2023 Annual Report OMSNIC

2023 ANNUAL REPORT

OMS National Insurance Company, Risk Retention Group

As the only medical malpractice company owned by oral & maxillofacial surgeons

with singular focus on their needs, OMSNIC has always been guided by our mission

to champion the Specialty and protect OMS practices.

OMSNIC takes immense pride in our heritage, founded on the proposition of OMS coming

together to collectively confront the malpractice crisis of the 1980s. We continue to

steadfastly honor that legacy while looking for ways to improve and propel the Company

forward. Embracing both tradition and innovation will allow OMSNIC to provide the best

possible protection to the Specialty for years to come.

Table of Contents

3 • Year at a Glance

4 • Letter from the Chair of the Board

8 • Remembering Lewis N. Estabrooks, DMD, MS

9 • Moving forward. Giving back. Interview with Dr. Chris Johnson

14 •BoardofDirectorsandCorporateOfcers

15 • OMSCap

Plan

16 • Financial Highlights

17 • Fortress Insurance Year in Review

18 • Statutory Financial Statements

Cover Photo:

Dr. Chris Johnson

Below:

Dr. Chris Johnson

and team

ANNUAL REPORT 2023 | 2

TABLE OF CONTENTS

“As OMSNIC reects on another

remarkable year, we extend our

profound gratitude to Dr. James

Swift for his tremendous service

to the Company and to the

Specialty. His Board leadership

has been instrumental in

driving OMSNIC forward,

as evidenced by extraordinary

policyholder satisfaction scores

and consistent nancial strength

during his tenure. Beyond those

metrics, Dr. Swift’s legacy of

always putting each policyholder

front and center in decision

making while steadfastly

defending their interests is

universally understood within

the Company.”

MATT NIELSEN, CEO

OMSNIC Year at a Glance

OMSNIC wrote the highest number of policyholders ever,

with 5,276 OMS insured at year-end 2023.

For the 10th consecutive year, a dividend was received from the

Fortress Insurance Company, a wholly owned subsidiary. To date,

Fortress has paid $13.3 million to OMSNIC in dividends.

To date, OMSNIC has cumulatively paid out $104.2 million

to OMS who have received the proceeds of their OMSCap

Preferred Stock, against an original investment of $15.7 million.

This represents a gain of $88.5 million.

PER SHARE PREFERRED

STOCK PRICE APRIL 1, 2024

$2,571

PER SHARE INCREASE

SINCE APRIL 1, 2023

$360

ANNUAL INCREASE IN PER

SHARE PRICE SINCE APRIL 1, 2023

16.3%

AVERAGE ANNUAL INCREASE IN PER

SHARE PRICE OVER PAST 10 YEARS

5.8%

For the 22nd year in a row, OMSNIC

received an “A” (Excellent) rating from

A.M. Best, the insurance industry’s

“reportcard”ofnancialhealth.

85%

Insuring more than

85% of eligible OMS

across the nation.

Matthew J. Nielsen, JD, CPCU

President and Chief Executive Ofcer

ANNUAL REPORT 2023 | 3

OMSNIC: YEAR AT A GLANCE

Dear Colleagues,

Serving as Chair of the OMSNIC Board has been both a highlight of my OMS career and an unwavering

privilege. I am tremendously grateful that the Board entrusted me with this role and will always have a deep

and enduring appreciation for having the opportunity to represent your interests within your Company.

A Deep-Rooted Relationship

My relationship with OMSNIC began more than

35 years ago. At that time, the OMS residency

program at the University of Minnesota had offered

me the role of program director and faculty member.

Iwasalsoafliatedwithanoralandmaxillofacial

surgery practice in Minneapolis, Maxillofacial and Oral

Surgery PA (MOSPA), which was the practice for the

university faculty. We carried medical professional

liability (MPL) insurance for our practice activities,

and I always had a keen interest in how the law and

medicine intersected.

The malpractice insurance crisis in the United States

was in full swing at that time. It impacted all doctors

and resulted in very high premiums from malpractice

insurance carriers. Malpractice insurance was

particularly unaffordable for oral and maxillofacial

surgeons. Congress recognized the crisis and the

need for malpractice coverage options, so a few

years earlier the legislature passed the Liability

Risk Retention Act of 1986, allowing common risks,

such as oral and maxillofacial surgeons, to form

risk retention groups (RRGs) to provide malpractice

insurance coverage to the members.

The American Association of Oral and Maxillofacial

Surgeons (AAOMS) assembled a sub-committee to

look into establishing an RRG to provide malpractice

insurance. The team, consisting of a group of

knowledgeable and progressive surgeons willing

to spend time and effort to create a company,

established what was then known as AAOMS Mutual

National Insurance Company, RRG (now, of course,

known as OMSNIC). With the help of consulting

insurance business professionals, these doctors

established protocols for underwriting, claims defense,

riskmanagementandnancefortheCompany.

It was a daunting task.

Claims Committee

In September of 1989, I was asked by a member

of the Claims Committee if I might be interested

in reviewing claims for the Company. I gladly

agreed.TherstClaimsCommitteemeetingI

attendedwasheldinAAOMS’sofcespacein

Rosemont, Illinois. The committee was comprised of

practicing OMS and case managers who reviewed

all claims against insured doctors to identify ways to

medically defend the OMS. I was infatuated with the

Letter from the

Chair of the Board

Dr. James Q. Swift steps down as Chair of the OMSNIC

Board in 2024. It is with gratitude and heartfelt thanks

that we mark the end of Dr. Swift’s service to the

Company. In his nal Annual Report message, he shares

his reections, insights and parting wisdom gleaned

from his years of service to OMSNIC, its policyholders

and the Specialty.

James Q. Swift, DDS, FACS

Chair of the Board

ANNUAL REPORT 2023 | 4

LETTER FROM CHAIR OF THE BOARD

LETTER CONTINUED

complexity of the process and the world of malpractice

liability. The Claims Committee reviewed each claim

withane-toothcomb,andtheguidanceitprovided

most often resulted in victories (outright defense

verdicts, dismissals, or a settlement payment that was

signicantlylowerthantheoriginaldemand)forthe

matters against our policyholders.

In those early days, we established a culture of

steadfast defense of OMS that remains at the

forefront of our Company today. That culture has

enabled countless positive outcomes for our OMS.

With exceptional claims defense, service and case

management by the Company, OMSNIC built a

well-deserved reputation of being the gold standard

for defending the Specialty in malpractice claims.

This allowed the Company to grow and provide

state-of-the-art malpractice insurance for the majority

of oral and maxillofacial surgeons in the US.

Providing Exceptional Service

I remain a member of the Claims Committee to

this day. We still meet face-to-face six times a year

at OMSNIC’s headquarters, now in Schaumburg,

Illinois, to deliberate each matter. Our case

managers, many of whom are attorneys, provide

research and prepare all the necessary materials,

with all the relevant medical records, in advance

of each meeting. We discuss, as a group, how to

medically defend matters and we look at the legal

implications to weigh our options and defense

strategies. It was helpful to my career with OMSNIC

to be educated in malpractice liability while on the

Claims Committee. I also served on many other

OMSNIC Committees and was able to understand

how a malpractice risk retention group functioned

successfully. It was an educational process to learn

so many complex facets of the malpractice insurance

enterprise while providing service to the Company

and to all insured oral and maxillofacial surgeons.

Underwriting, claims management, rate making,

nance,riskmanagementandactuarialsciences

were all topics that were important to absorb and to

achieve competency in order to govern exceptional

malpractice coverage for oral and maxillofacial

surgeons. My focus was always on providing the

best service possible and that resulted in me being

selected and elected by OMSNIC policyholders to

act as a director.

LETTER FROM CHAIR OF THE BOARD

ANNUAL REPORT 2023 | 5

LETTER CONTINUED

Acknowledgment and Gratitude

I remain deeply indebted to the leaders and founders of the

company for the opportunity to be a part of the team and

to learn from them. Oral and maxillofacial surgeons, insurance

executives and individuals both within the Company and outside

of it helped my career at OMSNIC. Some of those names include:

Dr. Lew Estabrooks, Dr. Jeff Topf, Dr. Jerry Jones, Dr. Robert Guyette,

Dr. Steven Holmes, Dr. Duke Deegan, Dr. Jack Bolton, Ken Ludwig,

Victoria Sterling, Bill Passolt, and Pat Pigoni, to name just a few.

Many others have been exceptional to work with over the years.

The success of our company can be attributed to so many folks that

have worked very hard to help us and the Specialty throughout the

past 35 years.

Planning for Transition

My fellow Directors have taken steps to ensure a quality leadership

succession. Each board member and each ofcer of OMSNIC

understands the need to think about succession and the future

of the company. You should know that my retirement succession

has been well-planned by the Board. OMSNIC’s board actively seeks

people with leadership qualities and elects only the best candidates

totheBoardandofcerroles.ThisensurestheCompany’slegacy.

Two years ago, we underwent a transition of OMSNIC’s Chief

ExecutiveOfcerwhenthatpositionwasvacatedduetoaplanned

retirement. We conducted an intense and thorough search for the

new CEO. Our search and selection team consisted of all eight

OMS Directors on OMSNIC’s Board. We consulted with the premier

insurancehead-huntingrm,wesoughtopinionsfromthought

leading insurance professionals, we engaged the leadership of the

Medical Professional Liability Association, we elicited feedback

from key stakeholders (reinsurers, actuaries, agents, etc.), and we

conducted many interviews. The process took over a year.

It was our extreme good fortune to be able to hire Matt Nielsen,

an existing Board member and trained lawyer, as Chief Executive

OfcerforOMSNIC.Matthasdedicatedhislegalcareertodefending

doctors embroiled in malpractice litigation before applying his talents

to overseeing operations like claims, underwriting, corporate legal

and reinsurance. He understands our culture and has a profound

appreciation of OMSNIC’s mission to Defend the Specialty. We were

“

Over the last two

years, OMSNIC has

ourished under

this new leadership.

ANNUAL REPORT 2023 | 6

LETTER FROM CHAIR OF THE BOARD

LETTER CONTINUED

also thrilled that Kathy Ehmann was willing to step

intotheroleofChiefOperatingOfcer.Kathyisa

Board Member that has been with the Company for

over 30 years and brings vast institutional knowledge

to her role.

Overthelasttwoyears,OMSNIChasourished

under this new leadership. The company has

grown both in number of policyholders and gross

written premium, while introducing new products

and systems to meet the needs of the changing

practice environment for OMS. Matt and Kathy

are exceptional leaders and executives, and I am

fullycondenttheywillelevatethetraditionsof

excellence for OMSNIC in the years to come.

Leadership Succession

Many years ago, OMSNIC formulated a leadership

succession process for OMS serving as Directors.

We determined that in order to assure continued

leadership and maintenance of expertise, we

needed to be mindful of aging and the need for

endurance and exceptional performance to assure

continued success. We have always kept our eyes

peeled for oral and maxillofacial surgeons that

are intelligent, knowledgeable, compassionate,

reasonable, personable, well-spoken and well

respected by members of our Specialty to act as

committee members and, potentially, directors.

I am extremely pleased to inform all policyholders

that Dr. Anthony Spina, Vice Chair, will succeed me

later this year as Chair of the OMSNIC Board of

Directors. He will be the fourth Chair in OMSNIC’s

36-year history. Anthony is an excellent businessman

and an exceptional surgeon. He has risen to this

position due to his clinical expertise, leadership skills

and intelligence. He has and will continue to do

great things for OMSNIC. I cannot think of another

OMS that will do a better job. It is my joy to know

that Anthony’s skill and ability will continue to serve

the companies under the aegis of OMSNIC.

An Ongoing Commitment

to Defending the Specialty

Anthony will be very well-supported by an

exceptional team of surgeon directors, including

Drs. Mike Stronczek, Colin Bell, Nicholas Bournias,

Mark Zajkowski, Cynthia Trentacosti and Vinny

Perciaccante. You are aware of the leaders in our

Specialty and I believe OMSNIC has, in its service,

surgeons that are capable of providing excellent

support to oral and maxillofacial surgery, and in

ensuring that a fair and just process is in place for

every surgeon being sued. The continued success

and service that OMSNIC provides for our insured

oral and maxillofacial surgeons is not surpassed

by any other malpractice insurance provider. The

Company and this team of Directors truly are

committed to continue “Defending the Specialty.”

With gratitude, regards, respect and best wishes

for all of you,

James Q. Swift, DDS, FACS | Chair of the Board

ANNUAL REPORT 2023 | 7

LETTER FROM CHAIR OF THE BOARD

Remembering

Lewis N. Estabrooks, DMD, MS

A Founding Director of OMSNIC and

a Leader in the Specialty

Dr. Lewis Estabrooks passed away in November 2023. He was

a founding member of OMSNIC and served as a director of

the Company from 1988 until his retirement in 2015. During

that time, Dr. Estabrooks served as Chair of the Board for 14 years,

from 1999 to 2013. He was a champion of defending OMS and

was instrumental in helping OMSNIC develop a claims team and

defense counsel panel to vigorously defend professional liability

claims brought against OMS. This effort resulted in both reduced

claims and lower lawsuit payments – stabilizing the Specialty’s cost

of professional liability insurance during a very turbulent time.

Dr. Estabrooks also served as Chair of OMSNIC’s subsidiary,

Fortress Insurance Company, and governed that entity during

atimeofsignicantexpansion.

Dr. Estabrooks received his dental degree from Tufts University,

where he also completed his residency and master’s program

in oral and maxillofacial surgery. Dr. Estabrooks was in private

practice in Maine from 1974 through 2006. In 1980, he founded

his solo practice with the philosophy of full-scope care for the

entirecommunity.Hewasastrongpresenceinhisofceand

at local hospitals, performing countless orthognathic, TMJ and

trauma surgeries until his retirement. As the practice grew, he

added partners, mentoring and treating them as equals in his

unique and subtle ways, and always leading by example. With

this foundation, his practice continues to provide full-scope oral

and maxillofacial services to the community.

Dr. Estabrooks was also a Diplomate of the American Board of

Oral and Maxillofacial Surgery and served on multiple AAOMS

committees. In 1988, he was selected as AAOMS Committee

Man of the Year. He was a respected leader in the medical

professional liability industry.

Dr. Estabrooks’ legacy lives

on through OMSNIC and the

Specialty today, both of which

are stronger because of his

contributions and leadership.

ANNUAL REPORT 2023 | 8

REMEMBERING LEWIS N. ESTABROOKS, DMD, MS

Moving

forward.

Giving back.

Dr. Chris Johnson is a Board Certied Oral and Maxillofacial Surgeon practicing as a

solo practitioner in Highland Park, Texas. He has been practicing for eleven years and

has managed his own full-scope OMS practice for the past two years, focusing on dental

implants, bone reconstruction, orthognathic surgery, oral pathology, dentoalveolar and

trauma. After earning a degree in biomedical science from the University of Oklahoma,

Dr. Johnson sojourned at OU to obtain his DDS from the College of Dentistry. He fullled

his OMS Residency at the University of Cincinnati College of Medicine in 2013.

ANNUAL REPORT 2023 | 9

Flying Start

One might say Dr. Chris Johnson was on the fast track to

becoming an Oral and Maxillofacial Surgeon from a young age.

Maybetoofast.Asanactivefthgrader,heaccidentallyewover

the handlebars of his bike, knocking out his two front teeth and

fracturing his maxilla. It would prove to be a life-altering experience.

As he explains, “my neighbor, Dr. Lester Cowden, was an oral and

maxillofacial surgeon and treated me over an 8-year period with

many different procedures, including bone grafts and implants.

We formed an authentic friendship over that timeframe and

I worked at his practice during high school. Dr. Cowden essentially

became a second dad to me and that close relationship strongly

inuencedmypursuitofacareerinoralsurgery.”

Doing Good Across the Globe

Opportunities for serving those in need has always intrigued

Dr. Johnson. During dental school, he volunteered his services

to help veterans, the disabled and the elderly by providing

dentaltreatments,includingcleanings,llingsandmorecomplex

procedures like crowns and extractions. The desire to help others

became even stronger when he started his OMS practice.

Dr. Johnson volunteered his time with local and overseas medical

missions to provide oral surgery to underserved communities, with

multiple trips to Central and South America to treat patients with

cleft lip, cleft palate and other oral surgery pathologies.

He encourages dental students, OMS residents and new-to-practice

OMS that he encounters to volunteer their time and expertise.

Dr. Johnson lets them know that service can take many forms,

both locally or abroad, and that serving others is a win-win scenario.

He noted, “Volunteering not only creates amazing memories and

chances to meet like-minded colleagues, but also offers an amazing

feel-good moment when you experience the positive impact you

have on people who would otherwise not experience the

life-changingbenetsthatoralsurgerycanprovide.”

Dr.Johnsoncontinuestovolunteerhistimeandhenowndsways

to do it closer to home. He has donated his time and surgery center

to provide pro bono care for faith-based ministries. He coaches

his kids’ sports teams and provides care for sports-related facial

injuries in the community. He also serves as an on-call resource for

local trauma incidents. As he says, “You can volunteer and give

back anywhere. You can make a difference in someone’s life close

to home and across the world.”

There’s nothing

better than the

feeling you get in

seeing the impact

you can make on

people...”

“

ANNUAL REPORT 2023 | 10

INTERVIEW WITH DR. CHRIS JOHNSON

Building A Successful Practice

Following residency, Dr. Johnson joined East Texas

OMS Associates. “My partner was the mayor at the

time and by being partner at one of the busiest

practices in East Texas, we treated a variety of cases,

including trauma, orthognathic, dentoalveolar, and

implants.” He believes it was helpful to inaugurate

his career in a practice which provided him with

heightened opportunities for collaboration and

mentorship. In those early days, Dr. Johnson thought

the close-knit collegial practice setting accelerated

the opportunity to learn so many practical tips.

As his family grew, Dr. Johnson made the decision

to move closer to extended family near Dallas, settling

in Highland Park. He opened Johnson Oral Facial

Surgery in 2022, which is a full-scope outpatient

surgical facility. Dr. Johnson worked closely with the

architects and designers to create a tech-forward OMS

practice that meets 2023 Category 1 NFPA standards.

“Wecanhandletraumainourofceandhave

treated nasal fractures, zygomas, and orthognathic

procedures. By not using a hospital facility to deliver

this type of care, we reduced the cost for these

procedures with our patients paying only a fraction

what a hospital would charge.”

NEED FULL RES

“

...we reduced the cost

for these procedures with

our patients paying only a

fraction of what a hospital

would charge.

ANNUAL REPORT 2023 | 11

INTERVIEW WITH DR. CHRIS JOHNSON

Dr. Johnson relishes owning his own practice. As he

explains, “Being in practice for myself, I can choose

my own hours, decide how many patients to see and

which procedures to focus on. I’ve learned how to run

asmallbusinessandkeepitprotablewhilealways

puttingtheneedsofthepatientrst.”Inaddition,

the autonomy that comes with practice ownership

allows Dr. Johnson to select his staff, develop a

personal connection with them, and provide training

which emphasizes optimal patient care.

His practice uses digital planning for performing

dental implants, facial reconstruction, orthognathic

surgery and wisdom teeth removal. The practice

integrates the latest technologies, including 3D

imaging for virtual surgery planning, digital intraoral

scanning, and medical 3D printing capabilities.

These integrated services allow Dr. Johnson to deliver

optimal care and outcomes.

A Family Affair

When not attending to his busy OMS practice,

Dr. Johnson cherishes spending time with his

family, including his wife, Meg, and his ve young

children (Hunter, Charlie, Luke, Emily and Ben).

Indeed, if you visit his website, you can meet all

of them in a lighthearted video titled, “What My

Dad Does.” Dr. Johnson noted that in order to

deliver the best care to his patients, he treats

patients like they are family, which enhances empathy

for each person. He tells his staff to strive to provide

each patient with the same level of care you would

expect for a loved one at a hospital.

Grateful for OMSNIC

Dr. Johnson has been an OMSNIC insured since

he began practicing eleven years ago. According

to him, “It was the easiest and best decision I ever

made with regard to my professional liability coverage.

OMSNIC’s track record, peer reviews, engagement

during my residency, and patient safety and risk

management resources have been a tremendous

asset in establishing my practice. I didn’t even think

to use another carrier.” He believes that OMSNIC

truly understands the nature of today’s OMS

practice. “OMSNIC really offers a unique product to

policyholders that is unmatched in the professional

liability realm.”

“

The easiest decision I ever

made was to use OMSNIC

for so many reasons.

“

You can make a difference

in someone’s life close

to home and across

the world.

ANNUAL REPORT 2023 | 12

INTERVIEW WITH DR. CHRIS JOHNSON

I like being the person that

people turn to, whether it’s

a sports injury, an accident

or a trauma case.

“

A Bright Future

Dr. Johnson is optimistic about the future of the

Specialty and his practice. “I think oral surgery is the

bestjobintheworld,providingautonomy,exibility–

so I have time for things like coaching my kids’ teams

–and professional rewards, such as making a difference

to my patients.”

He also believes in helping the next generation,

saying, “The advice I offer to young oral surgeons is

to join different organizations and associations to

help develop a camaraderie with your peers. It’s an

ideal way to ask questions and bounce ideas off like-

minded professionals about everything from patient

care to practice management.”

As a proud member of his tight-knit community,

Dr. Johnson goes on to say, “I like being the person

that people turn to, whether it’s a sports injury, an

accident or a trauma case. You need to be open to

treating people in different settings, like trauma call

at the hospital, as this is how we give back with our

expertise and skills. When somebody’s sick, injured

or in pain, they’re worried about the outcome, and we,

as OMS, can treat them and give them peace of mind,

which is so rewarding.“

ANNUAL REPORT 2023 | 13

INTERVIEW WITH DR. CHRIS JOHNSON

Cynthia Trentacosti, DDS, MS; Colin S. Bell, DDS, MSD; Michael J. Stronczek, DDS, MS; Matthew J. Nielsen, JD, CPCU;

Anthony M. Spina, DDS, MD; James Q. Swift, DDS, FACS; Vincent J. Perciaccante, DDS, FACS; Katherine A. Ehmann, CPA;

Mark D. Zajkowski, DDS, MD, MBA, FACS; Nicholas J. Bournias, DDS

Board of Directors and Corporate Ofcers

Board of Directors

James Q. Swift, DDS, FACS

Chair

Anthony M. Spina, DDS, MD

Vice Chair

Nicholas J. Bournias, DDS

Treasurer

Michael J. Stronczek, DDS, MS

Secretary

Colin S. Bell, DDS, MSD

Vincent J. Perciacante, DDS, FACS

Cynthia Trentacosti, DDS, MS

Mark D. Zajkowski, DDS, MD, MBA, FACS

Matthew J. Nielsen, JD, CPCU

Katherine A. Ehmann, CPA

CorporateOfcers

Matthew J. Nielsen, JD, CPCU

PresidentandChiefExecutiveOfcer

Katherine A. Ehmann, CPA

Executive Vice President and Chief Operating

Ofcer

Frode Brudvik

Vice President, Underwriting

Sherry L. Richard, CPA

VicePresidentandChiefFinancialOfcer

Luis Ugaz

VicePresidentandChiefInformationOfcer

Aike P. Zavala

Vice President, Human Resources

Jeffri A. Beth

Assistant Vice President, Claims

ANNUAL REPORT 2023 | 14

BOARD OF DIRECTORS AND CORPORATE OFFICERS

OMSCap

Plan

The OMSCap preferred stock price increased 16.3% over last year which represents a considerable

increase on a year-over-year basis and further translates into a sizable per-share dollar increase.

Thestockpriceincreaseoverthepastyearwasdrivenbystrongprotsstemmingfromstrongoperational

performance,gainsrecognizedonthedisposalofequitypositionsandincreasedxedincomeyieldsthrough

portfolio rebalancing efforts. Both the rallying of the equity and bond markets complimented the appreciation of

the Company’s Preferred Stock price. OMSNIC’s preferred stock has averaged an increase of 5.8% annually over

the past ten years.

OMSCap is the stock investment plan available only to OMSNIC’s insured oral and maxillofacial surgeons.

As a risk retention group, OMSNIC is owned by our Members, who purchase preferred stock upon joining the

Company. This capital contribution establishes each OMSCap account, entitling the OMS owner to their share

ofOMSNICretainedprotsuponretirement.ThecurrentvalueofOMSCapPreferredStockissetonApril1

ofeachyear,withpricepersharedeterminedbytheprioryear’sauditednancialresults.

Shareholders’ Equity

Dollars in Millions

2019 2020 2021 2022 2023

$350

$300

$250

$200

$150

$100

$50

$295

$301

$326

$296

$304

$3,000

$2,500

$2,000

$1,500

$1,000

$500

2004 2009 2014 2019 2024

$2,571

Preferred Stock Price Per Share

As of April 1 Each Year

Actual

Trendline represents the average annual

increase of 10.7% since inception.

ANNUAL REPORT 2023 | 15

OMSCAP PLAN

Financial Highlights

(STATUTORY BASIS)

As of December 31 2023 2022

Invested Assets $ 486,782,612 $ 474,858,727

Total assets 527,661,090 508,170,199

Reserve for losses* 158,550,560 149,471,405

Unearned premiums 41,631,983 39,186,304

Shareholders’ equity 303,587,651 295,926,727

For the Years Ended December 31 2023 2022

Net premiums earned $ 69,032,661 $ 61,230,018

Investment income 11,783,931 8,652,893

Net income 13,302,271 6,156,150

*Includes loss adjustment expenses

Net Income

Dollars in Millions

0 10 20

2023

2022

2021

2020

2019

$17.2

$13.3

$6.2

$7.9

$19.5

Direct Written Premiums

Dollars in Millions

0 20 40 60 80

2023

2022

2021

2020

2019

$70.1

$74.1

$61.3

$70.5

$78.9

ANNUAL REPORT 2023 | 16

FINANCIAL HIGHLIGHTS

Fortress Insurance

Year in Review

Fortress ended with a protable 2023 year, impacted by

greater earnings in net investment income and realized gains.

The Company made a dividend payment of $1.6 million to the

parent company, marking ten consecutive years of dividend

payments. This represents a cumulative dividend to the parent

of $13.3 million. For 2023, Fortress experienced a 4% increase in

direct written premiums. The Company’s policyholder base grew

by 2.7% complementing the overall premium rise.

As a result of shared resources with the parent company,

Fortress has a depth of clinical expertise unmatched in the

industry. Fortress has crafted digital enhancements to their

insured base of nearly 13,600 and continues to grow in a

competitive market. The Fortress dental professional liability

policy is designed to address the increasing complexity

of modern dentistry, with specialized claims management,

aggressive defense and exclusive patient safety and risk

management education.

Fortress Direct Written Premiums

Dollars in Millions

0 5 10 15 20 25 30

2023

2022

2021

2020

2019

$25.0

$21.7

$24.7

$26.2

$27.3

CUMULATIVE DIVIDEND TO

THE PARENT

$13.3 million

DIVIDEND TO THE PARENT

IN 2023

$1.6 million

INCREASE IN DIRECT WRITTEN

PREMIUMS IN 2023

POLICYHOLDER BASE GROWTH

IN 2023

2.7%

Dr. Courtney Richter

and Dr. David Carlton of

Lake District Family Dentistry

in Alexandria, LA

ANNUAL REPORT 2023 | 17

FORTRESS INSURANCE YEAR IN REVIEW



OMSNationalInsuranceCompany,

RiskRetentionGroup

StatutoryBasisFinancialStatementsandSupplementalInformation

December31,2023and2022

(withIndependentAuditor’sReportThereon)



OMSNationalInsuranceCompany,

RiskRetentionGroup

Index

December31,2023and2022



  Page(s)



IndependentAuditor’sReport...........................................................................................................1Ͳ2



FinancialStatements



StatementsofAdmittedAssets,LiabilitiesandCapitalandSurplus(StatutoryBasis)...........................3



StatementsofIncome(StatutoryBasis).................................................................................................4



StatementsofChangesinCapitalandSurplus(StatutoryBasis)............................................................5



StatementsofCashFlows(StatutoryBasis)...........................................................................................6



NotestoStatutoryBasisFinancialState

ments.................................................................................7Ͳ31



Independent Auditor’s Report

Board of Directors and Shareholders

OMS National Insurance Company, Risk Retention Group

Opinions

We have audited the statutory financial statements of OMS National Insurance Company, Risk Retention

Group (the Company), which comprise the statutory statements of admitted assets, liabilities, and capital

and surplus as of December 31, 2023 and 2022, and the related statutory statements of income, changes

in capital and surplus, and cash flows for the years then ended, and the related notes to the statutory

financial statements.

Unmodified Opinion on Regulatory Basis of Accounting

In our opinion, the accompanying financial statements present fairly, in all material respects, the admitted

assets, liabilities, and capital and surplus of OMS National Insurance Company, Risk Retention Group as

of December 31, 2023 and 2022, and the results of its operations and its cash flows thereof for the years

then ended in accordance with the basis of accounting described in Note 1.

Adverse Opinion on U.S. Generally Accepted Accounting Principles

In our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion on

U.S. Generally Accepted Accounting Principles section of our report, the financial statements do not

present fairly, in accordance with accounting principles generally accepted in the United States of

America, the financial position of OMS National Insurance Company, Risk Retention Group as of

December 31, 2023 and 2022, or the results of its operations or its cash flows thereof for the years then

ended.

Basis for Opinions

We conducted our audit in accordance with auditing standards generally accepted in the United States of

America (GAAS). Our responsibilities under those standards are further described in the Auditor’s

Responsibilities for the Audit of the Financial Statements section of our report. We are required to be

independent of the Company, and to meet our other ethical responsibilities, in accordance with the

relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our audit opinions.

Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles

As described in Note 1 of the financial statements, the financial statements are prepared by the Company

using accounting practices prescribed or permitted by the Insurance Department of the state of Illinois,

which is a basis of accounting other than accounting principles generally accepted in the United States of

America. The effects on the financial statements of the variances between these statutory accounting

practices described in Note 1 and accounting principles generally accepted in the United States of

America, although not reasonably determinable, are presumed to be material and pervasive.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in

accordance with the accounting practices prescribed or permitted by the Insurance Department of the

state of Illinois. Management is also responsible for the design, implementation and maintenance of

internal control relevant to the preparation and fair presentation of financial statements that are free from

material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or

events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue

as a going concern for one year after the date that the financial statements are issued.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are

free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that

includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance

and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a

material misstatement when it exists. The risk of not detecting a material misstatement resulting from

fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional

omissions, misrepresentations, or the override of internal control. Misstatements are considered material

if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment

made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:

• Exercise professional judgment and maintain professional skepticism throughout the audit.

• Identify and assess the risks of material misstatement of the financial statements, whether due to

fraud or error, and design and perform audit procedures responsive to those risks. Such procedures

include examining, on a test basis, evidence regarding the amounts and disclosures in the financial

statements.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.

• Evaluate the appropriateness of accounting policies used and the reasonableness of significant

accounting estimates made by management, as well as evaluate the overall presentation of the

financial statements.

• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that

raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable

period of time.

We are required to communicate with those charged with governance regarding, among other matters,

the planned scope and timing of the audit, significant audit findings, and certain internal control-related

matters that we identified during the audit.

Omaha, Nebraska

April 19, 2024

OMSNationalInsuranceCompany,RiskRetentionGroup

StatementsofAdmittedAssets,LiabilitiesandCapitalandSurplus(StatutoryBasis)

December31,2023and2022

Theaccompanyingnotesareanintegralpartofthesestatutorybasisfinancialstatements.



2023 2022

Admitt edAsse ts

Bonds,atamortizedcost 300,453,103$ 254,956,792$

Commonstocks,atfair val ue 90,960,449 113,746,640

Investmentinsubsidiary,atca rryi ngval ue 82,795,041 78,128,165

Cash ,cas hequiva l ents andshortͲtermi nves tments 12,574,019 28,027,130

Cash andi nves tments 486,782,612 474,858,727

Premiums rec eivable 25,920,581 24,100,659

Otheramountsreceivableunder rei nsura ncecontra cts 2,809,553 692,692

Reinsurancerec overa bl eonpaidlossandlossadjustmentexpens es 2,094,634 7,994

Electronicdataprocessingequipment 39,973 31,446

Accruedinvestmenti ncome 2,354,064 1,769,175

Netreceivable

fromaffi li a tes 551,477 489,175

Othera s s ets 7,108,196 6,220,331

Totaladmitteda s s ets 527,661,090$ 508,170,199$

Reserveforlossesandlossadjustmentexpens es 158,550,560$ 149,471,405$

Unearnedpremiums 41,631,983 39,186,304

Accruedpremiumta xes 625,471 568,922

Federalincometa xes 15,421 250,283

Deferredtaxliability 5,401,695 6,110,103

Ced edreinsurancepayabl e 2,028,132 2,204,236

Provisionforrei nsura nce 138,134 63,542

Othera ccruedexpenses 13,531,730 12,365,376

Commissionspayabl e 1,283,245 1,205,560

Advancepremi ums 867,068 817,741

Totall i a bi l i ties 224,073,439 212,243,472

Preferredstock($1parvalue;authorized1,000,000shares;

issued997,901s hares ) 997,901 997,901

Commonstock

($ 1parvalue;authorized10,000shares;issued10,000s hares ) 10,000 10,000

Subordinatedsurplusdebentures 7,234,976 6,980,481

GrosspaidͲinandcontributeds urpl us 62,354,045 60,376,876

Unassigneds urpl us 331,406,546 315,494,998

Treasurystock,atcost(2,234and2,371sharescommonstock;882,471and

878,809sharespreferredstockin2023and2022,res pecti vely) (98,415,817) (87,933,529)

Totalcapi ta l ands urpl us 303,587,651 295,926,727

Totalliabilitiesandca pita l ands urplus 527,661,090$ 508,170,199$

Lia bilities

andCapitalandSurplus

Commi tmentsandContingenc ies(SeeNote15)

OMSNationalInsuranceCompany,RiskRetentionGroup

StatementsofIncome(StatutoryBasis)

YearsEndedDecember31,2023and2022

Theaccompanyingnotesareanintegralpartofthesestatutorybasisfinancialstatements.



2023 2022

Directpremiumswritten 78,876,850$ 74,064,214$

Reinsuranceceded (7,398,510) (11,363,911)

Netpremiumswritten 71,478,340 62,700,303

Changeinunearnedpremiums (2,445,679) (1,470,285)

Netpremiumsearned 69,032,661 61,230,018

Ex penses

Lossesandlossadjustmentexpenses 48,844,466 39,881,029

Otherunderwritingexpenses 25,691,782 23,344,899

Totalunderwritingexpenses 74,536,248 63,225,928

Underwritingloss (5,503,587) (1,995,910)

Netinvestmentincome 11,783,931 8,652,893

Netrealizedcapitalga ins,netofcapitalgainstax

of$1,778,411in2023and$159,525in2022 7,170,045 732,495

Otherincome(loss) 1,558,548 (200,289)

Income

beforefederal incometaxes 15,008,937 7,189,189

Fe deral income taxprovision 1,706,666 1,033,039

Netincome 13,302,271$ 6,156,150$

OMSNationalInsuranceCompany,RiskRetentionGroup

StatementsofChangesinCapitalandSurplus(StatutoryBasis)

YearsEndedDecember31,2023and2022

Theaccompanyingnotesareanintegralpartofthesestatutorybasisfinancialstatements.



Gross

Subordinated PaidͲinand

Preferred Common Surplus Contributed Unassigned

Stock Stock D ebentur es Sur plus Surplus Common Prefer red Tot al

Balance,December31,2021 997,901$ 10,000$ 7,305,312$ 58,319,714$ 334,098,141$ (85)$ (74,734,546)$ 325,996,437$

Netincome ͲͲ Ͳ Ͳ6,156,150 ͲͲ6,156,150

Purchase oftreasurystock ͲͲ Ͳ Ͳ Ͳ(268) (13,200,393) (13,200,661)

Saleoftreasurystock ͲͲ Ͳ2,057,162 Ͳ 402 1,361 2,058,925

Neti ssuance(redemption)of

subordinateddebentures ͲͲ(324,831) ͲͲͲͲ(324,831)

Changeinnetdeferredincometax ͲͲ Ͳ Ͳ(44,147) ͲͲ(44,147)

Changeinnon

Ͳadmittedassets ͲͲ Ͳ Ͳ(111,398) ͲͲ(111,398)

Changeinliabilityfor

unauthori ze dreinsurance ͲͲ Ͳ Ͳ(11,107) ͲͲ(11,107)

Changeinnetunrealized gains/losses

oni nvestme nts, netoftax ͲͲ Ͳ Ͳ(24,592,641) ͲͲ(24,592,641)

Balance,December31,2022 997,901 10,000 6,980,481 60,376,876 315,494,998 49 (87,933,578) 295,926,727

Netincome ͲͲ Ͳ Ͳ13,302,271 ͲͲ13,302,271

Purchase oftreasurystock ͲͲ Ͳ Ͳ Ͳ(378) (10,483,748) (10,484,126)

Saleoftreasurystock ͲͲ Ͳ1,977,169 Ͳ 515 1,323 1,979,007

Neti ssuance(redemption)of

subordinateddebentures ͲͲ254,495 ͲͲͲͲ254,495

Changein

netdeferredincometax ͲͲ Ͳ Ͳ400,242 ͲͲ400,242

ChangeinnonͲadmittedassets ͲͲ Ͳ Ͳ(989,892) ͲͲ(989,892)

Changeinliabilityfor

unauthori ze dreinsurance ͲͲ Ͳ Ͳ(74,592) ͲͲ(74,592)

Changeinnetunrealized gains/losses

oni nvestme nts, netoftax ͲͲ Ͳ Ͳ3,273,519 ͲͲ3,273,519

Balance,December31,2023 997,901$ 10,000$ 7,234,976$ 62,354,045$ 331,406,546$ 186$ (98,416,003)$ 303,587,651$

TreasuryStock

OMSNationalInsuranceCompany,RiskRetentionGroup

StatementsofCashFlows(StatutoryBasis)

YearsEndedDecember31,2023and2022

Theaccompanyingnotesareanintegralpartofthesestatutorybasisfinancialstatements.



2023 2022

Cashfromoperations

Premiumscollected,netof reinsurance 69,545,992$ 62,693,347$

Lossandlossadjustmentexpensespaid,net (41,851,951) (43,104,552)

Underwritingexpensespaid (24,391,195) (23,041,758)

Cashprov ide d(used)byunderwriting 3,302,846 (3,452,963)

Netinvestmentincome 11,504,438 9,023,065

Other( loss)income (558,309) 1,281,011

Federalincometaxespaid (3,719,939) (3,161,855)

Netcashprovided byoperations 10,529,036 3,689,258

Cashfrominvestments

Proceedsfrombondssold,matured orrepaid 137,262,801 37,011,691

Proceedsfromstocksold 39,575,590 12,106,602

Costof

bondsacquired (192,372,910 ) (39,440,035)

Costofstocksacquire d Ͳ (863,597)

Netcash(used)prov ided byinvesti ngactivities (15,534,519) 8,814,661

Cashfromfinancingsources

Capitalandpai d Ͳinsurplus,lesstreasurystock (8,708,716) (11,243,062)

Othercashuse d (1,738,912) (869,292)

Netcashusedby financingsources (10,447,628) (12,112,354)

Netchangeincash,cashequivalentsandshortͲterminve stments (15,453,111) 391,565

Cash,cashequivalentsandshortͲter minve stments

Beginningofyear 28,027,130 27,635,565

Endof year 12,574,019$ 28,027,130$

SupplementalS chedulesofNoncashinvestingandfinancingac tivities:

De benturescanceledonreturningpolicy h olders 203,597$ 101 ,326$

Totalnoncashactivities 203,597$ 101,326$

OMSNationalInsuranceCompany,RiskRetentionGroup

NotestoStatutoryBasisFinancialStatements 

7

1. Organization



OMSNationalInsuranceCompany,RiskRetentionGroup(the“Company”)isastockinsuranceand

holdingcompany,organizedunderthelawsoftheStateofIllinois.TheCompanyoperatesunder

theFederalLiabilityRiskRetentionActof1986andprovidesprimaryprofessionalliabilitycoverage

tomembersofthe

AmericanAssociationofOralandMaxillofacialSurgeons(the“Association”)

whomeettheCompany’sunderwritingstandards.



TheCompanyissues“claimsͲmade”policies,whichinsureagainstclaimsmadeduringthepolicy

period.AclaimisconsideredtobemadewhenitisfirstreportedtotheCompanyorwhenspecific

circumstancesare

reportedtotheCompany,whichtheinsuredbelievesmaygiverisetoaclaimin

thefuture.TheCompanyalsooffersafreeextendedreportingendorsementavailabletoeligible

policyholdersupondeath,disabilityorretirement.



TheCompanyowns100%ofthecommonstockofFortressInsuranceCompany(“Fortress”).

Fortressisa

stockinsurancecompanyorganizedunderthelawsoftheStateofIllinois.Fortress

wasincorporatedonMay22,1997andwasauthorizedtoinitiateoperationsonJune2,1997.

Fortresshaslicensesin50statesandtheDistrictofColumbiaandprovidesprimaryprofessional

liabilitycoveragetothegeneraldental

anddentalspecialtyfields.



TheCompanyowns100%ofthecommonstockofTheRiverAgency,Inc.(“theAgency”),astock

insuranceagencycompan yorganizedunderthelawsoftheStateofIllinois,incorporatedon

August20,2014andauthorizedtoinitiateoperationsonJanuary9,2015.Theoperationsand

financial

positionoftheAgencyarenonadmittedandimmaterialinrelationtotheCompany.



 2. SummaryofSignificantAccountingPolicies



Thesignificantaccountingpoliciesfollowed bytheCompanyaresummarizedbelow.



BasisofReporting

Theaccompanyingstatutoryfinancialstatementshavebeenpreparedinconformitywiththe

accountingpracticesandprocedures

oftheNationalAssociationofInsuranceCommissioners

(“NAIC”)asprescribedorpermittedbytheIllinoisDepartmentofInsurance(“DOI”),whichisa

comprehensivebasisofaccountingotherthanaccountingprinciplesgenerallyacceptedinthe

UnitedStatesofAmerica(“GAAP”).TheDOIrecognizesonlystatutoryaccountingpractices

(“STAT”)prescribedorpermitted

bytheStateofIllinoisfordeterminingandreportingthefinancial

conditionandresultsofoperationsofaninsurancecompanyanddeterminingitssolvencyunder

theIllinoisInsuranceLaw.TheNAIC’sAccountingPracticesandProceduresManual,Version2023,

effectiveMarch1,2023,assubsequentlyamended,hasbeenadoptedasa

componentof

prescribedorpermittedpracticesbytheStateofIllinois.PermittedSTATencompassesall

accountingpracticesnot soprescribedandmayvarybystateandamonginsure rs withinthesame

state.TheCompanycurrentlyutilizesnomaterialaccountingpracticesthatwouldbeconsidered

permitted,butnotprescribed.



Thestatutoryfinancial

statementsvarymateriallyfromfinancialstatementspreparedin

conformitywithGAAP.ThemostsignificantdifferencesbetweenSTATandGAAPinclude:



OMSNationalInsuranceCompany,RiskRetentionGroup

NotestoStatutoryBasisFinancialStatements 

8

a. Costsincurredinconnectionwithacquiringnewinsurancebusiness,includingsuchacquisition

costsascommissions,arechargedagainststatutoryearningsassuchcostsareincurred,whilethe

relatedincomefrompremiumsisdeferredandcreditedtostatutoryearningsoverthetermsof

therespectivepolicies.UnderGAAP,such

costs,totheextentrecoverable,wouldbedeferredand

amortizedovertheeffectiveperiodoftherelatedinsurancepolicies.



b. InvestmentsinthewhollyͲownedsubsidiariesareaccountedforontheequitybasis.Thechanges 

inunassignedsurplusorequityofthesubsidiariesarecrediteddirectlytotheCompany’s

unassigned

surplus.UnderGAAP,thesubsidiariesareconsolidatedandthenetincomesofthe

subsidiariesareincludedinconsolidatednetincome.



c. ReinsuranceassetsandliabilitiesarereportedonanetbasisunderSTAT;however,theyare

presentedgrossforGAAPpurposes.



d. Commissionsallowedbyreinsurersonbusinesscededare

reportedasincomewhenreceived

ratherthanbeingdeferredand,totheextentrecoverable,amortizedwithdeferredpolicy

acquisitioncosts,asrequiredunderGAAP.



e. Astatutoryliabilityisestablishedandchargedtosurplusforamountsduefromunauthorized

reinsurersinexcessoflettersofcredit,fundsheldandpremiumspayable

totheapplicable

reinsurancecompanieswhereasunderGAAP,anallowanceforamountsdeemeduncollectible

wouldbeestablishedthroughachargetoearnings.



f. Certainassets,designatedasnonͲadmitted,whicharenotrecognizedunderstatutoryaccounting

practices,suchaspropertyandequipment,internallyͲdevelopedsoftware,receivablesover90days

past

dueandcertaindefer redincometaxassetsarechargedtosurplusintheyeartheyare

incurredwhereasunderGAAPsuchassets,totheextentrecoverable,arerecognizedinthebalance

sheet.



g. Deferredincometaxes,netofavaluationallowance,areprovidedforthetaxeffectsofcertain

incomeand

expenseitemsrecognizedfor incometaxpurposesindifferentyearsthanforfinancial

reportingpurposes.Thechangeinthedeferredtaxassetorliabilityisreflectedinsurplus.GAAP

requiresthechangetobereportedinincome.Admittancetestingmayresultin achargetocapital

andsurplusfornonͲ

admittedportionsofthedeferr edtaxasset.Statetaxesarenotconsideredfor

statutorypurposesincalculatingadeferredtaxassetorliability,however,theyareconsideredfor

GAAPpurposes.



h. Thestatementsofcashflowsarepreparedinaccordancewithstatutoryaccountingpra cticeswhich

donotincludereconciliationsofnet

incometonetcashfromoperationsaswouldbeincluded

underGAAP.Also,cashandshortͲterminvestmentsinthestatementsofcashflowsrepresentcash

balancesandinvestmentswithinitialmaturities ofoneyearorless.UnderGAAP,the

correspondingcaptionofcashandcashequivalentsincludecashbalances

andinvestmentswith

initialmaturitiesofthreemonthsorless.



i.DebtsecuritiesarestatedatvaluesprescribedorpermittedbytheNAIC.Debtsecuritieswithan

NAICdesignationof1or2arecarriedatamortizedcost,whereasbondswithanNAICdesignation

of3through6areassignedspecific

yearͲendvaluesbytheNAICSecuritiesValuationOffice(“SVO”)

andarewrittendowntotheseassignedvalues(iflessthanamortizedcost)bychargingstatutory

OMSNationalInsuranceCompany,RiskRetentionGroup

NotestoStatutoryBasisFinancialStatements 

9

surplus.UnderGAAP,bondsareclassifiedintothreecategories:heldͲtoͲmaturity,availablefor

sale,andtrading.BondsheldͲtoͲmaturityarestatedatamortizedcost;bondsavailableforsaleare

carriedatfairvaluewithunrealizedgainsorlossesreported,netofrelatedtaxes,asacomponent

of

accumulatedothercomprehensiveincomeinequity;andbondsheldfortradingarereportedat

fairvalueandtheresultingunrealizedgainsandlossesarereportedinearnings.



 AsitrelatestoloanͲbackedandstructuredsecurities,shouldtheCompanydeterminethatthey

intendtosellasecurityornolonger

havetheabilityandintenttoretaintheinvestmentfora

periodoftimesufficienttorecovertheamortizedcost,thatsecurityshallbewrittendowntofair

value.UnderSTAT,iftheCompanysubsequentlychangestheirassertion,andnowbelievestheydo

notintendtosellthesecurityor

havetheabilityandintenttoretaintheinvestmentforaperiodof

timesufficienttorecovertheamortizedcost,thatsecuritywillcontinuetobecarriedatthelower

ofcostormarketwithanyfuturedecreasesinfairvaluechargedthroughoperationsuntilthe

securityisdisposed.ForGAAP

purposes,oncetheCompanyalterstheirassertion,thesecurity’s

amortizedcostbasiswillnotbedecreasedforfuturereductionsinfairvalueunlessanotherͲthanͲ

temporaryimpairmentisdeterminedtohaveoccurred.



 Commonstocksarereportedatfairvaluewiththechangeinunrealizedgainorloss,net

oftax,

recordedtounassignedsurplus.UnderGAAP,commonstocksarereportedatfairvaluewiththe

changeinunrealized gainorlossrecordedtonetincome.



j. Comprehensiveincomeisnotdeterminedforstatutoryreportingpurposes,whereas,forGAAP,

suchincomeispresented.



k. Subordinatedsurplusdebenturesareincluded

insurplusforstatutoryreportingbutareconsidered

liabilitiesforGAAP.



l. Certainotherreportedamountsareclassifiedorpresenteddifferentlyinstatutoryfinancial 

statementsthantheywouldbeunderGAAP.Statutoryrequirementsindicatethatthefinancial

statementsaretobepreparedinaformandusinglanguageandgroupings

substantiallythesame

astheannualstatementoftheCompanyfiledwiththeNAICand stateregulatoryauthorities.

Accordingly,thestatutoryfinancialstatementsarepresentedinaformatconsistentwiththefiled

annualstatementwhichdiffersfromtheformatoffinancialstatementspresentedunderGAAP.

Requiredstatutorydisclosuresthatare

notapplicabletotheCompanyarenotincludedinthe

notestothesestatutoryfinancialstatements.



Risksanduncertainties

CertainrisksanduncertaintiesareinherenttotheCompany’sdayͲtoͲdayoperationsandtothe

processofpreparingitsstatutoryfinancialstatements.Themoresignificantofthoserisksand

uncertainties

arepresentedbelowandthroughoutthenotestothestatutoryfinancialstatements.



Estimates:Thepreparationofthestatutoryfinancialstatementsrequiresmanagementtomake

estimatesandassumptionsthataffectthereportedamountsofassetsandliabilitiesand

disclosureofcontingentassetsandliabilitiesatthedateofthestatutoryfinancial

statements

andthereportedamountsofrevenueandexpensesduringthereportingperiod.Actualresults

coulddifferfromtheseestimates.



OMSNationalInsuranceCompany,RiskRetentionGroup

NotestoStatutoryBasisFinancialStatements 

10

LossReserves:TheCompanyestimateslossandlossadjustmentexpensesbasedonthe

accumulationofcaseestimatesfordirectclaimsreported,netofdeductionsofamountsfor 

reinsurancecededonreportedclaims,andsubsequenttoconsultationwiththeCompany’s

independentactuary.Actualresultscoulddifferfromtheseestimates.



Reinsurance:

ReinsurancecontractsdonotrelievetheCompanyfromitsobligationstoits

insureds.FailureofreinsurerstohonortheirobligationscouldresultinlossestotheCompany.

TheCompanyevaluatesthefinancialconditionofitsreinsurerstominimizeexposureto

significantlossesfromreinsurerinsolvencies.Managementbelievesthatanyliability

arising

fromthiscontingencywouldnotbematerialtotheCompany’sfinancialposition.



ExternalFactors:TheCompanyishighlyregulatedbythestateinwhichitisdomiciled,aswell

asstatesinwhichitdoesbusiness.Suchregulations,amongotherthings,limittheamountof

dividendsandimposerestrictions

ontheamountandtypesofinvestments.



RiskͲBasedCapital:TheNAIChasdevelopedpropertyͲcasualtyriskͲbasedcapital(“RBC”)

standardsthatrelateaninsurer’sreportedstatutorycapitalandsurplustotherisksinherentin

itsoveralloperations.TheRBCformulausesthestatutoryannualstatementtocalculatethe

minimum

indicatedcapitalleveltoprotecttheCompanyfromthevariousrisksthatitfaces.The

NAICmodellawcallsforvariouslevelsofregulatoryactionbasedonthemagnitudeofan

indicatedRBCcapitaldeficiency,ifany.TheCompanycontinuestomonitoritsinternalcapital

requirementsandtheNAIC’sRBCrequirements.

TheCompanyhasdeterminedthatitscapital

levelsareinexcessoftheminimumcapitalrequirementsforallRBCactionlevels.Management

believesthattheCompany’scapitallevelsaresufficienttosupportthelevelofriskinherentin

itsoperations.



ConcentrationsofGeographicandCreditRisk:TheCompany’stotaldirect

writtenpremiumof

$78,876,850fortheyearendedDecember31,2023includedamountswrittenforinsu redpartiesin

theStatesofNewYork(15.0 %),Florida(9.9%),California(8.0%),Tex as(5.8%) ,NewJersey(5.4%),

andPennsylvania(5.1%).



FDICLimit:TheCompanymaintainsitscash,cashequivalentsandshortͲterminvestmentswith



highqualityfinancialinstitutions.AccountsareguaranteedbytheFederalDepositInsurance

Corporation(“FDIC”)upto$250,000perinstitution.FromtimetotimetheCompany’scash,

cashequivalentsandshortͲterminvestmentsexceedthoseamountsguaranteedbythe

FDIC.TheCompanyhasnotexperiencedanylossesinsuchaccountsand

believesitisnot

exposedtoanysignificantriskoncashbalances.



Investments:TheCompanyinvestsinaprofessionallymanagedportfoliothatcontainsequity

anddebtsecuritiesofpubliclyͲtradedcompanies,U.S.Governmentobligations,government

agencies,stateandlocalgovernmentobligations,mutualfundsandmoneymarketfunds.Such

investmentsareexposed

tovariousriskssuchasinterestrate,marketorcredit.Duetothelevel

ofriskassociatedwithsuchinvestmentsandthelevelofuncertaintyrelatedtochangesinthe

valueofsuchinvestments,itisatleastreasonablypossiblethatchangesinrisksinthenearterm

wouldmaterially

affectinvestmentbalancesandtheamountsreportedinthestatutoryfinancial

statements.



OMSNationalInsuranceCompany,RiskRetentionGroup

NotestoStatutoryBasisFinancialStatements 

11

Thisportfolioiswidelydiversifiedamongvariousissu ers andindustriesandisnotdependentonthe

econom icstabilityofoneissuerorindustry.

ThecreditqualityofthebondportfolioatDecember31,2023and2022ispresentedinthe

followingchart:

Carrying Carrying

Value Percentage Value Percentage

Class1Ͳhighestquality 2 77,515 ,573$ 92.4% 245,789,245$ 96.4%

Class2Ͳhighquality 22,937,530 7.6% 9,167,547 3.6%

Class3Ͳmedi umquality Ͳ 0.0% Ͳ 0.0%

Class4Ͳlowqual ity Ͳ 0.0% Ͳ 0.0%

Class5Ͳlowerquality Ͳ 0.0% Ͳ 0.0%

Class6Ͳinorne ardef ault Ͳ 0.0% Ͳ 0.0%

Total

300,453,103$ 100.0% 254,956,792$ 100.0%

2023 2022

BondswithratingsfromAAAtoBBBasassignedbyStandard&Poor’sCorporationaregenerally

consideredasinvestmentgradesecurities.SomesecuritiesissuedbytheU.S.Governmentoran

agencythereof,arenotrated,butareconsideredtobeinvestmentgrade.TheNAICregards

U.S.Treasuriesandagenciesand

allAratingsasClass1(highestquality),BBBratingsasClass2

(highquality),BBratingsasClass3(mediumquality),BratingsasClass4(lowquality),allC

ratingsasClass5(lowerquality),andDratingsasClass6(inorneardefault).



Cash,CashEquivalents

andShortͲTermInvestments

ShortͲterminvestmentsarestatedatcostandmatureinoneyearorless.Cashequivalentsconsist

ofmoneyͲmarketfundsandU.S.treasurybillsandareshortͲterm,highlyliquidinvestments,with

anoriginalmaturityofthreemonthsorless,thatarebothreadilyconvertible

tocashandsonear

theirmaturitythattheypresentinsignificantriskofchangesinvalue.



Investments

Investments,excludingresidentialmortgageͲbackedsecuritiesnotguaranteedbyfederalor

federallysponsoredagencies,commercialmortgageͲbackedsecuritiesandotherloanͲbacked

securities,arestatedatvaluesprescribedbytheNAIC.Accordingly,bonds

designated1and2by

theNAICarestatedatamortizedcostusingthescientific(constantyield)interestmethodwith

bondscontainingcallprovisionsbeingamortizedtothecall ormaturitydate,whicheverresultsin

alowerassetvalue.LoanͲbackedbondsdesignated1and2bytheNAICare

statedatamortized

costusingthescientific(constantyield)interestmethodincludinganticipatedprepayments.Bonds

designated3through6arecarriedatthelowerofamortizedcostorfairvaluewiththechangerun

throughcapitalandsurplus,netofapplicabletaxes.



InvestmentsinresidentialmortgageͲbackedsecurities,commercialmortgageͲ

backedsecurities

andotherloanͲbackedsecuritiesnotguaranteedbyfederalorfederallysponsoredagenciesutilize

afinancialmodelcommissionedbytheNAICtodeterminecreditratingsandultimatelytheNAIC

designation.ThisfinancialmodelrequiresatwoͲstepprocess.TheCompanyfirstdeterminesthe

initialdesignationbaseduponeachsecurity’s

amortizedcostasapercentageofparinrelationto

securityspecificprescribedbreakpoints. Thisinitialdesignationdetermineswhetherthesecurity

willbestatedatamortizedcostorfairvalue,basedonthesamecriterianotedinthepreceding

paragraph.Thelowertheamortizedcostrelativetopar,the

highertheNAICdesignation,and

OMSNationalInsuranceCompany,RiskRetentionGroup

Notes



Statutory



Basis



Financial



Statements

 

12

morelikelythesecuritywillbecarriedatamortizedcost.For thosesecuritiesdesignated3Ͳ6,the

Companythendeterminesthefinaldesignationbaseduponeachsecurity’sfair valueinrelationto

thesamesecurityspecificprescribedbreakpointsusedinthefirststep.Thefinaldesignationis

used

forRBCpurposesaswellasforNAICdesignationdisclosure.



Unaffiliatedcommonstocksarestatedatfairvalue.Fairvalueofsecuritiestradedonnational

securitiesexchangesisvaluedatthelastreportedsalesprice.Thesevaluesdonotdiffer

significantlyfromthoseprescribedbytheSVO.Investmentsinthe

Company’sunconsolidated

subsidiariesarereflectedintheaccompanyingstatementsofadmittedassets,liabilitiesandcapital 

andsurplusbasedontheunderlyingstatutorysurplusorshareholders’equity,ifaudited.Changes

ininvestmentsintheunconsolidated,auditedsubsidiariesarerecordedasadirectincreaseor

decreasetosurplus.Dividendsarerecognizedasincome

whendeclared.



Investmentincomeisrecognizedasearned.Investmentincomeincludesamortizationof

premiumsandaccretionofdiscounts.Realizedgainsandlossesaredeterminedonaspecific

identificationbasisandrecordednetoftax.Unrealizedgainsandlossesresultingfromchangesin

thefairvalueofbonds,commonandpreferred

stockscarriedatfairvaluearereflectedinthenet

changeinunrealized appreciationofinvestment;acomponentoftheCompany’sunassigned

surplus,netofdeferredincometaxes.



DeclinesinfairvaluethatareconsideredotherͲthanͲtemporaryarechargedtorealizedlossesand

thecostoftheinvestmentisadjusted

toestimatedfairvalueintheperiodwhenthe

determinationismade.TheassessmentofotherͲthanͲtemporaryimpairmentsisperformedona

caseͲbyͲcasebasis.IndeterminingwhethertheselossesareexpectedtobeotherͲthanͲtemporary,

theCompanyconsidersseverityofimpairment,investmentratingsandanydowngrades,

duration

ofimpairment,forecastedfairvaluerecovery,andtheintentandabilityoftheCompanytohold

theinvestmentuntilthefairvaluehasrecovered.NootherͲthanͲtemporaryimpairmentwriteͲ

downswererecognizedin2023and2022.



ForloanͲbackedorstructuredsecurities,factorsconsideredbymanagementindetermining

whether

anotherͲthanͲtemporaryimpairmentexistsincludetheCompany’sstatedintenttonot

sell,theCompany’sabilitytoholdsuch investmentsuntilthefairvaluerecovers,andthe

discountedcashflowsofthesecuritybasedontheyieldatthedateofacquisition.IftheCompany

intendstosellor

iftheCompanydoesnothavetheabilitytoholdthesecurityforaperiodoftime

sufficienttorecoveritsamortizedcostbasis,anotherͲthanͲtemporaryimpairmentexists,andthe

securityiswrittendowntofairvaluewiththeamountofthewriteͲdownrecordedasarealized

loss.

IftheCompanydoesnotintendtosellthesecurityandhastheabilitytoholdthesecurityfor

aperiodoftimesufficienttorecovertheamortizedcostbasis,theCompanycalculatesthecash

flowsexpectedtobecollected. Inthiscalculation,theCompanycomparesthepresentvalueof

cashflowsexpectedtobecollected,discountedatthesecurity’seffectiveinterestrateatdateof

purchase,totheamortizedcostbasis.Ifthepresentvalueofcashflowsislessthantheamortized

costbasis,arealizedlossisrecordedforthedifference.Thepresentvalueofcashflowsthen



becomesthenewcostbasis.



TheCompanyusestheretrospectivemethodtoaccretetheamortizedcostbasistotheultimate

expectedcashflows.



OMSNationalInsuranceCompany,RiskRetentionGroup

Notes



Statutory



Basis



Financial



Statements

 

13

AtyearͲend2023,theCompanyhasassesseditsinvestmentportfoliotodeterminesubprime

exposureandtheCompanyhasdetermineditdoesnothaveanyexposureforsubprimemortgage

relatedrisks.TheCompanyowned$108,402,721(admittedvalue),$18,796,343(admittedvalue)

and$13,857,108(admittedvalue)ofresidentialmortgageͲbacked,commercial

mortgageͲbacked

andotherloanͲbackedandstructuredsecurities,respectively.Theseholdingsrepresented46.9%

ofthefixedͲincomeportfolio.Theindividualmortgageswhichcomprisethesesecuritiesconform

tostrictunderwritingstandards,areconsideredAAA/AAequivalents,andtheresidential

mortgagesfurthercarryanexplicitagencyguaranteeastorepaymentofprincipaland

interest.In

addition,withallbondsheldintheportfolio,theCompany’sinve stmentadvisormonitorsloanson

anongoingbasisfordelinquencyandlosstrendsthatcouldsignalcollateraldeterioration.

Premiums

Premiumsaredeferredandearnedonthedailyproratabasisoverthetermsoftherespective

policies.The

standardtermofapolicyistwelvemonths.



Unearnedpremiumsrepr e sentthatportionofpremiumswrittenwhichisapplicabletothe

unexpiredtermsofthepoliciesinforceasofthefinancialstatementdateandreservesestablished

inanticipationoffreeextendedreportingendorsementavailabletoeligiblepolicyholdersupon

death,

disabilityorretirement.



PremiumsReceivable

AtDecember31,2023and2022,theCompanyhadadmittedassetsof$25,920,581and

$24,100,659respectively,inuncollectedpremiumsreceivable.TheCompanyassessesthe

collectabilityofpremiumsreceivablesandthepotentialamountthatmaybecomeuncollectible.

Premiumspastdueninetydaysoftheoriginaldue

datearenonͲadmitted.



Reinsurance

TheCompanyreinsurescertainriskswithotherinsuranceorganizationsforthepurposeoflimiting

itsexposuretolossesonanysinglerisk.In2023and2022,theCompanyretainedthefirst

$1,000,000ofeachriskandreinsuredamountsinexcessofitsretention.Inaddition,

the

Company’sexcessoflossreinsurancecoveragehasanaggregatedeductibleof $1,862,547and

$1,760,018foryears2023and2022,respectively.



Premiumscededtoreinsurersonthesereinsurancecontractsarebasedprimarilyonapercentageof

premiumsearnedorwrittenontheunderlyingpolicieswrittenbytheCompany.Forcertain

contracts,

premiumscededonthesereinsurancecontractsaresubjecttoadjustmentbasedonthe

actuallossesincurred,subjecttocontractualminimumandmaximumamounts.CessionstoLloyd’sof

Londonwere53%and54%ofreinsurancecededbeforeanyadjustmentsforyears2023and2022,

respectively.



Accruedcededpremiumspayableandamounts

recoverablefromreinsurersarebasedon

actuariallydevelopedestimatesoflossesbaseduponpastexperienceoftheCompanymodifiedby

certainindustrydataofultimatedevelopedcosts,whichmaydifferfromcaseestimates.Changes

intheassumptionsusedinmakingtheseestimatesforsuchthingsaslegalactionsandchanges

in

actualexperiencecouldcausetheseestimatestochangeinthenearterm.Theseestimatesare

reviewedbymanagementand,asadjustmentsbecomenecessary,suchadjustmentsarereflected

inresultsofoperationsintheperiodinwhichtheyaredetermined.

OMSNationalInsuranceCompany,RiskRetentionGroup

Notes



Statutory



Basis



Financial



Statements

 

14

Thereserveforlossesandlossadjustmentexpensesisstatednetofamountscededof

$10,774,029and$12,739,835atDecember31,2023and2022,respectively.AtDecember31,

2023and2022,cessionstoLloyd’sofLondonwere77%and74%,respectively,inreinsurance

cededbeforeanyadjustments.



TheCompany

evaluatesthefinancialconditionofitsreinsurerstominimizeitsexposureto

significantlossesfromreinsurerinsolvencies.TheCompanyholdscollateralassecurityunder

reinsuranceagreementsintheformoflettersofcredi tforanyreinsurersnotsubjecttothe

regulationoftheDOI.Intheopinionofmanagement,allamounts

duefromreinsurersat

December31,2023and2022areconsideredrecoverable.Theestimatedunsecuredreinsurance

recoverablewithLloyd’sofLondonis$9,987,699and$9,884,239atDecember31,2023and2022,

respectively.



FederalIncomeTaxes

Currentincometaxesincurredarerecogni zedinthestatutorystatementsofope ration sbasedontax



returnsforthecurrent yearandtaxcontingenciesforthecurrentandallprioryears,totheext entnot

previouslyprovided.





Deferredtaxassetsandliab ili tiesarerecognizedforthefutu retaxconsequencesattributableto

differencesbetweenthestatutoryfinancialst at ement carryingamountsofexist ingassetsand

liabilitiesandtheirresp ectivetaxbases. Grossdeferredtaxassetsandliabilitie saremeasu redusing

enactedtaxratesandar e consideredforadmittedassetstatus

accordingtotheadmissibilitytestsas

setforthbytheNAIC.Changesindeferred taxassetsanddeferredtaxliabilities,includingchanges

attributabletochangesintaxrates,arerec ogn izedasacomponentofunassignedsu rplu s.



GrossdeferredincometaxassetsarereducedbyavaluationallowanceiftheCompanydeterminesit

ismorelikelythannotthatsomeportionorallofthegrossdeferredtaxassetswillnotbe

realized.Adjusteddeferredincometaxassetsarelimitedto(1)theamountoffederalincome

taxes

paidinprioryearsthatcanberecoveredthroughlosscarrybacksforexistingtemporarydifferences

thatre ve rseduringatimeframecorrespondingwithIRStaxlosscarrybackprovisions,nottoexceed

threeyears,plus(2)the lesseroftheremain inggrossdeferredincometaxassetsexpectedtobe

realizedwithinthree

yearsofthebalancesheetdateor15%ofcapitalandsu rp lus(subjecttocertain

limitations),excludinganynetdeferredinc ometaxassets,electronicdataprocessingequipmentand

operatingsoftwareandanynetpositivegoodwill,plus(3)theamountofremainin ggrossdeferred

incometaxassetsthatcanbeoffset

againstexistingdeferredinc ometaxliabilities.Therem ain ing

deferredincometaxassetsinexcessoftheabovearenonͲadmitted.Deferred incometaxesdonot

includeamountsforst atetaxes.



PropertyandEquipment

Equipment,furniture,leaseholdimprovementsandinternallydevelopedsoftwarearerecordedat

costlessaccumulateddepreciation.Equipmentis

depreciatedonthestraightͲlinemethodover

threeyears.FurnitureisdepreciatedonthestraightͲlinemethodoverfiveyearsandleasehold

improvementsaredepreciatedonthestraightͲlinemethodovertheremaininglifeofthelease.

Internalandexternalcostsincurredduringtheapplicationdevelopmentstagetodevelopinternal

use

computersoftwarearecapitalizedanddepreciatedon thestraightͲlinemethodoverfive

years.Theexternalcostsincludefeespaidtothirdpartiesforservicesprovidedtodevelopthe

softwareandtheinternalcostsincludepayrollandpayrollͲrelatedcostsincurredbyemployees

directlyassociatedwithdevelopment.Softwaredevelopmentcosts

forinternallydeveloped

OMSNationalInsuranceCompany,RiskRetentionGroup

Notes



Statutory



Basis



Financial



Statements

 

15

softwareof$950,513and$1,052,470werecapitalizedin2023and2022,respectively,recordedas

otherassets,andappropriatelynonͲadmitted.



ThefollowingsummarizesdepreciableassetsbyclassasofDecember31:

Accumulated Admitted NonͲAdmitted Depreciation/

Depreciation/ Carrying Carrying Amortization

Basis Amortization Basis Basis Expense

EDPequi pment 570,686 530,713 39,973$ Ͳ$ 33,053$

Capitalizedsoftwa re 802,574 801,992 Ͳ 582 1,1 68

Equi pment 305,921 303,632 Ͳ 2,289 247

Internallydevel o pedsoftwa r e 15,177,844 14,293,874 Ͳ 883,970 227,474

Furni ture 1,083,352 1,063,899 Ͳ 19,45 3 216,669

Leaseholdi mprovements 1,810,140 589,869 Ͳ 1,220,271 120,719

Tota l 19,750,517$  17,583,979$ 39,973$ 2,126,565$ 599,330$

Accumulated Admitted NonͲAdmitted Depreciation/

Depreciation/ Carrying Carrying Amortization

Basis Amortization Basis Basis Expense

EDPequi pment 529,106 497,660 31,446$ Ͳ$ 58,027$

Capitalizedsoftwa re 802,574 800,824 Ͳ 1,750 2,1 58

Equi pment 303,385

303,385 Ͳ Ͳ 8,060

Internallydevel o pedsoftwa r e 14,187,686 14,066,400 Ͳ 121,286 111,956

Furni ture 1,083,352 84 7,230 Ͳ 236,122 216,427

Leaseholdi mprovements 1,806,016 469,150 Ͳ 1,336,866 120,619

Tota l 18,712,119$  16,984,649$ 31,446$ 1,696,024$ 517,247$

2023

2022



OMS



National



Insurance



Company,



Risk



Retention



Group



Notes



Statutory



Basis



Financial



Statements

 

16

ReserveforLossesandLossAdjustmentExpenses

Thereserveforlossesandlossadjustmentexpensesisbasedupontheaccumulationofindividual

caseestimatesforreportedlosses,plusactuariallydevelopedestimates,basedupon past

experienceoftheCompanymodifiedbycertainindustrydata,ofultimatedevelopedcosts.

Changesin

theassumptionsusedinmakingtheseestimatesforsuchthingsaslegalactionsand

changesinactualexperiencecouldcausetheseestim atestochangeinthenearterm.These

estimatesarereviewedbymanagementand,asadjustmentsbecomenecessary,suchadjustments

arereflectedinresultsofoperationsintheperiodin

whichtheyaredetermined.Intheopinion of

theCompany’smanagement,thereserveforlossesandlossadjustmentexpensesissufficientto

meettheCompany’sliabilityforfutureclaimspayments.However,sincethereserveforlosses

andlossadjustmentexpensesisnecessarilybaseduponestimatesandderived,inpart,from

the

Company’shistoricalexperience,theultimatesettlementoftheseliabilitiesmaybesignificantly

greaterorlessthansuchestimates.



ThecomponentsofthereserveforunpaidlossesandlossadjustmentexpensesasofDecember

31:

2023 2022

Unpaidlosses:

Casebasis 27,494,886$ 29,162,292$

Reservesfordevelopment,

i ncludingincurredbutnotreported 82,288,078 76,604,379

Reinsurancerecoverableonunpaidlosses (8,089,014) (10,939,299)

101,693,950 94,827,372

Unpaidlossadjustmente xpenses: 

Casebasis 24,700,504 24,144,760

Reservesfordevelopment,

i ncludingincurredbutnotreported 34,841,121 32,299,809

ReinsurancerecoverableonunpaidLAE (2,685,015) (1,800,536)

56,856,61

 54,644,033

158,550,560$ 149,471,405$

PremiumDeficiencyReserves

Premiumdeficiencyreservesandtherelatedexpensearerecognizedwhenitisprobablethat

losses,lossadjustmentexpenseandpolicymaintenancecostsunderagroupofexistingcontra cts

willexceednetunearnedpremiumsandexpectedreinsurancerecoveries.TheCompany

evaluatedifapremiumdeficiencyreservewasneeded

anddeterminedthatnopremium

deficiencyreserveisrequiredatDecember31,2023.TheCompanydoesnotanticipate

investmentincomeasafactorindeterminingpremiumdeficiencyreserves.



OMS



National



Insurance



Company,



Risk



Retention



Group



Notes



Statutory



Basis



Financial



Statements

 

17

3. Investments



Theamortizedcost,grossunrealized gains,grossunrealizedlossesandestimatedfairvalueof

investmentsatDecember31:

Costor Gross Gross E stimated

Amortized Unrea lized Unrealized Fair

Cost Ga ins Losses Va lue

U.S.Treasurysecuritiesandobligations

ofU.S.Governmentcorpora ti ons

andagencies:

Guar anteed 10,042,239$ 91,941$ Ͳ$ 10,134,180$

States,territories,andpossessions 6,643,964 56,566 553,931 6,146,599

Politicalsubdivisionsofstates,territories

andposs es s i ons 26,883,790 6,360 3,721,347 23,168,803

Specialrevenueanda s s es s ments 39,786,868 372,400 2,993,222 37,166,046

I ndustr ial andmi s cel laneous 76,040,070 2,039,158 1,285,894 76,793,334

ResidentialmortgageͲba cked 108,402,721 2,060,357 2,020,449 108,442,629

CommercialmortgageͲbacked 18,796,343 665,309 Ͳ 19,461,652

OtherloanͲbackedsecuri ti es 13,857,108 92,456 1,049,238 12,900,326

Totalbonds andnotes 300,453,103 5,384,547 11,624,081 294,213,569

Commonstocks 39,495,585 51,464,864 Ͳ

90,960,449

Totali nves tments 339,948,688$ 56,849,411$ 11,62 4,081$ 385,174,018$

Costor Gross Gross E stimated

Amortized Unrea lized Unrealized Fair

Cost Ga ins Losses Va lue

States,territories,andpossessions 8,207,840$ Ͳ$ 880,089$ 7,327,751$

Politicalsubdivisionsofstates,territories

andposs es s i ons 65,178,496 20,015 8,729,244 56,469,267

Specialrevenueanda s s es s ments 88,757,920 158,555 8,108,636 80,807,839

I ndustr ial andmi s cel laneous 55,730,683 Ͳ 4,992,418 50,738,265

ResidentialmortgageͲba cked 24,904,677 23,667 2,176,773 22,751,571

OtherloanͲbackedsecuri ti es 12,177,176 Ͳ 615,635 11,561,541

Totalbonds andnotes 254,956,792 202,237 25,502,795 229,656,234

Commonstocks 60,814,321 53,255,244 322 ,925 113,746,640

Totali nves tments 315,771,113$ 53,457,481$ 25,82 5,720$ 343,402,874$



2023

2022

TheamortizedcostandestimatedfairvalueofdebtsecuritiesatDecember31,2023,by

contractualmaturity,areshownbelow.Expectedmaturitiesmaydifferfromcontractual

maturitiesbecauseborrowersmayhavetherighttocallorprepayobligationswithorwithoutcall

orprepaymentpenalties.

Costor Estimated

Amortized Fair

Cost Value

Duein1yearorless 16,851,789$ 16,633,064$

Dueafter1yearthrough5years 52,535,904 51,610,552

Dueafter5yearsthrough10years 89,577,276 84,732,010

Dueafter10yearsthrough20years 431,962 433,336

ResidentialmortgageͲbacked 108,402,721 108,442,629

CommercialmortgageͲbacked 18,796,343 19,461,652

OtherloanͲback edsecurities 13,857,108 12,900,326

Totalde b tsecurities 300,453,103$ 294,213,569$





OMS



National



Insurance



Company,



Risk



Retention



Group



Notes



Statutory



Basis



Financial



Statements

 

18

ThefollowingtablesshowestimatedfairvalueandgrossunrealizedlossesfortheCompany’s

investmentsthatarenotdeemedtobeotherͲthanͲtemporarilyimpaired,aggregatedbyindividual

categoryandlengthoftimethatindividualsecuritieshavebeeninacontinuousunrealizedloss

position,atDecember31:

2023

Estimated Gross Estimated Gross Estimated Gross

F air Unrealized F air Unrealized Fair Unrealized

Value Losses Value Losses Value Losses

States,territories ,andpossessions Ͳ$ Ͳ$ 3,130,033$ 553,931$ 3,130,033$ 553,931$

Politicalsubdivisionsofstates,

territori es andpos s es si ons 2,393,640 15,918 18,768,803 3,705,429 21,162,443 3,721,347

Specialre venue andassessments Ͳ Ͳ 25,060,542 2,993,222 25,060,542 2,993,222

Indus tri a landmiscellaneous Ͳ Ͳ 16,269,247 1,285,894 16,269,247 1,285,894

Re sid e n ti almo rtga geͲbacked 14,021,609 154,855 12,160,073 1,865,594 26,181,682 2,020,449



OtherloanͲba ckedsecurities Ͳ Ͳ 9,871,101 1,049,238 9,871,101 1,049,238

To talbon ds andnotes 16,415,249 170,773 85,259,799 11,453,308 101,675,048 11,624,081

To tali nves tme nts 16,415,249$ 170,773$ 85,259,799$ 11,453,308$ 101,675,048$ 11,624,081$

2022

Estimated Gross Estimated Gross Estimated Gross

F air Unrealized F air U nrealized Fair Unrealized

Value Losses Value Losses Value Losses

States,territories ,andposse s s ions 4,166,964$ 119,675$ 3,160,787$ 760,414$ 7,327,751$ 880,089$

Politicalsubdivisionsofstates,

territori es andpos s es s i ons 11,725,220 1,077,553

41,468,047 7,651,691 53,193,267 8,729,244

Specialre venue anda s ses s me nts 22,729,528 2,780,346 45,300,832 5,328,290 68,030,360 8,108,636

Indus tri a landmi s cell a neous 13,141,213 472,902 37,597,052 4,519,516 50,738,265 4,992,418

Re sid e n ti almo rtga geͲba cke d 8,648,743 300,773 10,957,085 1,876,000 19,605,828 2,176,773

OtherloanͲba ckeds ecurities 11,119,610 525,684 441,931 89,951 11,561,541 615,635

To talbon ds andnotes 71,531,278 5,276,933 138,925,734 20,225,862 210,457,012 25,502,795

Common s tocks 9,278,136 322,925 Ͳ Ͳ 9,278,136 322,925

To tali nves tme nts 80,809,414$ 5,599,858$ 138,925,734$ 20,225,862$ 219,735,148$

 25,825,720$

12MonthsorLess Morethan12Months Total



TheCompanyevaluatesimpairmentateachreportingperiodforeachsecurity(otherthanloanͲ

backedorstructuredsecurities)wherethefairvalueoftheinvestmentislessthanitsamortized

cost.Itisexpectedthatthesecuritieswouldnotbesettledatapricelessthantheamortizedcost

theinvestment,astheCompanyhastheabilityandintenttoholdtheinvestmentuntil

forecastedrecovery.TheCompanyevaluatedthecreditratingsoftheseholdings,notingneither a

significantdeteriorationsincepurchasenorotherfactorswhichmayindicateanotherͲthanͲ

temporaryimpairment,suchasthelengthoftime

andextenttowhichfairvaluehasbeenless

thancost,thefinancialconditionandnearͲtermprospectsoftheissueraswellasspecificeventsor

circumstancesthatmayinfluencetheoperationsoftheissuer,andtheCompany’sintentand

abilitytoholdtheinvestmentforasufficienttimein

ordertoenablerecoveryofourcost.



TheCompanyevaluatedeachloanͲbackedandstructuredsecurityforimpairmentwherethefair

valueoftheinvestmentwaslessthanitsamortizedcost.ForthosesecuritiesthattheCompany

doesintendtosellordoesnothavetheabilitytoholdthe

securityuntilrecovery,animpairmentis

recordedequaltothedifferenceofamortizedcostandfairvalue.However,theCompanyhadno

OMS



National



Insurance



Company,



Risk



Retention



Group



Notes



Statutory



Basis



Financial



Statements

 

19

suchsecuritiesinwhichanimpairmentneededtoberecognized.ForallotherloanͲbackedand

structuredsecurities,theCompanydevelopedassumptionsaroundprepaymentspeeds,expected

defaultratesandthevalueoftheunderlyingcollateral.Theseassumptionswereusedtodevelop

expectedcashflowswhichwerediscountedatthe

effectiveyieldatthedateofacquisition(or

mostrecentimpairment).Thesemodeledcashflowswerecomparedagainstthecurrent

amortizedcostbasis.Iftheexpecteddiscountedcashflowswerelessthantheamortizedcost

basis,thesecuritywaswrittendowntothediscountedcashflowamount,withthedifference

recorded

asarealizedloss.Asaresult,noamountswererecordedasotherthantemporary

impairments.



TheCompany’sinvestmentincomefortheyearsendedDecember31:



2023 2022

Bondsandnotesinterest 7,671,045$ 5,074,688$

Cash,cashequiv al entandshortͲterminvestments 829,085 302,872

Equitiesdividends 3,562,937 3,579,604

Totalsecuritiesinterestanddividends 12,063,067 8,957,164

Lessinvestmentexpenses 279,136 304,271

Netinvestmentincome 11,783,931$ 8,652,893$



Proceedsfromsalesofdebtsecuritieswere$107,437,658and$0in2023and2022.Proceedsfrom

salesofequitysecuritieswere$39,575,590and$12,106,602in2023and2022,respectively.Gross

realizedgainsandlossesfortheyearsendedDecember31:



Gross Gross Gross Gross

Realized Realized Realized Realized

Gains Losses Gains Losses

Debtsecuriti esͲsale s 2,981$ 9,311,380$ 12,227$ Ͳ$

Equiti esͲ sales 18,313,807 56,952 1,649,582 769,789

Totalsecuri ti escapitalgains(losses) 18,316,788$ 9,368,332$ 1,661,809$ 769,789$

2023 2022



TheCompanyhasnoinvestmentsinjointventures,partnershipsorlimitedliabilitycompanies.



TheCompanydoesnotengageinanyoffͲbalanceͲsheet,derivativeorhedgingactivities.



 4. InvestmentinSubsidiary



TheCompany’sinvestmentinsubsidiaryiscomposedofthestatutorynetworthofFortress.The

netincomeand

financialpositionoftheAgencyareimmaterialtotheCompanyandare

nonadmittedduetobeingunaudited.



AtDecember31,theinvestmentinFortressonthebalancesheetiscomposedof:



2023 2022

Statutory surplusofFortress 82,795,041$ 78,128,165$

OMS



National



Insurance



Company,



Risk



Retention



Group



Notes



Statutory



Basis



Financial



Statements

 

20

SummarizedstatutoryinformationforFortressisinthetablebelowfortheyearsended

December31:

OMSNIC

Carryi ng

Ne tIncome Assets Liabilitie s Value

2023 6,952,530$ 167,802,951$ 85,007,910$ 82,795,041$

2022 1,785,902$ 159,290,810$ 81,162,645$ 78,128,165$

Fortress’nonͲadmittedassetswere$283,880and$481,521in2023and2022,respectively.

5. FairValuesofFinancialInstruments



Thefollowingmethodsandassumptionswereusedtoestimatethefairvalueofeachclassof

financialinstrumentsforwhichitispracticabletoestimatethatvalue:



Cash,cashequivalents

andshortͲterminvestments:Thecarryingamountapproximatesfair

valuebecauseoftheshortͲtermmaturityofthoseinvestments.



Investmentsecurities:Thefairvaluesofinvestmentsecuritiesareestimatedbasedonmarket

pricespublishedbytheSVO,orintheabsenceoftheSVOpublishedmarkets,thelastreported

sales

pricesforthosesecuritiestradedonnationalsecuritiesexchange.Forsecuritiesnot

activelytraded,fairvaluesareestimatedbaseduponyieldsandotherfactorssuchasdiscounted

cashflowmodelsandsimilartechniques.



TheCompany’sfinancialassetsandliabilitiescarriedatfairvaluehavebeenclassified,for

disclosurepurposes,based

onahierarchythatprioritizestheinputstovaluationtechniquesused

tomeasurefairvalueintothreebroadlevels.Thehierarchygivesthehighestprioritytofairvalues

determinedusingunadjustedquotedpri ces inactivemarketsforidenticalassetsorliabilities

(Level1)andthelowestprioritytofairvaluesdetermined

usingunobservableinputs(Level 3).An

asset’sorliability’sclassificationisdeterminedbasedonthelowestlevelinputthatissignificantto

itsmeasurement.Forexample,aLevel3fairvaluemeasurementmayincludeinputsthatareboth

observable(Levels1and2)andunobservable(Level3).Thelevelsof

thefairvaluehierarchyare

asfollows:



Level1–Unadjustedquotedpricesinactivemarketsforidenticalassetsorliabilitiesthatthe

Companyhastheability toaccessatthemeasurementdate.



Level2–ValuationsderivedfrominputsotherthanquotedmarketpricesincludedwithinLevel1

that

areobservablefortheassetorliability,eitherdirectlyorindirectly,suchas:



a) Quotedpricesforsimilarassetsorliabilities inactivemarkets.

b) Quotedpricesforidenticalorsimilarassetsorliabilitiesinmarketsthatarenotactive. 

c) Inputsotherthanquotedpricesthatareobservablefor

theassetorliability.

d) Inputs that arederived principally from or corroboratedby observable market data by

correlationorothermeans.



OMS



National



Insurance



Company,



Risk



Retention



Group



Notes



Statutory



Basis



Financial



Statements

 

21

Level3–Valuationsarederivedfromtechniquesthatrequiresignificantunobservableinputs.The

unobservableinputsreflecttheCompany’sownassumptionsabouttheassumptionsthatmarket

participantswoulduse inpricingtheassetorliability.



Thefollowingsummarizesthecarryingvaluesandfairvaluesofalladmittedassetsthat

are

financialinstrumentsexcludingthosethatareaccountedforundertheequitymethodasof

December31,2023and2022.ThefairvaluesarealsocategorizedintothethreeͲlevelhierarchy.



2023 CarryingValue FairValue Level1 L evel2 Level3

NetAsset

Value (NAV)

Bonds 300,453,103$ 294,213,569$ 10,134,180$ 284,079,389$ Ͳ$ Ͳ$

Commons tocks 90,960,449 90,960,449 90,960,449 Ͳ Ͳ Ͳ

Cash,ca s hequivalents

andshortͲtermi nves tments 12,574,019 12,574,019 12,574,019 Ͳ Ͳ Ͳ

Tota l 403,987,571$ 397,748,037$ 113,668,648$ 284,079,389$ Ͳ$ Ͳ$

FairValueHierarchyLevel

2022 CarryingValue Fair Value Level1 L evel2Level3

NetAsset

Value(NAV)

Bonds 254,956,792$ 229,656,234$ Ͳ$ 229,6 56,234$ Ͳ$ Ͳ$ 

Commonstocks 1 13,7 46,640 113,746,640 113,746,640 Ͳ Ͳ Ͳ

Cash,cashequivalents

andshortͲterminvestments 28,027,130 28,032,453 28,032,453 Ͳ Ͳ Ͳ

Tota l 396,730,562$ 371,435,327$ 141,779,093$ 229,656,234$ Ͳ$ Ͳ$

FairValueHierarchyLevel

6. ReserveforLossesandLossAdjustmentExpenses



Activityinthereserveforlossesandlossadjustmentexpensesissummarizedasfollows:



2023 2022

ReservesonunpaidlossandLAEatJanuary1 149,471,405$ 152,690,995$

Incurredrelatedto

Currentyear 54,615,746 47,669,977

Prioryears (5,771,280) (7,788,948)

Totalincurred 48,844,466 39,881,029

Paidrelatedto

Currentyear 2,329,588 2,193,696

Prioryears 39,522,363 40,910,856

Totalpaid 41,851,951 43,104,552

ReinsurancerecoveredonpaidlossandLAE 2,086,640 3,933

ReservesonunpaidlossandLAEatDecember

31 158,550,560$ 149,471,405$

In2023and2022,theestimatedcostoflossandlossadjustmentexpensesattributabletoinsured

eventsofprioryearsdecreasedbyanet$5,771,280and$7,788,948,respectively.Management

reviewsthereserveactivityonanaccidentyearbasisasadditionalinformationisreceived

regardingunpaidindividualclaims.Unfavorabledevelopmentin

morerecentyearswasoffsetby

favorabledevelopmentinmorematureyearsresultingintheoveralldecreasestothereserves

relatedtoprioryears.

OMS



National



Insurance



Company,



Risk



Retention



Group



Notes



Statutory



Basis



Financial



Statements

 

22

Increasesordecreasesofthisnatureoccurasaresultofclaimsettleme ntsduringthecurrentyear,

andasadditionalinformationisreceivedregardingunpaidindividualclaims.Recentloss

developmenttrendsarealsotakenintoaccountinevaluatingtheoveralladequacyofunpaid

lossesandlossadjustmentexpenses.



7.

DividendRestrictions,CapitalizationandSurplus

WithoutpriorapprovaloftheDirectoroftheDOI,ordinarydividendstoshareholdersarelimited

bythelawsofIllinoistoanamountthatisbasedonrestrictionsrelatingtotheCompany’s

statutorysurplus.StatutorysurplusatDecember31,2023was$303,587,651.Themaximum

dividend

payoutwhichcanbemadeoneithercommonstockorpreferredstock,withoutprior

approval,asofDecember31,2023is$30,358,765.Nodividendsmaybepaidoncommonshares

orpreferredsharesifpaymentsforrepurchasesofpreferredshares,asdiscussedinNote12,are

suspendedbylaw,regulation,order

oftheDOI,theBoardofDirectorsorifthenumberof

shareholdersisfewerthan1,000.Additionally,undertheCompany’sbylaws,dividendscannotbe

paidoncommonstockunlessdividendsofatleast$8.00persharehavebeenpaidonpreferred

stockinthatyear.Theannualmaximumdividend

payableoncommonstockis$0.10pershare.As

requiredbytheIllinoisInsuranceCode,theCompanymustmaintainminimumcapitalof

$1,000,000andminimumpolicyholders’surplus of$500,000.



TheportionofunassignedfundsrepresentedbyeachitembelowatDecember31isasfollows:



2023 2022

Unrealizedgains 81,321,222$ 78,355,869$

Netdeferredtaxliabilities (5,401,695)$ (6,110,103)$

NonͲadmittedassets (8,496,640)$ (7,506,748)$



Theunrealizedgainsarenotnetoftheapplicabledeferredtaxliabilityof$10,807,621and

$11,115,787for2023and2022,respectively.

 8. RelatedͲPartyTransactions



Otherunderwritingexpensesinclude$750,000in2023and$600,000in2022paidtothe

Association,underanendorsementandroyaltyagreementinconnectionwith

theadvertising,

marketing,promotionandsaleofprofessionalliabilityinsurance.TheCompanyhasan

endorsementandroyaltyagreementwiththeAssociationthatexpiresDecember31,2026.Under

thetermsoftheendorsementandroyaltyagreement,theCompanypaystheAssociationa

monthlyfeeof$50,000.AoneͲtimespecialbonus

of$150,000waspaidtotheAssociationin

2023.ThebonuswascontingentuponthetotalnumberofOMSNICinsuredsexceeding5,171

policyholders;thismilestonewasmetinAugust2023.



In2023and2022,theCompanyreceived$1,600,000and$1,500,000,respectively,incommon

stockdividendsfromFortress.In2023,theCompany

received$300,000incommonstock

dividendsfromTheRiverAgency.



OMS



National



Insurance



Company,



Risk



Retention



Group



Notes



Statutory



Basis



Financial



Statements

 

23

AtDecember31,2023and2022,theCompanyreported$551,477and$489,175,respectively,as

netamountsduefromaffiliates.Thenettermsofthequarterlysettlementrequirethatthese

amountsaresettledwithin45days.



TheCompanyandFortressenteredintoareinsuranceintermediaryagreementeffectiveAugust1,

2006.

Underthisagreement,theCompanyperformsallfunctionsandactivitiesnecessarytoactas

areinsuranceintermediaryonbehalfofFortressincludingcontactingthereinsurancemarketsand

negotiatingreinsuranceagreementsonbehalfofFortress.TheCompanyretainedintermediary

incomeof$99,211and$120,112in2023and2022,respectively.



TheCompany

entered

intoacapitalsupport(keepwell)agreementeffectiveDecember1,2013

withFortress.Underthisagreement,theCompanyagreestoprovideFortresscashequitycapital

contributionstoallowFortresstoqualifyandretainits“A”ratingwithA.M.Best.Thetermsofthis

agreementshallcontinueinfullforceand

effectuntilNovember30,2024.Oneachanniversaryof

theeffectivedate,thisAgreementshallautomaticallyrenewforanadditionaltwelveͲmonth

period.



TheCompanyanditssubsidiarycompany,Fortress,enteredintoamanagementagreement

effectiveJanuary1,2014.Underthisagreement,pe rsonnelexpensesarereimbursedin

accordancewiththe



regulationsoftheIllinoisAdministrativeCode,(215ILCS5/131.20a).The

reimbursedcostswere$2,734,339and$2,810,699in2023and2022,respectively.



TheCompanyandFortressenteredintoacostͲsharingagreementeffectiveJanuary1,2021.Under

thisagreement,rent,utilities,andinsuranceexpensesareapportionedinaccordancewiththe

regulations



relatingtoJointExpensesoftheIllinoisAdministrativeCode,(50Ill.Adm.Code

903.310).Theallocatedcostswere$351,886and$342,302in2023and2022,respectively.



 9. FederalIncomeTaxes



TheCompanyfilesaconsolidatedfederalincometaxreturnasaninsurancecompanywithits

subsidiaries.Themethodof

allocation

betweenthecompaniesissubjecttowri ttenagreement,

approvedbytheBoardofDirectors.Intercompanytaxbalancesaresettledquarterlywithin45

daysandthefinalsettlementfortheyearismade15daysafterthefilingofthereturn.



Thecomponentsofthenetdeferredtaxliability(DTL)

December31areasfollows:

Ordinary C apital Total Ordinary C apital Total Ordinary Capital Total

GrossDeferredTaxAss ets

6,350,059$ 6,350,059$ 5,879,427$ 10 2,066$ 5,981,493$ 470,632$ (102,066)$ 368,566$

StatutoryValuationAllowance

Adj ustments

Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ

Adj ustedGros sDTA

6,350,059 Ͳ 6,350,059 5 ,879,42 7 102,066 5,981,493 4 70,632 (102,066) 368,566

DeferredTaxAss etsNona dmi tted

SubtotalNetA dmi ttedDeferredTax

Assets

6,350,059 Ͳ

6,350,059 5,879,42 7 102,066 5,981,493 470,632 (102,066) 368,566

DeferredTaxLiability

944,133 10,807,621 11,751,754 974,508 11,117,088 12,091,596 (30,37 5) (309,467) (339,8 42)

NetAdmittedDTA(DTL)at21%

5,405,926$ (10,807,621)$ (5,401,695)$ 4,9 04,919$ (11,01 5,022)$ (6,110,1 03)$ 501,007$ 207,401$ 70 8,408$

2023 2 022 Change



OMS



National



Insurance



Company,



Risk



Retention



Group



Notes



Statutory



Basis



Financial



Statements

 

24

AsummaryoftheCompany’sadjustedadmittedgrossDTAcalculationbycomponentandcharacter

fortheyearsendedDecember31,2023and2022asoutlinedinSSAP101areasfollows:



Component Ordinary Capital Total Ordinary Capital Total Ordinary Capital Total

a. Federalincometaxespaidinpr ioryears

recoverablethroughlosscar rybacks $2,751,648$Ͳ$2,751,648$2,973,250$Ͳ$2,973,250$(221,602) $Ͳ$(221,602)

b. Adjus tedGrossDTAExpectedtoberea lized

(excludingtheamountofDTAsfroma,above)

afterappli c ationofthethres hol dlimitation

(thel esserofb.i.

andb.ii.below) 1,135,876 Ͳ 1,135,876 827,686 Ͳ827,686 308,190 Ͳ308,190

bi. Adj ustedGrossDTAExpectedtoberea lized

followingthebalancesheetda te 1,135,876 Ͳ1,135,876 827,686 Ͳ827,686 308,190 Ͳ308,190

bii AdjustedGrossDTAallowedperli mitation

threshold N/AN/A 45,538,148N/AN/A 44,389,009N/AN/A 1,149,139

c. AdjustedGrossDTAs(excludinga.andb.

above)

OffsetbyDTLs 2,462,535 Ͳ 2,462,535 2,078,491 102,066 2,180,557 384,044 (102,066) 281,978

$6,350,059$Ͳ$6,350,059$5,879,427$102,066$5,981,493$470,632$(102,066) $368,566

Deferredtaxassetsadmi ttedastheres ul tof

applicationofSSAPNo.101Total(a +b+c)

2023 2022 Change



2023 2022

Ratiopercentage usedtodetermin erecoverype riodthreshold

limitationamount 1215% 1072%

Amountofadjustedcapitalandsurpl ususedtode te rmi ne

recoveryperiod andthresholdlimitation 303,547,678$ 295,895,281$

For2023and2022,theCompanydeterminedavaluationallowancewasnotnecessaryandnotax

planningstrategieswereused.



Alldeferredtaxliabilities(DTLs)havebeenrecognizedandnoneoftheexceptionsdescribedin

paragraph7ofSSAP101applytotheCompany.



OMS



National



Insurance



Company,



Risk



Retention



Group



Notes



Statutory



Basis



Financial



Statements

 

25

ChangesinmaincomponentsoftheDTAsandDTLsatDecember31areasfollows:



2023 2022 Change

DTAsresultingfrombook/taxdifferencesin:

Ordinary

Reserves 2,470,532$ 2,315,260$ 155,272$

Deferredcompensation 2,094,568 1,883,998 210,570

Unearnedpremiums 1,748,542 1,645,824 102,718

Advance premiums 36,417 34,345 2,072

Capital

Investmentimpairmentonequities Ͳ 102,066 (102,066)

TotalDT Asat21% 6,350,059$ 5,981,493$ 368,566$

DTLsresultingfrombook/taxdifferencesin:

Ordinary

Marketdiscountaccr etion(bonds) 293,633$ 236,676$ 56,957$

2017"TCJA"TransitionAdjustment 203,292 304,937 (101,645)

Depreciableassets 408,019 390,311 17,708

Accrueddividends 39,189 42,584 (3,395)

Capital

Bonds Ͳ 1,301 (1,301)

Commonstocks 10,807,621 11,115,787 (308,166)

TotalDT L sat21% 11,751,754$ 12,091,596$ (339,842)$

TotalNetDTL (5,401,695)$ (6,110,103)$ 708,408$



Thechangeinnetdeferredincometaxesiscomprisedofthefollowing:



2023 2022 Change

TotalDTAs 6,350,059$ 5,981,493$ 368,566$

TotalDTLs 11,751,75

12,091,596 (339,842)

NetDTLs (5,401,695)$ (6,110,103)$ 708,408

Taxe ffectofchangesinunrealizedgainsandlosses (308,166)

400,242$

Changeinnetdef erredincometax,e xcludingtax

effectofchangesinunre alizedgainsandl osse s

OMS



National



Insurance



Company,



Risk



Retention



Group



Notes



Statutory



Basis



Financial



Statements

 

26

Theprovisionforfederalincometaxesincurredisdifferentfromthatwhichwouldbeobtainedby

applyingthestatutoryfederalincometaxratetoincomebeforeincometaxes.Thesignificant

itemscausingthisdifferenceareasfollows:

 2023 2022

Provisioncomputedatstatutoryrate 3,525,344$ 21.0 % 1,543,230$ 21.0 %

Taxexemptincomededuction (112,603) (0.7) (114,812) (1.4)

Dividendsreceiveddeduction (506,202) (3.0) (441,291) (6.0)

Meals 18,532 0.1 190 Ͳ

Other 159,764 1.0 249,394 3.3

3,084,835$ 18.4

1,236,711$ 16.9

Fe d eralincometaxes 1,706,666$ 10.2

1,033,039$ 14.1

Realizedcapitalgains tax 1,778,411 10.6 159,525 2.2

Fe d eralincometaxesincurred 3,485,077 20.8 1,192,564 16.3

(400,242) (2.4) 44,147 0.6

Totalstatutoryincometaxes 3,084,835$ 18.4 % 1,236,711$ 16.9 %

Changeinnetdeferredincome tax,excludin g

taxeffectofunrealizedga ins(losses)

2023

Effective

TaxRate

2022

Effective

TaxRate



TheprovisionsforfederalincometaxesincurredonearningsfortheyearsendedDecember31

are:

2023 202

Currentincometaxexpense(benefit) 1,715,137$ 1,044,981$

Adjustme ntstopri oryeartaxes (8,471) (11,942)

Subtotal 1,706,66

1,033,039

Realizedcapitalgainstax(benefit) 1,778,411 159,525

Fe deral income taxesincurred 3,485,077$ 1,192,564$

Thefollowingareincometaxesincurredinthecurrentandprioryearthatwillbeavailablefor

recoupmentintheeventoffuturenetlosses:

2023 3,493,548$

2022 1,196,035$

The Company has no capital  loss or operating loss carryforward or AMT credit carryforwards at

December31,2023or2022.



Thestatuteoflimitationshasexpiredfortaxyearsthrough2019.



TheCompanyhasnoliabilityfortaxcontingenciescomputedinaccordancewithSSAPno.5,

Liabilities,Contingenciesand

ImpairmentsofAssets,withmodificationsprovidedinSSAPNo.101,

IncomeTaxes–AReplacementofSSAPNo.10RandSSAPNo.10,atDecember31,2023or2022,

andbelievesitisreasonablypossiblethatthetaxcontingenciesbalancewillnotincreasewithin

thenexttwelvemonths.Noamounts

havebeenaccruedforinterestorpenaltieswithrespectto

taxcontingencies.

TheCompanyhadnodepositsatDecember31,2023underSection6603oftheCode.



OMS



National



Insurance



Company,



Risk



Retention



Group



Notes



Statutory



Basis



Financial



Statements

 

27

TheInflation  Reduction Act(Act)was enactedonAugust 16,2022,and includeda newCorporate

AlternativeMinimumTax(CAMT).Thereportingentity(orthecontrolledgroupofcorporationsof

whichthereportingentityisamember)hasdeterminedthattheydonotexpecttobeliableforCAMT

in2023.



10. LeaseAgreements



TheCompanyenteredintoanewleaseforofficeandstoragespacebeginningFebruary1,2019

andexpiringJanuary31,2034.Thenewleaseagreementincludesanabatementofbaserent,tax

paymentsandoperatingexpense(CAM)paymentsforthefirstfifteenfullcale ndarmonths.Total

rentisexpensedona

straightͲlinebasis.



Theleaseagreementalsoincludesaleaseholdincentiveof$1,680,825relatingtotheconstruction

ofthenewleasedofficespace.ThisincentiveisrecordedasaliabilityandamortizedonastraightͲ

linebasisoverthelifeofthelease(15years)asareductiontorent

expense.Totalrentexpense

underthisleasewas$623,320and$605,660in2023and2022,respectively.



ThestorageportionoftheleasewascancelledeffectiveJune30,2022,resultingincancellationfee

expensesof$7,741.



Thefutureminimumbaserentalpayments(beforetaxesandoperatingexpenses)requiredunder

this

leaseareasfollows:



YearendingDecember31

202

385,65

$

2025 396,861

202

408,067

2027 419,272

2028 430,478

Thereafter 2,361,093

4,401,427$Totalminimum paymentsrequired

TheCompanyleasesvariousofficeequipmentundernonͲcancelableleasesthatexpirethrough

December2028.Rentalexpensefor2023and2022was$81,292and$68,651,respectively.

Futureminimumrentalpaymentsareasfollows:



YearendingDecember31

202

67,210$

2025 67,210

202

34,77

2027 34,776

2028 31,878

235,850$Totalmi nimu m paymentsrequired



Certainofficeequipmentrentalcommitmentshaverenewaloptionsextendingthroughtheyear2028.

OMS



National



Insurance



Company,



Risk



Retention



Group



Notes



Statutory



Basis



Financial



Statements

 

28

11. CapitalStock



ThetransferabilityofcommonsharesisrestrictedtotheCompanyoranothershareholder,and

onlyatapriceof$1.00pershare.PreferredsharesarenottransferableexcepttotheCompany.



CommonandpreferredsharesarerepurchasedbytheCompanywhenapolicyholderterminates

his

orherinsurancecoverage.Therepurchasepriceforcommonsharesis$1.00pershare.

SubjecttospecificexceptionsenumeratedintheArticlesofIncorporationandByͲlawsofthe

Company,therepurchasepriceforpref erredsharesisthepricepershareasofthetermination

date,or,iflower,atthe

timeofthepolicyholder’sdeath,disability orretirement.Thepreferred

sharepriceiscalculatedeachApril1astheprioryear’sendingstatutorysurplusadjustedforthe

differenceinmarketvalueversuscarryingcostofinvestmentsandcertainotheradjustmentsas

definedintheCompany’sAmendedandRestatedArticlesof

Incorporation.AsofDecember31,

2023,thepreferredsharepricewas$2,210.83pershare.Paymentforrepurchasedsharesis

deferreduntildeath,disabilityorretirementofthepolicyholder. Repurchasedcommonand

preferredsharesareheldastreasurystock.



ThepreferredstockoftheCompanyisnonvoting.Sharesofpreferredstock

mayonlybe

transferredtotheCompany.Newinsuredsarerequiredtopurchasepreferredstockinanamount

equalto75%ofthefirst$250,000incoverage.Sharesofpreferredstockareissuedoutof

treasurystockatapricedeterminedannuallyaccordingtoaformula.



Inliquidationofthe

Company,theholdersofpreferredstockareentitledtoreceiveallliquidation

proceedsupto$100.00persharebeforetheholdersofcommonstockreceive$1.00pershare.All

remainingliquidationproceedsthengotoholdersofpreferredstock.



12. SubordinatedSurplusDebentures



TheCompanyissuessubordinated surplus debenturesfor

repurchasesofpreferredstockmadeon

cessationofcoverageforreasonsotherthanretirement,disabilityordeath.Thedebenturesare

payableinanamountequaltothenumberofsharesrepurchasedtimesthelowerofthepershare

priceatthedateofcessationofcoverageoratthedate

ofretirement,disabilityordeath.The

debenturesarenonͲinterestͲbearingandaresubordinateinrightofpaymenttoallother

indebtednessoftheCompany.Paymentofthedebenturesuponretirement,disabilityordeath

mayonlybemadeifthestatutorysurplusoftheCompanyexceedsthestatutorysurplusatthe



timethedebenturewasissuedandapprovalofthepaymenthasbeenreceivedfromtheDirector

oftheDOI.



IfaformerpolicyholderreturnstotheCompany,amountsowedonsubordinatedsurplus

debenturestotheformerpolicyholderarereducedorcanceledtooffsetthepolicyholder’snew

preferredstockrepurchaserequirement.



OMS



National



Insurance



Company,



Risk



Retention



Group



Notes



Statutory



Basis



Financial



Statements

 

29

Thefollowingsummarizestheissuanceandrepay mentofdebenturesin2023:



BalanceatDecember31,2022 6,980,481$

Debenture s issuedin2023 783,371

Debenture s repaidin2023 (325,279)

Debenture s canceledonreturningpolicyholdersin2023 (203,597)

BalanceatDecember31,2023 7,234,976$

13. Reinsurance



Thefollowingtablesummarizesthecededandassumedunearnedpremiums andrelated

commissionequityatDecember31,2023:

Unearned Commission Unearned Commission Unearned Commission

Premium Equity Premium Equity Premium Equity

Affiliates Ͳ$ Ͳ$ Ͳ$ Ͳ$ Ͳ$ Ͳ$

All other ͲͲ735,060 147,012 (735,060) (147,012)

Total Ͳ$ Ͳ$ 735,060$ 147,012$ (735,060)$ (147,012)$

Assumed Ceded AssumedLessCede d

Directunearnedpremiumreserveis$42,367,043and$39,838,418in2023and2022,respectively.



14. DefinedContributionPlanandDeferredCompensationPlan



TheCompanyhasestablishedanemployee401(k)planforwhichallemployeesoftheCompany

andFortresswhohaveattainedtheageof21areeligibleto

participateonavoluntarybasis.The

401(k)plancallsfortheCompanyandFortresstomatchemployeecontributionsupto4%ofan

employee’scompensation,limitedtothemaximumallowedunderfederaltaxlaws,whichwas

$13,200and$12,200peremployeefor2023and2022,respectively.TheCompanyandFortress

fund

theirfullobligationunderthe401(k)planannually.TheCompany’scontributionstothe

401(k)planwere$335,381and$320,918fortheyearsendedDecember31,2023and2022,

respectively.Thesecontributionsinclude$77,671and$75,975contributedbyFortress,during

2023and2022,respectively.



TheCompanyhasestablishedaDeferredCompensation

Planforallemployees.Undertheterms

oftheplan,unitsarecreditedtoeligibleemployeesinanamountequalto5%ofanemployee’s

baseannualsalaryasofApril1ofthegrantyear,dividedbythepricepershareoftheCompany’s

preferredstock.Anemployeevests

inphantomstockawardsonthefifthanniversaryofthegrant.

Grantsofdeferredcompensationunitsthathavenotvestedareforfeiteduponterminationof

employmentexceptinthecaseofdeath,disability,orretirement.Theplanisnotfunded.



OMS



National



Insurance



Company,



Risk



Retention



Group



Notes



Statutory



Basis



Financial



Statements

 

30

Thefollowingsummarizestheunitsgranted,paid,andforfeitedduring2023and2022:

 2023

2022

UnitsoutstandingatJanuary1 2,076.08 2,172.50

Plus:unitsgranted 247.29 193.03

Less:unitspaid (292.91) (229.35)

Less:unitsforfeited (44.86)

(60.10)

UnitsoutstandingatDecember31 1,985.60 2,076.08

VestedunitsatDecember31 1,124.89 1,060.64

Paymentofvestedamountsismadeonthevestingdateunlessanemployeeelectstodefer

paymenttoalaterdate.During2023and2022,$654,361and$609,871,respectively,invested

unitswerepaidtoemployees.



Thetotalcostofthedeferredcompensationunits grantedisexpensedprorataover

thefiveͲyear

vestingperiod.Sharesdeferredforfuturepayoutbutvesteduponretirementareexpensedinfull

intheyearofretirement.Adjustmentsduetochangesinthepricepersharewhichisusedinthe

deferredcompensationcalculationorforfeituresareexpensedintheyearofthechange.

Included

inLossAdjustmentExpensesandSalaryExpensefor2023are$18,860and($446,739)andfor2022

are$100,068and$634,846,respectively,forunvestedandvestedunits.FortressrecordedLoss

AdjustmentExpensesandSalaryExpensefor2023of$11,918and($122,987)andfor2022of

$42,586and$135,679respectively,forunvested

andvestedunits.AsofDecember31,2023and

2022,$2,515,858and$3,526,335,respectively,wereincludedinotherliabilitiesrelatingtothe

plan.AsofDecember31,2023and2022,$944,453and$1,127,286,respectively,werealso

includedinFortress’otherliabilitiesrelatingtotheplan.



Assumingnoforfeituresorterminations

ofemploymentandusingthesharepriceatDecember31,

2023,thescheduledpayoutofgrantsasofDecember31,2023,adjustedforelectiveemployee

deferrals,isasfollows:



Year

DeferredCompensationUnits Amount

2024 251.23 $555,427

2025 316.90 $700,612

2026 364.32 $805,450

2027 460.68$1,018,485

2028 325.52 $719,669

After2028 266.95 $590,181

TheCompanyoffersanonqualifieddeferredcompensationarrangementforcertainsenior

executivesandboardmembersoftheCompanyandFortress.TheplanisunfundedunderSections

201(2),301(a)(3)and401(a)(1)of

theEmployeeRetirementIncomeSecurityActof1974.



15. Contingencies



Itismanagement’sopinion,afterconsultationwithcounsel,thattheCompanyhasnocontingent

liabilitieswhichcouldhaveamaterialeffectontheCompany’sfinancialpositionorresultsof

operations.



OMS



National



Insurance



Company,



Risk



Retention



Group



Notes



Statutory



Basis



Financial



Statements



31

16. ReconciliationtoAnnualStatement

TherearenodifferencestotheAnnualStatementfiledwiththeDOIandtheauditedstatutory

statementsofadmittedassets,liabilitiesandcapitalandsurplus,thestatementofoperationsand

thestatutorystatementofcashflowsfor2023and2022.

17. SubsequentEvents

Allofth

eeffectsofsubsequent

eventsthatprovideadditionalevidenceabout conditionsthat

existedatthefinancialstatementdate,includingtheestimatesinherentintheprocessof

preparingthestatutoryfinancialstatements,arerecognizedinthestatutoryfinancialstatements.

TheCompanydoesnotrecognizesubsequenteventsthatprovideevidenceabo utconditionsthat

didno

texistatthe

financialstatementdatebutaroseafter,butbeforethestatutoryfinancial

statementsareavailabletobeissued.Insomecases,nonͲrecognizedsubsequenteventsare

disclosedtokeepthestatutoryfinancialstatementsfrombeingmisleading.

TheCompanyhasevaluatedsubsequenteventsthroughApril19,2

024anddeterminedno

additionaldisclosuresarerequired.

Thesestatutoryfinancialstatementswereavailablefor

releaseonApril19,2024.