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Investments (Tables)
 6 Months Ended
Jun. 30, 2019
Investments [Abstract]  
Schedule of summary of available-for-sale investments
The Company’s available-for-sale fixed maturity securities are summarized as follows:
 
Cost or
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
(in thousands)
June 30, 2019
 

 
 

 
 

 
 

Fixed maturity securities:
 

 
 

 
 

 
 

State and municipal
$
130,215

 
$
8,041

 
$
(6
)
 
$
138,250

Residential mortgage-backed
249,452

 
2,212

 
(1,906
)
 
249,758

Corporate
590,233

 
16,672

 
(631
)
 
606,274

Commercial mortgage and asset-backed
216,771

 
3,808

 
(503
)
 
220,076

U.S. Treasury securities and obligations guaranteed by the U.S. government
114,250

 
1,454

 
(71
)
 
115,633

Redeemable preferred stock
2,025

 
26

 
—

 
2,051

Total fixed maturity securities, available-for-sale
$
1,302,946


$
32,213


$
(3,117
)

$
1,332,042

December 31, 2018
 

 
 

 
 

 
 

Fixed maturity securities:
 

 
 

 
 

 
 

State and municipal
$
147,160

 
$
3,422

 
$
(1,287
)
 
$
149,295

Residential mortgage-backed
208,869

 
577

 
(5,337
)
 
204,109

Corporate
534,024

 
1,516

 
(10,772
)
 
524,768

Commercial mortgage and asset-backed
199,528

 
310

 
(2,813
)
 
197,025

U.S. Treasury securities and obligations guaranteed by the U.S. government
107,803

 
235

 
(845
)
 
107,193

Redeemable preferred stock
2,025

 
—

 
(213
)
 
1,812

Total fixed maturity securities, available-for-sale
$
1,199,409


$
6,060


$
(21,267
)

$
1,184,202
Schedule of summary of available-for-sale investments by contractual maturity
The amortized cost and fair value of available-for-sale investments in fixed maturity securities at June 30, 2019 are summarized, by contractual maturity, as follows:
 
Cost or
Amortized
Cost
 
Fair
Value
 
(in thousands)
One year or less
$
46,982

 
$
47,016

After one year through five years
481,646

 
490,856

After five years through ten years
210,431

 
218,335

After ten years
95,639

 
103,950

Residential mortgage-backed
249,452

 
249,758

Commercial mortgage and asset-backed
216,771

 
220,076

Redeemable preferred stock
2,025

 
2,051

Total
$
1,302,946

 
$
1,332,042
Schedule of gross unrealized losses and fair value for available-for-sale securities
The following table shows the Company’s gross unrealized losses and fair value for available-for-sale securities aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position:
 
Less Than 12 Months
 
12 Months or More
 
Total
 
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
 
(in thousands)
June 30, 2019
 

 
 

 
 

 
 

 
 

 
 

Fixed maturity securities:
 

 
 

 
 

 
 

 
 

 
 

State and municipal
$
170

 
$
—

 
$
2,317

 
$
(6
)
 
$
2,487

 
$
(6
)
Residential mortgage-backed
8,983

 
(32
)
 
109,153

 
(1,874
)
 
118,136

 
(1,906
)
Corporate
3,988

 
(6
)
 
67,981

 
(625
)
 
71,969

 
(631
)
Commercial mortgage and asset-backed
21,557

 
(81
)
 
47,797

 
(422
)
 
69,354

 
(503
)
U.S. Treasury securities and obligations guaranteed by the U.S. government
—

 
—

 
19,775

 
(71
)
 
19,775

 
(71
)
Total fixed maturity securities, available-for-sale
$
34,698


$
(119
)

$
247,023


$
(2,998
)

$
281,721


$
(3,117
)
December 31, 2018
 

 
 

 
 

 
 

 
 

 
 

Fixed maturity securities:
 

 
 

 
 

 
 

 
 

 
 

State and municipal
$
19,733

 
$
(284
)
 
$
47,018

 
$
(1,003
)
 
$
66,751

 
$
(1,287
)
Residential mortgage-backed
49,180

 
(743
)
 
105,778

 
(4,594
)
 
154,958

 
(5,337
)
Corporate
243,384

 
(5,089
)
 
155,902

 
(5,683
)
 
399,286

 
(10,772
)
Commercial mortgage and asset-backed
106,423

 
(1,229
)
 
51,805

 
(1,584
)
 
158,228

 
(2,813
)
U.S. Treasury securities and obligations guaranteed by the U.S. government
17,618

 
(51
)
 
54,201

 
(794
)
 
71,819

 
(845
)
Redeemable preferred stock
1,812

 
(213
)
 
—

 
—

 
1,812

 
(213
)
Total fixed maturity securities, available-for-sale
$
438,150


$
(7,609
)

$
414,704


$
(13,658
)

$
852,854


$
(21,267
)
Schedule of summary of realized gains and losses
The Company’s net realized and unrealized gains and losses on investments are summarized as follows:
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
 
(in thousands)
Fixed maturity securities:
 

 
 

 
 

 
 

Gross realized gains
$
411

 
$
360

 
$
588

 
$
382

Gross realized losses
(80
)
 
(252
)
 
(485
)
 
(475
)
 
331


108


103


(93
)
Bank loan participations:
 

 
 

 
 

 
 

Gross realized gains
137

 
360

 
150

 
1,580

Gross realized losses
(1,308
)
 
(1,006
)
 
(3,000
)
 
(1,106
)
 
(1,171
)

(646
)

(2,850
)

474

Equity securities:
 

 
 

 
 

 
 

Gross realized gains
—

 
—

 
—

 
—

Gross realized losses
—

 
(47
)
 
(18
)
 
(62
)
Changes in fair values of equity securities
1,900

 
521

 
5,449

 
(1,189
)
 
1,900


474


5,431


(1,251
)
Short-term investments and other:
 

 
 

 
 

 
 

Gross realized gains
3

 
—

 
4

 
—

Gross realized losses
—

 
—

 
—

 
(4
)
 
3


—


4


(4
)
Total
$
1,063


$
(64
)

$
2,688


$
(874
)
Schedule of other invested assets
The Company invests selectively in private debt and equity opportunities. These investments, which together comprise the Company’s other invested assets, are primarily focused in renewable energy, limited partnerships, and bank holding companies.
 
Carrying Value
 
Investment Income
 
June 30,
 
December 31,
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
 
(in thousands)
Renewable energy LLCs (a)
$
30,449

 
$
29,795

 
$
(13
)
 
$
530

 
$
908

 
$
1,741

Renewable energy notes receivable (b)
8,750

 
8,750

 
328

 
328

 
656

 
625

Limited partnerships (c)
26,720

 
29,276

 
728

 
1,092

 
2,797

 
1,319

Bank holding companies (d)
4,500

 
4,500

 
86

 
86

 
172

 
172

Total other invested assets
$
70,419


$
72,321


$
1,129


$
2,036


$
4,533


$
3,857

 
(a)
The Company’s Corporate and Other segment owns equity interests ranging from 2.6% to 32.2% in various LLCs whose principal objective is capital appreciation and income generation from owning and operating renewable energy production facilities (wind and solar). The LLCs are managed by an entity for which two of our directors serve as officers, and the Company’s Non-Executive Chairman has invested in certain of these LLCs. The equity method is used to account for the Company’s LLC investments. Income for the LLCs primarily reflects adjustments to the carrying values of investments in renewable energy projects to their determined fair values. The fair value adjustments are included in revenues for the LLCs. Expenses for the LLCs are not significant and are comprised of administrative and interest expenses. The Company received cash distributions from these investments totaling $253,000 and $2.1 million in the six months ended June 30, 2019 and 2018, respectively.
(b)
The Company's Corporate and Other segment has invested in notes receivable for renewable energy projects. At June 30, 2019, the Company holds an $8.8 million note issued by an entity for which two of our directors serve as officers. Interest on the note, which matures in 2021, is fixed at 15.0%. Interest income on the note was $328,000 and $656,000 for the three and six
months ended June 30, 2019, respectively ($328,000 and $625,000 for the three and six months ended June 30, 2018, respectively).
(c)
The Company owns investments in limited partnerships that invest in concentrated portfolios including publicly-traded small cap equities, loans of middle market private equity sponsored companies, equity tranches of collateralized loan obligations (“CLOs”), and tranches of distressed home loans. Income from the partnerships is recognized under the equity method of accounting. The Company’s Corporate and Other segment held an investment in a limited partnership with a carrying value of $3.6 million at June 30, 2019. The Company recognized investment income of $480,000 and $208,000 on the investment for the six months ended June 30, 2019 and 2018, respectively. The Company’s Excess and Surplus Lines segment holds investments in limited partnerships of $23.2 million at June 30, 2019. Investment income of $2.3 million and $1.1 million was recognized on the investments for the six months ended June 30, 2019 and 2018, respectively. At June 30, 2019, the Company’s Excess and Surplus Lines segment has outstanding commitments to invest another $625,000 in these limited partnerships.
(d)
The Company's Corporate and Other segment holds $4.5 million of subordinated notes issued by a bank holding company for which the Company’s Non-Executive Chairman was previously the Lead Independent Director and an investor and for which one of the Company’s directors was an investor and is currently a lender (the "Bank Holding Company"). Interest on the notes, which mature on August 12, 2023, is fixed at 7.6% per annum. Interest income on the notes was $172,000 in both the six months ended June 30, 2019 and 2018, respectively.