Conifer Holdings Inc
For the period ended Sep 30, 2024. Filed Nov 13, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 13, 2024
PRHI$6.97+2.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0000950170-24-096287
Item 2. — Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-13.
0000950170-24-126271
Item 2. — Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 116 previous paragraphs and 127 current paragraphs.
54 unchanged; 34 reworded; 39 added; 27 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 13 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (39)
Current report
Sale and Disposal of Agency Business
Current report
On August 30, 2024 the Company completed the sale of all of the issued and outstanding membership interests of Conifer Insurance Services ("CIS") to BSU Leaf Holdings LLC, a Delaware limited liability company, pursuant to the Interest Purchase Agreement, dated as of the Closing Date (the "CIS Agreement"), by and among the Company, Buyer and Buyer's parent (the "CIS Sale"). CIS comprised the Company’s managing general agency “MGA” business and was the legal entity used to implement the strategic shift to non risk-bearing revenue from an underwriting-based model as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. CIS also represented almost all of the Wholesale Agency segment. CIS and the related Wholesale Agency segment are now reported as discontinued operations for all periods presented. The Company sold CIS in order to generate liquidity to pay down debt and provide capital to the Insurance Company Subsidiaries.
Current report
The CIS Sale will have a significant negative impact on revenues for the Company going forward. With the previously mentioned strategic shift away from underwriting revenues, the Company was relying on the growth of commission revenue to replace the lost revenue from underwriting. Now that the Wholesale Agency segment has been sold, the Company will need to rely entirely on underwriting revenues. These revenues have reduced significantly in the past year. For example, gross written premiums were $38.5 million in the third quarter of 2023, as compared to only $15.1 million in the third quarter of 2024. Homeowners gross written premiums comprised $11.1 million of that premium volume with the remainder generated from commercial lines which is expected to reduce to a very small amount in the next year.
Current report
In connection with the CIS Sale, approximately 67 of the Company’s 77 employees were transferred to the Buyer, including Nicholas Petcoff, the Company’s then current Chief Executive Officer, as well as all of the underwriting, claims and IT teams, and a portion of the finance staff and other operating staff. As part of the completion of t the CIS Sale, Mr. Petcoff resigned from his role as Chief Executive Officer and as a director on August 30, 2024. Concurrently, Brian Roney, President of the Company, was appointed as the Company’s new Chief Executive Officer. The Company entered into a transition services agreement with the buyer to allow both parties to share resources for a certain period of time, generally less than twelve months, in order to effectuate an orderly separation of the internal systems and operations. The net cost to the Company was $225,000 which expense will be recognized over the period the services are provided.
Current report
The initial purchase price of CIS was $45.0 million, subject to purchase price adjustments. In addition, during the three years ending on the third anniversary of the Closing Date, the Company is eligible under the CIS Agreement to receive up to three contingent payments based on performance thresholds of the gross revenue earned by CIS in the applicable quarter, with the aggregate amount of contingent capped at $25.0 million. Consideration paid in cash to the Company was $46.6 million on August 30, 2024, which is comprised of the $45.0 million initial purchase price, plus $1.6 million of cash in CIS in excess of the working capital deficiency (as defined in the CIS Agreement). The contingent consideration payments, in order of achievability are $5.0 million, $10.0 million and $10.0 million. The contingent consideration included in the gain on sale was calculated based on the fair value of the three contingent payments as of September 30, 2024, in accordance with ASC 820 - Fair Value Measurement. The first contingent payment was earned as of September 30, 2024, and was reported at a fair value of $4.9 million value. The full $5.0 million contingent payment is expected to be received in December 2024. The second and third $10.0 million contingent payments are not expected to be earned until the end of 2025 or later, if at all. The Company determined the combined fair value of the second and third contingent payments to be $8.0 million as of September 30, 2024. The fair values of all contingent payments increased the gain on the sale of CIS as of September 30, 2024. As fair value estimates change over time, subsequent measurement adjustments will be reflected in income or loss in the period of change.
Current report
There was significant judgment in deriving the fair value of the final two $10.0 million contingent payments, including estimating the extent of time it will take to achieve the earnout, the credit quality of the buyer and, most importantly, the risk that the contingent payments may not be achieved at all. There is greater than an insignificant chance that we do not receive one or both of these contingent payments. There are no provisions allowing for a partial payment of the earnout.
Current report
Sale of SSU
Current report
Prior to August 30, 2024 the Company owned 50% of SSU and the other 50% of SSU was owned by Andrew Petcoff, the son of James Petcoff, the Company’s former Executive Chairman and Co-Chief Executive Officer and beneficial owner of more than 5% of the Company’s common stock. Andrew Petcoff purchased 50% of SSU from the Company on December 31, 2022, for $1,000.
Current report
On August 30, 2024, the Company completed the sale of its 50% ownership interest in SSU to an entity owned by Andrew Petcoff. Pursuant to the Membership Interest Purchase Agreement, dated as of August 30, 2024 (the “SSU Agreement”) among Sycamore Financial Group, LLC, Andrew Petcoff and VSRM Insurance Agency, Inc., the aggregate purchase price was $6.5 million, with $3.0 million paid in cash to the Company at the time of the closing and $3.5 million due throughout the balance of 2024. A gain of $6.5 million was recognized on the sale of SSU.
Current report
Other Impacts of Recent Developments
Current report
With the completion of the disposal of the agency business, we have just two agency relationships; with CIS and SSU. CIS has control over almost all of our commercial lines premium volume and it is expected that CIS will remove all of the remaining commercial lines business to another insurer as some point in the future. SSU has control of our remaining homeowners book of business and could move that business to another insurer or insurers. This is a significantly different structure from when we filed our Annual Report on Form 10-K, on April 1, 2024 with the U. S. Securities and Exchange Commission. We no longer directly “market and sell our insurance products through a network of over 4,400 independent agents that distribute our policies through approximately 950 sales offices” as stated in that filing. Those relationships are now owned by unrelated third parties (CIS and SSU). This greatly amplifies our concentration of risk relative to our marketing and distribution network.
Current report
Our staff is now only approximately ten people. We are relying heavily upon the CIS and SSU teams to handle underwriting, claims, and information technology services. Much of this is managed either through program administration agreements with CIS and SSU or a claims administration agreement with CIS. The policy management system also conveyed with CIS, which we can continue to use for our existing business, but may not be available for any new programs we may consider. CIS and SSU also handle all billing and collections. We no longer have the capacity to operate a direct bill process.
Current report
Redemption of Preferred Stock and payoff of Senior Secured Debt
Current report
On August 30, 2024 with a portion of the proceeds from the sale of CIS, the Company paid off all $9.3 million of its privately placed 12.5% Senior Secured Notes which were outstanding at August 30, 2024 (the "Senior Secured Notes"), and redeemed all of the $6.0 million of its outstanding Series A Preferred Stock. The Company incurred a redemption premium of $397,000 from the Preferred Stock, and recorded the premium as additional dividends paid on the Preferred Stock. See Note 8 ~Debt and Note 10 ~Shareholders Equityof the Notes to the Consolidated Financial Statements for further details.
Current report
The Company reported a net loss from continuing operations of $6.9 million, or $0.60 per share for the three months ended September 30, 2024, compared to a net loss from continuing operations of $4.4 million, or $0.36 per share for the same period in 2023.
Current report
The Company reported a net loss from continuing operations of $9.0 million, or $0.81 per share for the nine months ended September 30, 2024, compared to a net loss from continuing operations of $7.9 million, or $0.64 per share for the same period in 2023.
Current report
The Company reported net income allocable to common shareholders of $52.8 million, or $4.32 per share for the three months ended September 30, 2024, compared to a net loss of $2.7 million, or $0.22 per share, for the same period in 2023.
Current report
The Company reported net income allocable to common shareholders of $48.9 million, or $4.00 per share for the nine months ended September 30, 2024, compared to a net loss of $6.4 million, or $0.53 per share for the same period in 2023.
Current report
Our underwriting combined ratio was 143.1% and 120.8% for the three months ended September 30, 2024 and 2023, respectively. Our underwriting combined ratio was 120.0% and 114.1% for the nine months ended September 30, 2024 and 2023, respectively. Adverse development on prior year reserves remained during 2024, substantially due to great-than-expected case reserve emergence on existing claims, particularly in our Security Guard program which we ceased writing as of September 30, 2023.
Current report
Gross written premiums decreased $23.4 million, or 60.9%, to $15.1 million for the three months ended September 30, 2024, as compared to $38.5 million for the same period in 2023.
Current report
Personal lines gross written premiums increased $1.0 million, or 10.1%, to $11.1 million in the third quarter of 2024, as compared to $10.1 million for the same period in 2023. The increase was due to the organic growth in the low-value dwelling book of business in Texas and in the Midwest which, combined, grew by $5.6 million or 100.0%. However, this growth was offset from our exit of Oklahoma homeowners which declined by $4.6 million in the third quarter. We are no longer writing any Oklahoma homeowners business. We plan to continue to write the Midwest and Texas homeowners programs but we do not expect continued growth to be significant.
Current report
Net written premiums increased $5.5 million, or 96.4%, to $11.2 million for the three months ended September 30, 2024, as compared to $5.7 million for the same period in 2023. The increase was mostly attributable to growth in the homeowners programs, as described above. There was negative net written premiums in commercial lines for the three months ending September 30, 2023 due to the unearned premium portfolio transfer of the Security Guard program effective on September 30, 2023.
Current report
The Company’s incurred losses during the three months ended September 30, 2024 included prior-year adverse development of $7.9 million. The $7.9 million of adverse development related to emergence in the commercial liability lines of business. The adverse development was predominantly generated in the Security Guard program, which we ceased writing in September 2023, and ceded all unearned premiums on September 30, 2023. We experienced higher-than-expect open case loss emergence due to higher loss severity. To mitigate the impact of potential further adverse development on case reserves, we increased our expected loss ratio inputs for calculating IBNR in multiple accident years for this program which increased our ultimate loss estimates in accident years 2020 through 2023, by $10.9 million. The adverse development in this program was partially offset by favorable development in other programs.
Current report
Our expense ratio increased by 5.4% during the third quarter of 2024, compared to the same period in 2023.
Current report
Gross written premiums decreased $61.1 million, or 51.1%, to $58.4 million for the nine months ended September 30, 2024, as compared to $119.4 million for the same period in 2023.
Current report
The $10.2 million of adverse development for the nine months ended September 30, 2024, was related to emergence in the commercial liability lines of business. The adverse development was predominantly in the Security Guard program, which we ceased writing in September 2023, and ceded all unearned premiums on September 30, 2023. We experienced higher-than-expect open case loss emergence due to higher loss severity. To mitigate the impact of potential further adverse development on case reserves, we increased our expected loss ratio inputs for calculating IBNR in multiple accident years for this program which increased our ultimate loss estimates in accident years 2020 through 2023 by $12.2 million, for the nine months ended September 30, 2024. The adverse development in this program was partially offset by favorable development in other programs.
Current report
Our expense ratio decreased 1.1% during the first nine months of 2024, compared to the same period in 2023.
Current report
The CIS Sale generated sufficient cash for the Company to pay off all of the senior secured debt, redeem the Preferred Stock and still have sufficient funds to support the capital needs of its Insurance Company Subsidiaries.
Current report
The book value per share reflected in our financial statements, which have been prepared in accordance with generally accepted accounting principles (“GAAP”), may not represent the amount that shareholders would receive if the Company were liquidated or sold.
Current report
The book value per share is calculated based on the historical cost of our assets, less accumulated depreciation and liabilities. This value does not account for the current market conditions, potential future earnings or expenses, or the fair market value of our assets and liabilities. As a result, the book value per share may differ significantly from the actual proceeds that could be realized in a liquidation or sale.
Current report
Several factors contribute to this discrepancy, including the following:
Current report
Market Conditions: The value of our assets and liabilities can fluctuate based on market conditions, which are not reflected in the historical cost basis used in GAAP.
Current report
Intangible Assets: Intangible assets could have either greater or lesser value than their recorded amounts in a liquidation or sale.
Current report
Depreciation and Amortization: The book value includes depreciation and amortization, which reduce the carrying value of assets over time. However, these accounting adjustments may not accurately reflect the current market value of our assets.
Current report
Contingent Liabilities: Potential liabilities or obligations that are not recorded on the balance sheet under GAAP could impact the net proceeds in a liquidation or sale.
Current report
Transaction Costs: Costs associated with our future operations and with any sale or liquidation, such as legal fees, taxes and other expenses, are not considered in the book value calculation.
Current report
Financing Activities. Cash used in financing activities for the nine months ended September 30, 2024 was $16.6 million compared to $8.9 million for the same period in 2023. The $7.7 million increase in cash used for financing activities was attributable to the $9.8 million of repayment of long-term debt during the period. In addition, the Company paid $6.0 million of repayment of Preferred Stock during the period.
Current report
Subsidiaries’ state of domiciliary, rather than GAAP. The Insurance Company Subsidiaries’ aggregate statutory capital and surplus (which is a statutory measure of equity) was $47.4 million and $32.8 million at September 30, 2024 and December 31, 2023, respectively. We may contribute more capital into one or both of the Insurance Company Subsidiaries before year end in an amount of approximately $4.0 million to $9.0 million depending on the results of operations through the remainder of the year. The parent company has adequate cash on hand to contribute this capital. We are not anticipating any further capital contributions to be made to the Insurance Company Subsidiaries in the next twelve months.
Current report
Recent Accounting Pronouncements
Removed paragraphs (27)
Previous report
Consideration of Disposal of Assets or Operations
Previous report
The Company is currently actively considering the sale of assets and of business operations in order to raise capital with which to repay debt and improve its financial position. The Company has not entered into any binding agreements with respect to such asset or operations sale transactions, and there can be no assurance that we will do so or that any given amount of capital will be raised if such transactions occur. Even if a transaction is completed, it ultimately may not deliver the anticipated benefits or enhance stockholder value.
Previous report
Through our MGA, CIS operates through our wholesale agency business segment. Through CIS, we offer commercial and personal lines insurance products for our Insurance Company Subsidiaries as well as third-party insurers. The wholesale agency business segment provides our agents with more insurance product options. In recent periods, the wholesale agency business has become more prominent as substantially all of our commercial lines business is now produced by our MGA and underwritten by third-party insurers.
Previous report
An advantage of using these third-party insurers is they both have a minimum of an A- A.M. Best rating, which greatly improves our competitive edge in the marketplace.
Previous report
As we transition to more of a MGA operation, more revenues will be derived from commissions while insurance premiums and investment income will diminish over time. Cash flows from written premiums will decline quickly over the next two quarters and will be almost entirely comprised of the homeowners business by the third quarter of 2024. Concurrently, cash flows from commissions revenues will increase. As claims are settled, claim payments will be funded from the sale of investments within the Insurance Company Subsidiaries. Such claims payments will reduce cash flows provided by operating activities and will be offset by an increase in cash flows from investing activities as the investment portfolio is liquidated over time to fund the claim payments. See the Liquidity and Capital Resources section below for additional details of the impact of the Company's MGA shift.
Previous report
There will be fewer claim payments as loss reserves run off. Other operating costs and commissions to retail agencies will fluctuate relatively similarly to the premiums produced by the MGA as they did when the premiums were written by the insurance companies. However, certain insurance company specific costs will decrease as the premium volume in the insurance company subsidiaries decreases. As premium volumes decrease, there will be more reliance on MGA revenues to provide the majority of the cash flows needed to cover operating and debt service costs.
Previous report
The Company is currently actively considering the sale of assets and of business operations in order to raise capital with which to repay debt and improve its financial position. Such sale transactions could significantly impact the Company’s sources of revenue going forward.
Previous report
The Company reported a net loss allocable to common shareholders of $4.0 million, or $0.32 per share for the three months ended June 30, 2024, compared to a net loss of $4.7 million, or $0.39 per share, for the same period in 2023.
Previous report
The Company reported a net loss allocable to common shareholders of $3.9 million, or $0.32 per share for the six months ended June 30, 2024, compared to a net loss of $3.7 million, or $0.31 per share for the same period in 2023.
Previous report
Our underwriting combined ratio was 123.6% and 120.9% for the three months ended June 30, 2024 and 2023, respectively. Our underwriting combined ratio was 110.0% and 110.5% for the six months ended June 30, 2024 and 2023, respectively.
Previous report
Gross written premiums decreased $25.7 million, or 57.5%, to $19.0 million for the three months ended June 30, 2024, as compared to $44.7 million for the same period in 2023.
Previous report
Personal lines gross written premiums increased $2.3 million, or 23.0%, to $12.2 million in the second quarter of 2024, as compared to $9.9 million for the same period in 2023. The increase was due to the organic growth in the low-value dwelling book of business in Texas.
Previous report
Agency Commission Income
Previous report
Commission income is received by the Company’s insurance agency for writing policies for third-party insurance companies. Agency commission income increased by $8.6 million to $8.8 million during the second quarter of 2024, compared to $211,000 for the same period in 2023. The increase was due to the MGA shift the Company implemented in the beginning of 2024. Additionally, the increase was attributable to the Company's Security Program transaction in September of 2023. As part of the arrangement with the buyer, our MGA was appointed as the producer for this business, for approximately a two-year transition period. During this time our MGA will receive a commission from the buyer, and pay a sub-producer substantially the same commission. This results in higher consolidated Agency Commission Income for the Company. Policy acquisition costs will remain substantially the same amount for the period of this agreement. In the second quarter of 2024, the Company recorded $5.8 million of commission revenue and $5.8 million of commission expense as a result of this arrangement.
Previous report
The Company’s incurred losses during the three months ended June 30, 2024 included prior-year adverse development of $2.8 million. Of the $2.8 million of adverse development experience during the second quarter of 2024, $2.1 million of adverse development was experienced in the Company's commercial lines of business, mostly related to emergence in the commercial liability lines in the Security Program in the 2021 and 2022 accident years. The remainder was attributed to $747,000 of adverse development occurring in the Company's personal lines of business, mostly related to a few high severity claims in the 2023 accident year.
Previous report
Our expense ratio decreased by 5.8% during the second quarter of 2024, compared to the same period in 2023.
Previous report
Elimination amounts are a result of more intercompany commission revenue being generated in the Wholesale Agency, which is recognized when the premiums are written, while the Insurance Company Subsidiaries recognize the intercompany commission expense when the premiums are earned. This timing difference between two consolidating companies is adjusted through Eliminations.
Previous report
Gross written premiums decreased $37.6 million, or 46.5%, to $43.3 million for the six months ended June 30, 2024, as compared to $80.9 million for the same period in 2023.
Previous report
Agency Commission Income
Previous report
Commission income is received by the Company’s insurance agency for writing policies for third-party insurance companies. Agency commission income increased by $12.5 million to $13.2 million for the first six months of 2024, compared to $641,000 for the same period in 2023. The increase was due to the MGA shift the Company implemented in the beginning of 2024. Additionally, the increase was attributable to the Company's Security Program transaction in September of 2023. As part of the arrangement with the buyer, our MGA was appointed as the producer for this business, for approximately a two-year transition period. During this time our MGA will receive a commission from the buyer, and pay a sub-producer substantially the same commission. This results in higher consolidated Agency Commission Income for the Company. Policy acquisition costs will remain substantially the same amount for the period of this agreement. In the second quarter of 2024, the Company recorded $9.4 million of commission revenue and $9.4 million of commission expense as a result of this arrangement.
Previous report
Of the $2.3 million of adverse development experienced during the six months ended June 30, 2024, $2.1 million of adverse development was experienced in the Company's commercial lines of business, mostly related to emergence in the commercial liability lines in the Security Program in the 2021 and 2022 accident years. The remainder was attributed to $239,000 of adverse development occurring in the Company's personal lines of business, mostly related to a few high severity claims in the 2023 accident year.
Previous report
Our expense ratio decreased 4.2% during the first six months of 2024, compared to the same period in 2023.
Previous report
Elimination amounts are a result of more intercompany commission revenue being generated in the Wholesale Agency, which is recognized when the premiums are written, while the Insurance Company Subsidiaries recognize the intercompany commission expense when the premiums are earned. This timing difference between two consolidating companies is adjusted through Eliminations.
Previous report
For the next twelve months, based on the capital structure as of June 30, 2024, the Company will be required to make $1.0 million of principal payments on the senior secured notes, $630,000 of preferred dividend payments and approximately $2.9 million of interest on all of the Company's debt instruments, all of which are paid quarterly.
Previous report
With the producer agreements currently executed and anticipated proceeds from the potential sale of assets and business operations, the Company expects to be able to generate the needed revenues to meet our obligations as they become due over the next twelve months. Management believes the actions that were executed to implement the planned strategic shift coupled with additional available sources of available liquidity and planned sales of assets and business operations, will be sufficient to enable the Company to meet its obligations for the foreseeable future. In addition, the Company is currently actively considering the sale of assets and of business operations in order to raise capital with which to repay debt and improve its financial position. Such sale transactions could generate funds with which to meet current obligations and could also significantly impact the Company’s sources of revenue going forward.
Previous report
Financing Activities. Cash used in financing activities for the six months ended June 30, 2024 was $834,000 compared to $3,000 for the same period in 2023. The $831,000 increase in cash used for financing activities was attributable to $334,000 of preferred stock dividends paid during the first six months of 2024. The remaining increase was due to the Company paying $500,000 of principal payments towards the Company's senior secured notes during the first six months of 2024. The Company did not have the Senior Secured Notes or preferred stock dividends during the first six months of 2023.
Previous report
Recently Issued Accounting Pronouncements
Reworded paragraphs (34)
Previous wording
The forward-looking statements contained in this report are based on management’s good-faith belief and reasonable judgment based on current information. The forward-looking statements are qualified by important factors, risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from those in the forward-looking statements, including those described in our Form 10-K (“Item 1A Risk Factors”) filed with the SEC on April 1, 2024 and subsequent reports filed with or furnished to the SEC. Any forward-looking statement made by us in this report speaks only as of the date hereof or as of the date specified herein. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable laws or regulations.
Current wording
The forward-looking statements contained in this report are based on management’s good-faith belief and reasonable judgment based on current information. The forward-looking statements are qualified by important factors, risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from those in the forward-looking statements, including those described in our Form 10-K (“Item 1A Risk Factors”) filed with the SEC on April 1, 2024 and included herein, and subsequent reports filed with or furnished to the SEC. Any forward-looking statement made by us in this report speaks only as of the date hereof or as of the date specified herein. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable laws or regulations.
Previous wording
In the first and second quarter of 2024, the Company began a strategic shift has reduced premiums revenues from underwriting operations and increased commission revenues from policy production within the MGA. The Company began utilizing two third-party insurers for the underwriting capacity in the first two quarters of 2024. By the third quarter of 2024, we expect that almost all commercial lines business previously underwritten by the Company’s Insurance Company Subsidiaries will be written by third-party insurers. The Company expects to continue to directly write the Midwest and Texas homeowners business.
Current wording
In January 2024, the Company began a strategic shift to reduce premium revenues from underwriting operations and increase commission revenues from policy production within the MGA. The Company began utilizing two third-party insurers for the underwriting capacity and by September 30, 2024, almost all commercial lines business previously underwritten by the Company’s Insurance Company Subsidiaries was being written by third-party insurers. We expect minimal premiums from commercial lines in the near term with no current plans to re-establish commercial lines premium volumes in the future. The Company expects to continue to directly write the Midwest and Texas homeowners business going forward, however, the Company is subject to significant concentration of risk because all of the homeowners business is produced by one agency, SSU, and we no longer have any ownership interest or control over where SSU places its business.
Previous wording
We are an insurance holding company that markets and services our product offerings through specialty commercial and specialty personal insurance business lines. Currently, we are authorized to write insurance as an excess and surplus lines carrier in 44 states, including the District of Columbia. We are licensed to write insurance as an admitted carrier in 42 states, including the District of Columbia, and we offer our insurance products in almost all 50 states.
Current wording
We are an insurance holding company that markets and services our product offerings through specialty commercial and specialty personal insurance business lines. Currently, we are authorized to write insurance as an excess and surplus lines carrier in 44 states, including the District of Columbia. We are licensed to write insurance as an admitted carrier in 42 states, including the District of Columbia. As of September 30, 2024, we offer insurance products primarily in Texas, Illinois and Indiana, for homeowners lines and Nevada and Michigan for other lines.
Previous wording
Our revenues are primarily derived from premiums earned from our insurance operations. We also generate other revenues through investment income and other income which mainly consists of: installment fees and policy issuance fees generally related to the policies we write. Our revenues also include commission income from the Company's MGA, CIS.
Current wording
Our revenues are primarily derived from premiums earned from our insurance operations. We also generate other revenues through investment income.
Previous wording
Our expenses consist primarily of losses and loss adjustment expenses, agents’ commissions, and other underwriting and administrative expenses. We organize our operations in three insurance businesses: commercial insurance lines, personal lines, and agency business. Together, the commercial and personal lines refer to “underwriting” operations that take insurance risk, and the agency business refers to non-risk insurance business.
Current wording
Our expenses consist primarily of losses and loss adjustment expenses, agents’ commissions, and other underwriting and administrative expenses. Historically, we have organized our operations in three insurance businesses: commercial insurance lines, personal lines, and agency business. Together, the commercial and personal lines refer to “underwriting” operations that take insurance risk, and the agency business refers to non-risk insurance business.
Previous wording
Through our commercial insurance lines, we offer coverage for both commercial property and commercial liability. We also offer coverage for commercial automobiles and workers’ compensation. Our insurance policies are sold to targeted small and mid-sized businesses on a single or multiple-coverage basis.
Current wording
Through our commercial insurance lines, we historically offered coverage for both commercial property and commercial liability. We also offered coverage for commercial automobiles and workers’ compensation. Our insurance policies are sold to targeted small and mid-sized businesses on a single or multiple-coverage basis. We expect minimal commercial lines business going forward.
Previous wording
In certain circumstances, we are required to make estimates and assumptions that affect amounts reported in our consolidated financial statements and related footnotes. We evaluate these estimates and assumptions periodically on an on-going basis based on a variety of factors. There can be no assurance, however, that actual results will not be materially different than our estimates and assumptions, and that reported results of operations will not be affected by accounting adjustments needed to reflect changes in these estimates and assumptions. During the six months ended June 30, 2024, there were no material changes to our critical accounting policies and estimating methodologies, which are disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K filed with the SEC on April 1, 2024.
Current wording
In certain circumstances, we are required to make estimates and assumptions that affect amounts reported in our consolidated financial statements and related footnotes. We evaluate these estimates and assumptions periodically on an on-going basis based on a variety of factors. There can be no assurance, however, that actual results will not be materially different than our estimates and assumptions, and that reported results of operations will not be affected by accounting adjustments needed to reflect changes in these estimates and assumptions. During the nine months ended September 30, 2024, there were no material changes to our critical accounting policies and estimating methodologies, which are disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K filed with the SEC on April 1, 2024.
Previous wording
The Company reported $19.0 million of gross written premiums in the second quarter of 2024, representing a 57.5% decrease as compared to the same period in 2023. Our commercial lines gross written premiums decreased by $28.0 million, or 80.5%, to $6.8 million in the second quarter of 2024, compared to $34.8 million for the same period in 2023. Personal lines gross written premiums increased by $2.3 million, or 23.0%, to $12.2 million in the second quarter of 2024, compared to $9.9 million for the same period in 2023.
Current wording
The Company reported $15.1 million of gross written premiums in the third quarter of 2024, representing a 60.9% decrease as compared to the same period in 2023. Our commercial lines gross written premiums decreased by $24.5 million, or 85.9%, to $4.0 million in the third quarter of 2024, compared to $28.5 million for the same period in 2023. Personal lines gross written premiums increased by $1.0 million, or 10.1%, to $11.1 million in the third quarter of 2024, compared to $10.1 million for the same period in 2023. However, there was a significant shift in business out of Oklahoma and into Texas.
Previous wording
Adjusted operating income per share is a non-GAAP measure that represents net income allocable to common shareholders excluding net realized investment gains or losses and change in fair value of equity securities. Adjusted operating loss was $3.6 million, or $0.30 per share for the three months ended June 30, 2024, compared to $4.7 million or $0.39 for the same period in 2023.
Current wording
Adjusted operating income per share is a non-GAAP measure that represents net income allocable to common shareholders excluding net realized investment gains or losses, change in fair value of equity securities and net income from discontinued operations. Adjusted operating loss was $7.4 million, or $0.60 per share for the three months ended September 30, 2024, compared to $4.3 million or $0.35 for the same period in 2023.
Previous wording
Adjusted operating loss was $3.6 million, or $0.30 per share, for the six months ended June 30, 2024, compared to $4.4 million or $0.36 per share for the same period in 2023.
Current wording
Adjusted operating loss was $9.6 million, or $0.78 per share, for the nine months ended September 30, 2024, compared to $8.5 million or $0.69 per share for the same period in 2023.
Previous wording
Commercial lines gross written premiums decreased $28.0 million, or 80.5%, to $6.8 million in the second quarter of 2024, as compared to $34.8 million for the second quarter of 2023. There was an $18.6 million decrease in premiums due to the sale of the Security Program in September 2023, as well as continued reductions in certain hospitality lines as we exited less profitable states. The remaining decrease was primarily due to the MGA shifting business from our Insurance Company Subsidiaries to the third-party insurers during the quarter.
Current wording
Commercial lines gross written premiums decreased $24.5 million, or 85.9%, to $4.0 million in the third quarter of 2024, as compared to $28.5 million for the third quarter of 2023. The decrease was primarily due to our MGA shifting business from our Insurance Company Subsidiaries to the third-party insurers during the quarter. Substantially all commercial lines business has moved or is in the process of completing a move to other insurance carriers. We do not expect to continue writing any significant amount of commercial lines in the near term.
Previous wording
Net losses and LAE decreased by $4.0 million, or 20.9%, to $15.3 million during the second quarter of 2024, compared to $19.3 million for the same period in 2023. The $6.3 million decrease in current accident year losses during the first quarter of 2024, compared to the same period in 2023, was mostly due to a significant reduction in net earned premiums described above.
Current wording
Net losses and LAE decreased by $5.8 million, or 27.5%, to $15.2 million during the third quarter of 2024, compared to $20.9 million for the same period in 2023. The decrease was mostly attributable to a $10.0 million decrease in current accident year losses due to a significant reduction in net earned premiums described above. The decrease in current accident year losses was partially offset by a $4.2 million increase in adverse development on prior-year loss reserves.
Previous wording
Our expense ratio is a measure of the efficiency and performance of the commercial and personal lines of business (our risk-bearing underwriting operations). It is calculated by dividing the sum of policy acquisition costs and other underwriting expenses by the sum of net earned premiums and other income of the underwriting business. Costs that cannot be readily identifiable as a direct cost of a segment or product line remain in Corporate for segment reporting purposes. The expense ratio excludes wholesale agency and Corporate expenses.
Current wording
Our expense ratio is a measure of the efficiency and performance of the commercial and personal lines of business (our risk-bearing underwriting operations). It is calculated by dividing the sum of policy acquisition costs and other underwriting expenses by the sum of net earned premiums and other income of the underwriting business. Costs that cannot be readily identifiable as a direct cost of a segment or product line remain in Corporate for segment reporting purposes. The expense ratio excludes Corporate expenses.
Previous wording
Policy acquisition costs are costs we incur to issue policies, which include commissions, premium taxes, underwriting reports and underwriter compensation costs. The Company offsets direct commissions with ceding commissions from reinsurers. The percentage of policy acquisition costs to net earned premiums decreased by 3.7% in the Company's commercial lines mainly due to the added ceding commissions received from the unearned premium portfolio transaction that occurred on September 30, 2023, as part of the Security Program transaction. The personal lines acquisition costs increased by 2.5% percentage points due to increased commission rates to agents on the homeowners books of business.
Current wording
Policy acquisition costs are costs we incur to issue policies, which include commissions, premium taxes, underwriting reports and underwriter compensation costs. The Company offsets direct commissions with ceding commissions from reinsurers. The percentage of policy acquisition costs to net earned premiums decreased by 0.3% in the Company's commercial lines mainly due to the added ceding commissions received from the unearned premium portfolio transaction that occurred on September 30, 2023, as part of the Security Program transaction. The personal lines acquisition costs increased by 1.4% percentage points due to increased commission rates to agents on the homeowners books of business. Following the sale of SSU, the Company will be paying approximately 5.5% more in commissions on the homeowners business, thus increasing acquisition costs. However, the Company’s staff is significantly smaller and going forward, and the Company will be relying on SSU’s access to policy management systems which are no longer internally operated. Thus, operating costs are expected to go down substantially.
Previous wording
Operating expenses consist primarily of employee compensation, information technology and occupancy costs, such as rent and utilities. Operating expenses as a percent of net earned premiums and other underwriting income decreased by 7.1% during the second quarter of 2024 to 11.8%, compared to 18.9% for the same period in 2023. The decrease was attributed to the Company shifting its business through its MGA. As a result, operating expenses have increased in the Company's MGA and have decreased in its Insurance Company Subsidiaries.
Current wording
Operating expenses consist primarily of employee compensation, information technology and occupancy costs, such as rent and utilities. Operating expenses as a percent of net earned premiums and other underwriting income increased by 1.4% during the third quarter of 2024 to 17.1%, compared to 15.7% for the same period in 2023. The increase in the ratio was mostly due to significantly lower net earned premiums. Accordingly, even though operating expenses decreased significantly they did not completely offset the reduction in net earned premiums. We believe that while the Company absorbs the significant changes in operations resulting from the disposal of the agency business, this ratio will be somewhat volatile.
Previous wording
Results of Operations For The Six Months Ended June 30, 2024 and 2023
Current wording
Results of Operations For The Nine Months Ended September 30, 2024 and 2023
Previous wording
Our premiums are presented below for the six months ended June 30, 2024 and 2023 (dollars in thousands):
Current wording
Our premiums are presented below for the nine months ended September 30, 2024 and 2023 (dollars in thousands):
Previous wording
Commercial lines gross written premiums decreased $44.2 million, or 69.3%, to $19.5 million for the six months ended June 30, 2024, as compared to $63.7 million in the same period of 2023. The decrease was attributable to the Company's strategic shift of reducing premium revenue and increasing commission revenue from policy production within the Company's MGA. The Company is now using two third-party insurers to underwrite almost all commercial lines business.
Current wording
Commercial lines gross written premiums decreased $68.7 million, or 74.5%, to $23.6 million for the nine months ended September 30, 2024, as compared to $92.2 million in the same period of 2023. The decrease was attributable to the Company's strategic shift of reducing premium revenue described above. The Company is now using two third-party insurers to underwrite almost all commercial lines business.
Previous wording
Personal lines gross written premiums increased $6.6 million, or 38.4%, to $23.7 million for the six months ended June 30, 2024, as compared to $17.2 million for the same period in 2023. The increase was due to the organic growth in the low-value dwelling book of business in Texas.
Current wording
Personal lines gross written premiums increased $7.6 million, or 27.9%, to $34.8 million for the nine months ended September 30, 2024, as compared to $27.2 million for the same period in 2023. The increase was due to the organic growth in the low-value dwelling book of business in Texas and the Midwest. The increase in Texas and Midwest homeowners business was partially offset by the exiting of the Oklahoma homeowners business.
Previous wording
Net written premiums decreased $19.0 million, or 39.9%, to $28.6 million for the six months ended June 30, 2024, as compared to $47.7 million for the same period in 2023. Net written premiums declined during the first six months of 2024 as a result of the Company's reduction in gross written premiums due to its MGA shift, and also due to the sale of the Security Program in September 2023.
Current wording
Net written premiums decreased $13.5 million, or 25.4%, to $39.8 million for the nine months ended September 30, 2024, as compared to $53.4 million for the same period in 2023. Net written premiums declined during the first nine months of 2024 as a result of the Company's reduction in gross written premiums due to its MGA shift, and also due to the sale of the Security Program in September 2023.
Previous wording
The tables below detail our losses and loss adjustment expenses and loss ratios in our underwriting business for the six months ended June 30, 2024 and 2023 (dollars in thousands):
Current wording
The tables below detail our losses and loss adjustment expenses and loss ratios in our underwriting business for the nine months ended September 30, 2024 and 2023 (dollars in thousands):
Previous wording
Net losses and LAE decreased by $7.2 million, or 21.9%, to $25.8 million for the first six months of 2024, compared to $33.0 million for the same period in 2023. The $10.3 million decrease in current accident year losses during the first six months of 2024, compared to the same period in 2023, was mostly due to a significant reduction in net earned premiums described above.
Current wording
Net losses and LAE decreased by $13.0 million, or 24.1%, to $41.0 million for the first nine months of 2024, compared to $54.0 million for the same period in 2023. The decrease was mostly attributable to a $20.3 million decrease in current accident year losses due to a significant reduction in net earned premiums described above. The decrease in current accident year losses was partially offset by a $7.3 million increase in adverse development on prior-year loss reserves.
Previous wording
Our expense ratio is a measure of the efficiency and performance of the commercial and personal lines of business (our risk-bearing underwriting operations). It is calculated by dividing the sum of policy acquisition costs and other underwriting expenses by the sum of net earned premiums and other income of the underwriting business. Costs that cannot be readily identifiable as a direct cost of a segment or product line remain in Corporate for segment reporting purposes. The expense ratio excludes wholesale agency and Corporate expenses.
Current wording
Our expense ratio is a measure of the efficiency and performance of the commercial and personal lines of business (our risk-bearing underwriting operations). It is calculated by dividing the sum of policy acquisition costs and other underwriting expenses by the sum of net earned premiums and other income of the underwriting business. Costs that cannot be readily identifiable as a direct cost of a segment or product line remain in Corporate for segment reporting purposes. The expense ratio excludes Corporate expenses.
Previous wording
Operating expenses consist primarily of employee compensation, information technology and occupancy costs, such as rent and utilities. Operating expenses as a percent of net earned premiums and other underwriting income decreased by 3.8% for the six months ended June 30, 2024 to 13.9%, compared to 17.7% for the same period in 2023. The decrease was attributed to the Company shifting its business through its MGA. As a result, operating expenses have increased in the Company's MGA and have decreased in its Insurance Company Subsidiaries.
Current wording
Operating expenses consist primarily of employee compensation, information technology and occupancy costs, such as rent and utilities. Operating expenses as a percent of net earned premiums and other underwriting income decreased by 2.1% for the nine months ended September 30, 2024 to 14.9%, compared to 17.0% for the same period in 2023. The decrease was attributed to the Company shifting its business through its MGA. As a result, operating expenses have increased in the Company's MGA and have decreased in its Insurance Company Subsidiaries.
Previous wording
We measure the performance of our consolidated results, in part, based on our underwriting gain or loss. The following table provides the underwriting gain or loss for the six months ended June 30, 2024 and 2023 (dollars in thousands):
Current wording
We measure the performance of our consolidated results, in part, based on our underwriting gain or loss. The following table provides the underwriting gain or loss for the nine months ended September 30, 2024 and 2023 (dollars in thousands):
Previous wording
At June 30, 2024, the Company had $33.0 million in cash, cash equivalents and short-term investments. Our principal sources of funds are insurance premiums, investment income, commission income from the Company's MGA, proceeds from maturities and sales of invested assets and installment fees. These funds are primarily used to pay claims, commissions, employee compensation, taxes and other operating expenses, and service debt.
Current wording
At September 30, 2024, the Company had $53.6 million in cash, cash equivalents and short-term investments. Our principal sources of funds are insurance premiums, investment income and proceeds from maturities and sales of invested assets. These funds are primarily used to pay claims, commissions, employee compensation, taxes and other operating expenses, and service debt.
Previous wording
We conduct our business operations primarily through our Insurance Company Subsidiaries and our MGA. Our ability to service debt, and pay administrative expenses is primarily reliant upon our intercompany service fees paid by the Insurance Company Subsidiaries and MGA to the holding company for management, administrative, and information technology services provided to the Insurance Company Subsidiaries and MGA by the Parent Company. Secondarily, the Parent Company may receive dividends from the Insurance Company Subsidiaries; however, this is not the primary means in which the holding company supports its funding as state insurance laws restrict the ability of our Insurance Company Subsidiaries to declare dividends to the Parent Company. Generally, the limitations are based on the greater of statutory net income for the preceding year or 10% of statutory surplus at the end of the preceding year. There were no dividends paid from our Insurance Company Subsidiaries for the six months ended June 30, 2024 and 2023. We do not anticipate any dividends being paid to us from our insurance subsidiaries in the near term. The MGA may pay dividends to the Parent without regulatory restrictions.
Current wording
We conduct our business operations primarily through our Insurance Company Subsidiaries. Our ability to service debt, and pay administrative expenses is primarily reliant upon our intercompany service fees paid by the Insurance Company Subsidiaries to the holding company for management, administrative, and information technology services provided to the Insurance Company Subsidiaries by the Parent Company. Secondarily, the Parent Company may receive dividends from the Insurance Company Subsidiaries; however, this is not the primary means in which the holding company supports its funding as state insurance laws restrict the ability of our Insurance Company Subsidiaries to declare dividends to the Parent Company. Generally, the limitations are based on the greater of statutory net income for the preceding year or 10% of statutory surplus at the end of the preceding year. There were no dividends paid from our Insurance Company Subsidiaries for the nine months ended September 30, 2024 and 2023. We do not anticipate any dividends being paid to us from our insurance subsidiaries in the near term.
Previous wording
Due to significant losses in 2023, much of which was attributable to strengthening reserves and severe storm activity affecting the Oklahoma homeowners business, both Insurance Company Subsidiaries lack sufficient capital to continue to underwrite the volume of business they have historically written. Also, both CIC and WPIC fell below critical statutory capital and surplus minimum requirements including the Risk Based Capital (“RBC”) ratio. CIC’s and WPIC’s RBC ratios at December 31, 2023, were 169% and 142%, respectively. The Insurance Company Subsidiaries submitted action plans with the state of domicile insurance regulator on April 1, 2024, to remediate certain statutory capital and surplus regulatory deficiencies. As part of the plan, WPIC will no longer write any business after June 30, 2024, and CIC will only write a small amount of commercial business as well as the homeowners business after June 30, 2024. It is likely that the Company will need to contribute $3.0 million to $5.0 million of more capital into WPIC before the end of the year in order to maintain its licenses. These actions were part of a strategic shift implemented by management to utilize third-party insurers and to mostly rely on commission revenues generated by our MGA to fund operations and service debt.
Current wording
Due to significant losses in 2023, much of which was attributable to strengthening reserves and severe storm activity affecting the Oklahoma homeowners business, both Insurance Company Subsidiaries lack sufficient capital to continue to underwrite the volume of business they have historically written. Also, both CIC and WPIC fell below critical statutory capital and surplus minimum requirements including the Risk Based Capital (“RBC”) ratio. CIC’s and WPIC’s RBC ratios at December 31, 2023, were 169% and 142%, respectively. The Insurance Company Subsidiaries submitted action plans with the state of domicile insurance regulator on April 1, 2024, to remediate certain statutory capital and surplus regulatory deficiencies. As part of the plan, WPIC no longer wrote any business after June 30, 2024, and CIC will only write a small amount of commercial business as well as the homeowners business after June 30, 2024. These actions were part of a strategic shift implemented by management to utilize third-party insurers and to mostly rely on commission revenues generated by our MGA to fund operations and service debt. With the disposal of the agency business and WPIC no longer writing business, revenue is expected to continue to decrease in the near term. A substantial amount of expenses, however, have also gone with the CIS Sale, which should result in a much smaller, but sustainable operation.
Previous wording
We believe that, through our existing cash and investment securities balances, operating cash flows, potential asset or operations sales or capital raises, we will be able to meet our capital and liquidity needs and the needs of our subsidiaries over the next twelve months.
Current wording
We believe that, through our existing cash and investment securities balances and operating cash flows, we will be able to meet our capital and liquidity needs and the needs of our subsidiaries over the next twelve months.
Previous wording
Operating Activities. Cash used in operating activities for the six months ended June 30, 2024 was $2.0 million compared to cash used in operating activities of $1.4 million for the same period in 2023. The $505,000 increase in cash from used in operating activities was primarily due to a $15.6 million decrease in net premiums collected as the Company continued to reduce premiums written. This was offset by $12.5 million increase in other income received substantially from the Company's agency commission revenue. There was a net decrease in cash paid on losses and acquisition costs of $1.6 million and a net decrease of $1.0 million on cash paid for administrative expenses.
Current wording
Operating Activities. Cash used in operating activities for the nine months ended September 30, 2024 was $12.7 million compared to cash used in operating activities of $729,000 for the same period in 2023. The $12.0 million increase in cash used in operating activities was primarily due to a $21.8 million increase in paid losses, partially offset by a $8.4 million decrease in paid acquisition costs and a $2.0 million in premiums collected.
Previous wording
Investing Activities. Cash provided by investing activities for the six months ended June 30, 2024 was $1.4 million, compared to cash used in investing activities of $7.8 million for the same period in 2023. The $9.2 million increase in cash provided by investing activities was driven by a $22.6 million decrease in cash used for the purchases of investments during the period. This amount was offset by a $13.3 million decrease in proceeds from sales of investments during the period.
Current wording
Investing Activities. Cash provided by investing activities for the nine months ended September 30, 2024 was $50.5 million, compared to cash used in investing activities of $4.0 million for the same period in 2023. The $54.6 million increase in cash provided by investing activities was driven by an increase of $46.0 million in cash received from the sale of CIS and SSU during the period.
Previous wording
Our Insurance Company Subsidiaries are required to file quarterly and annual financial reports with state insurance regulators. These financial reports are prepared using statutory accounting practices promulgated by the Insurance Company Subsidiaries’ state of domiciliary, rather than GAAP. The Insurance Company Subsidiaries’ aggregate statutory capital and surplus (which is a statutory measure of equity) was $32.6 million and $32.8 million at June 30, 2024 and December 31, 2023, respectively.
Current wording
Our Insurance Company Subsidiaries are required to file quarterly and annual financial reports with state insurance regulators. These financial reports are prepared using statutory accounting practices promulgated by the Insurance Company
Previous wording
Adjusted operating income and adjusted operating income per share are non-GAAP measures that represent net income allocable to common shareholders excluding net realized investment gains or losses, changes in fair value of equity securities and other gains and losses. The most directly comparable financial GAAP measures to adjusted operating income and adjusted operating income per share are net income and net income per share, respectively. Adjusted operating income and adjusted operating income per share are intended as supplemental information and are not meant to replace net income or net income per share. Adjusted operating income and adjusted operating income per share should be read in conjunction with the GAAP financial results. Our definition of adjusted operating income may be different from that used by other companies. The following is a reconciliation of net income (loss) to adjusted operating income (loss) (dollars in thousands), as well as net income (loss) per share to adjusted operating income (loss) per share:
Current wording
Adjusted operating income and adjusted operating income per share are non-GAAP measures that represent net income allocable to common shareholders excluding net realized investment gains or losses, changes in fair value of equity securities and net income from discontinued operations. The most directly comparable financial GAAP measures to adjusted operating income and adjusted operating income per share are net income allocable to common shareholders and net income allocable to common shareholders per share, respectively. Adjusted operating income and adjusted operating income per share are intended as supplemental information and are not meant to replace net income allocable to common shareholders or net income allocable to common shareholders per share. Adjusted operating income and adjusted operating income per share should be read in conjunction with the GAAP financial results. Our definition of adjusted operating income may be different from that used by other companies. The following is a reconciliation of net income (loss) allocable to common shareholders to adjusted operating income (loss) (dollars in thousands), as well as net income (loss) allocable to common shareholders per share to adjusted operating income (loss) per share:
Previous wording
Refer to Note 1 ~ Summary of Significant Accounting Policies – Recently Issued Accounting Guidance of the Notes to the Consolidated Financial Statements for detailed information regarding recently issued accounting pronouncements.
Current wording
Refer to Note 1 ~Summary of Significant Accounting Policies –Accounting Guidance Not Yet Adopted of the Notes to the Consolidated Financial Statements for detailed information regarding recently issued accounting pronouncements.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Net written premiums decreased $16.1 million, or 54.8%, to $13.2 million for the three months ended June 30, 2024, as compared to $29.3 million for the same period in 2023. Net written premiums declined during the second quarter of 2024 as a result of the Company's reduction in gross written premiums due to its MGA shift, and also due to the sale of the Security Program in September 2023.