SEC Document


 
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, 2016
 
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 001-37536
 
 
Conifer Holdings, Inc.
(Exact name of registrant as specified in its charter)
Michigan
 
27-1298795
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
550 West Merrill Street, Suite 200
 
 
Birmingham, Michigan
 
48009
(Address of principal executive offices)
 
(Zip code)
 
(248) 559-0840
(Registrant’s telephone number, including area code)
 
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 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 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, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☐
Accelerated filer ☐
Non-accelerated filer ☐
(Do not check if a smaller
reporting company)
Smaller reporting company ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
 
The number of outstanding shares of the registrant’s common stock, no par value, as of May 10, 2016, was 7,595,635.
 




CONIFER HOLDINGS, INC. AND SUBSIDIARIES
 
Form 10-Q
 
INDEX
 
 
Page No.
 
 






22

30

31

 
32

32

32

33

34


2



PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
 
CONIFER HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(dollars in thousands) 
 
March 31, 2016
 
December 31, 2015
 
(Unaudited)
 
 
Assets
 
 
 
Investment securities:
 
 
 
Fixed maturity securities, at fair value (amortized cost of $108,390
and $107,213, respectively)
$
109,671

 
$
107,093

Equity securities, at fair value (cost of $3,339 and $3,341, respectively)
4,380

 
4,240

Short-term investments, at fair value
5,142

 
6,391

Total investments
119,193

 
117,724

 
 
 
 
Cash
15,843

 
12,703

Premiums and agents' balances receivable, net
19,321

 
18,010

Receivable from affiliate
1,907

 
1,792

Reinsurance recoverables on unpaid losses
5,015

 
5,405

Reinsurance recoverables on paid losses
1,039

 
1,639

Ceded unearned premiums
3,988

 
3,483

Deferred policy acquisition costs
12,221

 
12,102

Other assets
5,497

 
5,069

Total assets
$
184,024

 
$
177,927

 
 
 
 
Liabilities and Shareholders' Equity
 
 
 
Liabilities:
 
 
 
Unpaid losses and loss adjustment expenses
$
38,488

 
$
35,422

Unearned premiums
49,763

 
47,916

Reinsurance premiums payable
1,369

 
1,069

Senior debt
13,250

 
12,750

Accounts payable and accrued expenses
3,768

 
2,758

Other liabilities
637

 
750

Total liabilities
107,275

 
100,665

 
 
 
 
Commitments and contingencies

 

 
 
 
 
Shareholders' equity:
 
 
 
Common stock, no par value (100,000,000 shares authorized; 7,610,659 and 7,644,492 issued and outstanding, respectively)
80,084

 
80,111

Accumulated deficit
(5,059
)
 
(3,031
)
Accumulated other comprehensive income
1,724

 
182

Total shareholders' equity
76,749

 
77,262

Total liabilities and shareholders' equity
$
184,024

 
$
177,927

 
The accompanying notes are an integral part of the Consolidated Financial Statements.

3



CONIFER HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
(dollars in thousands, except per share data)

 
 
Three Months Ended
March 31,
 
2016
 
2015
Revenue
 
 
 
Premiums
 
 
 
Gross earned premiums
$
23,546

 
$
20,974

Ceded earned premiums
(3,437
)
 
(6,481
)
Net earned premiums
20,109

 
14,493

Net investment income
537

 
486

Net realized investment gains (losses)
(8
)
 
145

Other income
245

 
489

Total revenue
20,883

 
15,613

 
 
 
 
Expenses
 
 
 
Losses and loss adjustment expenses, net
12,699

 
8,570

Policy acquisition costs
6,003

 
2,595

Operating expenses
4,139

 
3,692

Interest expense
157

 
244

Total expenses
22,998

 
15,101

 
 
 
 
Income (loss) before income taxes
(2,115
)
 
512

Income tax (benefit) expense

 

Equity earnings (losses) of affiliates, net of tax
87

 

 
 
 
 
Net income (loss)
(2,028
)
 
512

Less net income (loss) attributable to noncontrolling interest

 
49

Net income (loss) attributable to Conifer
$
(2,028
)
 
$
463

 
 
 
 
Net income (loss) allocable to common shareholders
$
(2,028
)
 
$
250

 
 
 
 
Earnings (loss) per common share, basic and diluted
$
(0.27
)
 
$
0.06

 
 
 
 
Weighted average common shares outstanding, basic and diluted
7,638,780

 
4,040,872

 
The accompanying notes are an integral part of the Consolidated Financial Statements.

4



CONIFER HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(dollars in thousands)
  
 
 
Three Months Ended
March 31,
 
 
2016
 
2015
Net income (loss)
 
$
(2,028
)
 
$
512

 
 
 
 
 
Other comprehensive income (loss), net of tax:
 
 
 
 
Unrealized investment gains:
 
 
 
 
Unrealized investment gains during the period
 
1,459

 
703

Income tax expense (benefit)
 

 

Unrealized investment gains, net of tax
 
1,459

 
703

 
 
 
 
 
Less: reclassification adjustments to:
 
 
 
 
Net realized investment gains included in net income (loss)
 
(83
)
 
217

Income tax expense
 

 

Total reclassifications included in net income (loss), net of tax
 
(83
)
 
217

 
 
 
 
 
Other comprehensive income (loss)
 
1,542

 
486

 
 
 
 
 
Total comprehensive income (loss)
 
(486
)
 
998

Less comprehensive (loss) income attributable to noncontrolling interest
 

 
49

Comprehensive income (loss) attributable to Conifer
 
$
(486
)
 
$
949

 
The accompanying notes are an integral part of the Consolidated Financial Statements.

5



CONIFER HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statement of Changes in Redeemable Preferred Stock and Shareholders' Equity (Unaudited)
(dollars in thousands)
  
 
Redeemable
Preferred Stock
Preferred Stock
 
No Par, Common Stock
 
Retained
Earnings
 
Accumulated
Other
 
Total Conifer
Holdings
 
 
 
 
 
Shares
 
Amount
Shares
 
Amount
 
Shares
 
Amount
 
(Accumulated
deficit)
 
Comprehensive
Income (Loss)
 
Shareholders'
Equity
 
Noncontrolling
Interest
 
Total Equity
Balances at December 31, 2014
60,600

 
$
6,119


 
$

 
3,995,013

 
$
46,119

 
$
(3,095
)
 
$
1,158

 
$
44,182

 
$
(23
)
 
$
44,159

Net income

 


 

 

 

 
463

 

 
463

 
49

 
512

Issuance of common stock (Pre IPO)*

 


 

 
55,029

 
750

 

 

 
750

 

 
750

Paid-in-kind dividends

 
61


 

 

 
(61
)
 

 

 
(61
)
 

 
(61
)
Cash dividends paid on preferred stock

 


 

 

 
(152
)
 

 

 
(152
)
 

 
(152
)
Reclassification of redeemable preferred stock to permanent equity
(60,600
)
 
(6,180
)
60,600

 
6,180

 

 

 

 

 
6,180

 

 
6,180

Other comprehensive loss

 


 

 

 

 

 
486

 
486

 

 
486

Balances at March 31, 2015

 
$

60,600

 
$
6,180

 
4,050,042

 
$
46,656

 
$
(2,632
)
 
$
1,644

 
$
51,848

 
$
26

 
$
51,874

Net loss

 


 

 

 

 
(399
)
 

 
(399
)
 
(130
)
 
(529
)
Paid-in-kind dividends

 


 
95

 

 
(95
)
 

 

 

 

 

Cash dividends paid on preferred stock

 


 

 

 
(232
)
 

 

 
(232
)
 

 
(232
)
Issuance of common stock (IPO)*

 


 

 
3,300,000

 
32,224

 

 

 
32,224

 

 
32,224

IPO Expenses*

 


 

 

 
(1,837
)
 

 

 
(1,837
)
 

 
(1,837
)
Repurchase of preferred stock

 

(60,600
)
 
(6,275
)
 

 

 

 

 
(6,275
)
 

 
(6,275
)
Issuance of common stock to former preferred stockholders

 


 

 
294,450

 
3,092

 

 

 
3,092

 

 
3,092

Vesting of RSU**

 


 

 

 
303

 

 

 
303

 

 
303

Deconsolidation of affiliate

 


 

 

 

 

 

 

 
104

 
104

Other comprehensive loss

 


 

 

 

 

 
(1,462
)
 
(1,462
)
 

 
(1,462
)
Balances at December 31, 2015

 
$


 
$

 
7,644,492

 
$
80,111

 
$
(3,031
)
 
$
182

 
$
77,262

 
$

 
$
77,262

Net loss

 


 

 

 

 
(2,028
)
 

 
(2,028
)
 

 
(2,028
)
Repurchase of common stock

 


 

 
(33,833
)
 
(231
)
 

 

 
(231
)
 

 
(231
)
Vesting of RSU**

 


 

 

 
204

 

 

 
204

 

 
204

Other comprehensive income

 


 

 

 

 

 
1,542

 
1,542

 

 
1,542

Balances at March 31, 2016

 
$


 
$

 
7,610,659

 
$
80,084

 
$
(5,059
)
 
$
1,724

 
$
76,749

 
$

 
$
76,749

 
* "IPO" - initial public offering
** "RSU" - restricted stock units

The accompanying notes are an integral part of the Consolidated Financial Statements.

6



CONIFER HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
 
 
Three Months Ended
March 31,
 
2016
 
2015
Cash Flows from Operating Activities
 
 
 
Net income (loss)
$
(2,028
)
 
$
512

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
 
Depreciation and amortization of property and equipment, and intangibles
92

 
101

Amortization of bond premium and discount, net
148

 
125

(Gains) losses on investments
8

 
(145
)
Incentive awards expenses - vesting of RSU
204

 

Other
(87
)
 
2

Changes in operating assets and liabilities:
 
 
 
(Increase) decrease in:
 
 
 
Premiums and agents' balances receivable
(1,426
)
 
1,552

Reinsurance recoverables
990

 
(1,675
)
Ceded unearned premiums
(505
)
 
(1,057
)
Deferred policy acquisition costs
(119
)
 
(441
)
Other assets
(411
)
 
(20
)
Increase (decrease) in:
 
 
 
Unpaid losses and loss adjustment expenses
3,066

 
1,456

Unearned premiums
1,847

 
231

Reinsurance premiums payable
300

 
(2,666
)
Accounts payable and accrued expenses
1,010

 
996

Other liabilities
(113
)
 
(402
)
Net cash provided by (used in) operating activities
2,976

 
(1,431
)
Cash Flows From Investing Activities
 
 
 
Purchase of investments:
 
 
 
Fixed maturity securities
(5,979
)
 
(13,469
)
Equity securities
(434
)
 
(439
)
Short-term investments
(11,842
)
 
(19,393
)
Proceeds from maturities and redemptions of investments:
 
 
 
Fixed maturity securities
2,505

 
1,103

Proceeds from sales of investments:
 
 
 
Fixed maturity securities
2,157

 
1,926

Equity securities
418

 
359

Short-term investments
13,091

 
30,816

Purchases of property and equipment
(21
)
 
(39
)
Net cash provided by (used in) investing activities
(105
)
 
864

Cash Flows From Financing Activities
 
 
 
Proceeds received from issuance of shares of common stock

 
750

Repurchase of common stock
(231
)
 

Borrowings under debt arrangements
1,000

 
900

Repayment of borrowings under debt arrangements
(500
)
 
(250
)
Payment of offering costs

 
(140
)
Net cash provided by financing activities
269

 
1,260

Net increase in cash
3,140

 
693

Cash at beginning of period
12,703

 
18,488

Cash at end of period
$
15,843

 
$
19,181

 
 
 
 
Supplemental Disclosure of Cash Flow Information:
 
 
 
Interest paid
$
98

 
$
233

Net income taxes paid

 

Dividends declared but not paid at end of the period

 
152

Paid-in-kind interest

 
61

 
The accompanying notes are an integral part of the Consolidated Financial Statements.

7



CONIFER HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
 
 
1.     Summary of Significant Accounting Policies
 Basis of Presentation and Management Representation
 The consolidated financial statements include accounts, after elimination of intercompany accounts and transactions, of Conifer Holdings, Inc. (the “Company” or “Conifer”), its wholly owned subsidiaries Conifer Insurance Company ("CIC"), White Pine Insurance Company ("WPIC"), Red Cedar Insurance Company ("RCIC"), American Colonial Insurance Company ("ACIC"), American Colonial Insurance Services ("ACIS") and Sycamore Insurance Agency, Inc ("SIA"). CIC, WPIC, RCIC and ACIC are collectively referred to as the "Insurance Company Subsidiaries." On a stand-alone basis Conifer Holdings, Inc. is referred to as the "Parent Company."
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”), which differ from statutory accounting practices prescribed or permitted for insurance companies by regulatory authorities. The Company has applied the applicable rules and regulations of the United States Securities and Exchange Commission (“SEC”) regarding interim financial reporting and therefore the consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments, consisting of items of a normal recurring nature, necessary for a fair presentation of the consolidated interim financial statements, have been included. The results of operations for the three months ended March 31, 2016, are not necessarily indicative of the results expected for the year ended December 31, 2016.
These consolidated financial statements and the notes thereto should be read in conjunction with the Company's audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC on March 15, 2016.
 Business
The Company is engaged in the sale of property and casualty insurance products and has organized its principal operations into two types of insurance businesses: commercial lines and personal lines. The Company underwrites a variety of specialty insurance products, including property, general liability, commercial multi-peril, liquor liability, automobile, and homeowners and dwelling policies. The Company markets and sells its insurance products through a network of independent agents, including managing general agents, whereby policies are written in all 50 states in the United States. The Company’s corporate headquarters is located in Birmingham, Michigan with additional office facilities in Florida, Texas, Pennsylvania and Tennessee.
 The Company discontinued offering nonstandard personal automobile policies in the first half of 2015. The Company will continue to pay claims and perform other administrative services until existing policies expire and all claims are paid (a process referred to as “run-off”). The run-off is expected to be substantially complete by the end of 2016.
Initial Public Offering
In August 2015, the Company completed its initial public offering (“IPO”) whereby it issued and sold 3,300,000 shares of common stock, which included 100,000 shares issued and sold to the Company’s Chief Executive Officer, at a public offering price of $10.50 per share. Refer to Note 8 ~ Shareholders’ Equity for further details.
 Stock Split
 On July 22, 2015, the board of directors approved a stock split in the form of a stock dividend of 10.2 shares for each share of common stock which was effectuated immediately prior to the effectiveness of the IPO. Accordingly, all common share and per share amounts for all periods presented in these unaudited consolidated financial statements and notes thereto, were adjusted retroactively to reflect the stock split.
Principles of Consolidation
Prior to September 30, 2015, the consolidated financial statements included the accounts of Conifer Holdings, Inc. and its wholly owned subsidiaries, as well as a 50%-owned affiliate (the “Affiliate”) which the Company controlled due to its majority representation on the entity’s board of directors. Noncontrolling interest in a consolidated subsidiary in the consolidated balance sheets represents the noncontrolling shareholder’s proportionate share of the entity’s equity. Consolidated net income or loss is allocated to the Company and noncontrolling interest in proportion to their percentage ownership interests. As of September 30, 2015, the Company no longer controlled the Affiliate but retained significant influence. As a result the entity

8



was deconsolidated from the consolidated financial statements and recognized as an investment in an affiliate utilizing the equity method of accounting. All intercompany transactions and accounts were eliminated.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. While management believes the amounts included in the consolidated financial statements reflect management's best estimates and assumptions, actual results may differ from these estimates.
 Recently Issued Accounting Guidance
In May 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-09, Disclosures about Short-Duration Contracts (Topic 944), which enhances disclosure requirements for insurance entities with short-duration insurance contracts. The enhanced disclosures under the new guidance will be provided by the Company for the year ended December 31, 2016, as required.
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in this update modify the requirements related to the measurement of certain financial instruments in the statement of financial condition and results of operation. Management is currently evaluating the impact of the guidance.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which addresses the financial reporting of leasing transactions. This update will require the recognition of a right-of-use asset and a corresponding lease liability, discounted to the present value, for all leases that extend beyond 12 months. For operating leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the consolidated statement of cash flows. For finance leases, interest on the lease liability will be recognized separately from the amortization of the right-of-use asset in the consolidated statement of operations and the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the consolidated statement of cash flows. This ASU is effective for annual and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. We have not yet completed the analysis of how adopting this guidance will affect our financial statements.
2.     Investments
The cost or amortized cost, gross unrealized gain or loss, and estimated fair value of the investments in securities classified as available-for-sale at March 31, 2016 and December 31, 2015 were as follows (dollars in thousands):
 
March 31, 2016
 
Cost or
Amortized
Cost
Gross Unrealized
Estimated
Fair Value 
 
 
Gains
Losses
Fixed Maturity Securities:
 
 
 
 
U.S. Government obligations
$
4,645

$
64

$
(2
)
$
4,707

State and local government
14,058

606

(1
)
14,663

Corporate debt
40,191

454

(333
)
40,312

Commercial mortgage-backed and other asset-backed
49,496

530

(37
)
49,989

Total fixed maturity securities available for sale
108,390

1,654

(373
)
109,671

Equity Securities:
 
 
 
 
Common stocks - Public Utilities
190

46


236

Common stocks - Banks, Trusts and Insurance Companies
523

157

(8
)
672

Common stocks - Industrial, miscellaneous and all other
2,626

899

(53
)
3,472

Total equity securities available for sale
3,339

1,102

(61
)
4,380

Total securities available for sale
$
111,729

$
2,756

$
(434
)
$
114,051


9



 
December 31, 2015
 
Cost or
Amortized
Cost
Gross Unrealized
Estimated
Fair Value 
 
Gains
Losses
Fixed Maturity Securities:
 
 
 
 
U.S. Government obligations
$
5,474

$
47

$
(13
)
$
5,508

State and local government
14,391

398

(6
)
14,783

Corporate debt
39,183

84

(483
)
38,784

Commercial mortgage-backed and other asset-backed
48,165

164

(311
)
48,018

Total fixed maturity securities available for sale
107,213

693

(813
)
107,093

Equity Securities:
 
 
 
 
Common stocks - Public Utilities
122

20

(1
)
141

Common stocks - Banks, Trusts and Insurance Companies
503

150

(7
)
646

Common stocks - Industrial, miscellaneous and all other
2,716

836

(99
)
3,453

Total equity securities available for sale
3,341

1,006

(107
)
4,240

Total securities available for sale
$
110,554

$
1,699

$
(920
)
$
111,333

The following table summarizes the aggregate fair value and gross unrealized losses, by security type, of the available-for-sale securities in unrealized loss positions. The table segregates the holdings based on the length of time that individual securities have been in a continuous unrealized loss position, as follows (dollars in thousands): 
 
March 31, 2016
 
Less than 12 months
 
Greater than 12 months
 
Total
 
#
of
Issues
Fair Value of
Investments
with Unrealized
Losses
Gross
Un realized
Losses
 
#
of
Issues
Fair Value of
Investments
with Unrealized
Losses
Gross
Un realized
Losses
 
#
of
Issues
Fair Value of
Investments
with Unrealized
Losses
Gross
Un realized
Losses
Fixed Maturity Securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Government obligations
2

$
1,330

$
(1
)
 
2

$
685

$
(1
)
 
4

$
2,015

$
(2
)
State and local government
3

499

(1
)
 



 
3

499

(1
)
Corporate debt
22

8,736

(304
)
 
10

3,251

(29
)
 
32

11,987

(333
)
Commercial mortgage and asset-backed
10

3,667

(7
)
 
9

4,255

(30
)
 
19

7,922

(37
)
Total fixed maturity securities available for sale
37

14,232

(313
)
 
21

8,191

(60
)
 
58

22,423

(373
)
Equity Securities:
 
 
 
 
 
 
 
 
 
 
 
Common stock
25

523

(49
)
 
2

76

(12
)
 
27

599

(61
)
Total equity securities available for sale
25

523

(49
)
 
2

76

(12
)
 
27

599

(61
)
Total securities
62

$
14,755

$
(362
)
 
23

$
8,267

$
(72
)
 
85

$
23,022

$
(434
)

10



 
December 31, 2015
 
Less than 12 months
 
Greater than 12 months
 
Total
 
#
of
Issues
Fair Value of
Investments
with Unrealized
Losses
Gross
Un realized
Losses
 
#
of
Issues
Fair Value of
Investments
with Unrealized
Losses
Gross
Un realized
Losses
 
#
of
Issues
Fair Value of
Investments
with Unrealized
Losses
Gross
Un realized
Losses
Fixed Maturity Securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Government obligations
7

$
2,580

$
(7
)
 
2

$
679

$
(6
)
 
9

$
3,259

$
(13
)
State and local government
8

2,688

(6
)
 



 
8

2,688

(6
)
Corporate debt
80

21,760

(438
)
 
12

3,618

(45
)
 
92

25,378

(483
)
Commercial mortgage and asset-backed
67

32,539

(258
)
 
5

2,175

(53
)
 
72

34,714

(311
)
Total fixed maturity securities available for sale
162

59,567

(709
)
 
19

6,472

(104
)
 
181

66,039

(813
)
Equity Securities:
 
 
 
 
 
 
 
 
 
 
 
Common stock
86

782

(72
)
 
3

79

(35
)
 
89

861

(107
)
Total equity securities available for sale
86

782

(72
)
 
3

79

(35
)
 
89

861

(107
)
Total securities
248

$
60,349

$
(781
)
 
22

$
6,551

$
(139
)
 
270

$
66,900

$
(920
)
 The Company analyzed its investment portfolio in accordance with its other-than-temporary impairment ("OTTI") review procedures and determined the Company did not need to record a credit related OTTI loss, nor recognize a non-credit related OTTI loss in other comprehensive income for the three months ended March 31, 2016 and 2015.
 The Company’s sources of net investment income are as follows (dollars in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
Fixed maturity securities
$
586

 
$
531

Equity securities
26

 
23

Cash and short-term investments
2

 
2

Total investment income
614

 
556

Investment expenses
(77
)
 
(70
)
Net investment income
$
537

 
$
486



11



The following table summarizes the gross realized gains and losses from sales or maturities of available-for-sale fixed maturity and equity securities, as follows (dollars in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
Fixed maturity securities:
 
 
 
Gross realized gains
$
16

 
$
68

Gross realized losses
(6
)
 
(3
)
Total fixed maturity securities
10

 
65

Equity securities:
 
 
 
Gross realized gains
56

 
99

Gross realized losses
(74
)
 
(19
)
Total equity securities
(18
)
 
80

Total realized gains (losses)
$
(8
)
 
$
145

 Proceeds from the sales of debt and equity securities available for sale were $2.6 million and $2.3 million for the three months ended March 31, 2016 and 2015, respectively.
 The table below summarizes the amortized cost and fair value of available-for-sale fixed maturity securities by contractual maturity at March 31, 2016. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties (dollars in thousands):
 
Amortized
Cost
 
Estimated
Fair Value
Due in one year or less
$
6,018

 
$
6,028

Due after one year through five years
35,972

 
36,293

Due after five years through ten years
8,791

 
9,033

Due after ten years
8,113

 
8,328

Securities with contractual maturities
58,894

 
59,682

Commercial mortgage and asset backed
49,496

 
49,989

Total Fixed maturity securities
$
108,390

 
$
109,671

 At March 31, 2016 and December 31, 2015, the insurance companies had an aggregate of $9.6 million and $8.9 million, respectively, on deposit in trust accounts to meet the deposit requirements of various state insurance departments. There are withdrawal and other restrictions on these deposits, including the type of investments that may be held, however the Company may generally invest in high-grade bonds and short-term investments and earn interest on the funds. 
3.     Fair Value Measurements
 The Company’s financial instruments include assets and liabilities carried at fair value, as well as assets and liabilities carried at cost or amortized cost but disclosed at fair value in these consolidated financial statements. Fair value is defined as the price that would be received for an asset or paid to transfer a liability in the principal most advantageous market for the asset or liability in an orderly transaction between market participants. In determining fair value, the Company applies the market approach, which uses prices and other relevant data based on market transactions involving identical or comparable assets and liabilities. The inputs to valuation techniques used to measure fair value are prioritized into a three-level hierarchy. The hierarchy gives the highest priority to quoted prices from sources independent of the reporting entity (“observable inputs”) and the lowest priority to prices determined by the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (“unobservable inputs”). The fair value hierarchy is as follows:
 Level 1—Valuations that are based on quoted prices (unadjusted) in active markets for identical assets or liabilities.
 Level 2—Valuations that are based on observable inputs (other than Level 1 prices) such as quoted prices for similar assets or liabilities at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

12



 Level 3—Unobservable inputs that are supported by little or no market activity. The unobservable inputs represent the Company’s best assumption of how market participants would price the assets or liabilities.
The following tables present the Company’s assets and liabilities measured at fair value on a recurring basis, classified by the valuation hierarchy as of March 31, 2016 and December 31, 2015 (dollars in thousands):
 
 
March 31, 2016
 
Fair Value Measurements Using
 
Total
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Assets:
 
 
 
 
 
 
 
Fixed Maturity Securities:
 
 
 
 
 
 
 
U.S. Government obligations
$
4,707

 
$

 
$
4,707

 
$

State and local government
14,663

 

 
14,663

 

Corporate debt
40,312

 

 
40,312

 

Commercial mortgage-backed and other asset-backed
49,989

 

 
49,989

 

Total fixed maturity securities
109,671

 

 
109,671

 

Equity Securities, common stock
4,380

 
4,380

 

 

Short-term investments
5,142

 
5,142

 

 

Total assets measured at fair value
$
119,193

 
$
9,522

 
$
109,671

 
$

 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Senior debt*
$
13,250

 
$

 
$
13,250

 
$

Total Liabilities measured at fair value
$
13,250

 
$

 
$
13,250

 
$

 * Carried at cost or amortized cost on the consolidated balance sheet


13



 
December 31, 2015
 
Fair Value Measurements Using
 
Total
 
Quoted Prices in Active Markets for
Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Assets:
 
 
 
 
 
 
 
Fixed Maturity Securities:
 
 
 
 
 
 
 
U.S. Government obligations
$
5,508

 
$

 
$
5,508

 
$

State and local government
14,783

 

 
14,783

 

Corporate debt
38,784

 

 
38,784

 

Commercial mortgage-backed and other asset-backed
48,018

 

 
48,018

 

Total fixed maturity securities
107,093

 

 
107,093

 

Equity Securities, common stock
4,240

 
4,240

 

 

Short-term investments
6,391

 
6,391

 

 

Total assets measured at fair value
$
117,724

 
$
10,631

 
$
107,093

 
$

 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Senior debt*
$
12,750

 
$

 
$
12,750

 
$

Total Liabilities measured at fair value
$
12,750

 
$

 
$
12,750

 
$

 * Carried at cost or amortized cost on the consolidated balance sheet
Level 1 investments consist of equity securities traded in an active exchange market. The Company uses unadjusted quoted prices for identical instruments to measure fair value. Level 1 also includes money market funds and other interest-bearing deposits at banks, which are reported as short-term investments. The fair value measurements that were based on Level 1 inputs comprise 8.0% of the fair value of the total investment portfolio as of March 31, 2016.
Level 2 investments include fixed maturity securities, which consist of U.S. government agency securities, state and local municipal bonds (including those held as restricted securities), corporate debt securities, mortgage-backed and asset-backed securities. The fair value of securities included in the Level 2 category were based on the market values obtained from a third party pricing service that were evaluated using pricing models that vary by asset class and incorporate available trade, bid and other observable market information. The third party pricing service monitors market indicators, as well as industry and economic events. The fair value measurements that were based on Level 2 inputs comprise 92.0% of the fair value of the total investment portfolio as of March 31, 2016.
 The Company obtains pricing for each security from independent pricing services, investment managers or consultants to assist in determining fair value for its Level 2 investments. To validate that these quoted prices are reasonable estimates of fair value, the Company performs various quantitative and qualitative procedures, such as (i) evaluation of the underlying methodologies, (ii) analysis of recent sales activity, (iii) analytical review of our fair values against current market prices or (iv) comparison of the pricing services’ fair value to other pricing services’ fair value for the same investment. No markets for the investments were determined to be inactive at period-ends. Based on these procedures, the Company did not adjust the prices or quotes provided from independent pricing services, investment managers or consultants.
The Level 2 financial instruments also include our senior debt. The fair value of borrowings under the senior debt, consisting of the revolving credit facility and term loans, approximates its carrying amount because interest is based on a short-term, variable, market-based rate.
 The Company’s policy on recognizing transfers between hierarchy levels is applied at the end of each reporting period. There were no transfers between Levels 1, 2 and 3 for the three months ended March 31, 2016 and 2015, respectively.
4. Deferred Policy Acquisition Costs
The Company defers costs incurred which are incremental and directly related to the successful acquisition of new or renewal insurance business, net of corresponding amounts of ceded reinsurance commissions. Net deferred policy acquisition costs are amortized and charged to expense in proportion to premium earned over the estimated policy term. The Company anticipates that its deferred policy acquisition costs will be fully recoverable and there were no premium deficiencies for the

14



three months ended March 31, 2016 and 2015. The activity in deferred policy acquisition costs, net of reinsurance transactions, is as follows (dollars in thousands):
 
Three Months Ended
March 31,
 
2016
 
2015
Balance at beginning of period
$
12,102

 
$
5,679

 
 
 
 
Deferred policy acquisition costs
6,122

 
3,036

Amortization of policy acquisition costs
(6,003
)
 
(2,595
)
Net change
119

 
441

 
 
 
 
Balance at end of period
$
12,221

 
$
6,120


5.     Unpaid Losses and Loss Adjustment Expenses
 The Company establishes reserves for unpaid losses and loss adjustment expenses ("LAE") which represent the estimated ultimate cost of all losses incurred that were both reported and unreported (i.e., incurred but not yet reported losses; or “IBNR”) and LAE incurred that remain unpaid at the balance sheet date. The Company’s reserving process takes into account known facts and interpretations of circumstances and factors including the Company’s experience with similar cases, actual claims paid, historical trends involving claim payment patterns and pending levels of unpaid claims, loss management programs, product mix and contractual terms, changes in law and regulation, judicial decisions, and economic conditions. In the normal course of business, the Company may also supplement its claims processes by utilizing third party adjusters, appraisers, engineers, inspectors, and other professionals and information sources to assess and settle catastrophe and non-catastrophe related claims. The effects of inflation are implicitly considered in the reserving process.
 Reserves are estimates of unpaid portions of losses that have occurred, including IBNR losses, therefore the establishment of appropriate reserves is an inherently uncertain and complex process. The ultimate cost of losses may vary materially from recorded amounts, which are based on management’s best estimates. The highest degree of uncertainty is associated with reserves for losses incurred in the current reporting period as it contains the greatest proportion of losses that have not been reported or settled. The Company regularly updates its reserve estimates as new information becomes available and as events unfold that may affect the resolution of unsettled claims. Changes in reserve estimates, which may be material, are reported in the results of operations in the period such changes are determined to be needed and recorded.
  Management believes that the reserve for losses and LAE, net of reinsurance recoverables, is appropriately established in the aggregate and adequate to cover the ultimate net cost of reported and unreported claims arising from losses which had occurred by the date of the consolidated financial statements based on available facts and in accordance with applicable laws and regulations.
 The table below provides the changes in the reserves for losses and LAE, net of reinsurance recoverables, for the periods indicated as follows (dollars in thousands):

15



 
Three Months Ended
March 31,
 
2016
 
2015
Gross reserves - beginning of period
$
35,422

 
$
31,531

Less: reinsurance recoverables on unpaid losses
5,405

 
3,224

Net reserves - beginning of period
30,017

 
28,307

 
 
 
 
Add: incurred losses and LAE, net of reinsurance:
 
 
 
Current period
11,112

 
8,535

Prior period
1,587

 
35

Total net incurred losses and LAE
12,699

 
8,570

 
 
 
 
Deduct: loss and LAE payments, net of reinsurance:
 
 
 
Current period
1,999

 
1,765

Prior period
7,244

 
6,715

Total net loss and LAE payments
9,243

 
8,480

 
 
 
 
Net reserves - end of period
33,473

 
28,397

Plus: reinsurance recoverables on unpaid losses
5,015

 
4,590

Gross reserves - end of period
$
38,488

 
$
32,987

The Company’s incurred losses during the three months ended March 31, 2016 include prior-year adverse reserve development of $1.6 million. The adverse development was generated by the Florida homeowners, personal automobile, and commercial automobile lines, totaling $758,000, $547,000, and $858,000, respectively. This adverse development was partially offset by favorable development of $271,000 and $253,000 in commercial multi-peril and workers compensation lines, respectively.
The Company’s incurred losses during the three months ended March 31, 2015, reflect prior-year adverse reserve development of $35,000. The adverse development was generated primarily by adverse development in the commercial and personal automobile lines of $195,000 and $69,000, respectively, which was partially offset by favorable development of $207,000 in the workers compensation line. 
6.     Reinsurance
In the normal course of business, the Company seeks to minimize the loss that may arise from catastrophes or other events that cause unfavorable underwriting results by reinsuring certain levels of risk in various areas of exposure with reinsurers. The Company participates in reinsurance agreements in order to limit its loss exposure including protecting against catastrophe losses. The Company primarily ceded all specific risks in excess of $500,000 in both 2016 and 2015. Reinsurance does not discharge the direct insurer from liability to its policyholder. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial condition of its reinsurers and monitors the concentration of credit risk arising from similar geographic regions, activities, or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. To date, the Company has not experienced any significant difficulties in collecting reinsurance recoverables.
The Company assumes written premiums under a few fronting arrangements, most of which are net of other reinsurance arrangements. The fronting arrangements are with unaffiliated insurers who write on behalf of the Company in markets that require a higher A.M. Best rating than the Company’s rating, or where the policies are written in a state where the Company is not licensed or for other strategic reasons. Assumed premiums is comprised entirely of these arrangements other than where there are premiums assumed from Citizens Property and Casualty Corporation (“Citizens”).
The following table presents the effects of such reinsurance and assumption transactions on premiums, and losses and LAE (dollars in thousands):

16



 
Three Months Ended
March 31,
 
2016
 
2015
Written premiums:
 
 
 
Direct
$
21,600

 
$
21,119

Assumed
3,793

 
85

Ceded
(3,343
)
 
(7,538
)
Net written premiums
$
22,050

 
$
13,666

 
 
 
 
Earned premiums:
 
 
 
Direct
$
22,241

 
$
19,301

Assumed
1,305

 
1,673

Ceded
(3,437
)
 
(6,481
)
Net earned premiums
$
20,109

 
$
14,493

 
 
 
 
Losses and LAE:
 
 
 
Direct
$
13,939

 
$
9,652

Assumed
909

 
794

Ceded
(2,149
)
 
(1,876
)
Net Losses and LAE
$
12,699

 
$
8,570

 
 
 
 
7.     Senior Debt
 The Company's senior debt facility ("Credit Facility") is comprised of three notes: a $17.5 million revolving line of credit ("Revolver"); a $5.0 million five-year term note ("Term Note") which commenced in October 2013; and a $7.5 million five-year term note which commenced in September 2014 ("2014 Term Note"). A summary of the outstanding senior debt is as follows (dollars in thousands):
 
March 31, 2016
 
December 31, 2015
Revolver
$
4,500

 
$
3,500

Term Note
2,500

 
2,750

2014 Term Note
6,250

 
6,500

Total
$
13,250

 
$
12,750

 The undrawn portion of the Revolver was $13.0 million as of March 31, 2016, and is available to finance working capital, fund other general corporate purposes and provide surplus contributions to the Company's Insurance Company Subsidiaries to support premium growth or strategic acquisitions.
The Credit Facility contains various restrictive covenants that relate to the Company’s shareholders’ equity, premiums-to-capital and surplus ratios, fixed-charge coverage ratio, risk-based capital ratios, and A.M. Best ratings of its Insurance Company Subsidiaries. At March 31, 2016, the Company was in compliance with all of its Credit Facility financial covenants.
8.     Shareholders’ Equity
 On February 25, 2016, the Company's Board of Directors authorized a stock repurchase program, under which the Company may repurchase up to $2.1 million of its outstanding common stock over a one-year period. Under this program, management is authorized to repurchase shares at prevailing market prices through open market purchases, privately negotiated transactions, block purchases or otherwise in accordance with applicable federal securities laws, including Rule 10b5-1 and 10b-18 of the Securities Exchange Act of 1934, as amended. The actual timing, number and value of shares repurchased under the program will be determined by management in its discretion and will depend on a number of factors, including the market price of the Company’s stock, general market conditions, and other factors. Repurchases may be made from time to time, without prior notice. The Company may suspend or discontinue the program at any time. As of March 31, 2016, the Company had repurchased 33,833 shares of stock valued at approximately $231,000.


17



9. Other Comprehensive Income (Loss)
 The following table presents changes in accumulated other comprehensive income (loss) for unrealized gains and losses on available-for-sale securities (dollars in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
Balance at beginning of period
$
182

 
$
1,158

Other comprehensive income before reclassifications
1,459

 
703

Amounts reclassified from accumulated other comprehensive income (loss)
83

 
(217
)
Net current period other comprehensive income (loss)
1,542

 
486

Balance at end of period
$
1,724

 
$
1,644

10. Earnings Per Share
 Basic and diluted earnings (loss) per share are computed by dividing net income allocable to common shareholders by the weighted average number of common shares outstanding during the period. The dividends on preferred stock and other gains are deducted from the net income to arrive at net income allocable to common shareholders. In the period of a net loss, the dividends on preferred stock are added to the net loss to arrive at net loss allocable to common shareholders. The following table presents the calculation of basic and diluted earnings (loss) per common share, as follows (dollars in thousands, except per share amounts):
 
Three Months Ended March 31,
 
2016
 
2015
Net income (loss) attributable to Conifer
$
(2,028
)
 
$
463

Preferred stock dividends

 
152

Paid-in-kind dividends

 
61

Net income (loss) allocable to common shareholders
$
(2,028
)
 
$
250

 
 
 
 
Weighted average common shares, basic and diluted*
7,638,780

 
4,040,872

 
 
 
 
Earnings (loss) per share allocable to common, basic and diluted
$
(0.27
)
 
$
0.06

* The nonvested shares of the restricted stock units were anti-dilutive as of March 31, 2016. Therefore, the basic and and diluted weighted average common shares are equal as of March 31, 2016.
11.     Stock-based Compensation

In 2015, the Company issued 390,352 restricted stock units (“RSU”) to executive officers and other employees to be settled in shares of common stock. The total RSUs were valued at $4.1 million on the date of grant. The Company recorded $204,000 of compensation expense related to the RSUs for the three months ended March 31, 2016. The total compensation cost related to the non-vested portion of the restricted stock units which has not been recognized as of March 31, 2016 was $3.6 million.
 
12.     Commitments and Contingencies
 Legal proceedings
 The Company and its subsidiaries are subject at times to various claims, lawsuits and proceedings relating principally to alleged errors or omissions in the placement of insurance, claims administration, and other business transactions arising in the ordinary course of business. Where appropriate, the Company vigorously defends such claims, lawsuits and proceedings. Some of these claims, lawsuits and proceedings seek damages, including consequential, exemplary or punitive damages, in amounts that could, if awarded, be significant. Most of the claims, lawsuits and proceedings arising in the ordinary course of business are covered by the insurance policy at issue. On the basis of current information, the Company does not believe that there is a

18



reasonable possibility that any material loss exceeding amounts already accrued, if any, will result from any of the claims, lawsuits and proceedings to which the Company is subject, either individually, or in the aggregate.
13.     Segment Information
 The Company is engaged in the sale of property and casualty insurance products and has organized its principal operations into two types of insurance businesses: commercial lines and personal lines. Within these two insurance businesses, the Company offers various insurance products. Such insurance businesses are engaged in underwriting and marketing insurance coverages, and administering claims processing for such policies.
 The Company defines its operating segments as components of the business where separate financial information is available and used by the chief operating decision-making group in deciding how to allocate resources to its segments and in assessing its performance. In assessing performance of its operating segments, the Company’s chief operating decision-making group, comprised of key senior executives, reviews a number of financial measures including gross written premiums, net earned premiums, losses and LAE, net of reinsurance recoveries. The primary measure used for making decisions about resources to be allocated to an operating segment and assessing its performance is segment underwriting gain or loss which is defined as segment revenues, consisting of net earned premiums and other income, less segment expenses, consisting of losses and LAE, policy acquisition costs and other underwriting and operating expenses of the operating segments. Other underwriting and operating expenses primarily include compensation and related benefits for underwriting personnel, licensing of policy issuance and claims systems, rent and utilities. The Company markets, distributes and sells its insurance products through its own insurance agencies and a network of independent agents. All of the Company’s insurance activities are conducted in the United States with a concentration of activity in Florida, Michigan, Pennsylvania and Texas. For the three months ended March 31, 2016 and 2015, gross written premiums attributable to these four states were 70% and 69%, respectively, of the Company’s total gross written premiums.
The commercial lines and personal lines accounted for approximately 76% and 24%, respectively, of net earned premiums for the three months ended March 31, 2016, and approximately 65% and 35%, respectively, of net earned premiums for the three months ended March 31, 2015. Other income includes installment and policy fees charged to policyholders and commission income from third party insurers on policies written through our agencies relating to our product lines.
 The following provides a description of the Company’s two insurance businesses and product offerings within these businesses:
Commercial lines—offers coverage for property, liability, automobile and other miscellaneous coverage primarily to owner-operated small and mid-sized businesses, professional organizations and hospitality businesses such as restaurants, bars and taverns. Included within commercial insurance business are the following key products:
Commercial multi-peril (“CMP”)—provides property and liability coverages in a package to the policyholder.
Other liability—provides coverage for general liability and liquor liability on an individual policy.
Automobile—provides coverage for commercial automobiles for businesses that supply to their employees company-owned vehicles.
Other—primarily includes workers’ compensation coverage in narrowly selected areas.
Personal lines—offers coverage for low-value dwelling, wind-exposed homeowners and automobile. Included within personal insurance business are the following key products:
Low-value dwelling—provides coverage for nonstandard homeowners insurance and dwelling fire insurance products (property and basic perils coverage only) located primarily in Indiana, Illinois and Texas.
Wind-exposed homeowners—provides coverage in niche homeowners markets that have special risk characteristics, including coastal exposure to wind, located primarily in Florida, Hawaii and Texas.
Automobile—provides coverage for nonstandard private passenger automobile insurance policies primarily for individuals located in Florida and Illinois. Both the Florida and Illinois books of nonstandard auto business are currently in run-off.
 In addition to the reportable segments, the Company maintains a Corporate and Other category to reconcile segment results to the consolidated totals. The Corporate and Other category includes: (i) corporate operating expenses such as salaries and related benefits of the Company’s executive management team and finance and information technology personnel, and other corporate headquarters expenses, (ii) interest expense on the Company’s senior debt obligations; (iii) depreciation and amortization on property and equipment, and (iv) all investment income activity. All investment income activity is reported

19



within net investment income and net realized investment gains on the consolidated statements of operations. The Company’s assets on the consolidated balance sheet are not allocated to the reportable segments.
The following tables present information by reportable segment (dollars in thousands):
 
 
Commercial Lines
 
Personal Lines
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Homeowners
 
 
 
 
 
 
 
 
Three Months Ended
March 31, 2016
CMP
 
Other
Liability
 
Auto
 
Other
 
Total
 
Low-value
Dwelling
 
Wind-
exposed
 
Auto
 
Total
 
Corporate
& Other
 
Total
Gross written premiums
$
12,121

 
$
3,400

 
$
2,531

 
$
1,092

 
$
19,144

 
$
2,311

 
$
3,937

 
$
1

 
$
6,249

 
$

 
$
25,393

Net written premiums
$
10,599

 
$
3,084

 
$
2,265

 
$
1,038

 
$
16,986

 
$
2,031

 
$
3,032

 
$
1

 
$
5,064

 
$

 
$
22,050

Net earned premiums
$
9,438

 
$
2,357

 
$
2,588

 
$
896

 
$
15,279

 
$
1,761

 
$
3,067

 
$
2

 
$
4,830

 
$

 
$
20,109

Other income
60

 
33

 
5

 

 
98

 
112

 
20

 

 
132

 
15

 
245

Segment revenue
9,498

 
2,390

 
2,593

 
896

 
15,377

 
1,873

 
3,087

 
2

 
4,962

 
15

 
20,354

Loss and loss adjustment expenses, net
4,402

 
1,489

 
2,498

 
246

 
8,635

 
1,140

 
2,378

 
546

 
4,064

 

 
12,699

Policy acquisition costs
2,843

 
732

 
661

 
152

 
4,388

 
582

 
1,033

 

 
1,615

 

 
6,003

Operating expenses
1,247

 
249

 
131

 
107

 
1,734

 
355

 
282

 
32

 
669

 
1,736

 
4,139

Segment expenses
8,492

 
2,470

 
3,290

 
505

 
14,757

 
2,077

 
3,693

 
578

 
6,348

 
1,736

 
22,841

Segment underwriting gain (loss)
$
1,006

 
$
(80
)
 
$
(697
)
 
$
391

 
$
620

 
$
(204
)
 
$
(606
)
 
$
(576
)
 
$
(1,386
)
 
$
(1,721
)
 
$
(2,487
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment income
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
537

 
537

Net realized investment gains (losses)
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
(8
)
 
(8
)
Interest expense
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
(157
)
 
(157
)
Income (loss) before income taxes
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
$
(1,349
)
 
$
(2,115
)


20



 
Commercial Lines
 
Personal Lines
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Homeowners
 
 
 
 
 
 
 
 
Three Months Ended
March 31, 2015
CMP
 
Other
Liability
 
Auto
 
Other
 
Total
 
Low-value
Dwelling
 
Wind-
exposed
 
Auto
 
Total
 
Corporate
& Other
 
Total
Gross written premiums
$
9,662

 
$
2,298

 
$
2,676

 
$
1,106

 
$
15,742

 
$
1,588

 
$
3,067

 
$
807

 
$
5,462

 
$

 
$
21,204

Net written premiums
$
5,818

 
$
1,426

 
$
1,815

 
$
795

 
$
9,854