We currently lease approximately 3,000 square feet of office space at 4904 Eisenhower Boulevard, Tampa, FL 33634 in suite 100. This lease expires in September 2015 and the rental payments for the space will be approximately $21.70 per square foot.
On September 5, 2014, we acquired approximately 40,000 square feet of commercial office space and associated property located at 800 2nd Avenue South, St. Petersburg, FL. We expect to renovate the property and move our principal executive offices to this location before the end of 2015.
Consolidated net income was $41,013,000 in 2014 compared to $20,342,000 in 2013. Net income per diluted share was $2.05 in 2014 compared to $1.26 in 2013.
Total revenues were $280,230,000 in 2014 compared to $208,080,000 in 2013.
Investment and cash holdings were $443,018,000 at December 31, 2014, compared to $326,548,000 at December 31, 2013.
Net realized losses were $(20,000) in 2014 compared to net realized losses of $(129,000) in 2013.
Book value per diluted share (ratio of stockholders' equity to total shares outstanding and dilutive potential shares outstanding) was $9.75 at December 31, 2014, a 46.8% increase from $6.64 at December 31, 2013.
Return on average equity for the twelve months ended December 31, 2014 was 27.2%, compared to 20.8% for the twelve months ended December 31, 2013.
Policies in-force were 252,104 at December 31, 2014, a 24.5% increase from 202,454 policies in-force at December 31, 2013.
effect of current year catastrophe losses on the combined ratio and the effect of prior year development on the combined ratio. We believe that this ratio is useful to investors and it is used by management to reveal the trends in our business that may be obscured by current year catastrophe losses, prior year development and assessments. Current year catastrophe losses cause our loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude, and can have a significant impact on the combined ratio. Prior year development is caused by unexpected loss development on historical reserves. We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our performance. The most direct comparable GAAP measure is the combined ratio. The underlying combined ratio should not be considered as a substitute for the combined ratio and does not reflect the overall profitability of our business.
Reserves for losses incurred but not reported (IBNR reserves) - Our IBNR reserves include true IBNR reserves plus "bulk" reserves. Bulk reserves represent additional amounts that cannot be allocated to particular claims, but which are necessary to estimate ultimate losses on reported and unreported claims. We estimate our IBNR reserves by projecting the ultimate losses using the methods discussed below and then deducting actual loss payments and case reserves from the projected ultimate losses. We review and adjust our IBNR reserves on a quarterly basis based on information available to us at the balance sheet date.
Estimation of the Reserves for Unpaid Losses and Allocated Loss Adjustment Expenses
Incurred Development Method - The incurred development method is based upon the assumption that the relative change in a given year’s incurred loss estimates from one evaluation point to the next is similar to the relative change in prior years’ reported loss estimates at similar evaluation points. In utilizing this method, actual annual historical incurred loss data is evaluated. Successive years can be arranged to form a triangle of data. Loss development factors (LDFs) are calculated to measure the change in cumulative incurred costs from one evaluation point to the next. These historical LDFs and comparable industry benchmark factors form the basis for selecting the LDFs used in projecting the current valuation of losses to an ultimate basis. This method’s implicit assumption is that the relative adequacy of case reserves has been consistent over time, and that there have been no material changes in the rate at which claims have been reported. The paid development method is similar to the incurred development method. While the incurred development method has the disadvantage of not recognizing the information provided by current case reserves, it has the advantage of avoiding potential distortions in the data due to changes in case reserving methodology. The incurred development method’s implicit assumption is that the rate of payment of claims has been relatively consistent over time.
As previously noted, we evaluate several factors when exercising our judgment in the selection of the loss development factors that ultimately drive the determination of our loss reserves. The process of establishing our reserves is complex and necessarily imprecise, as it involves using judgment that is affected by many variables. We believe a reasonably-likely change in almost any of these aforementioned factors could have an impact on our reported results, financial condition and liquidity. However, we do not believe any reasonably-likely changes in the frequency or severity of claims would have a material impact on us.
Once assumptions and estimates are made, any number of changes in facts and circumstances could cause us to subsequently determine that a fixed income or equity security is other-than-temporarily impaired, including: (1) general economic conditions that are worse than previously forecasted or that have a greater adverse effect on a particular issuer or industry sector than originally estimated; (2) changes in the facts and circumstances related to a particular issue or issuer's ability to meet all of its contractual obligations; and (3) changes in facts and circumstances that result in changes to management's intent to sell or result in our assessment that it is more likely than not we will be required to sell before recovery of the amortized cost basis of a fixed income security or causes a change in our ability or intent to hold an equity security until it recovers in value. Changes in assumptions, facts and circumstances could result in additional charges to earnings in future periods to the extent that losses are realized. The charge to earnings, while potentially significant to net income, would not have a significant effect on stockholders' equity, since our securities are designated as available for sale and carried at fair value and as a result, any related unrealized loss, net of taxes would already be reflected as a component of accumulated other comprehensive income in stockholders' equity.
With respect to our investments, we primarily attempt to preserve capital, maximize after-tax investment income, maintain liquidity and minimize risk. To accomplish our goals, we purchase debt securities in sectors that represent the most attractive relative value, and we maintain a moderate equity exposure. We must comply with applicable state insurance regulations that prescribe the type, quality and concentrations of investments our insurance affiliates can make; therefore, our current investment policy limits investment in non-investment-grade fixed maturities and limits total investment amounts in preferred stock, common stock and mortgage notes receivable. We do not invest in derivative securities.
We classify all of our investments as available-for-sale. Our investments at December 31, 2014 and 2013 consisted mainly of U.S. government and agency securities and securities of high-quality corporate issuers. Our equity holdings consist mainly of securities issued by companies in the energy, consumer products, technology and telecommunications industries. Most of the corporate bonds we hold reflect a similar diversification. At December 31, 2014, approximately 86% of our fixed maturities were U.S. Treasuries, states, municipalities and political subdivisions, or corporate bonds rated “A” or better, and 14% were corporate bonds rated “BBB”.
Revenues for the year ended December 31, 2014 increased $72,150,000, or 35%, to $280,230,000, from $208,080,000 for the twelve-months ended December 31, 2013. The increase in revenues primarily resulted from a $67,472,000, or 34%, increase in net premiums earned. The growth in net premiums earned for the year was driven by continued growth in new business production in Florida and other states.
* Only includes new and renewal homeowner, commercial and dwelling fire policies written during the year.
We expect our gross written premium growth to continue as we increase our policies in-force in the states in which we currently write policies and as we expand into the other states that we are currently licensed to write property and casualty insurance.
Expenses for the twelve months ended December 31, 2014 increased $42,303,000, or 24%, primarily due to increased losses, policy acquisition costs and general and administrative expenses.
Our gross underlying loss ratio increased to 30.3% for the year ended December 31, 2014, which was up 1.5 points from 28.8% for the year ended December 31, 2013. The increase in our gross underlying loss ratio was primarily due to a shift in the mix toward business outside of Florida, where non-catastrophe loss costs as a percentage of gross earned premium tend to be higher.
Policy acquisition costs increased to $65,657,000 for the year ended December 31, 2014, from $50,623,000 for the same period of 2013, or 30%. These costs vary directly with the growth in gross premiums earned which increased 27% over the prior year.
Operating and underwriting expenses increased $2,524,000 to $11,746,000 for the year ended December 31, 2014 compared to$9,222,000 for the same period in 2013 primarily due to increased costs for home inspections, underwriting reports, licensing costs, and systems costs resulting from the Company's ongoing growth and continuing expansion into new states.
Realized gains decreased $2,289,000 in 2013 because we sold fixed maturities in an unrealized gain position during the fourth quarter of 2012 to reposition our portfolio, whereas in 2013 our realized losses were driven by sales of our short-term investments.
As a holding company, we do not conduct any business operations of our own and as a result, we rely on cash dividends or intercompany loans from our management affiliate to pay our general and administrative expenses. Insurance regulatory authorities in the states in which we operate heavily regulate our insurance affiliates, including restricting any dividends paid by our insurance affiliate and requiring approval of any management fee our insurance affiliates pays to our management affiliates for services rendered; however, nothing restricts our non-insurance company subsidiaries from paying us dividends other than state corporate laws regarding solvency. Our non-insurance company subsidiaries may pay us dividends from any positive net cash flows that they generate. Our management affiliate subsidiaries pay us dividends primarily using cash from the collection of management fees from our insurance affiliates, pursuant to the management agreements in effect between those entities.
During the year ended December 31, 2014, our operations generated cash of $68,918,000, compared to generating $109,766,000 of cash during the same period in 2013. The $40,848,000 year over year decrease in operating cash was primarily driven by the decrease of assumed premiums received from Citizens, increases in claims payments, reinsurance payments, agent commission payments, tax payments and increased operating expense payments. In 2013, we received $51,578,000 of assumed premiums from Citizens whereas in 2014 we received $29,807,000 of assumed premiums from Citizens. In addition, we returned $6,597,000 of assumed premiums to Citizens in 2014 related to opt outs from our 2013 assumptions compared to returning $2,459,000 of assumed premiums in the same period in 2013. Claim payments increased approximately $25,780,000 primarily due to the increase in exposures and payments on claims from current and prior accident years. Reinsurance payments increased approximately $16,050,000 because we purchased more reinsurance coverage under our 2014-2015 contracts than we purchased under our 2013-2014 contracts. Agent commission payments, operating expense payments and income tax payments increased $10,750,000, $7,599,000 and $18,035,000, respectively, due to the overall growth in the business during 2014 compared to the same period in 2013. The decrease in cash flows described above was offset by the increase in premium collections of $62,648,000 due to the increased writings we experienced during 2014 compared to the same period in 2013.
During the year ended December 31, 2014, our investing activities used $91,466,000 of cash compared to using $146,154,000 of cash in 2013 primarily because we purchased $305,013,000 of investments during the year ended December 31, 2014 compared to purchasing $246,514,000 during the same period in 2013. The increase in purchases was partially offset by the $117,666,000 increase in sales of investments during the year ended December 31, 2014 compared to the same period in 2013. In addition, our investments in property and equipment increased $4,479,000 primarily due to the purchase of property for our new headquarters. In 2015, we expect to invest $3,200,000 to renovate the building prior to occupancy.
Our insurance subsidiaries are subject to extensive state regulation, including approval of any management fee it pays to our management affiliate for services rendered. In accordance with Florida law, United Property & Casualty Insurance Company may pay dividends or make distributions out of that part of its statutory surplus derived from its net operating profit and its net realized capital gains. Family Security Insurance Company may pay dividends or make distributions out of its statutory surplus or net income less realized capital gains. See Part II Item 5 for additional information regarding the limitations on dividend payments by our insurance affiliate. The risk-based capital guidelines published by the National Association of Insurance Commissioners may further restrict our insurance affiliate’s ability to pay dividends or make distributions if the amount of the intended dividend or distribution would cause its surplus as regards policyholders to fall below minimum risk-based capital guidelines. Most states, including Florida, have adopted the NAIC requirements, and insurers having less surplus as regards policyholders than required will be subject to varying degrees of regulatory action, depending on the level of capital inadequacy. State insurance regulatory authorities could require us to cease operations in the event we fail to maintain the statutory surplus required in our insurance affiliate.
We prepare our consolidated financial statements in accordance with GAAP; which differs in some respects from reporting practices prescribed or permitted by insurance regulatory authorities. To retain our certificate of authority, Florida law requires United Property & Casualty Insurance Company to maintain surplus as regards policyholders equal to the greater of 10% of our total liabilities or $5,000,000. At December 31, 2014, United Property & Casualty Insurance Company’s surplus as regards policyholders was $126,249,000, exceeding the minimum requirements. Florida law also requires United Property & Casualty Insurance Company to adhere to prescribed premium-to-capital surplus ratios, with which we were in compliance at December 31, 2014.
The following table summarizes our expected payments for contractual obligations at December 31, 2014:
Represents principal payments over the life of the debt, see Note 10 in our Notes to Consolidated Financial Statements for additional information regarding our long-term debt. The total long-term debt amount shown in the table above also includes the outstanding debt of FSH at December 31, 2014.
Represents base salary for the unfulfilled portion of the original employment agreements with certain executive officers.
As of December 31, 2014, United Property and Casualty Insurance Company had unpaid loss and loss adjustment expenses (LAE) of $54,436,000 and Family Security Insurance Company had unpaid loss and LAE reserves of $2,195,000. The specific amounts and timing of obligations related to known and unknown reserves and related LAE reserves are not set contractually, and the amounts and timing of these obligations are unknown. Nonetheless, based upon our cumulative claims paid over the last 15 years, we estimate that the loss and LAE reserves will be paid in the periods shown above. While we believe that historical performance of loss payment patterns is a reasonable source for projecting future claims payments, there is inherent uncertainty in this estimated projected settlement of loss and LAE reserves, and as a result these estimates will differ, perhaps significantly, from actual future payments.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of United Insurance Holdings Corp. and subsidiaries as of December 31, 2014 and 2013, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), United Insurance Holdings Corp. 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 in 2013, and our report dated February 25, 2015 expressed an unqualified opinion on the effectiveness of United Insurance Holdings Corp’s internal control over financial reporting.
We prepare our consolidated financial statements in conformity with U.S. GAAP. While preparing our consolidated financial statements, we make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements, as well as reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Reported amounts that require us to make extensive use of estimates include our reserves for unpaid losses and loss adjustment expenses, reinsurance recoverable, deferred policy acquisition costs, and investments. Except for the captions on our Consolidated Balance Sheets and Consolidated Statements of Comprehensive Income, we generally use the term loss(es) to collectively refer to both loss and loss adjustment expenses.
We reclassified certain amounts in the 2013 and 2012 financial statements to conform to the 2014 presentation. These reclassifications had no impact on our results of operations, cash flows, or stockholders' equity, as previously reported.
Premiums receivable represents amounts due from our policyholders for billed premiums and related policy fees. We perform a policy-level evaluation to determine the extent to which the balance of premium receivable exceeds the balance of unearned premium. We then age any resulting exposure based on the last date the policy was billed to the policyholder, and we establish an allowance for credit losses for any amounts outstanding for more than 90 days. When we receive payments on amounts previously charged off, we credit bad debt expense in the period we receive the payment. The balances of our allowance for uncollectible premiums totaled $34,000 and $29,000 at December 31, 2014 and 2013, respectively.
We incur policy acquisition costs that vary with, and are directly related to, the production of new business. Policy acquisition costs consist primarily of the following three items: (i) commissions paid to outside agents at the time of policy issuance; (ii) policy administration fees paid to a third-party administrator at the time of policy issuance; and (iii) premium tax. We capitalize policy acquisition costs to the extent recoverable, then we amortize those costs over the contract period of the related policy.
We record our property and equipment, at cost less accumulated depreciation and amortization. We use the straight-line method of calculating depreciation over the estimated useful lives of the assets. We also use the straight-line method to calculate amortization of leasehold improvements over the estimated useful lives of the assets or the term of the lease, whichever is shorter. We periodically review estimated useful lives and, where appropriate, we make changes prospectively. We charge maintenance and repair costs to expense as incurred.
We estimate uncollectible amounts receivable from reinsurers based on an assessment of factors including the creditworthiness of the reinsurers and the adequacy of collateral obtained, where applicable. We recorded no bad debt expense related to reinsurance during the years ended December 31, 2014, 2013 or 2012.
Where permitted by law or regulatory authority, we collect assessments imposed upon policyholders as a policy surcharge and we record the amounts collected as a liability until we remit the amounts to the regulatory agency that imposed the assessment. During 2014 we did not receive any significant assessments from the regulatory authorities in the states in which our insurance affiliate operates.
We record any income tax penalties and income-tax-related interest as income tax expense in the period incurred. We did not incur any material tax penalties or income-tax-related interest during the years ended December 31, 2014, 2013 or 2012.
a concentration of credit risk with regard to our cash, because we choose to deposit all our cash at two financial institutions
With regard to our cash balances held at financial institutions, we had $74,871,000 and $40,843,000 in excess of Federal Deposit Insurance Corporation (FDIC) insurance limits at December 31, 2014 and 2013, respectively. The $34,028,000 increase in excess of FDIC insurance limits is the result of holding more cash at the end of 2014 than we did in 2013.
We have evaluated pending and final accounting pronouncements and do not believe they would have a material impact on the operations or financial reporting of our Company.
The following table details the difference between cost or adjusted/amortized cost and estimated fair value, by major investment category, at December 31, 2014 and 2013:
If we have not made the decision to sell the fixed income security and it is not more likely than not that we will be required to sell the fixed income security before recovery of its amortized cost basis, we evaluate whether we expect the security to receive cash flows sufficient to recover the entire cost or amortized cost basis of the security. We calculate the estimated recovery value by discounting the best estimate of future cash flows at the security's original or current effective rate, as appropriate, and compare this to the cost or amortized cost of the security. If we do not expect to receive cash flows sufficient to recover the entire cost or amortized cost basis of the fixed income security, the credit loss component of the impairment is recorded in earnings, with the remaining amount of the unrealized loss related to other factors recognized in other comprehensive income.
The following table presents the fair value measurements of our financial instruments by level at December 31, 2014 and December 31, 2013:
Throughout 2014, 2013 and 2012, we acquired investments in limited partnerships, recorded in the other investments line of our Consolidated Balance Sheets, that are currently being accounted for at fair value utilizing a discounted cash flow methodology. The estimated fair value of our investments in the limited partnership interests was $2,710,000. We have fully funded our investments in DCR and RCH, but we are still obligated to fund an additional $1,261,000 for our investment in Kayne.
On October 31, 2013, we entered into a participation agreement with United Capital Funding (UC Funding), that was recorded in other assets, at cost. We invested $1,000,000 in cash with UC Funding which they utilized to factor receivables from another company. During 2014, UC Funding returned our investment in full as they were unable to fully utilize our investment.
The following unaudited pro forma financial information presents financial information as if the FSH transaction had occurred as of the beginning of the 2014 fiscal year. The material non-recurring pro forma adjustments made to arrive at the below earnings amounts include the add back of $557,000 of ceded premiums earned to bring FSH's reinsurance costs as a percentage of gross premiums earned in line with our reinsurance costs as a percentage of gross premiums earned and the add back of $751,000 of personnel costs associated with non-retained employees. The pro forma information presented does not purport to represent results that would have been achieved had the merger occurred at the beginning of 2014, or to be indicative of our future financial performance.
On September 5, 2014, we entered into a purchase and sale agreement to acquire approximately 40,000 square feet of commercial office space and associated property in St. Petersburg, FL. At acquisition, the real estate consisted of approximately 2.3 acres of land and an office building, plus an additional 1.5 acres of leased parking space.
Our program provides reinsurance protection for catastrophes including hurricanes, tropical storms, and tornadoes. These reinsurance agreements are part of our catastrophe management strategy, which is intended to provide our stockholders an acceptable return on the risks assumed in our property business, and to reduce variability of earnings, while providing protection to our policyholders.
During the second quarter of 2014, we placed our reinsurance program for the 2014 treaty year beginning June 1, 2014 and ending on May 31, 2015. The agreements incorporate the mandatory coverage required by and placed with the FHCF. The private agreements provide coverage against severe weather events such as hurricanes, tropical storms and tornadoes.
The 2014 private catastrophe excess of loss reinsurance agreements structure coverage into layers, with a cascading feature such that all layers attach at $25,000,000. If the aggregate limit of the preceding layer is exhausted, the next layer drops down (cascades) in its place. Additionally, any unused layer protection drops down for subsequent events until exhausted. The 2014
Reflects losses from the Richland hailstorm, Hurricane Arthur and the Revere Tornado in 2014. Winterstorm Nemo in 2013.
Incurred loss and LAE is equal to losses and LAE paid plus the change in case and incurred but not reported reserves.
We write flood insurance under an agreement with the National Flood Insurance Program. We cede 100% of the premiums written and the related risk of loss to the federal government. We earn commissions for the issuance of flood policies based upon a fixed percentage of net written premiums and the processing of flood claims based upon a fixed percentage of incurred losses, and we can earn additional commissions by meeting certain growth targets for the number of in-force policies. We recognized commission revenue from our flood program of $1,078,000, $570,000, and $267,000 for the years ended December 31, 2014, 2013, and 2012, respectively.
The following table highlights the effects that our reinsurance transactions have on unpaid losses and loss adjustment expenses and unearned premiums in our Consolidated Balance Sheets:
At December 31, 2014, the annual maturities of our long-term debt were as follows:
Our SBA note requires that we maintain a 2:1 ratio of net written premium to surplus, or net writing ratio, (the SBA note agreement defines surplus for the purpose of calculating the required ratios as the $20,000,000 of capital contributed to our insurance affiliate under the agreement plus the outstanding balance of the note) or a 6:1 ratio of gross written premium to surplus, or gross writing ratio, to avoid additional interest penalties. At December 31, 2014, our net written premium to surplus ratio was 5.6:1, which is well above the 2:1 required ratio. Our gross written premium to surplus ratio was 9.6:1, which exceeds the required gross ratio of 6:1. Should we fail to exceed either a net writing ratio of 1.5:1 or a gross writing ratio of 5:1, our interest rate will increase by 450 basis points above the 10-year Constant Maturity Treasury rate which was 2.17% at the end of December. Any other writing ratio deficiencies result in an interest rate penalty of 25 basis points above the stated rate of the note, which is 2.50% at December 31, 2014. Our SBA note further provides that the SBA may, among other things, declare its loan immediately due and payable for all defaults existing under the SBA note; however, any payment is subject to approval by the insurance regulatory authority. At December 31, 2014, and during the three and twelve months then ended, we complied with all covenants as specified in the SBA note.
Deferred income taxes, which are included in other assets or other liabilities as appropriate, reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
The statute of limitations related to our consolidated Federal income tax returns and our Florida income tax returns expired for all tax years up to and including 2010; therefore, only the 2011 through 2014 tax years remain subject to examination by taxing authorities. No taxing authorities are currently examining any of our federal or state income tax returns.
Our insurance subsidiary is domiciled in Florida, and the laws of that state require that our insurance affiliate maintain capital and surplus equal to the greater of 10% of its total liabilities or $5,000,000. Our statutory capital surplus was $126,249,000 at December 31, 2014. State law also requires our insurance affiliate to adhere to prescribed premium-to-capital surplus ratios, with which we were in compliance at December 31, 2014.
Florida law limits an insurer’s investment in equity instruments and also restricts investments in medium to low quality debt instruments. We were in compliance with all investment restrictions at December 31, 2014 and 2013.
Florida law permits an insurer to pay dividends or make distributions out of that part of statutory surplus derived from net operating profit and net realized capital gains. The law further provides calculations to determine the amount of dividends or distributions that can be made without the prior approval of the insurance regulatory authority and the amount of dividends or
distributions that would require prior approval of the insurance regulatory authority. Statutory risk-based capital requirements may further restrict our insurance affiliate’s ability to pay dividends or make distributions if the amount of the intended dividend or distribution would cause statutory surplus to fall below minimum risk-based capital requirements.
Mandatory Control Level - If RBC is less than 70%, the regulator is required to take steps to place the insurer under its control regardless of the level of capital and surplus.
The table below reconciles our consolidated GAAP net income to the statutory net income of our insurance affiliate:
The table below reconciles our consolidated GAAP stockholders’ equity to the surplus as regards policyholders of our insurance affiliate:
We are authorized to issue 875,000 shares of "blank check" preferred stock, which may be issued from time to time in one or more series upon authorization by our board of directors. Our Board, without further approval of the stockholders, is authorized to fix the designations, powers, including voting powers, preferences and the relative, participating optional or other special rights of the shares of each series and any qualifications, limitations and restrictions thereof. As of December 31, 2014, we had not issued any shares of preferred stock.
See Note 19 for information regarding the activity of our common stock and share-based compensation.
We granted 103,156 restricted common stock awards during the twelve-month period ended December 31, 2014, which had a weighted-average grant date fair value of $13.86 per share. We granted 10,476 shares of restricted stock during the twelve-month period ended December 31, 2013, which had a weighted-average grant date fair value of $7.64.
We had approximately $477,000 of unrecognized director stock-based compensation expense at December 31, 2014, related to non-vested director stock-based compensation granted, which we expect to recognize ratably until the 2015 Annual Meeting of Stockholders. We recognized $371,000 of director stock-based compensation expense during the twelve months ended December 31, 2014.
We evaluate all subsequent events and transactions for potential recognition or disclosure in our financial statements.
On February 5, 2015, our Board of Directors declared a $0.05 per share quarterly cash dividend payable on March 6, 2015, to stockholders of record on February 27, 2015.
On February 3, 2015, we acquired FSH, and its two wholly-owned subsidiaries, in a $9,000,000 all-stock transaction. As a result of the transaction, we issued 503,883 shares of our common stock, as determined by the average closing price of our common stock in the preceding 180-days. In addition to the merger consideration, we agreed to pay FSH contingent consideration of three percent (3%) of all gross premiums written on the renewal of FSIC policies in-force as of the closing during the subsequent twelve month period following the closing of the transaction. The contingent consideration will be paid in the form of additional shares of our common stock issued in a manner similar to the merger consideration within approximately 30 days following the twelve month anniversary of the closing.
On January 9, 2015, we assumed more than 30 commercial residential policies from Citizens Property Insurance Corporation (Citizens), representing approximately $1,200,000 of annualized premiums. The total amount of assumed premium may be reduced by additional opt outs and cancellations by policyholders.