QUARTERLY STATEMENT OF THE ASCENDANT COMMERCIAL INSURANCE, INC. CORAL GABLES TO THE. Insurance Department OF THE STATE OF

Transcription

1 QUARTERLY STATEMENT OF THE of in the state of ASCENDANT COMMERCIAL INSURANCE, INC. CORAL GABLES FLORIDA TO THE Insurance Department OF THE STATE OF FLORIDA OFFICE OF INSURANCE REGULATION FOR THE QUARTER ENDED March 31, 2018 PROPERTY AND CASUALTY 2018

2 PROPERTY AND CASUALTY COMPANIES - ASSOCIATION EDITION QUARTERLY STATEMENT AS OF MARCH 31, 2018 OF THE CONDITION AND AFFAIRS OF THE NAIC Group Code 0000, 0000 NAIC Company Code Employer's ID Number (Current Period) (Prior Period) Organized under the Laws of Florida, State of Domicile or Port of Entry FL Country of Domicile USA Incorporated/Organized August 31, 2009 Commenced Business September 1, 2009 Statutory Home Office 2199 Ponce de Leon Blvd, Ste 500, Coral Gables, FL US (Street and Number) (City or Town, State, Country and Zip Code) Main Administrative Office 2199 Ponce de Leon Blvd, Ste 500 (Street and Number) Coral Gables, FL US (City or Town, State, Country and Zip Code) (Area Code) (Telephone Number) Mail Address 2199 Ponce de Leon Blvd, Ste 500, Coral Gables, FL US (Street and Number or P.O. Box) (City or Town, State, Country and Zip Code) Primary Location of Books and Records 2199 Ponce de Leon Blvd, Ste 500 Coral Gables, FL US (Street and Number) (City or Town, State, Country and Zip Code) (Area Code) (Telephone Number) Internet Website Address Statutory Statement Contact Pablo L Cejas (Name) (Area Code) (Telephone Number) (Extension) plcejas@acicompanies.com ( Address) (Fax Number) OFFICERS Name Title 1. Pablo L Cejas Chief Executive Officer 2. Helene C Cejas Secretary 3. Jorge E Gonzalez Chief Financial Officer VICE-PRESIDENTS Name Title Name Title DIRECTORS OR TRUSTEES Pablo L Cejas Paul L Cejas Helene C Cejas Hilary C Candela Jose C Romano State of.. Florida County of.. Miami-Dade ss The officers of this reporting entity being duly sworn, each depose and say that they are the described officers of said reporting entity, and that on the reporting period stated above, all of the herein described assets were the absolute property of the said reporting entity, free and clear from any liens or claims thereon, except as herein stated, and that this statement, together with related exhibits, schedules and explanations therein contained, annexed or referred to, is a full and true statement of all the assets and liabilities and of the condition and affairs of the said reporting entity as of the reporting period stated above, and of its income and deductions therefrom for the period ended, and have been completed in accordance with the NAIC Annual Statement Instructions and Accounting Practices and Procedures manual except to the extent that: (1) state law may differ; or, (2) that state rules or regulations require differences in reporting not related to accounting practices and procedures, according to the best of their information, knowledge and belief, respectively. Furthermore, the scope of this attestation by the described officers also includes the related corresponding electronic filing with the NAIC, when required, that is an exact copy (except for formatting differences due to electronic filing) of the enclosed statement. The electronic filing may be requested by various regulators in lieu of or in addition to the enclosed statement. (Signature) (Signature) (Signature) Pablo L Cejas Helene C Cejas Jorge E Gonzalez (Printed Name) (Printed Name) (Printed Name) Chief Executive Officer Secretary Chief Financial Officer (Title) (Title) (Title) Subscribed and sworn to before me this a. Is this an original filing? [ X ] Yes [ ] No 10 day of May, 2018 b. If no: 1. State the amendment number 2. Date filed 3. Number of pages attached

3 ASSETS Current Statement Date Net Admitted December 31 Nonadmitted Assets Prior Year Net Assets Assets (Cols. 1-2) Admitted Assets 1. Bonds 9,706,326 9,706,326 9,104, Stocks: 2.1 Preferred stocks 214, Common stocks 1,126,433 1,126, , Mortgage loans on real estate: 3.1 First liens 3.2 Other than first liens 4. Real estate: 4.1 Properties occupied by the company (less $ 0 encumbrances) 4.2 Properties held for the production of income (less $ 0 encumbrances) 4.3 Properties held for sale (less $ 0 encumbrances) 5. Cash ($ 31,242,892), cash equivalents ($ ), and short-term investments ($ ) 31,242,892 31,242,892 13,019, Contract loans (including $ 0 premium notes) 7. Derivatives 8. Other invested assets 9. Receivables for securities 10. Securities lending reinvested collateral assets 11. Aggregate write-ins for invested assets 12. Subtotals, cash and invested assets (Lines 1 to 11) 42,075,651 42,075,651 23,048, Title plants less $ 0 charged off (for Title insurers only) 14. Investment income due and accrued 86,943 86,943 72, Premiums and considerations: 15.1 Uncollected premiums and agents' balances in the course of collection 3,138,793 1,742,676 1,396,117 2,091, Deferred premiums, agents' balances and installments booked but deferred and not yet due (including $ earned but unbilled premiums) 37,760, ,422 37,247,715 35,655,468 4,639, Accrued retrospective premiums ($ 0) and contracts 16. Reinsurance:. subject to redetermination ($ ) Amounts recoverable from reinsurers 86,453 86,453 88, Funds held by or deposited with reinsured companies 16.3 Other amounts receivable under reinsurance contracts 17. Amounts receivable relating to uninsured plans 18.1 Current federal and foreign income tax recoverable and interest thereon 18.2 Net deferred tax asset 1,282,341 1,282,341 1,160, Guaranty funds receivable or on deposit 20. Electronic data processing equipment and software 62,504 62,504 70, Furniture and equipment, including health care delivery assets ($ ) 22. Net adjustment in assets and liabilities due to foreign exchange rates 23. Receivables from parent, subsidiaries and affiliates 1,358,727 1,358,727 1,837, Health care ($ 0) and other amounts receivable Aggregate write-ins for other than invested assets 39,295 39, Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines 12 to 25) 85,890,844 2,294,393 83,596,451 64,024, From Separate Accounts, Segregated Accounts and Protected Cell Accounts Total (Lines 26 and 27) 85,890,844 2,294,393 83,596,451 64,024, DETAILS OF WRITE-IN LINES Summary of remaining write-ins for Line 11 from overflow page Totals (Lines 1101 through 1103 plus 1198) (Line 11 above) Security Deposits 39,295 39, Other Assets NONE Summary of remaining write-ins for Line 25 from overflow page Totals (Lines 2501 through 2503 plus 2598) (Line 25 above) 39,295 39,295 2

4 Statement as of March 31, 2018 of the LIABILITIES, SURPLUS AND OTHER FUNDS 1 2 Current December 31, Statement Date Prior Year 1. 2,987,894 Losses (current accident year $ ) 22,902,779 23,329, Reinsurance payable on paid losses and loss adjustment expenses 3. Loss adjustment expenses 2,363,719 2,272, Commissions payable, contingent commissions and other similar charges 5. Other expenses (excluding taxes, licenses and fees) 2,604,271 2,539, Taxes, licenses and fees (excluding federal and foreign income taxes) 183, , Current federal and foreign income taxes (including $ on realized capital gains (losses)) 358, , Net deferred tax liability Borrowed money $ and interest thereon $ 9. Unearned premiums (after deducting unearned premiums for ceded reinsurance of 28,915,868 0 $ and including warranty reserves of $ and accrued accident and health 0 experience rating refunds including $ for medical loss ratio rebate per the Public Health Service Act) 11,576,686 11,394, Advance premium 259, , Dividends declared and unpaid: Stockholders Policyholders 12. Ceded reinsurance premiums payable (net of ceding commissions) 27,145,277 8,630, Funds held by company under reinsurance treaties 14. Amounts withheld or retained by company for account of others 15. Remittances and items not allocated 159,388 17, Provision for reinsurance (including $ certified) 17. Net adjustments in assets and liabilities due to foreign exchange rates 18. Drafts outstanding 19. Payable to parent, subsidiaries and affiliates 4,628,498 3,955, Derivatives 21. Payable for securities 22. Payable for securities lending 23. Liability for amounts held under uninsured plans 18,476 25, Capital notes $ and interest thereon $ 25. Aggregate write-ins for liabilities 26. Total liabilities excluding protected cell liabilities (Lines 1 through 25) 72,200,077 52,723, Protected cell liabilities 28. Total liabilities (Lines 26 and 27) 72,200,077 52,723, Aggregate write-ins for special surplus funds 30. Common capital stock 1,000 1, Preferred capital stock 32. Aggregate write-ins for other than special surplus funds 33. Surplus notes 34. Gross paid in and contributed surplus 9,539,000 9,539, Unassigned funds (surplus) 1,856,373 1,761, Less treasury stock, at cost: shares common (value included in Line 30 $ ) shares preferred (value included in Line 31 $ ) 37. Surplus as regards policyholders (Lines 29 to 35, less 36) 11,396,373 11,301, Totals (Page 2, Line 28, Col. 3) 83,596,450 64,024,607 DETAILS OF WRITE-IN LINES Summary of remaining write-ins for Line 25 from overflow page Totals (Lines 2501 through 2503 plus 2598) (Line 25 above) Summary of remaining write-ins for Line 29 from overflow page Totals (Lines 2901 through 2903 plus 2998) (Line 29 above) Summary of remaining write-ins for Line 32 from overflow page Totals (Lines 3201 through 3203 plus 3298) (Line 32 above) NONE NONE NONE

5 Statement as of March 31, 2018 of the STATEMENT OF INCOME Current Year Prior Year Prior Year Ended To Date To Date December 31 UNDERWRITING INCOME 1. Premiums earned: ,817,009 Direct (written $ ) 19,518,742 16,031,393 72,307, Assumed (written $ ) ,988,568 Ceded (written $ ) 13,872,539 11,291,900 50,025, ,828,441 Net (written $ ) 5,646,203 4,739,493 22,281,940 DEDUCTIONS: 2. 3,211,920 Losses incurred (current accident year $ ): 2.1 Direct 11,348,534 9,594,500 43,546, Assumed 2.3 Ceded 8,383,024 6,978,506 28,922, Net 2,965,510 2,615,994 14,623, Loss adjustment expenses incurred 655, ,143 1,285, Other underwriting expenses incurred 2,068,007 1,906,557 6,296, Aggregate write-ins for underwriting deductions 6. Total underwriting deductions (Lines 2 through 5) 5,688,520 4,979,694 22,206, Net income of protected cells 8. Net underwriting gain (loss) (Line 1 minus Line 6 + Line 7) (42,317) (240,201) 75,801 INVESTMENT INCOME 9. Net investment income earned 139,960 73, , Net realized capital gains (losses) less capital gains tax of $ (51,439) 29 (122,583) 11. Net investment gain (loss) (Lines ) 88,521 73, ,305 OTHER INCOME 12. Net gain or (loss) from agents' or premium balances charged off (amount recovered 0 30,347 $ amount charged off $ ) (30,347) (7,872) (250,464) 13. Finance and service charges not included in premiums 497, ,582 1,688, Aggregate write-ins for miscellaneous income 15. Total other income (Lines 12 through 14) 467, ,710 1,438, Net income before dividends to policyholders, after capital gains tax and before all other federal and foreign income taxes (Lines ) 513, ,919 1,781, Dividends to policyholders 18. Net income, after dividends to policyholders, after capital gains tax and before all other federal and foreign income taxes (Line 16 minus Line 17) 513, ,919 1,781, Federal and foreign income taxes incurred 132, , , Net income (Line 18 minus Line 19) (to Line 22) 381,020 11, ,859 CAPITAL AND SURPLUS ACCOUNT 21. Surplus as regards policyholders, December 31 prior year 11,301,559 10,626,768 10,626, Net income (from Line 20) 381,020 11, , Net transfers (to) from Protected Cell accounts Change in net unrealized capital gains or (losses) less capital gains tax of $ (153,031) 6,798 58, Change in net unrealized foreign exchange capital gain (loss) 26. Change in net deferred income tax 122, ,458 (386,374) 27. Change in nonadmitted assets (255,511) (44,851) 48, Change in provision for reinsurance 29. Change in surplus notes 30. Surplus (contributed to) withdrawn from protected cells 31. Cumulative effect of changes in accounting principles 32. Capital changes: 32.1 Paid in 32.2 Transferred from surplus (Stock Dividend) 32.3 Transferred to surplus 33. Surplus adjustments: 33.1 Paid in 33.2 Transferred to capital (Stock Dividend) 33.3 Transferred from capital 34. Net remittances from or (to) Home Office 35. Dividends to stockholders 36. Change in treasury stock 37. Aggregate write-ins for gains and losses in surplus 38. Change in surplus as regards policyholders (Lines 22 through 37) 94, , , Surplus as regards policyholders, as of statement date (Lines 21 plus 38) 11,396,374 10,748,915 11,301,559 DETAILS OF WRITE-IN LINES Summary of remaining write-ins for Line 05 from overflow page Totals (Lines 0501 through 0503 plus 0598) (Line 05 above) Other Income Summary of remaining write-ins for Line 14 from overflow page Totals (Lines 1401 through 1403 plus 1498) (Line 14 above) Summary of remaining write-ins for Line 37 from overflow page Totals (Lines 3701 through 3703 plus 3798) (Line 37 above) NONE NONE

6 CASH FLOW Cash from Operations Current Year Prior Year Prior Year To Date To Date Ended December Premiums collected net of reinsurance 23,288,452 14,185,477 26,015, Net investment income 142, , , Miscellaneous income 467, ,709 1,438, Total (Lines 1 to 3) 23,897,587 14,665,642 27,943, Benefit and loss related payments 3,390,087 3,211,329 12,234, Net transfers to Separate Accounts, Segregated Accounts and Protected Cell Accounts 7. Commissions, expenses paid and aggregate write-ins for deductions 2,560,441 2,145,977 7,404, Dividends paid to policyholders 9. Federal and foreign income taxes paid (recovered) net of $ tax on capital gains (losses). (1) 800, Total (Lines 5 through 9) 5,950,527 5,357,306 20,439, Net cash from operations (Line 4 minus Line 10) 17,947,060 9,308,336 7,504,116 Cash from Investments 12. Proceeds from investments sold, matured or repaid: 12.1 Bonds 3,262,897 1,020,957 5,973, Stocks 1,089,883 18, Mortgage loans 12.4 Real estate 12.5 Other invested assets 12.6 Net gains (or losses) on cash, cash equivalents and short-term investments 12.7 Miscellaneous proceeds 1 32, Total investment proceeds (Lines 12.1 to 12.7) 4,352,781 1,053,166 5,992, Cost of investments acquired (long-term only): 13.1 Bonds 4,057,606 1,027,378 5,645, Stocks 1,320, , Mortgage loans 13.4 Real estate 13.5 Other invested assets 13.6 Miscellaneous applications 1 58, Total investments acquired (Lines 13.1 to 13.6) 5,377,786 1,027,378 6,360, Net increase (or decrease) in contract loans and premium notes 15. Net cash from investments (Line 12.8 minus Line 13.7 and Line 14) (1,025,005) 25,788 (367,588) Cash from Financing and Miscellaneous Sources 16. Cash provided (applied): 16.1 Surplus notes, capital notes 16.2 Capital and paid in surplus, less treasury stock 16.3 Borrowed funds 16.4 Net deposits on deposit-type contracts and other insurance liabilities 16.5 Dividends to stockholders 16.6 Other cash provided (applied) 1,301,603 1,470, , Net cash from financing and miscellaneous sources (Line 16.1 through Line 16.4 minus Line 16.5 plus Line 16.6) 1,301,603 1,470, ,617 RECONCILIATION OF CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS 18. Net change in cash, cash equivalents and short-term investments (Line 11, plus Lines 15 and 17) 18,223,658 10,804,392 7,908, Cash, cash equivalents and short-term investments: 19.1 Beginning of year 13,019,234 5,111,089 5,111, End of period (Line 18 plus Line 19.1) 31,242,892 15,915,481 13,019,234 Note: Supplemental disclosures of cash flow information for non-cash transactions:

7 Note 1 Summary of Significant Accounting Policies and Going Concern was incorporated on August 31, 2009 and was issued its certificate of authority from the State of Florida on September 1, The company began writing business in September, A. Accounting Practices NOTES TO FINANCIAL STATEMENTS The accompanying financial statements have been prepared in conformity with the National Association of Insurance Commissioners Annual Statement Instructions and Accounting Practices and Procedures Manuals. A table reconciling income and surplus between state basis and SAP basis is shown below: F/S F/S NET INCOME SSAP # Page Line # state basis (Page 4, Line 20, Column 1 & 3) 02. State Prescribed Practices that are an increase/(decrease) from NAIC SAP: X X X X X X X X X 381, ,859 F/S F/S Net Income Net Income Details of Depreciation of Fixed Assets SSAP # Page Line # Totals (Lines 01A0201 through 01A0225) State Permitted Practices that are an increase/(decrease) from NAIC SAP: F/S F/S Net Income Net Income Details of Depreciation of Home Office Property SSAP # Page Line # Totals (Lines 01A0301 through 01A0325) NAIC SAP...( = 4) X X X X X X X X X 381, ,859 SURPLUS F/S F/S SSAP # Page Line # state basis (Page 3, Line 37, Column 1 & 2) 06. State Prescribed Practices that are an increase/(decrease) from NAIC SAP: X X X X X X X X X 11,396,373 11,301,559 F/S F/S Surplus Surplus Goodwill, Net; Fixed Assets, Net SSAP # Page Line # Totals (Lines 01A0601 through 01A0625) State Permitted Practices that are an increase/(decrease) from NAIC SAP: F/S F/S Surplus Surplus Home Office Property SSAP # Page Line # Totals (Lines 01A0701 through 01A0725) NAIC SAP...( = 8) X X X X X X X X X 11,396,373 11,301,559 6

8 NOTES TO FINANCIAL STATEMENTS B. Use of Estimates in the Preparation of the Financial Statements The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. It also requires disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from these estimates. C. Accounting Policies Premiums are earned over the terms of the related insurance policies and reinsurance contracts. Unearned premiums are established to cover the unexpired portion of premiums written. Such reserves are computed by daily pro rata methods over the term of the policies. Expenses incurred in connection with acquiring new insurance business, including acquisition costs such as sales commissions, premium taxes and assessments are charged to operations as the written premium is recorded. Such expenses are reduced for ceding allowances received or receivable. In addition, the company uses the following accounting policies: 1. Short-term investments are stated at amortized cost using the interest method. 2. Bonds are stated at amortized cost using the interest method. SVO-Identified Investments are reported at fair value. 3. Common stocks at market. 4. Preferred stocks are stated in accordance with the guidance provided in SSAP No Mortgage loans on real estate are stated at the aggregate carrying value less accrued interest. 6. Loan-backed securities are stated at amortized cost using the interest method. 7. Investments in subsidiaries are recorded at statutory equity. There are no investments in controlled and affiliated companies. 8. There are no investments in joint ventures, partnerships and limited liability companies. 9. There are no derivative investments 10. The Company does not anticipate investment income as a factor in premium deficiency calculations. 11. Unpaid losses and loss adjustment expenses include an amount determined from individual case estimates and loss reports and an amount, based on experience, for losses incurred but not reported. Such liabilities are necessarily based on assumptions and estimates and while management believes the amount is adequate, the ultimate liability may be in excess of or less than the amount provided. The methods for making such estimates and for establishing the resulting liabilities are continually reviewed and any adjustments are reflected in the period determined. 12. The Company s policy is to capitalize amounts in excess of $1, There are no pharmaceutical rebate receivables. D. Going Concern Based on management's evaluation, the Company does not believe there to be substantial doubt about the entity's ability to continue as a going concern. Note 2 - Accounting Changes and Correction of Errors Not Applicable Note 3 Business Combinations and Goodwill Not Applicable 6.1

9 NOTES TO FINANCIAL STATEMENTS Note 4 Discontinued Operations Not Applicable Note 5 Investments A. Mortgage Loans - None B. Debt Restructuring - None C. Reverse Mortgages - None D. Loan-Backed Securities - None E. Dollar Repurchase Agreements and/or Securities Lending Transactions - None F. Repurchase Agreements Transactions Accounted for as Secured Borrowing - None G. Reverse Repurchase Agreements Transactions Accounted for as Secured Borrowing - None H. Repurchase Agreements Transactions Accounted for as a Sale - None I. Reverse Repurchase Agreements Transactions Accounted for as a Sale - None J. Real Estate - None K. Low-Income Housing Tax Credits (LIHTC) - None L. Restricted Assets (1) Restricted Asset Category a. Subject to contractual obligation for which liability is not shown b. Collateral held under security lending agreements c. Subject to repurchase agreements d. Subject to reverse repurchase agreements e. Subject to dollar repurchase agreements f. Subject to dollar reverse repurchase agreements g. Placed under option contracts h. Letter stock or securities restricted as to sale - excluding FHLB capital stock i. FHLB capital stock j. On deposit with states k. On deposit with other regulatory bodies l. Pledged as colletaral to FHLB (including assets backing funding agreements) m. Pledged as colletaral not captured in oth. categories n. Other restricted Assets o. Total Restricted Assets Total Protected Total Proct. Prot'd Cell Acct Gen Acct Cell Acct Activity Cell Acct Rest Access Assets Supp G/A Activity (b) Total Prior Year Change Nonadm Rest. Total Total Gross (Adm & Non Adm) Adm Rest Rest to Total Assets Adm Rest to Total Admitted Assets 347, , ,598 1, , % 0.415% , , ,598 1, , % 0.415% (2) Description of Assets Total General Account (G/A) G/A Total Prot. Prot'd Cell Total (1 Total From Increase / Total Current Supporting Cell Acct Acct Assets plus 3) Prior Year (Decrease) (5 Year Protected Restricted Supporting minus 6) Admitted Cell Account Access G/A Activity Restricted Activity (a) (b) Gross (Admitted & Nonadmitt ed) Restricted to Total Assets Admitted Restricted to Total Admitted Assets Total (c) % 0.000% 6.2

10 (3) Description of Assets Total General Account (G/A) G/A Total Prot. Prot'd Cell Total (1 plus 3) Total From Increase / Total Supporting Cell Acct Acct Assets Prior Year (Decrease) Current Protected Cell Restricted Supporting (5 minus 6) Year Account Access G/A Activity Admitted Activity (a) (b) Restricted Gross (Admitted & Nonadmitt ed) Restricted to Total Assets Admitted Restricted to Total Admitted Assets Total (c) % 0.000% (4) Collateral Assets Book / Adjusted Carrying Value (BACV) a. Cash, Cash Equivalents and Short-Term Investments Fair Value % of BACV to Total Assets (Admitted and Nonadmitted) * % of BACV to Total Admitted Assets ** % 0.000% b. Schedule D, Part % 0.000% c. Schedule D, Part 2, Section % 0.000% d. Schedule D, Part 2, Section % 0.000% e. Schedule B % 0.000% f. Schedule A % 0.000% g. Schedule BA, Part % 0.000% h. Schedule DL, Part % 0.000% i. Other % 0.000% j. Total Collateral Assets Statement as of March 31, 2018 of the (a + b + c + d + e + f + g + h + i) NOTES TO FINANCIAL STATEMENTS % 0.000% k. Recognized Obligation to Amount % of Liability to Total Liabilities * Return Collateral Asset % M. Working Capital Finance Investments - None N. Offsetting and Netting of Assets and Liabilities - None O. Structured Notes - None P. 5* Securities - None Q. Short Sales - None R. Prepayment Penalty and Accelerations Fees - None Note 6 Joint Ventures, Partnerships and Limited Liability Companies The Company is not a member of a Joint Venture, Limited Partnership or a Limited Liability Company that exceeds 10% of its admitted assets or has been determined to be impaired. Note 7 Investment Income Due and accrued income was excluded from surplus on the following basis: A. All investment income due and accrued with amounts that are over 90 days past due with the exception of mortgage loans in default. B. Total amount excluded $ Note 8 Derivative Instruments The Company does not have any derivative instruments. Note 9 Income Taxes A. The components of the net deferred tax asset/(liability) at March 31, 2018 are as follows:

11 NOTES TO FINANCIAL STATEMENTS March 31, 2018 December 31, 2017 Change Ordinary Capital Total Ordinary Capital Total Ordinary Capital Total (a) Gross deferred tax assets $1,247,415 $48,051 $1,295,467 $1,169,638 $15,174 $1,184,812 $77,777 $32,877 $110,654 (b) Statutory valuation allowance adjustments (c) Adjusted gross deferred tax assets (1a - 1b) 1,247,415 48,051 1,295,467 1,169,638 15,174 1,184,812 77,777 32, ,654 (d) Deferred Tax Assets Nonadmitted (e) Subtotal Net Admitted Deferred Tax Asset (1c - 1d) 1,247,415 48,051 1,295,467 1,169,638 15,174 1,184,812 77,777 32, ,654 (f) Deferred Tax Liabilities 13,126-13,126 14,746 10,061 24,807 (1,620) (10,061) (11,681) (g) Net admitted deferred tax asset/(net Deferred Tax Liability) (1e - 1f) $1,234,289 $48,051 $1,282,341 $1,154,892 $5,113 $1,160,005 $79,397 $42,939 $122,336 (a) 2. Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks March 31, 2018 December 31, 2017 Change Ordinary Capital Total Ordinary Capital Total Ordinary Capital Total $977,361 40,687 $1,018,048 $1,161,741 $16,350 $1,178,090 ($184,380) $24,338 ($160,042) (b) Adjusted Gross Deferred Tax Assests Expected to be Realized (Excluding The Amount of Deferred Tax Assets from 2 above) After Application of the Threshold Limitation 256,068 21, ,418 2,277 4,445 6, ,791 16, ,696 (The Lesser of 2b1 and 2b2 Below) 1. Adjusted Goss Deferred tax Assets Expected to be Realized Following the Balance Sheet Date 256,068 21, ,418 2,277 4,445 6, ,791 16, , Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold 1,005,153 1,007,133 (1,980) (c) Adjusted Gross Deferred Tax Assets (Excluding the - Amount of Deferred Tax Assets from 2a and 2b above) Offset by Gross Deferred Tax Liabilities - 0 (10,061) 10,061-10,061 (10,061) - (d) Deferred Tax Assets Admitted as the Results of Application of SSAP No. 101 Total (2a+2b+2c) 1,233,429 62,037 1,295,466 1,153,956 30,856 1,184,812 79,472 31, , (a) (b) March 31, 2018 December 31, 2017 Percentage Percentage Ratio Percentage Used to Determine Recovery Period and Threshold Limitation Amount 249% 250% Amount of Adjusted Capital and Surplus Used Determine Recovery Period and Threshold Limitation in 2bs Above 10,051,529 10,071, March 31, 2018 December 31, 2017 Change Ordinary Capital Total % Ordinary Capital Total Ordinary Capital Total Impact of Tax Planning Strategies (a) Determination of Adjusted Gross Deferred Tax Assets, 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% By Tax Character as a Percentage 1. Adjusted Gross DTAs Amounts from Note 9A1(c) 1,247,415 48,051 1,295,467 1,169,638 15,174 1,184,812 77,777 32, , Percentage of Adjusted Gross DTAs By Tax Character 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Attributable to the Impact of Tax Planning Strategies 3. Net Admitted Adjusted Gross DTAs Amount from Note Note 9A1(e) 1,247,415 48,051 1,295,467 1,169,638 15,174 1,184,812 77,777 32, , Percentage of Net Admitted Adjusted Gross DTAs by Tax 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Character Admitted because of the Impact of Tax Planning Strategies (b) Does the Company's tax-planning strategies include the use of reinsurance? Yes No X B. Unrecognized DTLs Not Applicable C. Current Tax and Change in Deferred Tax 1. Current income tax: March 31, 2018 December 31, 2017 Change (a) Federal 132, ,454 (695,141) (b) Foreign - - (c) Subtotal 132, ,454 (685,141) (d) Federal income tax on net capital gains - - (e) Utilization of capital loss carryforward - - (f) Other 48 (48) Federal and foreign income taxes incurred 132, ,502 (695,189) 2. Deferred tax assets: 6.4

12 NOTES TO FINANCIAL STATEMENTS March 31, 2018 December 31, 2017 Change (a) Ordinary: (1) Discounting of unpaid losses 278, ,753 5,199 (2) Unearned premium reserve 486, ,567 7,654 (3) Policyholder reserves (4) Investments (5) Deferred acquisition costs (6) Policyholder dividends accrual (7) Fixed assets (8) Compensation and benefits accrual (9) Pension accrual (10) Receivables - nonadmitted (11) Net operating loss carry-forward (12) Tax credit carry-forward (13) Other (including items <5% of total ordinary tax assets) (14) Other assets nonadmitted 482, ,318 64,924 (99) Subtotal 1,247,415 1,169,638 77,777 (b) Statutory valuation allowance adjustment (c) Nonadmitted - - (d) Admitted ordinary deferred tax assets (2a99-2b-2c) 1,247,415 1,169,638 77,777 (e) Capital (1) Investments 22,075-22,075 (2) Net capital loss carry-forward 25,976 15,174 10,802 (3) Real estate (4) Other (including items <5% of total capital tax assets) (99) Subtotal 48,051 15,174 32,877 (f) Statutory valuation allowance adjustment (g) Nonadmitted (h) Admitted capital deferred tax assets (2e99-2f-2g) 48,051 15,174 32,877 (i) Admitted deferred tax assets (2d+2h) 1,295,467 1,184, , Deferred tax liabilities: March 31, 2018 December 31, 2017 Change (a) Ordinary: (1) Investments - 10,061 (10,061) (2) Fixed assets 13,126 14,746 (1,620) (3) Deferred and uncollected premiums (4) Policyholder reserves (5) Other (including items <5% of total ordinary tax liabilities) (6) Additional acquisition costs-installment premiums (7) Discount of accrued salvage and subrogation (8) Guaranty funds receivable (99) Subtotal 13,126 24,807 (11,681) (b) Capital (1) Investments (2) Real estate (3) Other (including items <5% of total capital tax liabilities) (99) Subtotal (c) Deferred tax liabilities (3a99+3b99) 13,126 24,807 (11,681) 4. Net Deferred tax assets/liabilities (2i-3c) 1,282,341 1,160, ,336 D. Reconciliation of Federal Income Tax Rate to Actual Effective Rate The significant items causing a difference between the statutory federal income tax rate and Piedmont's effective income tax rate are as follows: March 31,2018 Effective Tax Rate Provision computed at statutory rate $107, % 0 Change in nonadmitted assets (64,924) % Change in unrealized gain/loss (32,137) -6.26% Tax exempt income deduction % Dividends received deduction (955) -0.19% Accrued dividend from 100% owned affiliate % Proration of tax exempt investment income % Other than temporary impairments % Penalties % Disallowed travel and entertainment % 6.5

13 NOTES TO FINANCIAL STATEMENTS Taxes recovered - -3 RAR % Accrual adjustment - prior year % Change in enacted tax rate % Other % Totals $9, % Federal and foreign income taxes incurred $132, % Realized capital gains (losses) tax 0 0.0% Change in net deferred income taxes (122,337) -23.8% $9, % E. Operating Loss and Tax Credit Carryforwards (1). March 31, 2018, the Company did not have any unused operating loss carryforwards available to offset future taxable income. At March 31, 2018 the company had $ 123,696 of capital loss carryforwards available to offset against future taxable income. (2). The following is income tax expense for 2018 and 2017 that is available for recoupment in the event of future net losses. Year Amount 2018 $132, $867,454 (3). The Company did not have any protective tax deposits under Section 6603 of the Internal Revenue Code. F. Consolidated Federal Income Tax Return (1). The Company's federal income tax return is consolidated with the following entities: Not Applicable (2). Not Applicable G. Federal or Foreign Federal Income Tax Loss Contingencies The Company has no tax loss contingencies for which it is reasonably possible that the total liability will significally increase within twelve months of the reporting date. Note 10 Information Concerning Parent, Subsidiaries, Affiliates and Other Related Parties A. Nature of Relationships Ascendant Underwriters, LLC (AU), an MGA affiliated through common ownership, has a management contract to produce, administer and manage policies, perform marketing, claims analysis, catastrophe risk management and other administrative functions. Fees are 10% of written premiums plus actual acquisition expenses paid by AU to its agents. Ascendant Claims Services, LLC, affiliated through common ownership, has a contract to adjust and settle claims for fees ranging from $150-$850 per claim, depending on the nature of the claim. Specialty Commercial Brokers, LLC (SCB), an agency affiliated through common ownership, has an agreement with AU to transact insurance at commission rates ranging from 9-16%. 6.6

14 NOTES TO FINANCIAL STATEMENTS B. Detail of Transactions Greater than ½ of 1 % of Admitted Assets The Company has incurred expenses year to date totaling $4,659,044 pursuant to the management contract with Ascendant Underwriters, LLC, of which $2,170,978 are for MGA fees directly to AU and $2,488,066 are for pass through of commissions payable to brokers. Specialty Commercial Brokers, LLC was paid $23.29 in broker commissions through March 31, 2018, for policies insured by the Company. The company has incurred expenses year to date of $857,150 pursuant to the claims contract with Ascendant Claims Services, LLC. C. Change in Terms of Inter-company Arrangements There were no changes in terms from the preceding period. D. Amounts Due from (to) Related Parties The company has the following net amounts due from (to)related parties: Current days days Over 90 days Total Ascendant Underwriters, LLC (4,196,411) 390,383 - (3,806,027) Ascendant Claims Services, LLC 278, , ,256 Specialty Commercial Brokers, LLC (3,917,908) 648, (3,269,771) E. Guarantees or Contingencies for Related Parties -Not Applicable F. Management, Service Contracts, Cost Sharing Arrangements - See Note 10 A, B, and C above G. Nature of relationships that Could Affect Operations - See Note 10 A, B, and C above H. Amount Deducted for Investment in Upstream Company - Not Applicable I. Detail of Investments in Affiliates Greater than 10 % of Admitted Assets - Not Applicable J. Write Down for Impairments of Investments in Subsidiaries, Controlled or Affiliated Companies - Not Applicable K. Investment in foreign insurance subsidiary - Not Applicable L. Investment in a downstream noninsurance holding company - Not Applicable. M. Investment in all Subsidiary, Controlled and Affiliated Entities Not Applicable N. Investment in Insurance Subsidiary, Controlled and Affiliated Entities Not Applicable Note 11 Debt A. Outstanding Debt - None B. FHLB Agreements - None Note 12 Retirement Plans, Deferred Compensation, Postemployment Benefits and Compensated Absences and Other Postretirement Benefit Plans A. Defined Benefit Plan - None B. Investment Policies and Strategies - None C. Fair Value of Plan Assets - None D. Long-Term of Return-on Assets - None E. Defined Contributions Plans - None F. Multiemployers Plans - None G. Consolidated/Holding Company Plans - None H. Postemployment Benefits and Compensated Absences - None I. Impact of Medicare Modernization Act on Postretirement Benefits - None Note 13 Capital and Surplus, Dividend Restrictions and Quasi-Reorganizations. 6.7

15 NOTES TO FINANCIAL STATEMENTS 1. Outstanding Shares The Company has 1,000 shares of $1 par value common capital stock authorized and 1,000 shares issued and outstanding. The company has no preferred stock authorized issued, or outstanding. 2. Dividend Rate of Preferred Stock - Not Applicable 3. Dividend Restrictions The maximum amount of dividends which can be paid by State of Florida insurance companies without prior approval of the Insurance Commissioner is subject to restrictions relating to statutory surplus. Section Florida Statutes provides that a domestic stock insurer shall not pay any cash dividends to stockholders except out of its part of its available and accumulated surplus funds which are derived from realized net operating profit on its business and realized capital gain, but such cash dividend shall not exceed 10% of such surplus in any one year unless otherwise approved by the department: however, nothing herein shall in any way limit or be applicable to cash dividend payments out of the insurer s net operating profits and realized gain derived during the immediately preceding calendar year. Statutory surplus at March 31, 2018 is $ 11,396, Dividends Paid No dividends were paid by the company. 5. Dividend Limitations Other than the limitations of (3) above, there were no restrictions placed on the portion of Company profits that may be paid as ordinary dividends to stockholders. 6. Surplus Restrictions There were no restrictions placed on the Company s surplus, including for whom the surplus is being held. 7. Surplus Advances - Not Applicable 8. Company Stock Held for Special Purposes - Not Applicable 9. Changes in Special Surplus Funds - Not Applicable 10. Changes in Unassigned Funds The portion of unassigned funds (surplus) represented or (reduced by) cumulative unrealized gains and losses is ($0). 11. Surplus Notes - None 12/13. Quasi Reorganization - None Note 14 Liabilities, Contingencies and Assessments A. Contingent Commitments - Not Applicable B. Assessments The Company is subject to assessments by the Florida Workers Compensation Insurance Guaranty Association (FWCIGA), the Special Disability Trust Fund (SDTF), the Workers Compensation Administrative Trust (WCATF), and the Florida Insurance Guaranty Association (FIGA). The activities of FWCIGA include collecting funds from solvent insurance companies. The SDTF is a fund created to encourage employers to hire individuals with pre-existing physical impairments by spreading the increased risk of the workers compensation losses and costs associated with such 6.8

16 employment. The WCATF covers the costs of administering the Florida workers compensation system. The Company s policy is to recognize its obligation for assessments when the Company has the information available to reasonably estimate its liabilities. Most assessments are paid quarterly based on premiums written or earned. The Company has accrued a liability for guaranty fund and other assessments of $164,652. This represents management s best estimates based on information received from the states in which the Company writes business and may change due to many factors including the Company s share of the ultimate cost of current insolvencies. C. Gain Contingencies -Not Applicable D. Claims Related Extra Contractual Obligations and Bad Faith Losses Stemming From Lawsuits The company paid $0 in the reporting period to settle claims related extra contractual obligations or bad faith claims stemming from lawsuits. E. Product Warranties Not Applicable F. Joint and Several Liabilities Not Applicable G. All Other Contingencies Note 15 Leases Contingent liabilities arising from litigation, income taxes and other matters are not considered material in relation to the financial position of the Company. At March 31, 2018 and 12/31/17, the company had admitted assets of $38,643,832 and $37,747,434, respectively, in premiums receivables due from policyholders. The Company routinely assesses the collectability of these receivables. Based upon Company experience, any uncollectible premiums receivable as of March 31, 2018 are not expected to exceed the non-admitted amounts totaling $ 2,255,098 of which $463,910 represents 10% of the earned but unbilled estimate as required by the NAIC Accounting Policy and Procedures Manual, and, therefore, no additional provision for uncollectible amounts has been recorded. The potential for any additional loss is not believed to be material to the Company s financial condition. A. Lessee Operating Lease (1) Statement as of March 31, 2018 of the NOTES TO FINANCIAL STATEMENTS a. The Company recognized $60,255 in rent expense for the three months ended March 31, 2018 after reductions for cost sharing allocation with the Company's affiliates. The Company's home office is leased from an affiliated entity since September 1, 2015 as approved by the Florida Office of Insurance Regulation. b. The office space rental commitment has renewal options extending through the year 2025 which is subject to adjustments in future periods. (2) a. Future minimum aggregate rental commitments are as follows: Year Ending December $236, $243, $250, $258, $265,

17 Total $1,253,947 These gross rental commitments are reduced in the financial statements by payments received under a cost sharing allocation agreement with the Company s affiliates. B. Lessor Leases - Not Applicable Note 16 Information About Financial Instruments With Off-Balance Sheet Risk and Financial Instruments with Concentration of Credit Risk None Statement as of March 31, 2018 of the NOTES TO FINANCIAL STATEMENTS Note 17 Sale, Transfer and Servicing of Financial Assets and Extinguishments of Liabilities A. Transfers of Receivables Reported as Sales - Not Applicable B. Transfer and Servicing of Financial Assets - Not Applicable C. Wash Sales - Not Applicable Note 18 Gain or Loss to the Reporting Entity from Uninsured Plans and the Uninsured Portion of Partially Insured Plans A. ASO Plans - Not Applicable B. ASC Plans - Not Applicable C. Medicare or Similarly Structured Cost Based Reimbursement Contract - Not Applicable Note 19 Direct Premium Written/Produced by Managing General Agents/Third Party Administrators The Company uses a managing general agent to write and administer insurance products in Florida. As reported in the following chart, the managing general agent (MGA) writes direct premiums greater than 5% of policyholders surplus. The terms of the MGA contract gives the MGA authority for premium collection (P), underwriting (U), binding (B), and reinsurance (R). (See Note 10) Name FEI Number Exclusive Type of Type of Direct And Address Contract Business Authority Premium Written Granted Written Ascendant Yes Workers Comp, R,B,P,U $20,817,009 Underwriters, LLC. Commercial Auto, 2199 Ponce De Leon Blvd Other Liability Suite 500 Coral Gables, FL Note 20 Fair Value Measurements A 1 Fair Value Measurements at Reporting Date (2) (3) (4) (5) (1) Description for each class of asset or liability (Level 1) (Level 2) (Level 3) Total Net Asset Value(NAV) Included in Level 2 a. Assets at fair Value 6.10

18 Preferred Stocks - - Industrial and Misc Parent, Subsidiares and Affiliates - Total Perpetual Preferred Stocks Bonds - - U.S Governments Industrial and Misc 9,597,003 9,597,003 Hybrid Securities - Parent, Subsidiaries and Affiliates - Total Bonds 9,597,003-9,597,003 Common Stocks. - - Industrial and Misc 1,126,433 1,126,433 Parent, Subsidiaries and Affiliates - Total Common Stocks 1,126, ,126,433 Derivatives Statement as of March 31, 2018 of the Interest Rate Contracts Foreign Exchange Contracts Credit Contracts Commodity Futures Contracts Commodity Forward Contracts NOTES TO FINANCIAL STATEMENTS Total Derivatives Total assets at fair value 1,126,433 9,597,003-10,723,436 (2) Fair Value Measurements in Level 3 of the Fair Value Hierarchy - N/A B. Fair Value Information disclosed under Other Accounting Pronouncements - N/A C. Type of Financial Instrument Not Net Asset Practicable Value(NAV) Type of Aggregate Admitted (Carrying Included in Financial Instrument Fair Value Assets (Level 1) (Level 2) (Level 3) Value) Level 2 Preferred Stocks Bonds 9,597,003 9,706,326 9,597, Common Stocks 1,126,433 1,126,433 1,126, Mortgage Loans - Total 10,723,436 10,832,759 1,126,433 9,597, D. Not Practicable to Estimate Fair Value - N/A Note 21 Other items A. Unusual or Infrequent Items Not Applicable B. Troubled Debt Restructuring for Debtors - Not Applicable C. Other Disclosures: (1) Agent Balances-The Company had uncollected premiums and agent balances receivable as set forth on pg. 2, line 15.1 of $ 1,396,117 and $2,091,966 at 03/31/18 and 12/31/17, respectively. There are no amounts due from controlled or controlling persons. (2) Special Disability Trust Fund- Pursuant to the State of Florida requirements, the company provides the following information: The Company has not offset its Loss 6.11

19 NOTES TO FINANCIAL STATEMENTS reserves for any amounts expected to be realized as recoveries from the Special Disability Trust Fund (SDF). The Company did not receive any payments from the SDF in the current year or in the prior year. The SDF assessments were $ 80,597 for the current calendar year and $386,862 for the prior year. D. Business Interruption Insurance Recoveries Not Applicable E. State Transferable and Non-transferable Tax Credit Not Applicable F. Subprime-Mortgage-Related Risk Exposure Not Applicable G. Insurance Linked Securities Contracts Not Applicable Note 22 Events Subsequent Type I - Recognized Subsequent Events - None Type II - Nonrecognized Subsequent Events - None Current Year Prior Year A. Did the reporting entity write accident and health Insurance premiums that is subject to Section 9010 of the federal Affordable Care Act (YES/NO)? NO B. ACA fee assessment payable for the upcoming year C. ACA fee assessment paid D. Premium written subject to ACA 9010 assessment E. Total Adjusted Capital before surplus adjustment $ 11,396,373 F. Total Adjusted Capital after surplus adjustment $ 11,396,373 G. Authorized Control Level $ 4,028,777 H. Would reporting the ACA assessment as of December 31, 2017, have triggered an RBC action level (YES/NO)? NO Note 23 Reinsurance A. Unsecured Reinsurance Recoverable The Company has an unsecured aggregate recoverable for losses, paid and unpaid including IBNR, loss adjustment expenses and unearned premium of $69,928,058 with individual reinsurers that exceeds 3% of policyholders surplus as follows: NAIC Code Federal ID # Name of Reinsurer Amount General Reins Corp $39,939, Maiden Reins Corp $20,889, Berkley Insurance Co $7,983,394 The Company's Reinsurance Recoverable from Maiden Re is collaterized by a trust account for the benefit of Ascendant Commercial Insurance. As of March 31, 2018, the market value of the trust account was $28,176,610. Settlements occur on a quarterly basis in arrears. B. Reinsurance Recoverable in Dispute - None C. Reinsurance Assumed and Ceded Effective January 1, 2018, the Company transitioned its reinsurance program in its entirety to General Reinsurance Corporation, an A++ rated reinsurer by A.M. Best. The program consists of the following: (1) an Excess of Loss Treaty coving Auto Liability losses from $300,000 up to $1 million per occurrence, General Liability losses from $500,000 up to $1 million per occurrence, and Workers' Compensation losses from $750,000 up to $15 million per occurrence (subject to a $10 million maximum for any one life); and (2) a 70% Net Retained All-Lines Quota Share Treaty for losses occurring from and after January 1,