The following table sets forth selected financial data for ICC prior to the offering. The selected statements of operations and expenses data for each of the years ended December 31, 2016 and 2015 and the selected balance sheet data as of December 31, 2016 and 2015 are derived from the audited consolidated financial statements of ICC and its subsidiaries contained herein. This data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the related notes thereto included elsewhere in this report.
ICC is a regional property and casualty insurance company incorporated in Illinois and focused exclusively on the food and beverage industry. On the effective date of the conversion, ICC became a wholly owned subsidiary of ICC Holdings, Inc. The consolidated financial statements of ICC prior to the conversion will become the consolidated financial statements of ICC Holdings, Inc. upon completion of the conversion.
For the year ended December 31, 2016, we had direct written premium of $51.0 million, net premiums earned of $42.6 million, and net income of $2.8 million. For the year ended December 31, 2015, we had direct premiums written of $49.0 million, net premiums earned of $40.2 million, and net income of $2.2 million. At December 31, 2016, we had total assets of $122.2 million and equity of $33.6 million. At December 31, 2015 we had total assets of $123.4 million and equity of $30.2 million.
Expenses incurred to underwrite risks are referred to as policy acquisition expenses. Variable policy acquisition costs consist of commission expenses, premium taxes and certain other underwriting expenses that vary with and are primarily related to the writing and acquisition of new and renewal business. These policy acquisition costs are deferred and amortized over the effective period of the related insurance policies. Fixed policy acquisition costs, referred to herein as underwriting and administrative expenses are expensed as incurred. These costs include salaries, rent, office supplies, depreciation and all other operating expenses not otherwise classified separately.
The loss and settlement expense ratio is the ratio (expressed as a percentage) of loss and settlement expenses incurred to premiums earned. We measure the loss ratio on an accident year and calendar year loss basis to measure underwriting profitability. An accident year loss ratio measures loss and settlment expenses for insured events occurring in a particular year, regardless of when they are reported, as a percentage of premiums earned during that year. A calendar year loss ratio measures loss and settlement expense for insured events occurring during a particular year and the change in loss reserves from prior accident years as a percentage of premiums earned during that year.
The underwriting expense ratio is the ratio (expressed as a percentage) of amortization of deferred policy acquisition costs and net underwriting and administrative expenses (attributable to insurance operations) to premiums earned, and measures our operational efficiency in producing, underwriting and administering our insurance business.
Available-for-Sale Securities-Debt and equity securities are classified as available-for-sale and reported at fair value. Unrealized gains and losses on these securities are excluded from net earnings but are recorded as a separate component of comprehensive earnings and policyholders’ equity, net of deferred income taxes.
The Company regularly evaluates its fixed income and equity securities using both quantitative and qualitative criteria to determine impairment losses for other-than-temporary declines in the fair value of the investments. The following are the key factors for determining if a security is other-than-temporarily impaired:
Property Held for Investment-Property held for investment purposes is initially recorded at the purchase price, which is generally fair value, and is subsequently reported at cost less accumulated depreciation. Buildings are depreciated on a straight-line bases over the estimated useful lives of the building, which we estimate to be 39 years. Income from property held for investment is reported as net investment income
Future A&OE costs are projected by inflating the selected average A&OE per unit rate, 1.0% annually, against future units calculated by claims runoff patterns.
For the year ended December 31, 2016, we ceded to reinsurers $7.9 million of earned premiums, compared to $7.7 million of earned premiums for the year ended December 31, 2015. Ceded earned premiums as a percent of direct premiums written were 15.5% in 2016, and 15.7% in 2015. This favorable, slight decrease is a result of an overall softer reinsurance market pricing.
For calendar year 2015, the Company experienced favorable development relative to prior years’ reserve estimates in its property line of business primarily from the 2014 accident year. This was partially offset by adverse development in the casualty line of business in Liquor Liability, with approximately 89.4% of the development coming from this business.
Policy acquisition costs are costs we incur to issue policies, which include commissions, premium taxes, underwriting reports, and underwriter compensation costs. The Company offsets the direct commissions it pays with ceded commissions it receives from reinsurers. Policy acquisition costs were increased by $1.3 million, or 8.9%.
Our expense ratio increased 100 basis points from 36.2% to 37.2% for the year ended December 31, 2016 as compared to 2015, due primarily to the increased cost of our self-funded healthcare plan as well as costs related to increased use of temporary employees for projectes related to our mutual-to-stock conversion. As our earned premiums grow year-over-year on an expense structure that is less variable to premium volume, we expect this trend to continue in the near future, but at a slower pace.
Our investment portfolio consisted of 86.8% and 88.0% of readily marketable, investment-grade fixed-maturity securities as of December 31, 2016 and 2015, respectively. The remainder of the portfolio is comprised of rental real estate, highly liquid exchange traded funds, and preferred stock. Net investment income is primarily comprised of interest earned and dividends paid on these securities and rental income on investment real estate, net of related investment expenses, and excludes realized gains and losses.
We reported an income tax expense of $1.2 million in 2016, as compared to an income tax expense of $862,000 in 2015. The income tax expense increase for 2016 relates to an increase in earnings before income taxes in 2016 compared to 2015.
The major components of our assets and liabilities are as follows:
The following table provides case and IBNR reserves for losses and settlement expenses as of December 31, 2016 and 2015.
Potential for variability in our reserves is evidenced by this development. As further illustration of reserve variability, we initially estimated unpaid loss and settlement expense net of reinsurance at the end of 2015 at $41.9 million. As of December 31, 2016, that reserve was re-estimated at $40.6 million, which is $1.3 million, or 3.1%, lower than the initial estimate.
If the net loss and settlement expense reserves were recorded at the high end of the actuarially-determined range as of Decemeber 31, 2016, the loss and settlement expense reserves would increase by $405,000 before taxes. This increase in reserves would have the effect of decreasing net income and equity as of December 31, 2016 by $267,000. If the loss and settlement expense reserves were recorded at the low end of the actuarially-determined range, the net loss and settlement expense reserves at December 31, 2016 would be reduced by $4.5 million with corresponding increases in net income and equity of $3.0 million.
Our fixed maturity and equity securities investments are classified as available-for-sale and carried at estimated fair value as determined by management based upon quoted market prices or a recognized pricing service at the reporting date for those or similar investments. Changes in unrealized investment gains or losses on our investments, net of applicable income taxes, are reflected directly in equity as a component of comprehensive income (loss) and, accordingly, have no effect on net income (loss). Investment income is recognized when earned, and capital gains and losses are recognized when investments are sold, or other-than-temporarily impaired.
The unrealized losses as of December 31, 2016 and 2015 were primarily related to changes in the interest rate environment. Fair values of interest rate sensitive instruments may be affected by increases and decreases in prevailing interest rates which generally translate, respectively, into decreases and increases in fair values of fixed maturity investments. The fair values of interest rate sensitive instruments also may be affected by the credit worthiness of the issuer, prepayment options, relative values of other investments, the liquidity of the instrument, and other general market conditions.
We monitor our investment portfolio and review securities that have experienced a decline in fair value below cost to evaluate whether the decline is other than temporary. When assessing whether the amortized cost basis of the security will be recovered, we compare the present value of the cash flows likely to be collected, based on an evaluation of all available information relevant to the collectability of the security, to the amortized cost basis of the security. The shortfall of the present value of the cash flows expected to be collected in relation to the amortized cost basis is referred to as the “credit loss.” If there is a credit loss, the impairment is considered to be other-than-temporary. If we identify that an other-than-temporary impairment loss has occurred, we then determine whether we intend to sell the security, or if it is more likely than not that we will be required to sell the security prior to recovering the amortized cost basis less any current-period credit losses. If we determine that we do not intend to sell, and it is not more likely than not that we will be required to sell the security, the amount of the impairment loss related to the credit loss will be recorded in earnings, and the remaining portion of the other-than-temporary impairment loss will be recognized in other comprehensive income (loss), net of tax. If we determine that we intend to sell the security, or that it is more likely than not that we will be required to sell the security prior to recovering its amortized cost basis less any current-period credit losses, the full amount of the other-than-temporary impairment will be recognized in earnings.
The fair value estimates of our investments provided by the independent pricing service at December 31, 2016 and December 31, 2015, respectively, were utilized, among other resources, in reaching a conclusion as to the fair value of our investments.
Management reviews the reasonableness of the pricing provided by the independent pricing service by employing various analytical procedures. We review all securities to identify recent downgrades, significant changes in pricing, and pricing anomalies on individual securities relative to other similar securities. This will include looking for relative consistency across securities in common sectors, durations, and credit ratings. This review will also include all fixed maturity securities rated lower than “A” by Moody’s or S&P. If, after this review, management does not believe the pricing for any security is a reasonable estimate of fair value, then it will seek to resolve the discrepancy through discussions with the pricing service. In our review we did not identify any such discrepancies for the years ended December 31, 2016 and 2015, and no adjustments were made to the estimates provided by the pricing service. The classification within the fair value hierarchy of Accounting Standards Codification (ASC) Topic 820, Fair Value Measurement, is then confirmed based on the final conclusions from the pricing review.
As of December 31, 2016 and 2015, we had no material unrecognized tax benefits or accrued interest and penalties. Federal tax years 2013 through 2015 are open for examination. The tax return related to the year ended December 31, 2016 has not yet been filed.
As of December 31, 2016 and 2015, outstanding debt balances totaled $3.8 million and $3.3 million, respectively. On August 31, 2016, surplus notes, with an initial par value of $250,000 and remaining outstanding principal of $71,000 as of such date, matured. We incurred interest expense for the years ended December 31, 2016 and 2015 of $226,000 and $136,000, respectively. The average interest rate on debt in was 5.0% in 2016 compared to 4.8% in 2015. The debt balance is comprised of surplus notes, leasehold obligations, debt obligations, home office mortgage, and our revolving line of credit.
We had $1.85 million and $1.9 million of surplus notes issued, for cash, and outstanding as of December 31, 2016 and 2015, respectively. Payment of principal and interest on all surplus notes requires specific approval by the Illinois Department of Insurance. Our obligation to pay principal and interest on surplus notes is subordinate to the insurance claims of policyholders of ICC in accordance with terms of Section 56 of the Illinois Insurance Code.
Note holders are entitled to 1/28th of the principal each year. To date, the note holders of the surplus notes maturing on December 31, 2033 and July 15, 2034 have elected to waive principal repayment. The terms of the note allow for the conversion to equity should the company convert from a mutual insurance company to a stock insurance company.
Future minimum lease payments for the five succeeding years as of December 31, 2016 are:
Additionally, the Company entered into two debt agreements in 2016; one agreement for $500,000 and another debt agreement for $75,000. The terms of the loans are 36 months, but the Company has the option to prepay after 12 months. The loans bear interest at 4.7%. Interest paid for the twelve months ended December 31, 2016 and 2015 was $8,146 and $0, respectively.
We maintain a mortgage on our home office. Interest is charged at a fixed rate of 2.6% and the loan matures in 2017. The building is used as collateral to secure the loan. The loan balance at year end 2016 and 2015 was $184,000 and $492,000, respectively. The interest paid on the loan in 2016 was $9,000 and $17,000 in 2015.
We maintain a revolving line of credit with American Bank & Trust, which permits borrowing up to an aggregate principal amount of $2.0 million. This facility was entered into during 2013 and is renewed annually with a current expiration of August 1, 2017. The line of credit is priced at 30 day LIBOR plus 2% with a floor of 3.5%. Interest paid on the line of credit in 2016 was immaterial. There are no financial covenants governing this agreement. For the years ended December 31, 2016 and 2015, no amounts were outstanding on this facility.
Cash flows from continuing operations for the years ended December 31, 2016 and 2015 were as follows:
The following table summarizes, as of December 31, 2016, our future payments under contractual obligations and estimated claims and claims related payments for continuing operations.
In May 2015, FASB issued ASU No. 2015-09, Disclosure about Short-Duration Contracts. The guidance addresses enhanced disclosure requirements for insurers relating to short-duration insurance contract claims and the unpaid claims liability rollforward for long and short-duration contracts. This ASU is effective for annual reporting periods beginning after December 15, 2015, and for interim periods after December 15, 2016. Early adoption is permitted. The Company has adopted this ASU for the year ended December 31, 2017 and while disclosures will be increased, management does not believe adoption will have a material effect on the Company’s financial statements.
Consolidated Statements of Earnings and Comprehensive Earnings (Years ended December 31, 2016 and 2015)
Consolidated Statements of Policyholders’ Equity (Years ended December 31, 2016 and 2015)
Consolidated Statements of Cash Flows (Years ended December 31, 2016 and 2015)
ICC Holdings, Inc. is a Pennsylvania corporation that was organized in 2016. ICC Holdings, Inc. was formed so that it could acquire all of the capital stock of Illinois Casualty Company (ICC) in the mutual-to-stock conversion. Prior to the conversion on March 30, 2017, ICC Holdings, Inc did not engage in any operations. After the conversion, ICC Holdings, Inc’s primary assets are the outstanding capital stock of ICC, the outstanding membership interests of ICC Realty, LLC and a portion of the net proceeds from the stock offering completed in connection with the mutual-to-stock conversion. These financial statements presented herein are for ICC, as it was the ultimate reporting entity as of December 31, 2016.
We are a specialty insurance carrier primarily underwriting commercial multi-peril, liquor liability, workers’ compensation, and umbrella liability coverages for the food and beverage industry through our subsidiary insurance company, ICC. ICC writes business in Illinois, Iowa, Indiana, Minnesota, Missouri, Wisconsin, and Ohio and markets through independent agents. Approximately 36.9% and 35.7% of the premium is written in Illinois for the years ended December 31, 2016 and 2015, respectively. The Company has three wholly owned subsidiaries, Beverage Insurance Agency, Estrella Innovative Solutions, Inc., and ICC Realty, LLC.; however the Company operates as a single segment.
The Company regularly evaluates its fixed income and equity securities using both quantitative and qualitative criteria to determine impairment losses for other-than-temporary declines in the fair value of the investments. The following are the key factors for determining if a security is other-than-temporarily impaired as follows:
The Company performs a qualitative evaluation of holdings that fall below the price threshold. The analysis begins with an opinion of industry and competitive position. This includes an assessment of factors that enable the profit structure of the business (e.g., reserve profile for exploration and production companies), competitive advantage (e.g., distribution system), management strategy, and an analysis of trends in return on invested capital. Analysts may also review other factors to determine whether an impairment exists including liquidity, asset value cash flow generation, and industry multiples.
Property and equipment are presented at cost, less accumulated depreciation, and are depreciated using accelerated methods for financial statement purposes for a period based on their economic life. Computer equipment is depreciated over 3 years and equipment over a range of 5 to 7 years. Buildings are depreciated over 39 years and related improvements over 15 years. Annually, the Company reviews the major asset classes held for impairment. For the years ended December 31, 2016 and 2015, the Company recognized no impairments. Property and equipment are summarized as follows:
General corporate expenses consist primarily of real estate and occupancy costs, such as utilities and maintenance. These costs do not vary significantly with premium volume but rather with square footage of real estate owned.
Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15) - This guidance addresses eight specific cash flow issues with the objective of reducing existing diversity in practice. The new guidance is effective beginning after December 15, 2018, and it is not expected to have a material impact on the Company’s cash flows.
Financial Instruments Credit Losses (ASU 2016-13) - This guidance affects the recognition of expected credit losses. Credit losses relating to available for sale securities will be recorded through an allowance for credit losses. The amendments will be applied to fiscal years beginning after December 15, 2019, and early adoption is permitted as of fiscal years beginning after December 15, 2018. The effect of applying the new guidance on accounting for credit losses has not yet been determined.
The Company’s insurance coverages include exposure to catastrophic events. All catastrophe exposures are monitored by quantifying exposed policy limits in each region and by using computer-assisted modeling techniques. Additionally, the Company limits its risk to such catastrophes through restraining the total policy limits written in each region and by purchasing reinsurance. The Company’s major catastrophe exposure is to losses caused by tornado and hail to commercial properties throughout the Midwest.
The catastrophe reinsurance treaty renewed on January 1, 2016, and the Company had protection of $9.5 million in excess of $500,000 first-dollar retention for both of the years ended December 31, 2016 and 2015. The catastrophe program is actively managed to keep net retention in line with risk tolerances and to optimize the risk/return trade off.
The National Association of Insurance Commissioners (NAIC) has developed Property/Casualty Risk-Based Capital (RBC) standards that relate an insurer’s reported statutory surplus to the risks inherent in its overall operations. The RBC formula uses the statutory annual statement to calculate the minimum indicated capital level to support asset (investment and credit) risk and underwriting (loss reserves, premiums written and unearned premium) risk. The NAIC model law calls for various levels of regulatory action based on the magnitude of an indicated RBC capital deficiency, if any. As of December 31, 2016, the Company determined that its capital levels are well in excess of the minimum capital requirements for all RBC action levels and that its capital levels are sufficient to support the level of risk inherent in its operations. See Note 10 - Statutory Information and Dividend Restrictions for further discussion of statutory information and related insurance regulatory restrictions.
In addition, ratings are a critical factor in establishing the competitive position of insurance companies. The Company is rated by A.M. Best. This rating reflects their opinion of the insurance company’s financial strength, operating performance, strategic position, and ability to meet its obligations to policyholders.
The amortized cost and estimated fair value of fixed income AFS securities at December 31, 2016, are shown by contractual maturity below.
In addition, the following table is a schedule of amortized costs and estimated fair values of investments in fixed maturity and equity securities as of December 31, 2016 and 2015:
Net unrealized gains in the corporate bond portfolio increased $693,171 in 2016 from a gain of $58,168 in 2015 to a gain of $751,339 in 2016 as interest rates decreased during the year. This increase was due to corporate spreads tightening throughout the year. Of particular interest, the risk premiums associated with energy sector holdings (which comprise about 19% of the corporate portfolio) decrease substantially in the second half of the year as oil prices rallied from a low of about $30/barrel to end the year at $55/barrel. The corporate bond portfolio has an overall rating of A+.
The equity portfolio consists of ETFs and preferred stock. Net unrealized gains in the equity portfolio increased $949,119 and decreased $487,516 in 2016 and 2015, respectively. Given the intent to hold and expectation of recovery to cost within a reasonable period of time, the Company does not consider any of its equities to be other-than-temporarily impaired.
The following table is also used as part of the impairment analysis and displays the total value of securities that were in an unrealized loss position as of December 31, 2016 and 2015. The table segregates the securities based on type, noting the fair value, cost (or amortized cost), and unrealized loss on each category of investment as well as in total. The table further classifies the securities based on the length of time they have been in an unrealized loss position.
In 2016, investment property comprised of 35 apartment rental units located in Rock Island and Moline, Illinois. Property held for investment is net of accumulated depreciation of $50,948 and $3,155 as of December 31, 2016, and 2015, respectively. Related depreciation expense was $47,793 and $3,155 for the years ended December 31, 2016, and 2015, respectively.
Due to the relatively short-term nature of cash, cash equivalents, and the mortgage on the home office, their carrying amounts are reasonable estimates of fair value. The surplus notes, leasehold obligations, and debt obligations reported under Note 5-Debt, are carried at face value and given that there is no readily available market for these to trade in, management believes that face value accurately reflects fair value. Cash and cash equivalents are classified as Level 1 of the hierarchy. The mortgage on the home office and the surplus notes are carried at Level 2 of the hierarchy.
As of December 31, 2016 and 2015, outstanding debt balances totaled $3,786,950 and $3,273,560, respectively. The Company incurred interest expense for the years ended December 31, 2016 and 2015 of $226,095 and $136,295, respectively. The average rate on debt was 5.0% in 2016 compared to 4.5% in 2015. The debt balance is comprised of the following:
The Company has $1,850,000 and $1,921,428 of surplus notes issued, for cash, and outstanding as of December 31, 2016 and 2015, respectively. Payment of principal and interest on all surplus notes requires specific approval by the Illinois Department of Insurance. The Company’s obligation to pay principal and interest on surplus notes is subordinate to the insurance claims of policyholders of the Company in accordance with terms of Section 56 of the Illinois Insurance Code.
Subject to the approval of the Director of Insurance of the State of Illinois and the applicable provisions of the Illinois Insurance Code, the noteholder shall have the right at the time of a stock conversion of the Company, upon not less than thirty (30) days’ written notice to the Company, to convert all or any portion of the outstanding principal amount of the note into common shares of the Company.
Note holders are entitled to 1/28th of the principal each year. To date, the note holders of the surplus notes maturing on 12/31/2033 and 7/15/2034 have elected to waive principal repayment. The terms of the note allow for the conversion to equity should the company convert from a mutual insurance company to a stock insurance company.
Additionally, the Company entered into two debt agreements in 2016; one agreement for $500,000 and another debt agreement for $75,000. The terms of the loans are 36 months, but the Company has the option to prepay the $500,000 loan after 12 months. The total balance of debt agreements at year end 2016 and 2015 was $525,620 and $0, respectively. The loans bear interest at 4.7%. Interest paid for the twelve months ended December 31, 2016 and 2015 was $8,146 and $0, respectively.
In the ordinary course of business, the Company assumes and cedes premiums and selected insured risks with other insurance companies, known as reinsurance. A large portion of the reinsurance is put into effect under contracts known as treaties and, in some instances, by negotiation on each individual risk (known as facultative reinsurance). In addition, there are several types of treaties including quota share, excess of loss and catastrophe reinsurance contracts that protect against losses over stipulated amounts arising from any one occurrence or event. The arrangements allow the Company to pursue greater diversification of business and serve to limit the maximum net loss to a single event, such as a catastrophe. Through the quantification of exposed policy limits in each region and the extensive use of computer-assisted modeling techniques, management monitors the concentration of risks exposed to catastrophic events.
At December 31, 2016 and 2015, the Company had prepaid reinsurance premiums and recoverables on paid and unpaid losses and settlement expenses totaling $12,114,998 and $19,158,224, respectively. More than 98% of the Company’s reinsurance recoverables are due from companies with financial strength ratings of “A” or better by A.M. Best.
The following table is a reconciliation of the Company’s unpaid losses and settlement expenses for the years 2016 and 2015.
Income tax expense attributable to income from operations for the years ended December 31, 2016 and 2015, differed from the amounts computed by applying the U.S. federal tax rate of 34% to pretax income from continuing operations as demonstrated in the following table:
The Company’s effective tax rate was 29.5% and 28.6% for 2016 and 2015, respectively. Effective rates are dependent upon components of pretax earnings and the related tax effects.
Federal and state income taxes paid in 2016 and 2015 amounted to $300,000 and $950,000, respectively. As of December 31, 2016, the Company does not have any capital or operating loss carryforwards. Periods still subject to Internal Revenue Service (IRS) audit include 2013 through current year. There are currently no open tax exams.
The statutory financial statements of ICC are presented on the basis of accounting practices prescribed or permitted by the Illinois Department of Insurance, which has adopted the National Association of Insurance Commissioners (NAIC) statutory accounting practices as the basis of its statutory accounting practices. ICC did not use any permitted statutory accounting practices that differ from NAIC prescribed statutory accounting practices. In converting from statutory to GAAP, typical adjustments include deferral of policy acquisition costs, the inclusion of statutory non-admitted assets and the inclusion of net unrealized holding gains or losses in equity relating to AFS investment securities, and the reclassification of surplus notes from equity to debt.
The NAIC has Risk-based capital (RBC) requirements that require insurance companies to calculate and report information under a risk-based formula, which measures statutory capital and surplus needs based upon a regulatory definition of risk relative to the company’s balance sheet and mix of products. As of December 31, 2016 and 2015, ICC had RBC amounts in excess of the authorized control level RBC, as defined by the NAIC. ICC had an authorized control level RBC of $6,314,396 and $6,175,978 as of December 31, 2016 and 2015, respectively, compared to actual statutory capital and surplus of $29,957,250 and $26,855,678, respectively, for these same periods.
Mr. Scott T. Burgess is a director of the Company and a Senior Managing Director of Griffin Financial Group. Mr. Burgess was paid $2,190 and $2,284 in 2016 and 2015, respectively. Griffin Financial Group was paid $9,910 and $75,000 in 2016 and 2015, respectively. Griffin and Stevens & Lee are affiliated. Stevens & Lee is a full-service law firm that was paid $630,125 and $0 as of December 31, 2016 and 2015, respectively.
On February 7, 2017, the Company received preliminary approval for expansion into the state of Colorado. On March 20, 2017, we received our license to write business in the state of Kansas.
On February 14, 2017, the SEC approved the Company's initial public offering. As of March 15, 2017, the Company received common stock orders for an amount in excess of the offering range referenced in the prospectus. The plan of conversion was approved by ICC policyholders at a special meeting on March 17, 2017. Simultaneously, surplus notes totaling $1.65 million were converted into 165,000 shares of the Company’s common stock. Included in the conversion of surplus notes, John R. Klockau, a director of the Company, converted $1.15 million in exchange for 115,000 shares of the Company’s common stock. John R. Klockau received a payment for interest on the surplus note of $12,975. The Company’s offering closed on March 24, 2017, and on March 28, 2017, the Company’s stocks began trading on the NASDAQ Capital Market under the “ICCH” ticker. The Company paid $978,150 of underwriting fees to Griffin Financial Group, LLC. Proceeds received from the offering totaled $3.5 million.