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Statutory Accounting and Regulation | 12 Months Ended
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Dec. 31, 2024
Insurance [Abstract] |
Statutory Accounting and Regulation | STATUTORY ACCOUNTING AND REGULATION The insurance industry is heavily regulated. State laws and regulations, as well as national regulatory agency requirements, govern the operations of all insurers such as our insurance subsidiaries. The various laws and regulations require that insurers maintain minimum amounts of statutory surplus and risk-based capital, restrict insurers' ability to pay dividends, specify allowable investment types and investment mixes, and subject insurers to assessments. Effective June 1, 2022, our insurance subsidiaries JIC and AmCoastal were merged, with AmCoastal being the surviving entity. AmCoastal is domiciled in Florida, while IIC is domiciled in New York. At December 31, 2024, and during the year then ended, AmCoastal and IIC met all regulatory requirements of the states in which they operate. During 2023, we received two assessment notices from FIGA. These assessments will be 1.0% and 0.7% on direct written premiums of all covered lines of business in Florida to cover the cost of insurance companies facing insolvency. These assessments are in addition to the 1.3% assessment, described below, and are recoupable from policyholders. During 2022, we received an assessment notice from FIGA. This assessment was 1.3% on direct written premium of all covered lines of business in Florida to cover the cost of an insurance company facing insolvency. The NAIC has RBC guidelines for insurance companies that are designed to assess capital adequacy and to raise the level of protection that statutory surplus provides for policyholders. Most states, including Florida and New York, have enacted statutory requirements adopting the NAIC RBC guidelines, and insurers having less statutory surplus than required will be subject to varying degrees of regulatory action, depending on the level of capital inadequacy. State insurance regulatory authorities could require an insurer to cease operations in the event the insurer fails to maintain the required statutory capital. The state laws of Florida and New York permit an insurer to pay dividends or make distributions out of that part of statutory surplus that is derived from net operating profit and net realized capital gains. The state laws further provide calculations to determine the amount of dividends or distributions that can be made without the prior approval of the insurance regulatory authorities in those states and the amount of dividends or distributions that would require prior approval of the insurance regulatory authorities in those states. Statutory RBC requirements may further restrict our insurance subsidiaries' ability to pay dividends or make distributions if the amount of the intended dividend or distribution would cause statutory surplus to fall below minimum RBC requirements. Additionally, in connection with our former subsidiary UPC's plan for run off, IIC agreed not to pay ordinary dividends without prior approval of the NYDFS until January 1, 2025. Governmental agencies or certain quasi-governmental entities can levy assessments upon us in the states in which we write policies. See Note 2(t) for a description of how we recover assessments imposed upon us. We expense an assessment when the particular governmental agency or quasi-governmental entity levies it upon us; therefore, expected recoveries are not assets and we will record the amounts as income when collected from policyholders. Governmental agencies or certain quasi-governmental entities can also levy assessments upon policyholders, and we collect the amount of the assessments from policyholders as surcharges for the benefit of the assessing agency. We collect $4 per commercial policy written in the state of Florida on behalf of the Florida Emergency Management Preparedness and Assistance Trust Fund. Our insurance subsidiaries must maintain capital and surplus ratios or balances as determined by the regulatory authority of the states in which they are domiciled. At December 31, 2024, we met these requirements. The table below details the amount of surplus as regards policyholders for each of our regulated entities at December 31, 2024 and 2023.
|  | December 31, 2024 |  | December 31, 2023
AmCoastal |  | $ | 230,001 |  |  | $ | 143,452 |
IIC |  | 21,008 |  |  | 22,661 |
Total |  | $ | 251,009 |  |  | $ | 166,113 |
The amount of restricted net assets of our insurance subsidiaries are:
|  | December 31, 2024
AmCoastal |  | $ | 169,828 |
IIC |  | 19,042 |
NAIC law limits an insurer’s investment in equity instruments and also restricts investments in medium-to-low quality debt instruments. We were in compliance with all investment restrictions at December 31, 2024 and 2023. We have reported our insurance subsidiaries’ assets, liabilities and results of operations in accordance with GAAP, which varies from statutory accounting principles prescribed or permitted by state laws and regulations, as well as by general industry practices. The following items are principal differences between statutory accounting and GAAP: •Statutory accounting requires that we exclude certain assets, called non-admitted assets, from the balance sheet. •Statutory accounting requires us to expense policy acquisition costs when incurred, while GAAP allows us to defer to the extent realizable and amortize policy acquisition costs over the estimated life of the policies. •Statutory accounting requires that surplus notes, also known as surplus debentures, be recorded in statutory surplus, while GAAP requires us to record surplus notes as a liability. •Statutory accounting allows certain investments to be carried at amortized cost or fair value based on the rating received from the Securities Valuation Office of the NAIC, while they are recorded at fair value for GAAP because the investments are held as available for sale. •Statutory accounting allows ceding commission income to be recognized when written if the cost of acquiring and renewing the associated business exceeds the ceding commissions, but under GAAP, such income is deferred and recognized over the coverage period. •Statutory accounting requires that unearned premiums and loss reserves are presented net of related reinsurance, rather than on a gross basis under GAAP. •Statutory accounting requires a provision for reinsurance liability be established for reinsurance recoverable on paid losses aged over ninety days and for unsecured amounts recoverable from unauthorized reinsurers. Under GAAP, there is no charge for uncollateralized amounts ceded to a company not licensed in the insurance subsidiary’s domiciliary state, and a reserve for uncollectible reinsurance is charged through earnings, rather than surplus or equity. •Statutory accounting requires an additional admissibility test and the change in deferred income tax is reported directly in capital and surplus, rather than being reported as a component of income tax expense under GAAP. Our insurance subsidiaries must file with the various insurance regulatory authorities an “Annual Statement” which reports, among other items, statutory net income (loss) and surplus as regards policyholders, which is called stockholders’ equity (deficit) under GAAP. The table below details the statutory net income (loss) for each of our regulated entities for the years ended December 31, 2024, 2023 and 2022

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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/disclosureRef -Topic 944 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 7 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479838/944-20-50-7 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 944 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/944/tableOfContent Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 944 -SubTopic 310 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Subparagraph (c)(4)(ii) -Publisher FASB -URI https://asc.fasb.org/1943274/2147477363/944-310-50-3 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 944 -SubTopic 310 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Subparagraph (c)(4)(iv) -Publisher FASB -URI https://asc.fasb.org/1943274/2147477363/944-310-50-3 + Details
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