Premium Finance Contracts, Related Receivable and Allowance for Credit Losses

12 Months Ended

Dec. 31, 2025

Premium Finance Contracts Related Receivable And Allowance For Credit Losses

Premium Finance Contracts, Related Receivable and Allowance for Credit Losses

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

Premium Finance Contracts and Related Receivable represent monthly payments due on insurance premium finance contracts. The Company finances insurance policies over periods from three to eleven months for businesses and consumers who make an initial down payment of, on average, 25 percent of the insurance policy amounts. The entire amount of the contract is recorded including amounts due for finance charges and services charges. These receivables are reported net of unearned interest for financial statements purposes. Upon cancellation of an insurance premium finance contract, the unearned premium on the contract becomes due from the insurance carrier. The Company segregates its Premium Finance Contracts Receivable into three portfolio segments for reporting and allowance calculation purposes. The segments are (1) Due from Insured, (2) Due from Insurance Carrier, and (3) Due from Agents. Amounts due from agents represent balances related to (1) an agent’s unearned commission due to a policy cancellation and (2) down payments collected by the agents on behalf of the insured, which are due to us.

At December 31, 2025 and 2024, premium finance contract and agents’ receivable consists of the following:


Description	December 31, 2025			December 31, 2024
Contracts due from insured	$	69,350,806		$	59,758,090
Contracts due from insurance carrier		7,279,828			7,415,885
		76,630,634			67,173,975
Amounts due from agents		1,146,494			1,059,085
Less: Unearned interest		(2,736,977	)		(2,406,496	)
		75,040,151			65,826,564
Less: Allowance for credit losses		(2,202,768	)		(1,969,007	)

Total	$	72,837,383		$	63,857,557

The allowance for credit losses at December 31, 2025 and December 31, 2024 is as follows:

Schedule of allowance for credit losses
	December 31, 2025		December 31, 2024
Allowance for contracts due from insured	$	1,268,799	$	1,099,338
Allowance for contracts due from insurance carrier		746,506		692,066
Allowance for amounts due from agents		187,463		177,603

Total allowance for credit losses	$	2,202,768	$	1,969,007

Activity in the allowance for credit losses for the years ended December 31, 2025 and 2024, is as follows:


	December 31, 2025			December 31, 2024
Balance at the beginning of the year	$	1,969,007		$	1,501,593
Current year provision		2,115,000			1,846,860
Write-offs charged against the allowance		(2,211,812	)		(1,726,907	)
Recoveries of amounts previously charged off		330,573			347,461

Balance at end of the year	$	2,202,768		$	1,969,007

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


	December 31, 2025			December 31, 2024
Current year provision	$	2,115,000		$	1,846,860
Less: Contra-revenue		(853,966	)		(592,335	)
Provision for credit losses	$	1,261,034		$	1,254,525

The aging analyses of past-due contract receivables as of December 31, 2025 and December 31, 2024 are as follows:


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


As of December 31, 2024	30–59 Days		60–89 Days		90-119 Days		Greater Than 120 Days		Total Past-Due		Current		Grand Total
Premium finance contracts:
Due from insured	$	113,024	$	100,104	$	5,186	$	12,403	$	230,717	$	59,527,373	$	59,758,090
Due from insurance carrier		446,035		400,021		302,676		2,387,638		3,536,370		3,879,515		7,415,885
Total	$	559,059	$	500,125	$	307,862	$	2,400,041	$	3,767,087	$	63,406,888	$	67,173,975

Inactive agent receivables are defined as agent receivables that have not changed in at least three months, which pose a greater risk of credit losses. Agent inactivity is used by management as a credit quality indicator in evaluating receivables. The analysis of active and inactive agents as of December 31, 2025 and December 31, 2024 are as follows:


	December 31, 2025		December 31, 2024
Receivables from active agents	$	997,452	$	882,890
Receivables from inactive agents		149,042		176,195
Total	$	1,146,494	$	1,059,085

STANDARD PREMIUM FINANCE HOLDINGS, INC. 10-K