Treasure Island, Florida. The real estate consists of approximately 10 acres of waterfront property and land improvements, a restaurant and a marina facility. The marina facility and the restaurant are currently operated by us.
Premiums Ceded for the years ended December 31, 2013 and 2012 were $102,865 and $75,939, respectively. Our premiums ceded represent amounts paid to reinsurers to cover losses from catastrophes that exceed the thresholds defined by our catastrophe excess of loss reinsurance treaties. During the year ended December 31, 2013, premiums ceded were reduced by $12,521 related to the provisions under certain reinsurance contracts. See “Economic Impact of Reinsurance Contracts with Retrospective Provisions” under “Critical Accounting Policies and Estimates.” Our reinsurance rates are based primarily on policy exposures reflected in gross premiums earned. Premiums ceded were 30.5% and 32.5% of gross premiums earned during the years ended December 31, 2013 and 2012, respectively.
Net Premiums Earned for the years ended December 31, 2012 and 2011 were $157,668 and $88,081, respectively, and reflect the gross premiums earned less reinsurance costs as described above.
In January 2013, we completed the sale of an aggregate of approximately $40,250 of our 8.00% Senior Notes due 2020. In December 2013, we completed the sale of an aggregate of $103,000 of our 3.875% senior convertible notes due 2019. See Note 10 - “Long-term debt” to our consolidated financial statements under Item 8 of this Annual Report on Form 10-K.
Consolidated Statements of Income for the Years Ended December 31, 2013, 2012 and 2011
Florida Insurance Guaranty Association Assessments. The Company may be assessed by the state guaranty association. The assessments are intended to be used for the payment of covered claims of insolvent insurance entities. The assessments are generally based on a percentage of premiums written during or following the year of insolvency. Liabilities are recognized when the assessments are probable to be imposed on the premiums on which they are expected to be based and the amounts can be reasonably estimated. The Company is permitted by Florida statutes to recover the entire amount of assessments from in-force and future policyholders through policy surcharges. U.S. GAAP provides that the Company should record an asset based on the amount of written or obligated-to-write premiums and limited to the amounts recoverable over the life of the in-force policies.
March 31, 2014, if for at least twenty trading days within any period of thirty consecutive trading days, the market price of the Company’s common stock exceeds the conversion price of the Series A Preferred by more than 20% and the Company’s common stock is then traded on specified exchange markets. Under certain circumstances, the Company will be required to adjust the conversion rate. The initial conversion price of $10 per share is subject to proportionate adjustment in the event of stock splits, reverse stock splits, stock dividends, or similar changes with respect to the Company’s common stock. On February 4, 2014, the Company announced its Board of Directors fixed April 1, 2014 as the cancellation date for the conversion rights on its 7% Series A Preferred. As such, the record holders of the Series A Preferred will no longer have conversion rights on and after April 1, 2014.
The Company has outstanding stock-based awards granted under the 2007 Stock Option and Incentive Plan (“2007 Plan”) and its 2012 Omnibus Incentive Plan (the “2012 Plan”) which are collectively called “the Incentive Plan.” The Company terminated the 2007 Plan in 2012 and thus there were no shares available for future grant under the 2007 Plan. With respect to the Incentive Plan which permits the granting of stock-based awards to employees, directors, consultants, and advisors of the Company, the aggregate number of shares of common stock reserved and available for issuance is 5,000,000. At December 31, 2013, there were 4,344,350 shares available for grant under the Incentive Plan.
In September 2013, the Company received a notice of intent to make audit adjustments from the Pittsburgh Service Center of the Florida Department of Revenue (“FDR”) in connection with the FDR’s audit of the Company’s premium tax returns for the three-year period ended December 31, 2012. The auditor’s proposed adjustments primarily relate to the disallowance of the entire amount of $1,754 in Florida salary credits applicable to that period. The proposed adjustment, which includes interest through September 10, 2013, approximates $1,913. Management has held discussions with the FDR staff and will continue working with the FDR to resolve this matter. The Company is confident in the merits of its position in claiming the Florida salary credits and intends to vigorously defend its position. As such, and based on the current status of and likelihood of final resolution, the Company has no amount accrued as of December 31, 2013 related to this contingency.
On February 4, 2014, the Company’s Board of Directors fixed April 1, 2014 as the cancellation date for the conversion rights on the Company’s 7% Series A cumulative convertible preferred stock . As such, the record holders of the Series A Preferred will no longer have conversion rights on and after April 1, 2014. On February 27, 2014, the Company voluntarily delisted its Series A Preferred from the NASDAQ Capital Market.