Significant Accounting Policies

6 Months Ended

Jun. 30, 2011

Significant Accounting Policies [Abstract]

2. Significant Accounting Policies

The Company reported Significant Accounting Policies in its Annual Report on Form 10-K for the year ended December 31, 2010. The following are new or revised disclosures or disclosures required on a quarterly basis.

Concentrations of Credit Risk. The Company is exposed to concentrations of credit risk, consisting principally of cash and cash equivalents, debt securities, premiums receivable and reinsurance recoverables.

Concentrations of credit risk with respect to cash on deposit are limited by the Company’s policy of investing excess cash with custodial institutions who invest primarily in money market accounts backed by the United States Government and United States Government agency securities with major national banks. These accounts are held by the Institutional Trust & Custody division of U.S. Bank, the Trust Department of SunTrust Bank and Bank of New York Trust Fund.

The Company maintains depository relationships with SunTrust Bank and Wachovia Bank, a division of Wells Fargo Bank N.A. It is the Company’s policy not to have a balance of more than $250 thousand for any of its affiliates at either institution on any given day to minimize exposure to a bank failure. Cash balances in excess of $250 thousand are transferred daily into custodial accounts with SunTrust Bank where cash is immediately invested into shares of Federated Treasury Obligations Money Market Funds.

Cash and cash equivalents consist of checking, repurchase, and money market accounts with carrying values as follows (in thousands):


	As of June 30, 2011
			Money Market
Institution	Cash		Funds		Total		%

U. S. Bank IT&C	$	—	$	41,455	$	41,455		11.6	%
Evergreen Investment Management Company, L.L.C.		—		3		3		0.0	%
SunTrust Bank		2,726		—		2,726		0.8	%
SunTrust Bank Institutional Asset Services		—		279,977		279,977		78.4	%
Wells Fargo Bank N.A.		920		—		920		0.3	%
Bank of New York Trust Fund (1)		—		31,029		31,029		8.7	%
All Other Banking Institutions		629		—		629		0.2	%

	$	4,275	$	352,464	$	356,739		100.0	%


	As of December 31, 2010
			Money Market
Institution	Cash		Funds		Total		%

U. S. Bank IT&C	$	—	$	41,454	$	41,454		28.1	%
Evergreen Investment Management Company, L.L.C.		—		3		3		0.0	%
SunTrust Bank		1,241		—		1,241		0.8	%
SunTrust Bank Institutional Asset Services		—		92,324		92,324		62.6	%
Wells Fargo Bank N.A.		780		—		780		0.5	%
Bank of New York Trust Fund (1)		—		11,340		11,340		7.7	%
All Other Banking Institutions		443		—		443		0.3	%

	$	2,464	$	145,121	$	147,585		100.0	%


(1)		Amounts held in trust include collateral contributed by the Company in connection with reinsurance contracts entered into between a segregated account owned and maintained by the Company and UPCIC. See Note 4 — Reinsurance for information about this arrangement.

All debt securities owned by the Company as of June 30, 2011 and December 31, 2010 are direct obligations of the United States Treasury.

Concentrations of credit risk with respect to premiums receivable are limited due to the large number of individuals comprising the Company’s customer base. However, the majority of the Company’s revenues are currently derived from products and services offered to customers in Florida, which could be adversely affected by economic downturns, an increase in competition or other environmental changes.

In order to reduce credit risk for amounts due from reinsurers, UPCIC seeks to do business with financially sound reinsurance companies and regularly evaluate the financial strength of all reinsurers used. Everest Reinsurance Company, the reinsurer to which UPCIC cedes the largest volume of premium, has the following ratings from each of the rating agencies: A+ from A.M. Best Company, A+ from Standard and Poor’s Rating Services and Aa3 from Moody’s Investors Service, Inc. UPCIC’s reinsurance portfolio contained the following authorized reinsurers that had unsecured recoverables for paid and unpaid losses, including incurred but not reported (“IBNR”) reserves, loss adjustment expenses and unearned premiums whose aggregate balance exceeded 3% of UPCIC’s statutory surplus (in thousands):


	As of June 30,		As of December 31,
Reinsurer	2011		2010
Everest Reinsurance Company	$	255,514	$	227,942
Florida Hurricane Catastrophe Fund		—		32,849

Total	$	255,514	$	260,791

Recently Adopted Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (“FASB “) issued new accounting guidance which expands disclosure requirements relating to fair value measurements. The guidance adds requirements for disclosing amounts of and reasons for significant transfers into and out of Levels 1 and 2 and requires gross rather than net disclosures about purchases, sales, issuances and settlements relating to Level 3 measurements. The guidance also provides clarification that fair value measurement disclosures are required for each class of assets and liabilities. Disclosures about the valuation techniques and inputs used to measure fair value for measurements that fall in either Level 2 or Level 3 are also required. The Company adopted the provisions of the new guidance as of March 31, 2010 except for disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements, which were adopted as of January 1, 2011. Disclosures are not required for earlier periods presented for comparative purposes. The new guidance affects disclosures only; and therefore, the adoption had no impact on the Company’s results of operations or financial position.

- Definition

The entire disclosure for all significant accounting policies of the reporting entity.

+ References+ Details