v3.26.1
Premium Finance Contracts, Related Receivable and Allowance for Credit Losses
 6 Months Ended
Jun. 30, 2026
Premium Finance Contracts Related Receivable And Allowance For Credit Losses  
Premium Finance Contracts, Related Receivable and Allowance for Credit Losses

3. Premium Finance Contracts, Related Receivable and Allowance for Credit Losses

 

Premium Finance Contracts and Related Receivable represent monthly payments due on insurance premium finance contracts. The Company finances insurance policies over periods from three to eleven months for businesses and consumers who make an initial down payment of, on average, 25 percent of the insurance policy amounts. The entire amount of the contract is recorded including amounts due for finance charges and services charges. These receivables are reported net of unearned interest for financial statements purposes. Upon cancellation of an insurance premium finance contract, the unearned premium on the contract becomes due from the insurance carrier. The Company segregates its Premium Finance Contracts Receivable into three segments for reporting and allowance calculation purposes. The segments are (1) Due from Insured and (2) Due from Insurance Carrier. Amounts due from agents represent balances related to (1) an agent’s unearned commission due to a policy cancellation and (2) down payments collected by the agents on behalf of the insured, which are due to us.

 

At June 30, 2026 and December 31, 2025, premium finance contract and agents’ receivable consists of the following:

        
Description  June 30, 2026   December 31, 2025 
Contracts due from insured  $81,888,732   $69,350,806 
Contracts due from insurance carrier   8,905,080    7,279,828 
    90,793,812    76,630,634 
Amounts due from agents   1,361,200    1,146,494 
Less: Unearned interest   (3,114,781)   (2,736,977)
    89,040,231    75,040,151 
Less: Allowance for credit losses   (2,514,737)   (2,202,768)
           
Total  $86,525,494   $72,837,383 

 

The allowance for credit losses at June 30, 2026 and December 31, 2025 are as follows:

Schedule of allowance for credit losses        
   June 30, 2026   December 31, 2025 
Allowance for contracts due from insured  $1,410,818   $1,268,799 
Allowance for contracts due from insurance carrier   911,456    746,506 
Allowance for amounts due from agents   192,463    187,463 
           
Total allowance for credit losses  $2,514,737   $2,202,768 

 

Activity in the allowance for credit losses for the six months ended June 30, 2026 and the year ended December 31, 2025 are as follows:

        
   June 30, 2026   December 31, 2025 
Balance at the beginning of the year  $2,202,768   $1,969,007 
Current year provision   1,175,000    2,115,000 
Write-offs charged against the allowance   (989,841)   (2,211,812)
Recoveries of amounts previously charged off   126,810    330,573 
           
Balance at end of the period  $2,514,737   $2,202,768 

 

 

The Company maintains an allowance that includes the expected write-offs of principal and interest. Provisions and write-offs per the note disclosures above are displayed at gross amounts, which include provisions and write-offs of both principal and unearned interest. The write-offs are allocated between the principal (i.e. provision for credit losses) and interest (i.e. contra-revenue) on the income statement. The following table shows a reconciliation between the total provision per this note and provision for credit losses on the consolidated statement of operations:

        
   For the three months ended
June 30,		 
   2026   2025 
Current additions to the allowance  $580,000   $585,000 
Less: Contra-revenues   (272,921)   (194,249)
Provision for credit losses  $307,079   $390,751 

 

         
   For the six months ended
June 30,		 
   2026   2025 
Current additions to the allowance  $1,175,000   $1,010,000 
Less: Contra-revenues   (470,586)   (379,734)
Provision for credit losses  $704,414   $630,266 

 

The aging analyses of contract receivables as of June 30, 2026 and December 31, 2025 are as follows:

 

                            
As of June 30, 2026  30–59 Days   60–89 Days   90-119 Days   Greater Than 120 Days   Total Past-Due   Current   Grand Total 
Premium finance contracts:                                   
Due from insured  $97,017   $39,719   $3,909   $27,927   $168,572   $81,720,160   $81,888,732 
Due from insurance carrier   854,475    937,549    971,478    3,577,439    6,340,941    2,564,139    8,905,080 
Total  $951,492   $977,268   $975,387   $3,605,366   $6,509,513   $84,284,299   $90,793,812 

 

                             
As of December 31, 2025  30–59 Days   60–89 Days   90-119 Days   Greater Than 120 Days   Total Past-Due   Current   Grand Total 
Premium finance contracts:                                   
Due from insured  $121,417   $21,018   $4,230   $15,145   $161,810   $69,188,996   $69,350,806 
Due from insurance carrier   631,883    635,401    568,894    2,497,849    4,334,027    2,945,801    7,279,828 
Total  $753,300   $656,419   $573,124   $2,512,994   $4,495,837   $72,134,797   $76,630,634 

 

Inactive agent receivables are defined as agent receivables that have not changed in at least twelve months, which pose a greater risk of credit losses. Agent inactivity is used by management as a credit quality indicator in evaluating receivables. The analysis of active and inactive agents as of June 30, 2026 and December 31, 2025 are as follows:

 

        
   June 30, 2026   December 31, 2025 
 Receivables from active agents  $1,283,718   $997,452 
 Receivables from inactive agents   77,482    149,042 
           
 Total  $1,361,200   $1,146,494