Note 2 - Investments

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Investment Holdings [Text Block]

Note 2.    Investments

Fixed Maturity

The amortized cost and fair value of available for sale investments as of March 31, 2024 and December 31, 2023 is as follows:

	March 31, 2024
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(unaudited)
Available for sale:
Fixed maturities:
US Treasury securities	$	791,681	$	-	$	(78,212	)	$	713,469
Corporate bonds		20,021,974		66,937		(2,795,376	)		17,293,535
Municipal bonds		5,733,087		68		(588,471	)		5,144,684
Redeemable preferred stock		3,620,009		730		(196,668	)		3,424,071
Term loans		16,800,927		150,906		(290,534	)		16,661,299
Mortgage backed and asset backed securities		32,009,368		586,040		(922,423	)		31,672,985
Total available for sale	$	78,977,046	$	804,681	$	(4,871,684	)	$	74,910,043

	December 31, 2023
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Available for sale:
Fixed maturities:
US Treasury securities	$	790,976	$	-	$	(66,308	)	$	724,668
Corporate bonds		20,234,444		95,085		(2,516,167	)		17,813,362
Municipal bonds		6,207,596		4,044		(575,547	)		5,636,093
Redeemable preferred stock		3,622,572		1,699		(318,702	)		3,305,569
Term loans		17,177,179		162,011		(286,770	)		17,052,420
Mortgage backed and asset backed securities		30,621,025		520,599		(1,164,216	)		29,977,408
Total available for sale	$	78,653,792	$	783,438	$	(4,927,710	)	$	74,509,520

The amortized cost and fair value of debt securities as of March 31, 2024 and December 31, 2023, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	As of March 31, 2024				As of December 31, 2023
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(unaudited)
Amounts maturing in:
One year or less	$	-	$	-	$	152,840	$	147,835
After one year through five years		15,589,592		15,632,945		16,397,124		16,461,777
After five years through ten years		6,227,335		5,940,946		6,371,609		6,112,389
More than 10 years		21,530,742		18,239,096		21,488,624		18,504,542
Redeemable preferred stocks		3,620,009		3,424,071		3,622,572		3,305,569
Mortgage backed and asset backed securities		32,009,368		31,672,985		30,621,025		29,977,408
Total amortized cost and fair value	$	78,977,046	$	74,910,043	$	78,653,792	$	74,509,520

Note 2. Investments (continued)

Proceeds from the sale of securities, maturities, and asset paydowns for the three months ended March 31, 2024 and 2023 were $3,580,556 and $1,736,118, respectively. With the implementation of CECL, changes in the allowance for credit losses is included in net gains (losses).  Realized gains and losses related to the sale of securities and net credit losses recognized in income are summarized as follows:

	Three Months Ended March 31,
	(unaudited)
	2024			2023
Gross gains	$	6,064		$	188,777
Gross losses		(41,962	)		(3,692	)
Realized gains (losses)	$	(35,898	)	$	185,085
Mortgage loans on real estate		-			13,225
Decrease in allowance for credit losses	$	-		$	13,225

Gross unrealized losses by duration are summarized as follows:

	Less than 12 months					Greater than 12 months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
March 31, 2024	(unaudited)
Available for sale:
Fixed maturities:
US Treasury securities	$	441,492	$	(10,075	)	$	271,976	$	(68,137	)	$	713,469	$	(78,212	)
Corporate bonds		499,563		(5,081	)		14,551,379		(2,790,295	)		15,050,942		(2,795,376	)
Municipal bonds		745,637		(13,356	)		4,348,543		(575,115	)		5,094,180		(588,471	)
Redeemable preferred stock		-		-			3,300,478		(196,668	)		3,300,478		(196,668	)
Term loans		155,150		(2,076	)		7,561,890		(288,458	)		7,717,040		(290,534	)
Mortgage backed and asset backed securities		5,810,107		(106,347	)		7,345,331		(816,076	)		13,155,438		(922,423	)
Total fixed maturities	$	7,651,949	$	(136,935	)	$	37,379,598	$	(4,734,749	)	$	45,031,547	$	(4,871,684	)

	Less than 12 months					Greater than 12 months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
December 31, 2023
Available for sale:
Fixed maturities:
US Treasury securities	$	724,668	$	(66,308	)	$	-	$	-		$	724,668	$	(66,308	)
Corporate bonds		262,673		(863	)		15,653,914		(2,515,304	)		15,916,587		(2,516,167	)
Municipal bonds		523,744		(4,792	)		4,825,568		(570,755	)		5,349,312		(575,547	)
Redeemable preferred stock		-		-			3,305,569		(318,702	)		3,305,569		(318,702	)
Term loans		3,739,859		(174,955	)		3,534,621		(111,815	)		7,274,480		(286,770	)
Mortgage backed and asset backed securities		9,549,515		(219,946	)		6,228,220		(944,270	)		15,777,735		(1,164,216	)
Total fixed maturities	$	14,800,459	$	(466,864	)	$	33,547,892	$	(4,460,846	)	$	48,348,351	$	(4,927,710	)

Note 2. Investments (continued)

Unrealized losses occur from market price declines due to changes in interest rates. The total number of available for sale fixed maturity securities in the investment portfolio in an unrealized loss position as of March 31, 2024 was 214, which represented an unrealized loss of $4,871,684 of the aggregate carrying value of those securities. The 214 securities breakdown as follows: 120 bonds, 69 mortgage and asset backed securities, 11 term loans, and 14 redeemable preferred stock.  Management does not intend to sell and it is likely that management will not be required to sell before their anticipated recovery. 

Mortgage Loans on Real Estate

The Company has invested in various mortgage loans through participation agreements with the original issuing entity.  The Company’s mortgage loans by property type as of March 31, 2024 and December 31, 2023 are summarized as follows:

	March 31, 2024			December 31, 2023
	(unaudited)
Commercial mortgage loans by property type
Condominium	$	231,686		$	377,621
Multi-property		8,089,164			8,923,604
Multi-family		2,335,317			2,855,008
Industrial		1,000,000			1,000,000
Retail/Office		6,971,359			6,482,664
Total commercial mortgages	$	18,627,526		$	19,638,897
Allowance for credit losses		(21,644	)		(21,644	)
Carrying value	$	18,605,882		$	19,617,253

The Company’s mortgage loans by loan-to-value ratio as of December 31, 2023 and December 31, 2022 are summarized as follows:

	March 31, 2024			December 31, 2023
	(unaudited)
Loan to value ratio
Over 70 to 80%	$	-		$	7,123,604
Over 60 to 70%		3,167,230			3,137,953
Over 50 to 60%		8,611,437			2,322,273
Over 40 to 50%		2,325,780			2,327,436
Over 30 to 40%		-			377,621
Over 20 to 30%		2,873,993			2,689,619
Over 10 to 20%		1,649,086			1,660,391
Total	$	18,627,526		$	19,638,897
Allowance for credit losses		(21,644	)		(21,644	)
Carrying value	$	18,605,882		$	19,617,253

The Company’s mortgage loans by maturity date as of December 31, 2023 and December 31, 2022 are summarized as follows:

	March 31, 2024			December 31, 2023
	(unaudited)
Maturity Date
One year or less	$	13,469,937		$	14,599,568
After one year through five years		5,157,589			5,039,329
Total	$	18,627,526		$	19,638,897
Allowance for credit losses		(21,644	)		(21,644	)
Carrying value	$	18,605,882		$	19,617,253

Note 2. Investments (continued)

The Company individually evaluates its commercial mortgage loan portfolio for the establishment of a specific loan loss allowance.   A mortgage loan requires a specific allowance when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. If the Company determines that the value of any specific mortgage loan requires an allowance, the carrying amount of the mortgage loan will be reduced to its fair value, based upon the present value of expected future cash flows from the loan discounted at the loan's effective interest rate, or the fair value of the underlying collateral less estimated costs to sell.  The Company had no mortgage loans that were on non-accrued status as of March 31, 2024 and December 31, 2023.  The were no mortgage loans delinquent on payments due to the Company as of March 31, 2024 and December 31, 2023. 

The Company analyzes our commercial mortgage loan portfolio for the need of a general loan allowance for expected credit losses on all other loans on a quantitative and qualitative basis by grouping assets with similar risk characteristics when there is not a specific expectation of a loss for an individual loan. The amount of the general loan allowance is based upon management's evaluation of the collectability of the loan portfolio, historical loss experience, delinquencies, credit concentrations, underwriting standards and national and local economic conditions. The Company does not measure a credit loss allowance on accrued interest receivable as we write off any uncollectible accrued interest receivable balance to net investment income in a timely manner. The Company did not charge off any uncollectible accrued interest receivable on our commercial mortgage loan portfolio during the three months ended March 31, 2024 and March 31, 2023.

The Company's commercial mortgage loans are pooled by risk rating and property collateral type and an estimated loss ratio is applied against each risk pool. The loss ratios are generally based upon historical loss experience for each risk pool and are adjusted for current and forecasted economic factors management believes to be relevant and supportable. Economic factors are forecasted for two years with immediate reversion to historical experience.

The following table presents a roll-forward of our specific and general valuation allowances for our commercial mortgage loan portfolio:

	Three Months Ended March 31, 2024
	(unaudited)
	Specific Allowance		General Allowance
Beginning allowance balance	$	-	$	21,644
Cumulative adjustment for changes in accounting principals		-		-
Charge-offs		-		-
Recoveries		-		-
Change in provision for credit losses		-		-
Ending Allowance	$	-	$	21,644

The specific allowance represents the total credit loss allowances on loans which are individually evaluated for impairment. The general allowance is for the group of loans discussed above which are collectively evaluated for impairment.  The change in provision for credit losses is recorded in net investment gains (losses).  

Charge-offs include allowances that have been established on loans that were satisfied either by taking ownership of the collateral or by some other means such as discounted pay-off or loan sale. When ownership of the property is taken it is recorded at the lower of the loan's carrying value or the property's fair value (based on appraised values) less estimated costs to sell. The real estate owned is recorded as a component of other investments and the loan is recorded as fully paid, with any allowance for credit loss that has been established charged off. Fair value of the real estate is determined by third party appraisal. Recoveries are situations where the Company has received a payment from the borrower in an amount greater than the carrying value of the loan (principal outstanding less specific allowance). The Company did not own any real estate related to our mortgage participations during the three months ended March 31, 2024 and 2023. 

Note 2. Investments (continued)

Investment Income, Net of Expenses

The components of net investment income for the three months ended March 31, 2024 and 2023 are as follows:

	Three Months Ended March 31,
	2024			2023
	(unaudited)
Fixed maturities	$	1,309,729		$	1,039,423
Mortgages		406,549			509,022
Equity securities		83,165			210,370
Other invested assets		60,055			45,940
Cash and cash equivalents		88,972			14,021
		1,948,471			1,818,776
Less investment expenses		(278,514	)		(313,166	)
	$	1,669,957		$	1,505,610

Net Investment Gains (losses)

Accounting standards require that the unrealized gains and losses on equity securities be reported as income on the consolidated statements of comprehensive income (loss). For the quarter ended March 31, 2024, net investment gains is comprised of $96,321 of unrealized gains on our equity portfolio, net realized losses of $35,828, no change in allowance for credit losses, and a gain on the change in the fair value of our embedded derivatives of $79,929. For the quarter ended March 31, 2023, net investment gains is comprised of $246,126 of unrealized gains on our equity portfolio, net realized gains of $185,085, a gain on the reduction in allowance for credit losses of $13,225, and a loss on the change in the fair value of our embedded derivative of $97,334.