Investments

3 Months Ended

Mar. 31, 2024

Investments, Debt and Equity Securities [Abstract]

Investments

2. Investments

The Company analyzed its investment portfolio in accordance with its credit loss review policy and determined it did not need to record a credit loss for the three months ended March 31, 2024. The Company holds only investment grade securities from high credit quality issuers. The gross unrealized losses of $13.8 million as of March 31, 2024, from the Company's available-for-sale securities are due to market conditions and interest rate changes.

The cost or amortized cost, gross unrealized gains or losses, and estimated fair value of the investments in securities classified as available for sale at March 31, 2024 and December 31, 2023 were as follows (dollars in thousands):

	March 31, 2024
	Cost or		Gross Unrealized					Estimated
	Amortized Cost		Gains		Losses			Fair Value
Debt Securities:
U.S. Government	$	5,702	$	—	$	(172	)	$	5,530
State and local government		23,961		—		(3,799	)		20,162
Corporate debt		33,880		—		(3,667	)		30,213
Asset-backed securities		37,813		75		(485	)		37,403
Mortgage-backed securities		26,320		—		(5,044	)		21,276
Commercial mortgage-backed securities		3,382		—		(142	)		3,240
Collateralized mortgage obligations		3,161		—		(451	)		2,710
Total debt securities available for sale	$	134,219	$	75	$	(13,760	)	$	120,534

	December 31, 2023
	Cost or		Gross Unrealized					Estimated
	Amortized Cost		Gains		Losses			Fair Value
Debt Securities:
U.S. Government	$	5,405	$	3	$	(161	)	$	5,247
State and local government		24,274		—		(3,810	)		20,464
Corporate debt		34,002		—		(3,507	)		30,495
Asset-backed securities		38,289		47		(584	)		37,752
Mortgage-backed securities		26,768		—		(4,641	)		22,127
Commercial mortgage-backed securities		3,404		—		(160	)		3,244
Collateralized mortgage obligations		3,228		—		(444	)		2,784
Total debt securities available for sale	$	135,370	$	50	$	(13,307	)	$	122,113

The following table summarizes the aggregate fair value and gross unrealized losses, by security type, of the available-for-sale securities in unrealized loss positions. The table segregates the holdings based on the length of time that individual securities have been in a continuous unrealized loss position (dollars in thousands):

	March 31, 2024
	Less than 12 months							Greater than 12 months							Total
	No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses			No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses			No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses
Debt Securities:
U.S. Government		3	$	1,938	$	(27	)		9	$	3,407	$	(145	)		12	$	5,345	$	(172	)
State and local government		1		300		(1	)		114		19,862		(3,798	)		115		20,162		(3,799	)
Corporate debt		—		—		—			65		30,213		(3,667	)		65		30,213		(3,667	)
Asset-backed securities		7		3,453		(4	)		11		11,175		(481	)		18		14,628		(485	)
Mortgage-backed securities		1		5		(1	)		66		21,271		(5,043	)		67		21,276		(5,044	)
Commercial mortgage-backed securities		—		—		—			4		3,240		(142	)		4		3,240		(142	)
Collateralized mortgage obligations		—		—		—			31		2,710		(451	)		31		2,710		(451	)
Total debt securities available for sale		12	$	5,696	$	(33	)		300	$	91,878	$	(13,727	)		312	$	97,574	$	(13,760	)

	December 31, 2023
	Less than 12 months							Greater than 12 months							Total
	No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses			No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses			No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses
Debt Securities:
U.S. Government		1	$	649	$	(7	)		9	$	3,400	$	(154	)		10	$	4,049	$	(161	)
State and local government		3		1,193		(7	)		113		19,096		(3,803	)		116		20,289		(3,810	)
Corporate debt		—		—		—			66		30,495		(3,507	)		66		30,495		(3,507	)
Asset-backed securities		1		1,090		(1	)		21		16,270		(583	)		22		17,360		(584	)
Mortgage-backed securities		4		11		(1	)		64		22,116		(4,640	)		68		22,127		(4,641	)
Commercial mortgage-backed securities		—		—		—			4		3,225		(160	)		4		3,225		(160	)
Collateralized mortgage obligations		—		—		—			32		2,803		(444	)		32		2,803		(444	)
Total debt securities available for sale		9	$	2,943	$	(16	)		309	$	97,405	$	(13,291	)		318	$	100,348	$	(13,307	)

The Company’s sources of net investment income and losses are as follows (dollars in thousands):

	Three Months Ended March 31,
	2024			2023
Debt securities	$	1,225		$	853
Equity securities		11			11
Cash, cash equivalents and short-term investments		377			503
Total investment income		1,613			1,367
Investment expenses		(61	)		(60	)
Net investment income	$	1,552		$	1,307

The Company had no gross realized gains or losses from sales, calls and maturities of available-for-sale debt and equity securities for the three months ended March 31, 2024 and 2023, respectively.

Proceeds from available-for-sale debt securities were $1.8 million and $23.6 million for the three months ended March 31, 2024 and 2023, respectively.

There were no payables or receivables from securities purchased or sold for the three months ended March 31, 2024 and 2023, respectively.

The Company's gross unrealized gains related to its equity investments were $505,000 as of March 31, 2024 and December 31, 2023, respectively. The Company’s gross unrealized losses related to its equity investments were $492,000 and $535,000 as of March 31, 2024 and December 31, 2023, respectively.

The Company also carries other equity investments that do not have a readily determinable fair value at cost, less impairment or observable changes in price. We review these investments for impairment during each reporting period. There were no impairments or observable changes in price recorded for the three months ended March 31, 2024 and 2023, respectively, related to the Company's other equity investments. These investments are included in Other Assets in the Consolidated Balance Sheets and amounted to $1.4 million as of March 31, 2024 and December 31, 2023, respectively.

The table below summarizes the amortized cost and fair value of available-for-sale debt securities by contractual maturity at March 31, 2024. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties (dollars in thousands):

	Amortized Cost		Estimated Fair Value
Due in one year or less	$	4,629	$	4,564
Due after one year through five years		30,738		28,557
Due after five years through ten years		17,489		14,648
Due after ten years		10,687		8,136
Securities with contractual maturities		63,543		55,905
Asset-backed securities		37,813		37,403
Mortgage-backed securities		26,320		21,276
Commercial mortgage-backed securities		3,382		3,240
Collateralized mortgage obligations		3,161		2,710
Total debt securities	$	134,219	$	120,534

At March 31, 2024 and December 31, 2023, the Insurance Company Subsidiaries had $8.1 million and $8.2 million, respectively, on deposit in trust accounts to meet the deposit requirements of various state insurance departments. At March 31, 2024 and December 31, 2023, the Company had $122.5 million and $123.5 million, respectively, held in trust accounts to meet collateral requirements with other third-party insurers, relating to various fronting arrangements. Approximately $121.7 million of the trust account balances are for collateral of gross unearned premiums and gross loss reserves of the fronted business on the security guard and installation industries ("Security Program") and the quick service restaurant program. There are withdrawal and other restrictions on these deposits, including the type of investments that may be held, however, the Company may generally invest in high-grade bonds and short-term investments and earn interest on the funds. As the unearned premiums run off to zero and loss reserves are paid on these programs, the remaining trust balances will be released and available for general use.