Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. KINGSWAY FINANCIAL SERVICES INC (1072627) 10-Q published on Jul 17, 2020 at 4:01 pm
Reporting Period: Mar 30, 2020
On September 5, 2018, the Company executed an Amended and Restated Restricted Stock Award Agreement ("Amended RSA Agreement") with its former Chief Executive Officer. Pursuant to the terms of the Amended RSA Agreement, the Company granted to the former Chief Executive Officer a modified award of 350,000 shares of restricted common stock (the "2018 Modified Restricted Stock Award"). The Company deemed the 2018 Modified Restricted Stock Award to be taxable to the former Chief Executive Officer on the modification date. As a result, the Company cancelled 102,550 of the 350,000 shares of the 2018 Modified Restricted Stock Award to satisfy the tax withholding obligation. The remaining 247,450 shares of the 2018 Modified Restricted Stock Award shall become fully vested after the satisfaction of certain performance conditions, as defined in the Amended RSA Agreement. Pursuant to the Amended RSA Agreement, the 2018 Modified Restricted Stock Award is to vest upon (i) the completion of the sale by 1347 Investors of its entire interest in the shares of Limbach common stock and (ii) the subsequent completion of the liquidation of 1347 Investors and the distribution of its assets to its members.
Net (Loss) Income
In the first quarter of 2020, we reported net loss of $0.4 million compared to net income of $3.2 million in the first quarter of 2019. The net loss for the three months ended March 31, 2020 is primarily due to interest expense not allocated to segments and other income and expenses not allocated to segments, net, partially offset by gain on change in fair value of debt and gain on change in fair value of limited liability investments, at fair value. The net income for the three months ended March 31, 2019 is primarily due operating income in Extended Warranty and Leased Real Estate, net investment income, income tax benefit and gain on change in fair value of limited liability investments, at fair value, partially offset by interest expense not allocated to segments and other income and expenses not allocated to segments, net.
Net realized gains were $0.2 million in the first quarter of 2020 compared to $0.3 million in the first quarter of 2019. The net realized gains for the three months ended March 31, 2020 relate primarily to sales of fixed maturities and distributions received from one of the Company’s investments in which its carrying value previously had been written down to zero as a result of prior distributions. The net realized gains for the three months ended March 31, 2019 relate primarily to a realized gain on the sale of 1347 Energy Holdings LLC ("Energy"). See Note 22, "Related Parties," to the unaudited consolidated interim financial statements, for further information about the sale of Energy.
Gain on change in fair value of limited liability investments, at fair value was $1.9 million in the first quarter of 2020 compared to $4.3 million in the first quarter of 2019. The gain on change in fair value of limited liability investments, at fair value includes an increase in fair value of $1.9 million and a decrease in fair value of less than $0.1 million related to Net Lease Investment Grade Portfolio LLC ("Net Lease") during the three months ended March 31, 2020 and March 31, 2019, respectively, and increases in fair value of zero and $4.2 million related to 1347 Investors LLC (“1347 Investors”) during the three months ended March 31, 2020 and March 31, 2019, respectively. During the fourth quarter of 2019, the Company’s investment in 1347 Investors was dissolved. See Note 22, "Related Parties," to the unaudited consolidated interim financial statements for further information about the dissolution of 1347 Investors.
Other income and expenses not allocated to segments, net was a net expense of $3.0 million in the first quarter of 2020 compared to $1.8 million in the first quarter of 2019. The increase for the three months ended March 31, 2020 is primarily attributable to higher professional services fees incurred with the Company’s outside auditors related to the Company's 2018 Annual Report, which was filed on February 27, 2020, and $0.9 million of expense recorded pursuant to a settlement agreement related to outstanding litigation between the Company and Aegis Security Insurance Company. See Note 23, "Commitments and Contingencies," to the unaudited consolidated interim financial statements, for further discussion.