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Investments
 9 Months Ended
Sep. 30, 2022
Investments Debt And Equity Securities [Abstract]  
Investments

2. Investments

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, 2022 and December 31, 2021, were as follows (dollars in thousands):

 

 

 

September 30, 2022

 

 

 

Cost or

 

 

Gross Unrealized

 

 

Estimated

 

 

 

Amortized Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Debt Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government

 

$

7,830

 

 

$

—

 

 

$

(367

)

 

$

7,463

 

State and local government

 

 

25,661

 

 

 

—

 

 

 

(4,516

)

 

 

21,145

 

Corporate debt

 

 

35,544

 

 

 

—

 

 

 

(5,398

)

 

 

30,146

 

Asset-backed securities

 

 

22,896

 

 

 

—

 

 

 

(1,173

)

 

 

21,723

 

Mortgage-backed securities

 

 

29,772

 

 

 

—

 

 

 

(5,442

)

 

 

24,330

 

Commercial mortgage-backed securities

 

 

3,418

 

 

 

—

 

 

 

(181

)

 

 

3,237

 

Collateralized mortgage obligations

 

 

4,251

 

 

 

—

 

 

 

(448

)

 

 

3,803

 

Total debt securities available for sale

 

$

129,372

 

 

$

—

 

 

$

(17,525

)

 

$

111,847

 

 

 

 

December 31, 2021

 

 

 

Cost or

 

 

Gross Unrealized

 

 

Estimated

 

 

 

Amortized Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Debt Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government

 

$

20,723

 

 

$

74

 

 

$

(77

)

 

$

20,720

 

State and local government

 

 

30,063

 

 

 

555

 

 

 

(189

)

 

 

30,429

 

Corporate debt

 

 

30,808

 

 

 

88

 

 

 

(550

)

 

 

30,346

 

Asset-backed securities

 

 

28,652

 

 

 

10

 

 

 

(224

)

 

 

28,438

 

Mortgage-backed securities

 

 

33,178

 

 

 

105

 

 

 

(762

)

 

 

32,521

 

Commercial mortgage-backed securities

 

 

1,659

 

 

 

31

 

 

 

0

 

 

 

1,690

 

Collateralized mortgage obligations

 

 

5,649

 

 

 

35

 

 

 

(45

)

 

 

5,639

 

Total debt securities available for sale

 

$

150,732

 

 

$

898

 

 

$

(1,847

)

 

$

149,783

 

 

 

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, 2022

 

 

 

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

 

 

9

 

 

$

3,746

 

 

$

(161

)

 

 

4

 

 

$

3,717

 

 

$

(206

)

 

 

13

 

 

$

7,463

 

 

$

(367

)

State and local government

 

 

93

 

 

 

16,323

 

 

 

(3,165

)

 

 

32

 

 

 

4,518

 

 

 

(1,351

)

 

 

125

 

 

 

20,841

 

 

 

(4,516

)

Corporate debt

 

 

42

 

 

 

16,035

 

 

 

(2,568

)

 

 

28

 

 

 

14,111

 

 

 

(2,830

)

 

 

70

 

 

 

30,146

 

 

 

(5,398

)

Asset-backed securities

 

 

16

 

 

 

8,267

 

 

 

(162

)

 

 

12

 

 

 

13,456

 

 

 

(1,011

)

 

 

28

 

 

 

21,723

 

 

 

(1,173

)

Mortgage-backed securities

 

 

60

 

 

 

4,947

 

 

 

(780

)

 

 

9

 

 

 

19,347

 

 

 

(4,662

)

 

 

69

 

 

 

24,294

 

 

 

(5,442

)

Commercial mortgage-backed securities

 

 

4

 

 

 

3,212

 

 

 

(181

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

 

 

3,212

 

 

 

(181

)

Collateralized mortgage obligations

 

 

26

 

 

 

2,397

 

 

 

(239

)

 

 

7

 

 

 

1,370

 

 

 

(209

)

 

 

33

 

 

 

3,767

 

 

 

(448

)

Total debt securities available for sale

 

 

250

 

 

$

54,927

 

 

$

(7,256

)

 

 

92

 

 

$

56,519

 

 

$

(10,269

)

 

 

342

 

 

$

111,446

 

 

$

(17,525

)

 

 

 

December 31, 2021

 

 

 

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

 

 

$

10,323

 

 

$

(47

)

 

 

1

 

 

$

4,728

 

 

$

(30

)

 

 

7

 

 

$

15,051

 

 

$

(77

)

State and local government

 

 

41

 

 

 

8,875

 

 

 

(172

)

 

 

4

 

 

 

446

 

 

 

(17

)

 

 

45

 

 

 

9,321

 

 

 

(189

)

Corporate debt

 

 

41

 

 

 

22,748

 

 

 

(505

)

 

 

1

 

 

 

705

 

 

 

(45

)

 

 

42

 

 

 

23,453

 

 

 

(550

)

Asset-backed securities

 

 

24

 

 

 

24,305

 

 

 

(219

)

 

 

2

 

 

 

1,893

 

 

 

(5

)

 

 

26

 

 

 

26,198

 

 

 

(224

)

Mortgage-backed securities

 

 

12

 

 

 

27,034

 

 

 

(762

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

12

 

 

 

27,034

 

 

 

(762

)

Commercial mortgage-backed securities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Collateralized mortgage obligations

 

 

10

 

 

 

2,638

 

 

 

(45

)

 

 

2

 

 

 

29

 

 

 

—

 

 

 

12

 

 

 

2,667

 

 

 

(45

)

Total debt securities available for sale

 

 

134

 

 

$

95,923

 

 

$

(1,750

)

 

 

10

 

 

$

7,801

 

 

$

(97

)

 

 

144

 

 

$

103,724

 

 

$

(1,847

)

 

The Company analyzed its investment portfolio in accordance with its other-than-temporary impairment ("OTTI") review procedures and determined the Company did not need to record a credit-related OTTI loss in net income, nor recognize a non-credit related OTTI loss in other comprehensive income for the nine months ended September 30, 2022 and 2021.

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,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Debt securities

 

$

636

 

 

$

562

 

 

$

1,814

 

 

$

1,716

 

Equity securities

 

 

3

 

 

 

63

 

 

 

41

 

 

 

166

 

Cash, cash equivalents and short-term investments

 

 

279

 

 

 

1

 

 

 

316

 

 

 

2

 

Total investment income

 

 

918

 

 

 

626

 

 

 

2,171

 

 

 

1,884

 

Investment expenses

 

 

(58

)

 

 

(112

)

 

 

(240

)

 

 

(335

)

Net investment income

 

$

860

 

 

$

514

 

 

$

1,931

 

 

$

1,549

 

 

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,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross realized gains

 

$

—

 

 

$

2

 

 

$

6

 

 

$

29

 

Gross realized losses

 

 

—

 

 

 

—

 

 

 

(155

)

 

 

(6

)

Total debt securities

 

 

—

 

 

 

2

 

 

 

(149

)

 

 

23

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross realized gains

 

$

—

 

 

 

55

 

 

 

375

 

 

 

4,063

 

Gross realized losses

 

 

—

 

 

 

(158

)

 

 

(1,731

)

 

 

(203

)

Total equity securities

 

 

—

 

 

 

(103

)

 

 

(1,356

)

 

 

3,860

 

Total net realized investment gains (losses)

 

$

—

 

 

$

(101

)

 

$

(1,505

)

 

$

3,883

 

 

Proceeds from available-for-sale debt securities were $29.3 million and $25.6 million for the nine months ended September 30, 2022 and 2021, respectively. 

There were no gross realized gains or losses from the sale of available-for-sale debt securities for the three months ended September 30, 2022.  The gross realized gains and losses from the sale of available-for-sale debt securities for the nine months ended September 30, 2022, were $5,000 and $155,000, respectively.  

There were no gross realized gains or losses from the sales of available-for-sale securities for the three months ended September 30, 2021.  The gross realized gains and losses from the sales of available-for-sale debt securities for the nine months ended September 30, 2021, were $27,000 and $6,000, respectively.  

As of September 30, 2022 and 2021, there were $0 and $43,000 of payables from securities purchased, respectively.  There were $0 and $3,000 of receivables from securities sold as of September 30, 2022, and 2021, respectively.

The Company’s gross unrealized losses related to its equity investments were $595,000 and $1.0 million as of September 30, 2022 and December 31, 2021, 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 during 2022 related to the Company's equity securities without readily determinable fair value.  These investments are included in Other Assets in the Consolidated Balance Sheets and amounted to $1.7 million as of September 30, 2022 and $1.2 million as of December 31, 2021.  

The table below summarizes the amortized cost and fair value of available-for-sale debt securities by contractual maturity at September 30, 2022.  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

 

$

3,955

 

 

$

3,886

 

Due after one year through five years

 

 

28,544

 

 

 

25,944

 

Due after five years through ten years

 

 

23,584

 

 

 

19,261

 

Due after ten years

 

 

12,952

 

 

 

9,663

 

Securities with contractual maturities

 

 

69,035

 

 

 

58,754

 

Asset-backed securities

 

 

22,896

 

 

 

21,723

 

Mortgage-backed securities

 

 

29,772

 

 

 

24,330

 

Commercial mortgage-backed securities

 

 

3,418

 

 

 

3,237

 

Collateralized mortgage obligations

 

 

4,251

 

 

 

3,803

 

Total debt securities

 

$

129,372

 

 

$

111,847

 

 

At September 30, 2022 and December 31, 2021, the Insurance Company Subsidiaries had $7.9 million and $8.5 million, respectively, on deposit in trust accounts to meet the deposit requirements of various state insurance departments.  At September 30, 2022 and December 31, 2021, the Company had $99.9 million and $76.1 million, respectively, held in trust accounts to meet collateral requirements with other third-party insurers, relating to various fronting arrangements.  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.