loss and loss adjustment expenses ( “ lae ” ) incurred represent our largest expense item , and for any given reporting period , include estimates of future claim payments , changes in those estimates from prior reporting periods and costs associated with investigating , defending and servicing claims . these expenses fluctuate based on the amount and types of risks we insure . we record loss and lae related to estimates of future claim payments based on case-by-case valuations , statistical analyses and actuarial procedures . we seek to establish all reserves at the most likely ultimate liability based on our historical claims experience . it is typical for certain claims to take several years to settle and we revise our estimates as we receive additional information from the claimants . our ability to estimate loss and lae accurately at the time of pricing our insurance policies is a critical factor in our profitability . 24 commission expenses and other underwriting expenses . other underwriting expenses include acquisition costs and other underwriting expenses . policy acquisition costs represent the costs of originating new insurance policies that vary with , and are primarily related to , the production of insurance policies ( principally commissions , premium taxes and certain underwriting salaries ) . policy acquisition costs are deferred and recognized as expense as the related premiums are earned . other underwriting expenses represent general and administrative expenses of our insurance business and are comprised of other costs associated with our insurance activities such as regulatory fees , telecommunication and technology costs , occupancy costs , employment costs , and legal and auditing fees . other operating expenses . other operating expenses include the corporate expenses of our holding company , kingstone companies , inc. these expenses include executive employment costs , legal and auditing fees , occupancy costs related to our former corporate office , which was closed in may 2013 , and other costs directly associated with being a public company . non-cash equity compensation . non-cash equity compensation includes the fair value of stock grants issued to our directors , officers and employees , and amortization of stock options issued to the same . depreciation and amortization . depreciation and amortization includes the amortization of intangibles related to the acquisition of kico , depreciation of the real estate used in kico 's operations , as well as depreciation of office equipment and furniture . interest expense . interest expense represents amounts we incurred on our former indebtedness at the then-applicable interest rates . income tax expense . we incur federal income tax expense on our consolidated operations as well as state income tax expense for our non-insurance underwriting subsidiaries . product lines our product lines include the following : personal lines . our largest line of business is personal lines , consisting of homeowners , dwelling fire , 3-4 family dwelling package , condominium , renters , mechanical breakdown , service line and personal umbrella policies . commercial liability . we offer business owners policies which consist primarily of small business retail risks without a residential exposure . we also write artisan 's liability policies and special multi-peril property and liability policies . commercial automobile . we provide physical damage and liability coverage for light vehicles owned by small contractors and artisans . livery physical damage and other . we write for-hire vehicle physical damage only policies for livery and car service vehicles and taxicabs as well as canine legal liability policies . 25 key measures we utilize the following key measures in analyzing the results of our insurance underwriting business : net loss ratio . the net loss ratio is a measure of the underwriting profitability of an insurance company 's business . expressed as a percentage , this is the ratio of net losses and loss adjustment expenses ( “ lae ” ) incurred to net premiums earned . net underwriting expense ratio . the net underwriting expense ratio is a measure of an insurance company 's operational efficiency in administering its business . expressed as a percentage , this is the ratio of the sum of acquisition costs ( the most significant being commissions paid to our producers ) and other underwriting expenses less ceding commission revenue less other income to net premiums earned . net combined ratio . the net combined ratio is a measure of an insurance company 's overall underwriting profit . this is the sum of the net loss and net underwriting expense ratios . if the net combined ratio is at or above 100 percent , an insurance company can not be profitable without investment income , and may not be profitable if investment income is insufficient . underwriting income . underwriting income is net pre-tax income attributable to our insurance underwriting business except for net investment income , net realized gains from investments , and depreciation and amortization ( net premiums earned less expenses included in combined ratio ) . underwriting income is a measure of an insurance company 's overall operating profitability before items such as investment income , depreciation and amortization , interest expense and income taxes . critical accounting policies and estimates our consolidated financial statements include the accounts of kingstone companies , inc. and all majority-owned and controlled subsidiaries . the preparation of financial statements in conformity with accounting principles generally accepted in the united states requires our management to make estimates and assumptions in certain circumstances that affect amounts reported in our consolidated financial statements and related notes . in preparing these financial statements , our management has utilized information available including our past history , industry standards and the current economic environment , among other factors , in forming its estimates and judgments of certain amounts included in the consolidated financial statements , giving due consideration to materiality . story_separator_special_tag insurance underwriting business on a standalone basis our insurance underwriting business reported on a standalone basis for the years ended december 31 , 2013 and 2012 follows : replace_table_token_11_th 33 an analysis of our direct , assumed and ceded earned premiums , loss and loss adjustment expenses , and loss ratios is shown below : replace_table_token_12_th 34 the key measures for our insurance underwriting business for the years ended december 31 , 2013 and 2012 are as follows : replace_table_token_13_th ( 1 ) the effect of superstorm sandy , which occurred on october 29 , 2012 , reduced contingent ceding commission revenue by $ 1,846,882 and $ 1,918,871 for the years ended december 31 , 2013 and 2012 , respectively . ( 2 ) includes the sum of net catastrophe losses and loss adjustment expenses of $ 36,233 and $ 1,143,022 resulting from superstorm sandy for the years ended december 31 , 2013 and 2012 , respectively . 35 investments portfolio summary the following table presents a breakdown of the amortized cost , aggregate fair value and unrealized gains and losses by investment type as of december 31 , 2013 and 2012 : available for sale securities replace_table_token_14_th 36 held to maturity securities replace_table_token_15_th u.s. treasury securities included in held to maturity securities are held in trust pursuant to the new york state department of financial services ' minimum funds requirement . a summary of the amortized cost and fair value of the company 's investments in held-to-maturity securities by contractual maturity as of december 31 , 2013 and december 31 , 2012 is shown below : replace_table_token_16_th 37 credit rating of fixed-maturity securities the table below summarizes the credit quality of our available for sale fixed-maturity securities as of december 31 , 2013 and december 31 , 2012 as rated by standard and poor 's ( or , if unavailable from standard and poor 's , then moody 's or fitch ) : replace_table_token_17_th the table below summarizes the average maturity by type of fixed-maturity security as well as detailing the average yield as of december 31 , 2013 and december 31 , 2012 : replace_table_token_18_th fair value consideration as disclosed in note 4 to the consolidated financial statements , with respect to “ fair value measurements , ” we define fair value under gaap guidance as the price that would be received to sell an asset or paid to transfer a liability in a transaction involving identical or comparable assets or liabilities between market participants ( an “ exit price ” ) . this gaap guidance establishes a fair value hierarchy that distinguishes between inputs based on market data from independent sources ( “ observable inputs ” ) and a reporting entity 's internal assumptions based upon the best information available when external market data is limited or unavailable ( “ unobservable inputs ” ) . the fair value hierarchy in gaap prioritizes fair value measurements into three levels based on the nature of the inputs . quoted prices in active markets for identical assets have the highest priority ( “ level 1 ” ) , followed by observable inputs other than quoted prices including prices for similar but not identical assets or liabilities ( “ level 2 ” ) , and unobservable inputs , including the reporting entity 's estimates of the assumption that market participants would use , having the lowest priority ( “ level 3 ” ) . as of december 31 , 2013 and 2012 , 78 % and 54 % , respectively , of the investment portfolio recorded at fair value was priced based upon quoted market prices . 38 as more fully described in note 3 to our consolidated financial statements , “ investments—impairment review , ” we completed a detailed review of all our securities in a continuous loss position as of december 31 , 2013 and 2012 , and concluded that the unrealized losses in these asset classes are temporary in nature and the result of a decrease in value due to technical spread widening and broader market sentiment , rather than fundamental collateral deterioration . the table below summarizes the gross unrealized losses of our fixed-maturity securities available-for-sale and equity securities by length of time the security has continuously been in an unrealized loss position as of december 31 , 2013 and 2012 : replace_table_token_19_th 39 replace_table_token_20_th 40 there were 52 securities at december 31 , 2013 that accounted for the gross unrealized loss , none of which were deemed by us to be other than temporarily impaired . there were 33 securities at december 31 , 2012 that accounted for the gross unrealized loss , none of which were deemed by us to be other than temporarily impaired . significant factors influencing our determination that unrealized losses were temporary included the magnitude of the unrealized losses in relation to each security 's cost , the nature of the investment and management 's intent not to sell these securities and it being not more likely than not that we will be required to sell these investments before anticipated recovery of fair value to our cost basis . liquidity and capital resources story_separator_special_tag margin-right : 0pt `` > our reinsurance treaties for both our personal lines business , which primarily consists of homeowners ' policies , and commercial lines business expired on june 30 , 2013. effective july 1 , 2013 , we entered into new treaties with different terms . the treaties are annual , except for personal lines described below , and provide for the following material terms as of july 1 , 2013 : personal lines our personal lines treaty has a two year term expiring on june 30 , 2015. personal lines business , which includes homeowners , dwelling fire and canine legal liability insurance , is reinsured under a 75 % quota share treaty , which provides coverage with respect to losses of up to $ 1,200,000 per occurrence . an excess of loss contract

cash flows the primary sources of cash flow are from our insurance underwriting subsidiary , kico , and include direct premiums written , ceding commissions from our quota share reinsurers , loss recovery payments from our reinsurers , investment income and proceeds from the sale or maturity of investments . funds are used by kico for ceded premium payments to reinsurers , which are paid on a net basis after subtracting losses paid on reinsured claims and reinsurance commissions . kico also uses funds for loss payments and loss adjustment expenses on our net business , commissions to producers , salaries and other underwriting expenses as well as to purchase investments and fixed assets . the primary sources of cash flow for our holding company operations are in connection with the fee income we receive from the premium finance loans and collection of principal and interest income from the notes received by us upon the sale of businesses that were included in our former discontinued operations . we also receive cash dividends from kico , subject to statutory restrictions . for the year ended december 31 , 2013 , kico paid dividends of $ 700,000 to us . on december 13 , 2013 , we completed an underwritten public offering of 3,450,000 shares of our common stock , including 450,000 shares issued pursuant to the underwriter 's 30-day over-allotment option , at a public offering price of $ 5.95 per share .


 Write a concise suspicious activity report of the following text delimited by triple backquotes. Return your response as a formal report which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.
     ```cash flows the primary sources of cash flow are from our insurance underwriting subsidiary , kico , and include direct premiums written , ceding commissions from our quota share reinsurers , loss recovery payments from our reinsurers , investment income and proceeds from the sale or maturity of investments . funds are used by kico for ceded premium payments to reinsurers , which are paid on a net basis after subtracting losses paid on reinsured claims and reinsurance commissions . kico also uses funds for loss payments and loss adjustment expenses on our net business , commissions to producers , salaries and other underwriting expenses as well as to purchase investments and fixed assets . the primary sources of cash flow for our holding company operations are in connection with the fee income we receive from the premium finance loans and collection of principal and interest income from the notes received by us upon the sale of businesses that were included in our former discontinued operations . we also receive cash dividends from kico , subject to statutory restrictions . for the year ended december 31 , 2013 , kico paid dividends of $ 700,000 to us . on december 13 , 2013 , we completed an underwritten public offering of 3,450,000 shares of our common stock , including 450,000 shares issued pursuant to the underwriter 's 30-day over-allotment option , at a public offering price of $ 5.95 per share .
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 Suspicious Activity Report : loss and loss adjustment expenses ( “ lae ” ) incurred represent our largest expense item , and for any given reporting period , include estimates of future claim payments , changes in those estimates from prior reporting periods and costs associated with investigating , defending and servicing claims . these expenses fluctuate based on the amount and types of risks we insure . we record loss and lae related to estimates of future claim payments based on case-by-case valuations , statistical analyses and actuarial procedures . we seek to establish all reserves at the most likely ultimate liability based on our historical claims experience . it is typical for certain claims to take several years to settle and we revise our estimates as we receive additional information from the claimants . our ability to estimate loss and lae accurately at the time of pricing our insurance policies is a critical factor in our profitability . 24 commission expenses and other underwriting expenses . other underwriting expenses include acquisition costs and other underwriting expenses . policy acquisition costs represent the costs of originating new insurance policies that vary with , and are primarily related to , the production of insurance policies ( principally commissions , premium taxes and certain underwriting salaries ) . policy acquisition costs are deferred and recognized as expense as the related premiums are earned . other underwriting expenses represent general and administrative expenses of our insurance business and are comprised of other costs associated with our insurance activities such as regulatory fees , telecommunication and technology costs , occupancy costs , employment costs , and legal and auditing fees . other operating expenses . other operating expenses include the corporate expenses of our holding company , kingstone companies , inc. these expenses include executive employment costs , legal and auditing fees , occupancy costs related to our former corporate office , which was closed in may 2013 , and other costs directly associated with being a public company . non-cash equity compensation . non-cash equity compensation includes the fair value of stock grants issued to our directors , officers and employees , and amortization of stock options issued to the same . depreciation and amortization . depreciation and amortization includes the amortization of intangibles related to the acquisition of kico , depreciation of the real estate used in kico 's operations , as well as depreciation of office equipment and furniture . interest expense . interest expense represents amounts we incurred on our former indebtedness at the then-applicable interest rates . income tax expense . we incur federal income tax expense on our consolidated operations as well as state income tax expense for our non-insurance underwriting subsidiaries . product lines our product lines include the following : personal lines . our largest line of business is personal lines , consisting of homeowners , dwelling fire , 3-4 family dwelling package , condominium , renters , mechanical breakdown , service line and personal umbrella policies . commercial liability . we offer business owners policies which consist primarily of small business retail risks without a residential exposure . we also write artisan 's liability policies and special multi-peril property and liability policies . commercial automobile . we provide physical damage and liability coverage for light vehicles owned by small contractors and artisans . livery physical damage and other . we write for-hire vehicle physical damage only policies for livery and car service vehicles and taxicabs as well as canine legal liability policies . 25 key measures we utilize the following key measures in analyzing the results of our insurance underwriting business : net loss ratio . the net loss ratio is a measure of the underwriting profitability of an insurance company 's business . expressed as a percentage , this is the ratio of net losses and loss adjustment expenses ( “ lae ” ) incurred to net premiums earned . net underwriting expense ratio . the net underwriting expense ratio is a measure of an insurance company 's operational efficiency in administering its business . expressed as a percentage , this is the ratio of the sum of acquisition costs ( the most significant being commissions paid to our producers ) and other underwriting expenses less ceding commission revenue less other income to net premiums earned . net combined ratio . the net combined ratio is a measure of an insurance company 's overall underwriting profit . this is the sum of the net loss and net underwriting expense ratios . if the net combined ratio is at or above 100 percent , an insurance company can not be profitable without investment income , and may not be profitable if investment income is insufficient . underwriting income . underwriting income is net pre-tax income attributable to our insurance underwriting business except for net investment income , net realized gains from investments , and depreciation and amortization ( net premiums earned less expenses included in combined ratio ) . underwriting income is a measure of an insurance company 's overall operating profitability before items such as investment income , depreciation and amortization , interest expense and income taxes . critical accounting policies and estimates our consolidated financial statements include the accounts of kingstone companies , inc. and all majority-owned and controlled subsidiaries . the preparation of financial statements in conformity with accounting principles generally accepted in the united states requires our management to make estimates and assumptions in certain circumstances that affect amounts reported in our consolidated financial statements and related notes . in preparing these financial statements , our management has utilized information available including our past history , industry standards and the current economic environment , among other factors , in forming its estimates and judgments of certain amounts included in the consolidated financial statements , giving due consideration to materiality . story_separator_special_tag insurance underwriting business on a standalone basis our insurance underwriting business reported on a standalone basis for the years ended december 31 , 2013 and 2012 follows : replace_table_token_11_th 33 an analysis of our direct , assumed and ceded earned premiums , loss and loss adjustment expenses , and loss ratios is shown below : replace_table_token_12_th 34 the key measures for our insurance underwriting business for the years ended december 31 , 2013 and 2012 are as follows : replace_table_token_13_th ( 1 ) the effect of superstorm sandy , which occurred on october 29 , 2012 , reduced contingent ceding commission revenue by $ 1,846,882 and $ 1,918,871 for the years ended december 31 , 2013 and 2012 , respectively . ( 2 ) includes the sum of net catastrophe losses and loss adjustment expenses of $ 36,233 and $ 1,143,022 resulting from superstorm sandy for the years ended december 31 , 2013 and 2012 , respectively . 35 investments portfolio summary the following table presents a breakdown of the amortized cost , aggregate fair value and unrealized gains and losses by investment type as of december 31 , 2013 and 2012 : available for sale securities replace_table_token_14_th 36 held to maturity securities replace_table_token_15_th u.s. treasury securities included in held to maturity securities are held in trust pursuant to the new york state department of financial services ' minimum funds requirement . a summary of the amortized cost and fair value of the company 's investments in held-to-maturity securities by contractual maturity as of december 31 , 2013 and december 31 , 2012 is shown below : replace_table_token_16_th 37 credit rating of fixed-maturity securities the table below summarizes the credit quality of our available for sale fixed-maturity securities as of december 31 , 2013 and december 31 , 2012 as rated by standard and poor 's ( or , if unavailable from standard and poor 's , then moody 's or fitch ) : replace_table_token_17_th the table below summarizes the average maturity by type of fixed-maturity security as well as detailing the average yield as of december 31 , 2013 and december 31 , 2012 : replace_table_token_18_th fair value consideration as disclosed in note 4 to the consolidated financial statements , with respect to “ fair value measurements , ” we define fair value under gaap guidance as the price that would be received to sell an asset or paid to transfer a liability in a transaction involving identical or comparable assets or liabilities between market participants ( an “ exit price ” ) . this gaap guidance establishes a fair value hierarchy that distinguishes between inputs based on market data from independent sources ( “ observable inputs ” ) and a reporting entity 's internal assumptions based upon the best information available when external market data is limited or unavailable ( “ unobservable inputs ” ) . the fair value hierarchy in gaap prioritizes fair value measurements into three levels based on the nature of the inputs . quoted prices in active markets for identical assets have the highest priority ( “ level 1 ” ) , followed by observable inputs other than quoted prices including prices for similar but not identical assets or liabilities ( “ level 2 ” ) , and unobservable inputs , including the reporting entity 's estimates of the assumption that market participants would use , having the lowest priority ( “ level 3 ” ) . as of december 31 , 2013 and 2012 , 78 % and 54 % , respectively , of the investment portfolio recorded at fair value was priced based upon quoted market prices . 38 as more fully described in note 3 to our consolidated financial statements , “ investments—impairment review , ” we completed a detailed review of all our securities in a continuous loss position as of december 31 , 2013 and 2012 , and concluded that the unrealized losses in these asset classes are temporary in nature and the result of a decrease in value due to technical spread widening and broader market sentiment , rather than fundamental collateral deterioration . the table below summarizes the gross unrealized losses of our fixed-maturity securities available-for-sale and equity securities by length of time the security has continuously been in an unrealized loss position as of december 31 , 2013 and 2012 : replace_table_token_19_th 39 replace_table_token_20_th 40 there were 52 securities at december 31 , 2013 that accounted for the gross unrealized loss , none of which were deemed by us to be other than temporarily impaired . there were 33 securities at december 31 , 2012 that accounted for the gross unrealized loss , none of which were deemed by us to be other than temporarily impaired . significant factors influencing our determination that unrealized losses were temporary included the magnitude of the unrealized losses in relation to each security 's cost , the nature of the investment and management 's intent not to sell these securities and it being not more likely than not that we will be required to sell these investments before anticipated recovery of fair value to our cost basis . liquidity and capital resources story_separator_special_tag margin-right : 0pt `` > our reinsurance treaties for both our personal lines business , which primarily consists of homeowners ' policies , and commercial lines business expired on june 30 , 2013. effective july 1 , 2013 , we entered into new treaties with different terms . the treaties are annual , except for personal lines described below , and provide for the following material terms as of july 1 , 2013 : personal lines our personal lines treaty has a two year term expiring on june 30 , 2015. personal lines business , which includes homeowners , dwelling fire and canine legal liability insurance , is reinsured under a 75 % quota share treaty , which provides coverage with respect to losses of up to $ 1,200,000 per occurrence . an excess of loss contract

