10-K 1 icch20231231_10k.htm FORM 10-K icch20231231_10k.htm
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Table of Contents



Washington, D.C. 20549





(Mark One)



For the fiscal year ended December 31, 2023




For transition period from                      to                     .

Commission File Number: 001-38046

ICC Holdings, Inc.

(Exact name of registrant as specified in its charter)



(State or other jurisdiction of
‎incorporation or organization) 


(I.R.S. Employer
‎Identification No.) 

225 20th Street, Rock Island, Illinois

(Address of principal executive offices) 


(Zip Code) 

(309) 793-1700

(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share


The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes    No 

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes    No 

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    No 

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes    No 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer   

Accelerated filer   


Non-accelerated filer     

Smaller reporting company   


Emerging growth company    

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.  

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No 

The aggregate market value of the registrant’s common stock held by non-affiliates as of June 30, 2023, based upon the closing sale price of the Common Stock on June 30, 2023 as reported on the NASDAQ Stock Market, LLC, was $31,649,025. Shares of Common Stock held directly or indirectly by each reporting officer and director along with shares held by the Company ESOP have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

The number of shares of the registrant’s common stock outstanding as of March 11, 2024 was 3,138,976.


Portions of the definitive Proxy Statement for our 2024 Annual Meeting of Shareholders which is to be filed within 120 days after the end of the fiscal year ended December 31, 2023, are incorporated by reference into Part III of this Form 10-K, to the extent described in Part III.




Table of Contents






Item 1.



Item 1A.

Risk Factors


Item 1B.

Unresolved Staff Comments


Item 1C. Cybersecurity 35

Item 2.



Item 3.

Legal Proceedings


Item 3A.

Forward-Looking Information


Item 4.

Mine Safety Disclosures





Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities


Item 6.



Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations


Item 7A.

Quantitative and Qualitative Disclosures about Market Risk


Item 8.

Financial Statements and Supplementary Data


Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure


Item 9A.

Controls and Procedures


Item 9B.

Other Information


Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 97



Item 10.

Directors, Executive Officers, and Corporate Governance


Item 11. Executive Compensation 98
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 98
Item 13. Certain Relationships and Related Transactions and Director Independence 98
Item 14. Principal Accountant Fees and Services 98



Item 15.

Exhibits, Financial Statement Schedules



Exhibit Index 








Item 1. Business




ICC Holdings, Inc. is a Pennsylvania corporation that was organized in 2016. As used in this Form 10-K, references to the "Company," "we," "us," and "our" refer to the consolidated group. On a stand-alone basis ICC Holdings, Inc. is referred to as the "Parent Company." The consolidated group consists of the holding company, ICC Holdings, Inc.; Two Rivers Realty Investments, LLC, a real estate services and holding company; Beverage Insurance Agency, Inc., dba Beverage Insurance Specialty, a wholesale insurance agency; Estrella Innovative Solutions, Inc., an outsourcing company; Southern Hospitality Education, LLC, dba Katkin, a full-service food safety and education company; Guild Insurance Inc. (Guild), an operating insurance agency acquired in October 2023; and Illinois Casualty Company (ICC), an operating insurance company. ICC is an Illinois domiciled company. ICC owns Two Rivers Investment Properties, LLC, a real estate services and holding company, and ICC Re Limited, a vehicle to participate in various Lloyd's of London (Lloyd's) syndicate's underwriting activity.


We are a specialty insurance carrier primarily underwriting commercial multi-peril, liquor liability, workers’ compensation, and umbrella liability coverages for the food and beverage industry through our subsidiary insurance company, ICC. ICC writes business in Arizona, Colorado, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Ohio, Pennsylvania, Utah, and Wisconsin and markets through independent agents. Approximately 23.1% and 22.6% of the premium was written in Illinois for the years ended December 31, 2023 and December 31, 2022, respectively. The Company operates as a single segment.


We primarily market our products through a network of 184 independent agents in the states that we write in. ICC's financial strength rating of "A-" (Excellent) has been reaffirmed as of August 10, 2023, which is the fourth highest out of fifteen possible ratings. The Long-Term ICR is stable. A.M. Best also reaffirmed the Long-Term ICR of ICC Holdings, Inc. at "bbb-" (Good). The outlook assigned to the credit ratings of the Company is stable, as of August 10, 2023. We expect that ICC’s upcoming evaluation by A.M. Best should occur on May 9, 2024; therefore, the ratings from this evaluation will not be available at the time of this report.


Since inception, ICC has specialized in providing customized insurance products and aggressive claims defense for customers exclusively in the food and beverage industry.


ICC was founded as an inter-insurance exchange in 1950 based upon the recognition that establishments serving alcohol require unique insurance protection. Beginning in 1998, we expanded the scope of our product offerings beyond liquor liability to include property, general liability, and umbrella. Workers’ compensation coverage was added in 2007. Our goal is to meet the full range of business insurance needs of our clients in the food and beverage industry.


In 1999, ICC recognized the significant need to automate. Upon determining available commercial software was inadequate to meet our long-term vision, we contracted the development of an integrated platform to handle agency, policy, and vendor management. Introduced in 2001, the first module successfully improved productivity and reporting capabilities. We built on that success by adding document imaging, claims, billing, and risk management modules. As it has grown, our information management system has provided us with a unique and comprehensive ability to automate processes, track and examine risk traits, and monitor claims development. As a result, ICC has constructed and leveraged a multi-variant pricing algorithm that allows us to better analyze our business to more effectively price to actual exposure.


ICC mutualized in 2004 and began to expand its territory geographically within the Midwest. We are an admitted carrier in 19 states: Arizona, Colorado, Illinois, Indiana, Iowa, Kansas, Kentucky, Minnesota, Michigan, Missouri, Nebraska, North Dakota, Ohio, Oregon, Pennsylvania, South Dakota, Tennessee, Utah, and Wisconsin. As we expand our territory and product lines, we maintain our focus and commitment to the food and beverage industry. As a result, we have developed an expertise in our niche, particularly within the areas of underwriting, loss control, and claims management. ICC continues to leverage that experience into the ongoing development of innovative insurance products and services uniquely tailored to the food and beverage industry.


ICC is subject to examination and comprehensive regulation by the Illinois Department of Insurance. See Item 1. Business Regulation.


Our executive offices are located at 225 20th Street, Rock Island, Illinois 61201, and our phone number is (309) 793-1700. Our corporate website address is http://IR.ICCHoldingsInc.com. Information contained on our website is not incorporated by reference into this Annual Report on Form 10-K and such information should not be considered to be part of this Annual Report on Form 10-K.



Our Business Strategies


We believe that our mission is to deliver expertly crafted insurance products and services for the food and beverage industry. Accordingly, we believe that this focus positions us to write profitable business in both hard insurance markets (where industry capital is constricted, competition is low, and premium rates are rising) and soft insurance markets (where industry capital is rising, competition is high and premium rates are falling). As part of our business process, we have developed our business strategy and focus using the following guiding principles to reflect the essence of who we aspire to be:



We exist to return value to our stakeholders in the form of strong financial performance and sustained surplus growth.


We conduct our business with the highest ethics, unquestionable integrity, and commitment to disciplined corporate governance.


We recognize and reward the commitment of all employees who make us successful, by challenging them, valuing them, and recognizing their contribution, while cultivating a mutually supporting culture.


We are committed to being an inclusive culture and promote a collaborative workforce that aligns with the diversity we see among our policyholders.


We are committed to the independent agency system and our mutual drive to deliver the highest quality products at competitive prices.


Customer experience—understanding and meeting the evolving needs and expectations of our policyholder and agents is at the fundamental core of our existence.


We thrive in the marketplace by pursuing a unique understanding of the niche, offering customized products, and aggressively defending our insureds.


We identify worthy causes to support with company and employee resources. We promote responsible corporate citizenship.


Innovation drives our efficiency, quality, and effectiveness. We proactively improve our products and processes through intelligent investment in talent and technology that meets the exacting needs of our customer.


We utilize journey mapping to identify areas to improve and enhance the overall customer experience as well as to offer innovative coverage solutions.


To effectuate our mission and guiding principles, we have identified the following core strategies to achieve our long-term success:



Offer ISO-based commercial property and casualty policies focused on the unique requirements of the food and beverage industry. Immerse ourselves in the rapidly changing legal and technological fields to quickly adapt to new product and service needs.


Pursue continuous methodical and deliberate geographic expansion.


Develop MGA operations to diversify risk and provide non-corelated revenue stream.


Market through independent insurance agents that are committed to the hospitality industry and sell the value of our coverage and products.


Develop complimentary investments that create value-added services and enhance risk management for our agents and insureds as well as generate supplementary revenue streams.


Leverage data and technology to maximize operational efficiency, maintain sustainable pricing and drive continuous innovation.


Employ an investment strategy that maximizes return within acceptable risk tolerances.


Promote a culture of excellence that encourages teamwork and contributes to talent attraction, development, and retention.


Maintain a robust and comprehensive Enterprise Risk Management program, focused on upside optimization and downside mitigation.


Employ highly skilled and credentialed claims staff for superior first-party claims handling and aggressive third-party claims investigation and defense.


Carefully research and implement internally developed and purchased Artificial Intelligence solutions into claims handling and underwriting to drive automation and profitability.


Physically inspect every risk we write in order to better understand the data and the risk, to enhance risk management, prevent losses, and optimize underwriting processes.


Competitive Growth Strategies


Technology – We believe that existing and developing technology and information systems are impacting and will continue to impact the insurance industry’s use of risk analysis in the underwriting process, providing tools for reduction of claims, and modernizing the claims handling process. As part of our focus, we have internally developed a completely integrated policy management system. This system allows us to leverage loss control data for predictive analytics in both the claims and underwriting areas. For example, in the underwriting area, we create pricing models taking into account the unique characteristics of our customers, with industry-specific variables such as latest hour of close, type and frequency of on-site entertainment, and average alcoholic beverage pricing. We also have achieved better efficiency by moving to a more paperless organization and have integrated off-site employees in our claims, underwriting, accounting, loss control, and IT development areas. We intend to remain a leader in the industry in utilizing technology and data analysis to price our coverage based on the risk assumed, reduce accidents, and provide prompt claims response.



Industry Expertise – We have provided the food and beverage industry with insurance products and services since 1950. By leveraging over 70 years of experience in this industry, we better understand our customers and their needs. This understanding allows us to more accurately price our products and services and defend claims aggressively and economically using the experience of our in-house legal department and an established network of specialized defense attorneys. We are recognized as the exclusively endorsed property and liability insurance provider for the: Arizona Licensed Beverage Association; Colorado Licensed Beverage Association; Tavern League of Colorado; Illinois Licensed Beverage Association; Michigan Licensed Beverage Association; Minnesota Licensed Beverage Association; Ohio Bar Owners Association; and Pennsylvania Licensed Beverage and Tavern Association. We provide insurance agents and policyholders with education on industry topics, such as liquor liability, alcohol server training, food handling, allergen safety, sexual harassment prevention, and bar and night club security. Our employees are also regular panel speakers at local and national claims conferences and other industry association events. 


Enterprise Risk Management – As part of our effort to grow responsibly, we have put in place a cross-functional, multi-dimensional enterprise risk management program. The program is focused on financial, organization, operational, tactical, market, and legal risks and is managed at two different levels: the enterprise risk committee of our board of directors and our internal enterprise risk management committee. The focus of the enterprise risk committee of our board of directors is on oversight of top tier risk, emerging risks, and risk optimization. The internal enterprise risk committee is comprised of our executive team, which is focused on conducting a review of all risks attendant to the Company approximately once a year; rating triaged risks for severity, frequency, and control; completing risk control reports for stress testing, risk tolerance, and mitigation plans; measuring and monitoring risk on an ongoing basis; and tying enterprise risk management to individual performance evaluations and compensation.


Growth Strategies


While we have established a significant market share in our existing territories, we believe that there is still opportunity for growth within our existing footprint. We will continue to seek out insurance agency partners who have a commitment to our niche and an ability to sell the value represented by our products. Our long-term growth plan also involves expanding geographically into states where we believe current insurance laws provide an attractive market within our niche for our existing products and services. We will consider geographic expansion opportunities that allow us to leverage existing agency relationships whose footprints overlap our own. Growth opportunities will always be carefully evaluated with long term profitability at the forefront of the decision-making process.


Although we do not have any current plans or intent to expand or grow our business by acquisition, we will consider the opportunities that are presented to us.


Reaction to Market Cycles


Many insurance companies sporadically target businesses within our niche; however, a relatively small number make a long-term commitment to the niche through changing insurance market cycles. When the insurance market is "hard" and premium growth is achievable in less specialized segments, many carriers exit this niche. Large and diversified insurance carriers have the ability to shift their focus and resources to less challenging areas. When market conditions "soften," those same carriers often aggressively move back into our niche for premium growth. Because we specialize in this niche, we do not shift resources to other market segments. Therefore, the Company generally maintains pricing stability throughout market cycles by relying on our strong loss control, underwriting and claims expertise, and our customer service commitment. We react to market cycles by adjusting our appetite for risks based on pricing and cycle conditions, but we maintain a consistent commitment to the food and beverage industry. Due to the relatively small number of insurance companies that make a long-term commitment to this niche, the insurance market does not fluctuate to the same extent as the insurance market for the general commercial market.



Our Challenges


Our business faces significant challenges that can impede our goal of growing our business while realizing operating profits, including the following:


Changes in the Economy


Factors such as business revenue, consumer spending, the volatility and strength of the capital markets, and inflation can all affect the business and economic environment. These same factors affect our ability to generate revenue and profits. Insurance premiums in our market are heavily dependent upon our customer revenues, payroll, property values, and ability to operate their businesses as normal. In an economic downturn characterized by higher unemployment, declines in spending and disposable income, the demand for insurance products is adversely affected. Changes in the economy may lead our customers to have less need for insurance coverage, to modify coverage or to not renew with the Company, all of which affect our ability to generate revenue.


Estimating Our Loss Reserves.


We maintain loss reserves to cover our estimated ultimate liability for unpaid losses and settlement expenses for reported and unreported claims incurred as of the end of each accounting period. These reserves represent management’s estimates of what the ultimate settlement and administration of claims will cost. Pursuant to applicable insurance regulations, these reserves are reviewed by an independent actuary on at least an annual basis. Setting reserves is inherently uncertain and there can be no assurance that current or future reserves will prove adequate. If our loss reserves are inadequate, it will have an unfavorable impact on our results. See Item 1. Business Losses and Settlement Expense for a summary of the favorable and unfavorable developments in our loss reserves in the previous 10-year period.


Reliance on Independent Agents.


Our product is distributed through a contracted network of primarily independent insurance agents. Agents are typically contracted with a number of insurance carriers. The producers within an agency will determine which product is most appropriate to recommend to their client or prospective client. The agency will select a product based on a variety of factors such as: premium; coverage; service including billing and claims; agency compensation; and agency/company relationship. Establishing and maintaining long-term financially successful agency relationships is very important to the long-term success of a company. As discussed previously, we acquired Guild Insurance, Inc. in the fourth quarter of 2023. We do not anticipate this will have a material impact on our agency relationships.


Maintaining Our Financial Strength Ratings.


In June 2021, A.M. Best upgraded ICC’s financial strength rating to "A-" from "B++" stable outlook. This rating was reaffirmed as of August 10, 2023. A key to achieving our goal of significant growth in our premiums written is maintaining an A.M. Best rating of "A-" or better. Increasing our capitalization and maintaining strong operating performance are significant rating components reviewed by A.M. Best. This is combined with a review of various other rating requirements. If we are not able to increase our rating or if A.M. Best downgrades our rating, it is likely that we will not be able to compete as effectively and our ability to sell insurance policies could decline. As a result, our financial results would be adversely affected. A.M. Best reviews our rating approximately once per year.


Attracting, Developing and Retaining Experienced Personnel.


To sustain our growth as a property and casualty insurance company operating in a specialty niche market, we must continue to attract, develop, and retain management, marketing, distribution, underwriting, customer service, and claims personnel with expertise in the products we offer. The loss of key personnel, or our inability to recruit, develop, and retain additional qualified personnel, could materially and adversely affect our business, growth, and profitability.


Competitive Strengths


Our opportunity for growth is driven by our competitive strengths, which include the following:


Use of Data and Metrics to Improve our Underwriting Results.


Our analysis of data available through both governmental and other industry resources, combined with our internal data, drives our underwriting and pricing decisions. We have developed a multi-variant risk grading system and pricing algorithms that combine both objective and subjective inputs that drive both whether to provide coverage and pricing. This information helps us avoid providing coverage to higher risk insureds while improving our overall risk profile. Most risks we insure are inspected within the first 60 days of policy binding, which permits us to cancel the policy if we determine that the insured is not an acceptable risk or pricing is inadequate. Each inspection consists of an extensive risk profile questionnaire as well as 25 to 100 pictures of the insured’s place of business. We believe this approach reduces claims frequency.



Focus on niche food and beverage business.


We target niche markets within the food and beverage industry that support adequate pricing and believe we can adapt to changing market needs ahead of our competitors through our strategic focus. We develop and deliver specialty insurance products priced to meet our customers’ needs and strive to generate consistent underwriting profit. We believe that our extensive experience and expertise specific to underwriting and claims management in the food and beverage industry will allow continued loss ratio improvement going forward. The Company is committed to retaining this underwriting and claim handling expertise as a core competency as the volume of business increases.


Strong market presence with name recognition and long-standing producer relationships.


We have been writing insurance for the food and beverage industry in Illinois since 1950. Approximately 23.1% of current direct premium was generated in Illinois for the year ended December 31, 2023.


Great care is taken in building the ICC brand in all states of operation and the Company holds a significant market share in nearly all states serviced. ICC acknowledges that each state, each agency, and each customer is unique. A commitment to the quality of products and services is universally important and recognized.


Scalable operations positioned for growth.


We are focused on automation and operating efficiencies across our core functional areas. We have consistently increased premium per full time equivalent employee for five consecutive years with the exception of 2020 during which we experienced a decrease in written premium per full time equivalent employee due to the disproportionate negative impact COVID-19 had on the Company’s market niche. We believe we are well positioned in both terms of personnel and systems to increase written premiums and to expand into new geographic markets with better than industry level profitability using the efficient operating infrastructure we have developed.


Experienced management team.


We are managed by an experienced group of executives led by Arron K. Sutherland, our President and Chief Executive Officer. Mr. Sutherland has served in his current position since June 2010, joined ICC in 2006 and has worked in the insurance industry for over 26 years. Michael R. Smith, our Vice President – Chief Financial Officer, has served with ICC since 2011. Mr. Smith has more than 26 years of experience in the insurance industry. Howard J. Beck, our Vice President – Chief Underwriting Officer, has been with ICC since 2004 and has 31 years of insurance experience and 27 years of property and casualty underwriting experience. Norman D. Schmeichel, our Vice President – Chief Information Officer, has served with ICC since 2002. Mr. Schmeichel has more than 26 years of experience in information technologies and 19 years of experience in the insurance industry. Additionally, Julia B. Suiter, our Vice President – Chief Legal Officer, has served with ICC since 2009 and has over 26 years of experience in insurance defense and contract law. Kathleen S. Springer, our Vice President – Chief Human Resources Officer, has served with ICC since 2008 and has over 26 years of experience in benefits, compensation, and talent acquisition and more than 12 years of experience in the insurance industry. As a group, our executive officers have on average more than 24 years’ experience in the property and casualty insurance industry.




ICC has specialized in the food and beverage industry since 1950. Our product language is based on Insurance Services Offices (ISO) forms, which is an industry standard, but tailored to the specific needs of our clients. We began by writing liquor liability or dram shop insurance and that remains a prominent line of business today. Commercial property and liability are written in a single policy as a business owners policy (BOP). ICC also writes workers’ compensation and commercial umbrella policies which are written as complementary lines to the BOP and liquor liability and are not offered on a stand-alone basis. As of December 31, 2023, ICC had 5,904 BOP policies, 7,095 liquor liability policies, 1,710 workers’ compensation policies, and 1,512 commercial umbrella policies. 89.7% of BOP policies and 96.5% of liquor liability policies are for either restaurants or taverns. While we do not currently write commercial auto insurance, we do insure risks associated with the delivery of food or beverage.


Lloyd's Syndicates


On December 12, 2023, the Company became a member of Lloyd's through ICC Re Limited. As a member of Lloyd's, the Company is required to maintain capital at Lloyd's, referred to as Funds at Lloyd's (FAL), to support underwriting of property and casualty and reinsurance business.


Marketing and Distribution


Our commercial insurance product is sold by over 184 independent insurance agents, also referred to as producers. These agencies access multiple insurance companies and are typically established businesses in the communities in which they operate. We view these agents as our primary customers because they are in a position to recommend either our insurance products or those of a competitor to their customers. We consider our relationships with these agencies to be a core strength of the Company. As discussed previously, we acquired Guild Insurance, Inc. in the fourth quarter of 2023. We do not anticipate this will have a material impact on our agency relationships.



We manage our producers through quarterly business reviews utilizing various internally generated reports. Our quantitative agency review (QAR) measures each agency on a variety of weighted metrics and ranks them from high to low. The measurement is updated on a weekly basis and is available for all company employees’ review.


For the year ended December 31, 2023, three of our producers were responsible for more than 5% of our direct premiums written and our top 10 producers accounted for approximately 42.0% of direct premiums written.


Our agency partners are supported by our Marketing Department. These representatives also identify and train new agents. We conduct regularly scheduled webinars for agents as well as onsite training on company products and services. These include technical training about our products as well as sales training to effectively market our products. We also offer our agents industry specific training that qualifies for continuing education credit for state insurance license requirements.


Agents are compensated through a fixed base commission with an opportunity for profit sharing depending on the producer’s premiums written and profitability. Agents receive commission as a percentage of premiums (generally 15% for most lines, except workers' compensation policies which are generally at 7.5%) as their primary compensation from us. We offer a contingent compensation plan as an incentive for producers to place high-quality business with us and to support our loss control efforts. We believe that the contingent compensation paid to our producers is comparable with those offered by other insurance companies and is designed to reward agents for growth and profitability.


Our marketing efforts are also supported by our claims, litigation, billing, underwriting, and loss control departments. As industry specialists, we can offer expertise in all interactions with agents and/or policyholders. For example, our claims philosophy is to provide prompt and efficient service and claims processing, resulting in a positive experience for both the agents and policyholders. We take an aggressive, defense-oriented position on third party liability claims, which is recognized and appreciated by our policyholders. We believe that these positive experiences result in higher policyholder retention and create new business opportunities for our agents. While we rely on our agents for front line distribution and customer support, underwriting, billing, loss control, and claim handling responsibilities are retained by us. Many of our agents have had direct relationships with us for a number of years.


Underwriting, Risk Assessment and Pricing


Our underwriting philosophy is aimed at consistently generating profits through sound risk selection, stringent loss control, and pricing discipline. One key element in sound risk selection is our use of risk characteristic metrics. Through our practice of focused underwriting, we have identified predictive metrics of data that many other insurance companies do not recognize or measure. Use of these metrics allows us to more effectively price risks, thereby improving our profitability and allowing us to compete favorably with other insurance carriers. We are also very active in leveraging our onsite loss control inspections. An example would be the monitoring of kitchen fire suppression systems servicing to reduce kitchen fire losses.


Our philosophy is to understand our industry and be disciplined in our underwriting efforts. We will not compromise profitability for top line growth.


Our competitive strategy in underwriting is:



Maximize the use of available information acquired through a wide variety of industry resources.


Allow our internal metrics and rating to establish risk pricing and use sound underwriting judgment for risk selection and pricing modification.


Utilize our risk grading system, which combines both objective and subjective inputs, to quantify desirability of risks and improve our overall risk profile.


Physically inspect most new insureds within the first 60 days of policy binding with our in-house loss control representatives. Our inspection consists of an extensive risk profile questionnaire and includes 25 to 100 electronic photos of the insured’s place of business. Inspections that demonstrate that a risk is not desirable is a basis for revoking coverage.


Provide very high-quality service to our agents and insureds by responding quickly and effectively to information requests and policy submissions. Treat our agents as partners and have the same expectation of them.


Our underwriting department works in teams with each agent assigned to one of two teams. We underwrite our accounts by evaluating each risk with consistently applied standards. Each policy undergoes a thorough evaluation process prior to every renewal.



Our underwriting staff of 26 employees has an average of 11 years of insurance industry experience. Howard J. Beck, our Vice President – Chief Underwriting Officer, has been with ICC since 2004 and has over 31 years of insurance experience with 27 years of property and casualty underwriting experience. .


We strive to be disciplined in our pricing by pursuing targeted rate changes to continually improve our underwriting profitability while still being able to attract and retain profitable customers. Our pricing reviews involve evaluating our claims experience, loss trends, data acquired from inspections, applications, and other data sources to identify characteristics that drive the frequency and severity of our claims. These results drive changes to rates and rating metrics as well as understanding what portions of our business are most profitable.


This knowledge and analysis enables us to price risks accurately, improve account retention, and drive profitable new business.


Claims and Litigation Management


Our claims team supports our underwriting strategy by working to provide a timely, good faith claims handling response to our policyholders. Claims excellence is achieved by timely investigation and handling of claims, settlement of meritorious claims for equitable amounts, maintenance of adequate case reserves, and control of claims loss settlement expenses.


Claims on insurance policies are received directly from the insured or through our independent agents. Our claims department supports our producer relationship strategy by working to provide a consistently responsive level of claim service to our policyholders.


Vice President – Chief Legal Officer, Julia Suiter, provides oversight of our claims and legal departments. She has over 26 years of experience in insurance defense litigation and contract law. Ms. Suiter, supervises a legal department staff that includes a Litigation Manager, Litigation Counsel, a Paralegal, a Claims Manager, and a claims staff of 19 employees with considerable years of experience in processing property and casualty insurance claims.




Our technology efforts are focused on supporting our strategy of differentiating ourselves from our competitors through use of data mining, business intelligence solutions, and data analysis to determine profitability of new and existing business and to better price risks that we underwrite.


We have streamlined internal processes to achieve operational efficiencies through the implementation of a policy and claim imaging and workflow system. This system provides online access to electronic copies of policies, quotes, inspections, and any other correspondence enabling our associates to quickly and efficiently underwrite policies, adjust claims, and respond to our producers’ inquiries.


Since the system integrates all aspects of the policy life cycle, from underwriting to billing to claims, we can better automate all internal workflows through electronic routing thus lowering costs and providing better service to our customers. This system allows us to leverage loss control data for predictive analytics in both the claims and underwriting areas. For example, in the underwriting area, we can create pricing models taking into account the unique characteristics of our customers, such as neighborhoods, entertainment on site, and average alcoholic beverage pricing.


We have implemented best in class virus or malware protections while still enabling our employees to work from any location. We are tested on a periodic basis to ensure our protections are sufficient.


We have the ability to scale since we are almost entirely a paperless organization. This allows us to integrate off-site employees just as if they are in the office. We intend to remain a leader in the industry by utilizing technology and data analysis to price our coverage based on the risk assumed and to both reduce accidents and provide a prompt response to claims.


As part of our disaster recovery program, we utilize a third-party backup software package to provide a complete copy of our production systems at an off-site location that is updated on a daily basis. We also have a generator that will allow the home office to operate in the event power or access to our headquarters is disrupted. We test this disaster recovery plan annually as well as continually expand its capabilities to eliminate business interruption to the best of our ability.





In accordance with insurance industry practice, we reinsure a portion of our exposure and pay to the reinsurers a portion of the premiums received on all policies reinsured. Insurance policies written by us are reinsured with other insurance companies principally to:



reduce net liability on individual risks;


mitigate the effect of individual loss occurrences (including catastrophic losses);


stabilize underwriting results;


decrease leverage; and


increase our underwriting capacity.


Reinsurance can be facultative or treaty. Under facultative reinsurance, each policy or portion of a risk is reinsured individually. Under treaty reinsurance, an agreed-upon portion of a class of business is automatically reinsured. Reinsurance also can be classified as quota share reinsurance, pro rata reinsurance or excess of loss reinsurance. Under quota share reinsurance and pro rata reinsurance, the insurance company issuing the policy cedes a percentage of its insurance liability to the reinsurer in exchange for a like percentage of premiums, less a ceding commission. The company issuing the policy in turn recovers from the reinsurer the reinsurer’s share of all loss and settlement expenses incurred on those risks. Under excess of loss reinsurance, an insurer limits its liability to all or a particular portion of the amount in excess of a predetermined deductible or retention. Regardless of type, reinsurance does not legally discharge the insurance company issuing the policy from primary liability for the full amount due under the reinsured policies. However, the assuming reinsurer is obligated to reimburse the company issuing the policy to the extent of the coverage ceded.


We determine the amount and scope of reinsurance coverage to purchase each year based on a number of factors. These factors include the evaluation of the risks accepted, consultations with reinsurance intermediates and a review of market conditions, including the availability and pricing of reinsurance. A primary factor in the selection of reinsurers from whom we purchase reinsurance is their financial strength. Our reinsurance arrangements are generally renegotiated annually. For the year ended December 31, 2023, we ceded to reinsurers $10.5 million of written premiums, compared to $9.5 million of written premiums for the year ended December 31, 2022. We expect 2024’s reinsurance spend to increase slightly over 2023.


The chart below illustrates the 2024 reinsurance coverage under our excess of loss treaty for individual liability and property risks (with the defined terms following the chart):







1 @ x%


"1" refers to the number of times that we reinstate the coverage. The number prior to the "%" sign indicates the overall cost to us when reinstating coverage.



This is short for Aggregate Annual Deductible. Aggregate annual deductible is the maximum amount ICC needs to pay within a policy period before the reinsurer pays for covered losses.

Basket Coverage


Excess liability reinsurance that attaches once retained losses in combined property and casualty occurrences (i.e., those that involve BOP property and BOP liability, or Liquor Liability or Workers’ Compensation or Hired and Non-owned Auto) exceed $1 million. If ICC has an occurrence where the combined property and casualty retention is greater than $1.0 million, then the company would recover up to $1.0 million of loss in excess of that $1.0 million retention. The basket coverage limits the Company’s retention in any one combined occurrence to $1 million and not the combined separate retentions provided for in the casualty reinsurance ($1.0 million), Workers’ Compensation reinsurance ($1.0 million), Hired and Non-owned Auto reinsurance ($750,000) and Property reinsurance ($1.0 million).



For this chart, this refers to our Liquor Liability, BOP Liability, Workers’ Compensation, and any Umbrella policies.



Reflects the sum of all individual losses directly resulting from any one occurrence, disaster, accident or loss or a series of occurrences, disasters, accidents, or losses arising out of one event.



Indicates that there is no additional reinsurance premium payment associated with reinstating the reinsurance coverage.



This reinsurance sublimit puts a cap on the maximum loss any one life/claimant can contribute to the reinsurance recoverable.

Per Risk


Reinsurance in which the reinsurance limit and our loss retention apply "per risk," rather than per accident, per event, or in the aggregate.



The amount of loss and settlement expense retained by us either per occurrence on casualty losses or per risk on property claims.



This is short for Workers’ Compensation.



This is short for Excess of Loss reinsurance coverage.



This is short for Excess. For example, our Property per Risk tower has three separate contracts providing coverage. The top layer in that tower provides $7.0 million coverage for each risk for losses in excess of $5.0 million.


We retain the first $1.0 million of workers’ compensation losses. Losses in excess of the $1.0 million are covered under our casualty excess of loss program within the Casualty XOL Tower up to $11.0 million. Above $11.0 million, losses are covered under a workers’ compensation cover within the WC XOL Tower that provides $14.5 million in excess of $11.0 million. We have an additional cover that provides $15.0 million of coverage in excess of $25.5 million.


Casualty risks (Casualty XOL Tower) (business owners liability other than hired and non-owned auto, liquor liability, and umbrella) are covered for $10.0 million in loss above a $1.0 million retention for each loss occurrence. Hired and non-owned losses have a $750,000 retention instead of the standard $1.0 million retention on casualty. The Company only offers limits up to $2.0M and accordingly buys reinsurance up to the $2.0M limit.


Property per risk excess of loss program (Property Per Risk XOL Tower) provides coverage above our $1.0 million retention up to $12.0 million on a treaty basis and facultative for a few risks above that to their full limits.


Property catastrophe reinsurance (Section A Property Cat Occurrence) provides coverage in any one event for $13.5 million of loss in excess of our $1.5 million retention.



The insolvency or inability of any reinsurer to meet its obligations to us could have a material adverse effect on our results of operations or financial condition. Our reinsurance providers, the majority of whom are longstanding partners who understand our business, are all carefully selected with the help of our reinsurance broker. We monitor the solvency of reinsurers through regular review of their financial statements and, if available, their A.M. Best ratings. All of our reinsurance partners have at least an "A-" rating from A.M. Best. According to A.M. Best, companies with a rating of "A-" or better "have an excellent ability to meet their ongoing obligations to policyholders."


The following table sets forth the largest amounts of loss and loss expenses unpaid and recoverable from reinsurers as of December 31, 2023:



Losses and Settlement

    Expense Recoverable              

On Unpaid Claims (In thousands)


Percentage of Total


A.M. Best

Reinsurance Company


(In thousands)





General Reinsurance Corporation

  $ 9,602       75.5 %  


Renaissance Reinsurance U.S. Incorporated

    632       5.0 %  


Partner Reinsurance Co. of the U.S.

    446       3.5 %  


Hannover Rueck SE

    399       3.1 %  


Aspen Insurance UK Ltd.

    336       2.6 %  


Swiss Reinsurance

    288       2.3 %  


Axis Reinsurance Company

    210       1.6 %  


Everest Reinsurance Company

    179       1.4 %  


Toa Reinsurance Company

    119       0.9 %  


Nationwide Mutual Insurance Company

    114       0.9 %  


Lloyd's Syndicate Number 2791

    67       0.5 %  


All other reinsurers including anticipated subrogation

    345       2.7 %  

A- or better


  $ 12,737       100.0 %    


Losses and Settlement Expense Reserves


We are required by applicable insurance laws and regulations to maintain reserves for payment of loss and settlement expenses. These reserves are established for both reported claims and for claims incurred but not reported (IBNR), arising from the policies we have issued. The laws and regulations require that provision be made for the ultimate cost of those claims without regard to how long it takes to settle them or the time value of money. The determination of reserves involves actuarial and statistical projections of what we expect to be the cost of the ultimate settlement and administration of such claims. The reserves are set based on facts and circumstances then known, estimates of future trends in claims severity, and other variable factors such as inflation and changing judicial theories of liability.


Estimating the ultimate liability for losses and settlement expense is an inherently uncertain process. Therefore, the reserve for losses and settlement expense does not represent an exact calculation of that liability. Our reserve policy recognizes this uncertainty by maintaining reserves at a level providing for the possibility of adverse development relative to the estimation process. We do not discount our reserves to recognize the time value of money.


When a claim is reported to us, our claims personnel establish a "case reserve" for the estimated amount of the ultimate payment. This estimate reflects an informed judgment based upon general insurance reserving practices and on the experience and knowledge of our claims staff. In estimating the appropriate reserve, our claims staff considers the nature and value of the specific claim, the severity of injury or damage, and the policy provisions relating to the type of loss. Case reserves are adjusted by our claims staff as more information becomes available. It is our policy to resolve each claim as expeditiously as possible.


We maintain IBNR reserves to provide for already incurred claims that have not yet been reported and developments on reported claims. The IBNR reserve is determined by estimating our ultimate net liability for both reported and IBNR claims and then subtracting the case reserves and paid loss and settlement expense for reported claims.


Each quarter, we compute our estimated ultimate liability using principles and procedures applicable to the lines of business written. However, because the establishment of loss reserves is an inherently uncertain process, we cannot provide assurance that ultimate losses will not exceed the established loss reserves. Adjustments in aggregate reserves, if any, are reflected in the operating results of the period during which such adjustments are made.



The following table provides information about open claims, reserves, and paid loss and settlement expense on a direct basis only:



As of and for the period ended December 31, 2023


(In millions, except open claims count)


Open Claims


Total Reserves1


Case Reserves


IBNR Reserves


Paid Losses and Settlement Expense


Commercial Multi-Peril (non-liability portion)

  495     $ 4.34     $ 4.18     $ 0.16     $ 18.84  

Commercial Multi-Peril (liability portion)

  390       34.67       12.81       21.86       11.25  

Workers' Compensation

  173       5.35       2.90       2.45       2.59  

Other Liability - occurrence

  220       27.26       12.00       15.26       10.15  


  1,278     $ 71.62     $ 31.89     $ 39.73     $ 42.83  



Assumed reserves of $0.30 million are excluded from the Total Gross Reserves. Workers Compensation ($0.29 million assumed reserve) and Umbrella Liability ($0.01 million assumed reserve) are the only lines of business that have assumed reserves.

The following table provides a reconciliation of beginning and ending unpaid losses and settlement expense reserve balances for the years ended December 31, 2023, and 2022, prepared in accordance with GAAP.



For the Twelve-Months Ended


December 31,


(In thousands)






Unpaid losses and settlement expense - beginning of the period:



  $ 67,614     $ 61,835  

Less: Ceded

    13,610       14,521  


    54,004       47,314  

Increase in incurred losses and settlement expense:


Current year

    45,381       39,434  

Prior years

    2,549       5,099  

Total incurred

    47,930       44,533  

Deduct: Loss and settlement expense payments for claims incurred:


Current year

    16,459       16,512  

Prior years

    26,374       21,331  

Total paid

    42,833       37,843  

Net unpaid losses and settlement expense - end of the period

    59,101       54,004  

Plus: Reinsurance recoverable on unpaid losses net of CECL1

    12,737       13,610  

Plus: CECL allowance for reinsurance recoverable on unpaid losses


Gross unpaid losses and settlement expense - end of the period

  $ 71,920     $ 67,614  


See page 71 for an explanation of CECL.


The estimation process for determining the liability for unpaid losses and settlement expense inherently results in adjustments each year for claims incurred (but not paid) in preceding years. Negative amounts reported for claims incurred related to prior years are a result of claims being settled for amounts less than originally estimated (favorable development). Positive amounts reported for claims incurred related to prior years are a result of claims being settled for amounts greater than originally estimated (unfavorable or adverse development).


Reconciliation of Reserve for Loss and Settlement Expenses


The following table shows the development of our reserves for unpaid loss and settlement expense from 2014 through 2023 on a GAAP basis. The top line of the table shows the liabilities at the balance sheet date, including losses incurred but not yet reported. The upper portion of the table shows the cumulative amounts subsequently paid as of successive years with respect to the liability. The lower portion of the table shows the re-estimated amount of the previously recorded liability based on experience as of the end of each succeeding year. The estimates change as more information becomes known about the frequency and severity of claims for individual years. The redundancy (deficiency) exists when the re-estimated liability for each reporting period is less (greater) than the prior liability estimate. The "cumulative redundancy (deficiency)" depicted in the table, for any particular calendar year, represents the aggregate change in the initial estimates over all subsequent calendar years.


Gross deficiencies and redundancies may be significantly more or less than net deficiencies and redundancies due to the nature and extent of applicable reinsurance.



As noted in the table below, since 2014 the Company has principally selected initial ultimate loss picks that have proven to be deficient over time.


(In thousands)






















Liability for unpaid loss and settlement expense, net of reinsurance recoverable

  $ 38,795     $ 41,898     $ 40,702     $ 41,048     $ 44,714     $ 45,806     $ 48,557     $ 47,314     $ 54,004     $ 59,101  

Cumulative amount of liability paid through:


One year later

    14,088       17,686       16,841       17,122       17,311       16,737       21,069       21,316       26,374          

Two years later

    26,877       29,066       26,640       28,219       27,719       31,494       34,589       38,432                

Three years later

    34,742       35,548       34,275       34,955       37,103       40,816       43,726                      

Four years later

    37,926       39,047       37,901       41,195       43,729       45,310                            

Five years later

    39,452       40,592       41,480       45,498       46,663                                  

Six years later

    40,224       41,701       43,326       47,358                                        

Seven years later

    40,676       42,658       44,931                                              

Eight years later

    41,090       43,405                                                    

Nine years later


Liability estimated after:


One year later

    38,237       40,417       39,667       42,525       44,839       46,993       49,155       52,398       56,553          

Two years later

    39,598       42,176       41,573       44,176       45,631       49,785       51,421       56,343                

Three years later

    41,569       42,294       43,011       45,156       47,830       50,757       52,883                      

Four years later

    41,348       43,108       43,772       47,448       48,911       50,923                            

Five years later

    41,519       43,155       45,177       48,831       49,091                                  

Six years later

    41,355       43,770       45,609       49,100                                        

Seven years later

    41,504       43,947       46,202                                              

Eight years later

    41,645       44,337                                                    

Nine years later


Cumulative total redundancy (deficiency):


Gross liability - end of year

    64,618       61,054       52,817       51,071       51,445       56,838       61,578       61,836       67,614       71,920  

Reinsurance recoverable

    25,823       19,156       12,115       10,022       6,731       11,032       13,021       14,522       13,610       12,737  

Net liability - end of year

    38,795       41,898       40,702       41,049       44,714       45,806       48,557       47,314       54,004       59,183  

Gross re-estimated liability - latest

    68,202       61,971       57,208       57,661       57,189       59,565       77,003       66,180       66,245          

Re-estimated reinsurance recoverables - latest

    26,459       17,634       11,006       8,561       8,098       8,642       24,120       9,837       9,692          

Net re-estimated liability - latest

    41,743       44,337       46,202       49,100       49,091       50,923       52,883       56,343       56,553          

Gross cumulative redundancy (deficiency)

    (3,584 )     (917 )     (4,391 )     (6,590 )     (5,744 )     (2,727 )     (15,425 )     (4,344 )     1,369          

Net cumulative redundancy (deficiency)

    (2,948 )     (2,439 )     (5,500 )     (8,051 )     (4,377 )     (5,117 )     (4,326 )     (9,029 )     (2,549 )        





Our investments in debt are classified as available for sale (AFS) and are carried at fair value with unrealized gains and losses reflected as a component of comprehensive earnings and equity net of deferred taxes. Our investments in equity securities are carried at fair value with subsequent changes in fair value recorded in net earnings. The goal of our investment activities is to complement and support our overall mission. As such, the investment portfolio’s goal is to maximize after-tax investment income and price appreciation while maintaining the portfolio’s target risk profile. Our returns on these investments are subject to changes in interest rates, credit markets, equity prices, and numerous other factors beyond our control and can affect the value of our investments.


An important component of our operating results has been the return on invested assets. Our investment objectives are (i) to preserve and grow capital and surplus, in order to improve our competitive position and allow for expansion of insurance operations; (ii) to ensure sufficient cash flow and liquidity to fund expected liability payments and otherwise support our underwriting strategy; (iii) to provide a reasonable and stable level of income; and (iv) to maintain a portfolio which will assist in attaining the highest possible rating from A.M. Best. See Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Information about Market Risk.


In addition to any investments prohibited by the insurance laws and regulations of Illinois and any other applicable states, our investment policy prohibits the following investments and investing activities:



short sales;


purchase of securities on margin;


hedge funds;




investment in commodities;


mortgage derivatives such as inverse floaters, interest only strips, and principal only strips;


options, puts, and futures contracts; and


non-U.S. dollar denominated securities.


Our board of directors developed our investment policy and reviews the policy periodically. Exceptions to prohibitions discussed above are allowed only with express authorization by the board of directors' investment committee, but under no circumstance can such exception exceed 5% of our invested assets.


Our investment portfolio is managed by two independent third party firms. The board of directors' investment committee reviews the performance of each firm periodically.


The following table sets forth information concerning our investments in available for sale (AFS) securities, as of December 31:





(In thousands)


Amortized Cost


Estimated Fair Value


Fixed maturity securities


U.S. Treasury

  $ 1,352     $ 1,290  


    49,400       47,020  


    45,765       42,982  


    22,633       19,493  

Redeemable preferred stock

    186       171  

Total AFS securities

  $ 119,336     $ 110,956  





(In thousands)


Amortized Cost


Estimated Fair Value


Fixed maturity securities


U.S. Treasury

  $ 1,353     $ 1,253  


    41,859       38,803  


    39,716       35,602  


    21,437       17,542  

Redeemable preferred stock

    216       189  

Total AFS securities

  $ 104,581     $ 93,389  



The following table summarizes the distribution of our portfolio of fixed maturity investments as a percentage of total estimated fair value based on credit ratings assigned by Standard & Poor’s Corporation (S&P), as of December 31:









Estimated Fair Value (In thousands)


Percent of Total2


Estimated Fair Value (In thousands)


Percent of Total2



  $ 20,749       18.7 %   $ 19,985       21.4 %


    43,051       38.8 %     33,620       36.0 %


    30,624       27.6 %     23,160       24.8 %


    14,424       13.0 %     13,355       14.3 %


    2,108       1.9 %     3,269       3.5 %


  $ 110,956       100.0 %   $ 93,389       100.0 %


The ratings set forth in this table are based on the ratings assigned by S&P. If S&P’s ratings were unavailable, the equivalent ratings supplied by Moody’s Investor Service, Fitch Investors Service, Inc. or the NAIC were used where available.

Represents percent of fair value for classification as a percent of the total portfolio.


The table below sets forth the maturity profile of our debt securities, as of December 31, 2023. Expected maturities could differ from contractual maturities because borrowers may have the right to call or prepay obligations, with or without call or prepayment penalties.


(In thousands)


Amortized Cost


Estimated Fair Value1


Less than one year

  $ 4,747     $ 4,693  

One through five years

    14,751       14,212  

Five through ten years

    23,880       22,518  

Greater than ten years

    26,372       22,342  


    49,400       47,020  

Redeemable preferred stock

    186       171  

Total debt securities

  $ 119,336     $ 110,956  


Debt securities are carried at fair value in our financial statements.


On December 31, 2023, the average maturity of our fixed maturity investment portfolio was 8.4 years, and the average duration was 5.6 years. As a result, the fair value of our investments may fluctuate significantly in response to changes in interest rates. In addition, we may experience investment losses to the extent our liquidity needs require the disposition of fixed maturity securities in unfavorable interest rate environments.


We use quoted values and other data provided by independent pricing services as inputs in our process for determining fair values of our investments. The pricing services cover substantially all the securities in our portfolio for which publicly quoted values are not available. The pricing services’ evaluations represent an exit price, a good faith opinion as to what a buyer in the marketplace would pay for a security in a current sale. The pricing is based on observable inputs either directly or indirectly, such as quoted prices in markets that are active, quoted prices for similar securities at the measurement date, or other inputs that are observable.


Our independent third-party investment managers provide us with pricing information that they obtain from independent pricing services, to determine the fair value of our fixed maturity securities. After performing a detailed review of the information obtained from the pricing service, limited adjustments may be made by the managers to the values provided.


Our average cash and invested assets, net investment income, and return on average cash and invested assets for the years ended December 31, 2023, and 2022 were as follows:


(In thousands)






Average cash and invested assets

  $ 136,398     $ 137,949  

Net investment income

    5,179       4,034  

Return on average cash and invested assets

    3.8 %     2.9 %



A.M. Best Rating


A.M. Best Company, Inc. ("A.M. Best") rates insurance companies based on factors of concern to policyholders. A.M. Best currently assigns an "A-" (Excellent) rating to ICC. This rating is the fourth highest out of 15 rating classifications. We expect that the next rating evaluation by A.M. Best will occur on May 9, 2024; therefore, the report from this evaluation has not yet been released. According to the A.M. Best guidelines, companies rated "A-" are considered by A.M. Best to have "an excellent ability to meet their ongoing insurance obligations." The rating evaluates the claims paying ability of a company and is not a recommendation on the merits of an investment in our common stock.


In evaluating a company’s financial and operating performance, A.M. Best reviews:



the company’s profitability, leverage, and liquidity;


its book of business;


the adequacy and soundness of its reinsurance;


the quality and estimated fair value of its assets;


the adequacy of its reserves and surplus;


its capital structure;


the experience and competence of its management; and


its marketing presence.


In its ratings report on ICC, A.M. Best stated that ICC’s rating reflected ICC’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, limited business profile, and appropriate enterprise risk management. A.M. Best also stated that ICC’s balance sheet reflects the company’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR) and its favorable underwriting leverage measures compared with the commercial casualty composite averages. A.M. Best has assigned the Parent Company’s outlook to the Issuer Credit Rating as stable.




Our competition varies geographically based upon the states in which we operate and by the segment of the food and beverage industry (e.g., bars versus fine dining). When evaluating the franchise and fine dining segment of the food and beverage industry, we compete with national insurance carriers, such as Allied Insurance Company, Travelers Insurance Company, and The Hartford Insurance Company. For risks with greater alcohol and entertainment exposures, competition for liquor liability comes from primarily excess and surplus lines companies such as USLI and Conifer. In some states (Illinois, Indiana, Iowa, Minnesota, and Wisconsin) competition is primarily from Midwest based regional carriers, such as Society Mutual Insurance Company, Midwest Family Mutual Insurance Company, SPRISKA, and West Bend Mutual Insurance Company, with products targeting the food and beverage industry. Because of the challenging judicial climate in Missouri, we do not face much competition from the larger regional or national insurance companies. Most competitors are excess and surplus lines companies (E&S) especially for risks with higher alcohol sales or entertainment. In our eastern-most states of Michigan, Ohio, and Pennsylvania, the primary competitors are well established national carriers with a strong presence in those states such as Auto Owners, Erie, and Cincinnati. In our most western states of Arizona and Colorado, we initially found market opportunities due to a lack of strong regional competition although the landscape has changed in both states. Society Mutual and SPRISKA are now in Colorado and Badger Mutual and SPRISKA are aggressive in Arizona. We entered Utah at a time when we are seeing other competitors reduce their appetite in that state and our main competitor is Everspan Indemnity Insurance Company. 



Despite significant competition, we believe we will continue to maintain strong market share.



Number of Eating and Drinking Places in 20221


Number of Locations Insured by ICC on December 31, 2023


Approximate Market Share (%)



    11,633       628       5.4 %


    12,884       1,384       10.7 %


    26,193       3,566       13.6 %


    12,929       853       6.6 %


    6,474       2,487       38.4 %


    5,441       158       2.9 %


    8,201             0.0 %


    18,300       690       3.8 %


    10,944       1,472       13.5 %


    11,971       1,462       12.2 %


    4,412             0.0 %

North Dakota

    1,799             0.0 %


    23,912       1,099       4.6 %


    26,637       524       2.0 %

South Dakota

    1,957             0.0 %


    13,372             0.0 %


    5,862       77       1.3 %


    12,412       365       2.9 %


    215,333       14,765          


National Restaurant Association 


Human Capital Resources


We recognize that our employees are our most valuable asset. We are committed to building an inclusive and diverse workforce and promoting a culture of respect where individual viewpoints are heard. The Company’s Chief Human Resources Officer (CHRO), with oversight by the executive team, leads our talent management initiatives. The CHRO’s key responsibilities include developing programs that advocate diversity, equity, and inclusion within the Company’s recruiting, selection, training, and development practices.


The Company’s Total Rewards program is a competitive compensation package that supports the Company’s commitment to attracting and retaining a talented workforce. In addition to base salaries or hourly wages, Total Rewards includes an annual profit-sharing incentive for all employees, an executive long-term incentive plan, and retirement, health, disability, and life insurance benefits. Local, regional, and national compensation surveys are used by the Human Resources Department to ensure a competitive compensation package exists for the Company’s positions.


An important component of the annual profit-sharing incentive is the Company’s Employee Stock Ownership Plan (ESOP), a qualified retirement plan that grants shares of the Company’s stock to eligible employees. The ESOP provides an avenue for employees to actively participate in building value in alignment with the interests of other shareholders. In addition to the ESOP, certain members of management participate in a discretionary bonus program where restricted stock units are awarded annually.


As of December 31, 2023, we had 105.5 full-time equivalent employees. None of these employees are covered by a collective bargaining agreement, and we believe that our employee relations are good.






We are subject to extensive regulation, particularly at the state level. The method, extent, and substance of such regulation varies by state, but generally has its source in statutes and regulations that establish standards and requirements for conducting the business of insurance and that delegate regulatory authority to state insurance regulatory agencies. In general, such regulation is intended for the protection of those who purchase or use insurance products, not the companies that write the policies. These laws and regulations have a significant impact on our business and relate to a wide variety of matters including accounting methods, agent and company licensure, claims procedures, corporate governance, examinations, investing practices, policy forms, pricing, trade practices, reserve adequacy, and underwriting standards.



State insurance laws and regulations require ICC to file financial statements with state insurance departments everywhere it does business, and the operations of ICC and its accounts are subject to examination by those departments at any time. ICC prepares statutory financial statements in accordance with accounting practices and procedures prescribed or permitted by these departments.


Premium rate regulation varies greatly among jurisdictions and lines of insurance. In most states in which our subsidiary writes insurance, premium rates for the various lines of insurance are subject to either prior approval or limited review upon implementation. States require rates for property-casualty insurance that are adequate, not excessive, and not unfairly discriminatory.


Many jurisdictions have laws and regulations that limit an insurer’s ability to withdraw from a particular market. For example, states may limit an insurer’s ability to cancel or non-renew policies. Laws and regulations that limit cancellation and non-renewal may restrict our ability to exit unprofitable marketplaces in a timely manner.




Examinations are conducted by the Illinois Department of Insurance every three to five years. The Illinois Department of Insurance last completed its examination of ICC in May 2023 covering the period from 2017-2021. The report from this exam became available to other states or the public on June 6, 2023. The 2021 examination did not result in any adjustments to our financial position. In addition, there were no substantive qualitative matters indicated in the examination report that had a material adverse impact on our operations.


NAIC Risk-Based Capital Requirements


In addition to state-imposed insurance laws and regulations, the NAIC has adopted risk-based capital requirements that require insurance companies to calculate and report information under a risk-based formula. These risk-based capital requirements attempt to measure statutory capital and surplus needs based on the risks in a company’s mix of products and investment portfolio. Under the formula, a company first determines its "authorized control level" risk-based capital. This authorized control level takes into account (i) the risk with respect to the insurer’s assets; (ii) the risk of adverse insurance experience with respect to the insurer’s liabilities and obligations, (iii) the interest rate risk with respect to the insurer’s business; and (iv) all other business risks and such other relevant risks as are set forth in the risk-based capital instructions. A company’s "total adjusted capital" is the sum of statutory capital and surplus and such other items as the risk-based capital instructions may provide. The formula is designed to allow state insurance regulators to identify weakly capitalized companies.


The requirements provide for four different levels of regulatory attention. The "company action level" is triggered if a company’s total adjusted capital is less than 2.0 times its authorized control level but greater than or equal to 1.5 times its authorized control level. At the company action level, the company must submit a comprehensive plan to the regulatory authority that discusses proposed corrective actions to improve the capital position. The "regulatory action level" is triggered if a company’s total adjusted capital is less than 1.5 times but greater than or equal to 1.0 times its authorized control level. At the regulatory action level, the regulatory authority will perform a special examination of the company and issue an order specifying corrective actions that must be followed. The "authorized control level" is triggered if a company’s total adjusted capital is less than 1.0 times but greater than or equal to 0.7 times its authorized control level; at this level, the regulatory authority may take action it deems necessary, including placing the company under regulatory control. The "mandatory control level" is triggered if a company’s total adjusted capital is less than 0.7 times its authorized control level; at this level, the regulatory authority is mandated to place the company under its control. The capital levels of ICC have never triggered any of these regulatory capital levels. We cannot provide assurance, however, that the capital requirements applicable to ICC will not increase in the future.


NAIC Ratios


The NAIC also has developed a set of 13 financial ratios referred to as the Insurance Regulatory Information System (IRIS). On the basis of statutory financial statements filed with state insurance regulators, the NAIC annually calculates these IRIS ratios to assist state insurance regulators in monitoring the financial condition of insurance companies. The NAIC has established an acceptable range for each of the IRIS financial ratios. If four or more of its IRIS ratios fall outside the range deemed acceptable by the NAIC, an insurance company may receive inquiries from individual state insurance departments. During the years ended December 31, 2023, and 2022, ICC did not receive inquiries from regulators on results for any of the IRIS tests.



Enterprise Risk Assessment


In 2012, the NAIC adopted the NAIC Amendments. The NAIC Amendments, when adopted by the various states, are designed to respond to perceived gaps in the regulation of insurance holding company systems in the United States. One of the major changes is a requirement that an insurance holding company system’s ultimate controlling person submit annually to its lead state insurance regulator an "enterprise risk report" that identifies activities, circumstances or events involving one or more affiliates of an insurer that, if not remedied properly, are likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole. Other changes include requiring a controlling person to submit prior notice to its domiciliary insurance regulator of its divestiture of control, having detailed minimum requirements for cost sharing and management agreements between an insurer and its affiliates and expanding of the agreements between an insurer and its affiliates to be filed with its domiciliary insurance regulator. In addition, in 2012 the NAIC adopted the Own Risk Solvency Assessment (ORSA) Model Act. The ORSA Model Act, when adopted by the various states, requires an insurance holding company system’s chief risk officer to submit at least annually to its lead state insurance regulator a confidential internal assessment appropriate to the nature, scale, and complexity of an insurer, conducted by that insurer of the material and relevant risks identified by the insurer associated with an insurer’s current business plan and the sufficiency of capital resources to support those risks. Although ICC is exempt from ORSA because of its size, we have incorporated elements of ORSA, that we believe constitute "best practices," into our annual internal enterprise risk assessment.


Market Conduct Regulation


State insurance laws and regulations include numerous provisions governing trade practices and the marketplace activities of insurers, including provisions governing the form and content of disclosure to consumers, illustrations, advertising, sales practices, and complaint handling. State regulatory authorities generally enforce these provisions through periodic market conduct examinations.


Property and Casualty Regulation


Our property and casualty operations are subject to rate and policy form approval, as well as laws and regulations covering a range of trade and claim settlement practices. State insurance regulatory authorities have broad discretion in approving an insurer’s proposed rates. The extent to which a state restricts underwriting and pricing of a line of business may adversely affect an insurer’s ability to operate that business profitably in that state on a consistent basis.


State insurance laws and regulations require us to participate in mandatory property-liability "shared market," "pooling" or similar arrangements that provide certain types of insurance coverage to individuals or others who otherwise are unable to purchase coverage voluntarily provided by private insurers. Shared market mechanisms include assigned risk plans and fair access to insurance requirement or "FAIR" plans. In addition, some states require insurers to participate in reinsurance pools for claims that exceed specified amounts. Our participation in these mandatory shared market or pooling mechanisms generally is related to the amount of our direct writings for the type of coverage written by the specific arrangement in the applicable state. We cannot predict the financial impact of our participation in these arrangements. See Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.


Guaranty Fund Laws


All states have guaranty fund laws under which insurers doing business in the state can be assessed to fund policyholder liabilities of insolvent insurance companies. Under these laws, an insurer is subject to assessment depending upon its market share in the state of a given line of business. For the years ended December 31, 2023, and 2022, we incurred $14,000 and $0, respectively, in assessments pursuant to state insurance guaranty association laws. We establish reserves relating to insurance companies that are subject to insolvency proceedings when we are notified of assessments by the guaranty associations. We cannot predict the amount and timing of any future assessments on ICC under these laws. See Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.



Federal Regulation


The U.S. federal government generally has not directly regulated the insurance industry except for certain areas of the market, such as insurance for flood, nuclear, and terrorism risks. However, the federal government has undertaken initiatives or considered legislation in several areas that may impact the insurance industry, including tort reform, corporate governance, and the taxation of reinsurance companies. The Dodd-Frank Act established the Federal Insurance Office which is authorized to study, monitor, and report to Congress on the insurance industry, and to recommend that the Financial Stability Oversight Council designate an insurer as an entity posing risks to the U.S. financial stability in the event of the insurer’s material financial distress or failure. In December 2013, the Federal Insurance Office issued a report on alternatives to modernize and improve the system of insurance regulation in the United States, including increasing national uniformity through either a federal charter or effective action by the states. Changes to federal legislation and administrative policies in several areas, including changes in federal taxation, can also significantly impact the insurance industry and us.


Sarbanes-Oxley Act of 2002


Enacted in 2002, the stated goals of the Sarbanes-Oxley Act of 2002, or SOX, are to increase corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies, and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws. We became subject to most of the provisions of SOX immediately after completion of the mutual-to-stock conversion.


The SOX includes very specific disclosure requirements and corporate governance rules and requires the SEC and securities exchanges to adopt extensive additional disclosure, corporate governance, and other related regulations.


Terrorism Risk Insurance Act of 2002


In January 2015 and December 2019, Congress passed the Terrorism Risk Insurance Program Reauthorization Act of 2015 and 2019, respectively, which amended and extended the Terrorism Insurance Program through December 31, 2027. Under this law, coverage provided by an insurer for losses caused by certified acts of terrorism is partially reimbursed by the United States under a formula under which the government pays 80% of covered terrorism losses exceeding a prescribed deductible. The act limits an insurer’s exposure to certified terrorist acts (as defined by the Act) to the prescribed deductible amount. The insurance industry’s aggregate deductible is $48.5 billion in 2024. Each insurer’s deductible is capped at 20% of the insurer’s direct earned premium for commercial property and casualty policies. Coverage under the act must be offered to all property, casualty, and surety insureds.


The new law also amended the Gramm-Leach-Bliley Act to establish the National Association of Registered Agents and Brokers as a nonprofit corporation with the purpose of prescribing licensing and producer qualification requirements and conditions on a multi-state basis.




As mandated by the Gramm-Leach-Bliley Act, states continue to promulgate and refine laws and regulations that require financial institutions, including insurance companies, to take steps to protect the privacy of certain consumer and customer information relating to products or services primarily for personal, family or household purposes. An NAIC initiative that affected the insurance industry was the adoption in 2000 of the Privacy of Consumer Financial and Health Information Model Regulation, which assisted states in promulgating regulations to comply with the Gramm-Leach-Bliley Act. In 2002, to further facilitate the implementation of the Gramm-Leach-Bliley Act, the NAIC adopted the Standards for Safeguarding Customer Information Model Regulation. Several states have now adopted similar provisions regarding the safeguarding of customer information. We have implemented procedures to comply with the Gramm-Leach-Bliley Act’s related privacy requirements.




The Treasury Department’s Office of Foreign Asset Control (OFAC) maintains a list of "Specifically Designated Nationals and Blocked Persons" (the SDN List). The SDN List identifies persons and entities that the government believes are associated with terrorists, rogue nations, or drug traffickers. OFAC’s regulations prohibit insurers, among others, from doing business with persons or entities on the SDN List. If the insurer finds and confirms a match, the insurer must take steps to block or reject the transaction, notify the affected person, and file a report with OFAC.





Illinois law sets the maximum amount of dividends that may be paid by ICC during any twelve-month period after notice to, but without prior approval of, the Illinois Department of Insurance. This amount cannot exceed the greater of 10% of the insurance company’s surplus as regards policyholders as reported on the most recent annual statement filed with the Illinois Department of Insurance, or the insurance company’s statutory net income for the period covered by the annual statement as reported on such statement. As of December 31, 2023, the amount available for payment of dividends by ICC in 2024 without the prior approval of the Illinois Department of Insurance is approximately $6.3 million. "Extraordinary dividends" in excess of the foregoing limitations may only be paid with prior notice to, and approval of, the Illinois Department of Insurance. See Item 7. Management Discussion and Analysis Liquidity and Capital Resources.


Holding Company Laws


Most states have enacted legislation that regulates insurance holding company systems. Each insurance company in a holding company system is required to register with the insurance supervisory agency of its state of domicile and furnish certain information. This includes information concerning the operations of companies within the holding company group that may materially affect the operations, management, or financial condition of the insurers within the group. Pursuant to these laws, the Illinois Department of Insurance requires disclosure of material transactions involving ICC and its affiliates and requires prior notice and/or approval of certain transactions, such as "extraordinary dividends" distributed by ICC. Under these laws, the Illinois Department of Insurance also has the right to examine us at any time.


All transactions within our consolidated group affecting ICC must be fair and equitable. Notice of certain material transactions between ICC and any person or entity in our holding company system will be required to be given to the Illinois Department of Insurance. Certain transactions cannot be completed without the prior approval of the Illinois Department of Insurance.


Approval of the state insurance commissioner is required prior to any transaction affecting the control of an insurer domiciled in that state. In Illinois, the acquisition of 10% or more of the outstanding voting securities of an insurer or its holding company is presumed to be a change in control. Illinois law also prohibits any person or entity from (i) making a tender offer for, or a request or invitation for tenders of, or seeking to acquire or acquiring any voting security of an Illinois insurer if, after the acquisition, the person or entity would be in control of the insurer, or (ii) effecting or attempting to effect an acquisition of control of or merger with an Illinois insurer, unless the offer, request, invitation, acquisition, effectuation or attempt has received the prior approval of the Illinois Department of Insurance.




Item 1A. Risk Factors


In addition to all other information contained in this Annual Report on Form 10-K, a potential investor should carefully consider the following risk factors in deciding whether to purchase our common stock.


Risks Related to Our Business


A reduction in our A.M. Best rating could affect our ability to write new business or renew our existing business.


Ratings assigned by A.M. Best are an important factor influencing the competitive position of insurance companies. A.M. Best ratings, which are reviewed approximately once a year, represent independent opinions of financial strength and ability to meet obligations to policyholders and are not directed toward the protection of investors. Therefore, our A.M. Best rating should not be relied upon as a basis for an investment decision to purchase our common stock.


ICC holds a financial strength rating of "A-" (Excellent) by A.M. Best, the fourth highest rating out of 15 rating classifications. We expect that our upcoming evaluation by A.M. Best will occur on May 9, 2024, with the ratings from this evaluation being released thereafter. Our most recent prior evaluation occurred on May 4, 2023 and was made public on August 10, 2023. Financial strength ratings are used by producers and customers as a means of assessing the financial strength and quality of insurers. Issuer credit ratings are an opinion by A.M. Best of an entity’s ability to meet its ongoing financial obligations. If our financial position deteriorates, we may not maintain our favorable financial strength and issuer credit ratings from A.M. Best. A downgrade of our rating could severely limit or prevent us from writing desirable business or from renewing our existing business. In addition, a downgrade could negatively affect our ability to implement our strategy. See Item 1. Business A.M. Best Rating.


Our investment portfolio is subject to significant market and credit risks, which could result in an adverse impact on our financial conditions or results of operations.


We invest the premiums we receive from policyholders until cash is needed to pay insured claims or other expenses. We had net realized investment gains of $673,000 and $874,000 for the years ended December 31, 2023, and December 31, 2022, respectively. Accordingly, our results of operations depend, in part, on the performance of our investment portfolio. We seek to hold a diversified portfolio of investments that is managed by professional investment advisory management firms in accordance with our investment policy and routinely reviewed by our investment committee. However, our investments are subject to general economic conditions and market risks as well as risks inherent to particular securities.


The value of our investment portfolio is subject to the risk that certain investments may default or become impaired due to deterioration in the financial condition of one or more issuers of the securities held, or due to deterioration in the financial condition of an entity that guarantees an issuer’s payments of such investments. Such defaults and impairments could reduce our net investment income and result in realized investment losses.


A severe economic downturn could cause us to incur substantial realized and unrealized investment losses in future periods, which would have an adverse impact on our financial condition, results of operations, debt and financial strength ratings, capital liquidity, and ability to access capital markets. In addition, losses in our investment portfolio may occur at the same time as underwriting losses and, therefore, exacerbate the adverse effect of the losses on us. Additionally, an unexpected increase in the volume or severity of claims may force us to liquidate securities, which may cause us to incur capital losses. If we do not structure the duration of our investments to match our insurance liabilities or sell securities at a time when such securities are in a loss position, we may be forced to liquidate investments prior to maturity at a significant loss to cover such payments. Investment losses could significantly decrease our asset base and statutory surplus, thereby affecting our ability to conduct business. See Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations - Quantitative and Quantitative Disclosures About Market Risk for more information.


We may be adversely affected by interest rate changes.


Our investment portfolio is predominantly comprised of fixed income securities. These securities are sensitive to changes in interest rates. An increase in interest rates typically reduces the fair market value of fixed income securities. In addition, if interest rates decline, investment income earned from future investments in fixed income securities will be lower. Rising interest rates could result in a significant reduction of our book value. A low investment yield environment could adversely impact our net earnings as a result of fixed income securities maturing and being replaced with lower yielding securities which impact investing results.


Interest rates are highly sensitive to many factors beyond our control including general economic conditions, governmental monetary policy, and political conditions. See Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations - Quantitative and Quantitative Disclosures About Market Risk for further discussion on interest rate risk.


Our food and beverage customers have been the target of claims and lawsuits. Proceedings of this nature, if successful, could result in our payment of substantial costs and damages.


Occasionally, patrons of our food and beverage industry insured customers file complaints or lawsuits against our insureds alleging a variety of claims arising in the ordinary course of their business, including personal injury claims, contract claims, and claims alleging violations of federal and state laws. In addition, certain of our insured customers who serve alcohol are subject to state "dram shop" or similar laws that generally allow a person to sue our customer if that person was injured by a legally intoxicated person who was wrongfully served alcoholic beverages by our customer. A number of these lawsuits in the food and beverage industry have resulted in the payment of substantial damages by us on behalf of our insureds.


Additionally, states have, from time to time, explored lowering the blood alcohol content levels for criminal statutes related to driving under the influence or similar laws, removing or increasing caps for liability with respect to injuries by a legally intoxicated person, or preventing or limiting rate changes by insurance companies.


Regardless of whether any claims against our customers are valid or whether they are liable, claims may be expensive to defend and may result in significant liabilities. Defense costs, even for unfounded claims, or a judgment or other liability in excess of our reinsurance limits for any claims or any adverse publicity resulting from claims could adversely affect our business, results of operations, and financial condition.



Our strategy for growing our business may not be profitable.


Over the past several years, we have made, and our current plans are to continue to make, investments in our lines of business, and we have increased expenses in order to, among other things, strengthen our product offerings and service capabilities, expand into new geographic areas, improve technology and our operating models, build expertise in our personnel, and expand our distribution capabilities, with the ultimate goal of achieving significant, sustained growth. The ability to achieve significant profitable premium growth in order to earn adequate returns on such investments and expenses, and to grow further without proportionate increases in expenses, is an important part of our current strategy. There can be no assurance that we will be successful at profitably growing our business, or that we will not alter our current strategy due to changes in our markets or an inability to successfully maintain acceptable margins on new business or for other reasons, in which case premiums written and earned, operating income and net book value could be adversely affected.


The geographic distribution of our business exposes us to significant natural disasters, which may negatively affect our financial and operating results.


For the year ended December 31, 2023, approximately 23.1% of our direct premiums written originated from business written in Illinois, and therefore, we have a greater exposure to catastrophic or other significant natural or man-made losses in that geographic region. The incidence and severity of such events are inherently unpredictable. In recent years, changing climate conditions have increased the unpredictability, severity, and frequency of tornados, hurricanes, and other storms.


States and regulators from time to time have taken action that has the effect of limiting the ability of insurers to manage these risks, such as prohibiting insurers from reducing exposures or withdrawing from catastrophe-prone areas, or mandating that insurers participate in residual markets. Our ability or willingness to manage our exposure to these risks may be limited due to considerations of public policy, the evolving political environment, or social responsibilities. We may choose to write business in catastrophe-prone geographic areas that we might not otherwise write for strategic purposes, such as improving our access to other underwriting opportunities.


Our ability to properly estimate reserves related to tornados and storms can be affected by the inability to access portions of the impacted areas, the complexity of factors contributing to the losses, the legal and regulatory uncertainties, and the nature of the information available to establish the reserves. These complex factors include, but are not limited to the following:



determining whether damages were caused by flooding versus wind;


evaluating general liability and pollution exposures;


the impact of increased demand for products and services necessary to repair or rebuild damaged properties;


infrastructure disruption;




the effect of mold damage;


business interruption costs; and


reinsurance collectability.


The estimates related to catastrophes are adjusted as actual claims are filed and additional information becomes available. This adjustment could reduce income during the period in which the adjustment is made, which could have a material adverse impact on our financial condition and results of operations.


Catastrophic losses are unpredictable and may have a material adverse effect on our business, financial condition, and results of operations.


The Company's insurance coverages include exposure to catastrophic events, particularly severe convective storms, wildfires, and winter weather. If our insureds were to experience a large-scale natural disaster, claims incurred would likely increase and our insured's properties may incur substantial damage, which could have a material adverse effect on our business, financial condition, and results of operations.



Changing weather and climate conditions may adversely affect our profitability or financial conditions.


Climate change and weather are complex and evolving issues. The Company cannot predict the cumulative impact these might have on our results of operations or financial condition at this time. The effect on the Company could include:



changes in the location, frequency, and severity of weather-related catastrophes, which may result in higher levels of losses;


added uncertainty in third party catastrophe models, which could impair the Company's ability to adequately price and assess exposure for the catastrophe risks we insure; and


obtaining reinsurance at desired levels and/or costs may be more difficult due to increased losses from weather-related catastrophes, which may reduce the amount of business we write and the revenues we generate.


Our results may fluctuate as a result of many factors, including cyclical changes in the insurance industry, which may lead to reduced premium volume.


Results of companies in the insurance industry, and particularly the property and casualty insurance industry, historically have been subject to significant fluctuations and uncertainties. The industry’s profitability can be affected significantly by:



rising levels of actual costs that are not known by companies at the time they price their products;


volatile and unpredictable developments, including man-made and natural catastrophes;


changes in reserves resulting from the general claims and legal environments as different types of claims arise and judicial interpretations relating to the scope of insurers’ liability develop; and


fluctuations in interest rates, inflationary pressures, and other changes in the investment environment, which affect returns on invested capital and may impact the ultimate payout of losses.


Historically, the financial performance of the insurance industry has fluctuated in cyclical periods of low premium rates and excess underwriting capacity resulting from increased competition (a so-called "soft market"), followed by periods of high premium rates and a shortage of underwriting capacity resulting from decreased competition (a so-called "hard market"). Fluctuations in underwriting capacity, demand and competition, and the impact on our business of the other factors identified above, could have a negative impact on our results of operations and financial condition.


Because estimating future losses is difficult and uncertain, if our actual losses exceed our loss reserves, our operating results may be adversely affected.


We maintain reserves to cover amounts we estimate will be needed to pay for insured losses and for the expenses necessary to settle claims. Estimating loss and loss expense reserves is a difficult and complex process involving many variables and subjective judgments. We regularly review our reserve estimate protocols and our overall amount of reserves. We review historical data and consider the impact of various factors such as:



trends in claim frequency and severity;


information regarding each claim for losses;


legislative enactments, judicial decisions, and legal developments regarding damages; and


trends in general economic conditions, including inflation.


Our actual losses could exceed our reserves. If we determine that our loss reserves are inadequate, we will have to increase them. This adjustment would reduce income during the period in which the adjustment is made, which could have a material adverse impact on our financial condition and results of operations. Such adjustments to loss reserve estimates are referred to as "loss development." If existing loss reserves exceed the revised estimate, it is referred to as positive loss development. Negative loss development occurs when the revised estimate of expected losses with respect to a calendar year exceed existing loss reserves. For additional information, see Item 1. Business Loss and Settlement Expense Reserves.


If our reinsurers do not pay our claims in accordance with our reinsurance agreements, we may incur losses.


We are subject to loss and credit risk with respect to the reinsurers with whom we deal because buying reinsurance does not relieve us of our liability to policyholders. If our reinsurers are not capable of fulfilling their financial obligations to us, our insurance losses would increase. For the year ended December 31, 2023, we ceded 11.3% of our direct written premiums to our reinsurers. We secure reinsurance coverage from a number of reinsurers. The lowest A.M. Best rating issued to any of our reinsurers is "A-" (Excellent), which is the fourth highest of fifteen ratings. See Item 1. Business Reinsurance.



The property and casualty insurance market in which we operate is highly competitive, which limits our ability to increase premiums for our products and recruit new producers.


Competition in the property and casualty insurance business is based on many factors. These factors include the perceived financial strength of the insurer, premiums charged, policy terms and conditions, services provided, reputation, financial ratings assigned by independent rating agencies, and the experience of the insurer in the line of insurance to be written. We compete with stock insurance companies, mutual companies, local cooperatives, and other underwriting organizations. Many of these competitors have substantially greater financial, technical, and operating resources than we have. Many of the lines of insurance we write are subject to significant price competition. If our competitors' price their products aggressively, our ability to grow or renew our business may be adversely affected. We pay producers on a commission basis to produce business. Some of our competitors may offer higher commissions or insurance at lower premium rates through the use of salaried personnel or other distribution methods that do not rely on independent agents. Increased competition could adversely affect our ability to attract and retain business and thereby reduce our profits from operations.


Our results of operations may be adversely affected by any loss of business from key producers.


Our products are primarily marketed by independent agents. Other insurance companies compete with us for the services and allegiance of these producers. These producers may choose to direct business to our competitors or may direct less desirable risks to us. We had three producers that were responsible for more than 5% of our direct premiums written. These producers accounted for $20.4 million or approximately 21.9% of our direct premiums written in 2023. No other producers accounted for more than 5% of our 2023 direct premiums written. If we experienced a significant decrease in business from, or lose entirely, our largest producers, it would have a material adverse effect on us.


Proposals to federally regulate the insurance business could affect our business.


Currently, the U.S. federal government does not directly regulate the insurance business. However, federal legislation and administrative policies in several areas can significantly and adversely affect insurance companies. These areas include financial services regulation, securities regulation, pension regulation, privacy, tort reform legislation, and taxation. In addition, various forms of direct federal regulation of insurance have been proposed. These proposals generally would maintain state-based regulation of insurance but would affect state regulation of certain aspects of the insurance business, including rates, producer and company licensing, and market conduct examinations. We cannot predict whether any of these proposals will be adopted, or what impact, if any, such proposals or, if enacted, such laws may have on our business, financial condition, or results of operations.


If we fail to comply with insurance industry regulations, or if those regulations become more burdensome, we may not be able to operate profitably.


We are regulated by the Illinois Department of Insurance, as well as, to a more limited extent, the federal government, and the insurance departments of other states in which we do business. For the year ended December 31, 2023, approximately 23.1% of our direct premiums written originated from business written in Illinois. Therefore, the cancellation or suspension of our license in Illinois, as a result of any failure to comply with the applicable insurance laws and regulations, may negatively impact our operating results.


Most insurance regulations are designed to protect the interests of policyholders rather than shareholders and other investors. These regulations relate to, among other things:



approval of policy forms and premium rates;


standards of solvency, including establishing requirements for minimum capital and surplus, and for risk-based capital;


classifying assets as admissible for purposes of determining solvency and compliance with minimum capital and surplus requirements;


licensing of insurers and their producers;




advertising and marketing practices;


restrictions on the nature, quality, and concentration of investments;


assessments by guaranty associations and mandatory pooling arrangements;


restrictions on the ability to pay dividends;


restrictions on transactions between affiliated companies;


restrictions on the size of risks insurable under a single policy;


requiring deposits for the benefit of policyholders;


requiring certain methods of accounting;


periodic examinations of our operations and finances;


claims practices;


prescribing the form and content of reports of financial condition required to be filed; and


requiring reserves for unearned premiums, losses, and other purposes.


The Illinois Department of Insurance also conducts periodic examinations of the affairs of insurance companies and requires the filing of annual and other reports relating to financial condition, holding company issues, and other matters. These regulatory requirements may adversely affect or inhibit our ability to achieve some or all of our business objectives. Our last completed examination by the Illinois Department of Insurance was in May 2023.


In addition, regulatory authorities have relatively broad discretion to deny or revoke licenses for various reasons, including the violation of regulations. Further, changes in the level of regulation of the insurance industry or changes in laws or regulations themselves or interpretations by regulatory authorities could adversely affect our ability to operate our business.


Our ability to manage our exposure to underwriting risks depends on the availability and cost of reinsurance coverage.


Reinsurance is the practice of transferring part of an insurance company’s liability and premium under an insurance policy to another insurance company. We use reinsurance arrangements to limit and manage the amount of risk we retain, to stabilize our underwriting results and to increase our underwriting capacity. The availability and cost of reinsurance are subject to current market conditions and may vary significantly over time. Any decrease in the amount of our reinsurance will increase our risk of loss. We may be unable to maintain our desired reinsurance coverage or to obtain other reinsurance coverage in adequate amounts and at favorable rates. If we are unable to renew our expiring coverage or obtain new coverage, it will be difficult for us to manage our underwriting risks and operate our business profitably.


It is also possible that the losses we experience on risks we have reinsured will exceed the coverage limits on the reinsurance. If the amount of our reinsurance coverage is insufficient, our insurance losses could increase substantially.



The Company relies on information technology and telecommunication systems, and the disruption or failure of these systems, or the compromise of the security of the systems that results in the misuse of confidential information, could materially and adversely affect its business.


The Company’s business is highly dependent upon the successful and uninterrupted functioning of the information technology and telecommunications systems of ICC and its third-party vendors. We have established security policies, processes and layers of defense designed to help identify and protect against intentional and unintentional misappropriation or corruption of our systems and information, and disruption of our operations. Our employees participate in ongoing security awareness training focused on the prevention and identification of possible threats. We also have security measures in place which are focused on the prevention, detection, and remediation of damage from computer viruses, natural disasters, unauthorized access, cyber-attack, and other similar disruptions.


Despite these efforts, our systems may be damaged, disrupted, or shut down due to attacks by unauthorized access, malicious software, undetected intrusion, hardware failures, or other events, and in these circumstances our disaster recovery planning may be ineffective or inadequate. Information technology security threats from user error to cybersecurity attacks are increasing in frequency and sophistication. Cybersecurity attacks may range from random attempts to coordinated and targeted attacks, including sophisticated computer crime and advanced threats. These threats pose a risk to the security of our systems and networks and the confidentiality, availability, and integrity of our data. No cybersecurity attack has had a material impact on our financial condition, results of operations or liquidity. However, the potential consequences of a material cybersecurity attack include reputational damage, litigation with third parties, and increased cybersecurity protection and remediation costs. A sustained business interruption or system failure could adversely impact our ability to process our business, provide customer service, pay claims in a timely manner or perform other necessary business functions. We could also be subject to fines and penalties from a security breach. The cost to remedy a severe breach could be substantial.


We could be adversely affected by the loss of our existing management or key employees.


The success of our business is dependent, to a large extent, on our ability to attract and retain key employees, in particular our senior officers. Our business may be adversely affected if labor market conditions make it difficult for us to replace our current key officers with individuals having equivalent qualifications and experience at compensation levels competitive for our industry. In particular, because of the shortage of experienced underwriters and claims personnel who have experience or training in the liquor liability sector of the insurance industry, replacing key employees in that line of our business could be challenging. Our key officers include Arron K. Sutherland, our President and Chief Executive Officer, Michael R. Smith, our Vice President – Chief Financial Officer, Norman D. Schmeichel, our Vice President – Chief Information Officer, Howard J. Beck, our Vice President – Chief Underwriting Officer, Julia B. Suiter, our Vice President – Chief Legal Officer, and Kathleen S. Springer, our Vice President – Chief Human Resources Officer. These key officers have an average of more than 24 years of experience in the property and casualty insurance industry.


We do not have agreements not to compete or employment agreements with our senior officers, except for our employment agreement with Mr. Sutherland, and change in control agreements with certain officers, including Messrs. Smith, Schmeichel, and Beck, and Mesdames Suiter and Springer. Our employment agreement with Mr. Sutherland and change in control agreements have change of control provisions that provide for certain payments and the continuation of certain benefits in the event such officer is terminated without cause, or such officer voluntarily quits for good reason after a change in control.


Losses resulting from political instability, acts of war or terrorism may negatively affect our financial and operating results.


Numerous classes of business are exposed to terrorism related catastrophic risks. The frequency, number and severity of these losses are unpredictable. As a result, we have changed our underwriting protocols to address terrorism and the limited availability of terrorism reinsurance. However, given the uncertainty of the potential threats, we cannot be sure that we have addressed all the possibilities.


The Terrorism Risk Insurance Act of 2002, as extended by the Terrorism Risk Insurance Program Reauthorization Acts of 2015 and 2019, is effective through December 31, 2027. Prior to the act, insurance coverage from private insurers for losses (other than workers’ compensation) arising out of acts of terrorism was severely limited. The act provides, among other things, that all licensed insurers must offer coverage on most commercial lines of business for acts of terrorism. Losses arising out of acts of terrorism that are certified as such by the Secretary of the Treasury of the United States (in consultation with the Secretary of Homeland Security) and that exceed $200 million in any year will be reimbursed by the federal government subject to a limit of $100 billion. Each insurance company is responsible for a deductible equal to 20% of its direct earned premiums in the previous calendar year, up to the insurer’s proportionate share of the $100 billion. Our deductible is approximately $17.3 million for 2024. For losses in excess of the deductible, the federal government will reimburse 80% of the insurer’s loss.



Notwithstanding the protection provided by reinsurance and the Terrorism Risk Insurance Act of 2002, the risk of severe losses to us from acts of terrorism has not been eliminated. Our reinsurance contracts include various limitations or exclusions limiting the reinsurers’ obligation to cover losses caused by acts of terrorism. Accordingly, events constituting acts of terrorism may not be covered by, or may exceed the capacity of, our reinsurance and could adversely affect our business and financial condition.


We could be adversely affected by any interruption to our ability to conduct business at our current location.


Our business operations could be substantially interrupted by flooding, snow, ice, and other weather-related incidents, or from fire, power loss, telecommunications failures, terrorism, or other such events. In such an event, we may not have sufficient redundant facilities to cover a loss or failure in all aspects of our business operations and to restart our business operations in a timely manner. Any damage caused by such a failure or loss may cause interruptions in our business operations that may adversely affect our service levels and business. See Item 1. Business Technology.


Changes in accounting standards issued by the Financial Accounting Standards Board (FASB) or other standard-setting bodies may adversely affect our consolidated financial statements.


Our consolidated financial statements are subject to the application of GAAP, which is periodically revised and/or expanded. Accordingly, we are required to adopt new or revised accounting standards from time to time issued by recognized authoritative bodies, including the FASB. It is possible that future changes we are required to adopt could change the current accounting treatment that we apply to our consolidated financial statements and that such changes could have a material effect on our financial condition and results of operations.


Assessments and premium surcharges for state guaranty funds, second injury funds, and other mandatory pooling arrangements may reduce our profitability.


Most states require insurance companies licensed to do business in their state to participate in guaranty funds, which require the insurance companies to bear a portion of the unfunded obligations of impaired, insolvent, or failed insurance companies. These obligations are funded by assessments, which are expected to continue in the future. State guaranty associations levy assessments, up to prescribed limits, on all member insurance companies in the state based on their proportionate share of premiums written in the lines of business in which the impaired, insolvent, or failed insurance companies are engaged. Accordingly, the assessments levied on us may increase as we increase our written premiums. Some states also have laws that establish second injury funds to reimburse insurers and employers for claims paid to injured employees for aggravation of prior conditions or injuries. These funds are supported by either assessments or premium surcharges based on incurred losses. See Item 1. Business Regulation.


In addition, as a condition to conducting business in some states, insurance companies are required to participate in residual market programs to provide insurance to those who cannot procure coverage from an insurance carrier on a negotiated basis. Insurance companies generally can fulfill their residual market obligations by, among other things, participating in a reinsurance pool where the results of all policies provided through the pool are shared by the participating insurance companies. Although we price our insurance to account for our potential obligations under these pooling arrangements, we may not be able to accurately estimate our liability for these obligations. Accordingly, mandatory pooling arrangements may cause a decrease in our profits. On December 31, 2023, we participated in mandatory pooling arrangements in six states. As we write policies in new states that have mandatory pooling arrangements, we will be required to participate in additional pooling arrangements. Further, the impairment, insolvency, or failure of other insurance companies in these pooling arrangements would likely increase the liability for other members in the pool. The effect of assessments and premium surcharges or increases in such assessments or surcharges could reduce our profitability in any given period or limit our ability to grow our business. See Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.


Our operations in Mexico and the United Kingdom expose us to foreign currency exchange rate risk.


Foreign currency exchange rate risk arises from the possibility that changes in foreign exchange rates will impact our financial results. Foreign currency exchange rate risk can occur as a result of our business located in Mexico or our participation in Funds at Lloyd's. We consider this risk to be minimal and immaterial to our financial results.



Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and operating results.


We are subject to the ongoing internal control provisions of Section 404 of the Sarbanes-Oxley Act of 2002, as applicable to smaller reporting companies, which requires management to assess the effectiveness of internal controls. As described in Item 9A of Part II of this Annual Report on Form 10-K, management concluded that our disclosure controls and procedures were effective as of December 31, 2023. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business, the economic and regulatory environments, and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. We cannot assure you that the measures we will take will remediate any material weaknesses identified or that we may identify in the future, or that we will implement and maintain adequate controls over our financial process and reporting in the future.


Pursuant to Section 404 of the Sarbanes-Oxley Act and current SEC regulations, we are required to prepare assessments regarding internal control over financial reporting and furnish a report by our management on our internal control over financial reporting. Failure to achieve and maintain an effective internal control environment or complete our Section 404 certifications could have a material adverse effect on our stock price.


Any failure to complete our assessment of our internal control over financial reporting, to remediate any material weaknesses or to implement new or improved controls could harm our operating results, cause us to fail to meet our reporting obligations or result in material misstatements in our consolidated financial statements. Any such failure could also adversely affect the results of the periodic management evaluations of our internal controls and, in the case of a failure to remediate any material weaknesses that we may identify, would adversely affect the annual auditor attestation reports regarding the effectiveness of our internal control over financial reporting that are required under Section 404 of the Sarbanes-Oxley Act. Inadequate internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.


Risk Factors Related to Ownership of Our Common Stock


A small number of shareholders collectively own a substantial portion of our common stock and voting power, as a result, our public float will be limited.


Collectively, the three investors who purchased shares from us pursuant to investment agreements (the Clinton-Flood Purchasers, Rock Island Investors, LLC, and Tuscarora Wayne) own or exercise voting and investment control of 1.0 million of our shares, or 31.8% of our outstanding common stock. Additionally, ICC Holdings, Inc. Employee Stock Ownership Plan beneficially owns 350,000 of our shares, or 11.2% of our outstanding common stock.


This significant concentration of share ownership may adversely affect the trading price for our common stock because investors may perceive disadvantages in owning stock in a company that is controlled by a small number of shareholders.



Following the expiration of the standstill provision in March 2024 and other provisions in their respective purchase agreements, if these three investors retain their ownership levels, such investors together may be able to exhibit significant control over us and our management and will have significant influence over matters requiring shareholder approval, including future amendments to our amended and restated articles of incorporation or other significant or extraordinary transactions. The interests of these investors may differ from the interests of our other shareholders with respect to certain matters.


Our Employee Stock Ownership Plan (ESOP) and stock-based incentive plan will increase our costs, which will reduce our income.


As of December 31, 2023, our ESOP holds 11.2% of our outstanding shares of common stock, with such shares acquired with funds borrowed from us prior to the expiration of our IPO. The cost of acquiring the shares of common stock for the ESOP, and therefore the amount of the loan, was $3.5 million. The loan will be repaid over a fifteen-year period. We record employee stock ownership plan expense in an amount equal to the fair value of the shares of common stock committed to be released to employees under the ESOP for each year. If shares of our common stock appreciate in value over time, compensation expense relating to the employee stock ownership plan will increase.


Our board of directors adopted a stock-based incentive plan that was submitted to, and approved by, our shareholders in 2017. Under this plan, we may award participants restricted shares of our common stock, restricted stock units denominated in shares of our common stock, or options to purchase shares of our common stock. Restricted stock and restricted stock unit awards will be made at no cost to the participants. Restricted stock units are payable in shares of common stock or in cash at the discretion of the compensation committee. The number of shares of common stock that may be issued pursuant to restricted stock and restricted stock unit awards (to the extent that such restricted stock unit awards are not paid in cash) or upon exercise of stock option awards under the stock-based incentive plan may not exceed 10% and 4%, respectively, of the total number of shares sold in the offering.


The costs associated with the grant of restricted stock awarded under the stock-based incentive plan will be recognized and expensed over the vesting period of the award at the fair market value of the shares on the date they are awarded. The costs associated with the grant of restricted stock unit awards to be settled in cash will similarly be recognized and expensed over their vesting period at the fair market value of the shares on the date they are awarded. However, unlike awards of restricted stock, the fair market value will be remeasured on a quarterly basis until the award vests or is otherwise settled. Therefore, in addition to reducing our net earnings by recording this compensation and benefit expense, increases in our stock price will increase this expense for restricted stock unit awards settled in cash, thereby further reducing our net earnings.



Finally, accounting rules require companies to recognize as compensation expense the award-date fair value of stock options. This compensation expense will be recognized over the appropriate service period. When we record an expense for the award of options using the fair value method, we will incur significant compensation and benefits expense, which will reduce our net earnings.


The price of our common stock may decline.


The price of shares of our common stock may decline for many reasons, some of which are beyond our control, including among others:



capital market conditions generally;


quarterly variations in our results of operations;


changes in expectations as to our future results of operations, including financial estimates by securities analysts and investors;


announcements by third parties of claims against us;


changes in law and regulation;


results of operations that vary from those expected by investors; and


future sales of shares of our common stock.


In addition, the stock market routinely experiences substantial price and volume fluctuations that sometimes have been unrelated or disproportionate to the operating performance of companies. As a result, the trading price of shares in our common stock may decline and a shareholder may not be able to sell shares at or above the price paid to purchase them.


Statutory provisions and our articles and bylaws may discourage takeover attempts on the Company that shareholders may believe are in their best interests or that might result in a substantial profit for them.


We are subject to provisions of Pennsylvania corporate law and Illinois insurance law that hinder a change of control. Illinois law requires the Illinois Department of Insurance’s prior approval of a change of control of an insurance holding company. Under Illinois law, the acquisition of 10% or more of the outstanding voting stock of an insurer or its holding company is presumed to be a change in control. Approval by the Illinois Department of Insurance may be withheld even if the transaction would be in the shareholders’ best interest if the Illinois Department of Insurance determines that the transaction would be detrimental to policyholders.


Our articles of incorporation and bylaws also contain provisions that may discourage a change in control. These provisions include:


a prohibition on a person, including a group acting in concert, from acquiring voting control of more than 10% of our outstanding stock without prior approval of the board of directors;


a classified board of directors divided into three classes serving for successive terms of three years each;


the prohibition of cumulative voting in the election of directors;


the requirement that nominations for the election of directors made by shareholders and any shareholder proposals for inclusion on the agenda at any annual meeting must be made by notice (in writing) delivered or mailed to us not less than 90 days prior to the meeting;


the prohibition of shareholders’ action without a meeting and of shareholders’ right to call a special meeting;


unless otherwise waived by the board of directors, to be elected as a director, a person must be a shareholder of ICC Holdings, Inc. for the lesser of one year or the time that has elapsed since the completion of the conversion;


the requirement imposing a mandatory tender offering requirement on a shareholder that has a combined voting power of 25% or more of the votes that our shareholders are entitled to cast;




the requirement that certain provisions of our articles of incorporation can only be amended by an affirmative vote of shareholders entitled to cast at least 80% of all votes that shareholders are entitled to cast, unless approved by an affirmative vote of at least 80% of the members of the board of directors; and


the requirement that certain provisions of our bylaws can only be amended by an affirmative vote of shareholders entitled to cast at least 66 2/3%, or in certain cases 80%, of all votes that shareholders are entitled to cast.


These provisions may serve to entrench management and may discourage a takeover attempt that a shareholder may consider to be in his or her best interest or in which the shareholder would receive a substantial premium over the current market price. These provisions may make it extremely difficult for any one person, entity or group of affiliated persons or entities to acquire voting control of the Company, with the result that it may be extremely difficult to bring about a change in the board of directors or management. Some of these provisions also may perpetuate present management because of the additional time required to cause a change in the control of the board. Other provisions make it difficult for shareholders owning less than a majority of the voting stock to be able to elect even a single director.


If ICC is not sufficiently profitable, our ability to pay dividends will be limited.


We are a separate entity with no operations of our own other than holding the stock of ICC; Two Rivers Realty Investments, LLC; Beverage Insurance Agency, Inc; Estrella Innovative Solutions, Inc; Southern Hospitality Education, LLC; and Guild Insurance Inc. We depend primarily on dividends paid by ICC, distributions from Two Rivers Realty Investments, LLC, and any proceeds from the offering that are not contributed to ICC to pay the debt service on our existing loans and to provide funds for the payment of dividends. We will receive dividends only after all of ICC’s obligations and regulatory requirements with the Illinois Department of Insurance have been satisfied. During any twelve-month period, the amount of dividends paid by ICC to us, without the prior approval of the Illinois Department of Insurance, may not exceed the greater of 10% of ICC’s surplus as regards policyholders as reported on its most recent annual statement filed with the Illinois Department of Insurance or ICC’s statutory net income as reported on such statement. We presently do not intend to pay dividends to our shareholders. If ICC is not sufficiently profitable, our ability to pay dividends in the future will be limited.


Ongoing compliance with the requirements of the Securities Exchange Act and the Sarbanes-Oxley Act could result in higher operating costs and adversely affect our results of operations.


We are subject to the periodic reporting, proxy solicitation, insider trading prohibitions, and other obligations imposed under the Securities Exchange Act. In addition, certain of the provisions of the Sarbanes-Oxley Act became applicable to us at the completion of the offering. Compliance with these requirements will increase our legal, accounting, and other compliance costs and the cost of directors and officer’s liability insurance and will require management to devote substantial time and effort to ensure initial and ongoing compliance with these obligations. A key component of compliance under the Exchange Act is to produce quarterly and annual financial reports within prescribed time periods after the close of our fiscal year and each fiscal quarter. Historically, we have not been required to prepare such financial reports within these time periods. Failure to satisfy these reporting requirements may result in delisting of our common stock by the NASDAQ Capital Market, and inquiries from or sanctions by the SEC. Moreover, the provision of the Sarbanes-Oxley Act that requires public companies to review and report on the adequacy of their internal controls over financial reporting may be applicable to us so long as we are categorized as a smaller reporting company. We expect these rules, regulations, and requirements to significantly increase our accounting, legal, compliance, and other costs and to make some activities more time-consuming and costly. We also may need to hire additional accounting, legal, compliance, and administrative staff with experience working for public companies. We may be unable to hire such additional staff on terms that are favorable to us, or at all. In addition, such additional staff may not be able to provide such services at levels sufficient to comply with these requirements. Moreover, the rules that became applicable to us as a public company could make it more difficult and expensive for us to attract and retain qualified members of our board of directors and qualified executive officers. We also anticipate that these rules will make it more expensive for us to obtain directors’ and officers’ insurance, and we may be required to incur substantially higher costs to obtain such coverage. If we fail to predict these costs accurately or to manage these costs effectively, our operating results could be adversely affected.


Our business could be negatively affected as a result of the actions of activist shareholders and such activism could impact the trading value of our securities.


Shareholders may, from time to time, engage in proxy solicitations or advance shareholder proposals, or otherwise attempt to effect changes and assert influence on our board of directors and management. Activist campaigns that contest or conflict with our strategic direction or seek changes in the composition of our board of directors could have an adverse effect on our operating results and financial condition. A proxy contest would require us to incur significant legal and advisory fees, proxy solicitation expenses and administrative and associated costs, and require significant time and attention by our board of directors and management, diverting their attention from the pursuit of our business strategy. Any perceived uncertainties as to our future direction and control, our ability to execute on our strategy, or changes to the composition of our board of directors or senior management team arising from a proxy contest could lead to the perception of a change in the direction of our business or instability which may result in the loss of potential business opportunities, make it more difficult to pursue our strategic initiatives, or limit our ability to attract and retain qualified personnel and business partners, any of which could adversely affect our business and operating results. If individuals are ultimately elected to our board of directors with a specific agenda, it may adversely affect our ability to effectively implement our business strategy and create additional value for our shareholders. We may choose to initiate, or may become subject to, litigation as a result of a proxy contest or matters arising from a proxy contest, which would serve as a further distraction to our board of directors and management and would require us to incur significant additional costs. In addition, actions such as those described above could cause significant fluctuations in our stock price based upon temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.




If we fail to maintain the necessary requirements to be listed on the NASDAQ Capital Market, the price and liquidity of our stock may be adversely affected.


In order to remain listed on the NASDAQ Capital Market, we must meet certain minimum requirements for our shareholders’ equity, net earnings, the market value and number of publicly held shares, the number of shareholders, and the market price of our stock. In addition, we must have up to four market makers making a market in our stock under certain continued listing standards. Delisting from the NASDAQ Capital Market may adversely affect the market price for our stock and reduce the liquidity of our common stock, and therefore make it more difficult for a shareholder to sell our stock. For more information regarding the reduced liquidity as a result of our agreements with the investors, see Item 1A. Risk FactorsRisks Related to the Ownership of Our Common Stock A small number of shareholders will collectively own a substantial portion of our common stock and voting power, and, because of restrictions on their ability to buy or sell our shares, our public float will be limited.


The COVID-19 pandemic has adversely affected, and could continue to adversely affect, our business, financial condition, liquidity, and results of operations. 


The COVID-19 pandemic and most related restrictions have ended. As restaurants and bars began to function at regular capacity again, it seemed that one of the unintended consequences of the shutdowns may have been for certain organizations to make up for lost revenue encouraging additional consumption by patrons. To that end, the Company has experienced increased liquor liability claims. These losses have reduced the Company's overall profitability.




Item 1B. Unresolved Staff Comments




Item 1C. Cybersecurity


The Company manages risks through a multi-faceted approach. Steps include outlining guidelines for data access, usage, and protection, ongoing security training and awareness programs for employees, implementation of strong authentication techniques including multi-issue authentication (MFA), regularly updating and patching software and structures facilitates to mitigate vulnerabilities, conducting cybersecurity audits, and closely working with cybersecurity specialists to staying informed about emerging threats and trends and to implement multi-layered protections.


The Company assesses and reports on any findings quarterly at both an internal and external Enterprise Risk Management (ERM) meeting. Our approach to managing cybersecurity risk aligns with the five key functions contained within the COBIT Framework:



meeting stakeholder needs;


covering the enterprise end to end;


applying a single integrated network;


enabling a holistic approach; and

separating governance from management.


Currently, the Company has not been materially impacted from an operational or financial perspective from cybersecurity threats. Cybersecurity is a rapidly evolving area that the Company takes great efforts to mitigate any adverse impacts; however, the Company cannot guarantee that it will not be subject to cybersecurity attacks. See Item 1A, Risk Factors, for more information.


Our Board provides oversight for cybersecurity risks primarily through its ERM committee. The Company's Chief Information Officer (CIO) provides information quarterly to the ERM committee on cybersecurity risks. The CIO has 30 years of experience in technology both on the company and consulting sides and a B.A. in Economics.


Management oversight of cybersecurity risks is provided through the Company's internal ERM committee, which is comprised of executive management and our Director of Actuarial Services. The ERM committee has identified numerous risk attributes and developed risk control reports that identify drivers, characteristics, stress testing levels, potential mitigation efforts, or risk appetite, and any reaction in response to a breach. The ERM committee meets quarterly to review and update risk limit grids, current estimates relative to pre-defined acceptable levels, and make adjustments as needed.


The Company's Networking department, which reports up to the CIO, is responsible for the day-to-day monitoring of cybersecurity risks. Mitigation efforts are executed, if necessary, to cope with the impact of a cybersecurity incident. The Company is finalizing its Cybersecurity Incident Response Plan and anticipates it being available in early April 2024. We anticipate it will provide a framework for the identification, evaluation, and escalation of potential cybersecurity events.


The CIO routinely engages third-party cybersecurity consultants to conduct network security audits. The Company also engages other their-party consultants in a number of areas to support the assessment, identification, and management of cybersecurity risks, including risk assessments, log monitoring, threat intelligence, system penetration testing, and incident response, among others.


The Company performs cybersecurity due diligence and monitoring of third-party vendors, which includes a security questionnaire to identify the cybersecurity controls and protections maintained by a third party. Lasty, the Company requires that all employees participate in monthly training videos that are geared toward identifying potential cybersecurity threats.


Item 2. Properties


Our headquarters are located at 225 20th Street, Rock Island, Illinois. We own this approximately 24,000 square foot facility. We also own and operate investment property comprising 70 rental units consisting of single-family homes, duplexes, condominiums, senior living units, and a seven-plex property. These rentals are in Carbon Cliff, Illinois; Colona, Illinois; East Moline, Illinois; Milan, Illinois; Moline, Illinois; Rock Island, Illinois; Silvis, Illinois; and Le Claire, Iowa.


Item 3. Legal Proceedings


We are a party to litigation in the normal course of business. Based upon information presently available to us, we do not consider any litigation to be material. However, given the uncertainties attendant to litigation, we cannot provide assurance that our results of operations and financial condition will not be materially adversely affected by any litigation.



Item 3A. Forward-Looking Information


The Private Securities Litigation Reform Act of 1995 (the "Reform Act") provides a safe harbor for forward-looking statements made by or on behalf of ICC Holdings, Inc. ICC Holdings, Inc. and its representatives may, from time to time, make written or verbal forward-looking statements, including statements contained in ICC Holdings, Inc.'s filings with the Securities and Exchange Commission (SEC) and its reports to shareholders. Generally, the inclusion of the words "anticipates," "believe," "estimate," "expect," "future," "intend," "may," "plans," "seek", "will," or the negative of such terms and similar expressions identify statements that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and that are intended to come within the safe harbor protection provided by those sections. All statements addressing operating performance, events, or developments that ICC Holdings, Inc. expects or anticipates will occur in the future, including statements relating to sales growth, earnings or earnings per share growth, and market share, as well as statements expressing optimism or pessimism about future operating results, are forward-looking statements within the meaning of the Reform Act. The forward-looking statements are and will be based on management’s then-current beliefs and assumptions regarding future events and operating performance and on information currently available to management and are applicable only as of the dates of such statements.


Forward-looking statements involve risks, uncertainties, and assumptions, including, among other things, the factors discussed under the heading "Item 1A. Risk Factors" and those listed below. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Actual results may differ materially from those expressed in these forward-looking statements due to a number of uncertainties and risks, including the risks described in this Annual Report on Form 10-K, and other unforeseen risks. Readers should not put undue reliance on any forward-looking statements. These statements speak only as of the date of this Annual Report on Form 10-K, even if subsequently made available by us on our website or otherwise, and we undertake no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this Annual Report on Form 10-K.


All of these factors are difficult to predict, and many are beyond our control. These important factors include those discussed under Item 1A. Risk Factors and those listed below:



the potential impact of fraud, operational errors, systems malfunctions, or cybersecurity incidents;


future economic conditions in the markets in which we compete that are less favorable than expected;


our ability to expand geographically;


the effects of weather-related and other catastrophic events;


the effect of legislative, judicial, economic, demographic, and regulatory events in the jurisdictions where we do business, especially changes with respect to laws, regulations, and judicial decisions relating to liquor liability;


our ability to enter new markets successfully and capitalize on growth opportunities either through acquisitions or the expansion of our producer network;


the impacts of negative social media and the cancel culture;


financial market conditions, including, but not limited to, changes in interest rates and the stock markets causing a reduction of investment income or investment gains and a reduction in the value of our investment portfolio;


heightened competition, including specifically the intensification of price competition, the entry of new competitors and the development of new products by new or existing competitors, resulting in a reduction in the demand for our products;


a downgrade in our A.M. Best rating;


disruptions and negative investor sentiment caused by bank failures during 2023;


reliance on Lloyd's of London brokers to profitably operate, share timely financial results, and maintain accurate reserves;


the impact of acts of terrorism and acts of war;


the effects of terrorist related insurance legislation and laws;


changes in general economic conditions, including inflation, unemployment, interest rates, and other factors;


the cost, availability, and collectability of reinsurance;


estimates and adequacy of loss reserves and trends in loss and settlement expenses;


changes in the coverage terms selected by insurance customers, including higher limits;


our inability to obtain regulatory approval of, or to implement, premium rate increases;


our ability to obtain reinsurance coverage at reasonable prices or on terms that adequately protect us;

  expense and reputational impact on the Company as a result of expenses related to the continuing activities of an activist shareholder;




adverse litigation or arbitration results; and


adverse changes in applicable laws, regulations or rules governing insurance holding companies and insurance companies, and environmental, tax or accounting matters including limitations on premium levels, increases in minimum capital and reserves, and other financial viability requirements, and changes that affect the cost of, or demand for our products.


Because forward-looking information is subject to various risks and uncertainties, actual results may differ materially from that expressed or implied by the forward-looking information.




Item 4. Mine Safety Disclosures


Not applicable.




Item 5. Market for Registrants Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities


In March 2017, the Company completed its IPO. The Company’s common stock trades on the NASDAQ Capital Market under the symbol "ICCH." As of March 11, 2024, there were approximately 137 registered holders of the Company’s common stock. A substantially greater number of holders of the Company's common stock are held in "street name" or beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions.



We have never paid or declared any cash dividends on our common stock, and we have certain restrictions from doing so under Pennsylvania and Illinois law. For more information, see Item 1. Business Regulation Dividends. We currently intend to retain any earnings for future growth and, therefore, do not expect to pay any cash dividends on our common stock in the foreseeable future.



Purchases of Equity Securities by the Issuer and Affiliated Purchasers


The following table summarizes repurchases of common stock pursuant to share repurchase programs authorized by the Board of Directors.


Purchases of Equity Securities




Total number of shares purchased


Average price paid per share


Total number of shares purchased as part of publicly announced plans


Maximum number (or approximate dollar value) of shares that may be purchased under the plans or programs (1)


October 1, 2023 to October 31, 2023


Open Market Purchases

    622     $ 15.65       622     $ 4,647,300  

November 1, 2023 to November 30, 2023


Open Market Purchases


December 1, 2023 to December 31, 2023


Open Market Purchases



    622     $ 15.65       622     $ 4,647,300  



In December 2022, the Company announced the establishment of a $5.0 million share repurchase program with no expiration date. The authorization is in addition to the existing share repurchase program authorized in August 2018. From time to time, repurchases under our programs are executed under the terms of a pre-set trading plan meeting the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934.



Item 6. [Reserved]






Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations


The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and accompanying notes included elsewhere in this Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Form 10-K constitutes forward-looking information that involves risks and uncertainties. Please see Item 3A. Forward-Looking Information and Item 1A. Risk Factors for more information. Please see Item 1A. Risk Factors for a discussion of important factors that could cause actual results to differ materially from the results described, or implied by, the forward-looking statements contained herein.




ICC is a regional property and casualty insurance company incorporated in Illinois and focused exclusively on the food and beverage industry. On the effective date of the conversion, ICC became a wholly owned subsidiary of ICC Holdings, Inc.


For the year ended December 31, 2023, we had direct written premiums of $93.0 million, net premiums earned of $75.7 million, and net earnings of $4.3 million. For the year ended December 31, 2022, we had direct premiums written of $82.7 million, net premiums earned of $69.1 million, and a net loss of $0.6 million. On December 31, 2023, we had total assets of $211.0 million and equity of $67.0 million. On December 31, 2022, we had total assets of $192.2 million and equity of $60.4 million.


Principal Revenue and Expense Items


We derive our revenue primarily from premiums earned, net investment income, and net realized gains (losses) from investments.


Gross and net premiums written


Gross premiums written are equal to direct and assumed premiums before the effect of ceded reinsurance. Net premiums written is the difference between gross premiums written and premiums ceded or paid to reinsurers (ceded premiums written).


Premiums earned


Premiums earned is the earned portion of our net premiums written. Gross premiums written include all premiums recorded by an insurance company during a specified policy period. Insurance premiums on property and casualty insurance contracts are recognized in proportion to the underlying risk insured and are earned ratably over the duration of the policies. At the end of each accounting period, the portion of the premiums that is not yet earned is included in unearned premiums and is realized as revenue in subsequent periods over the remaining term of the policy. Our policies typically have a term of twelve months. Thus, for example, for a policy that is written on July 1, 2023, one-half of the premiums would be earned in 2023 and the other half would be earned in 2024.



Net investment income and net realized gains (losses) on investments


We invest our surplus and the funds supporting our insurance liabilities (including unearned premiums and unpaid loss and settlement expenses) in cash, cash equivalents, equities, fixed maturity securities, and real estate. Investment income includes interest and dividends earned on invested assets. Net realized gains and losses on invested assets are reported separately from net investment income. We recognize realized gains when invested assets are sold for an amount greater than their cost or amortized cost (in the case of fixed maturity securities) and recognize a current expected credit loss (CECL) allowance for the amount by which the amortized cost of the security exceeds fair value. Our portfolio of investment securities is managed by two independent third parties with managers specializing in the insurance industry.


ICC’s expenses consist primarily of: