| Summary of Gain on Sale of CIS |
The gain on sale of CIS is calculated as follows:
|
|
|
|
Total consideration at closing |
$ |
46,552 |
|
First contingent consideration as of August 30, 2024 |
|
4,894 |
|
Second and third contingent considerations as of August 30, 2024 |
|
8,030 |
|
Total consideration |
$ |
59,476 |
|
|
|
|
Less: |
|
|
Carrying value of CIS net assets |
$ |
556 |
|
Transaction costs and other adjustments |
|
4,339 |
|
Gain on sale of CIS |
$ |
54,581 |
|
|
| Summary of Discontinued Operations |
The major assets and liabilities that comprise the carrying value of CIS’s net assets as of August 30, 2024 are presented as follows:
|
|
|
|
|
|
|
August 30,
2024 |
|
|
|
|
|
Cash |
|
$ |
7,184 |
|
Premiums receivable |
|
|
30,603 |
|
Other assets |
|
|
2,190 |
|
Total assets |
|
$ |
39,977 |
|
|
|
|
|
Less: |
|
|
|
Premiums payable |
|
$ |
33,272 |
|
Commissions payable |
|
|
1,800 |
|
Unearned commissions |
|
|
2,052 |
|
Other liabilities |
|
|
2,297 |
|
Total liabilities |
|
$ |
39,421 |
|
|
|
|
|
Total carrying value of CIS net assets |
|
$ |
556 |
|
Below represents statements of operations of the discontinued operations for the year ended December 31, 2024:
|
|
|
|
|
Discontinued Operations |
|
Consolidated Statement of Operations |
|
Year Ended December 31, |
|
|
|
2024 |
|
Revenue and Other Income from operations |
|
|
|
Commission revenue |
|
$ |
32,944 |
|
Investment income |
|
|
86 |
|
Other income |
|
|
376 |
|
Total revenue and other income from operations |
|
|
33,406 |
|
|
|
|
|
Expenses |
|
|
|
Policy acquisition costs |
|
|
29,099 |
|
Administrative expenses |
|
|
5,023 |
|
Total expenses |
|
|
34,122 |
|
|
|
|
|
Income (loss) from operations before income taxes |
|
|
(716 |
) |
|
|
|
|
Gains from sale and disposal transactions |
|
|
|
Gain on sale of CIS |
|
|
54,581 |
|
Gain on sale of SSU |
|
|
6,459 |
|
Gain from sale of renewal rights |
|
|
— |
|
Total gains from sale and disposal transactions |
|
|
61,040 |
|
|
|
|
|
Income before income taxes |
|
|
60,324 |
|
Equity earnings (loss) in Affiliate, net of tax |
|
|
97 |
|
Income tax expense (benefit) |
|
|
1,834 |
|
Net income from discontinued operations |
|
$ |
58,587 |
|
The Company’s accounting policy for net cash received from the sale of discontinued operations is to show a cash inflow from investing activities in continuing operations. As such, the Company reflected $54.8 million in proceeds received from the sale of discontinued operations in the investing section of our cash flow for the year ended December 31, 2024. Below represents statements of cash flows of the discontinued operations for the year ended December 31, 2024:
|
|
|
|
|
Discontinued Operations Statement of Cash Flows |
|
Year Ended December 31, |
|
|
|
2024 |
|
Cash flows from Operating Activities |
|
|
|
Net income from discontinued operations |
|
$ |
58,587 |
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
|
Gains on sale of CIS |
|
|
(54,581 |
) |
Gain on sale of SSU |
|
|
(6,459 |
) |
Gain from sale of renewal rights |
|
|
— |
|
Deferred income tax expense |
|
|
— |
|
Equity (earnings) loss in subsidiary |
|
|
(97 |
) |
Allocated expense from Corporate |
|
|
1,147 |
|
Other |
|
|
755 |
|
|
|
|
|
Changes in Assets & Liabilities: |
|
|
|
Premiums receivable |
|
|
(30,598 |
) |
Settlement of intercompany balances |
|
|
(2,507 |
) |
Change in deferred acquisition costs |
|
|
1,933 |
|
Intercompany receivables |
|
|
4,154 |
|
Other receivables |
|
|
(1,692 |
) |
Income taxes payable |
|
|
(655 |
) |
Premiums payable |
|
|
33,272 |
|
Other liabilities |
|
|
3,463 |
|
Net cash provided by (used in) operating activities |
|
|
6,722 |
|
|
|
|
|
Cash flows from Investing Activities |
|
|
|
Cash disposed in CIS sale |
|
|
(7,184 |
) |
Proceeds from sale of renewal rights |
|
|
— |
|
Additional true-up Contribution to SSU |
|
|
— |
|
Net cash provided by (used in) investing activities |
|
|
(7,184 |
) |
|
|
|
|
|
|
|
|
Change in cash from discontinued operations |
|
|
(462 |
) |
Cash at beginning of period from discontinued operations |
|
|
462 |
|
Cash at end of period from discontinued operations |
|
|
- |
|
|