The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes thereto included in Item 8 of this report. This discussion includes forward-looking statements that are subject to risks, uncertainties and other factors described in Item 1A of this report. These factors could cause our actual results in 2015 and beyond to differ materially from those expressed in, or implied by, those forward-looking statements.
The use of reinsurance is an important component of our business strategy. We purchase reinsurance to protect us from the impact of large losses. Our reinsurance program for 2015 includes 14 reinsurers that provide coverage to us in excess of a certain specified loss amount, or retention level. Our 2015 reinsurance program provides us with reinsurance coverage for each loss occurrence up to $70.0 million, subject to limitations, applicable deductibles, retentions and aggregate limits. However, for any loss occurrence involving only one claimant, our reinsurance coverage is limited to $10.0 million for any single claimant, subject to applicable deductibles, retentions and aggregate limits. In 2014, we raised our retention from $1.0 million to $2.0 million
For example, for the five-year period ended December 31, 2014 we had recorded 42 severe claims, or an average of 8 severe claims per year for accident years 2010 through 2014. The number of severe claims reported in any one accident year as of December 31, 2014 ranged from a low of 6 in 2011 to a high of 10 in 2010, 2013 and 2014. The average reported case severity for these claims ranged from $1.3 million for the 2010 accident year to $2.9 million for the 2013 accident year. For the five accident years, the case incurred for these severe claims accounted for an average of 6.2 percentage points of our overall loss and loss adjustment expense, or LAE, ratio, measured at December 31, 2014.
Substantial judgment is required to determine the relevance of our historical experience and industry information under current facts and circumstances. The interpretation of this historical and industry data can be impacted by external forces, principally frequency and severity of unreported claims, length of time to achieve ultimate settlement of claims, utilization, inflation in medical costs and wages, insurance policy coverage
interpretations, jury determinations and legislative changes. Accordingly, our reserves may prove to be inadequate to cover our actual losses. If we change our estimates, these changes would be reflected in our results of operations during the period in which the changes occurred, with increases in our reserves resulting in decreases in our earnings.
Our gross reserves for loss and loss adjustment expenses at December 31, 2014, 2013 and 2012 were $687.6 million, $614.6 million and $570.5 million, respectively. As a percentage of gross reserves at year end, IBNR represented 22.4% in 2014, 20.2% in 2013 and 21.6% in 2012.
Net Investment Income and Net Realized Gains and Losses on Investments. We invest our statutory surplus funds and the funds supporting our insurance liabilities in fixed maturity, equity securities and alternative investments. In addition, a portion of these funds are held in cash and cash equivalents to pay current claims. Our net investment income includes interest and dividends earned on our invested assets, amortization of premiums and discounts on our fixed-maturity securities and returns on our other investments. We assess the performance of our investment portfolio using a standard tax equivalent yield metric. Investment income that is tax-exempt is increased by our marginal federal tax rate of 35% to express yield on tax-exempt securities on the same basis as taxable securities. Net realized gains and losses on our investments are reported separately from our net investment income. Net realized gains occur when our investment securities are sold for more than their costs or amortized costs, as applicable. Net realized losses occur when our investment securities are sold for less than their costs or amortized costs, as applicable, or are written down as a result of other-than-temporary impairment. We classify the majority of our fixed maturity securities as held-to-maturity. We also have some fixed-maturity securities classified as available-for-sale, as are our equity securities and other investments. Net unrealized gains or losses on our securities classified as available-for-sale are reported separately within accumulated other comprehensive income on our balance sheet.
Salaries and Benefits. We pay salaries and provide benefits to our employees.
In establishing our reserves, we review the results of analyses using actuarial methods that utilize historical loss data from our more than 29 years of underwriting workers’ compensation insurance. The actuarial analysis of our historical data provides the factors we use in estimating our loss reserves. These factors are primarily measures over time of the number of claims paid and reported, average paid and incurred claim amounts, claim closure rates and claim payment patterns. In evaluating the results of our analyses, management also uses substantial judgment in considering other factors that are not considered in these actuarial analyses, including changes in business mix, claims management, regulatory issues, medical trends, employment and wage patterns, insurance policy coverage interpretations, judicial determinations and other subjective factors. Due to the inherent uncertainty associated with these estimates, and the cost of incurred but unreported claims, our actual liabilities may vary significantly from our original estimates.
Amounts Recoverable from Reinsurers. Amounts recoverable from reinsurers represent the portion of our paid and unpaid loss and loss adjustment expenses that are assumed by reinsurers and related commissions due
Net Investment Income. Net investment income in 2014 was $27.2 million, an increase of 0.7% from the $27.0 million reported in 2013. The pre-tax investment yield on our investment portfolio was 2.6% per annum for 2014 and 2.8% for 2013. The tax-equivalent yield on our investment portfolio was 3.5% per annum for 2014, compared to 3.9% per annum for 2013. The tax-equivalent yield is calculated using the effective interest rate and a 35% marginal tax rate. Average invested assets, including cash and cash equivalents, increased 12.7%, from an average of $944.4 million for 2013 to an average of $1,064.4 million for 2014.
Income tax expense. Income tax expense for 2014 was $20.1 million, compared to $15.6 million for 2013. The increase was primarily attributable to an increase in pre-tax income, from $59.2 million for 2013 to $73.7 million for 2014. The effective tax rate also increased to 27.2% for 2014, compared to 26.3% for 2013. This increase is due to the changing mix of taxable income versus non-taxable income.
Gross Premiums Written. Gross premiums written for 2013 were $372.2 million, compared to $328.8 million for 2012, an increase of 13.2%. The increase was attributable to a $46.9 million increase in annual premiums on voluntary policies written during the period, a $2.8 million increase in premiums from mandatory pooling arrangements and a $0.9 million increase in direct assigned risk premiums offset by a $7.4 million decrease in premiums resulting from payroll audits and related premium adjustments. Related premium adjustments in 2013 include a $1.3 million increase in “earned but unbilled”, or EBUB, premium.
Underwriting and Certain Other Operating Costs, Commissions and Salaries and Benefits. Underwriting and certain other operating costs, commissions and salaries and benefits for 2013 were $67.1 million, compared to $61.4 million for 2012, an increase of 9.3%. This increase was primarily due to a $3.2 million increase in commission expense, a $0.6 million increase in insurance related assessments and a $0.8 million increase in mandatory pooling arrangement fees. Offsetting these increases were a $2.0 million decrease in bad debt expense, a $0.3 million decrease in taxes and fees, a $1.8 million increase in experience-rated commissions and a $0.5 million increase in ceding commission which serve to decrease the cost of our reinsurance. Our underwriting expense ratio decreased to 20.3% in 2013 from 21.1% in 2012.
Interest expense. There was no interest expense for 2013 compared to $0.6 million for 2012. The Company retired all of its debt in August 2012.
The Company recorded favorable prior accident year loss and loss adjustment expense development of $23.7 million in calendar year 2014, $12.6 million in calendar year 2013 and $2.5 million in calendar year 2012. The table below sets forth the favorable or unfavorable development for accident years 2009 through 2013 and, collectively, all accident years prior to 2009.
At December 31, 2014, our incurred amounts for certain accident years, particularly 2012 and 2010, developed more favorably than management previously expected. The assumptions we used in establishing our reserves for these accident years were based on our historical claims data. However, as of December 31, 2014, actual results for these accident years have been better than our assumptions would have predicted. We do not presently intend to modify our assumptions for establishing reserves in light of recent results. However, if actual results for current and future accident years are consistent with, or different than, our results in these recent accident years, our historical claims data will reflect this change and, over time, will impact the reserves we establish for future claims.
We forecast claim payments based on our historical trends. We seek to manage the funding of claim payments by actively managing available cash and forecasting cash flows on a short- and long-term basis. Cash payments, net of reinsurance, for claims were $182.5 million in 2014, $178.4 million in 2013 and $181.9 million in 2012. We fund claim payments out of cash flow from operations, principally premiums, net of amounts ceded to our reinsurers, and net investment income. Our investment portfolio has increased from $800.5 million at December 31, 2009 to $1.1 billion at December 31, 2014.
Net cash used in investing activities was $141.0 million in 2014, as compared to $97.0 million in 2013 and $9.3 million in 2012. In 2014, major components of net cash used in investing activities included investment purchases of $455.2 million and net purchases of furniture, fixtures and equipment of $1.0 million, offset by proceeds from sales and maturities of investment of investments of $315.2 million. In 2013, major components of net cash used in investing activities included investment purchases of $355.6 million and net purchases of furniture, fixtures and equipment of $1.1 million, offset by proceeds from sales and maturities of investments of $259.8 million. In 2012, major components of net cash used in investing activities included investment purchases of $267.7 million and net purchases of furniture, fixtures and equipment of $1.2 million, offset by proceeds from sales and maturities of investments of $259.6 million.
Net cash used in financing activities was $31.6 million in 2014, as compared to net cash used in financing activities of $1.5 million in 2013 and net cash used in financing activities of $24.6 million in 2012. Major components of cash provided in financing activities in 2014 included $2.7 million of proceeds from the exercise of stock options and $2.8 million of tax benefit from share-based compensation, offset by cash used for dividends paid to shareholders of $37.1 million. Major components of cash provided in financing activities in 2013 included $2.3 million of proceeds from the exercise of stock options and $2.0 million of tax benefit from share-based compensation, offset by cash used for dividends paid to shareholders of $5.9 million. Major components of cash used in financing activities in 2012 included $25.8 million for the redemption of subordinated debt securities, $0.8 million of proceeds from the exercise of stock options and $0.4 million of tax benefit from share-based compensation.
In October 2007, the Company entered into an agreement providing for a line of credit in the maximum amount of $20.0 million with Frost Bank, NA. The agreement expired in October 2010. The Company renewed this agreement in the fourth quarter 2010 for an additional three years to mature in December of 2013. Under the agreement, advances may be made either in the form of loans or letters of credit. Borrowings under the agreement accrue at interest rates based upon prime rate or LIBOR. The Company paid a fee of 0.375% on the unused portion of the loan in arrears quarterly for a fee of $75,000 annually, assuming the line of credit remains unused during the calendar year. In December of 2013, the Company renewed the agreement providing for a line of credit up to $20.0 million, expiring in December 2016. Under the agreement, the Company will pay a fee of 0.25% on the unused portion of the loan in arrears quarterly for a fee of $50,000 annually. The line of credit is unsecured. At December 31, 2014, there were no outstanding borrowings.
The Board of Directors initially authorized the Company’s share repurchase program in February 2010. In October 2011, 2012 2013 and 2014 the Board reauthorized this program. As of December 31, 2014, we had repurchased a total of 1,258,250 shares of our outstanding common stock for $22.4 million. The Company had
$25.0 million available for future purchases at December 31, 2014 under this program. There were no share repurchases in 2014, 2013 or 2012. The purchases will continue to be effected from time to time depending upon market conditions and subject to applicable regulatory considerations. It is anticipated that future purchases will be funded from available capital.
In 2013, the Company paid a quarterly cash dividend of $0.08 per share. In 2014, the Company paid a quarterly dividend of $0.12 share. In addition, the Company paid two extraordinary cash dividends of $0.50 and $1.00 per share in 2014.
On February 24, 2015 the Company declared a regular quarterly cash dividend of $0.15 per share payable on March 27, 2015 to shareholders of record on March 13, 2015.
The Board intends to continue to consider the payment of a regular cash dividend each calendar quarter. On an annualized basis, the cash dividend is expected to be $0.60 per share in 2015.
The principal objectives of our investment portfolio are to preserve capital and surplus and to maintain appropriate liquidity for corporate requirements. Additional objectives are to support our A.M. Best rating of “A” (Excellent) and to maximize after-tax income and total return. We presently expect to maintain sufficient liquidity from funds generated by operations to meet our anticipated insurance obligations and operating and capital expenditure needs. Excess funds from operations will be invested in accordance with our investment policy and statutory requirements.
On January 1, 2008, we adopted FASB ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a fair value hierarchy and requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. As disclosed in Note 19 of the financial statements, our securities available-for-sale are classified using Level 1, 2 and 3 inputs. We did not elect the fair value option prescribed under FASB ASC Topic 825, Financial Instruments, for any financial assets or financial liabilities in 2013 or 2014.
We reviewed all securities with unrealized losses in accordance with the impairment policy described above. The Company expects to hold these investments in equity securities for a reasonable period of time sufficient for a recovery of fair value. We determined that the unrealized losses in the fixed maturity securities portfolio related primarily to changes in market interest rates since the date of purchase, current conditions in the capital markets and the impact of those conditions on market liquidity and prices generally, and the transfer of the investments from the available-for-sale classification to the held-to-maturity classification in January 2004. We expect to recover the carrying value of these securities as it is not more likely than not that we will be required to sell the security before the recovery of its amortized cost basis. In addition, none of the unrealized losses on debt securities are considered credit losses.
During 2014, the Company impaired securities totaling $0.2 million related to a fixed maturity security. The impairment charge is included in “Net realized gains (losses) on investments” for 2014. We impaired the security due a downgrade of the security and the amount of the accumulated unrealized loss.
The table below provides information with respect to our contractual obligations as of December 31, 2014.
(2) We are subject to various annual assessments imposed by certain of the states in which we write insurance policies. These assessments are generally based upon the amount of premiums written or losses paid during the applicable year. Assessments based on premiums are generally paid within one year after the calendar year in which the policies are written, while assessments based on losses are generally paid within one year after calendar year in which the loss is paid. When we establish a reserve for loss and loss
Audited Financial Statements as of December 31, 2014 and 2013 and for the three years in the period ended December 31, 2014:
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), AMERISAFE, Inc. and Subsidiaries’ internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 27, 2015 expressed an unqualified opinion thereon.
The Company provides workers’ compensation insurance for companies primarily in special trade groups, including construction, trucking, manufacturing, oil and gas and agriculture. Assets and revenues of AIIC represent at least 95% of comparable consolidated amounts of the Company for each of 2014, 2013 and 2012.
The Company estimates the annual premiums to be paid by its policyholders when the Company issues the policies and records those amounts on the balance sheet as premiums receivable. The Company conducts premium audits on all of its voluntary business policyholders annually, upon the expiration of each policy, including when the policy is renewed. The purpose of these audits is to verify that policyholders have accurately reported their payroll expenses and employee job classifications, and therefore have paid the Company the premium required under the terms of the policies. The difference between the estimated premium and the ultimate premium is referred to as “earned but unbilled” premium, or EBUB premium. EBUB premium can be higher or lower than the estimated premium. EBUB premium is subject to significant variability and can either
increase or decrease earned premium based upon several factors, including changes in premium growth, industry mix and economic conditions. Due to the timing of audits and other adjustments, ultimate premium earned is generally not determined for several months after the expiration of the policy.
Amounts recoverable from reinsurers include balances currently owed to the Company for losses and allocated loss adjustment expenses that have been paid to policyholders, amounts that are currently reserved for and will be recoverable once the related expense has been paid and experience-rated commissions recoverable upon commutation.
The Company accounts for income taxes using the liability method. The provision for income taxes has two components, amounts currently payable or receivable and deferred amounts. Deferred income tax assets and liabilities are recognized for the differences between the financial statement carrying amounts of existing assets
Insurance-related assessments are accrued in the period in which they have been incurred. The Company is subject to a variety of assessments related to insurance commerce, including those by state guaranty funds and workers’ compensation second-injury funds. State guaranty fund assessments are used by state insurance oversight agencies to cover losses of policyholders of insolvent or rehabilitated insurance companies and for the operating expenses of such agencies. The Company has a premium tax benefit accrued of $4.0 million and $3.6 million as of December 31, 2014 and 2013, respectively, for mandatory assessments that may be recovered through a reduction in future premium taxes in certain states. Assessments based on premiums are generally paid one year after the calendar year in which the premium is written, while assessments based on losses are generally paid within one year of the calendar year in which the loss is paid.
Short-term investments held at December 31, 2014 include $32.7 million of corporate bonds and certificates of deposit of $1.0 million. Short-term investments held at December 31, 2013 include $82.7 million of corporate bonds, certificates of deposits of $0.9 million and $0.8 million of municipal securities. All certificates of deposits are fully insured by the Federal Deposit Insurance Corporation.
The gross unrealized gains and losses on, and the cost or amortized cost and fair value of, those investments classified as available-for-sale at December 31, 2013 are summarized as follows:
At December 31, 2014, there were $19.8 million of held-to-maturity investments on deposit with regulatory agencies of states in which the Company does business.
A summary of the Company’s realized gains and losses on sales, calls or redemptions of investments for 2014, 2013 and 2012 is as follows:
any reduction or elimination of dividends, or nonpayment of scheduled principal or interest payments;
In 2014, the Company impaired a fixed maturity security in the amount of $0.2 million. The impairment charge is included in “Net realized gains (losses) on investments” for 2014. We impaired the security due to a downgrade of the security and the amount of the accumulated unrealized loss.
The Company cedes certain premiums and losses to various reinsurers under quota share and excess-of-loss treaties. These reinsurance arrangements provide for greater diversification of business, allow management to control exposure to potential losses arising from large risks, and provide additional capacity for growth. Ceded reinsurance contracts do not relieve the Company from its obligations to policyholders. The Company remains liable to its policyholders for the portion reinsured to the extent that any reinsurer does not meet the obligations assumed under the reinsurance agreements. To minimize its exposure to significant losses from reinsurer insolvencies, the Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities, or economic characteristics of the reinsurers on a continual basis. The effect of reinsurance on premiums written and earned in 2014, 2013 and 2012 was as follows:
Amounts recoverable from reinsurers consists of ceded case reserves, ceded incurred but not reported (“IBNR”) reserves, paid losses recoverable and experience-rated commissions recoverable. Ceded case and ceded IBNR reserves represent the portion of gross loss and loss adjustment expense liabilities that are recoverable under reinsurance agreements, but are not yet due from reinsurers. Paid losses recoverable are receivables currently due from reinsurers for ceded paid losses. The Company considers paid losses recoverable outstanding for more than 90 days to be past due. At December 31, 2014, there were no paid losses recoverable past due. Experience-rated commissions recoverable represents earned commission from certain reinsurance companies based on the financial results of the applicable risks ceded to the reinsurers.
At December 31, 2014, unsecured reinsurance recoverables from reinsurers that exceeded 1.5% of statutory surplus of the Company’s insurance subsidiary are shown below (in thousands). The A.M. Best Company rating for the reinsurer is shown parenthetically.
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. There were no uncertain tax positions as of December 31, 2014, 2013 and 2012.
The foregoing reconciliation reflects favorable development of the net reserves at December 31, 2014, 2013, and 2012. The favorable development reduced loss and loss adjustment expense incurred by $23.7 million in 2014 driven primarily by accident years 2012, 2010 and 2009 of $9.3 million, $6.9 million and $1.7 million, respectively. In 2013 and 2012, the Company recorded favorable development of $12.6 million and $2.5 million, respectively. The revisions to the Company’s reserves reflect new information gained by claims adjusters in the normal course of adjusting claims and is reflected in the financial statements when the information becomes available. It is typical for more serious claims to take several years or longer to settle and the Company continually revises estimates as more information about claimants’ medical conditions and potential disability becomes known and the claims get closer to being settled.
The Company’s insurance subsidiaries file financial statements prepared in accordance with statutory accounting principles prescribed or permitted by the insurance regulatory authorities of the states in which the subsidiaries are domiciled. Statutory-basis shareholders’ capital and surplus at December 31, 2014, 2013 and 2012 of the directly owned insurance subsidiary, AIIC, and the combined statutory-basis net income and realized investment gains for all AMERISAFE’s insurance subsidiaries for the three years in the period ended December 31, 2014, were as follows (in thousands):
Pursuant to regulatory requirements, AIIC cannot pay dividends to the Company in excess of the lesser of 10% of statutory surplus, or statutory net income, excluding realized investment gains, for the preceding 12-month period, without the prior approval of the Nebraska Director of Insurance. However, for purposes of this dividend calculation, net income from the previous two calendar years may be carried forward to the extent that it has not already been paid out as dividends. AIIC paid $25.0 million in dividends to the Company in 2014, $15.0 million in 2013 and $21.0 million in 2012. Based upon the dividend limitation described above, AIIC could pay to the Company dividends of up to $37.8 million in 2015 without seeking regulatory approval.
Shareholders approved an amended Certificate of Formation for the Company on June 15, 2010 under which the Company is authorized to issue 10,000,000 shares of preferred stock, par value $0.01 per share. At December 31, 2014, there were no shares of preferred stock outstanding.
The following table summarizes information about the restricted stock outstanding under the 2005 Incentive Plan at December 31, 2014:
In 2010, the Company’s shareholders approved an amendment to the AMERISAFE Non-Employee Director Restricted Stock Plan (the “2010 Restricted Stock Plan”). The Plan is administered by the Compensation Committee of the Board and provides for the automatic grant of restricted stock awards to non-employee directors of the Company. Awards to non-employee directors are generally subject to terms including non-transferability, immediate vesting upon death or total disability of a director, forfeiture of unvested shares upon termination of service by a director and acceleration of vesting upon a change of control of the Company. The maximum number of shares of common stock that may be issued pursuant to restricted stock awards under the 2010 Restricted Stock Plan is 100,000 shares, subject to the authority of the Board to adjust this amount in the event of a merger, consolidation, reorganization, stock split, combination of shares, recapitalization or similar transaction affecting the common stock. At December 31, 2014, there were 33,186 shares of common stock available for future awards under the 2010 Restricted Stock Plan.
As of December 31, 2014, there were 5,229 shares of restricted stock outstanding under the 2010 Restricted Stock Plan, all of which will vest on the date of the annual meeting of shareholders in 2015.
The following table summarizes information about the restricted stock outstanding under the 2010 Restricted Stock Plan at December 31, 2014:
The Company recognized compensation expense of $0.2 million in 2014, 2013 and 2012 related to the 2010 Restricted Stock Plan. Total tax benefits realized for tax deductions from vesting of restricted stock in 2014, 2013 and 2012 were $7,000, $18,000 and $16,000, respectively.
In 2014, 4,312 shares of restricted stock were granted under the 2012 Incentive Plan, which will vest through 2017. In 2013, 80,278 shares of restricted stock were granted under the 2012 Incentive Plan, which will vest through 2020. At December 31, 2014, there were 413,079 shares of common stock available for future awards under the 2012 Incentive Plan.
The following table summarizes information about the restricted stock outstanding under the 2012 Incentive Plan at December 31, 2014:
The sale or other-than-temporary impairment (OTTI) of an available-for-sale security results in amounts being reclassified from accumulated other comprehensive income (loss) to current period net income. The effects of reclassifications out of accumulated other comprehensive income (loss) by the respective line items of net income are presented in the following table.
The Company manages risk on certain long-duration claims by settling these claims through the purchase of annuities from unaffiliated carriers. In the event these carriers are unable to meet their obligations under these contracts, the Company could be liable to the claimants. The following table summarizes (in thousands) the fair value of the annuities at December 31, 2014, that the Company has purchased to satisfy its obligations. The A.M. Best Company rating is shown parenthetically.
Other Investments- Other investments consist of LP interests valued using the net asset value provided by the general partner of the LP, which approximates the fair value of the interest. The LP’s objective is to generate absolute returns by investing long and short in publicly-traded global securities. Redemptions are allowed monthly following a sixty day notice with no lock up periods. The Company has no unfunded commitments related to the LP. This investment is characterized as a Level 3 asset in the fair value hierarchy.
At December 31, 2014, the Company held two securities measured at fair value on a nonrecurring basis due to a recognized impairment of $0.3 million. The securities are valued using Level 2 inputs and had a value of $0.4 million at December 31, 2014.
In 2013, the Company’s Board of Directors initiated a quarterly dividend. During 2014, the Company’s Board of Directors declared a quarterly dividend of $0.12 per share compared to $0.08 per share in 2013. The Company declared extraordinary dividends totaling $1.50 per share in 2014. There were no extraordinary dividends declared in 2013.
On February 11, 2015, the Company was notified of an adverse verdict against its subsidiary, American Interstate Insurance Company, related to a 2009 workers’ compensation claim in the State of Iowa. The verdict was for $25.3 million, of which $0.3 million was actual damages and $25.0 million was punitive damages. For the fourth quarter of 2014, the Company recognized an additional $0.3 million in reserves related to this claim. As of December 31, 2014, the Company’s total reserve for the claim was $2.7 million. The Company presently believes that this reserve amount, together with its reinsurance coverage, is adequate to satisfy this claim. American Interstate will appeal this verdict.
On February 24, 2015 the Company declared a regular quarterly cash dividend of $0.15 per share payable on March 27, 2015 to shareholders of record on March 13, 2015. In 2014, the Company paid a quarterly cash dividend of $0.12 per share.