Investments

3 Months Ended

Mar. 31, 2017

Investments, Debt and Equity Securities [Abstract]

Investments

4. Investments

A summary of the amortized cost, estimated fair value, and gross unrealized gains and losses on the Company’s investments in fixed income and equity securities at March 31, 2017 and December 31, 2016 is as follows.

As of March 31, 2017	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Fixed income securities:
U.S. government	$	1,997	$	4	$	(18	)	$	1,983
State municipalities and political subdivisions		3,168		10		(21	)		3,157
Asset-backed securities and collateralized mortgage obligations		12,655		10		(131	)		12,534
Corporate		15,052		45		(65	)		15,032
Total fixed income securities		32,872		69		(235	)		32,706
Equity securities:
Common stock		1,000		151		—			1,151
Total equity securities		1,000		151		—			1,151
Total fixed income and equity securities	$	33,872	$	220	$	(235	)	$	33,857
As of December 31, 2016
Fixed income securities:
U.S. government	$	1,623	$	1	$	(20	)	$	1,604
State municipalities and political subdivisions		2,271		2		(27	)		2,246
Asset-backed securities and collateralized mortgage obligations		12,095		9		(136	)		11,968
Corporate		10,804		28		(91	)		10,741
Total fixed income securities		26,793		40		(274	)		26,559
Equity securities:
Common stock		1,000		136		—			1,136
Total equity securities		1,000		136		—			1,136
Total fixed income and equity securities	$	27,793	$	176	$	(274	)	$	27,695

The table below summarizes the Company’s fixed income securities at March 31, 2017 by contractual maturity periods. Actual results may differ as issuers may have the right to call or prepay obligations, with or without penalties, prior to the contractual maturity of these obligations.

Matures in:	Amortized Cost		Estimated Fair Value
One year or less	$	1,817	$	1,818
More than one to five years		14,298		14,255
More than five to ten years		7,583		7,559
More than ten years		9,174		9,074
Total	$	32,872	$	32,706

The following table highlights, by loss position and security type, those fixed income and equity securities in unrealized loss positions as of March 31, 2017 and December 31, 2016. The tables segregate the holdings based on the period of time the investments have been continuously held in unrealized loss positions. There were 136 and 122 fixed income investments that were in unrealized loss positions as of March 31, 2017 and December 31, 2016, respectively. The Company held no equity securities in unrealized loss positions at either date.

	Less than 12 Months					Greater than 12 Months					Total
As of March 31, 2017	Estimated Fair Value		Unrealized Loss			Estimated Fair Value		Unrealized Loss			Estimated Fair Value		Unrealized Loss
Fixed income securities:
U.S. government	$	1,304	$	(18	)	$	—	$	—		$	1,304	$	(18	)
State municipalities and political subdivisions		1,466		(21	)		—		—			1,466		(21	)
Asset-backed securities and collateralized mortgage obligations		9,841		(128	)		487		(2	)		10,328		(131	)
Corporate		6,215		(65	)		40		—			6,255		(65	)
Total investments in fixed income securities	$	18,826	$	(233	)	$	527	$	(2	)	$	19,353	$	(235	)
As of December 31, 2016
Fixed income securities:
U.S. government	$	1,303	$	(20	)	$	—	$	—		$	1,303	$	(20	)
State municipalities and political subdivisions		1,537		(27	)		—		—			1,537		(27	)
Asset-backed securities and collateralized mortgage obligations		9,552		(133	)		460		(3	)		10,012		(136	)
Corporate		5,952		(91	)		—		—			5,952		(91	)
Total investments in fixed income securities	$	18,344	$	(271	)	$	460	$	(3	)	$	18,804	$	(274	)

Under the terms of the certificate of authority granted to Maison by the Texas Department of Insurance, Maison is required to pledge securities totaling at least $2,000 with the State of Texas. Maison deposited the required securities with the State of Texas on May 13, 2015. These securities consist of various fixed income securities listed in the preceding tables which have an amortized cost basis of $2,002 and estimated fair value of $1,998 as of March 31, 2017.

The Company’s other investments are comprised of investments in two limited partnerships which seek to provide equity and asset-backed debt investment in a variety of privately-owned companies. The Company has committed to a total investment of $1,000, of which the limited partnerships have drawn down approximately $505 through March 31, 2017. One of these limited partnerships is managed by Argo Management Group, LLC, an entity which, as of April 21, 2016 is wholly owned by KFSI (see Note 12 – Related Party Transactions). The Company has accounted for its investments under the cost method as the instruments do not have readily determinable fair values and the Company does not exercise significant influence over the operations of the limited partnerships or the underlying privately-owned companies.

Also included in other investments is a $300 certificate of deposit with an original term of 18 months deposited with the State of Florida pursuant to the terms of the certificate of authority issued to Maison from the FL OIR.

Other-than-Temporary Impairment:

The establishment of an other-than-temporary impairment on an investment requires a number of judgments and estimates. The Company performs a quarterly analysis of the individual investments to determine if declines in market value are other-than-temporary. The analysis includes some or all of the following procedures as deemed appropriate by the Company:

● considering the extent, and length of time during which the market value has been below cost;

● identifying any circumstances which management believes may impact the recoverability of the unrealized loss positions;

● obtaining a valuation analysis from a third-party investment manager regarding the intrinsic value of these investments based upon their knowledge and experience combined with market-based valuation techniques;

● reviewing the historical trading volatility and trading range of the investment and certain other similar investments;

● assessing if declines in market value are other-than-temporary for debt instruments based upon the investment grade credit ratings from third-party credit rating agencies;

● assessing the timeliness and completeness of principal and interest payment due from the investee; and

● assessing the Company’s ability and intent to hold these investments until the impairment may be recovered

The risks and uncertainties inherent in the assessment methodology used to determine declines in market value that are other-than-temporary include, but may not be limited to, the following:

● the opinions of professional investment managers could be incorrect;

● the past trading patterns of investments may not reflect their future valuation trends;

● the credit ratings assigned by credit rating agencies may be incorrect due to unforeseen events or unknown facts related to the investee company’s financial situation; and

● the historical debt service record of an investment may not be indicative of future performance and may not reflect a company’s unknown underlying financial problems.

The Company has reviewed currently available information regarding the investments it holds which have estimated fair values that are less than their carrying amounts and believes that these unrealized losses are primarily due to temporary market and sector-related factors rather than to issuer-specific factors. The Company does not intend to sell these investments in the short term, and it is not likely that it will be required to sell these investments before the recovery of their amortized cost.

Accordingly, all of the Company’s investments were in good standing and there were no write-downs for other-than-temporary impairments on the Company’s investments for the three months ended March 31, 2017 and 2016.

The Company does not have any exposure to subprime mortgage-backed investments. Net investment income for the three months ended March 31, 2017 and 2016 was as follows:

	Three Months Ended March 31,
	2017			2016
Investment income:
Interest on fixed income securities	$	132		$	100
Interest on cash and cash equivalents		47			27
Gross investment income		179			127
Investment expenses		(11	)		(12	)
Net investment income	$	168		$	115