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Insurance Operations | 3 Months Ended
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Mar. 31, 2016
Insurance [Abstract] |
Insurance Operations | 5. Insurance Operations Deferred Policy Acquisition Costs, net The Company defers certain costs in connection with written policies, called Deferred Policy Acquisition Costs (“DPAC”), net of corresponding amounts of ceded reinsurance commissions, called Deferred Reinsurance Ceding Commissions (“DRCC”). Net DPAC is amortized over the effective period of the related insurance policies. The following table presents the beginning and ending balances and the changes in DPAC, net of DRCC, for the periods presented (in thousands):
| Three Months Ended |
| March 31, |
| 2016 |  |  | 2015 |
DPAC, beginning of period | $ | 60,019 |  |  | $ | 54,603 |
Capitalized Costs |  | 30,735 |  |  |  | 28,567 |
Amortization of DPAC |  | (29,596 | ) |  |  | (26,987 | )
DPAC, end of period | $ | 61,158 |  |  | $ | 56,183 |
DRCC, beginning of period | $ | — |  |  | $ | 28,943 |
Ceding Commissions Written |  | — |  |  |  | 17,661 |
Earned Ceding Commissions |  | — |  |  |  | (16,616 | )
DRCC, end of period | $ | — |  |  | $ | 29,988 |
DPAC (DRCC), net, beginning of period | $ | 60,019 |  |  | $ | 25,660 |
Capitalized Costs, net |  | 30,735 |  |  |  | 10,906 |
Amortization of DPAC (DRCC), net |  | (29,596 | ) |  |  | (10,371 | )
DPAC (DRCC), net, end of period | $ | 61,158 |  |  | $ | 26,195 |
Liability for Unpaid Losses and Loss Adjustment Expenses Set forth in the following table is the change in liability for unpaid losses and LAE for the periods presented (in thousands):
| Three Months Ended |
| March 31, |
| 2016 |  |  | 2015 |
Balance at beginning of period | $ | 98,840 |  |  | $ | 134,353 |
Less: Reinsurance recoverable |  | (13,540 | ) |  |  | (47,350 | )
Net balance at beginning of period |  | 85,300 |  |  |  | 87,003 |
Incurred (recovered) related to: |  |  |  |  |  |  |
Current year |  | 66,101 |  |  |  | 33,559 |
Prior years |  | 16 |  |  |  | 27 |
Total incurred |  | 66,117 |  |  |  | 33,586 |
Paid related to: |  |  |  |  |  |  |
Current year |  | 18,618 |  |  |  | 6,789 |
Prior years |  | 55,533 |  |  |  | 31,352 |
Total paid |  | 74,151 |  |  |  | 38,141 |
Net balance at end of period |  | 77,266 |  |  |  | 82,448 |
Plus: Reinsurance recoverable |  | 7,709 |  |  |  | 42,713 |
Balance at end of period | $ | 84,975 |  |  | $ | 125,161 |
Regulatory Requirements and Restrictions The Insurance Entities are subject to regulations and standards of the Florida Office of Insurance Regulation (“FLOIR”). UPCIC also is subject to regulations and standards of regulatory authorities in other states where it is licensed, although as a Florida-domiciled insurer its principal regulatory authority is the FLOIR. These standards require the Insurance Entities to maintain specified levels of statutory capital and restrict the timing and amount of dividends and other distributions that may be paid by the Insurance Entities to the parent company. Except in the case of extraordinary dividends, these standards generally permit dividends to be paid from statutory unassigned surplus of the regulated subsidiary and are limited based on the regulated subsidiary’s level of statutory net income and statutory capital and surplus. The maximum dividend that may be paid by UPCIC and APPCIC to their immediate parent company, Universal Insurance Holding Company of Florida (“UVECF”), without prior regulatory approval is limited by the provisions of Florida Statutes. These dividends are referred to as “ordinary dividends.” However, if the dividend, together with other dividends paid within the preceding twelve months, exceeds this statutory limit or is paid from sources other than earned surplus, the entire dividend is generally considered an “extraordinary dividend” and must receive prior regulatory approval. In accordance with Florida Statutes, and based on the calculations performed by the Company as of December 31, 2015, UPCIC has the capacity to pay ordinary dividends of $52.9 million during 2016. APPCIC does not have the capacity to pay ordinary dividends during 2016. For the three months ended March 31, 2016, no dividends were paid from UPCIC or APPCIC to UVECF. Dividends paid to the shareholders of UVE in 2016 have been paid from the earnings of UVE and its non-insurance subsidiaries. The Florida Insurance Code requires insurance companies to maintain capitalization equivalent to the greater of ten percent of the insurer’s total liabilities or $5.0 million. The following table presents the amount of capital and surplus calculated in accordance with statutory accounting principles, which differ from U.S. GAAP, and an amount representing ten percent of total liabilities for both UPCIC and APPCIC as of the dates presented (in thousands):
| March 31, |  |  | December 31, |
| 2016 |  |  | 2015 |
Ten percent of total liabilities |  |  |  |  |  |  |
UPCIC | $ | 57,002 |  |  | $ | 55,928 |
APPCIC | $ | 449 |  |  | $ | 463 |
Statutory capital and surplus |  |  |  |  |  |  |
UPCIC | $ | 274,069 |  |  | $ | 256,987 |
APPCIC | $ | 14,754 |  |  | $ | 14,777 |
As of the dates in the table above, both UPCIC and APPCIC met the capitalization requirement. UPCIC also met the capitalization requirements of the other states in which it is licensed as of March 31, 2016. UPCIC and APPCIC are also required to adhere to prescribed premium-to-capital surplus ratios and have met those requirements at such dates. The Insurance Entities are required by various state laws and regulations to maintain certain assets in depository accounts. The following table represents assets held by insurance regulators as of the dates presented (in thousands):
| March 31, |  |  | December 31, |
| 2016 |  |  | 2015 |
Restricted cash and cash equivalents | $ | 2,635 |  |  | $ | 2,635 |
Investments | $ | 3,964 |  |  | $ | 3,876 |

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- Definition The entire disclosure for the types of coverages and products sold, and the assets, obligations, recorded liabilities, revenues and expenses arising therefrom, and the amounts of and methodologies and assumptions used in determining the amounts of such items. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6480747&loc=d3e6772-158386 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6480747&loc=d3e6764-158386 + Details
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