Note 3 - Derivative Instruments |
6 Months Ended |
|---|---|
Jun. 30, 2026 | |
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
| Derivative Instruments [Text Block] | 3. Derivative Instruments
The Company uses commodity-based derivative instruments, specifically put options on livestock, as part of its financial risk management program to mitigate price risk associated with certain insurance contracts exposed to livestock commodity price fluctuations. As part of this program, the Company employs an economic hedging strategy using derivatives to reduce exposure to adverse livestock price movements. The notional amount of derivative contracts held and the degree of hedged exposure are actively managed and vary based on volume of the business written. The Company does not use derivatives for speculative or trading purposes. All derivative positions are intended to support the overall risk management objectives of the business. The Company has not elected hedge accounting for these derivatives. These derivative instruments are recorded at fair value on the unaudited condensed consolidated balance sheets within “Other investments,” with changes in fair value recognized in earnings in “Losses and loss adjustment expenses.” As of June 30, 2026, the notional amount and fair value of the Company’s derivative assets were $12.4 million and $5.0 million, respectively. As of December 31, 2025, the notional amount and fair value of the Company’s derivative assets were $16.4 million and $9.9 million, respectively. For the three months ended June 30, 2026 and 2025, the Company recognized $6.2 million and an insignificant amount, respectively, of pre-tax net losses related to these derivatives, which were included in earnings within “Losses and loss adjustment expenses.” For the six months ended June 30, 2026 and 2025, the Company recognized $18.5 million and an insignificant amount, respectively, of pre-tax net losses related to these derivatives, which were included in earnings within “Losses and loss adjustment expenses.” See Note 2 to the Notes to the Consolidated Financial Statements in our 2025 Annual Report on Form 10-K for additional discussion of the Company’s derivative instrument policy. |