Attached files
file | filename |
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EX-32 - EX-32 - UNIVERSAL INSURANCE HOLDINGS, INC. | uve-ex32_7.htm |
EX-31.2 - EX-31.2 - UNIVERSAL INSURANCE HOLDINGS, INC. | uve-ex312_9.htm |
EX-31.1 - EX-31.1 - UNIVERSAL INSURANCE HOLDINGS, INC. | uve-ex311_6.htm |
EX-15.1 - EX-15.1 - UNIVERSAL INSURANCE HOLDINGS, INC. | uve-ex151_8.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2017
or
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 001-33251
UNIVERSAL INSURANCE HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware |
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65-0231984 |
(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer |
1110 W. Commercial Blvd., Fort Lauderdale, Florida 33309
(Address of principal executive offices)
(954) 958-1200
(Registrant’s telephone number, including area code)
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 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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 |
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Accelerated filer |
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Non-accelerated filer |
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☐ (Do not check if a smaller reporting company) |
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Smaller reporting company |
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Emerging growth company |
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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 ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 35,072,667 shares of common stock, par value $0.01 per share, outstanding on April 27, 2017.
UNIVERSAL INSURANCE HOLDINGS, INC.
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION
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Page No. |
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Item 1. |
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4 |
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Condensed Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016 (unaudited) |
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Notes to Condensed Consolidated Financial Statements (unaudited) |
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7 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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25 |
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Item 3. |
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39 |
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Item 4. |
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41 |
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Item 1. |
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41 |
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Item 1A. |
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42 |
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Item 2. |
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42 |
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Item 6. |
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43 |
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44 |
2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Board of Directors and Stockholders of
Universal Insurance Holdings, Inc. and Subsidiaries
Fort Lauderdale, Florida
We have reviewed the accompanying condensed consolidated balance sheet of Universal Insurance Holdings, Inc. and its wholly-owned subsidiaries (the “Company”) as of March 31, 2017 and the related condensed consolidated statements of income, comprehensive income and cash flows for the three-month periods ended March 31, 2017 and 2016. These interim financial statements are the responsibility of the Company’s management.
We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Universal Insurance Holdings, Inc. and Subsidiaries as of December 31, 2016 and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for the year then ended (not presented herein) and we expressed an unqualified audit opinion on those consolidated financial statements in our report dated February 23, 2017. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2016, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
/s/ Plante & Moran, PLLC |
Chicago, Illinois May 1, 2017 |
3
PART I — FINANCIAL INFORMATION
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands, except per share data)
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As of |
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March 31, |
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December 31, |
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2017 |
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2016 |
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ASSETS |
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Fixed maturities, at fair value |
$ |
597,675 |
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$ |
584,361 |
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Equity securities, at fair value |
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50,286 |
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50,803 |
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Short-term investments, at fair value |
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5,001 |
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5,002 |
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Investment real estate, net |
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13,104 |
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11,435 |
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Total invested assets |
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666,066 |
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651,601 |
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Cash and cash equivalents |
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160,364 |
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105,730 |
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Restricted cash and cash equivalents |
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2,635 |
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2,635 |
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Prepaid reinsurance premiums |
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49,754 |
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124,385 |
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Reinsurance recoverable |
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605 |
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106 |
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Premiums receivable, net |
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56,224 |
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53,833 |
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Other receivables |
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5,388 |
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5,824 |
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Property and equipment, net |
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32,507 |
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32,162 |
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Deferred policy acquisition costs |
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66,524 |
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64,912 |
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Income taxes recoverable |
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— |
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3,262 |
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Deferred income tax asset, net |
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15,389 |
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10,674 |
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Other assets |
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4,983 |
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4,883 |
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Total assets |
$ |
1,060,439 |
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$ |
1,060,007 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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LIABILITIES: |
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Unpaid losses and loss adjustment expenses |
$ |
31,463 |
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$ |
58,494 |
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Unearned premiums |
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484,796 |
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475,756 |
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Advance premium |
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28,397 |
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17,796 |
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Accounts payable |
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3,317 |
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3,187 |
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Reinsurance payable, net |
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42,270 |
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80,891 |
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Income taxes payable |
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19,150 |
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— |
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Other liabilities and accrued expenses |
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38,310 |
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37,665 |
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Long-term debt |
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13,971 |
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15,028 |
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Total liabilities |
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661,674 |
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688,817 |
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Commitments and Contingencies (Note 12) |
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STOCKHOLDERS' EQUITY: |
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Cumulative convertible preferred stock, $.01 par value |
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— |
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— |
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Authorized shares - 1,000 |
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Issued shares - 10 and 10 |
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Outstanding shares - 10 and 10 |
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Minimum liquidation preference, $9.99 and $9.99 per share |
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Common stock, $.01 par value |
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454 |
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453 |
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Authorized shares - 55,000 |
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Issued shares - 45,445 and 45,324 |
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Outstanding shares - 35,073 and 35,052 |
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Treasury shares, at cost - 10,372 and 10,272 |
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(89,530 |
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(86,982 |
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Additional paid-in capital |
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83,657 |
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82,263 |
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Accumulated other comprehensive income (loss), net of taxes |
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(3,944 |
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(6,408 |
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Retained earnings |
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408,128 |
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381,864 |
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Total stockholders' equity |
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398,765 |
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371,190 |
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Total liabilities and stockholders' equity |
$ |
1,060,439 |
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$ |
1,060,007 |
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The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
4
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(in thousands, except per share data)
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Three Months Ended |
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March 31, |
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2017 |
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2016 |
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PREMIUMS EARNED AND OTHER REVENUES |
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Direct premiums written |
$ |
245,415 |
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$ |
227,973 |
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Change in unearned premium |
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(9,040 |
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(6,721 |
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Direct premium earned |
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236,375 |
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221,252 |
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Ceded premium earned |
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(74,816 |
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(68,804 |
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Premiums earned, net |
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161,559 |
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152,448 |
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Net investment income (expense) |
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2,704 |
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1,605 |
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Net realized gains (losses) on investments |
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(63 |
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667 |
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Commission revenue |
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4,598 |
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4,113 |
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Policy fees |
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4,483 |
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4,114 |
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Other revenue |
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1,593 |
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1,499 |
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Total premiums earned and other revenues |
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174,874 |
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164,446 |
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OPERATING COSTS AND EXPENSES |
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Losses and loss adjustment expenses |
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70,570 |
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66,117 |
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General and administrative expenses |
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56,933 |
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57,230 |
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Total operating costs and expenses |
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127,503 |
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123,347 |
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INCOME BEFORE INCOME TAXES |
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47,371 |
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41,099 |
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Income tax expense |
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16,172 |
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15,873 |
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NET INCOME |
$ |
31,199 |
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$ |
25,226 |
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Basic earnings per common share |
$ |
0.89 |
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$ |
0.73 |
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Weighted average common shares outstanding - Basic |
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35,140 |
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34,527 |
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Diluted earnings per common share |
$ |
0.86 |
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$ |
0.71 |
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Weighted average common shares outstanding - Diluted |
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36,180 |
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35,594 |
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Cash dividend declared per common share |
$ |
0.14 |
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$ |
0.14 |
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The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
5
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(in thousands)
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March 31, |
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2017 |
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2016 |
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Cash flows from operating activities: |
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Net cash provided by (used in) operating activities |
$ |
71,998 |
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$ |
43,737 |
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Cash flows from investing activities: |
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Proceeds from sale of property and equipment |
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8 |
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— |
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Purchases of property and equipment |
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(1,255 |
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(1,728 |
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Purchases of equity securities |
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(243 |
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(20,178 |
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Purchases of fixed maturities |
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(26,610 |
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(95,889 |
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Purchases of investment real estate, net |
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(1,714 |
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(2,021 |
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Proceeds from sales of equity securities |
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2,500 |
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13,210 |
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Proceeds from sales of fixed maturities |
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914 |
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16,152 |
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Proceeds from sales of short-term investments |
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— |
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12,500 |
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Maturities of fixed maturities |
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18,915 |
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10,504 |
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Net cash provided by (used in) investing activities |
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(7,485 |
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(67,450 |
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Cash flows from financing activities: |
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Preferred stock dividend |
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(3 |
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(3 |
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Common stock dividend |
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(4,924 |
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(4,915 |
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Purchase of treasury stock |
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(2,548 |
) |
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(1,874 |
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Payments related to tax withholding for share-based compensation |
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(1,337 |
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(3,897 |
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Excess tax benefits (shortfall) from share-based compensation |
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— |
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(1,510 |
) |
Repayment of debt |
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(1,067 |
) |
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(1,068 |
) |
Net cash provided by (used in) financing activities |
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(9,879 |
) |
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(13,267 |
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Net increase (decrease) in cash and cash equivalents |
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54,634 |
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(36,980 |
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Cash and cash equivalents at beginning of period |
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105,730 |
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|
197,014 |
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Cash and cash equivalents at end of period |
$ |
160,364 |
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$ |
160,034 |
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The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
6
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Nature of Operations and Basis of Presentation
Nature of Operations
Universal Insurance Holdings, Inc. (“UVE”) is a Delaware corporation incorporated in 1990. UVE with its wholly-owned subsidiaries (the “Company”) is a vertically integrated insurance holding company performing all aspects of insurance underwriting, distribution and claims. Through its wholly-owned subsidiaries, Universal Property & Casualty Insurance Company (“UPCIC”) and American Platinum Property and Casualty Insurance Company (“APPCIC”), together referred to as the “Insurance Entities,” the Company is principally engaged in the property and casualty insurance business offered primarily through a network of independent agents. Risk from catastrophic losses is managed through the use of reinsurance agreements. The Company’s primary product is homeowners’ insurance currently offered in fourteen states as of March 31, 2017, including Florida, which comprises the vast majority of the Company’s in-force policies. See “—Note 5 (Insurance Operations)” for more information regarding the Company’s insurance operations.
The Company generates revenues primarily from the collection of premiums and invests funds in excess of those retained for claims-paying obligations and insurance operations. Other significant sources of revenue include brokerage commissions collected from reinsurers on reinsurance programs placed by the Insurance Entities, policy fees collected from policyholders by our wholly-owned managing general agency subsidiary and payment plan fees charged to policyholders who choose to pay their premiums in installments.
Basis of Presentation
The Company has prepared the accompanying unaudited Condensed Consolidated Financial Statements (“Financial Statements”) in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, the Financial Statements do not include all of the information and footnotes required by United States Generally Accepted Accounting Principles (“GAAP”) for annual financial statements. Therefore, the Financial Statements should be read in conjunction with the audited Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the SEC on February 24, 2017. The condensed consolidated balance sheet at December 31, 2016, was derived from audited financial statements, but does not include all disclosures required by GAAP. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been included in the Financial Statements. The results for interim periods do not necessarily indicate the results that may be expected for any other interim period or for the full year.
To conform to the current period presentation, certain amounts in the prior periods’ consolidated financial statements and notes have been reclassified. Such reclassifications were of an immaterial amount and had no effect on net income or stockholders’ equity.
The Financial Statements include the accounts of UVE and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.
Management must make estimates and assumptions that affect amounts reported in the Company’s Financial Statements and in disclosures of contingent assets and liabilities. Actual results could differ from those estimates.
7
2. Significant Accounting Policies
The Company reported Significant Accounting Policies in its Annual Report on Form 10-K for the year ended December 31, 2016. The following are new or revised disclosures or disclosures required on a quarterly basis.
Recently Adopted Accounting Pronouncements
In March 2016, the Financial Accounting Standards Board (“FASB”) issued guidance which simplifies several aspects of the accounting for share-based payment transactions. The new guidance requires excess income tax benefits (windfalls) and deficiencies (shortfalls) to be recognized in the income statement as income tax benefits or charges when the awards vest or are settled. The former guidance required the recognition of excess tax benefits or deficiencies in stockholders’ equity. In addition, all income tax-related cash flows resulting from share-based payments will be reported as operating activities in the statement of cash flows under the new guidance. The guidance also allows us to repurchase more of an employee's shares for tax withholding purposes without triggering liability accounting; clarifies that all cash payments for tax withholdings made on an employee’s behalf should be presented as a financing activity on the Company’s statement of cash flows; and provides an accounting policy election to account for forfeitures as they occur. The guidance is effective for fiscal years and interim periods beginning after December 15, 2016, with early adoption permitted. The Company adopted this guidance effective January 1, 2017.
The adoption of the new standard resulted in the recognition of excess tax benefits of $0.8 million reflected in the Company’s Condensed Consolidated Statements of Income as an income tax benefit for the three months ended March 31, 2017. Additionally, excess tax benefits on the Company’s Condensed Consolidated Statement of Cash Flows are presented as an operating activity on a prospective basis. The presentation requirement for cash flows related to employee taxes paid for withheld shares did not impact any of the periods presented in the Company’s Condensed Consolidated Statement of Cash Flows since these cash flows have historically been presented as a financing activity. The Company will continue to account for forfeitures as they occur. The standard also modifies the calculation of dilutive earnings per share to no longer use proceeds from tax benefits or deficiencies.
8
3. Investments
Securities Available for Sale
The following table provides the cost or amortized cost and fair value of securities available for sale as of the dates presented (in thousands):
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March 31, 2017 |
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Cost or |
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Gross |
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Gross |
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Amortized |
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Unrealized |
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Unrealized |
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Cost |
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Gains |
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Losses |
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Fair Value |
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Fixed Maturities: |
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U.S. government obligations and agencies |
$ |
78,055 |
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$ |
1 |
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$ |
(587 |
) |
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$ |
77,469 |
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Corporate bonds |
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194,289 |
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727 |
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(975 |
) |
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194,041 |
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Mortgage-backed and asset-backed securities |
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215,670 |
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128 |
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(1,797 |
) |
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214,001 |
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Municipal bonds |
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100,762 |
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307 |
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(3,177 |
) |
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|
97,892 |
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Redeemable preferred stock |
|
13,777 |
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|
524 |
|
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(29 |
) |
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|
14,272 |
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Equity Securities: |
|
|
|
|
|
|
|
|
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|
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|
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Common stock |
|
214 |
|
|
|
— |
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(119 |
) |
|
|
95 |
|
Mutual funds |
|
51,616 |
|
|
|
953 |
|
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(2,378 |
) |
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|
50,191 |
|
Short-term investments |
|
5,000 |
|
|
|
1 |
|
|
|
— |
|
|
|
5,001 |
|
Total |
$ |
659,383 |
|
|
$ |
2,641 |
|
|
$ |
(9,062 |
) |
|
$ |
652,962 |
|
|
December 31, 2016 |
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Cost or |
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Gross |
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Gross |
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|
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|
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Amortized |
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Unrealized |
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Unrealized |
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|
|||
|
Cost |
|
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Gains |
|
|
Losses |
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Fair Value |
|
||||
Fixed Maturities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government obligations and agencies |
$ |
74,937 |
|
|
$ |
— |
|
|
$ |
(670 |
) |
|
$ |
74,267 |
|
Corporate bonds |
|
192,328 |
|
|
|
402 |
|
|
|
(1,300 |
) |
|
|
191,430 |
|
Mortgage-backed and asset-backed securities |
|
216,679 |
|
|
|
135 |
|
|
|
(2,038 |
) |
|
|
214,776 |
|
Municipal bonds |
|
94,794 |
|
|
|
130 |
|
|
|
(3,727 |
) |
|
|
91,197 |
|
Redeemable preferred stock |
|
12,723 |
|
|
|
125 |
|
|
|
(157 |
) |
|
|
12,691 |
|
Equity Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
214 |
|
|
|
— |
|
|
|
(121 |
) |
|
|
93 |
|
Mutual funds |
|
53,900 |
|
|
|
407 |
|
|
|
(3,597 |
) |
|
|
50,710 |
|
Short-term investments |
|
5,000 |
|
|
|
2 |
|
|
|
— |
|
|
|
5,002 |
|
Total |
$ |
650,575 |
|
|
$ |
1,201 |
|
|
$ |
(11,610 |
) |
|
$ |
640,166 |
|
The following table provides the credit quality of investment securities with contractual maturities or the issuer of such securities as of the dates presented (in thousands):
|
|
March 31, 2017 |
|
|
December 31, 2016 |
|
||||||||||
|
|
|
|
|
|
% of Total |
|
|
|
|
|
|
% of Total |
|
||
Comparable Ratings |
|
Fair Value |
|
|
Fair Value |
|
|
Fair Value |
|
|
Fair Value |
|
||||
AAA |
|
$ |
129,495 |
|
|
|
21.5 |
% |
|
$ |
131,260 |
|
|
|
22.3 |
% |
AA |
|
|
282,340 |
|
|
|
46.9 |
% |
|
|
275,480 |
|
|
|
46.7 |
% |
A |
|
|
111,734 |
|
|
|
18.5 |
% |
|
|
107,418 |
|
|
|
18.2 |
% |
BBB |
|
|
70,754 |
|
|
|
11.7 |
% |
|
|
67,263 |
|
|
|
11.4 |
% |
BB+ and Below |
|
|
3,706 |
|
|
|
0.6 |
% |
|
|
3,444 |
|
|
|
0.6 |
% |
No Rating Available |
|
|
4,647 |
|
|
|
0.8 |
% |
|
|
4,498 |
|
|
|
0.8 |
% |
Total |
|
$ |
602,676 |
|
|
|
100.0 |
% |
|
$ |
589,363 |
|
|
|
100.0 |
% |
The tables above include comparable credit quality ratings by Standard and Poor’s Rating Services, Inc., Moody’s Investors Service, Inc. and Fitch Ratings, Inc.
9
The following table summarizes the cost or amortized cost and fair value of mortgage-backed and asset-backed securities as of the dates presented (in thousands):
|
March 31, 2017 |
|
|
December 31, 2016 |
|
||||||||||
|
Cost or |
|
|
|
|
|
|
Cost or |
|
|
|
|
|
||
|
Amortized |
|
|
|
|
|
|
Amortized |
|
|
|
|
|
||
|
Cost |
|
|
Fair Value |
|
|
Cost |
|
|
Fair Value |
|
||||
Mortgage-backed Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency |
$ |
111,148 |
|
|
$ |
109,720 |
|
|
$ |
110,724 |
|
|
$ |
109,022 |
|
Non-agency |
|
18,247 |
|
|
|
18,128 |
|
|
|
19,408 |
|
|
|
19,265 |
|
Asset-backed Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto loan receivables |
|
36,900 |
|
|
|
36,857 |
|
|
|
37,390 |
|
|
|
37,429 |
|
Credit card receivables |
|
38,617 |
|
|
|
38,553 |
|
|
|
38,640 |
|
|
|
38,568 |
|
Other receivables |
|
10,758 |
|
|
|
10,743 |
|
|
|
10,517 |
|
|
|
10,492 |
|
Total |
$ |
215,670 |
|
|
$ |
214,001 |
|
|
$ |
216,679 |
|
|
$ |
214,776 |
|
The following table summarizes the fair value and gross unrealized losses on securities available for sale, aggregated by major investment category and length of time that individual securities have been in a continuous unrealized loss position as of the dates presented (dollars in thousands):
|
March 31, 2017 |
|
|||||||||||||||||||||
|
Less Than 12 Months |
|
|
12 Months or Longer |
|
||||||||||||||||||
|
Number of |
|
|
|
|
|
|
Unrealized |
|
|
Number of |
|
|
|
|
|
|
Unrealized |
|
||||
|
Issues |
|
|
Fair Value |
|
|
Losses |
|
|
Issues |
|
|
Fair Value |
|
|
Losses |
|
||||||
Fixed Maturities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government obligations and agencies |
|
12 |
|
|
$ |
72,345 |
|
|
$ |
(540 |
) |
|
|
2 |
|
|
$ |
3,511 |
|
|
$ |
(47 |
) |
Corporate bonds |
|
92 |
|
|
|
76,775 |
|
|
|
(934 |
) |
|
|
2 |
|
|
|
289 |
|
|
|
(41 |
) |
Mortgage-backed and asset-backed securities |
|
86 |
|
|
|
148,308 |
|
|
|
(1,651 |
) |
|
|
8 |
|
|
|
14,521 |
|
|
|
(146 |
) |
Municipal bonds |
|
65 |
|
|
|
76,343 |
|
|
|
(3,177 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Redeemable preferred stock |
|
14 |
|
|
|
1,606 |
|
|
|
(29 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Equity Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
1 |
|
|
|
20 |
|
|
|
(5 |
) |
|
|
2 |
|
|
|
75 |
|
|
|
(114 |
) |
Mutual funds |
|
1 |
|
|
|
16,685 |
|
|
|
(116 |
) |
|
|
1 |
|
|
|
9,090 |
|
|
|
(2,262 |
) |
Total |
|
271 |
|
|
$ |
392,082 |
|
|
$ |
(6,452 |
) |
|
|
15 |
|
|
$ |
27,486 |
|
|
$ |
(2,610 |
) |
|
December 31, 2016 |
|
|||||||||||||||||||||
|
Less Than 12 Months |
|
|
12 Months or Longer |
|
||||||||||||||||||
|
Number of |
|
|
|
|
|
|
Unrealized |
|
|
Number of |
|
|
|
|
|
|
Unrealized |
|
||||
|
Issues |
|
|
Fair Value |
|
|
Losses |
|
|
Issues |
|
|
Fair Value |
|
|
Losses |
|
||||||
Fixed Maturities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government obligations and agencies |
|
11 |
|
|
$ |
70,453 |
|
|
$ |
(608 |
) |
|
|
2 |
|
|
$ |
3,504 |
|
|
$ |
(62 |
) |
Corporate bonds |
|
116 |
|
|
|
96,379 |
|
|
|
(1,219 |
) |
|
|
4 |
|
|
|
3,250 |
|
|
|
(80 |
) |
Mortgage-backed and asset-backed securities |
|
73 |
|
|
|
149,928 |
|
|
|
(1,923 |
) |
|
|
5 |
|
|
|
9,660 |
|
|
|
(115 |
) |
Municipal bonds |
|
69 |
|
|
|
79,402 |
|
|
|
(3,726 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Redeemable preferred stock |
|
50 |
|
|
|
6,340 |
|
|
|
(158 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Equity Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
1 |
|
|
|
18 |
|
|
|
(7 |
) |
|
|
2 |
|
|
|
75 |
|
|
|
(115 |
) |
Mutual funds |
|
3 |
|
|
|
28,020 |
|
|
|
(774 |
) |
|
|
2 |
|
|
|
11,529 |
|
|
|
(2,823 |
) |
Total |
|
323 |
|
|
$ |
430,540 |
|
|
$ |
(8,415 |
) |
|
|
15 |
|
|
$ |
28,018 |
|
|
$ |
(3,195 |
) |
Evaluating Investments for Other Than Temporary Impairment (“OTTI”)
At March 31, 2017, the Company held fixed maturity, equity securities and short-term investments that were in an unrealized loss position as presented in the table above. For fixed maturity securities with significant declines in value, the Company performs quarterly fundamental credit analysis on a security-by-security basis, which includes consideration of credit quality and credit ratings, review of relevant industry analyst reports and other available market data. For fixed maturity, equity securities and short-term investments, the Company considers whether it has the intent and ability to hold the securities for a period of time sufficient to recover its cost basis. Where the Company lacks the intent and ability to hold to recovery, or believes the recovery period is extended, the security’s decline in fair value is considered other than temporary and is recorded in earnings. Based on our analysis, we believe that
10
our fixed income portfolio is of high quality and that we will recover the amortized cost basis of our fixed income securities. We continually monitor the credit quality of our fixed income investments to assess if it is probable that we will receive our contractual or estimated cash flows in the form of principal and interest. Additionally, the Company considers management’s intent and ability to hold the securities until recovery and its credit analysis of the individual issuers of the securities. Based on this process and analysis, management has no reason to believe the unrealized losses for securities available for sale at March 31, 2017 are other than temporary.
As of March 31, 2017, the Company held approximately $9.2 million equity securities that were in an unrealized loss position twelve months or longer. The unrealized loss on these securities was $2.4 million. Based on our analysis, the Company believes each security will recover in a reasonable period of time and the Company has the intent and ability to hold them until recovery. There were no OTTI losses recognized in the periods presented on the equity portfolio.
The following table presents the amortized cost and fair value of investments with contractual maturities as of the date presented (in thousands):
|
March 31, 2017 |
|
|||||
|
Cost or |
|
|
|
|
|
|
|
Amortized Cost |
|
|
Fair Value |
|
||
Due in one year or less |
$ |
53,558 |
|
|
$ |
53,570 |
|
Due after one year through five years |
|
229,273 |
|
|
|
228,831 |
|
Due after five years through ten years |
|
38,207 |
|
|
|
37,658 |
|
Due after ten years |
|
57,068 |
|
|
|
54,344 |
|
Mortgage-backed and asset-backed securities |
|
215,670 |
|
|
|
214,001 |
|
Perpetual maturity securities |
|
13,777 |
|
|
|
14,272 |
|
Total |
$ |
607,553 |
|
|
$ |
602,676 |
|
Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay with or without penalty.
The following table provides certain information related to securities available for sale during the periods presented (in thousands):
|
Three Months Ended |
|
|||||
|
March 31, |
|
|||||