Commitments and Contingencies

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

Litigation

We are involved in claims-related legal actions arising in the ordinary course of business. We accrue amounts resulting from claims-related legal actions in unpaid losses and LAE during the period that we determine an unfavorable outcome becomes probable and we can estimate the amounts. Management makes revisions to our estimates based on its analysis of subsequent information that we receive regarding various factors, including: (i) per claim information; (ii) company and industry historical loss experience; (iii) judicial decisions and legal developments in the awarding of damages; and (iv) trends in general economic conditions, including the effects of inflation.

At March 31, 2022, the Company is involved in legal proceedings whereby on August 18, 2021, a former employee of Skyway Legal Services, LLC, filed a complaint against the Company in the United States District Court for the District of Delaware. The lawsuit alleges violations of and damages arising under Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act of 1967, and seeks damages in an unspecified amount. The Company, a named party to the lawsuit, denies that it employed the plaintiff and disputes the claims set forth in the lawsuit. The Company believes that an unfavorable outcome is neither probable nor estimable.

In addition, on January 13, 2022, Southern Florida Restoration (SFR) Services, LLC v. United Property and Casualty Insurance Company, et al. was filed in the United States District Court for the Middle District of Florida. The District Court dismissed the lawsuit on its own accord on January 14, 2022. SFR Services then filed an amended complaint on January 26, 2022. The complaint alleges four causes of action: (i) violation of the Federal Civil Racketeer Influenced and Corrupt Organizations statute (18 U.S.C. § 1962(c)), (ii) breach of contract, (iii) fraud, and (iv) violation of the Florida Unfair Insurance Trade Practices Act (Fla. Stat. Chpt. 626). The plaintiff seeks unspecified damages. The Company believes that an unfavorable outcome is neither probable nor estimable.

Commitments to fund partnership investments

We have fully funded three limited partnership investments and have committed to fund our remaining six limited partnership investments. The amount of unfunded commitments was $6,785,000 and $1,969,000 at March 31, 2022 and December 31, 2021, respectively.

Leases

We, as lessee, have entered into leases of commercial office space of various term lengths. In addition to office space, we lease office equipment and a parking lot under operating leases and vehicles under finance leases.

The classification of operating and finance lease asset and liability balances within the Unaudited Condensed Consolidated Balance Sheets was as follows:


	Financial Statement Line	March 31, 2022		December 31, 2021
Assets
Operating lease assets	Other assets	$	1,544	$	1,689
Financing lease assets	Property and equipment, net	376		477
Total lease assets		$	1,920	$	2,166

Liabilities
Operating lease liabilities	Operating lease liability	$	1,751	$	1,934
Financing lease liabilities	Other liabilities	11		16
Total lease liabilities		$	1,762	$	1,950

The components of lease expenses were as follows:


	Three Months Ended March 31,
		2022		2021
Operating lease expense		$	160	$	165
Financing lease expense:
Amortization of leased assets		129		196


Net lease expense		$	289	$	361

At March 31, 2022, future minimum gross lease payments relating to these non-cancellable operating and finance lease agreements were as follows:


	Operating Leases		Finance Leases		Total
Remaining in 2022	$	478	$	10	$	488
2023	619		4		623
2024	602		—		602
2025	257		—		257
2026	32		—		32
Thereafter	1,160		—		1,160
Total undiscounted future minimum lease payments	3,148		14		3,162
Less: Imputed interest	(1,397)		(3)		(1,400)
Present value of lease liabilities	$	1,751	$	11	$	1,762

Weighted average remaining lease term and discount rate related to operating and finance leases were as follows:


	March 31, 2022		December 31, 2021
Weighted average remaining lease term (months)
Operating leases	47		51
Financing leases	15		17

Weighted average discount rate
Operating leases	3.62	%	3.61	%
Financing leases	3.27	%	3.27	%

There were no other cash or non-cash related activities during the three months ended March 31, 2022 and 2021.

Capital lease amortization expenses are included in depreciation expense in our Unaudited Condensed Consolidated Statements of Comprehensive Loss. See Note 6 of these Notes to Unaudited Condensed Consolidated Financial Statements for more information regarding depreciation expense, Note 10 for information regarding commitments related to long-term debt, and Note 13 for information regarding commitments related to regulatory actions.