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Investments
 9 Months Ended
Sep. 30, 2024
Investments, Debt and Equity Securities [Abstract]  
Investments

3. 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 and nine months ended September 30, 2024. The Company holds only investment grade securities from high credit quality issuers. The gross unrealized losses of $10.2 million as of September 30, 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 September 30, 2024 and December 31, 2023 were as follows (dollars in thousands):

 

 

 

September 30, 2024

 

 

 

Cost or

 

 

Gross Unrealized

 

 

Estimated

 

 

 

Amortized Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Debt Securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government

 

$

5,393

 

 

$

24

 

 

$

(73

)

 

$

5,344

 

State and local government

 

 

23,014

 

 

 

6

 

 

 

(3,096

)

 

 

19,924

 

Corporate debt

 

 

33,686

 

 

 

—

 

 

 

(2,499

)

 

 

31,187

 

Asset-backed securities

 

 

32,757

 

 

 

86

 

 

 

(165

)

 

 

32,678

 

Mortgage-backed securities

 

 

25,178

 

 

 

—

 

 

 

(4,002

)

 

 

21,176

 

Commercial mortgage-backed securities

 

 

2,284

 

 

 

—

 

 

 

(66

)

 

 

2,218

 

Collateralized mortgage obligations

 

 

2,945

 

 

 

—

 

 

 

(311

)

 

 

2,634

 

Total debt securities available for sale

 

$

125,257

 

 

$

116

 

 

$

(10,212

)

 

$

115,161

 

 

 

 

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):

 

 

 

September 30, 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

 

 

—

 

 

$

—

 

 

$

—

 

 

 

6

 

 

$

2,724

 

 

$

(73

)

 

 

6

 

 

$

2,724

 

 

$

(73

)

State and local government

 

 

1

 

 

 

196

 

 

 

(3

)

 

 

106

 

 

 

17,963

 

 

 

(3,093

)

 

 

107

 

 

 

18,159

 

 

 

(3,096

)

Corporate debt

 

 

1

 

 

 

95

 

 

 

(5

)

 

 

64

 

 

 

31,092

 

 

 

(2,494

)

 

 

65

 

 

 

31,187

 

 

 

(2,499

)

Asset-backed securities

 

 

3

 

 

 

2,425

 

 

 

(1

)

 

 

7

 

 

 

9,510

 

 

 

(164

)

 

 

10

 

 

 

11,935

 

 

 

(165

)

Mortgage-backed securities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

66

 

 

 

21,171

 

 

 

(4,002

)

 

 

66

 

 

 

21,171

 

 

 

(4,002

)

Commercial mortgage-backed securities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

 

 

2,218

 

 

 

(66

)

 

 

4

 

 

 

2,218

 

 

 

(66

)

Collateralized mortgage obligations

 

 

—

 

 

 

—

 

 

 

—

 

 

 

29

 

 

 

2,634

 

 

 

(311

)

 

 

29

 

 

 

2,634

 

 

 

(311

)

Total debt securities available for sale

 

 

5

 

 

$

2,716

 

 

$

(9

)

 

 

282

 

 

$

87,312

 

 

$

(10,203

)

 

 

287

 

 

$

90,028

 

 

$

(10,212

)

 

 

 

 

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
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Debt securities

 

$

1,106

 

 

$

1,130

 

 

$

3,527

 

 

$

3,009

 

Equity securities

 

 

6

 

 

 

9

 

 

 

29

 

 

 

27

 

Cash, cash equivalents and short-term investments

 

 

332

 

 

 

349

 

 

 

1,020

 

 

 

1,169

 

Total investment income

 

 

1,444

 

 

 

1,488

 

 

 

4,576

 

 

 

4,205

 

Investment expenses

 

 

(53

)

 

 

(49

)

 

 

(165

)

 

 

(169

)

Net investment income

 

$

1,391

 

 

$

1,439

 

 

$

4,411

 

 

$

4,036

 

 

The following table summarizes the gross realized gains and losses from sales, calls and maturities of available-for-sale debt and equity securities (dollars in thousands):

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

Gross realized gains

 

$

10

 

 

$

—

 

 

$

10

 

 

$

0

 

Gross realized losses

 

 

(17

)

 

 

—

 

 

 

(17

)

 

 

—

 

Total debt securities

 

 

(7

)

 

 

—

 

 

 

(7

)

 

 

—

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

Gross realized gains

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Gross realized losses

 

 

—

 

 

 

—

 

 

 

(118

)

 

 

—

 

Total equity securities

 

 

—

 

 

 

—

 

 

 

(118

)

 

 

—

 

Total net realized investment gains (losses)

 

$

(7

)

 

$

—

 

 

$

(125

)

 

$

—

 

There were $1.8 million and $0 of proceeds from sales of available-for-sale debt securities for the nine months ended September 30, 2024 and 2023, respectively.

There were $10,000 of gross realized gains from the sale of available-for-sale debt securities for the three and nine months ended September 30, 2024. There were $17,000 of gross realized losses from the sale of available-for-sale debt securities for the three and nine months ended September 30, 2024. There were no gross realized gains or losses from the sale of available-for-sale debt securities for the three and nine months ended September 30, 2023.

There were $8.0 million and $0 of payables from securities purchased as of September 30, 2024 and September 30, 2023, respectively. There were no receivables from securities sold as of September 30, 2024 and September 30, 2023, respectively.

The Company's gross unrealized gains related to its equity investments were $350,000 and $505,000 as of September 30, 2024 and December 31, 2023, respectively. The Company’s gross unrealized losses related to its equity investments were $563,000 and $535,000 as of September 30, 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 and nine months ended September 30, 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 $250,000 and $1.4 million as of September 30, 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 September 30, 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

 

$

3,725

 

 

$

3,696

 

Due after one year through five years

 

 

32,450

 

 

 

30,977

 

Due after five years through ten years

 

 

15,615

 

 

 

13,670

 

Due after ten years

 

 

10,303

 

 

 

8,112

 

Securities with contractual maturities

 

 

62,093

 

 

 

56,455

 

Asset-backed securities

 

 

32,757

 

 

 

32,678

 

Mortgage-backed securities

 

 

25,178

 

 

 

21,176

 

Commercial mortgage-backed securities

 

 

2,284

 

 

 

2,218

 

Collateralized mortgage obligations

 

 

2,945

 

 

 

2,634

 

Total debt securities

 

$

125,257

 

 

$

115,161

 

 

At September 30, 2024 and December 31, 2023, the Insurance Company Subsidiaries had $8.3 million and $8.2 million on deposit in trust accounts to meet the deposit requirements of various state insurance departments. At September 30, 2024 and December 31, 2023, the Company had $107.5 million and $123.5 million, respectively, held in trust accounts to meet collateral requirements with other third-party insurers, relating to various fronting arrangements. At September 30, 2024, approximately $106.8 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.