Investments (Tables)

9 Months Ended

Sep. 30, 2020

Investments Tables Abstract

Investment income

A summary of investment income, net of investment expenses, is as follows:

	Three Months Ended September 30						Nine Months Ended September 30
	2020			2019			2020			2019
Fixed maturities	$	499,649		$	532,307		$	1,551,380		$	1,626,843
Equity securities		5,888			—			12,220			—
Short-term investments and cash equivalents		4,582			16,808			24,496			53,266
Gross investment income		510,119			549,115			1,588,096			1,680,109
Less: investment expenses		(32,974	)		(31,007	)		(100,761	)		(98,627	)
Net investment income		477,145			518,108			1,487,335			1,581,482
Net realized investment gains (losses)		38,214			—			39,789			(12,661	)
Net unrealized investment gains on equity securities		19,670			—			42,629			—
Net investment income, realized investment gains (losses) and unrealized investment gains on equity securities	$	535,029		$	518,108		$	1,569,753		$	1,568,821

Fixed maturity investments

The amortized cost and estimated fair values of investments in fixed maturities by category are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2020
Available-for-sale fixed maturities:
U.S. Treasury securities	$	10,090,505	$	286,489	$	—		$	10,376,994
Corporate securities		45,799,041		2,351,571		(203,965	)		47,946,647
Agency mortgage-backed securities		22,462,009		887,506		(3,922	)		23,345,593
Held-to-maturity fixed securities:
Certificates of deposits		798,000		—		—			798,000
Total fixed maturities	$	79,149,555	$	3,525,566	$	(207,887	)	$	82,467,234

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
December 31, 2019
Available-for-sale fixed maturities:
U.S. Treasury securities	$	15,105,795	$	130,564	$	(1,027	)	$	15,235,332
Corporate securities		41,953,378		1,076,012		(57	)		43,029,333
Agency mortgage-backed securities		24,943,238		293,757		(1,950	)		25,235,045
Held-to-maturity fixed securities:
Certificates of deposits		798,000		—		—			798,000
Total fixed maturities	$	82,800,411	$	1,500,333	$	(3,034	)	$	84,297,710

Unrealized gains (losses) on investments

A summary of the unrealized gains (losses) on investments in fixed maturities carried at fair value and the applicable deferred federal income taxes are shown below:

	September 30			December 31
	2020			2019
Gross unrealized gains on fixed maturities	$	3,525,566		$	1,500,333
Gross unrealized losses on fixed maturities		(207,887	)		(3,034	)
Net unrealized gains on fixed maturities		3,317,679			1,497,299
Deferred federal tax expense		(696,712	)		(314,433	)
Net unrealized gains, net of deferred income taxes	$	2,620,967		$	1,182,866

Components of investments in unrealized loss position for continiuos period of time

A summary of estimated fair value, gross unrealized losses, and number of securities in a gross unrealized loss position by the length of time in which the securities have continually been in that position is shown below:

	Less than 12 Months							12 Months or Longer
	Estimated Fair Value		Gross Unrealized Losses			Number of Securities		Estimated Fair Value		Gross Unrealized Losses		Number of Securities
September 30, 2020
Corporate securities	$	3,431,312	$	(203,965	)		6	$	—	$	—		—
Agency mortgage-backed securities		1,215,171		(3,922	)		2		—		—		—
Total	$	4,646,483	$	(207,887	)		8	$	—	$	—		—

	Less than 12 Months							12 Months or Longer
	Estimated Fair Value		Gross Unrealized Losses			Number of Securities		Estimated Fair Value		Gross Unrealized Losses			Number of Securities
December 31, 2019
U.S. Treasury securities	$	1,996,562	$	(252	)		1	$	1,002,031	$	(775	)		1
Corporate securities		999,818		(57	)		1		—		—			—
Agency mortgage-backed securities		750,058		(1,950	)		2		—		—			—
Total	$	3,746,438	$	(2,259	)		4	$	1,002,031	$	(775	)		1

Fixed maturities sold and called

Although the Company does not intend to sell its fixed maturity investments prior to maturity, the Company may sell investment securities from time to time in response to cash flow requirements, economic, regulatory, and/or market conditions or investment securities may be called by their issuers prior to the securities’ maturity. The fixed maturity securities previously held by the Company were sold and called prior to maturity as follows:

	Three Months Ended September 30				Nine Months Ended September 30
	2020		2019		2020		2019
Fixed maturities securities sold
Number of securities sold		6		—		7		3
Amortized cost of sold securities	$	2,923,386	$	—	$	3,524,702	$	2,997,098
Realized gains (losses) on sales	$	30,057	$	—	$	31,171	$	(12,679	)
Fixed maturities securities called
Number of securities called		1		—		3		1
Amortized cost of called securities	$	249,998	$	—	$	1,949,536	$	999,982
Realized gains on calls	$	2	$	—	$	464	$	18

Summary of equity investments

The Company started investing in common stock equity securities during the three months ended March 31, 2020. The Company’s equity securities allocation is intended to enhance the return of and provide diversification for the total investment portfolio. A summary of equity securities is shown below:

	September 30		December 31
	2020		2019
Cost	$	1,515,227	$	—
Unrealized gain		42,629		—
Fair market value of equity securities	$	1,557,856	$	—

Summary of state held deposits

The following securities from three different banks represent statutory deposits that are assigned to and held by the California State Treasurer and the Insurance Commissioner of the State of Nevada. These deposits are required for writing certain lines of business in California and for admission to transact insurance business in the state of Nevada.

	September 30		December 31
	2020		2019
Certificates of deposit	$	200,000	$	200,000
Short-term investments		200,000		200,000
Total state held deposits	$	400,000	$	400,000

Investment in short term assets

Short-term investments have an initial maturity of one year or less and consist of the following:

	September 30		December 31
	2020		2019
U.S. Treasury bills	$	—	$	1,996,815
Certificates of deposit		200,000		200,000
Total short-term investments	$	200,000	$	2,196,815