Total revenue was $30,470,240, $31,130,892 and $32,756,570 for the years ended December 31, 2014, 2013 and 2012, respectively. This represents a decrease of $660,652 (2%) for the 2014 year compared to the 2013 year and a decrease of $1,625,678 (5%) for the 2013 year compared to the 2012 year. The Company had net income of $846,361, $603,668, and $1,953,728 for the years ended December 31, 2014, 2013 and 2012, respectively. This represents an increase of $242,693 (40%) for the 2014 year compared to the 2013 year and a decrease of $1,350,060 (69%) for the 2013 year compared to the 2012 year.
Crusader writes annual policies and, therefore, earns written premium daily over the one-year policy term.
Crusader’s net loss and loss adjustment expense reserve was $39,233,783 as of December 31, 2014. Since underwriting profit is a significant part of income, a small percentage change in reserve estimates may result in a substantial effect on future reported earnings. Such changes might result from a variety of factors, including claims costs emerging in a different pattern than the average historical development patterns.
The following table sets forth the composition of the investment portfolio of the Company at the dates indicated:
The increase of $330,767 (53%) in other income from insurance company revenues and other insurance operations for the year ended December 31, 2014, when compared to year ended December 31, 2013, is primarily the result of an increase of $551,694 (209%) in rental income received by Crusader from the office building located in Calabasas, California, that was purchased on September 26, 2013. This increase was offset by the decrease of $318,194 (106%) in the contingent commission the Company recognized on the Company’s 2003, 2004 and 2006 excess of loss reinsurance treaties.
Other operating expenses generally do not change significantly with changes in production. This is true for both increases and decreases in production. However, other operating expenses increased $859,690 (34%) for the year ended December 31, 2014, compared to the year ended December 31, 2013. This increase is primarily related to operating costs associated with the Company’s office building located in Calabasas, California, which was purchased on September 26, 2013, and to an increase in the Company’s bad debt expense. The operating expenses for the Calabasas office building were $781,988 for the year ended December 31, 2014, compared to $186,230 for the year ended December 31, 2013, an increase of $595,758 (320%). The Company’s bad debt expense was $255,299 for the year ended December 31, 2014, compared to a benefit of $50,792 for the year ended December 31, 2013, or an increase of $306,091. The increase in bad debt expense was primarily a result of an increase the reserves for bad debts in 2014 of $250,000 related to the principals of one of the Company’s former agents as discussed above in “Liquidity and Capital Resources.”
Crusader evaluates and monitors the financial condition of its reinsurers and factors such as collection periods, disputes, applicable coverage defenses and other factors to assess the need for any allowance against anticipated reinsurance recoveries. No such allowance was considered necessary at December 31, 2014 or 2013.
There have been no accounting standards issued in 2014 that are expected to have a material impact on the Company’s consolidated financial statements.
The amortized cost and estimated fair value of fixed maturity investments at December 31, 2014, by contractual maturity are as follows. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.
Crusader’s primary excess of loss reinsurance agreements during years ended December 31, 2014, 2013 and 2012 are as follows: