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Investments (Tables)
 3 Months Ended
Mar. 31, 2020
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)
March 31, 2020
 

 
 

 
 

 
 

Fixed maturity securities:
 

 
 

 
 

 
 

State and municipal
$
173,919

 
$
8,007

 
$
(551
)
 
$
181,375

Residential mortgage-backed
298,904

 
9,366

 
(831
)
 
307,439

Corporate
669,191

 
19,583

 
(3,753
)
 
685,021

Commercial mortgage and asset-backed
274,448

 
3,790

 
(9,259
)
 
268,979

U.S. Treasury securities and obligations guaranteed by the U.S. government
122,335

 
3,688

 
—

 
126,023

Redeemable preferred stock
2,025

 
—

 
(257
)
 
1,768

Total fixed maturity securities, available-for-sale
$
1,540,822


$
44,434


$
(14,651
)

$
1,570,605

December 31, 2019
 

 
 

 
 

 
 

Fixed maturity securities:
 

 
 

 
 

 
 

State and municipal
$
159,894

 
$
7,949

 
$
(742
)
 
$
167,101

Residential mortgage-backed
261,524

 
3,244

 
(622
)
 
264,146

Corporate
611,304

 
21,306

 
(389
)
 
632,221

Commercial mortgage and asset-backed
249,309

 
3,954

 
(806
)
 
252,457

U.S. Treasury securities and obligations guaranteed by the U.S. government
114,477

 
1,229

 
(39
)
 
115,667

Redeemable preferred stock
2,025

 
9

 
—

 
2,034

Total fixed maturity securities, available-for-sale
$
1,398,533


$
37,691


$
(2,598
)

$
1,433,626
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 March 31, 2020 are summarized, by contractual maturity, as follows:
 
Cost or
Amortized
Cost
 
Fair
Value
 
(in thousands)
One year or less
$
108,264

 
$
108,823

After one year through five years
472,749

 
484,651

After five years through ten years
253,007

 
260,236

After ten years
131,425

 
138,709

Residential mortgage-backed
298,904

 
307,439

Commercial mortgage and asset-backed
274,448

 
268,979

Redeemable preferred stock
2,025

 
1,768

Total
$
1,540,822

 
$
1,570,605
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)
March 31, 2020
 

 
 

 
 

 
 

 
 

 
 

Fixed maturity securities:
 

 
 

 
 

 
 

 
 

 
 

State and municipal
$
33,372

 
$
(551
)
 
$
—

 
$
—

 
$
33,372

 
$
(551
)
Residential mortgage-backed
27,670

 
(830
)
 
27

 
(1
)
 
27,697

 
(831
)
Corporate
157,118

 
(3,749
)
 
1,251

 
(4
)
 
158,369

 
(3,753
)
Commercial mortgage and asset-backed
109,143

 
(6,962
)
 
37,859

 
(2,297
)
 
147,002

 
(9,259
)
Redeemable preferred stock
1,768

 
(257
)
 
—

 
—

 
1,768

 
(257
)
Total fixed maturity securities, available-for-sale
$
329,071


$
(12,349
)

$
39,137


$
(2,302
)

$
368,208


$
(14,651
)
December 31, 2019
 

 
 

 
 

 
 

 
 

 
 

Fixed maturity securities:
 

 
 

 
 

 
 

 
 

 
 

State and municipal
$
30,028

 
$
(741
)
 
$
667

 
$
(1
)
 
$
30,695

 
$
(742
)
Residential mortgage-backed
23,632

 
(78
)
 
37,363

 
(544
)
 
60,995

 
(622
)
Corporate
45,550

 
(365
)
 
9,933

 
(24
)
 
55,483

 
(389
)
Commercial mortgage and asset-backed
46,434

 
(406
)
 
56,720

 
(400
)
 
103,154

 
(806
)
U.S. Treasury securities and obligations guaranteed by the U.S. government
8,474

 
(22
)
 
7,168

 
(17
)
 
15,642

 
(39
)
Total fixed maturity securities, available-for-sale
$
154,118


$
(1,612
)

$
111,851


$
(986
)

$
265,969


$
(2,598
)
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
March 31,
 
2020
 
2019
 
(in thousands)
Fixed maturity securities:
 

 
 

Gross realized gains
$
215

 
$
177

Gross realized losses
(1
)
 
(405
)
 
214


(228
)
Bank loan participations:
 

 
 

Gross realized gains
103

 
13

Gross realized losses
(1,309
)
 
(1,692
)
Changes in fair values of bank loan participations
(43,947
)
 
—

 
(45,153
)

(1,679
)
Equity securities:
 

 
 

Gross realized gains
—

 
—

Gross realized losses
(170
)
 
(18
)
Changes in fair values of equity securities
(13,315
)
 
3,549

 
(13,485
)

3,531

Short-term investments and other:
 

 
 

Gross realized gains
18

 
1

Gross realized losses
(1
)
 
—

 
17


1

Total
$
(58,407
)

$
1,625
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
 
March 31,
 
December 31,
 
Three Months Ended
March 31,
 
2020
 
2019
 
2020
 
2019
 
(in thousands)
Renewable energy LLCs (a)
$
31,305

 
$
31,219

 
$
834

 
$
921

Renewable energy notes receivable (b)
2,680

 
8,750

 
166

 
328

Limited partnerships (c)
9,212

 
16,741

 
(569
)
 
2,069

Bank holding companies (d)
4,500

 
4,500

 
86

 
86

Total other invested assets
$
47,697


$
61,210


$
517


$
3,404

 
(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 former directors served as officers, and the Company’s Chairman and Chief Executive Officer ("CEO") 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 $747,000 and $253,000 in the three months ended March 31, 2020 and 2019, respectively.
(b)
The Company's Corporate and Other segment has invested in notes receivable for renewable energy projects. At December 31, 2019, the Company held an $8.8 million note issued by an entity for which two of our former directors serve as officers. During the three months ended March 31, 2020, the Company received repayment of $6.1 million of the original note principal. Interest on the note, which matures in 2021, is fixed at 15.0%. Interest income on the note was $166,000 and $328,000 for the three months ended March 31, 2020 and 2019, 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, 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 $2.7 million at March 31, 2020. The Company recognized investment losses of $710,000 and investment income of $481,000 on the investment for the three months ended March 31, 2020 and 2019, respectively. The Company’s Excess and Surplus Lines segment holds investments in limited partnerships of $6.5 million at March 31, 2020. Investment income of $141,000 and $1.6 million was recognized on the investments for the three months ended March 31, 2020 and 2019, respectively.
(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 Chairman and CEO 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 holder of the subordinated notes (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 $86,000 in both the three months ended March 31, 2020 and 2019, respectively.