination of similar quality loans, adjusted for specific loan risk.  These investments are classified as Level 3.

Short-term borrowings: The fair value of the Company's short-term borrowings is based on quoted market prices for the same or similar debt, or, if no quoted market prices are available, on the current market interest rates available to the Company for debt of similar terms and remaining maturities.

A summary of the carrying value and fair value by level of financial instruments not recorded at fair value on the Company's condensed consolidated balance sheets at March 31, 2019 and December 31, 2018 is as follows:

	Carrying		Fair Value
	Value		Level 1		Level 2		Level 3		Total
March 31, 2019
Assets:
Limited partnerships	$	38,239	$	–	$	–	$	38,239	$	38,239
Commercial mortgage loans		7,844		–		–		7,844		7,844
Liabilities:
Short-term borrowings		20,000		–		20,000		–		20,000
December 31, 2018
Assets:
Limited partnerships	$	55,044	$	–	$	–	$	55,044	$	55,044
Commercial mortgage loans		6,672		–		–		6,672		6,672
Liabilities:
Short-term borrowings		20,000		–		20,000		–		20,000

(9)  Stock Based Compensation:

The Company issues shares of restricted Class B Common Stock to the Company's outside directors, which serve as the annual retainer compensation for the outside directors.  The shares are distributed to the outside directors on the vesting date, which, with the exception of pro-rated annual retainers granted to outside directors, is one year following the date of grant.  The table below provides detail of the restricted stock issuances to directors for 2018 and 2019:

Grant Date	Number of Shares Issued		Vesting Date	Service Period	Grant Date Fair Value Per Share
5/9/2017		18,183	5/9/2018	7/1/2017 - 6/30/2018	$	24.20
8/31/2017		1,257	5/9/2018	8/31/2017 - 6/30/2018	$	21.90
2/9/2018		408	5/9/2018	2/9/2018 - 6/30/2018	$	24.20
5/8/2018		19,085	5/8/2019	7/1/2018 - 6/30/2019	$	23.05
5/7/2019		29,536	5/7/2020	7/1/2019 - 6/30/2020	$	16.25

Compensation expense related to the above stock grants is recognized over the period in which the directors render services.

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In May 2017, the Company's Compensation Committee granted equity-based awards pursuant to the Company's Long-Term Incentive Plan (the "Long-Term Incentive Plan"), which was approved by the Company's shareholders at the 2017 Annual Meeting of Shareholders.  Certain participants under the Long-Term Incentive Plan were granted Value Creation Incentive Plan awards (the "2017 VCIP Awards").  The 2017 VCIP Awards are performance-based equity awards that will be earned based on the Company's cumulative operating income over a three-year performance period from January 1, 2017 through December 31, 2019 relative to a cumulative operating income goal for the period set by the Compensation Committee in March 2017.  For the purpose of the 2017 VCIP Awards, cumulative operating income is equal to income before taxes excluding net realized gains (losses) on investments.  Any 2017 VCIP Awards that are earned will be paid in unrestricted shares of the Company's Class B Common Stock at the end of the three-year performance period, but no later than March 15, 2020.  No shares are eligible to be issued under the 2017 VCIP Awards as of March 31, 2019.

In March 2018, the Company's Compensation Committee granted equity-based awards pursuant to the Long-Term Incentive Plan.  Certain participants under the Long-Term Incentive Plan were granted equity awards (the "2018 LTIP Awards"), with the number of shares of Class B Common Stock earned pursuant to such award determined by applying a performance matrix consisting of a measurement of the combined results of the Company's 2018 growth in gross premiums earned and the Company's 2018 combined ratio.  The combined ratio is calculated as a ratio of (A) losses and loss expenses incurred, plus other operating expenses, less commission and other income to (B) net premiums earned.  No 2018 LTIP Awards were earned based on the Company's performance in 2018, and therefore no shares were issued pursuant to the 2018 LTIP Awards.  In addition to the 2018 LTIP Awards, in March 2018 the Company's Compensation Committee also granted Value Creation Incentive Plan awards (the "2018 VCIP Awards") to certain participants under the Long-Term Incentive Plan.  The 2018 VCIP Awards are performance-based equity awards that will be earned based on the Company's cumulative operating income, as defined above, over a three-year performance period from January 1, 2018 through December 31, 2020 relative to a cumulative operating income goal for the period set by the Compensation Committee in March 2018.  Any 2018 VCIP Awards that are earned will be paid in unrestricted shares of the Company's Class B Common Stock at the end of the three-year performance period, but no later than March 15, 2021.  No shares are eligible to be issued under the 2018 VCIP Awards as of March 31, 2019.

On November 13, 2018, the Company entered into an employment agreement (the "Agreement") with its Interim Chief Executive Officer, John D. Nichols, Jr.  Pursuant to the terms of the Agreement, on November 13, 2018, Mr. Nichols was granted 85,000 restricted shares of the Company's Class B Common Stock (the "Stock Grant"), of which 42,500 shares will vest as of October 17, 2019; 21,250 shares will vest as of October 17, 2020, and 21,250 shares will vest as of October 17, 2021.  The Company recorded $309 of expense during the three months ended March 31, 2019 related to the Stock Grant.

In March 2019, the Company's Compensation Committee granted equity-based awards pursuant to the Long-Term Incentive Plan.  Certain participants under the Long-Term Incentive Plan were granted equity awards (the "2019 LTIP Awards"), with the number of shares of Class B Common Stock earned pursuant to such award determined by applying a performance matrix consisting of a corporate performance component as well as a personal performance component.  The corporate performance component of the 2019 LTIP Awards will be determined based on the Company's achievement of 2019 underwriting income compared to the plan target.  The Company's underwriting income will be calculated as income (loss) before federal income tax expense (benefit), less net realized gains (losses) on investments, less net unrealized gains (losses) on equity securities and limited partnerships, less net investment income.  The personal performance component of the 2019 LTIP Awards will be determined based on the achievement of personal goals that align with departmental and corporate objectives for 2019.  Any 2019 LTIP Awards earned will be paid in shares of restricted Class B Common Stock in early 2020.  One-third of such shares will vest annually over the three-year period beginning one year from the date of issue.  The Company recorded $24 of expense during the three months ended March 31, 2019 related to the 2019 LTIP Awards.

(10)  Litigation, Commitments and Contingencies:

In the ordinary, regular and routine course of their business, the Company and its insurance subsidiaries are frequently involved in various matters of litigation relating principally to claims for insurance coverage provided.  No currently pending matter is deemed by management to be material to the Company.

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(11)  Shareholders' Equity:

On August 31, 2017, the Company's Board of Directors authorized the reinstatement of its share repurchase program for up to 2,464,209 shares of the Company's Class A or Class B Common Stock.  On August 7, 2018, the Company's Board of Directors reaffirmed its share repurchase program, but also provided that the aggregate dollar amount of shares of the Company's Common Stock that may be repurchased under the share repurchase program through August 8, 2019 may not exceed $25,000.  Pursuant to this share repurchase program, the Company entered into a Rule 10b5-1 plan on March 22, 2019, which authorized the repurchase of up to $3,500 of the Company's outstanding common shares at various pricing thresholds, in accordance with guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934.  The Rule 10b5-1 plan expires on May 9, 2019. No duration has been placed on the Company's share repurchase program, and the Company reserves the right to amend, suspend or discontinue it at any time.  The share repurchase program does not commit the Company to repurchase any shares of its Common Stock.

During the three months ended March 31, 2019, the Company paid $468 to repurchase 100 shares of Class A and 24,858 shares of Class B Common Stock under the share repurchase program.

The following table illustrates changes in accumulated other comprehensive income by component for the three months ended March 31, 2019:

	Foreign Currency			Unrealized Holding Gains (Losses) on Available-for-sale Securities			Total
Beginning balance at December 31, 2018	$	(1,139	)	$	(6,208	)	$	(7,347	)
Other comprehensive income before reclassifications		307			7,671			7,978
Amounts reclassified from accumulated other comprehensive income (loss)		–			785			785
Net current-period other comprehensive income		307			8,456			8,763
Ending balance at March 31, 2019	$	(832	)	$	2,248		$	1,416

The following table illustrates changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2018:

	Foreign Currency			Unrealized Holding Gains (Losses) on Available-for-sale Securities			Total
Beginning balance at December 31, 2017	$	(309	)	$	46,700		$	46,391
Cumulative effect of adoption of ASU 2016-01, net of tax		–			(46,157	)		(46,157	)
Balance at January 1, 2018		(309	)		543			234
Cumulative effect of adoption of ASU 2018-02		–			117			117
Other comprehensive loss before reclassifications		(223	)		(2,998	)		(3,221	)
Amounts reclassified from accumulated other comprehensive income (loss)		–			(123	)		(123	)
Net current-period other comprehensive loss		(223	)		(3,121	)		(3,344	)
Ending balance at March 31, 2018	$	(532	)	$	(2,461	)	$	(2,993	)

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(12)  Related Parties:

At March 31, 2019, the Company was invested in one limited partnership, the New Vernon India Fund, with an aggregate estimated value of $17,313, that is managed by an organization in which one director of the Company is an executive officer and owner.  The Company's ownership interest in this limited partnership at March 31, 2019 was 4%.  For the three months ended March 31, 2019 and 2018, the Company recorded $48 and $142 of fees related to the management of this limited partnership investment.

In January 2019, the Company withdrew $5,684 from the New Vernon Global Opportunity Fund, which liquidated its investment in this limited partnership.

The Company utilizes the services of an investment firm of which one director of the Company is a partial owner.  These investment firms manage equity securities and fixed income portfolios with an aggregate market value of approximately $7,899 at March 31, 2019.  Total commissions and net fees earned by the investment firms and affiliates on these portfolios were $5 and $27 for the three months ended March 31, 2019 and 2018.

(13)  Subsequent Events:

In April 2019, the Company withdrew $3,000 from the Arbiter Partners limited partnership, which reduced the Company's investment in this limited partnership.

On May 7, 2019, the Company's Board of Directors declared a regular quarterly dividend of $0.10 per share on the Company's Class A and Class B Common Stock.  The dividend per share will be payable June 4, 2019 to shareholders of record on May 21, 2019.

Pursuant to the Rule 10b5-1 plan entered into on March 22, 2019, the Company paid $3,031 to repurchase 23 shares of Class A and 172,416 shares of Class B Common Stock between April 1, 2019 and the date of this Quarterly Report on Form 10-Q.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Protective Insurance Corporation is a property-casualty insurer specializing in marketing and underwriting property, liability and workers' compensation coverage for trucking and public transportation fleets, as well as coverage for trucking industry independent contractors.  Additionally, we offer workers' compensation coverage for a variety of operations outside the transportation industry.  We operate as one reportable property and casualty insurance segment, offering a range of products and services, the most significant being commercial automobile and workers' compensation insurance products.

The term “Protective,” as used throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), refers to Protective Insurance Corporation, the parent company.  The terms the “Company,” “we,” “us” and “our,” as used throughout this MD&A, refer to Protective and all of its subsidiaries unless the context clearly indicates otherwise.  The term “Insurance Subsidiaries,” as used throughout this MD&A, refers to Protective Insurance Company, Protective Specialty Insurance Company, Sagamore Insurance Company and B&L Insurance, Ltd.

Liquidity and Capital Resources

The primary sources of our liquidity are (1) funds generated from insurance operations, including net investment income, (2) proceeds from the sale of investments, and (3) proceeds from maturing investments.

We generally experience positive cash flow from operations.  Premiums are collected on insurance policies in advance of the disbursement of funds for payment of claims.  Operating costs of our property/casualty Insurance Subsidiaries, other than loss and loss expense payments and commissions paid to related agency companies, average less than one-third of net premiums earned on a consolidated basis and the remaining amount is available for investment for varying periods of time depending on the type of insurance coverage provided and the timing of the claim payments. Because losses are often settled in periods subsequent to when they are incurred, operating cash flows may, at times, become negative as loss settlements on claim reserves established in prior years exceed current revenues.  Our cash flow relating to premiums is significantly affected by reinsurance programs in effect, whereby we cede both premium and risk to other insurance and reinsurance companies.  These programs vary significantly among products and certain contracts call for reinsurance payment patterns, which do not coincide with the collection of premiums by us from our insureds.

On August 31, 2017, our Board of Directors authorized the reinstatement of our share repurchase program for up to 2,464,209 shares of our Class A or Class B Common Stock.  On August 7, 2018, our Board of Directors reaffirmed our share repurchase program, but also provided that the aggregate dollar amount of shares of our common stock that may be repurchased under the share repurchase program through August 8, 2019 may not exceed $25.0 million.  The repurchases may be made in the open market or through privately negotiated transactions, from time-to-time, and in accordance with applicable laws, rules and regulations. On March 22, 2019, we entered into a stock repurchase plan for the purpose of repurchasing up to $3.5 million of shares of our common stock, at various pricing thresholds, in accordance with guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the "Rule 10b5-1 Plan"). The Rule 10b5-1 Plan was established pursuant to, and as part of, our share repurchase program and permits shares to be repurchased in accordance with pre-determined criteria when repurchases would otherwise be prohibited, such as during self-imposed blackout periods, or under insider trading laws. The Rule 10b5-1 plan expires on May 9, 2019. The share repurchase program may be amended, suspended or discontinued at any time and does not commit us to repurchase any shares of our common stock. We have funded, and intend to continue to fund, the share repurchase program from cash on hand. The actual number and value of the shares to be purchased will depend on the performance of our stock price, market volume and other market conditions.  During the three months ended March 31, 2019, we paid $0.5 million to repurchase 100 shares of Class A and 24,858 shares of Class B Common Stock under the share repurchase program.

For several years, our investment philosophy has emphasized the purchase of short-term bonds with high quality and liquidity.  Our fixed income investment portfolio continues to emphasize shorter-duration instruments. If there was a hypothetical increase in interest rates of 100 basis points, the price of our bonds at March 31, 2019 would be expected to fall by approximately 2.7%.  The credit quality of our fixed income securities remains high with a weighted average rating of AA-, including cash.  The average contractual life of our fixed income and short-term investment portfolio was 5.5 years at March 31, 2019 and December 31, 2018.  The average duration of our fixed income portfolio remains shorter than the average duration of our liabilities.  We also remain an active participant in the equity securities market using capital in excess of amounts considered necessary to fund our current operations.  The long-term horizon for our equity investments allows us to invest in positions where ultimate value, and not short-term market fluctuation, is the primary focus.  Investments made by our domestic property/casualty Insurance Subsidiaries are regulated by guidelines promulgated by the National Association of Insurance Commissioners (the "NAIC"), which are designed to provide protection for both policyholders and shareholders.

Net cash flows from operations increased $3.4 million to $11.4 million during the three months ended March 31, 2019 compared to $8.0 million for the three months ended March 31, 2018.  The increase in operating cash flows was primarily related to higher premium volume and higher investment income during the three months ended March 31, 2019 compared to the same period in 2018.

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Net cash used in investing activities was $47.3 million for the three months ended March 31, 2019 compared to net cash provided by investing activities of $11.2 million for the three months ended March 31, 2018.  The $58.5 million change was primarily related to lower proceeds from sales of our equity and fixed income security investments and our purchases of $1.2 million of commercial mortgage loans in the first quarter of 2019, partially offset by $17.2 million in distributions received from limited partnerships during the first quarter of 2019 and a $0.4 million reduction in purchases of property and equipment. Additionally, the first quarter of 2018 included the purchase of $10.0 million of company-owned life insurance, which did not recur in the first quarter of 2019.

Net cash used in financing activities for the three months ended March 31, 2019 consisted of regular cash dividend payments to shareholders of $1.5 million ($0.10 per share) and $0.5 million to repurchase shares of our Class A and B Common Stock. Financing activities for the three months ended March 31, 2018 consisted of regular cash dividend payments to shareholders of $4.2 million ($0.28 per share) and $0.2 million to repurchase shares of our Class B Common Stock.

Our assets at March 31, 2019 included $113.4 million of investments included within cash and cash equivalents on the condensed consolidated balance sheet that are readily convertible to cash without market penalty and an additional $95.0 million of fixed income investments maturing in less than one year.  We believe these liquid investments, plus the expected cash flow from premium collections, are sufficient to provide for projected claim payments and operating cost demands.  In the event competitive conditions produce inadequate premium rates and we choose to further restrict volume, the liquidity of our investment portfolio would permit us to continue to pay claims as settlements are reached without requiring the disposal of investments at a loss, regardless of interest rates in effect at the time.  In addition, our reinsurance program is structured to avoid significant cash outlays that accompany large losses.

We maintain a revolving credit facility with a $40.0 million limit, with the option for up to an additional $35.0 million in incremental loans at the discretion of the lenders, which has an expiration date of August 9, 2022.  Interest on this credit facility is referenced to the London Interbank Offered Rate and can be fixed for periods of up to one year at our option.  Outstanding drawings on this revolving credit facility were $20.0 million as of March 31, 2019.  At March 31, 2019, the effective interest rate was 3.59%, and we had $20.0 million remaining under the revolving credit facility as of March 31, 2019.  The current outstanding borrowings were used to repay the previous line of credit.  Our revolving credit facility has two financial covenants, each of which were met as of March 31, 2019, requiring us to have a minimum U.S. Generally Accepted Accounting Principles ("GAAP") net worth and a maximum consolidated leverage ratio of 0.35 to 1.00.

Annualized net premiums written by our Insurance Subsidiaries for the first quarter of 2019 equaled approximately 120% of the combined statutory surplus of these subsidiaries, a level consistent with higher premiums written.  Premium writings of up to 100% and in some cases up to 200% of surplus are generally considered acceptable by regulatory authorities.  Further, the statutory capital of each of our Insurance Subsidiaries substantially exceeded minimum risk-based capital requirements set by the NAIC as of March 31, 2019.  Accordingly, we have the ability to significantly increase our business without seeking additional capital to meet regulatory guidelines.

Consolidated shareholders' equity is composed largely of GAAP shareholders' equity of our Insurance Subsidiaries.  As such, there are statutory restrictions on the transfer of substantial portions of this equity to Protective.  At March 31, 2019, $54.1 million may be transferred by dividend or loan to Protective during the remainder of 2019 without approval by, or prior notification to, regulatory authorities.  An additional $212.5 million of shareholders' equity of our Insurance Subsidiaries could be advanced or loaned to Protective with prior notification to, and approval from, regulatory authorities, although transfers of this size would not be practical.  We believe these restrictions pose no material liquidity concerns for us.  We also believe the financial strength and stability of our Insurance Subsidiaries would permit access by Protective to short-term and long-term sources of credit when needed.  Protective had cash and marketable securities valued at $10.1 million at March 31, 2019.

- 20 -

Non-GAAP Measures

We believe investors’ understanding of our performance is enhanced by our disclosure of underwriting income (loss), which is a measure that is not calculated in accordance with GAAP. Underwriting income (loss) represents the pre-tax profitability of our insurance operations and is derived by subtracting net realized and unrealized gains (losses) on investments and net investment income from income before federal income tax expense (benefit). We use underwriting income (loss) as an internal performance measure in the management of our operations because we believe it gives us and users of our financial information useful insight into our results of operations, our underlying business performance and our ongoing operating trends. Underwriting income (loss) should not be viewed as a substitute for income before federal income tax expense (benefit) calculated in accordance with GAAP, and other companies may define underwriting income (loss) differently.

The ratio of consolidated other operating expenses less commissions and other income to net premiums earned, or our expense ratio, and the ratio of losses and loss expenses incurred, plus other operating expenses, less commission and other income to net premiums earned, or our combined ratio, are measures of our profitability that we believe increase the period-to-period comparability of our operational results.  Our management uses these ratios to evaluate performance, allocate resources and forecast future operating periods.  While expense ratios and combined ratios are widely used within our industry, our use of such ratios may not be directly comparable to similarly titled measures reported by other companies.

	2019			2018
Income before federal income tax expense (benefit)	$	3,514		$	314
Less: Net realized and unrealized gains (losses) on investments		6,028			(4,533	)
Less: Net investment income		6,232			4,636
Underwriting income (loss)	$	(8,746	)	$	211
Ratios
Losses and loss expenses incurred	$	87,122		$	72,298
Net premiums earned		110,013			105,462
Loss ratio		79.2	%		68.6	%
Other operating expenses	$	33,701		$	34,767
Less: Commissions and other income		2,064			1,814
Other operating expenses, less commissions and other income		31,637			32,953
Net premiums earned		110,013			105,462
Expense ratio		28.8	%		31.2	%
Combined ratio		108.0	%		99.8	%

- 21 -

Results of Operations

Comparison of First Quarter 2019 to First Quarter 2018

	2019			2018			Change			% Change
Gross premiums written	$	148,893		$	148,823		$	70			–
Ceded premiums written		(33,571	)		(35,389	)		1,818			5.1	%
Net premiums written	$	115,322		$	113,434		$	1,888			1.7	%
Net premiums earned	$	110,013		$	105,462		$	4,551			4.3	%
Net investment income		6,232			4,636			1,596			34.4	%
Commissions and other income		2,064			1,814			250			13.8	%
Net realized and unrealized gains (losses) on investments		6,028			(4,533	)		10,561			233.0	%
Total revenue		124,337			107,379
Losses and loss expenses incurred		87,122			72,298			14,824			20.5	%
Other operating expenses		33,701			34,767			(1,066	)		(3.1	)%
Total expenses		120,823			107,065
Income before federal income tax expense (benefit)		3,514			314			3,200
Federal income tax expense (benefit)		766			(16	)		782
Net income	$	2,748		$	330		$	2,418

Gross premiums written during the first quarter of 2019 were approximately flat, while net premiums earned increased $4.6 million (4.3%), as compared to the first quarter of 2018.  The higher net premiums earned were the result of the changes in our reinsurance structure discussed below.  The difference in the percentage change for premiums written compared to earned was reflective of the normal differences in the financial statement recognition of earned premiums compared to written, as well as differences in reinsurance ceding rates on the mix of business in-force.

Premiums ceded to reinsurers on our insurance business averaged 22.5% of gross premiums written for the first quarter of 2019 compared to 23.8% in the first quarter of 2018.  In the third quarter of 2017, we lowered the quota share rate on our workers compensation premiums to reflect growing profitability and confidence in this book of business. We also restructured our commercial automobile reinsurance treaty, moving away from variable premium ceded rates (based on loss performance), to a flat ceding arrangement with no material changes to the economic risks taken for these products (i.e. ceded losses will decrease by a similar amount as ceded premiums).   The impacts of these changes to our reinsurance structure were partially offset by the ceding of an additional $1.6 million in commercial automobile premium from prior treaty years related to variable premium adjustment provisions in our historical reinsurance treaties.

Losses and loss expenses incurred during the first quarter of 2019 increased $14.8 million (20.5%) compared to the first quarter of 2018, resulting in a loss ratio of 79.2% during the first quarter of 2019 compared to a loss ratio of 68.6% during the first quarter of 2018.  The loss ratio is calculated as the percentage of losses and loss expenses incurred to net premiums earned.  The increased losses and loss expenses and the higher loss ratio in the first quarter of 2019 reflected an increase in current accident year losses driven by severe commercial automobile losses, including continued emergence of severity.  This current accident year development was partially offset by prior accident year net savings of $1.1 million that developed during the three months ended March 31, 2019, primarily due to favorable loss development in workers' compensation and independent contractor coverages.  Including the impact of additional ceded premium discussed above, the total prior accident year impacts were unfavorable by $0.5 million for the three months ended March 31, 2019.

Net investment income for the first quarter of 2019 increased 34.4% to $6.2 million compared to $4.6 million for the first quarter of 2018. The increase reflected an increase in average funds invested resulting from positive cash flow, as well as a reallocation from equity investments held in limited partnerships into short-duration, high quality bonds.  After-tax investment income increased by 31.6% to $5.0 million during the first quarter of 2019, compared to $3.8 million during the first quarter of 2018, reflecting the aforementioned increase in average funds invested and reallocation from limited partnerships to short-duration, high quality bonds.

Net realized and unrealized gains on investments of $6.0 million during the first quarter of 2019 were primarily driven by $6.0 million in unrealized gains on equity securities during the period and a $0.4 million increase in the value of our limited partnership investments, partially offset by other-than-temporary impairments on our fixed income securities of $0.3 million recognized during the period.  Comparative first quarter 2018 net realized and unrealized losses on investments of $4.5 million were driven by a $2.6 million decrease in the value of our limited partnership investments and $2.3 million in unrealized losses on equity securities during the period, partially offset by net realized gains on sales of securities of $0.4 million.  Realized investment gains and losses result from decisions regarding overall portfolio realignment as well as the sale of individual securities, including the change in aggregate value of limited partnerships and, as such, should not be expected to be consistent from period to period.

Other operating expenses for the first quarter of 2019 decreased $1.1 million, or 3.1%, to $33.7 million compared to the first quarter of 2018.  The decrease was driven primarily by lower salary and benefit expense in addition to lower other operating expenses, partially offset by higher commission expenses as a result of the mix of premium written in the first quarter of 2019.  The ratio of consolidated other operating expenses less commissions and other income to net premiums earned (the “expense ratio”) was 28.8% during the first quarter of 2019 compared to 31.2% for the first quarter of 2018. The decrease in the ratio was primarily related to the leveraging effect of higher net premiums earned in the first quarter of 2019 compared to the first quarter of 2018.

- 22 -

Federal income tax expense was $0.8 million for the first quarter of 2019 compared to a federal income tax benefit of less than $0.1 million for the first quarter of 2018. The effective tax rate for the first quarter of 2019 was 21.8% compared to (5.1%) in the first quarter of 2018. The effective federal income tax rate in the current year differed from the normal statutory rate in part as a result of tax-exempt investment income.  The effective tax rate for the three months ended March 31, 2018 was also impacted by the change in accounting for unrealized gains and losses on equity securities related to our adoption of ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, where changes in unrealized gains and losses, and the corresponding tax effects, are now recorded in the condensed consolidated statement of operations.

As a result of the factors mentioned above, net income increased $2.4 million to $2.7 million during the first quarter of 2019 compared to net income of $0.3 million during the first quarter of 2018.

Sensitivity Analysis

Management is aware of the potential for variation from the reserves established at any particular point in time. Savings or deficiencies could develop in future valuations of the currently established loss and loss expense reserve estimates under a variety of reasonably possible scenarios. The majority of our reserves for losses and loss expenses, on a net of reinsurance basis, relate to our commercial automobile products. Perhaps the most significant example of sensitivity to variation in the key assumptions is the loss ratio selection for our commercial automobile products for policies subject to certain major reinsurance treaties.  Commercial automobile products covered by our reinsurance treaties are subject to an aggregate stop-loss provision.  Once this aggregate stop-loss level is reached, for every $100 of additional loss, we are responsible only for our $25 retention.  The following table illustrates the financial impact of a further 5% or 10% increase in ultimate losses for each of the five most recent reinsurance treaty years (2014-2018) covering these commercial automobile products:

	5% Increase in Ultimate Loss Ratio		10% Increase in Ultimate Loss Ratio
Gross loss expense from further strengthening current reserve position	$	35.3	$	70.7
Net financial loss		9.2		18.1
$/share (after tax)	$	0.49	$	0.96

Forward-Looking Information

The disclosures in this Form 10-Q contain "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995). All statements, trend analyses and other information contained in this Form 10-Q relative to markets for our products and trends in our operations or financial results, as well as other statements including words such as "may," "target," "anticipate," "believe," "plan," "estimate," "expect," "intend," "project," and other similar expressions, constitute forward-looking statements.

Investors are cautioned that such forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially from such forward-looking statements, many of which are difficult to predict and generally beyond our control.  Investors are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.  Investors are also urged to carefully review and consider the various disclosures made by us, which attempt to advise interested parties of the factors that affect our business, including "Risk Factors" set forth in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and our reports filed with the U.S. Securities and Exchange Commission from time to time.  Except to the extent otherwise required by federal securities laws, we do not undertake any obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof.

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Factors that could contribute to these differences include, among other things:

● general economic conditions, including weakness of the financial markets, prevailing interest rate levels and stock and credit market performance, which may affect or continue to affect (among other things) our ability to sell our products and to collect amounts due to us, our ability to access capital resources and the costs associated with such access to capital and the market value of our investments;

● our ability to obtain adequate premium rates and manage our operating strategies;

● increasing competition in the sale of our insurance products and services resulting from the entrance of new competitors into, or the expansion of the operations of existing competitors in, our markets and our ability to retain existing customers;

● other changes in the markets for our insurance products;

● the impact of technological advances, including those specific to the transportation industry;

● changes in the legal or regulatory environment, which may affect the manner in which claims are adjusted or litigated, including loss and loss adjustment expense;

● legal or regulatory changes or actions, including those relating to the regulation of the sale, underwriting and pricing of insurance products and services and capital requirements;

● the impact of a downgrade in our financial strength rating;

● technology or network security disruptions or breaches;

● adequacy of insurance reserves;

● availability of reinsurance and ability of reinsurers to pay their obligations;

● our ability to attract and retain qualified employees and to successfully complete our Chief Executive Officer transition;

● tax law and accounting changes; and

● legal actions brought against us.

Some of the significant risks and uncertainties that could cause actual results to differ materially from our expectations and projections are described more fully in Part II, Item 1A, "Risk Factors," of this Quarterly Report on Form 10-Q and Part I, Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.  You should read that information in conjunction with this "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our unaudited condensed consolidated financial statements and related notes in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Critical Accounting Policies

There have been no changes in our critical accounting policies as disclosed in our Annual Report on Form 10-K filed for the year ended December 31, 2018.

Concentrations of Credit Risk

Our Insurance Subsidiaries cede portions of their gross premiums to numerous reinsurers under quota share and excess of loss treaties, as well as facultative placements.  These reinsurers assume commensurate portions of the risk of loss covered by the contracts.  As losses are reported and reserved, portions of the gross losses attributable to reinsurers are established as receivable assets and losses incurred are reduced.  At March 31, 2019, amounts due from reinsurers on paid and unpaid losses were estimated to total approximately $383 million.  Because of the large policy limits reinsured by us, the ultimate amount of incurred but not reported losses and loss adjustment expenses attributable to reinsurers could vary significantly from the estimate; provided, however, absent the inability to collect from reinsurers, such variance would not result in changes in net claim losses incurred by us.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Other than as set forth below, there have been no material changes in the Company's exposure to market risk since the disclosure in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.

Interest Rate Risk

We are exposed to interest rate risk on our fixed income investments. Given the anticipated duration of our liabilities (principally insurance loss and loss expense reserves) relative to investment maturities, a 100 to 200 basis point increase in interest rates would not have a material impact on our ability to conduct daily operations or to meet our obligations and could result in significantly higher investment income in a relatively short period of time, as short-term investments and maturing bonds could be reinvested in higher yielding securities.

The table below summarizes our interest rate risk by illustrating the sensitivity of the fair value of our fixed income investments as of March 31, 2019 to selected hypothetical changes in interest rates (dollars in thousands).

	Fair Value		Estimated Change in Fair Value
200 basis point increase	$	634,881	$	(37,092	)
100 basis point increase		653,427		(18,546	)
Current fair value		671,973		–
100 basis point decrease		690,517		18,544
200 basis point decrease		709,058		37,085

Our selection of the range of values chosen to represent changes in interest rates should not be construed as our prediction of future market events, but rather, as an illustration of the impact of such events, should they occur.  Several other factors, including but not limited to the financial strength of the issuer, prepayment options, relative values of alternative investments, liquidity of the investment, currency fluctuations for non-U.S. debt holdings and other general market conditions, can impact the fair values of fixed income investments and, therefore, significant variations in market interest rates could produce quite different results from the hypothetical estimates presented above.

ITEM 4. CONTROLS AND PROCEDURES

The Company carried out an evaluation as of March 31, 2019 under the supervision and with the participation of management, including the Interim Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as defined in Rule 13a-15(e) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, or the "Exchange Act". Based upon that evaluation, the Interim Chief Executive Officer and Chief Financial Officer concluded the disclosure controls and procedures were effective in ensuring that information required to be disclosed in reports that the Company files or submits under the Exchange Act is: (a) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms; and (b) accumulated and communicated to management, including the Interim Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures. The Company noted no change in its internal control over financial reporting that occurred during the period covered by this report that materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information required with respect to this item can be found in Note 10 - Litigation, Commitments and Contingencies of Notes to Unaudited Condensed Consolidated Financial Statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q and is incorporated by reference into this Part II, Item 1.

ITEM 1A. RISK FACTORS

In addition to the information set forth in this Quarterly Report on Form 10-Q and before deciding to invest in, or retain, shares of the Company's common stock, you should carefully review and consider the information contained in the Company's other reports and periodic filings that it makes with the Securities and Exchange Commission, including, without limitation, the information contained under the caption Part I, Item 1A "Risk Factors" in its Annual Report on Form 10-K for the year ended December 31, 2018. Those risk factors could materially affect the Company's business, financial condition and results of operations. There have been no material changes from the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased Under the Program (1)		Remaining Shares Available to be Purchased Under the Program (1)
January 1 – January 31		–	$	-		–		2,179,581
February 1 – February 28		–		-		–		2,179,581
March 1 – March 31		24,958		18.72		24,958		2,154,623
Total		24,958				24,958

⁽¹⁾ On August 31, 2017, our Board of Directors authorized the reinstatement of our share repurchase program for up to 2,464,209 shares of our Class A or Class B Common Stock.  On August 7, 2018, our Board of Directors reaffirmed our share repurchase program, but also provided that the aggregate dollar amount of shares of our common stock that may be repurchased under the share repurchase program through August 8, 2019 may not exceed $25.0 million.  Pursuant to this share repurchase program, we entered into a Rule 10b5-1 plan on March 22, 2019, which authorizes the repurchase of up to $3.5 million of our outstanding common stock, at various pricing thresholds, in accordance with guidelines specified under Rule 10b5-1 of the Exchange Act. The Rule 10b5-1 plan expires on May 9, 2019.  No duration has been placed on our share repurchase program, and we reserve the right to discontinue it at any time.   The share repurchase program does not commit us to repurchase any shares of our Common Stock.  We have funded, and intend to continue to fund, the share repurchase program from cash on hand.

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ITEM 6. EXHIBITS

INDEX TO EXHIBITS

Exhibit No.	Description
3.1	Amended and Restated Articles of Incorporation of Protective Insurance Corporation, incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q filed August 8, 2018.
3.2	Code of By-Laws of Protective Insurance Corporation, as amended effective February 22, 2019, incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K filed March 7, 2019.
31.1	Certification of the Interim Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification of the Interim Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following materials from Protective Insurance Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, formatted in XBRL (eXtensible Business Reporting Language): (1) the Condensed Consolidated Balance Sheets, (2) the Condensed Consolidated Statements of Operations, (3) the Condensed Consolidated Statements of Comprehensive Income (Loss), (4) the Condensed Consolidated Statements of Cash Flows, and (5) the Notes to Unaudited Condensed Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PROTECTIVE INSURANCE CORPORATION

Date May 8, 2019

By:	/s/ John D. Nichols, Jr.
	John D. Nichols, Jr.
	Interim Chief Executive Officer & Chairman of the Board of Directors

Date May 8, 2019

By:	/s/ William C. Vens
	William C. Vens
	Chief Financial Officer

- 28 -

EX-31.1

Exhibit 31.1

CERTIFICATION

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, John D. Nichols, Jr., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Protective Insurance Corporation;

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 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 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;

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 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 function):

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.

Date: May 8, 2019

/s/ John D. Nichols, Jr.

John D. Nichols, Jr.

Interim Chief Executive Officer & Chairman of the Board of Directors

EX-31.2

Exhibit 31.2

CERTIFICATION

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, William C. Vens, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Protective Insurance Corporation;

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 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 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;

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 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 function):

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.

Date: May 8, 2019

/s/ William C. Vens

William C. Vens

Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Protective Insurance Corporation (the "Company") on Form 10-Q for the quarterly period ending March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, John D. Nichols, Jr., Interim Chief Executive Officer & Chairman of the Board of Directors, and William C. Vens, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to our knowledge:

(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.

Date: May 8, 2019

/s/ John D. Nichols, Jr.

John D. Nichols, Jr.

Interim Chief Executive Officer & Chairman of the Board of Directors

/s/ William C. Vens

William C. Vens

Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 01, 2019
Entity Information [Line Items]
Entity Registrant Name	Protective Insurance Corp
Entity Central Index Key	0000009346
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Entity Common Stock, Shares Outstanding		14,692,214
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Class A (voting) [Member]
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		2,615,216
Class B (nonvoting) [Member]
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		12,076,998

XML

Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Investments:
Fixed income securities	$ 671,973	$ 592,645
Equity securities	68,956	66,422
Limited partnerships	38,239	55,044
Commercial mortgage loans	7,844	6,672
Short-term and other	1,000	1,000
Total Investments	788,012	721,783
Cash and cash equivalents	117,418	163,996
Restricted cash and cash equivalents	15,888	6,815
Accounts receivable	108,974	102,972
Reinsurance recoverable	404,424	392,436
Other assets	95,572	88,426
Current federal income taxes recoverable	6,025	7,441
Deferred federal income taxes	3,478	6,262
Total Assets	1,539,791	1,490,131
Liabilities and shareholders' equity
Reserves for losses and loss expenses	894,221	865,339
Reserves for unearned premiums	80,332	71,625
Reinsurance payable	62,802	66,632
Short-term borrowings	20,000	20,000
Accounts payable and other liabilities	116,366	110,453
Total Liabilities	1,173,721	1,134,049
Shareholders' equity:
Additional paid-in capital	55,049	54,720
Accumulated other comprehensive income (loss)	1,416	(7,347)
Retained earnings	308,971	308,075
Shareholders' equity	366,070	356,082
Total liabilities and shareholders' equity	1,539,791	1,490,131
Class A Voting [Member]
Shareholders' equity:
Common stock	112	112
Class B Non-voting [Member]
Shareholders' equity:
Common stock	$ 522	$ 522

XML

Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2019	Dec. 31, 2018
Class A Voting [Member]
Shareholders' equity:
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	3,000,000	3,000,000
Common stock, shares outstanding (in shares)	2,615,239	2,615,339
Class B Non-voting [Member]
Shareholders' equity:
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	20,000,000	20,000,000
Common stock, shares outstanding (in shares)	12,249,414	12,253,922

XML

Unaudited Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenues
Net premiums earned	$ 110,013	$ 105,462
Net investment income	6,232	4,636
Commissions and other income	2,064	1,814
Net realized gains (losses) on investments, excluding impairment losses	(39)	376
Other-than-temporary impairment losses on investments	(260)	0
Net unrealized gains (losses) on equity securities and limited partnership investments	6,327	(4,909)
Net realized and unrealized gains (losses) on investments	6,028	(4,533)
Total revenues	124,337	107,379
Expenses
Losses and loss expenses incurred	87,122	72,298
Other operating expenses	33,701	34,767
Total expenses	120,823	107,065
Income before federal income tax expense (benefit)	3,514	314
Federal income tax expense (benefit)	766	(16)
Net income	$ 2,748	$ 330
Per share data:
Basic and diluted earnings (in dollars per share)	$ 0.18	$ 0.02
Dividends paid to shareholders (in dollars per share)	$ 0.10	$ 0.28
Reconciliation of shares outstanding:
Average shares outstanding - basic (in shares)	14,848	15,010
Dilutive effect of share equivalents (in shares)	30	24
Average shares outstanding - diluted (in shares)	14,878	15,034

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Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) [Abstract]
Net income	$ 2,748	$ 330
Other comprehensive income (loss), net of tax:
Unrealized net gains (losses) on fixed income securities	8,456	(3,121)
Foreign currency translation adjustments	307	(223)
Other comprehensive income (loss)	8,763	(3,344)
Comprehensive income (loss)	$ 11,511	$ (3,014)

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Unaudited Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Retained Earnings [Member]	Total	Class A [Member] Common Stock [Member]	Class A [Member]	Class B [Member] Common Stock [Member]	Class B [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative effect of adoption, net of tax | ASU 2016-01 [Member]	$ 0	$ (46,157)	$ 46,157	$ 0	$ 0		$ 0
Cumulative effect of adoption, net of tax | ASU 2018-02 [Member]	0	117	(117)	0	0		0
Beginning balance at Dec. 31, 2017	55,078	46,391	316,700	418,811	$ 112		$ 530
Beginning balance (in shares) at Dec. 31, 2017					2,623,000		12,424,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	330	330	$ 0		$ 0
Foreign currency translation adjustment, net of tax	0	(223)	0	(223)	0		0
Change in unrealized gain (loss) on investments, net of tax	0	(3,121)	0	(3,121)	0		0
Common stock dividends	0	0	(4,229)	(4,229)	0		0
Repurchase of common stock	(45)	0	(190)	(235)	0		$ 0
Repurchase of common stock (in shares)							(11,000)
Restricted stock grants	478	0	0	478	$ 0		$ 0
Restricted stock grants (in shares)					0		5,000
Ending balance at Mar. 31, 2018	55,511	(2,993)	358,651	411,811	$ 112		$ 530
Ending balance (in shares) at Mar. 31, 2018					2,623,000		12,418,000
Beginning balance at Dec. 31, 2018	54,720	(7,347)	308,075	356,082	$ 112		$ 522
Beginning balance (in shares) at Dec. 31, 2018					2,615,000		12,254,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	2,748	2,748	$ 0		$ 0
Foreign currency translation adjustment, net of tax	0	307	0	307	0		0
Change in unrealized gain (loss) on investments, net of tax	0	8,456	0	8,456	0		0
Common stock dividends	0	0	(1,493)	(1,493)	0		0
Repurchase of common stock	(108)	0	(359)	(468)	$ 0		$ (1)
Repurchase of common stock (in shares)					0	(100)	(25,000)	(24,858)
Restricted stock grants	437	0	0	438	$ 0		$ 1
Restricted stock grants (in shares)					0		20,000
Ending balance at Mar. 31, 2019	$ 55,049	$ 1,416	$ 308,971	$ 366,070	$ 112		$ 522
Ending balance (in shares) at Mar. 31, 2019					2,615,000		12,249,000

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Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Operating activities
Net income	$ 2,748	$ 330
Adjustments to reconcile net income to net cash provided by operating activities	8,657	7,697
Net cash provided by operating activities	11,405	8,027
Investing activities
Purchases of fixed income and equity securities	(140,645)	(140,820)
Purchases of limited partnership interests	0	(200)
Distributions from limited partnerships	17,214	0
Proceeds from maturities	16,776	14,021
Proceeds from sales of fixed income securities	52,199	89,636
Proceeds from sales of equity securities	9,169	59,757
Purchase of insurance company-owned life insurance	0	(10,000)
Purchase of commercial mortgage loans	(1,172)	0
Purchases of property and equipment	(797)	(1,218)
Proceeds from disposals of property and equipment	0	4
Net cash provided by (used in) investing activities	(47,256)	11,180
Financing activities
Dividends paid to shareholders	(1,493)	(4,229)
Repurchase of common shares	(468)	(235)
Net cash used in financing activities	(1,961)	(4,464)
Effect of foreign exchange rates on cash and cash equivalents	307	(223)
Increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents	(37,505)	14,520
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period	170,811	68,713
Cash, cash equivalents and restricted cash and cash equivalents at end of period	$ 133,306	$ 83,233

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

(1)  Summary of Significant Accounting Policies:

Description of Business:  Protective Insurance Corporation (the "Company"), based in Carmel, Indiana, is a property-casualty insurer specializing in marketing and underwriting property, liability and workers' compensation coverage for trucking and public transportation fleets, as well as coverage for trucking industry independent contractors.  In addition, the Company offers workers' compensation coverage for a variety of operations outside the transportation industry.  The Company operates as one reportable property and casualty insurance segment, offering a range of products and services, the most significant being commercial automobile and workers' compensation insurance products.

The term “Insurance Subsidiaries,” as used throughout this document, refers to Protective Insurance Company, Protective Specialty Insurance Company, Sagamore Insurance Company and B&L Insurance, Ltd.

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.  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 Annual Report on Form 10-K.  Operating results for interim periods are not necessarily indicative of results that may be expected for the year ending December 31, 2019 or any other future period.

Investments: Carrying amounts for fixed income 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).  Commercial mortgage loans are carried primarily at amortized cost along with a valuation allowance for losses when necessary. These investments represent interests in commercial mortgage loans originated and serviced by a third party of which the Company shares, on a pro-rata basis, in all related cash flows of the underlying mortgage loans. There was no valuation allowance on the Company's commercial mortgage loans as of March 31, 2019.

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 the limited partnerships 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 condensed consolidated statements of operations, its proportionate share of the investee's unrealized, as well as realized, investment gains or losses within net unrealized gains (losses) on equity securities and limited partnership investments.

Short-term and other investments are carried at cost, which approximates their fair values.

Fixed income securities are considered to be available-for-sale. The related unrealized net gains or losses (net of applicable tax effects) on fixed income securities are reflected directly in shareholders' equity. Included within available-for-sale fixed income securities are convertible debt securities.  A portion of the changes in the fair values of convertible debt securities is reflected as a component of net realized gains (losses) on investments, excluding impairment losses within the condensed consolidated statements of operations.  Realized gains and losses on disposals of fixed income securities are recorded on the trade date.  Realized gains and losses on fixed income securities are determined by the specific identification of the cost of investments sold and are included in net realized gains (losses) on investments, excluding impairment losses.

Effective January 1, 2018, equity securities are recorded at fair value, with unrealized net gains or losses reflected as a component of net unrealized gains (losses) on equity securities and limited partnership investments within the condensed consolidated statements of operations.  Realized gains and losses on disposals of equity securities are recorded on the trade date and included in net realized gains (losses) on investments, excluding impairment losses.  Prior to adoption of the new accounting guidance, unrealized gains and losses related to equity securities were reflected directly in shareholders’ equity unless a decline in value was determined to be other-than-temporary, in which case the loss was charged to income.

In accordance with the Financial Accounting Standards Board's ("FASB") other-than-temporary impairment guidance, if a fixed income security is in an unrealized loss position and the Company has the intent to sell the fixed income security, or it is more likely than not that the Company will have to sell the fixed income security before recovery of its amortized cost basis, the decline in value is deemed to be other-than-temporary and is recorded to other-than-temporary impairment losses on investments in the condensed consolidated statements of operations.   For impaired fixed income securities that the Company does not intend to sell or in cases where 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 other-than-temporary impairment losses on investments in the condensed consolidated statements of operations and the non-credit component of the other-than-temporary impairment is recognized directly in shareholders' equity.

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 income security.  The net present value is calculated by discounting the Company's best estimate of projected future cash flows at the appropriate effective interest rate.

Recognition of Revenue and Costs:  Premiums are earned over the period for which insurance protection is provided.  A reserve for unearned premiums, computed by the daily pro-rata method, is established to reflect amounts applicable to subsequent accounting periods.  Commissions to unaffiliated companies and premium taxes applicable to unearned premiums are deferred and expensed as the related premiums are earned.  The Company does not defer acquisition costs that are not directly variable with the production of premium.  If it is determined that expected losses and deferred expenses will likely exceed the related unearned premiums, the asset representing deferred policy acquisition costs is reduced and an expense is charged against current operations to reflect any such premium deficiency.  In the event that the expected premium deficiency exceeds deferred policy acquisition costs, an additional liability would be recorded with a corresponding expense to current operations for the amount of the excess premium deficiency.  Anticipated investment income is considered in determining recoverability of deferred acquisition costs.  The Company had no material contract assets, contract liabilities, or deferred contract costs recorded on its condensed consolidated balance sheet at March 31, 2019.

Recently Adopted Accounting Pronouncements:In February 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842), or ASU 2016-02. ASU 2016-02 superseded the current lease guidance in Accounting Standards Codification ("ASC") Topic 840, Leases.  Under the new guidance, lessees are required to recognize for all leases, with the exception of short-term leases, a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis.  Concurrently, lessees are required to recognize a right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term.  The guidance provides for a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative periods presented in the financial statements.  In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, or ASU 2018-11, which provided adopters an additional transition method by allowing entities to initially apply ASU 2016-02, and subsequent related standards, at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.   The Company adopted the new guidance on January 1, 2019 utilizing the transition method allowed per ASU 2018-11, and accordingly, comparative period financial information was not adjusted for the effects of the new guidance. No cumulative-effect adjustment was required to the opening balance of retained earnings on the adoption date. The Company's adoption of the new standard did not have any impact on the Company's condensed consolidated statements of operations or cash flows; however, the impact of adopting the new guidance resulted in a right-of-use asset and lease liability being recorded on the condensed consolidated balance sheet as of March 31, 2019 of approximately $400, which is included within other assets and accounts payable and other liabilities. 

In July 2018, the FASB issued ASU No. 2018-09, Codification Improvements. This update provides clarification, corrects errors in and makes minor improvements to various ASC topics. Many of the amendments in this update have transition guidance with effective dates for annual periods beginning after December 15, 2018 and some amendments in this update do not require transition guidance and were effective upon issuance of this update. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

Recently Issued Accounting Pronouncements:  In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, or ASU 2016-13. This update introduces a current expected credit loss model for measuring expected credit losses for certain types of financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. ASU 2016-13 replaces the current incurred loss model for measuring expected credit losses, requires expected losses on available-for-sale debt securities to be recognized through an allowance for credit losses rather than as reductions in the amortized cost of the securities, and provides for additional disclosure requirements. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2018. The Company is currently evaluating the effects the adoption of ASU 2016-13 will have on its consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, or ASU 2018-13. This update removes the disclosure requirements for the amounts of and the reasons for transfers between Level 1 and Level 2 and disclosure of the policy for timing of transfers between levels. This update also removes disclosure requirements for the valuation processes for Level 3 fair value measurements. Additionally, this update adds disclosure requirements for the changes in unrealized gains and losses for recurring Level 3 fair value measurements and quantitative information for certain unobservable inputs in Level 3 fair value measurements. ASU 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently evaluating the effects the adoption of ASU 2018-13 will have on its consolidated financial statements.

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Investments

3 Months Ended

Mar. 31, 2019

Investments [Abstract]

Investments

(2)  Investments:

The following is a summary of available-for-sale securities at March 31, 2019 and December 31, 2018:

	Fair Value		Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Net Unrealized Gains (Losses)
March 31, 2019
Fixed income securities
Agency collateralized mortgage obligations	$	15,773	$	15,567	$	265	$	(59	)	$	206
Agency mortgage-backed securities		41,283		40,486		849		(52	)		797
Asset-backed securities		77,307		77,890		180		(763	)		(583	)
Bank loans		11,284		11,372		38		(126	)		(88	)
Certificates of deposit		2,835		2,835		–		–			–
Collateralized mortgage obligations		5,433		5,072		433		(72	)		361
Corporate securities		227,529		227,017		2,110		(1,598	)		512
Mortgage-backed securities		37,984		37,699		588		(303	)		285
Municipal obligations		30,357		30,056		383		(82	)		301
Non-U.S. government obligations		30,879		30,810		162		(93	)		69
U.S. government obligations		191,309		190,324		1,469		(484	)		985
Total fixed income securities	$	671,973	$	669,128	$	6,477	$	(3,632	)	$	2,845

	Fair Value		Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Net Unrealized Gains (Losses)
December 31, 2018
Fixed income securities
Agency collateralized mortgage obligations	$	10,687	$	10,636	$	145	$	(94	)	$	51
Agency mortgage-backed securities		37,385		37,168		371		(154	)		217
Asset-backed securities		64,422		66,241		14		(1,833	)		(1,819	)
Bank loans		9,750		10,208		27		(485	)		(458	)
Certificates of deposit		2,835		2,835		–		–			–
Collateralized mortgage obligations		5,423		5,095		376		(48	)		328
Corporate securities		190,450		196,925		127		(6,602	)		(6,475	)
Mortgage-backed securities		38,540		38,586		377		(423	)		(46	)
Municipal obligations		29,155		29,102		239		(186	)		53
Non-U.S. government obligations		25,180		25,339		6		(165	)		(159	)
U.S. government obligations		178,818		178,369		1,252		(803	)		449
Total fixed income securities	$	592,645	$	600,504	$	2,934	$	(10,793	)	$	(7,859	)

The following table summarizes, for available-for-sale fixed income securities in an unrealized loss position at March 31, 2019 and  December 31, 2018, the aggregate fair value and gross unrealized loss categorized by the duration individual securities have been continuously in an unrealized loss position.

	March 31, 2019							December 31, 2018
	Number of Securities		Fair Value		Gross Unrealized Loss			Number of Securities		Fair Value		Gross Unrealized Loss
Fixed income securities:
12 months or less		85	$	96,462	$	(1,570	)		275	$	282,646	$	(7,296	)
Greater than 12 months		253		208,253		(2,062	)		217		131,001		(3,497	)
Total fixed income securities		338	$	304,715	$	(3,632	)		492	$	413,647	$	(10,793	)

The fair value and the cost or amortized costs of fixed income investments at March 31, 2019, organized by contractual maturity, are shown below.  Actual maturities may ultimately differ from contractual maturities because borrowers have, in some cases, the right to call or prepay obligations with or without call or prepayment penalties. Pre-refunded municipal bonds are classified based on their pre-refunded call dates.

	Fair Value		Cost or Amortized Cost
One year or less	$	95,201	$	95,347
Excess of one year to five years		315,983		314,909
Excess of five years to ten years		81,812		80,997
Excess of ten years		6,630		6,233
Contractual maturities		499,626		497,486
Asset-backed securities		172,347		171,642
Total	$	671,973	$	669,128

Following is a summary of the components of net realized and unrealized gains (losses) on investments for the periods presented in the accompanying condensed consolidated statements of operations.

	Three Months Ended March 31
	2019			2018
Gross gains on available-for-sale fixed income securities sold during the period	$	3,171		$	2,443
Gross losses on available-for-sale fixed income securities sold during the period		(3,527	)		(2,708	)
Other-than-temporary impairments		(260	)		–
Change in value of limited partnership investments		408			(2,603	)
Gains (losses) on equity securities:
Realized gains on equity securities sold during the period		317			641
Unrealized gains (losses) on equity securities held at the end of the period		5,919			(2,306	)
Realized and unrealized gains (losses) on equity securities during the period		6,236			(1,665	)
Net realized and unrealized gains (losses) on investments	$	6,028		$	(4,533	)

Shareholders' equity at March 31, 2019 included approximately $27,203, net of federal income tax expense, of reported earnings that remain undistributed by limited partnerships.

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Reinsurance

3 Months Ended

Mar. 31, 2019

Reinsurance [Abstract]

Reinsurance

(3)  Reinsurance:

The following table summarizes the Company's transactions with reinsurers for the three months ended March 31, 2019 and 2018.

	2019		2018
Three months ended March 31:
Premiums ceded to reinsurers	$	30,173	$	32,442
Losses and loss expenses ceded to reinsurers		30,789		26,661
Commissions from reinsurers		7,233		7,880

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Loss and Loss Expense Reserves

3 Months Ended

Mar. 31, 2019

Loss and Loss Expense Reserves [Abstract]

Loss and Loss Expense Reserves

(4)  Loss and Loss Expense Reserves:

Activity in the reserves for losses and loss expenses for the three months ended March 31, 2019 and 2018 is summarized as follows.  All amounts are shown net of reinsurance, unless otherwise indicated.

	Three Months Ended March 31
	2019			2018
Reserves, gross of reinsurance recoverable, at the beginning of the year	$	865,339		$	680,274
Reinsurance recoverable on unpaid losses at the beginning of the year		375,935			308,143
Reserves at the beginning of the year		489,404			372,131
Provision for losses and loss expenses:
Claims occurring during the current period		88,180			73,899
Claims occurring during prior periods		(1,058	)		(1,601	)
Total incurred		87,122			72,298
Loss and loss expense payments:
Claims occurring during the current period		8,708			10,683
Claims occurring during prior periods		56,747			48,655
Total paid		65,455			59,338
Reserves at the end of the period		511,071			385,091
Reinsurance recoverable on unpaid losses at the end of the period		383,150			309,359
Reserves, gross of reinsurance recoverable, at the end of the period	$	894,221		$	694,450

The table above shows a reserve savings of $1,058 that developed during the three months ended March 31, 2019 in the settlement of claims occurring on or before December 31, 2018.  Losses incurred from claims occurring during prior years reflect the development from prior accident years, composed of individual claim savings and deficiencies which, in the aggregate, have resulted from the settlement of claims at amounts higher or lower than previously reserved and from changes in estimates of losses incurred but not reported.

The $1,058 prior accident year savings that developed during the three months ended March 31, 2019 was primarily due to favorable loss development in workers' compensation and independent contractor coverages.  This 2019 savings compares to a savings of $1,601 for the three months ended March 31, 2018, which was also related to favorable loss development from workers' compensation and independent contractor coverages.

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Segment Information

3 Months Ended

Mar. 31, 2019

Segment Information [Abstract]

Segment Information

(5)  Segment Information:

The Company has one reportable business segment in its operations: Property and Casualty Insurance.  The property and casualty insurance segment provides multiple lines of insurance coverage primarily to commercial automobile companies, as well as to independent contractors who contract with commercial automobile companies.  In addition, the Company provides workers' compensation coverage for a variety of operations outside the transportation industry.

The following table summarizes segment revenues for the three months ended March 31, 2019 and 2018:

	Three Months Ended March 31
	2019		2018
Revenues:
Net premiums earned	$	110,013	$	105,462
Net investment income		6,232		4,636
Net realized and unrealized gains (losses) on investments		6,028		(4,533	)
Commissions and other income		2,064		1,814
Total revenues	$	124,337	$	107,379

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Debt

3 Months Ended

Mar. 31, 2019

Debt [Abstract]

Debt

(6)  Debt:

On August 9, 2018, the Company entered into a credit agreement providing a revolving credit facility with a $40,000 limit, with the option for up to an additional $35,000 in incremental loans at the discretion of the lenders.  This credit agreement has an expiration date of August 9, 2022.  Interest on this credit facility is referenced to the London Interbank Offered Rate and can be fixed for periods of up to one year at the Company's option.  Outstanding drawings on this revolving credit facility were $20,000 as of March 31, 2019.  At March 31, 2019, the effective interest rate was 3.59%, and the Company had $20,000 remaining under the revolving credit facility as of March 31, 2019.  The current outstanding borrowings were used to repay the Company's previous line of credit.  The Company's revolving credit facility has two financial covenants, each of which were met as of March 31, 2019, requiring the Company to have a minimum U.S. generally accepted accounting principles net worth and a maximum consolidated leverage ratio of 0.35 to 1.00.

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Taxes

3 Months Ended

Mar. 31, 2019

Taxes [Abstract]

Taxes

(7)  Taxes:

The effective federal tax rate on consolidated income for the three months ended March 31, 2019 was 21.8% compared to (5.1%) for the three months ended March 31, 2018.  The effective federal income tax rate differs from the normal statutory rate in part as a result of tax-exempt investment income.  The effective tax rate for the three months ended March 31, 2018 was also impacted by the change in accounting for unrealized gains and losses on equity securities related to the Company's adoption of ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, where changes in unrealized gains and losses, and the corresponding tax effects, are now recorded in the condensed consolidated statement of operations.  The Company recorded an unrealized loss, and corresponding tax benefit, related to equity securities during the three months ended March 31, 2019.

As of March 31, 2019, the Company's calendar years 2017, 2016 and 2015 remain subject to examination by the Internal Revenue Service.

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Fair Value

3 Months Ended

Mar. 31, 2019

Fair Value [Abstract]

Fair Value

(8)  Fair Value:

Assets and liabilities recorded at fair value in the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The following tables summarize fair value measurements by level for assets measured at fair value on a recurring basis:

As of March 31, 2019:

Description	Total		Level 1		Level 2		Level 3
Fixed income securities:
Agency collateralized mortgage obligations	$	15,773	$	–	$	15,773	$	–
Agency mortgage-backed securities		41,283		–		41,283		–
Asset-backed securities		77,307		–		77,307		–
Bank loans		11,284		–		11,284		–
Certificates of deposit		2,835		2,835		–		–
Collateralized mortgage obligations		5,433		–		5,433		–
Corporate securities		222,853		–		222,853		–
Options embedded in convertible securities		4,676		–		4,676		–
Mortgage-backed securities		37,984		–		37,984		–
Municipal obligations		30,357		–		30,357		–
Non-U.S. government obligations		30,879		–		30,879		–
U.S. government obligations		191,309		–		191,309		–
Total fixed income securities		671,973		2,835		669,138		–
Equity securities:
Consumer		15,862		15,862		–		–
Energy		3,534		3,534		–		–
Financial		24,814		24,814		–		–
Industrial		7,412		7,412		–		–
Technology		2,631		2,631		–		–
Funds (e.g. mutual funds, closed end funds, ETFs)		6,324		6,324		–		–
Other		8,379		8,379		–		–
Total equity securities		68,956		68,956		–		–
Short-term		1,000		1,000		–		–
Cash equivalents		113,377		504		112,873		–
Total	$	855,306	$	73,295	$	782,011	$	–

As of December 31, 2018:

Description	Total		Level 1		Level 2		Level 3
Fixed income securities:
Agency collateralized mortgage obligations	$	10,687	$	–	$	10,687	$	–
Agency mortgage-backed securities		37,385		–		37,385		–
Asset-backed securities		64,422		–		64,422		–
Bank loans		9,750		–		9,750		–
Certificates of deposit		2,835		2,835		–		–
Collateralized mortgage obligations		5,423		–		5,423		–
Corporate securities		186,651		–		186,651		–
Options embedded in convertible securities		3,799		–		3,799		–
Mortgage-backed securities		38,540		–		38,540		–
Municipal obligations		29,155		–		29,155		–
Non-U.S. government obligations		25,180		–		25,180		–
U.S. government obligations		178,818		–		178,818		–
Total fixed income securities		592,645		2,835		589,810		–
Equity securities:
Consumer		17,945		17,945		–		–
Energy		3,179		3,179		–		–
Financial		25,253		25,253		–		–
Industrial		6,920		6,920		–		–
Technology		2,303		2,303		–		–
Funds (e.g. mutual funds, closed end funds, ETFs)		5,489		5,489		–		–
Other		5,333		5,333		–		–
Total equity securities		66,422		66,422		–		–
Short-term		1,000		1,000		–		–
Cash equivalents		156,855		–		156,855		–
Total	$	816,922	$	70,257	$	746,665	$	–

Level inputs, as defined by the FASB guidance, are as follows:

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.

The Company did not have any Level 3 assets at March 31, 2019 or December 31, 2018.  Level 3 assets, when present, are valued using various unobservable inputs including extrapolated data, proprietary models and indicative quotes. 

Quoted market prices are obtained whenever possible.  Where quoted market prices are not available, fair values are estimated using broker/dealer quotes for specific securities.  These techniques are significantly affected by the Company's assumptions, including discount rates and estimates of future cash flows.  Potential taxes and other transaction costs have not been considered in estimating fair values.

Transfers between levels, if any, are recorded as of the beginning of the reporting period.  There were no significant transfers of assets between Level 1 and Level 2 during the three months ended March 31, 2019 and 2018.

In addition to the preceding disclosures on assets recorded at fair value in the condensed consolidated balance sheets, FASB guidance also requires the disclosure of fair values for certain other financial instruments for which it is practicable to estimate fair value, whether or not such values are recognized in the condensed consolidated balance sheets.

Non-financial instruments such as real estate, property and equipment, other assets, deferred income taxes and intangible assets, and certain financial instruments such as policy reserve liabilities are excluded from the fair value disclosures.  Therefore, the fair value amounts cannot be aggregated to determine the underlying economic value of the Company.  The following methods, assumptions and inputs were used to estimate the fair value of each class of financial instrument:

Limited partnerships: The Company accounts for investments in limited partnerships using the equity method of accounting, which requires an investor in a limited partnership to carry the investment at its proportionate share of the limited partnership's equity.   The underlying assets of the Company's investments in limited partnerships are carried primarily at fair value, and, therefore, the Company's carrying value of limited partnerships approximates fair value.  As these investments are not actively traded and the corresponding inputs are based on data provided by the investees, they are classified as Level 3.

Commercial mortgage loans:  Commercial mortgage loans are carried primarily at amortized cost along with a valuation allowance for losses when necessary. These investments represent interests in commercial mortgage loans originated and serviced by a third party of which the Company shares, on a pro-rata basis, in all related cash flows of the underlying mortgage loans.  The fair value of the Company’s investment in these commercial mortgage loans is based on expected future cash flows discounted at the current interest rate for origination of similar quality loans, adjusted for specific loan risk.  These investments are classified as Level 3.

Short-term borrowings: The fair value of the Company's short-term borrowings is based on quoted market prices for the same or similar debt, or, if no quoted market prices are available, on the current market interest rates available to the Company for debt of similar terms and remaining maturities.

A summary of the carrying value and fair value by level of financial instruments not recorded at fair value on the Company's condensed consolidated balance sheets at March 31, 2019 and December 31, 2018 is as follows:

	Carrying		Fair Value
	Value		Level 1		Level 2		Level 3		Total
March 31, 2019
Assets:
Limited partnerships	$	38,239	$	–	$	–	$	38,239	$	38,239
Commercial mortgage loans		7,844		–		–		7,844		7,844
Liabilities:
Short-term borrowings		20,000		–		20,000		–		20,000
December 31, 2018
Assets:
Limited partnerships	$	55,044	$	–	$	–	$	55,044	$	55,044
Commercial mortgage loans		6,672		–		–		6,672		6,672
Liabilities:
Short-term borrowings		20,000		–		20,000		–		20,000

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Stock Based Compensation

3 Months Ended

Mar. 31, 2019

Stock Based Compensation [Abstract]

Stock Based Compensation

(9)  Stock Based Compensation:

The Company issues shares of restricted Class B Common Stock to the Company's outside directors, which serve as the annual retainer compensation for the outside directors.  The shares are distributed to the outside directors on the vesting date, which, with the exception of pro-rated annual retainers granted to outside directors, is one year following the date of grant.  The table below provides detail of the restricted stock issuances to directors for 2018 and 2019:

Grant Date	Number of Shares Issued		Vesting Date	Service Period	Grant Date Fair Value Per Share
5/9/2017		18,183	5/9/2018	7/1/2017 - 6/30/2018	$	24.20
8/31/2017		1,257	5/9/2018	8/31/2017 - 6/30/2018	$	21.90
2/9/2018		408	5/9/2018	2/9/2018 - 6/30/2018	$	24.20
5/8/2018		19,085	5/8/2019	7/1/2018 - 6/30/2019	$	23.05
5/7/2019		29,536	5/7/2020	7/1/2019 - 6/30/2020	$	16.25

Compensation expense related to the above stock grants is recognized over the period in which the directors render services.

In May 2017, the Company's Compensation Committee granted equity-based awards pursuant to the Company's Long-Term Incentive Plan (the "Long-Term Incentive Plan"), which was approved by the Company's shareholders at the 2017 Annual Meeting of Shareholders.  Certain participants under the Long-Term Incentive Plan were granted Value Creation Incentive Plan awards (the "2017 VCIP Awards").  The 2017 VCIP Awards are performance-based equity awards that will be earned based on the Company's cumulative operating income over a three-year performance period from January 1, 2017 through December 31, 2019 relative to a cumulative operating income goal for the period set by the Compensation Committee in March 2017.  For the purpose of the 2017 VCIP Awards, cumulative operating income is equal to income before taxes excluding net realized gains (losses) on investments.  Any 2017 VCIP Awards that are earned will be paid in unrestricted shares of the Company's Class B Common Stock at the end of the three-year performance period, but no later than March 15, 2020.  No shares are eligible to be issued under the 2017 VCIP Awards as of March 31, 2019.

In March 2018, the Company's Compensation Committee granted equity-based awards pursuant to the Long-Term Incentive Plan.  Certain participants under the Long-Term Incentive Plan were granted equity awards (the "2018 LTIP Awards"), with the number of shares of Class B Common Stock earned pursuant to such award determined by applying a performance matrix consisting of a measurement of the combined results of the Company's 2018 growth in gross premiums earned and the Company's 2018 combined ratio.  The combined ratio is calculated as a ratio of (A) losses and loss expenses incurred, plus other operating expenses, less commission and other income to (B) net premiums earned.  No 2018 LTIP Awards were earned based on the Company's performance in 2018, and therefore no shares were issued pursuant to the 2018 LTIP Awards.  In addition to the 2018 LTIP Awards, in March 2018 the Company's Compensation Committee also granted Value Creation Incentive Plan awards (the "2018 VCIP Awards") to certain participants under the Long-Term Incentive Plan.  The 2018 VCIP Awards are performance-based equity awards that will be earned based on the Company's cumulative operating income, as defined above, over a three-year performance period from January 1, 2018 through December 31, 2020 relative to a cumulative operating income goal for the period set by the Compensation Committee in March 2018.  Any 2018 VCIP Awards that are earned will be paid in unrestricted shares of the Company's Class B Common Stock at the end of the three-year performance period, but no later than March 15, 2021.  No shares are eligible to be issued under the 2018 VCIP Awards as of March 31, 2019.

On November 13, 2018, the Company entered into an employment agreement (the "Agreement") with its Interim Chief Executive Officer, John D. Nichols, Jr.  Pursuant to the terms of the Agreement, on November 13, 2018, Mr. Nichols was granted 85,000 restricted shares of the Company's Class B Common Stock (the "Stock Grant"), of which 42,500 shares will vest as of October 17, 2019; 21,250 shares will vest as of October 17, 2020, and 21,250 shares will vest as of October 17, 2021.  The Company recorded $309 of expense during the three months ended March 31, 2019 related to the Stock Grant.

In March 2019, the Company's Compensation Committee granted equity-based awards pursuant to the Long-Term Incentive Plan.  Certain participants under the Long-Term Incentive Plan were granted equity awards (the "2019 LTIP Awards"), with the number of shares of Class B Common Stock earned pursuant to such award determined by applying a performance matrix consisting of a corporate performance component as well as a personal performance component.  The corporate performance component of the 2019 LTIP Awards will be determined based on the Company's achievement of 2019 underwriting income compared to the plan target.  The Company's underwriting income will be calculated as income (loss) before federal income tax expense (benefit), less net realized gains (losses) on investments, less net unrealized gains (losses) on equity securities and limited partnerships, less net investment income.  The personal performance component of the 2019 LTIP Awards will be determined based on the achievement of personal goals that align with departmental and corporate objectives for 2019.  Any 2019 LTIP Awards earned will be paid in shares of restricted Class B Common Stock in early 2020.  One-third of such shares will vest annually over the three-year period beginning one year from the date of issue.  The Company recorded $24 of expense during the three months ended March 31, 2019 related to the 2019 LTIP Awards.

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Litigation, Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

Litigation, Commitments and Contingencies [Abstract]

Litigation, Commitments and Contingencies

(10)  Litigation, Commitments and Contingencies:

In the ordinary, regular and routine course of their business, the Company and its insurance subsidiaries are frequently involved in various matters of litigation relating principally to claims for insurance coverage provided.  No currently pending matter is deemed by management to be material to the Company.

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Shareholders' Equity

3 Months Ended

Mar. 31, 2019

Shareholders' Equity [Abstract]

Shareholders' Equity

(11)  Shareholders' Equity:

On August 31, 2017, the Company's Board of Directors authorized the reinstatement of its share repurchase program for up to 2,464,209 shares of the Company's Class A or Class B Common Stock.  On August 7, 2018, the Company's Board of Directors reaffirmed its share repurchase program, but also provided that the aggregate dollar amount of shares of the Company's Common Stock that may be repurchased under the share repurchase program through August 8, 2019 may not exceed $25,000.  Pursuant to this share repurchase program, the Company entered into a Rule 10b5-1 plan on March 22, 2019, which authorized the repurchase of up to $3,500 of the Company's outstanding common shares at various pricing thresholds, in accordance with guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934.  The Rule 10b5-1 plan expires on May 9, 2019. No duration has been placed on the Company's share repurchase program, and the Company reserves the right to amend, suspend or discontinue it at any time.  The share repurchase program does not commit the Company to repurchase any shares of its Common Stock.

During the three months ended March 31, 2019, the Company paid $468 to repurchase 100 shares of Class A and 24,858 shares of Class B Common Stock under the share repurchase program.

The following table illustrates changes in accumulated other comprehensive income by component for the three months ended March 31, 2019:

	Foreign Currency			Unrealized Holding Gains (Losses) on Available-for-sale Securities			Total
Beginning balance at December 31, 2018	$	(1,139	)	$	(6,208	)	$	(7,347	)
Other comprehensive income before reclassifications		307			7,671			7,978
Amounts reclassified from accumulated other comprehensive income (loss)		–			785			785
Net current-period other comprehensive income		307			8,456			8,763
Ending balance at March 31, 2019	$	(832	)	$	2,248		$	1,416

The following table illustrates changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2018:

	Foreign Currency			Unrealized Holding Gains (Losses) on Available-for-sale Securities			Total
Beginning balance at December 31, 2017	$	(309	)	$	46,700		$	46,391
Cumulative effect of adoption of ASU 2016-01, net of tax		–			(46,157	)		(46,157	)
Balance at January 1, 2018		(309	)		543			234
Cumulative effect of adoption of ASU 2018-02		–			117			117
Other comprehensive loss before reclassifications		(223	)		(2,998	)		(3,221	)
Amounts reclassified from accumulated other comprehensive income (loss)		–			(123	)		(123	)
Net current-period other comprehensive loss		(223	)		(3,121	)		(3,344	)
Ending balance at March 31, 2018	$	(532	)	$	(2,461	)	$	(2,993	)

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Related Parties

3 Months Ended

Mar. 31, 2019

Related Parties [Abstract]

Related Parties

(12)  Related Parties:

At March 31, 2019, the Company was invested in one limited partnership, the New Vernon India Fund, with an aggregate estimated value of $17,313, that is managed by an organization in which one director of the Company is an executive officer and owner.  The Company's ownership interest in this limited partnership at March 31, 2019 was 4%.  For the three months ended March 31, 2019 and 2018, the Company recorded $48 and $142 of fees related to the management of this limited partnership investment.

In January 2019, the Company withdrew $5,684 from the New Vernon Global Opportunity Fund, which liquidated its investment in this limited partnership.

The Company utilizes the services of an investment firm of which one director of the Company is a partial owner.  These investment firms manage equity securities and fixed income portfolios with an aggregate market value of approximately $7,899 at March 31, 2019.  Total commissions and net fees earned by the investment firms and affiliates on these portfolios were $5 and $27 for the three months ended March 31, 2019 and 2018.

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Subsequent Events

3 Months Ended

Mar. 31, 2019

Subsequent Events [Abstract]

Subsequent Events

(13)  Subsequent Events:

In April 2019, the Company withdrew $3,000 from the Arbiter Partners limited partnership, which reduced the Company's investment in this limited partnership.

On May 7, 2019, the Company's Board of Directors declared a regular quarterly dividend of $0.10 per share on the Company's Class A and Class B Common Stock.  The dividend per share will be payable June 4, 2019 to shareholders of record on May 21, 2019.

Pursuant to the Rule 10b5-1 plan entered into on March 22, 2019, the Company paid $3,031 to repurchase 23 shares of Class A and 172,416 shares of Class B Common Stock between April 1, 2019 and the date of this Quarterly Report on Form 10-Q.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Summary of Significant Accounting Policies [Abstract]

Description of Business

Description of Business:  Protective Insurance Corporation (the "Company"), based in Carmel, Indiana, is a property-casualty insurer specializing in marketing and underwriting property, liability and workers' compensation coverage for trucking and public transportation fleets, as well as coverage for trucking industry independent contractors.  In addition, the Company offers workers' compensation coverage for a variety of operations outside the transportation industry.  The Company operates as one reportable property and casualty insurance segment, offering a range of products and services, the most significant being commercial automobile and workers' compensation insurance products.

The term “Insurance Subsidiaries,” as used throughout this document, refers to Protective Insurance Company, Protective Specialty Insurance Company, Sagamore Insurance Company and B&L Insurance, Ltd.

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.  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 Annual Report on Form 10-K.  Operating results for interim periods are not necessarily indicative of results that may be expected for the year ending December 31, 2019 or any other future period.

Investments

Investments: Carrying amounts for fixed income 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).  Commercial mortgage loans are carried primarily at amortized cost along with a valuation allowance for losses when necessary. These investments represent interests in commercial mortgage loans originated and serviced by a third party of which the Company shares, on a pro-rata basis, in all related cash flows of the underlying mortgage loans. There was no valuation allowance on the Company's commercial mortgage loans as of March 31, 2019.

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 the limited partnerships 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 condensed consolidated statements of operations, its proportionate share of the investee's unrealized, as well as realized, investment gains or losses within net unrealized gains (losses) on equity securities and limited partnership investments.

Short-term and other investments are carried at cost, which approximates their fair values.

Fixed income securities are considered to be available-for-sale. The related unrealized net gains or losses (net of applicable tax effects) on fixed income securities are reflected directly in shareholders' equity. Included within available-for-sale fixed income securities are convertible debt securities.  A portion of the changes in the fair values of convertible debt securities is reflected as a component of net realized gains (losses) on investments, excluding impairment losses within the condensed consolidated statements of operations.  Realized gains and losses on disposals of fixed income securities are recorded on the trade date.  Realized gains and losses on fixed income securities are determined by the specific identification of the cost of investments sold and are included in net realized gains (losses) on investments, excluding impairment losses.

Effective January 1, 2018, equity securities are recorded at fair value, with unrealized net gains or losses reflected as a component of net unrealized gains (losses) on equity securities and limited partnership investments within the condensed consolidated statements of operations.  Realized gains and losses on disposals of equity securities are recorded on the trade date and included in net realized gains (losses) on investments, excluding impairment losses.  Prior to adoption of the new accounting guidance, unrealized gains and losses related to equity securities were reflected directly in shareholders’ equity unless a decline in value was determined to be other-than-temporary, in which case the loss was charged to income.

In accordance with the Financial Accounting Standards Board's ("FASB") other-than-temporary impairment guidance, if a fixed income security is in an unrealized loss position and the Company has the intent to sell the fixed income security, or it is more likely than not that the Company will have to sell the fixed income security before recovery of its amortized cost basis, the decline in value is deemed to be other-than-temporary and is recorded to other-than-temporary impairment losses on investments in the condensed consolidated statements of operations.   For impaired fixed income securities that the Company does not intend to sell or in cases where 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 other-than-temporary impairment losses on investments in the condensed consolidated statements of operations and the non-credit component of the other-than-temporary impairment is recognized directly in shareholders' equity.

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 income security.  The net present value is calculated by discounting the Company's best estimate of projected future cash flows at the appropriate effective interest rate.

Recognition of Revenue and Costs

Recognition of Revenue and Costs:  Premiums are earned over the period for which insurance protection is provided.  A reserve for unearned premiums, computed by the daily pro-rata method, is established to reflect amounts applicable to subsequent accounting periods.  Commissions to unaffiliated companies and premium taxes applicable to unearned premiums are deferred and expensed as the related premiums are earned.  The Company does not defer acquisition costs that are not directly variable with the production of premium.  If it is determined that expected losses and deferred expenses will likely exceed the related unearned premiums, the asset representing deferred policy acquisition costs is reduced and an expense is charged against current operations to reflect any such premium deficiency.  In the event that the expected premium deficiency exceeds deferred policy acquisition costs, an additional liability would be recorded with a corresponding expense to current operations for the amount of the excess premium deficiency.  Anticipated investment income is considered in determining recoverability of deferred acquisition costs.  The Company had no material contract assets, contract liabilities, or deferred contract costs recorded on its condensed consolidated balance sheet at March 31, 2019.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements:In February 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842), or ASU 2016-02. ASU 2016-02 superseded the current lease guidance in Accounting Standards Codification ("ASC") Topic 840, Leases.  Under the new guidance, lessees are required to recognize for all leases, with the exception of short-term leases, a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis.  Concurrently, lessees are required to recognize a right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term.  The guidance provides for a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative periods presented in the financial statements.  In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, or ASU 2018-11, which provided adopters an additional transition method by allowing entities to initially apply ASU 2016-02, and subsequent related standards, at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.   The Company adopted the new guidance on January 1, 2019 utilizing the transition method allowed per ASU 2018-11, and accordingly, comparative period financial information was not adjusted for the effects of the new guidance. No cumulative-effect adjustment was required to the opening balance of retained earnings on the adoption date. The Company's adoption of the new standard did not have any impact on the Company's condensed consolidated statements of operations or cash flows; however, the impact of adopting the new guidance resulted in a right-of-use asset and lease liability being recorded on the condensed consolidated balance sheet as of March 31, 2019 of approximately $400, which is included within other assets and accounts payable and other liabilities. 

In July 2018, the FASB issued ASU No. 2018-09, Codification Improvements. This update provides clarification, corrects errors in and makes minor improvements to various ASC topics. Many of the amendments in this update have transition guidance with effective dates for annual periods beginning after December 15, 2018 and some amendments in this update do not require transition guidance and were effective upon issuance of this update. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements:  In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, or ASU 2016-13. This update introduces a current expected credit loss model for measuring expected credit losses for certain types of financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. ASU 2016-13 replaces the current incurred loss model for measuring expected credit losses, requires expected losses on available-for-sale debt securities to be recognized through an allowance for credit losses rather than as reductions in the amortized cost of the securities, and provides for additional disclosure requirements. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2018. The Company is currently evaluating the effects the adoption of ASU 2016-13 will have on its consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, or ASU 2018-13. This update removes the disclosure requirements for the amounts of and the reasons for transfers between Level 1 and Level 2 and disclosure of the policy for timing of transfers between levels. This update also removes disclosure requirements for the valuation processes for Level 3 fair value measurements. Additionally, this update adds disclosure requirements for the changes in unrealized gains and losses for recurring Level 3 fair value measurements and quantitative information for certain unobservable inputs in Level 3 fair value measurements. ASU 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently evaluating the effects the adoption of ASU 2018-13 will have on its consolidated financial statements.

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Investments (Tables)

3 Months Ended

Mar. 31, 2019

Investments [Abstract]

Available-for-Sale Securities

The following is a summary of available-for-sale securities at March 31, 2019 and December 31, 2018:

	Fair Value		Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Net Unrealized Gains (Losses)
March 31, 2019
Fixed income securities
Agency collateralized mortgage obligations	$	15,773	$	15,567	$	265	$	(59	)	$	206
Agency mortgage-backed securities		41,283		40,486		849		(52	)		797
Asset-backed securities		77,307		77,890		180		(763	)		(583	)
Bank loans		11,284		11,372		38		(126	)		(88	)
Certificates of deposit		2,835		2,835		–		–			–
Collateralized mortgage obligations		5,433		5,072		433		(72	)		361
Corporate securities		227,529		227,017		2,110		(1,598	)		512
Mortgage-backed securities		37,984		37,699		588		(303	)		285
Municipal obligations		30,357		30,056		383		(82	)		301
Non-U.S. government obligations		30,879		30,810		162		(93	)		69
U.S. government obligations		191,309		190,324		1,469		(484	)		985
Total fixed income securities	$	671,973	$	669,128	$	6,477	$	(3,632	)	$	2,845

	Fair Value		Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Net Unrealized Gains (Losses)
December 31, 2018
Fixed income securities
Agency collateralized mortgage obligations	$	10,687	$	10,636	$	145	$	(94	)	$	51
Agency mortgage-backed securities		37,385		37,168		371		(154	)		217
Asset-backed securities		64,422		66,241		14		(1,833	)		(1,819	)
Bank loans		9,750		10,208		27		(485	)		(458	)
Certificates of deposit		2,835		2,835		–		–			–
Collateralized mortgage obligations		5,423		5,095		376		(48	)		328
Corporate securities		190,450		196,925		127		(6,602	)		(6,475	)
Mortgage-backed securities		38,540		38,586		377		(423	)		(46	)
Municipal obligations		29,155		29,102		239		(186	)		53
Non-U.S. government obligations		25,180		25,339		6		(165	)		(159	)
U.S. government obligations		178,818		178,369		1,252		(803	)		449
Total fixed income securities	$	592,645	$	600,504	$	2,934	$	(10,793	)	$	(7,859	)

Fixed Maturity and Equity Security Investments in Unrealized Loss Position

The following table summarizes, for available-for-sale fixed income securities in an unrealized loss position at March 31, 2019 and  December 31, 2018, the aggregate fair value and gross unrealized loss categorized by the duration individual securities have been continuously in an unrealized loss position.

	March 31, 2019							December 31, 2018
	Number of Securities		Fair Value		Gross Unrealized Loss			Number of Securities		Fair Value		Gross Unrealized Loss
Fixed income securities:
12 months or less		85	$	96,462	$	(1,570	)		275	$	282,646	$	(7,296	)
Greater than 12 months		253		208,253		(2,062	)		217		131,001		(3,497	)
Total fixed income securities		338	$	304,715	$	(3,632	)		492	$	413,647	$	(10,793	)

Fair Value and Cost or Amortized Cost of Fixed Maturity Investments by Contractual Maturity

The fair value and the cost or amortized costs of fixed income investments at March 31, 2019, organized by contractual maturity, are shown below.  Actual maturities may ultimately differ from contractual maturities because borrowers have, in some cases, the right to call or prepay obligations with or without call or prepayment penalties. Pre-refunded municipal bonds are classified based on their pre-refunded call dates.

	Fair Value		Cost or Amortized Cost
One year or less	$	95,201	$	95,347
Excess of one year to five years		315,983		314,909
Excess of five years to ten years		81,812		80,997
Excess of ten years		6,630		6,233
Contractual maturities		499,626		497,486
Asset-backed securities		172,347		171,642
Total	$	671,973	$	669,128

Net Realized and Unrealized Gains (Losses) on Investments

Following is a summary of the components of net realized and unrealized gains (losses) on investments for the periods presented in the accompanying condensed consolidated statements of operations.

	Three Months Ended March 31
	2019			2018
Gross gains on available-for-sale fixed income securities sold during the period	$	3,171		$	2,443
Gross losses on available-for-sale fixed income securities sold during the period		(3,527	)		(2,708	)
Other-than-temporary impairments		(260	)		–
Change in value of limited partnership investments		408			(2,603	)
Gains (losses) on equity securities:
Realized gains on equity securities sold during the period		317			641
Unrealized gains (losses) on equity securities held at the end of the period		5,919			(2,306	)
Realized and unrealized gains (losses) on equity securities during the period		6,236			(1,665	)
Net realized and unrealized gains (losses) on investments	$	6,028		$	(4,533	)

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Reinsurance (Tables)

3 Months Ended

Mar. 31, 2019

Reinsurance [Abstract]

Reinsurance

The following table summarizes the Company's transactions with reinsurers for the three months ended March 31, 2019 and 2018.

	2019		2018
Three months ended March 31:
Premiums ceded to reinsurers	$	30,173	$	32,442
Losses and loss expenses ceded to reinsurers		30,789		26,661
Commissions from reinsurers		7,233		7,880

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Loss and Loss Expense Reserves (Tables)

3 Months Ended

Mar. 31, 2019

Loss and Loss Expense Reserves [Abstract]

Activity in Reserves for Losses and Loss Expenses

Activity in the reserves for losses and loss expenses for the three months ended March 31, 2019 and 2018 is summarized as follows.  All amounts are shown net of reinsurance, unless otherwise indicated.

	Three Months Ended March 31
	2019			2018
Reserves, gross of reinsurance recoverable, at the beginning of the year	$	865,339		$	680,274
Reinsurance recoverable on unpaid losses at the beginning of the year		375,935			308,143
Reserves at the beginning of the year		489,404			372,131
Provision for losses and loss expenses:
Claims occurring during the current period		88,180			73,899
Claims occurring during prior periods		(1,058	)		(1,601	)
Total incurred		87,122			72,298
Loss and loss expense payments:
Claims occurring during the current period		8,708			10,683
Claims occurring during prior periods		56,747			48,655
Total paid		65,455			59,338
Reserves at the end of the period		511,071			385,091
Reinsurance recoverable on unpaid losses at the end of the period		383,150			309,359
Reserves, gross of reinsurance recoverable, at the end of the period	$	894,221		$	694,450

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2019

Segment Information [Abstract]

Segment Revenues

The following table summarizes segment revenues for the three months ended March 31, 2019 and 2018:

	Three Months Ended March 31
	2019		2018
Revenues:
Net premiums earned	$	110,013	$	105,462
Net investment income		6,232		4,636
Net realized and unrealized gains (losses) on investments		6,028		(4,533	)
Commissions and other income		2,064		1,814
Total revenues	$	124,337	$	107,379

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Fair Value (Tables)

3 Months Ended

Mar. 31, 2019

Fair Value [Abstract]

Fair Value Measurements by Level for Assets Measured at Fair Value on Recurring Basis

The following tables summarize fair value measurements by level for assets measured at fair value on a recurring basis:

As of March 31, 2019:

Description	Total		Level 1		Level 2		Level 3
Fixed income securities:
Agency collateralized mortgage obligations	$	15,773	$	–	$	15,773	$	–
Agency mortgage-backed securities		41,283		–		41,283		–
Asset-backed securities		77,307		–		77,307		–
Bank loans		11,284		–		11,284		–
Certificates of deposit		2,835		2,835		–		–
Collateralized mortgage obligations		5,433		–		5,433		–
Corporate securities		222,853		–		222,853		–
Options embedded in convertible securities		4,676		–		4,676		–
Mortgage-backed securities		37,984		–		37,984		–
Municipal obligations		30,357		–		30,357		–
Non-U.S. government obligations		30,879		–		30,879		–
U.S. government obligations		191,309		–		191,309		–
Total fixed income securities		671,973		2,835		669,138		–
Equity securities:
Consumer		15,862		15,862		–		–
Energy		3,534		3,534		–		–
Financial		24,814		24,814		–		–
Industrial		7,412		7,412		–		–
Technology		2,631		2,631		–		–
Funds (e.g. mutual funds, closed end funds, ETFs)		6,324		6,324		–		–
Other		8,379		8,379		–		–
Total equity securities		68,956		68,956		–		–
Short-term		1,000		1,000		–		–
Cash equivalents		113,377		504		112,873		–
Total	$	855,306	$	73,295	$	782,011	$	–

As of December 31, 2018:

Description	Total		Level 1		Level 2		Level 3
Fixed income securities:
Agency collateralized mortgage obligations	$	10,687	$	–	$	10,687	$	–
Agency mortgage-backed securities		37,385		–		37,385		–
Asset-backed securities		64,422		–		64,422		–
Bank loans		9,750		–		9,750		–
Certificates of deposit		2,835		2,835		–		–
Collateralized mortgage obligations		5,423		–		5,423		–
Corporate securities		186,651		–		186,651		–
Options embedded in convertible securities		3,799		–		3,799		–
Mortgage-backed securities		38,540		–		38,540		–
Municipal obligations		29,155		–		29,155		–
Non-U.S. government obligations		25,180		–		25,180		–
U.S. government obligations		178,818		–		178,818		–
Total fixed income securities		592,645		2,835		589,810		–
Equity securities:
Consumer		17,945		17,945		–		–
Energy		3,179		3,179		–		–
Financial		25,253		25,253		–		–
Industrial		6,920		6,920		–		–
Technology		2,303		2,303		–		–
Funds (e.g. mutual funds, closed end funds, ETFs)		5,489		5,489		–		–
Other		5,333		5,333		–		–
Total equity securities		66,422		66,422		–		–
Short-term		1,000		1,000		–		–
Cash equivalents		156,855		–		156,855		–
Total	$	816,922	$	70,257	$	746,665	$	–

Carrying Value and Fair Value by Level of Financial Instruments

A summary of the carrying value and fair value by level of financial instruments not recorded at fair value on the Company's condensed consolidated balance sheets at March 31, 2019 and December 31, 2018 is as follows:

	Carrying		Fair Value
	Value		Level 1		Level 2		Level 3		Total
March 31, 2019
Assets:
Limited partnerships	$	38,239	$	–	$	–	$	38,239	$	38,239
Commercial mortgage loans		7,844		–		–		7,844		7,844
Liabilities:
Short-term borrowings		20,000		–		20,000		–		20,000
December 31, 2018
Assets:
Limited partnerships	$	55,044	$	–	$	–	$	55,044	$	55,044
Commercial mortgage loans		6,672		–		–		6,672		6,672
Liabilities:
Short-term borrowings		20,000		–		20,000		–		20,000

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Stock Based Compensation (Tables)

3 Months Ended

Mar. 31, 2019

Stock Based Compensation [Abstract]

Detail of Restricted Stock Issuances

The table below provides detail of the restricted stock issuances to directors for 2018 and 2019:

Grant Date	Number of Shares Issued		Vesting Date	Service Period	Grant Date Fair Value Per Share
5/9/2017		18,183	5/9/2018	7/1/2017 - 6/30/2018	$	24.20
8/31/2017		1,257	5/9/2018	8/31/2017 - 6/30/2018	$	21.90
2/9/2018		408	5/9/2018	2/9/2018 - 6/30/2018	$	24.20
5/8/2018		19,085	5/8/2019	7/1/2018 - 6/30/2019	$	23.05
5/7/2019		29,536	5/7/2020	7/1/2019 - 6/30/2020	$	16.25

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Shareholders' Equity (Tables)

3 Months Ended

Mar. 31, 2019

Shareholders' Equity [Abstract]

Changes in Accumulated Other Comprehensive Income (Loss) by Component

The following table illustrates changes in accumulated other comprehensive income by component for the three months ended March 31, 2019:

	Foreign Currency			Unrealized Holding Gains (Losses) on Available-for-sale Securities			Total
Beginning balance at December 31, 2018	$	(1,139	)	$	(6,208	)	$	(7,347	)
Other comprehensive income before reclassifications		307			7,671			7,978
Amounts reclassified from accumulated other comprehensive income (loss)		–			785			785
Net current-period other comprehensive income		307			8,456			8,763
Ending balance at March 31, 2019	$	(832	)	$	2,248		$	1,416

The following table illustrates changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2018:

	Foreign Currency			Unrealized Holding Gains (Losses) on Available-for-sale Securities			Total
Beginning balance at December 31, 2017	$	(309	)	$	46,700		$	46,391
Cumulative effect of adoption of ASU 2016-01, net of tax		–			(46,157	)		(46,157	)
Balance at January 1, 2018		(309	)		543			234
Cumulative effect of adoption of ASU 2018-02		–			117			117
Other comprehensive loss before reclassifications		(223	)		(2,998	)		(3,221	)
Amounts reclassified from accumulated other comprehensive income (loss)		–			(123	)		(123	)
Net current-period other comprehensive loss		(223	)		(3,121	)		(3,344	)
Ending balance at March 31, 2018	$	(532	)	$	(2,461	)	$	(2,993	)

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Summary of Significant Accounting Policies (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) Segment
Description of Business [Abstract]
Number of reportable segments | Segment	1
ASU 2016-02 [Member]
Recently Issued Accounting Pronouncements [Abstract]
Right-of-use asset	$ 400
Lease liability	$ 400

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Investments, Summary of Available-for-sale Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Available-for-sale Debt Securities [Abstract]
Fair value	$ 671,973	$ 592,645
Cost or amortized cost	669,128	600,504
Gross unrealized gains	6,477	2,934
Gross unrealized losses	(3,632)	(10,793)
Net unrealized gains (losses)	2,845	(7,859)
Agency Collateralized Mortgage Obligations [Member]
Available-for-sale Debt Securities [Abstract]
Fair value	15,773	10,687
Cost or amortized cost	15,567	10,636
Gross unrealized gains	265	145
Gross unrealized losses	(59)	(94)
Net unrealized gains (losses)	206	51
Agency Mortgage-backed Securities [Member]
Available-for-sale Debt Securities [Abstract]
Fair value	41,283	37,385
Cost or amortized cost	40,486	37,168
Gross unrealized gains	849	371
Gross unrealized losses	(52)	(154)
Net unrealized gains (losses)	797	217
Asset-backed Securities [Member]
Available-for-sale Debt Securities [Abstract]
Fair value	77,307	64,422
Cost or amortized cost	77,890	66,241
Gross unrealized gains	180	14
Gross unrealized losses	(763)	(1,833)
Net unrealized gains (losses)	(583)	(1,819)
Bank Loans [Member]
Available-for-sale Debt Securities [Abstract]
Fair value	11,284	9,750
Cost or amortized cost	11,372	10,208
Gross unrealized gains	38	27
Gross unrealized losses	(126)	(485)
Net unrealized gains (losses)	(88)	(458)
Certificates of Deposit [Member]
Available-for-sale Debt Securities [Abstract]
Fair value	2,835	2,835
Cost or amortized cost	2,835	2,835
Gross unrealized gains	0	0
Gross unrealized losses	0	0
Net unrealized gains (losses)	0	0
Collateralized Mortgage Obligations [Member]
Available-for-sale Debt Securities [Abstract]
Fair value	5,433	5,423
Cost or amortized cost	5,072	5,095
Gross unrealized gains	433	376
Gross unrealized losses	(72)	(48)
Net unrealized gains (losses)	361	328
Corporate Securities [Member]
Available-for-sale Debt Securities [Abstract]
Fair value	227,529	190,450
Cost or amortized cost	227,017	196,925
Gross unrealized gains	2,110	127
Gross unrealized losses	(1,598)	(6,602)
Net unrealized gains (losses)	512	(6,475)
Mortgage-backed Securities [Member]
Available-for-sale Debt Securities [Abstract]
Fair value	37,984	38,540
Cost or amortized cost	37,699	38,586
Gross unrealized gains	588	377
Gross unrealized losses	(303)	(423)
Net unrealized gains (losses)	285	(46)
Municipal Obligations [Member]
Available-for-sale Debt Securities [Abstract]
Fair value	30,357	29,155
Cost or amortized cost	30,056	29,102
Gross unrealized gains	383	239
Gross unrealized losses	(82)	(186)
Net unrealized gains (losses)	301	53
Non-U.S. Government Obligations [Member]
Available-for-sale Debt Securities [Abstract]
Fair value	30,879	25,180
Cost or amortized cost	30,810	25,339
Gross unrealized gains	162	6
Gross unrealized losses	(93)	(165)
Net unrealized gains (losses)	69	(159)
U.S. Government Obligations [Member]
Available-for-sale Debt Securities [Abstract]
Fair value	191,309	178,818
Cost or amortized cost	190,324	178,369
Gross unrealized gains	1,469	1,252
Gross unrealized losses	(484)	(803)
Net unrealized gains (losses)	$ 985	$ 449

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Investments, Continuous Unrealized Loss Position (Details) $ in Thousands	Mar. 31, 2019 USD ($) Security	Dec. 31, 2018 USD ($) Security
Available-for-sale Securities Continuous Unrealized Loss Position [Abstract]
Number of securities, 12 months or less | Security	85	275
Number of securities, Greater than 12 months | Security	253	217
Number of securities, total | Security	338	492
Available-for-sale Securities Continuous Unrealized Loss Position, Fair Value [Abstract]
Fair value, 12 months or less	$ 96,462	$ 282,646
Fair value, Greater than 12 months	208,253	131,001
Fair value, total	304,715	413,647
Available-for-sale Securities Continuous Unrealized Loss Position, Aggregate Losses [Abstract]
Gross unrealized loss, 12 months or less	(1,570)	(7,296)
Gross unrealized loss, Greater than 12 months	(2,062)	(3,497)
Gross unrealized loss, total	(3,632)	(10,793)
Available-for-sale Securities Debt Maturities Fair Value [Abstract]
One year or less, Fair Value	95,201
Excess of one year to five years, Fair Value	315,983
Excess of five years to ten years, Fair Value	81,812
Excess of ten years, Fair Value	6,630
Total contractual maturities, Fair Value	499,626
Asset-backed securities, Fair Value	172,347
Total, Fair Value	671,973	592,645
Available-for-sale Securities Debt Maturities Amortized Cost Basis [Abstract]
One year or less, Cost or Amortized Cost	95,347
Excess of one year to five years, Cost or Amortized Cost	314,909
Excess of five years to ten years, Cost or Amortized Cost	80,997
Excess of ten years, Cost or Amortized Cost	6,233
Total contractual maturities, Cost or Amortized Cost	497,486
Asset-backed securities, Cost or Amortized Cost	171,642
Cost or amortized cost	$ 669,128	$ 600,504

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Investments, Net Realized and Unrealized Gains (Losses) on Investments (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Components of net realized and unrealized gains (losses) on investments [Abstract]
Gross gains on available-for-sale fixed income securities sold during the period	$ 3,171	$ 2,443
Gross losses on available-for-sale fixed income securities sold during the period	(3,527)	(2,708)
Other-than-temporary impairments	(260)	0
Change in value of limited partnership investments	408	(2,603)
Gains (losses) on equity securities [Abstract]
Realized gains on equity securities sold during the period	317	641
Unrealized gains (losses) on equity securities held at the end of the period	5,919	(2,306)
Realized and unrealized gains (losses) on equity securities during the period	6,236	(1,665)
Net realized and unrealized gains (losses) on investments	6,028	$ (4,533)
Federal income taxes	$ 27,203

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Reinsurance (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Reinsurance [Abstract]
Premiums ceded to reinsurers	$ 30,173	$ 32,442
Losses and loss expenses ceded to reinsurers	30,789	26,661
Commissions from reinsurers	$ 7,233	$ 7,880

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Loss and Loss Expense Reserves (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Activity in the reserve for losses and loss expenses [Roll Forward]
Reserves, gross of reinsurance recoverable, at the beginning of the year	$ 865,339	$ 680,274
Reinsurance recoverable on unpaid losses at the beginning of the year	375,935	308,143
Reserves at the beginning of the year	489,404	372,131
Provision for losses and loss expenses [Abstract]
Claims occurring during the current period	88,180	73,899
Claims occurring during prior periods	(1,058)	(1,601)
Total incurred	87,122	72,298
Loss and loss expense payments [Abstract]
Claims occurring during the current period	8,708	10,683
Claims occurring during prior periods	56,747	48,655
Total paid	65,455	59,338
Reserves at the end of the period	511,071	385,091
Reinsurance recoverable on unpaid losses at the end of the period	383,150	309,359
Reserves, gross of reinsurance recoverable, at the end of the period	$ 894,221	$ 694,450

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Segment Information (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) Segment	Mar. 31, 2018 USD ($)
Segment Information [Abstract]
Number of reportable segments | Segment	1
Summary of Segment Revenue [Abstract]
Net premiums earned	$ 110,013	$ 105,462
Net investment income	6,232	4,636
Net realized and unrealized gains (losses) on investments	6,028	(4,533)
Commissions and other income	2,064	1,814
Total revenues	124,337	107,379
Property and Casualty Insurance [Member]
Summary of Segment Revenue [Abstract]
Net premiums earned	110,013	105,462
Net investment income	6,232	4,636
Net realized and unrealized gains (losses) on investments	6,028	(4,533)
Commissions and other income	2,064	1,814
Total revenues	$ 124,337	$ 107,379

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Debt (Details) - Revolving Credit Facility [Member] $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) Covenant	Aug. 09, 2018 USD ($)
Credit Agreement [Abstract]
Maximum credit limit		$ 40,000
Additional incremental loans limit		$ 35,000
Expiration date	Aug. 09, 2022
Optional period of fixed interest	1 year
Outstanding drawings	$ 20,000
Effective interest rate	3.59%
Amount remaining on credit facility	$ 20,000
Number of financial covenants | Covenant	2
Net worth and maximum consolidated leverage ratio	0.35

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Taxes (Details)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Taxes [Abstract]
Effective federal tax rate on consolidated loss	21.80%	(5.10%)

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Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Fixed income securities [Abstract]
Total fixed income securities	$ 671,973	$ 592,645
Equity securities [Abstract]
Total equity securities	68,956	66,422
Recurring [Member]
Fixed income securities [Abstract]
Agency collateralized mortgage obligations	15,773	10,687
Agency mortgage-backed securities	41,283	37,385
Asset-backed securities	77,307	64,422
Bank loans	11,284	9,750
Certificates of deposit	2,835	2,835
Collateralized mortgage obligations	5,433	5,423
Corporate securities	222,853	186,651
Options embedded in convertible securities	4,676	3,799
Mortgage-backed securities	37,984	38,540
Municipal obligations	30,357	29,155
Non-U.S. government obligations	30,879	25,180
U.S. government obligations	191,309	178,818
Total fixed income securities	671,973	592,645
Equity securities [Abstract]
Consumer	15,862	17,945
Energy	3,534	3,179
Financial	24,814	25,253
Industrial	7,412	6,920
Technology	2,631	2,303
Funds (e.g. mutual funds, closed end funds, ETFs)	6,324	5,489
Other	8,379	5,333
Total equity securities	68,956	66,422
Short-term	1,000	1,000
Cash equivalents	113,377	156,855
Total	855,306	816,922
Recurring [Member] | Level 1 [Member]
Fixed income securities [Abstract]
Agency collateralized mortgage obligations	0	0
Agency mortgage-backed securities	0	0
Asset-backed securities	0	0
Bank loans	0	0
Certificates of deposit	2,835	2,835
Collateralized mortgage obligations	0	0
Corporate securities	0	0
Options embedded in convertible securities	0	0
Mortgage-backed securities	0	0
Municipal obligations	0	0
Non-U.S. government obligations	0	0
U.S. government obligations	0	0
Total fixed income securities	2,835	2,835
Equity securities [Abstract]
Consumer	15,862	17,945
Energy	3,534	3,179
Financial	24,814	25,253
Industrial	7,412	6,920
Technology	2,631	2,303
Funds (e.g. mutual funds, closed end funds, ETFs)	6,324	5,489
Other	8,379	5,333
Total equity securities	68,956	66,422
Short-term	1,000	1,000
Cash equivalents	504	0
Total	73,295	70,257
Recurring [Member] | Level 2 [Member]
Fixed income securities [Abstract]
Agency collateralized mortgage obligations	15,773	10,687
Agency mortgage-backed securities	41,283	37,385
Asset-backed securities	77,307	64,422
Bank loans	11,284	9,750
Certificates of deposit	0	0
Collateralized mortgage obligations	5,433	5,423
Corporate securities	222,853	186,651
Options embedded in convertible securities	4,676	3,799
Mortgage-backed securities	37,984	38,540
Municipal obligations	30,357	29,155
Non-U.S. government obligations	30,879	25,180
U.S. government obligations	191,309	178,818
Total fixed income securities	669,138	589,810
Equity securities [Abstract]
Consumer	0	0
Energy	0	0
Financial	0	0
Industrial	0	0
Technology	0	0
Funds (e.g. mutual funds, closed end funds, ETFs)	0	0
Other	0	0
Total equity securities	0	0
Short-term	0	0
Cash equivalents	112,873	156,855
Total	782,011	746,665
Recurring [Member] | Level 3 [Member]
Fixed income securities [Abstract]
Agency collateralized mortgage obligations	0	0
Agency mortgage-backed securities	0	0
Asset-backed securities	0	0
Bank loans	0	0
Certificates of deposit	0	0
Collateralized mortgage obligations	0	0
Corporate securities	0	0
Options embedded in convertible securities	0	0
Mortgage-backed securities	0	0
Municipal obligations	0	0
Non-U.S. government obligations	0	0
U.S. government obligations	0	0
Total fixed income securities	0	0
Equity securities [Abstract]
Consumer	0	0
Energy	0	0
Financial	0	0
Industrial	0	0
Technology	0	0
Funds (e.g. mutual funds, closed end funds, ETFs)	0	0
Other	0	0
Total equity securities	0	0
Short-term	0	0
Cash equivalents	0	0
Total	$ 0	$ 0

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Fair Value, Balance Sheet Grouping (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Assets [Abstract]
Limited partnerships	$ 38,239	$ 55,044
Carrying Value [Member]
Assets [Abstract]
Limited partnerships	38,239	55,044
Commercial mortgage loans	7,844	6,672
Liabilities [Abstract]
Short-term borrowings	20,000	20,000
Fair Value [Member]
Assets [Abstract]
Limited partnerships	38,239	55,044
Commercial mortgage loans	7,844	6,672
Liabilities [Abstract]
Short-term borrowings	20,000	20,000
Fair Value [Member] | Level 1 [Member]
Assets [Abstract]
Limited partnerships	0	0
Commercial mortgage loans	0	0
Liabilities [Abstract]
Short-term borrowings	0	0
Fair Value [Member] | Level 2 [Member]
Assets [Abstract]
Limited partnerships	0	0
Commercial mortgage loans	0	0
Liabilities [Abstract]
Short-term borrowings	20,000	20,000
Fair Value [Member] | Level 3 [Member]
Assets [Abstract]
Limited partnerships	38,239	55,044
Commercial mortgage loans	7,844	6,672
Liabilities [Abstract]
Short-term borrowings	$ 0	$ 0

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Stock Based Compensation (Details) - Class B [Member] - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
	Nov. 13, 2018	Mar. 31, 2019
Stock Based Compensation [Abstract]
Shares distribution period from grant date		1 year
5/9/2017 [Member]
Summary of stock Issuances [Abstract]
Number of shares issued (in shares)		18,183
Vesting date		May 09, 2018
Service period		7/1/2017 - 6/30/2018
Grant date fair value per share (in dollars per share)		$ 24.20
8/31/2017 [Member]
Summary of stock Issuances [Abstract]
Number of shares issued (in shares)		1,257
Vesting date		May 09, 2018
Service period		8/31/2017 - 6/30/2018
Grant date fair value per share (in dollars per share)		$ 21.90
2/9/2018 [Member]
Summary of stock Issuances [Abstract]
Number of shares issued (in shares)		408
Vesting date		May 09, 2018
Service period		2/9/2018 - 6/30/2018
Grant date fair value per share (in dollars per share)		$ 24.20
5/8/2018 [Member]
Summary of stock Issuances [Abstract]
Number of shares issued (in shares)		19,085
Vesting date		May 08, 2019
Service period		7/1/2018 - 6/30/2019
Grant date fair value per share (in dollars per share)		$ 23.05
5/7/2019 [Member]
Summary of stock Issuances [Abstract]
Number of shares issued (in shares)		29,536
Vesting date		May 07, 2020
Service period		7/1/2019 - 6/30/2020
Grant date fair value per share (in dollars per share)		$ 16.25
Restricted [Member] | Chief Executive Officer [Member]
Summary of stock Issuances [Abstract]
Number of shares issued (in shares)	85,000
Stock based compensation expense		$ 309
Restricted [Member] | Chief Executive Officer [Member] | 10/17/2019 [Member]
Summary of stock Issuances [Abstract]
Number of shares vested (in shares)	42,500
Restricted [Member] | Chief Executive Officer [Member] | 10/17/2020 [Member]
Summary of stock Issuances [Abstract]
Number of shares vested (in shares)	21,250
Restricted [Member] | Chief Executive Officer [Member] | 10/17/2021 [Member]
Summary of stock Issuances [Abstract]
Number of shares vested (in shares)	21,250
2017 VCIP Awards [Member] | Performance Based Equity Award [Member]
Summary of stock Issuances [Abstract]
Number of shares issued (in shares)		0
Performance period		3 years
2018 LTIP Awards [Member] | Performance Based Equity Award [Member]
Summary of stock Issuances [Abstract]
Number of shares issued (in shares)		0
2018 VCIP Awards [Member] | Performance Based Equity Award [Member]
Summary of stock Issuances [Abstract]
Number of shares issued (in shares)		0
Performance period		3 years
2019 LTIP Awards [Member] | Performance Based Equity Award [Member]
Summary of stock Issuances [Abstract]
Number of shares issued (in shares)		0
Vesting period		3 years
Stock based compensation expense		$ 24
Annual vesting percentage of shares in year one		33.30%
Annual vesting percentage of shares in year two		33.30%
Annual vesting percentage of shares in year three		33.30%

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Shareholders' Equity (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	May 08, 2019	Mar. 31, 2019	Mar. 31, 2018	Mar. 22, 2019	Aug. 07, 2018	Aug. 31, 2017
Stock Repurchase Program [Abstract]
Stock repurchase program, shares authorized (in shares)						2,464,209
Stock repurchase program, authorized amount				$ 3,500
Repurchase of common shares amount paid	$ 3,031	$ 468	$ 235
Maximum [Member]
Stock Repurchase Program [Abstract]
Stock repurchase program, authorized amount					$ 25,000
Class A [Member]
Stock Repurchase Program [Abstract]
Repurchase of common stock (in shares)		100
Class A [Member] | Subsequent Event [Member]
Stock Repurchase Program [Abstract]
Repurchase of common stock (in shares)	23
Class B [Member]
Stock Repurchase Program [Abstract]
Repurchase of common stock (in shares)		24,858
Class B [Member] | Subsequent Event [Member]
Stock Repurchase Program [Abstract]
Repurchase of common stock (in shares)	172,416

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Shareholders' Equity, Changes in Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2017
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	$ 356,082	$ 418,811
Other comprehensive income (loss)	8,763	(3,344)
Ending balance	366,070	411,811
ASU 2016-01 [Member]
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Cumulative effect of adoption, net of tax			$ 0
ASU 2018-02 [Member]
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Cumulative effect of adoption, net of tax			0
Other Comprehensive Income (Loss) [Member]
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(7,347)	46,391
Other comprehensive income before reclassifications	7,978	(3,221)
Amounts reclassified from accumulated other comprehensive income (loss)	785	(123)
Other comprehensive income (loss)	8,763	(3,344)
Ending balance	1,416	(2,993)
Other Comprehensive Income (Loss) [Member] | ASU 2016-01 [Member]
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Cumulative effect of adoption, net of tax			(46,157)
Adjusted beginning balance		234
Other Comprehensive Income (Loss) [Member] | ASU 2018-02 [Member]
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Cumulative effect of adoption, net of tax			117
Foreign Currency [Member]
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(1,139)	(309)
Other comprehensive income before reclassifications	307	(223)
Amounts reclassified from accumulated other comprehensive income (loss)	0	0
Other comprehensive income (loss)	307	(223)
Ending balance	(832)	(532)
Foreign Currency [Member] | ASU 2016-01 [Member]
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Cumulative effect of adoption, net of tax			0
Adjusted beginning balance		(309)
Foreign Currency [Member] | ASU 2018-02 [Member]
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Cumulative effect of adoption, net of tax			0
Unrealized Holding Gains on Available-for-sale Securities [Member]
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(6,208)	46,700
Other comprehensive income before reclassifications	7,671	(2,998)
Amounts reclassified from accumulated other comprehensive income (loss)	785	(123)
Other comprehensive income (loss)	8,456	(3,121)
Ending balance	$ 2,248	(2,461)
Unrealized Holding Gains on Available-for-sale Securities [Member] | ASU 2016-01 [Member]
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Cumulative effect of adoption, net of tax			(46,157)
Adjusted beginning balance		$ 543
Unrealized Holding Gains on Available-for-sale Securities [Member] | ASU 2018-02 [Member]
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Cumulative effect of adoption, net of tax			$ 117

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Related Parties (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) Partnership Director	Mar. 31, 2018 USD ($)
Related Party [Abstract]
Amount withdrawn from partnership	$ 17,214	$ 0
New Vernon India Fund [Member]
Related Party [Abstract]
Ownership interest in limited partnership	4.00%
Amount withdrawn from partnership	$ 5,684
Director [Member] | New Vernon India Fund [Member]
Related Party [Abstract]
Number of investments | Partnership	1
Estimated aggregate value of investment in limited partnerships	$ 17,313
Number of related parties | Director	1
Director [Member] | Limited Partnerships [Member]
Related Party [Abstract]
Management fees and commissions	$ 48	142
Director [Member] | Investment Firm Services [Member]
Related Party [Abstract]
Number of related parties | Director	1
Management fees and commissions	$ 5	$ 27
Market value of equity and fixed maturity securities portfolio	$ 7,899

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Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Thousands			1 Months Ended	3 Months Ended
	May 07, 2019	Apr. 30, 2019	May 08, 2019	Mar. 31, 2019	Mar. 31, 2018
Subsequent Event [Abstract]
Amount withdrawn from partnership				$ 17,214	$ 0
Repurchase of common shares amount paid			$ 3,031	$ 468	$ 235
Arbiter Partners Limited [Member]
Subsequent Event [Abstract]
Amount withdrawn from partnership		$ 3,000
Class A [Member]
Subsequent Event [Abstract]
Repurchase of common stock (in shares)				100
Class B [Member]
Subsequent Event [Abstract]
Repurchase of common stock (in shares)				24,858
Subsequent Event [Member]
Subsequent Event [Abstract]
Dividend payable, date declared	May 07, 2019
Dividend payable, date to be paid	Jun. 04, 2019
Dividend payable, date of record	May 21, 2019
Subsequent Event [Member] | Class A [Member]
Subsequent Event [Abstract]
Dividend payable (in dollars per share)	$ 0.10
Repurchase of common stock (in shares)			23
Subsequent Event [Member] | Class B [Member]
Subsequent Event [Abstract]
Dividend payable (in dollars per share)	$ 0.10
Repurchase of common stock (in shares)			172,416