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11. Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Litigation

From time to time, the Company is involved in various legal proceedings in the ordinary course of business. For example, to the extent a claim is asserted by a third party in a lawsuit against one of the Company’s insureds covered by a particular policy, the Company may have a duty to defend the insured party against the claim. These claims may relate to bodily injury, property damage or other compensable injuries as set forth in the policy. Such proceedings are considered in estimating the liability for loss and LAE expenses. The Company is not subject to any other pending legal proceedings that management believes are likely to have a material adverse effect on the condensed consolidated financial statements.

Office Lease

The Company enters into lease agreements for real estate that is primarily used for office space in the ordinary course of business. These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease. See note 2 - Accounting Policies for additional information regarding the accounting for leases.

The Company is a party to a non-cancellable operating lease, dated March 27, 2015, for its office facility for KICO located in Valley Stream, New York. In June 2016, the Company entered into a lease modification agreement. The original lease had a term of seven years and nine months. The lease modification increased the space occupied by KICO and extended the lease term to seven years and nine months to be measured from the additional premises commencement date. The additional premises commencement date was September 19, 2016, and additional rent was payable beginning March 19, 2017. The original lease commencement date was July 1, 2015 and rent commencement began January 1, 2016.

In addition to the base rental costs, occupancy lease agreements generally provide for rent escalations resulting from increased assessments from real estate taxes and other charges. This lease is accounted for as an operating lease, whereby lease expense is recognized on a straight-line basis over the term of the lease.

Additional information regarding the Company’s real estate operating lease is as follows:

Lease Cost	March 31, 2019
Operating lease	$	41,342
Short-term leases		0
Total lease cost (1)	$	41,342

Other information on operating lease
Cash payments included in the measurement of lease liability reported in operating cash flows		41,379
Discount rate		5.50%
Remaining lease term in years		5 years

(1)

Included in the condensed consolidated statements of operations and comprehensive loss within other underwriting expenses.

The following table presents the contractual maturities of the Company’s lease liabilities as of March 31, 2019:

For the Year Ending December 31,	Total
Remainder of 2019	$ 128,482
2020	175,806
2021	181,959
2022	188,328
2023	194,919
Thereafter	49,145
Total undiscounted lease payments	918,639
Less: present value adjustment	76,904
Operating lease liability	$ 841,735

Rent expense for the three months ended March 31, 2018 amounted to $41,342, and is included in the condensed consolidated statements of operations and comprehensive loss within other underwriting expenses.