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Commitments and Contingencies | 9 Months Ended
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Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | 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 September 30, 2023, the Company was not involved in any material non-claims-related legal actions. Commitments to fund partnership investments We have fully funded one limited partnership investment. We have no unfunded commitments at September 30, 2023. The amount of unfunded commitments was $4,238,000 at December 31, 2022. 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 |  | September 30, 2023 |  | December 31, 2022
Assets |  |  |  |  |  |
Operating lease assets |  | Other assets |  | $ | 707 |  |  | $ | 1,278 |
Financing lease assets |  | Property and equipment, net |  | — |  |  | 51 |
Total lease assets |  |  |  | $ | 707 |  |  | $ | 1,329 |
Liabilities |  |  |  |  |  |
Operating lease liabilities |  | Operating lease liability |  | $ | 941 |  |  | $ | 1,689 |
Financing lease liabilities |  | Other liabilities |  | — |  |  | 2 |
Total lease liabilities |  |  |  | $ | 941 |  |  | $ | 1,691 |
The components of lease expenses were as follows:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2023 |  | 2022 |  | 2023 |  | 2022
Operating lease expense |  | $ | 222 |  |  | $ | 267 |  |  | $ | 666 |  |  | $ | 587 |
Financing lease expense: |  |  |  |  |  |  |  |
Amortization of leased assets |  | — |  |  | 78 |  |  | 9 |  |  | 320 |
Interest on lease liabilities |  | — |  |  | — |  |  | — |  |  | 1 |
Net lease expense |  | $ | 222 |  |  | $ | 345 |  |  | $ | 675 |  |  | $ | 908 |
At September 30, 2023, future minimum gross lease payments relating to these non-cancellable operating lease agreements were as follows:
|  |  |  |  |  | Total
Remaining in 2023 |  |  |  |  |  | $ | 183 |
2024 |  |  |  |  |  | 593 |
2025 |  |  |  |  |  | 222 |
2026 |  |  |  |  |  | 11 |
Total undiscounted future minimum lease payments |  |  |  |  |  | 1,009 |
Less: Imputed interest |  |  |  |  |  | (68) |
Present value of lease liabilities |  |  |  |  |  | $ | 941 |
Weighted average remaining lease term and discount rate related to operating and finance leases were as follows:
|  | September 30, 2023 |  | December 31, 2022
Weighted average remaining lease term (months) |  |  |  |
Operating leases |  | 19 |  |  | 25 |
Financing leases |  | — |  |  | 9 |
Weighted average discount rate |  |  |  |
Operating leases |  | 3.36 | % |  | 3.79 | %
Financing leases |  | — | % |  | 3.27 | %
There were no other cash or non-cash related activities during the three or nine months ended September 30, 2023 and 2022. Capital lease amortization expenses are included in depreciation expense in our Unaudited Condensed Consolidated Statements of Comprehensive Loss. See Note 7 of these Notes to Unaudited Condensed Consolidated Financial Statements for more information regarding depreciation expense, Note 11 for information regarding commitments related to long-term debt, and Note 14 for information regarding commitments related to regulatory actions. Subleases We previously leased and occupied office space in which we no longer operate. Effective October 1, 2022, this office space is now subleased to a third-party. This sublease is effective from October 1, 2022 through July 31, 2025, with no option to extend. During the nine months ended September 30, 2023, we recognized $149,000 of income related to this sublease, exclusive of the lease expense associated with the original lease. Additionally, as a result of the sublease, we evaluated our right-of-use asset associated with the original lease for impairment, using the undiscounted cash flows from the sublease. During the year ended December 31, 2022, we recognized impairment of $175,000, which was recognized in the results of our personal lines operating segment. Employee Retention Credit A series of legislation was enacted in the United States during 2020 and 2021 in response to the COVID-19 pandemic that provided financial relief for businesses impacted by government-mandated shutdowns, work stoppages, or other losses suffered by employers. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provided an employee retention credit, which is a refundable tax credit against certain employment taxes of up to $5,000 per employee for eligible employers. The tax credit is equal to 50% of qualified wages paid to employees during a quarter, capped at $10,000 of qualified wages per employee. During the second quarter of 2022, we evaluated our eligibility and filed for a $10,161,000 refund in connection with our Employee Retention Tax Credit for the tax year ended December 31, 2021. As of September 30, 2023, we have received $5,718,000 from the IRS related to this refund. A gain contingency is an uncertain situation that will be resolved in the future, possibly resulting in a gain. We have not recognized this gain contingency of $10,161,000 within our financial statements except for the $5,718,000 that has already been received. While we believe the likelihood of the refund approval being reversed is low, a loss contingency to the extent of the refunds received and recognized of $5,718,000 is included. We will continue to monitor the matter for further developments that could affect the outcome of these contingencies and will make any appropriate adjustments each quarter.

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