INVESTMENTS

The cost or amortized cost, gross unrealized holding gains and losses, and estimated fair value of fixed maturity investments, by major security type, and equity securities at

December

31,

2019

and

2018

are as follows:

	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
December 31, 2019
Fixed maturity investments:
U.S. government agency securities	$	4,731,181	$	38,524	$	(1,086	)	$	4,768,619
Obligations of U.S. states and political subdivisions		3,188,217		29,521		(5,936	)		3,211,802
Corporate debt securities		7,645,289		45,080		(2,473	)		7,687,896
Total fixed maturity investments		15,564,687		113,125		(9,495	)		15,668,317
Equity securities		10,889,683		4,854,179		(378,563	)		15,365,299
Total equity securities		10,889,683		4,854,179		(378,563	)		15,365,299
Total investments	$	26,454,370	$	4,967,304	$	(388,058	)	$	31,033,616

	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
December 31, 2018
Fixed maturity investments:
U.S. government agency securities	$	6,739,840	$	287	$	(66,395	)	$	6,673,732
Obligations of U.S. states and political subdivisions		1,908,719		7,735		(13,514	)		1,902,940
Corporate debt securities		6,157,868		—		(146,460	)		6,011,408
Total fixed maturity investments		14,806,427		8,022		(226,369	)		14,588,080
Equity securities		12,145,120		2,596,269		(1,296,163	)		13,445,226
Total equity securities		12,145,120		2,596,269		(1,296,163	)		13,445,226
Total investments	$	26,951,547	$	2,604,291	$	(1,522,532	)	$	28,033,306

The following tables summarize the Company’s fixed maturity and equity securities in an unrealized loss position and the aggregate fair value and gross unrealized loss by length of time the security has continuously been in an unrealized loss position:

	12 months or greater					Less than 12 months					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
December 31, 2019
Fixed maturity investments:
U.S. government agency securities	$	—	$	—		$	1,528,838	$	(1,086	)	$	1,528,838	$	(1,086	)
Obligations of states and political subdivisions		—		—			601,053		(5,936	)		601,053		(5,936	)
Corporate debt securities		743,360		(2,473	)		—		—			743,360		(2,473	)
Total fixed maturity investments		743,360		(2,473	)		2,129,891		(7,022	)		2,873,251		(9,495	)
Equity securities		336,321		(119,313	)		1,496,152		(259,250	)		1,832,473		(378,563	)
Total equity securities		336,321		(119,313	)		1,496,152		(259,250	)		1,832,473		(378,563	)
Total investments	$	1,079,681	$	(121,786	)	$	3,626,043	$	(266,272	)	$	4,705,724	$	(388,058	)

	12 months or greater					Less than 12 months					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
December 31, 2018
Fixed maturity investments:
U.S. government agency securities	$	3,389,369	$	(55,015	)	$	2,788,235	$	(11,380	)	$	6,177,604	$	(66,395	)
Obligations of states and political subdivisions		766,118		(13,166	)		139,651		(348	)		905,769		(13,514	)
Corporate debt securities		4,498,396		(125,689	)		1,513,012		(20,771	)		6,011,408		(146,460	)
Total fixed maturity investments		8,653,883		(193,870	)		4,440,898		(32,499	)		13,094,781		(226,369	)
Equity securities		97,708		(40,981	)		5,683,065		(1,255,182	)		5,780,773		(1,296,163	)
Total equity securities		97,708		(40,981	)		5,683,065		(1,255,182	)		5,780,773		(1,296,163	)
Total investments	$	8,751,591	$	(234,851	)	$	10,123,963	$	(1,287,681	)	$	18,875,554	$	(1,522,532	)

As of

December

31,

2019,

there were

fixed income securities (

2018:

securities) in an unrealized loss position with an estimated fair value of

$2,873,251

(

2018:

$13,094,781

). Of these fixed income securities,

(

2018:

) had been in an unrealized loss position for

months or greater. As of

December

31,

2019,

none

of the fixed income securities were considered to be other than temporarily impaired. The Company has the intent to hold these fixed income securities and it is

not

more likely than

not

that the Company will be required to sell these fixed income securities before their fair values recover above the adjusted cost. The unrealized losses from these fixed income securities were

not

a result of credit, collateral or structural issues.

The cost or amortized cost and estimated fair value of fixed maturity investments at

December

31,

2019

and

2018

by contractual maturity are shown below. Expected maturities

may

differ from contractual maturities as borrowers

may

have the right to call or prepay obligations without penalties.

	Amortized Cost		Estimated Fair Value
December 31, 2019
Due in one year or less	$	2,539,709	$	2,542,229
Due after one year through five years		12,518,738		12,619,593
Due after five years through ten years		506,240		506,495
Total	$	15,564,687	$	15,668,317

	Amortized Cost		Estimated Fair Value
December 31, 2018
Due in one year or less	$	4,434,013	$	4,429,510
Due after one year through five years		9,851,410		9,644,270
Due after five years through ten years		521,004		514,300
Total	$	14,806,427	$	14,588,080

Information on sales and maturities of investments during the

twelve

months ended

December

31,

2019

and

2018

are as follows:

	2019			2018
Total proceeds on sales of available-for-sale securities	$	4,412,518		$	4,045,798
Total proceeds from redemptions of hedge fund investments		—			6,491
Total proceeds from redemptions of fixed maturity investments		540,000			—
Total proceeds from maturities of fixed maturity investments		4,175,000			3,170,000
Gross gains on sales		1,497,860			1,566,109
Gross losses on sales		(598,373	)		(22,437	)
Impairment losses		—			—
Net unrealized losses on equity investments (1)		3,175,510			(3,792,844	)
Total	$	4,074,997		$	(2,249,172	)

(

)

Effective

January

2018,

the Company adopted ASU

No.

2016

01.

The change in fair value of equity securities is recognized in net realized and unrealized gain (loss) on investment.

Fair Value of Investments

The following tables show the fair value of the Company’s investments in accordance with ASC

820,

“Fair Value Measurements and Disclosures” as of

December

31,

2019

and

2018.

					Fair value measurement using:
	Carrying amount		Total fair value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
December 31, 2019
U.S. government agency securities	$	4,768,619	$	4,768,619	$	—	$	4,768,619	$	—
Obligations of U.S. state and political subdivisions		3,211,802		3,211,802				3,211,802
Corporate debt securities		7,687,896		7,687,896				7,687,896
Total fixed maturity investments		15,668,317		15,668,317
Equity securities		15,365,299		15,365,299		15,365,299
Total equity securities		15,365,299		15,365,299
Total investments	$	31,033,616	$	31,033,616	$	15,365,299	$	15,668,317	$	—

					Fair value measurement using:
	Carrying amount		Total fair value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
December 31, 2018
U.S. government agency securities	$	6,673,732	$	6,673,732	$	—	$	6,673,732	$	—
Obligations of U.S. state and political subdivisions		1,902,940		1,902,940				1,902,940
Corporate debt securities		6,011,408		6,011,408				6,011,408
Total fixed maturity investments		14,588,080		14,588,080
Equity securities		13,445,226		13,445,226		13,445,226
Total equity securities		13,445,226		13,445,226
Total investments	$	28,033,306	$	28,033,306	$	13,445,226	$	14,588,080	$	—

There were

transfers between Levels

and

during the years ended

December

31,

2019

and

2018.

In accordance with U.S. GAAP, we are required to recognize certain assets at their fair value in our consolidated balance sheets. This includes our fixed maturity investments and equity securities. In accordance with the Fair Value Measurements and Disclosures Topic of FASB’s ASC

820,

fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC

820

establishes a

three

-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon whether the inputs to the valuation of an asset or liability are observable or unobservable in the market at the measurement date, with quoted market prices being the highest level (Level

) and unobservable inputs being the lowest level (Level

). A fair value measurement will fall within the level of the hierarchy based on the input that is significant to determining such measurement. The

three

levels are defined as follows:

•

Level

: Observable inputs to the valuation methodology that are quoted prices (unadjusted) for identical assets or liabilities in active markets.

•

Level

: Observable inputs to the valuation methodology other than quoted market prices (unadjusted) for identical assets or liabilities in active markets. Level

inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in markets that are

not

active and inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

•

Level

: Inputs to the valuation methodology that are unobservable for the asset or liability.

At each measurement date, we estimate the fair value of the security using various valuation techniques. We utilize, to the extent available, quoted market prices in active markets or observable market inputs in estimating the fair value of our investments. When quoted market prices or observable market inputs are

not

available, we utilize valuation techniques that rely on unobservable inputs to estimate the fair value of investments. The following describes the valuation techniques we used to determine the fair value of investments held as of

December

31,

2019

and what level within the fair value hierarchy each valuation technique resides:

•

U.S. government agency securities

: Comprised primarily of bonds issued by the Federal Home Loan Bank, the Federal Home Loan Mortgage Corporation, Federal Farm Credit Bank and the Federal National Mortgage Association. The fair values of U.S. government agency securities are priced using the spread above the risk-free U.S. Treasury yield curve. As the yields for the risk-free U.S. Treasury yield curve are observable market inputs, the fair values of U.S. government agency securities are classified as Level

in the fair value hierarchy. AmerInst considers that there is a liquid market for the types of securities held. Broker quotes are

not

used for fair value pricing.

•

Obligations of U.S. state and political subdivisions

: Comprised of fixed income obligations of U.S. state and local governmental municipalities. The fair values of these securities are based on quotes and current market spread relationships, and are classified as Level

in the fair value hierarchy. AmerInst considers that there is a liquid market for the types of securities held. Broker quotes are

not

used for fair value pricing.

•

Corporate debt securities

: Comprised of bonds issued by corporations. The fair values of these securities are based on quotes and current market spread relationships, and are classified as Level

in the fair value hierarchy. We consider that there is a liquid market for the types of securities held. Broker quotes are

not

used for fair value pricing.

•

Equity securities, at fair value

: Comprised primarily of investments in the common stock of publicly traded companies in the U.S. All of the Company’s equities are classified as Level

in the fair value hierarchy. The Company receives prices based on closing exchange prices from independent pricing sources to measure fair values for the equities.

While we obtain pricing from independent pricing services, management is ultimately responsible for determining the fair value measurements for all securities. To ensure fair value measurement is applied consistently and in accordance with U.S. GAAP, we periodically update our understanding of the pricing methodologies used by the independent pricing services. We also challenge any prices we believe

may

not

be representative of fair value under current market conditions. Our review process includes, but is

not

limited to: (i) initial and ongoing evaluation of the pricing methodologies and valuation models used by outside parties to calculate fair value; (ii) quantitative analysis; (iii) a review of multiple quotes obtained in the pricing process and the range of resulting fair values for each security, if available, and (iv) randomly selecting purchased or sold securities and comparing the executed prices to the fair value estimates provided by the independent pricing sources.

There have been

material changes to any of our valuation techniques from what was used as of

December

31,

2018.

Since the fair value of a financial instrument is an estimate of what a willing buyer would pay for our asset if we sold it, we will

not

know the ultimate value of our financial instruments until they are sold. We believe the valuation techniques utilized provide us with the best estimate of the price that would be received to sell our assets or transfer our liabilities in an orderly transaction between participants at the measurement date.

Major categories of net interest and dividend income are summarized as follows:

	2019			2018
Interest earned:
Fixed maturity investments	$	348,551		$	335,047
Short term investments and cash and cash equivalents		69,218			20,210
Dividends earned		209,307			175,688
Investment expenses		(148,965	)		(146,536	)
Net investment income	$	478,111		$	384,409