We are a specialty personal lines insurance holding company. Through our subsidiaries,
we provide a variety of insurance products, including personal and commercial
automobile, homeowners, umbrella, recreational vehicle, supplemental health,
lender-placed and other niche insurance products. We sell insurance products
with a focus on underwriting profitability through a combination of our customized
and predictive analytics and our technology driven low cost infrastructure.
Our automobile insurance products protect our customers against losses due
to physical damage to their motor vehicles, bodily injury and liability to others
for personal injury or property damage arising out of auto accidents. Our homeowners
and umbrella insurance products protect our customers against losses to dwellings
and contents from a variety of perils, as well as coverage for personal liability.
We offer our property and casualty ("P&C") insurance products
through a network of approximately 22,000 independent agents, a number of affinity
partners and through direct-response marketing programs. We have approximately
2.8 million P&C policyholders.
We added lender-placed insurance to our P&C platform in 2015 through the
acquisition of QBEs lender-placed insurance business to offer a full suite
of lender-placed insurance products, including fire, home and flood products,
as well as collateral protection insurance and guaranteed asset protection products
for automobiles, to our customers.
We launched our accident and health (“A&H”) business in 2012
to provide accident and non-major medical health insurance products targeting
our existing P&C policyholders and the anticipated emerging market of employed
persons who are uninsured or underinsured. In 2015, we acquired certain business
lines from Assurant Health, including small group self-funded and supplemental
product lines. We market our and other carriers’ A&H insurance products
through a multi-pronged distribution platform that includes a network of over
19,800 independent agents, direct-to-consumer marketing, wholesaling and worksite
marketing.
We are licensed to operate in 50 states and the District of Columbia, but focus
on underserved niche markets. Approximately 84% of our P&C premium written
is originated in twelve core states: New York, North Carolina, California, Florida,
Louisiana, Michigan, Texas, New Jersey, Virginia, Washington, Connecticut and
Massachusetts.
Our company (formerly known as American Capital Acquisition Corporation) was
formed in 2009 to acquire the private passenger auto business of the U.S. consumer
property and casualty insurance segment of General Motors Acceptance Corporation
(“GMAC,” now known as Ally Financial), which operations date back
to 1939. We acquired this business on March 1, 2010.
Our wholly-owned subsidiaries include fifteen regulated domestic insurance
companies, of which fourteen write primarily P&C insurance and one writes
solely A&H insurance. Our insurance subsidiaries have been assigned an “A-”
(Excellent) group rating by A.M. Best Company, Inc. (“A.M. Best”).
Two of our wholly-owned subsidiaries that we acquired on September 15, 2014
are management companies that act as attorneys-in-fact for Adirondack Insurance
Exchange, a New York reciprocal insurer, and New Jersey Skylands Insurance Association,
a New Jersey reciprocal insurer (together, the “Reciprocal Exchanges”).
We do not own the Reciprocal Exchanges but manage their business operations
through our wholly-owned management companies.
In our P&C segment, we operate in niche businesses and offer a broad range
of products employing multiple channels of distribution. Through our agency
channel, we primarily sell nonstandard automobile insurance through independent
agents and brokers and also offer standard and preferred auto, motorcycle, commercial
vehicle, homeowners and umbrella products. Through our affinity channel, we
primarily underwrite and market standard and preferred auto and RV insurance.
Standard and preferred automobile insurance. These policies provide coverage
designed for drivers with greater financial resources and a less risky driving
and claims history and are renewed with greater frequency than nonstandard policies.
Nonstandard automobile insurance. These policies provide coverage for liability
and physical damage and are designed for drivers who represent a higher-than-normal
level of risk as a result of factors such as their driving record, limited driving
experience and claims history. Because these individuals often have limited
financial resources and a greater tendency to miss payments or to make late
payments, their premiums are generally higher than those for drivers who qualify
for standard or preferred coverage. A significant part of our profits from these
policies results from fees paid by our customers, which include origination
fees, installment fees relating to installment payment plans, late payment fees,
policy cancellation fees and reinstatement fees. For the year ended December
31, 2015, our P&C segment generated $174.7 million in revenue from policy
service fees.
Homeowners insurance. Our homeowners policies are generally multiple-peril policies,
providing property and liability coverages for one- and two-family, owner-occupied
residences. We also provide additional coverage to the homeowner for personal
umbrella.
Recreational vehicle insurance. Unlike many of our competitors, our policies
carry RV-specific endorsements tailored to these vehicles, including automatic
personal effects coverage, optional replacement cost coverage, RV storage coverage
and full-time liability coverage. We also bundle coverage for RVs and passenger
cars in a single policy for which the customer is billed on a combined statement.
Commercial automobile insurance. These policies include coverage for liability
and physical damage caused by light-to-medium duty commercial vehicles, focused
on artisan vehicles, with an average of two vehicles per policy.
Motorcycle insurance. We provide coverage for most types of motorcycles, as
well as golf carts and all-terrain vehicles. Our policy coverage offers flexibility
to permit the customer to select the type (e.g., liability) and limit of insurance
(e.g., $100,000/$250,000/$500,000), and to include other risks, such as add-on
equipment and towing.
Lender-placed insurance. Through the lender-placed insurance platform, we offer
a full suite of lender-placed insurance products to customers, including fire,
home and flood products, as well as collateral protection insurance and guaranteed
asset protection products for automobiles.
We focus on products that will be sold outside of the PPACA framework to the
emerging uninsured or underinsured individual and group worksite markets, who
we expect will consist largely of people with incomes above the level that qualify
for government subsidies. This emerging market includes groups and individuals
who are seeing their out-of-pocket health insurance costs rise under PPACA,
and part-time employees and full-time employees who work for employers with
fewer than 50 employees. Our products include products packaged with other coverages
or services to enhance the overall value proposition to the consumer, as well
as standalone products either purchased alone or as a supplement to major medical
coverage. Target products for groups (through employers) and individuals include:
Accident/AD&D. This coverage pays a stated benefit to the insured or his/her
beneficiary in the event of bodily injury or death due to accidental means (other
than natural causes). For our targeted young and uninsured population, accident
policies can provide basic insurance protection for those without coverage.
These policies also serve as supplemental policies underneath high deductible
major medical plans.
Hospital Indemnity. These plans serve as supplements to high deductible plans,
helping mitigate high catastrophic individual out of pocket expenses. They can
also be sold as standalone programs to groups, offering basic insurance for
those that cannot afford or do not wish to pay for more expensive major medical
coverage.
Short Term Recovery Care. These plans are designed to provide short term coverage
post discharge from acute care/rehab center to the nursing home setting.
Short-Term Medical. These plans offer comprehensive coverage to individuals
for a prescribed short duration, generally six months, but can be up to a year.
Cancer/Critical Illness. Critical illness policies can provide coverage for
many costs that are not covered by traditional health insurance. This coverage
can be sold on a guarantee and simplified issue (health questionnaire) basis
either as a standalone product or packaged with other products.
Stop Loss. We expect that increases in health insurance costs will cause an
increase in the number of employers offering self-insured plans. NHIC offers
a wide array of stop loss programs for small and large employers, as permitted
by state law. We also package our non-major medical coverages with stop loss
programs.
Dental/Vision. These policies provide basic dental or vision coverage and can
be sold on a stand-alone basis or packaged with other products. They are frequently
matched with discount plans.
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