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Significant Accounting Policies | 6 Months Ended
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Jun. 30, 2012
Significant Accounting Policies [Abstract] |
Significant Accounting Policies |
2. | Significant Accounting Policies
The Company reported Significant Accounting Policies in its Annual Report on Form 10-K for the year ended December 31, 2011. 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, restricted cash and cash equivalents, debt securities, premiums receivable, prepaid reinsurance premiums, reinsurance 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 that invest primarily in money market accounts consisting of short-term U.S. Treasury securities. These accounts are held primarily by the Institutional Trust & Custody division of U.S. Bank and SunTrust Bank Escrow Services. The Company maintains depository relationships with SunTrust Bank and Wells Fargo Bank N.A., and other banking institutions. It is the Company’s policy not to have a balance of more than $250 thousand for any of its affiliates at any 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 Escrow Services where cash is immediately invested into shares of money market funds. Restricted cash and cash equivalents are maintained in money market accounts consisting of U.S. Treasury and government agency securities. The following table presents the amount of cash and cash equivalents and restricted cash and cash equivalents as of the periods presented (in thousands):
|  | As of June 30, 2012 |
|  | Cash and cash equivalents |  |  | Restricted cash and cash equivalents |
Institution |  | Cash |  |  | Money Market Funds |  |  | Total |  |  | % by institution |  |  | Funds held in Trust (1) |  |  | State Deposits (2) |  |  | Total |  |  | % by institution |
U. S. Bank IT&C |  | $ | — |  |  | $ | 40,475 |  |  | $ | 40,475 |  |  |  | 11.4 | % |  | $ | — |  |  | $ | 800 |  |  | $ | 800 |  |  |  | 1.1 | %
SunTrust Bank |  |  | 1,106 |  |  |  | — |  |  |  | 1,106 |  |  |  | 0.3 | % |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
SunTrust Bank Escrow Services |  |  | — |  |  |  | 311,029 |  |  |  | 311,029 |  |  |  | 87.3 | % |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Wells Fargo Bank N.A. |  |  | 1,520 |  |  |  | 3 |  |  |  | 1,523 |  |  |  | 0.4 | % |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Bank of New York Mellon Trust Co. (1) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 19,979 |  |  |  | — |  |  |  | 19,979 |  |  |  | 26.9 | %
Florida Department of Financial Services |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 53,495 |  |  |  | 53,495 |  |  |  | 72.0 | %
All Other Banking Institutions |  |  | 2,033 |  |  |  | 159 |  |  |  | 2,192 |  |  |  | 0.6 | % |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  | $ | 4,659 |  |  | $ | 351,666 |  |  | $ | 356,325 |  |  |  | 100.0 | % |  | $ | 19,979 |  |  | $ | 54,295 |  |  | $ | 74,274 |  |  |  | 100.0 | %
|  | As of December 31, 2011 |
|  | Cash and cash equivalents |  |  | Restricted cash and cash equivalents |
Institution |  | Cash |  |  | Money Market Funds |  |  | Total |  |  | % by institution |  |  | Funds held in Trust (1) |  |  | State Deposits (2) |  |  | Total |  |  | % by institution |
U. S. Bank IT&C |  | $ | — |  |  | $ | 40,474 |  |  | $ | 40,474 |  |  |  | 17.6 | % |  | $ | — |  |  | $ | 800 |  |  | $ | 800 |  |  |  | 1.0 | %
SunTrust Bank |  |  | 1,629 |  |  |  | — |  |  |  | 1,629 |  |  |  | 0.7 | % |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
SunTrust Bank Escrow Services |  |  | — |  |  |  | 182,701 |  |  |  | 182,701 |  |  |  | 79.5 | % |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Wells Fargo Bank N.A. |  |  | 1,244 |  |  |  | 14 |  |  |  | 1,258 |  |  |  | 0.5 | % |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Bank of New York Mellon Trust Co. (1) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 30,220 |  |  |  | — |  |  |  | 30,220 |  |  |  | 38.6 | %
Florida Department of Financial Services |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 47,292 |  |  |  | 47,292 |  |  |  | 60.4 | %
All Other Banking Institutions |  |  | 1,739 |  |  |  | 1,884 |  |  |  | 3,623 |  |  |  | 1.6 | % |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  | $ | 4,612 |  |  | $ | 225,073 |  |  | $ | 229,685 |  |  |  | 100.0 | % |  | $ | 30,220 |  |  | $ | 48,092 |  |  | $ | 78,312 |  |  |  | 100.0 | %
(1) | Amounts held in trust include collateral contributed by UIH in connection with reinsurance contracts entered into between UPCIC and a segregated account owned and maintained by UIH.
(2) | State deposits represent amounts held with regulatory agencies in the various states in which our Insurance Entities do business. Applicable laws and regulations govern not only the amount, but also the type of securities that are eligible for deposit. State deposits also include amounts that UPCIC has voluntarily placed on deposit in connection with the reinsurance contract between UPCIC and UIH.
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 weather-related events. In order to reduce credit risk for amounts due from reinsurers, the Insurance Entities seek 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 the Insurance Entities ceded the most risk through May 31, 2012, 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. Additionally, Odyssey Reinsurance Company, the reinsurer to which the Insurance Entities cede the most risk effective June 1, 2012, 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; A3 from Moody’s Investors Service, Inc. The following table presents the unsecured net amounts due from the Company’s reinsurers whose aggregate balance exceeds 3% of the Company’s stockholders’ equity (in thousands):
|  | As of |
|  | June 30, |  |  | December 31, |
Reinsurer |  | 2012 |  |  | 2011 |
Everest Reinsurance Company |  | $ | 193,250 |  |  | $ | 264,997 |
Florida Hurricane Catastrophe Fund |  |  | — |  |  |  | 30,422 |
Odyssey Reinsurance Company |  |  | 42,084 |  |  |  | — |
Total (1) |  | $ | 235,334 |  |  | $ | 295,419 |
(1) | Amounts represent prepaid reinsurance premiums, reinsurance receivables, and net recoverables for paid and unpaid losses, including incurred but not reported (“IBNR”) reserves, loss adjustment expenses, net of offsetting reinsurance payables.
Recently Issued Accounting Pronouncements In December 2011, the Financial Accounting Standards Board (“FASB”) updated its guidance to the Balance Sheet Topic 210 of the FASB Accounting Standards Codification (“ASC”). This updated guidance requires entities that have financial instruments and derivative instruments that are offset, to disclose information about offsetting and related arrangements to enable users of financial statements to understand the effect of those arrangements on an entity’s financial position. This guidance is to be applied for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. Disclosure is required retrospectively for all comparative periods presented. The additional disclosures required by the updated guidance will not have an impact on the Company’s operating results, cash flows or financial position. In June 2011, the FASB updated its guidance related to the Comprehensive Income Topic 220 of the FASB ASC. This updated guidance increases the prominence of items reported in other comprehensive income by eliminating the option of presenting components of other comprehensive income as part of the statement of changes in stockholders’ equity. The guidance requires that total comprehensive income (including both the net income components and other comprehensive income components) be reported in either a single continuous statement of comprehensive income (the approach currently used in the Company’s financial statements), or two separate but consecutive statements. This guidance is to be applied retrospectively to fiscal years (and interim periods within those years) beginning after December 15, 2011. The Company adopted this guidance effective January 1, 2012. This guidance did not have an impact on the presentation of the Company’s financial statements and notes herein, as the Company did not have any amounts of other comprehensive income during the periods presented. In May 2011, the FASB updated its guidance related to the Fair Value Measurement, Topic 820 of the ASC, to achieve common fair value measurement and disclosure requirements with International Financial Reporting Standards. The amendments change the wording used to describe many of the requirements under GAAP, to clarify the intent of application of existing fair value measurement and disclosure requirements, and to change particular principles or requirements for measuring and disclosing fair value measurements. The amendments are to be applied prospectively to interim and annual reporting periods beginning after December 15, 2011. The Company adopted this guidance effective January 1, 2012. The adoption of this guidance resulted in additional disclosure but did not impact the Company’s results of operations, cash flows or financial position. In September 2010, the FASB issued guidance related to accounting for costs associated with acquiring or renewing insurance contracts. This guidance defines allowable deferred policy acquisition costs as costs incurred by insurance entities for the successful acquisition of new and renewal contracts. Such costs result directly from and are essential to the contract transaction(s) and would not have been incurred by the insurance entity had the contract(s) not occurred. This guidance is effective for periods beginning after December 15, 2011, with early adoption permitted. The Company adopted this guidance prospectively effective January 1, 2012. Under the new guidance, the Company’s net deferred policy acquisition costs were reduced from $13.0 million to $11.4 million, a difference of 13%. The resulting $1.6 million difference was charged directly to earnings during the three months ended March 31, 2012. This charge represents a charge-off of capitalized costs existing at December 31, 2011, which would have been amortized to earnings within a twelve-month period under the old guidance.

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- Definition The entire disclosure for all significant accounting policies of the reporting entity. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18861-107790 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18743-107790 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18780-107790 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18854-107790 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18726-107790 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 22 -Paragraph 8 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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