10/04/2024 | Press release | Distributed by Public on 10/04/2024 14:31
As of June 30, 2024
|
||||||||||||||||||||||
Historical
|
Disposed CIS
(a)
|
Transaction
Accounting
Adjustments
|
Other
Adjust-
ments (m)
|
Pro forma
|
||||||||||||||||||
Assets
|
||||||||||||||||||||||
Investment securities:
|
||||||||||||||||||||||
Debt securities, at fair value
|
$
|
119,371
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
119,371
|
||||||||||||
Equity securities, at fair value
|
1,660
|
-
|
-
|
-
|
1,660
|
|||||||||||||||||
Short-term investments, at fair value
|
23,339
|
-
|
-
|
-
|
23,339
|
|||||||||||||||||
Total investments
|
144,370
|
-
|
-
|
-
|
144,370
|
|||||||||||||||||
Cash and cash equivalents
|
9,697
|
(8,945
|
)
|
43,401
|
(b)
|
(13,400
|
)
|
(d)
|
30,753
|
|||||||||||||
Premiums and agents' balances receivable, net
|
30,583
|
(14,464
|
)
|
-
|
-
|
16,119
|
||||||||||||||||
Receivable from Affiliate
|
1,174
|
-
|
-
|
-
|
1,174
|
|||||||||||||||||
Reinsurance recoverables on unpaid losses
|
74,358
|
-
|
-
|
-
|
74,358
|
|||||||||||||||||
Reinsurance recoverables on paid losses
|
8,614
|
-
|
-
|
-
|
8,614
|
|||||||||||||||||
Prepaid reinsurance premiums
|
13,494
|
-
|
-
|
-
|
13,494
|
|||||||||||||||||
Deferred policy acquisition costs
|
4,606
|
-
|
-
|
-
|
4,606
|
|||||||||||||||||
Other assets
|
6,038
|
(2,023
|
)
|
-
|
3,270
|
(e)
|
7,285
|
|||||||||||||||
Total assets
|
$
|
292,934
|
$
|
(25,432
|
)
|
$
|
43,401
|
$
|
(10,130
|
)
|
$
|
300,773
|
||||||||||
Liabilities and Shareholders' Equity
|
||||||||||||||||||||||
Liabilities:
|
||||||||||||||||||||||
Unpaid losses and loss adjustment expenses
|
$
|
174,786
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
174,786
|
||||||||||||
Unearned premiums
|
44,820
|
-
|
-
|
-
|
44,820
|
|||||||||||||||||
Reinsurance premiums payable
|
1,408
|
-
|
-
|
-
|
1,408
|
|||||||||||||||||
Debt
|
24,832
|
-
|
-
|
(8,447
|
)
|
(f)
|
16,385
|
|||||||||||||||
Funds held under reinsurance agreements
|
23,602
|
-
|
-
|
-
|
23,602
|
|||||||||||||||||
Premiums payable to other insureds
|
19,299
|
(19,288
|
)
|
-
|
-
|
11
|
||||||||||||||||
Accounts payable and accrued expenses
|
5,352
|
(3,415
|
)
|
250
|
(b)
|
-
|
2,187
|
|||||||||||||||
Total liabilities
|
294,099
|
(22,703
|
)
|
250
|
(8,447
|
)
|
263,199
|
|||||||||||||||
Commitments and contingencies
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||
Shareholders' equity:
|
||||||||||||||||||||||
Preferred stock, no par value
|
6,000
|
-
|
-
|
(6,000
|
)
|
(g)
|
-
|
|||||||||||||||
Common stock, no par value
|
98,170
|
-
|
-
|
-
|
98,170
|
|||||||||||||||||
Accumulated deficit
|
(90,559
|
)
|
-
|
40,422
|
(c)
|
4,317
|
(h)
|
(45,820
|
)
|
|||||||||||||
Accumulated other comprehensive (loss)
|
(14,776
|
)
|
-
|
-
|
-
|
(14,776
|
)
|
|||||||||||||||
Total shareholders' equity
|
(1,165
|
)
|
-
|
40,422
|
(1,683
|
)
|
37,574
|
|||||||||||||||
Total liabilities and shareholders' equity
|
$
|
292,934
|
$
|
(22,703
|
)
|
$
|
40,672
|
$
|
(10,130
|
)
|
$
|
300,773
|
Six Months Ended June 30, 2024
|
|||||||||||||||||
Historical
|
Disposed CIS
(i)
|
Other Adjust-
ments (m)
|
Pro forma
|
||||||||||||||
Revenue and Other Income
|
|||||||||||||||||
Gross earned premiums
|
$
|
63,613
|
$
|
-
|
$
|
-
|
$
|
63,613
|
|||||||||
Ceded earned premiums
|
(30,060
|
)
|
-
|
-
|
(30,060
|
)
|
|||||||||||
Net earned premiums
|
33,553
|
-
|
-
|
33,553
|
|||||||||||||
Net investment income
|
3,057
|
(38
|
)
|
-
|
3,019
|
||||||||||||
Net realized investment gains (losses)
|
(118
|
)
|
-
|
-
|
(118
|
)
|
|||||||||||
Change in fair value of equity securities
|
(153
|
)
|
-
|
-
|
(153
|
)
|
|||||||||||
Gain on Sale of CIS
|
-
|
-
|
-
|
-
|
|||||||||||||
Agency commission income
|
13,167
|
(13,170
|
)
|
-
|
(3
|
)
|
|||||||||||
Other income
|
420
|
(124
|
)
|
-
|
296
|
||||||||||||
Total revenue and other income
|
49,926
|
(13,332
|
)
|
-
|
36,594
|
||||||||||||
Expenses
|
|||||||||||||||||
Losses and loss adjustment expenses, net
|
25,801
|
-
|
-
|
25,801
|
|||||||||||||
Policy acquisition costs
|
17,493
|
(10,738
|
)
|
-
|
6,755
|
||||||||||||
Operating expenses
|
8,751
|
(2,441
|
)
|
-
|
6,310
|
||||||||||||
Interest expense
|
1,746
|
-
|
(696
|
)
|
(j)
|
1,050
|
|||||||||||
Total expenses
|
53,791
|
(13,179
|
)
|
(696
|
)
|
39,916
|
|||||||||||
Income (loss) from continuing operations before income taxes
|
(3,865
|
)
|
(153
|
)
|
696
|
(3,322
|
)
|
||||||||||
Equity earnings (losses) in Affiliate, net of tax
|
286
|
-
|
(286
|
)
|
(k)
|
-
|
|||||||||||
Income tax expense (benefit)
|
(18
|
)
|
-
|
-
|
(18
|
)
|
|||||||||||
Net income (loss) from continuing operations
|
$
|
(3,561
|
)
|
$
|
(153
|
)
|
$
|
410
|
$
|
(3,304
|
)
|
||||||
Preferred stock dividends
|
315
|
-
|
(315
|
)
|
(l)
|
-
|
|||||||||||
Net income (loss) from continuing operations allocable to common shareholders
|
(3,876
|
)
|
(153
|
)
|
725
|
(3,304
|
)
|
||||||||||
Earnings (loss) from continuing operations per common share, basic and diluted
|
$
|
(0.32
|
)
|
$
|
(0.01
|
)
|
$
|
0.06
|
$
|
(0.27
|
)
|
||||||
Weighted average common shares outstanding, basic and diluted
|
12,222,881
|
12,222,881
|
12,222,881
|
12,222,881
|
Year Ended December 31, 2023
|
|||||||||||||||||
Historical
|
Disposed CIS
(i)
|
Other Adjust-
ments (m)
|
Pro forma
|
||||||||||||||
Revenue and Other Income
|
|||||||||||||||||
Gross earned premiums
|
$
|
146,572
|
$
|
-
|
$
|
-
|
$
|
146,572
|
|||||||||
Ceded earned premiums
|
(62,637
|
)
|
-
|
-
|
(62,637
|
)
|
|||||||||||
Net earned premiums
|
83,935
|
-
|
-
|
83,935
|
|||||||||||||
Net investment income
|
5,526
|
(24
|
)
|
-
|
5,502
|
||||||||||||
Net realized investment gains (losses)
|
(20
|
)
|
-
|
-
|
(20
|
)
|
|||||||||||
Change in fair value of equity securities
|
608
|
-
|
-
|
608
|
|||||||||||||
Gain from sale of renewal rights
|
2,335
|
(2,335
|
)
|
-
|
-
|
||||||||||||
Gain on CIS Sale
|
-
|
-
|
-
|
-
|
|||||||||||||
Gain on sale of Affiliate
|
-
|
-
|
-
|
-
|
|||||||||||||
Agency commission income
|
5,680
|
(5,680
|
)
|
-
|
-
|
||||||||||||
Other income
|
694
|
(138
|
)
|
-
|
556
|
||||||||||||
Total revenue and other income
|
98,758
|
(8,177
|
)
|
-
|
90,581
|
||||||||||||
Expenses
|
|||||||||||||||||
Losses and loss adjustment expenses, net
|
82,413
|
(33
|
)
|
-
|
82,380
|
||||||||||||
Policy acquisition costs
|
20,892
|
(5,680
|
)
|
-
|
15,212
|
||||||||||||
Operating expenses
|
17,891
|
(483
|
)
|
-
|
17,408
|
||||||||||||
Interest expense
|
3,206
|
-
|
(989
|
)
|
(j)
|
2,217
|
|||||||||||
Total expenses
|
124,402
|
(6,196
|
)
|
(989
|
)
|
117,217
|
|||||||||||
Income (loss) from continuing operations before income taxes
|
(25,644
|
)
|
(1,981
|
)
|
989
|
(26,636
|
)
|
||||||||||
Equity earnings (losses) in Affiliate, net of tax
|
(251
|
)
|
-
|
251
|
(k)
|
-
|
|||||||||||
Income tax expense (benefit)
|
9
|
(213
|
)
|
-
|
(204
|
)
|
|||||||||||
Net income (loss) from continuing operations
|
$
|
(25,904
|
)
|
$
|
(1,768
|
)
|
$
|
1,240
|
$
|
(26,432
|
)
|
||||||
Preferred stock dividends
|
19
|
-
|
(19
|
)
|
(l)
|
-
|
|||||||||||
Net income (loss) from continuing operations allocable to common shareholders
|
(25,885
|
)
|
(1,768
|
)
|
1,221
|
(26,432
|
)
|
||||||||||
Earnings (loss) from continuing operations per common share, basic and diluted
|
$
|
(2.12
|
)
|
$
|
(0.14
|
)
|
$
|
0.10
|
$
|
(2.16
|
)
|
||||||
Weighted average common shares outstanding, basic and diluted
|
12,220,511
|
12,220,511
|
12,220,511
|
12,220,511
|
Year Ended December 31, 2022
|
|||||||||||||||||
Historical
|
Disposed CIS (i)
|
Other Adjust- ments (m)
|
Pro forma
|
||||||||||||||
Revenue and Other Income
|
|||||||||||||||||
Gross earned premiums
|
$
|
135,401
|
$
|
-
|
$
|
-
|
$
|
135,401
|
|||||||||
Ceded earned premiums
|
(38,690
|
)
|
-
|
-
|
(38,690
|
)
|
|||||||||||
Net earned premiums
|
96,711
|
-
|
-
|
96,711
|
|||||||||||||
Net investment income
|
3,043
|
(15
|
)
|
-
|
3,028
|
||||||||||||
Net realized investment gains (losses)
|
(1,505
|
)
|
-
|
-
|
(1,505
|
)
|
|||||||||||
Change in fair value of equity securities
|
403
|
-
|
-
|
403
|
|||||||||||||
Gain from VSRM Transaction
|
8,810
|
(8,810
|
)
|
-
|
-
|
||||||||||||
Loss portfolio transfer risk fee
|
(5,400
|
)
|
-
|
-
|
(5,400
|
)
|
|||||||||||
Other gains (losses)
|
59
|
-
|
-
|
59
|
|||||||||||||
Other income
|
2,768
|
(1,621
|
)
|
-
|
1,147
|
||||||||||||
Total revenue and other income
|
104,889
|
(10,446
|
)
|
-
|
94,443
|
||||||||||||
Expenses
|
|||||||||||||||||
Losses and loss adjustment expenses, net
|
81,440
|
(203
|
)
|
-
|
81,237
|
||||||||||||
Policy acquisition costs
|
22,179
|
(2,432
|
)
|
-
|
19,747
|
||||||||||||
Operating expenses
|
18,789
|
(743
|
)
|
-
|
18,046
|
||||||||||||
Interest expense
|
2,971
|
-
|
1,173
|
(j)
|
4,144
|
||||||||||||
Total expenses
|
125,379
|
(3,378
|
)
|
1,173
|
123,174
|
||||||||||||
Income (loss) from continuing operations before income taxes
|
(20,490
|
)
|
(7,068
|
)
|
(1,173
|
)
|
(28,731
|
)
|
|||||||||
Equity earnings (losses) in subsidiary, net of tax
|
368
|
(368
|
)
|
-
|
-
|
||||||||||||
Income tax expense (benefit)
|
(9,441
|
)
|
(80
|
)
|
-
|
(9,521
|
)
|
||||||||||
Net income (loss) from continuing operations
|
$
|
(10,681
|
)
|
$
|
(7,356
|
)
|
$
|
(1,173
|
)
|
$
|
(19,210
|
)
|
|||||
Net income (loss) from continuing operations allocable to common shareholders
|
(10,681
|
)
|
(7,356
|
)
|
(1,173
|
)
|
(19,210
|
)
|
|||||||||
Earnings (loss) from continuing operations per common share, basic and diluted
|
$
|
(1.00
|
)
|
$
|
(0.69
|
)
|
$
|
(0.11
|
)
|
$
|
(1.80
|
)
|
|||||
Weighted average common shares outstanding, basic and diluted
|
10,692,090
|
10,692,090
|
10,692,090
|
10,692,090
|
(a) |
Reflects the disposition of assets and liabilities of the disposed CIS business as if the CIS Sale occurred on June 30, 2024.*
|
(b) |
Reflects the aggregate purchase price at the closing of the CIS Sale of approximately $43.4 million in cash, which was comprised of a base purchase price of $45.0 million,adjusted for cash on hand, required minimum net working capital and deal expenses. An estimated $250,000 of unpaid deal expenses are reflected in Accounts payable and accrued expenses. The purchase price is subject to a post-closing true-up mechanism which is expected to be determined within approximately 90 days from the date of the closing.
|
(c) |
Reflects the estimated net gain on the CIS Sale of $40.4 million representing the net cash proceeds less the net assets of the disposed CIS business.*
|
(d) |
Reflects the cash impact of other transactions that occur in concert with the CIS sale, including: A $6.4 million reduction for the Preferred Stock redemption, a $3.0 million increase in cash from Sale of SSU, and a $10.0 million decrease in cash for paying off the $9.3 million outstanding balance on the Senior Secured Note, inclusive of a call premium of $753,000.
|
(e) |
Reflects $3.5 million increase in other receivables for the installment payment owed to Company on the SSU sale and a $230,000 reduction from the write off of the book value of SSU.
|
(f) |
Reflects the pay down of the Senior Secured Note, net of the write off of unamortized deferred issuance costs.
|
(g) |
Reflects to redemption of the Preferred Stock
|
(h) |
Reflects the $6.3 million estimated gain on sale of SSU, less the $803,000 write off of the unamortized deferred issuance costs from the Senior Secured Note, a $753,000 call premium from the Senior Secured Note and a $397,000 redemption premium on the Preferred Stock.
|
(i) |
Reflects the elimination of the results of the disposed CIS business as if the CIS Sale occurred on January 1, 2022.
|
(j) |
Reflects the assumption that the Senior Secured Notes were paid off on January 1, 2022, resulting in elimination of interest expense and amortization of debt issuance costs on those notes in 2022, 2023 and 2024. In addition, it reflects a call premium of $1.2 million and the write off of deferred debt issuance costs of $862,000, in 2022.
|
(k) |
Reflects the assumption that SSU would have been sold on January 1, 2022, resulting in the elimination of Equity Earnings from Affiliate in 2023 and 2024.
|
(l)
|
Reflects the assumption that the preferred shares would not have been issued in 2023 and not considered outstanding in 2024. In addition, the dividends of $19,000 and $315,000 would not have been declared in 2023 and 2024, respectively.
|
(m) |
The Other Adjustments column represents transactions that were not directly part of the CIS Sale but occurred in concert with the CIS Sale. This included the payoff of the Senior Secured Notes and the redemption of the Preferred Stock.
|