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Investments

12 Months Ended

Dec. 31, 2025

3.	Investments

The gross unrealized gains and losses on investments in fixed maturity securities, and equity securities, including interests in mutual funds, and other invested assets, were as follows for the periods indicated.

As of December 31, 2025

 

Cost or

 

Allowance for

 

Gross Unrealized

 

Estimated

Amortized

Expected Credit

Fair

Cost

Losses

Gains

Losses (3)

Value

U.S. Treasury securities

4,211

—

(28)

4,205

Obligations of states and political subdivisions

38,837

—

532

(1,651)

37,718

Residential mortgage-backed securities (1)

376,354

—

5,075

(15,382)

366,047

Commercial mortgage-backed securities

162,755

—

702

(6,439)

157,018

Other asset-backed securities

170,332

—

373

(1,196)

169,509

Corporate and other securities

584,746

—

7,431

(11,126)

581,051

Subtotal, fixed maturity securities

1,337,235

—

14,135

(35,822)

1,315,548

Equity securities (2)

201,591

—

27,327

(7,965)

220,953

Other invested assets (4)

151,020

—

151,020

Totals

1,689,846

—

41,462

(43,787)

1,687,521


		As of December 31, 2024

		Cost or			Allowance for			Gross Unrealized					Estimated
		Amortized			Expected Credit								Fair
		Cost			Losses			Gains		Losses (3)			Value
U.S. Treasury securities		$	2,418		$	—		$	2	$	(77)		$	2,343
Obligations of states and political subdivisions			38,581			—			170		(2,585)			36,166
Residential mortgage-backed securities (1)			327,161			—			601		(26,535)			301,227
Commercial mortgage-backed securities			140,124			—			91		(10,840)			129,375
Other asset-backed securities			65,456			—			155		(1,894)			63,717
Corporate and other securities			607,298			(1,198)			2,734		(26,444)			582,390
Subtotal, fixed maturity securities			1,181,038			(1,198)			3,753		(68,375)			1,115,218
Short-term investments			19,970			—			5		—			19,975
Equity securities (2)			201,258			—			29,244		(9,080)			221,422
Other invested assets (4)			156,444			—			—		—			156,444
Totals		$	1,558,710		$	(1,198)		$	33,002	$	(77,455)		$	1,513,059

(1)

Residential mortgage-backed securities consist 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 700 and 884 securities in an unrealized loss position at December 31, 2025 and 2024, respectively.

(4)	Other invested assets are generally accounted for under the equity method which approximated 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, 2025
		Amortized			Estimated
		Cost			Fair Value
Due in one year or less		$	7,477		$	7,451
Due after one year through five years			303,371			299,617
Due after five years through ten years			296,277			295,111
Due after ten years through twenty years			19,835			19,929
Due after twenty years			834			866
Asset-backed securities			709,441			692,574
Totals		$	1,337,235		$	1,315,548

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


		Years Ended December 31,
		2025			2024		2023
Gross realized gains
Fixed maturity securities		$	2,296		$	1,482	$	1,025
Equity securities			30,216			13,304		8,584
Gross realized losses
Fixed maturity securities			(10,844)			(3,020)		(3,577)
Equity securities			(3,686)			(4,046)		(4,705)
Net realized gains on investments		$	17,982		$	7,720	$	1,327

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, 2025 and 2024 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, 2025

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

—

1,474

Obligations of states and political subdivisions

1,199

10,684

1,645

11,883

1,651

Residential mortgage-backed securities

26,318

153

156,857

15,229

183,175

15,382

Commercial mortgage-backed securities

15,491

108

103,960

6,331

119,451

6,439

Other asset-backed securities

95,322

146

10,113

1,050

105,435

1,196

Corporate and other securities

91,652

464

176,063

10,662

267,715

11,126

Subtotal, fixed maturity securities

229,982

877

459,151

34,945

689,133

35,822

Equity securities

68,924

5,162

7,967

2,803

76,891

7,965

Total temporarily impaired securities

298,906

6,039

467,118

37,748

766,024

43,787


		As of December 31, 2024
		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		$	—		$	—		$	1,742		$	77		$	1,742		$	77
Obligations of states and political subdivisions			13,289			315			19,209			2,270			32,498			2,585
Residential mortgage-backed securities			94,528			2,401			162,260			24,134			256,788			26,535
Commercial mortgage-backed securities			3,050			9			121,152			10,831			124,202			10,840
Other asset-backed securities			11,298			278			22,018			1,616			33,316			1,894
Corporate and other securities			129,953			2,342			287,179			24,102			417,132			26,444
Subtotal, fixed maturity securities			252,118			5,345			613,560			63,030			865,678			68,375
Equity securities			49,268			4,030			21,285			5,050			70,553			9,080
Total temporarily impaired securities		$	301,386		$	9,375		$	634,845		$	68,080		$	936,231		$	77,455

At December 31, 2025, U.S. Government residential mortgage backed securities with a fair value of $44,702 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, 2025, the Company concluded that none of the unrealized losses in the fixed maturity portfolio were attributable to credit factors; therefore, no allowance for credit losses was recorded, compared to an allowance of $1,198 as of December 31, 2024. The Company concluded that, other than securities previously identified as credit-impaired, the unrealized losses recorded on the fixed maturity portfolio at December 31, 2025 and 2024 were driven by changes 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,
		2025		2024		2023
Beginning of period	$	1,198	$	1,208	$	678
Credit losses on securities with no previously recorded credit losses		303		683		1,395
Net increases (decreases) in allowance on previously impaired securities		29		18		254
Reduction due to sales		(1,530)		(711)		(771)
Write-offs charged against allowance		—		—		(348)
Recoveries of amounts previously written off		—		—		—
Ending balance of period	$	—	$	1,198	$	1,208

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 nationally recognized rating agencies.

Net Investment Income

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


		Years Ended December 31,
		2025			2024		2023
Interest on fixed maturity securities		$	55,620		$	47,219	$	46,609
Dividends on equity securities			6,725			6,959		7,298
Equity in earnings of other invested assets			4,025			4,654		5,521
Interest on other assets			307			339		219
Total Investment Income			66,677			59,171		59,647
Investment expenses			3,945			3,451		3,270
Net investment income		$	62,732		$	55,720	$	56,377