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Investments
12 Months Ended
Dec. 31, 2022
Investments  
Investments

3.

Investments

​

The gross unrealized gains and losses on investments in fixed maturity securities, including redeemable preferred stocks that have characteristics of fixed maturities, and equity securities, including interests in mutual funds, and other invested assets, were as follows for the periods indicated.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

As of December 31, 2022

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

Cost or

    

Allowance for

    

Gross Unrealized

    

Estimated

​

​

Amortized

​

Expected Credit

​

​

​

​

​

Fair

​

​

Cost

​

Losses

​

Gains

​

Losses (3)

​

Value

U.S. Treasury securities

​

$

1,825

​

$

—

​

$

—

​

$

(156)

​

$

1,669

Obligations of states and political subdivisions

​

 

57,319

​

 

—

​

 

282

​

 

(3,532)

​

 

54,069

Residential mortgage-backed securities (1)

​

 

259,878

​

 

—

​

 

385

​

 

(25,761)

​

 

234,502

Commercial mortgage-backed securities

​

 

156,303

​

 

—

​

 

107

​

 

(16,479)

​

 

139,931

Other asset-backed securities

​

 

74,160

​

 

—

​

 

—

​

 

(5,429)

​

 

68,731

Corporate and other securities

​

 

603,294

​

 

(678)

​

 

740

​

 

(52,103)

​

 

551,253

Subtotal, fixed maturity securities 

​

 

1,152,779

​

 

(678)

​

 

1,514

​

 

(103,460)

​

 

1,050,155

Equity securities (2)

​

 

231,444

​

 

—

​

 

31,857

​

 

(23,146)

​

 

240,155

Other invested assets (4)

​

 

112,850

​

 

—

​

 

—

​

 

—

​

 

112,850

Totals

​

$

1,497,073

​

$

(678)

​

$

33,371

​

$

(126,606)

​

$

1,403,160

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

As of December 31, 2021

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

Cost or

    

Allowance for

    

Gross Unrealized

    

Estimated

​

​

Amortized

​

Expected Credit

​

​

​

​

​

Fair

​

​

Cost

​

Losses

​

Gains

​

Losses (3)

​

Value

U.S. Treasury securities

​

$

318

​

$

—

​

$

6

​

$

—

​

$

324

Obligations of states and political subdivisions

​

 

111,578

​

 

—

​

 

4,847

​

 

(123)

​

 

116,302

Residential mortgage-backed securities (1)

​

 

237,026

​

 

—

​

 

5,941

​

 

(1,503)

​

 

241,464

Commercial mortgage-backed securities

​

 

146,318

​

 

—

​

 

5,007

​

 

(442)

​

 

150,883

Other asset-backed securities

​

 

83,376

​

 

—

​

 

475

​

 

(255)

​

 

83,596

Corporate and other securities

​

 

609,241

​

 

(691)

​

 

20,647

​

 

(3,487)

​

 

625,710

Subtotal, fixed maturity securities 

​

 

1,187,857

​

 

(691)

​

 

36,923

​

 

(5,810)

​

 

1,218,279

Equity securities (2)

​

 

211,848

​

 

—

​

 

54,861

​

 

(1,764)

​

 

264,945

Other invested assets (4)

​

 

87,911

​

 

—

​

 

—

​

 

—

​

 

87,911

Totals

​

$

1,487,616

​

$

(691)

​

$

91,784

​

$

(7,574)

​

$

1,571,135

(1)Residential mortgage-backed securities consists primarily of obligations of U.S. Government agencies including collateralized mortgage obligations issued, guaranteed and/or insured by the following issuers: Government National Mortgage Association (GNMA), Federal Home Loan Mortgage Corporation (FHLMC), Federal National Mortgage Association (FNMA) and the Federal Home Loan Bank (FHLB).
(2)Equity securities include common stock, preferred stock, mutual funds and interests in mutual funds held to fund the Company’s executive deferred compensation plan.
(3)The Company’s investment portfolio included 1,195 and 444 securities in an unrealized loss position at December 31, 2022 and December 31, 2021, respectively.
(4)Other invested assets are accounted for under the equity method which approximates fair value.

​

The amortized cost and the estimated fair value of fixed maturity securities, by maturity, are shown below for the period indicated. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

​

​

​

​

​

​

​

​

​

​

​

​

​

As of December 31, 2022

​

    

Amortized

    

Estimated

​

​

Cost

​

Fair Value

Due in one year or less

​

$

4,899

​

$

4,665

Due after one year through five years

​

 

289,109

​

 

269,852

Due after five years through ten years

​

 

328,816

​

 

296,368

Due after ten years through twenty years

​

 

38,044

​

 

34,623

Due after twenty years

​

 

1,570

​

 

1,483

Asset-backed securities

​

 

490,341

​

 

443,164

Totals

​

$

1,152,779

​

$

1,050,155

​

​

​

​

The gross realized gains and losses on sales of investments were as follows for the periods indicated.

​

​

​

​

​

​

​

​

​

​

​

​

​

    

Years Ended December 31,

​

 

2022

    

2021

 

2020

Gross realized gains

​

​

​

​

​

​

​

​

​

Fixed maturity securities

​

$

1,511

​

$

3,666

​

$

1,645

Equity securities

​

 

12,367

​

 

12,275

​

 

6,864

Gross realized losses

​

​

​

​

​

​

​

​

​

Fixed maturity securities

​

 

(2,987)

​

 

(1,036)

​

 

(2,166)

Equity securities

​

 

(1,701)

​

 

(20)

​

 

(5,386)

Net realized gains on investments

​

$

9,190

​

$

14,885

​

$

957

​

In the normal course of business, the Company enters into transactions involving various types of financial instruments, including investments in fixed maturities and equity securities. Investment transactions have credit exposure to the extent that a counter party may default on an obligation to the Company. Credit risk is a consequence of carrying, trading and investing in securities. To manage credit risk, the Company focuses on higher quality fixed income securities, reviews the credit strength of all companies in which it invests, limits its exposure in any one investment and monitors the portfolio quality, taking into account credit ratings assigned by recognized statistical rating organizations.

The following tables as of December 31, 2022 and 2021 present the gross unrealized losses included in the Company’s investment portfolio and the fair value of those securities aggregated by investment category. The tables also present the length of time that they have been in a continuous unrealized loss position.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

As of December 31, 2022

​

​

Less than 12 Months

​

12 Months or More

​

Total

​

    

Estimated

    

Unrealized

    

Estimated

    

Unrealized

    

Estimated

    

Unrealized

​

​

Fair Value

​

Losses

​

Fair Value

​

Losses

​

Fair Value

​

Losses

U.S. Treasury securities

​

$

1,669

​

$

156

​

$

—

​

$

—

​

$

1,669

​

$

156

Obligations of states and political subdivisions

​

 

34,178

​

 

2,504

​

 

3,072

​

 

1,028

​

 

37,250

​

 

3,532

Residential mortgage-backed securities

​

 

140,855

​

 

12,254

​

 

70,956

​

 

13,507

​

 

211,811

​

 

25,761

Commercial mortgage-backed securities

​

 

110,073

​

 

11,632

​

 

24,653

​

 

4,847

​

 

134,726

​

 

16,479

Other asset-backed securities

​

 

41,113

​

​

2,358

​

​

27,618

​

​

3,071

​

​

68,731

​

​

5,429

Corporate and other securities

​

 

386,401

​

 

28,048

​

 

131,046

​

 

24,055

​

 

517,447

​

 

52,103

Subtotal, fixed maturity securities

​

 

714,289

​

 

56,952

​

 

257,345

​

 

46,508

​

 

971,634

​

 

103,460

Equity securities

​

 

116,881

​

 

21,198

​

 

6,209

​

 

1,948

​

 

123,090

​

 

23,146

Total temporarily impaired securities

​

$

831,170

​

$

78,150

​

$

263,554

​

$

48,456

​

$

1,094,724

​

$

126,606

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

As of December 31, 2021

​

​

Less than 12 Months

​

12 Months or More

​

Total

​

    

Estimated

    

Unrealized

    

Estimated

    

Unrealized

    

Estimated

    

Unrealized

​

​

Fair Value

​

Losses

​

Fair Value

​

Losses

​

Fair Value

​

Losses

U.S. Treasury securities

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

Obligations of states and political subdivisions

​

 

2,985

​

 

85

​

 

1,012

​

 

38

​

 

3,997

​

 

123

Residential mortgage-backed securities

​

 

97,116

​

 

1,502

​

 

11

​

 

1

​

 

97,127

​

 

1,503

Commercial mortgage-backed securities

​

 

29,660

​

 

442

​

 

—

​

 

—

​

 

29,660

​

 

442

Other asset-backed securities

​

 

39,266

​

​

255

​

​

—

​

​

—

​

 

39,266

​

 

255

Corporate and other securities

​

 

181,470

​

 

3,140

​

 

11,436

​

 

347

​

 

192,906

​

 

3,487

Subtotal, fixed maturity securities

​

 

350,497

​

 

5,424

​

 

12,459

​

 

386

​

 

362,956

​

 

5,810

Equity securities

​

 

19,457

​

 

1,559

​

 

1,029

​

 

205

​

 

20,486

​

 

1,764

Total temporarily impaired securities

​

$

369,954

​

$

6,983

​

$

13,488

​

$

591

​

$

383,442

​

$

7,574

​

At December 31, 2022, U.S. Government residential mortgage backed securities with a fair value of $40,195 are pledged as collateral for a borrowing with the Federal Home Loan Bank of Boston (“FHLB-Boston”) as described in Note 10 – Debt. These securities are included in fixed maturity securities on the Company’s Consolidated Balance Sheets.

Impairments

For fixed maturities that the Company does not intend to sell or for which it is more likely than not that the Company would not be required to sell before an anticipated recovery in value, the Company separates the credit loss component of the impairment from the amount related to all other factors. The expected credit loss component is recognized as an allowance for expected credit losses. The allowance is adjusted for any additional credit losses and subsequent recoveries, which are booked in income as either credit loss expense or credit loss benefit, respectively. Upon recognizing a credit loss, the cost basis is not adjusted. The impairment related to all other factors (non-credit factors) is reported in other comprehensive income.

​

For fixed maturities where the Company records a credit loss, a determination is made as to the cause of the impairment and whether the Company expects a recovery in the value. For fixed maturities where the Company expects a recovery in value, the constant effective yield method is utilized, and the investment is amortized to par.

​

For fixed maturity investments the Company intends to sell or for which it is more likely than not that the Company will be required to sell before an anticipated recovery in value, the full amount of the impairment is included in credit loss expense. The new cost basis of the investment is the previous amortized cost basis less the impairment recognized in credit loss expense. The new cost basis is not adjusted for any subsequent recoveries in fair value.

​

​

The Company uses a systematic methodology to evaluate declines in fair values below cost or amortized cost of our investments. Some of the factors considered in assessing impairment of fixed maturities due to credit losses include the extent to which the fair value is less than amortized cost, the financial condition of and the near and long-term prospects of the issuer, whether the debtor is current on its contractually obligated interest and principal payments, changes to the rating of the security by a rating agency, the historical volatility of the fair value of the security and whether it is more like than not that the Company will be required to sell the investment prior to an anticipated recovery in value.

​

As of December 31, 2022, the Company concluded that $678 of unrealized losses were due to credit factors and were recorded as an allowance for expected credit losses, compared to $691 as of December 31, 2021. The Company concluded that outside of the securities that were recognized as credit impaired, the unrealized losses recorded on the fixed maturity portfolio at December 31, 2022 and 2021 resulted from fluctuations in market interest rates and other temporary market conditions as opposed to fundamental changes in the credit quality of the issuers of such securities. Based upon the analysis performed, the Company’s decision to hold these securities, the Company’s current level of liquidity and our history of positive operating cash flows, management believes it is more likely than not that it will not be required to sell any of its securities before the anticipated recovery in the fair value to its amortized cost basis.

​

The following tables represent a reconciliation of the beginning and ending balances of the allowance for expected credit losses on fixed maturities classified as available for sale.

​

​

​

​

​

​

​

​

​

​

​

Year Ended December 31, 

​

​

​

2022

​

​

2021

Beginning of period

​

$

691

​

$

1,054

Credit losses on securities with no previously recorded credit losses

​

​

193

​

​

9

Net increases (decreases) in allowance on previously impaired securities

​

 

98

​

​

(137)

Reduction due to sales

​

​

(304)

​

​

(235)

Writeoffs charged against allowance

​

 

—

​

​

—

Recoveries of amounts previously written off

​

 

—

​

​

—

Ending balance of period

​

$

678

​

$

691

​

The Company holds no subprime mortgage debt securities. All of the Company’s holdings in mortgage-backed securities are either U.S. Government or Agency guaranteed or are rated investment grade by either Moody’s or Standard & Poor’s.

Net Investment Income

The components of net investment income were as follows for the periods indicated.

​

​

​

​

​

​

​

​

​

​

​

​

​

Years Ended December 31,

​

    

2022

    

2021

 

2020

Interest on fixed maturity securities

​

$

40,886

​

$

36,160

​

$

37,727

Dividends on equity securities

​

 

6,746

​

 

6,421

​

 

5,044

Equity in earnings of other invested assets

​

 

2,304

​

 

4,895

​

 

1,378

Interest on other assets

​

 

61

​

 

22

​

 

27

Total Investment Income

​

 

49,997

​

 

47,498

​

 

44,176

Investment expenses

​

 

3,272

​

 

3,363

​

 

3,131

Net investment income 

​

$

46,725

​

$

44,135

​

$

41,045

​