Investments

9 Months Ended

Sep. 30, 2024

INVESTMENTS

Money Market Investments. As of September 30, 2024 and December 31, 2023, the Company had money market investments of $95.5 million and $5.6 million, respectively, that are classified as cash and cash equivalents in the Company’s Condensed Consolidated Balance Sheets.

Investments in Marketable Equity Securities. Investments in marketable equity securities consist of the following:


	As of
	September 30, 2024		December 31, 2023
(in thousands)
Total cost	$	227,153	$	225,971
Gross unrealized gains	600,322		464,182
Gross unrealized losses	(2,059)		—
Total Fair Value	$	825,416	$	690,153

At September 30, 2024 and December 31, 2023, the Company owned 55,430 shares in Markel Group Inc. (Markel) valued at $86.9 million and $78.7 million, respectively. The Chief Executive Officer of Markel, Mr. Thomas S. Gayner, is a member of the Company’s Board of Directors. As of September 30, 2024, the Company owned 422 Class A and 482,945 Class B shares in Berkshire Hathaway valued at $514.0 million, which exceeded 5% of the Company’s total assets.

The Company purchased $5.0 million of marketable equity securities during the first nine months of 2024. The Company purchased $4.6 million of marketable equity securities during the first nine months of 2023.

During the first nine months of 2024, the gross cumulative realized net gains from the sales of marketable equity securities were $20.2 million. The total proceeds from such sales were $23.5 million. During the first nine months of 2023, the gross cumulative realized net gains from the sales of marketable equity securities were $13.0 million. The total proceeds from such sales were $62.0 million.

The net gain on marketable equity securities comprised the following:


	Three Months Ended September 30				Nine Months Ended September 30
(in thousands)	2024		2023		2024		2023
Gain on marketable equity securities, net	$	30,496	$	16,759	$	154,276	$	113,429
Less: Net gains in earnings from marketable equity securities sold and donated	(5,908)		—		(6,010)		(5,475)
Net unrealized gains in earnings from marketable equity securities still held at the end of the period	$	24,588	$	16,759	$	148,266	$	107,954

Investments in Affiliates. As of September 30, 2024, the Company held a 50.4% and 41.4% interest in N2K Networks and Realm, respectively, on a fully diluted basis, and accounts for these investments under the equity method. The Company holds one of the four seats of N2K Networks’ governing board with the other shareholders retaining substantive participation rights to control the financial and operating decisions of N2K Networks through representation on the board. In May 2024, the Company entered into a convertible promissory note agreement to loan N2K Networks $2.0 million. The convertible promissory note bears interest at a rate of 12% per annum and, subject to conversion provisions, all unpaid interest and principal are due by May 2027. In the third quarter of 2024, the Company recorded an impairment charge of $14.4 million on its investment in N2K Networks as a result of the investee exiting a significant product offering following losses incurred in the current and prior year.

As of September 30, 2024, the Company held an approximate 18% interest in Intersection Holdings, LLC (Intersection), and accounts for its investment under the equity method. The Company holds two of the ten seats of Intersection’s governing board, which allows the Company to exercise significant influence over Intersection. The Company loaned Intersection $30.0 million, which is repayable over 5 years at an interest rate of 9% per annum. The outstanding balance on this loan was $26.7 million as of September 30, 2024. The loan is repayable by May 2028.

As of September 30, 2024, the Company also held investments in several other affiliates; GHG held a 40% interest in each of the following affiliates: Residential Home Health Illinois, Residential Hospice Illinois, Mary Free Bed at Home, and Allegheny Health Network (AHN) Healthcare at Home. For the three and nine months ended September 30, 2024, the Company recorded $4.4 million and $12.9 million, respectively, in revenue for services provided to the affiliates of GHG. For the three and nine months ended September 30, 2023, the Company recorded $4.1 million and $11.5 million, respectively, in revenue for services provided to the affiliates of GHG.

Additionally, Kaplan International Holdings Limited (KIHL) held a 45% interest in a joint venture formed with University of York. KIHL loaned the joint venture £22 million, which is repayable over 25 years at an interest rate of 7% and guaranteed by the University of York. The outstanding balance on this loan was £19.3 million as of September 30, 2024. The loan is repayable by December 2041.

The Company had $36.4 million and $36.9 million in its investment account that represents cumulative undistributed income in its investments in affiliates as of September 30, 2024 and December 31, 2023, respectively.

Cost Method Investments. The Company held investments without readily determinable fair values in a number of equity securities that are accounted for as cost method investments, which are recorded at cost, less impairment, and adjusted for observable price changes for identical or similar investments of the same issuer. The carrying value of these investments was $74.6 million and $74.0 million as of September 30, 2024 and December 31, 2023, respectively. During the three and nine months ended September 30, 2024, the Company recorded gains of $0.2 million to equity securities that are accounted for as cost method investments based on observable transactions for identical or similar investments of the same issuer. During the nine months ended September 30, 2024, the Company recorded impairment losses of $0.7 million to those equity securities.