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Discontinued Operations and Disposal Groups | 6 Months Ended
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Jun. 30, 2024
Discontinued Operations and Disposal Groups [Abstract] |
Disposal Groups, Income Statement Disclosure | 3) DISCONTINUED OPERATIONS On May 9, 2024, the Company entered into the Sale Agreement with Forza in which ACIC will sell and Forza will acquire 100% of the issued and outstanding stock of IIC. The aggregate purchase price for the shares will be equal to IIC's GAAP shareholders' equity on the closing date. Closing is subject to customary closing conditions, including NYDFS approval of Forza's application for acquisition of control, and NYDFS approval of a new rate and form filing. The results from IIC's discontinued operations for the three and six months ended June 30, 2024 and 2023 are presented below.
IIC Results From Discontinued Operations |  |  |  |  |  |  |  |
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
REVENUE: |  |  |  |  |  |  |  |
Gross premiums written |  | $ | 6,002 |  |  | $ | 7,063 |  |  | $ | 18,859 |  |  | $ | 17,545 |
Change in gross unearned premiums |  | 2,756 |  |  | 1,299 |  |  | (1,549) |  |  | (2,682) |
Gross premiums earned |  | 8,758 |  |  | 8,362 |  |  | 17,310 |  |  | 14,863 |
Ceded premiums earned |  | (2,316) |  |  | (3,207) |  |  | (4,769) |  |  | (7,025) |
Net premiums earned |  | 6,442 |  |  | 5,155 |  |  | 12,541 |  |  | 7,838 |
Net investment income |  | 533 |  |  | 597 |  |  | 1,024 |  |  | 1,143 |
Net realized investment losses |  | (53) |  |  | (17) |  |  | (53) |  |  | (17) |
Other revenue |  | 15 |  |  | 18 |  |  | 31 |  |  | 34 |
Total revenue |  | 6,937 |  |  | 5,753 |  |  | 13,543 |  |  | 8,998 |
EXPENSES: |  |  |  |  |  |  |  |
Losses and loss adjustment expenses |  | 5,887 |  |  | 4,670 |  |  | 9,319 |  |  | 7,181 |
Policy acquisition costs |  | 1,984 |  |  | 2,019 |  |  | 4,182 |  |  | 3,825 |
Operating expenses |  | 291 |  |  | 228 |  |  | 763 |  |  | 561 |
General and administrative expenses |  | 134 |  |  | 169 |  |  | 792 |  |  | 351 |
Total expenses |  | 8,296 |  |  | 7,086 |  |  | 15,056 |  |  | 11,918 |
Loss before income taxes |  | (1,359) |  |  | (1,333) |  |  | (1,513) |  |  | (2,920) |
Provision (benefit) for income taxes (1) |  | (1,340) |  |  | (441) |  |  | (1,384) |  |  | (830) |
Loss from discontinued operations, net of tax |  | $ | (19) |  |  | $ | (892) |  |  | $ | (129) |  |  | $ | (2,090) |
(1) Includes $1,007,000 in tax benefit related to discontinued operations outside of IIC stand-alone results. The major classes of IIC assets and liabilities as of June 30, 2024 and December 31, 2023 are presented below.
IIC Major Classes of Assets and Liabilities Disposed |  |  |  |
|  | June 30, 2024 |  | December 31, 2023
ASSETS |  |  |  |
Fixed maturities, available-for-sale |  | $ | 38,428 |  |  | $ | 42,316 |
Cash and cash equivalents |  | 19,773 |  |  | 14,832 |
Accrued investment income |  | 337 |  |  | 337 |
Premiums receivable, net |  | 1,579 |  |  | 1,350 |
Reinsurance recoverable on paid and unpaid losses, net |  | 289 |  |  | 282 |
Ceded unearned premiums |  | 7,425 |  |  | 3,846 |
Deferred policy acquisition costs, net |  | 3,555 |  |  | 3,892 |
Intangible assets, net |  | 775 |  |  | 775 |
Other assets |  | 1,544 |  |  | 1,418 |
Total assets |  | $ | 73,705 |  |  | $ | 69,048 |
LIABILITIES |  |  |  |
Unpaid losses and loss adjustment expenses |  | $ | 20,915 |  |  | $ | 22,483 |
Unearned premiums |  | 18,450 |  |  | 16,900 |
Reinsurance payable on premiums |  | 7,069 |  |  | 2,312 |
Payments outstanding |  | 2,380 |  |  | 1,410 |
Accounts payable and accrued expenses |  | 423 |  |  | 501 |
Operating lease liability |  | 20 |  |  | 37 |
Other liabilities |  | 783 |  |  | 487 |
Total Liabilities |  | $ | 50,040 |  |  | $ | 44,130 |
On August 25, 2022, we announced that our former subsidiary, UPC, had filed plans for withdrawal in the states of Florida, Louisiana, and Texas and intended to file a plan for withdrawal in the state of New York. All filed plans entailed non-renewing personal lines policies in these states. Additionally, we announced that Demotech, an insurance rating agency, notified UPC of its intent to withdraw UPC's Financial Stability Rating. On December 5, 2022, the FLOIR issued Consent Order No. 303643-22- CO that provided for the administrative supervision and approval of the plan of run-off for UPC (the "Consent Order"). The Consent Order provided formal approval of UPC's Plan of Run-Off (the "Plan") to facilitate a solvent wind down of its affairs in an orderly fashion. On February 10, 2023, we announced that a solvent run-off of UPC was unlikely, driven by Hurricane Ian losses which exhausted UPC's reinsurance coverage. On February 27, 2023, UPC was placed into receivership with the DFS which divested our ownership of UPC. In the first quarter of 2023, the assets and liabilities of UPC were divested. In addition, activities provided by our entities, SCS, SLS and UIM, related directly to supporting the business conducted by UPC were included. The remaining assets for the balance sheet as of December 31, 2023 are presented as held for disposal, and the results of UPC and activities related directly to supporting the business conducted by UPC are presented as discontinued operations for all periods. The results from UPC's discontinued operations, including the supporting activities provided by SCS, SLS and UIM for the three and six months ended June 30, 2024 and 2023 are presented below.
UPC Results From Discontinued Operations |  |  |  |  |  |  |  |
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
REVENUE: |  |  |  |  |  |  |  |
Gross premiums written |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (120,608) |
Change in gross unearned premiums |  | — |  |  | — |  |  | — |  |  | 198,154 |
Gross premiums earned |  | — |  |  | — |  |  | — |  |  | 77,546 |
Ceded premiums earned |  | — |  |  | — |  |  | — |  |  | (48,203) |
Net premiums earned |  | — |  |  | — |  |  | — |  |  | 29,343 |
Net investment income |  | — |  |  | — |  |  | — |  |  | 2,182 |
Net realized investment gains |  | — |  |  | — |  |  | — |  |  | 1,343 |
Net unrealized gains on equity securities |  | — |  |  | — |  |  | — |  |  | 2,080 |
Other revenue |  | — |  |  | — |  |  | — |  |  | 2,717 |
Total revenue |  | — |  |  | — |  |  | — |  |  | 37,665 |
EXPENSES: |  |  |  |  |  |  |  |
Losses and loss adjustment expenses |  | — |  |  | 1,191 |  |  | — |  |  | 36,417 |
Policy acquisition costs |  | — |  |  | (170) |  |  | — |  |  | (1,522) |
Operating expenses |  | — |  |  | 507 |  |  | — |  |  | 4,503 |
General and administrative expenses |  | — |  |  | 1,275 |  |  | — |  |  | 2,559 |
Interest expense |  | — |  |  | — |  |  | — |  |  | 22 |
Total expenses |  | — |  |  | 2,803 |  |  | — |  |  | 41,979 |
Loss before income taxes |  | — |  |  | (2,803) |  |  | — |  |  | (4,314) |
Provision (benefit) for income taxes |  | — |  |  | (230) |  |  | — |  |  | (214) |
Loss from discontinued operations, net of tax |  | $ | — |  |  | $ | (2,573) |  |  | $ | — |  |  | $ | (4,100) |
As of February 28, 2023, the Company completed the disposal of its former subsidiary, UPC. This divestiture resulted in a gain of $238,440,000 for the three months ended March 31, 2023. This gain was driven by the negative equity position of UPC prior to the divestiture. The major classes of assets and liabilities transferred as a result of the UPC transaction as of the date of transfer are presented below.
UPC Major Classes of Assets and Liabilities Disposed |  |  |  |
|  | Closing (1) |  |
ASSETS |  |  |  |
Fixed maturities, available-for-sale |  | $ | 1,380 |  |  |
Equity securities |  | 272 |  |  |
Other investments |  | 12,882 |  |  |
Cash and cash equivalents |  | 224,824 |  |  |
Restricted cash |  | 7,758 |  |  |
Accrued investment income |  | 875 |  |  |
Premiums receivable, net |  | 22,733 |  |  |
Reinsurance recoverable on paid and unpaid losses, net |  | 548,929 |  |  |
Ceded unearned premiums |  | 75,262 |  |  |
Deferred policy acquisition costs, net |  | (89) |  |  |
Other assets |  | 51,625 |  |  |
Total assets |  | $ | 946,451 |  |  |
LIABILITIES |  |  |  |
Unpaid losses and loss adjustment expenses |  | $ | 920,431 |  |  |
Unearned premiums |  | 98,655 |  |  |
Reinsurance payable on premiums |  | 12,612 |  |  |
Payments outstanding |  | 144,238 |  |  |
Accounts payable and accrued expenses |  | 1,361 |  |  |
Other liabilities |  | 3,476 |  |  |
Notes payable, net |  | 4,118 |  |  |
Total Liabilities |  | $ | 1,184,891 |  |  |
(1) The Company divested its ownership on February 27, 2023, the date the DFS was appointed as receiver of the entity. During the first quarter of 2024, due to a change in the fact pattern, the Company evaluated its capitalized software, previously classified as held for disposal at December 31, 2023. As a result of this evaluation, it was determined that the use case of the software by the Company has shifted. The Company has reclassified this asset and the associated amortization expense in the current period presented within this footnote in accordance with GAAP guidance, resulting in amortization expense for the capitalized software being captured in continuing operations prospectively. Property & equipment of $8,095,000 at December 31, 2023 was also reclassed at March 31, 2024, before current quarter amortization. In addition, other than the item related to capitalized software noted above, there were no non-cash transactions during the six months ended June 30, 2024. During the three and six months ended June 30, 2023, amortization attributed to discontinued operations totaled $236,000 and $488,000, respectively.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/360/tableOfContent + Details
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