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Investments
 12 Months Ended
Dec. 31, 2017
Investments [Abstract]  
Investments
Investments
Available-for-sale investments
The following tables summarize the Company’s available-for-sale investments:
 
 
December 31, 2017

 
Amortized Cost
 
Gross Unrealized Holding Gains
 
Gross Unrealized Holding Losses
 
Estimated Fair Value
 
 
(in thousands)
Fixed maturities:
 
 
 
 
 
 
 
 
U.S. Treasury securities and obligations of U.S. government agencies
 
$
9,108

 
$
4

 
$
(14
)
 
$
9,098

Obligations of states, municipalities and political subdivisions
 
161,012

 
3,726

 
(412
)
 
164,326

Corporate and other securities
 
71,224

 
579

 
(172
)
 
71,631

Asset-backed securities
 
95,223

 
405

 
(268
)
 
95,360

Residential mortgage-backed securities
 
85,688

 
466

 
(1,378
)
 
84,776

Total fixed maturities
 
422,255

 
5,180

 
(2,244
)
 
425,191

 
 
 
 
 
 
 
 
 
Equity securities:
 
 
 
 
 
 
 
 
Exchange traded funds
 
26,041

 
8,339

 
—

 
34,380

Nonredeemable preferred stock
 
19,875

 
108

 
(231
)
 
19,752

Total equity securities
 
45,916

 
8,447

 
(231
)
 
54,132

Total available-for-sale investments
 
$
468,171

 
$
13,627

 
$
(2,475
)
 
$
479,323

 
 
December 31, 2016
 
 
Amortized Cost
 
Gross Unrealized Holding Gains
 
Gross Unrealized Holding Losses
 
Estimated Fair Value
 
 
(in thousands)
Fixed maturities:
 
 
 
 
 
 
 
 
U.S. Treasury securities and obligations of U.S. government agencies
 
$
12,106

 
$
8

 
$
(16
)
 
$
12,098

Obligations of states, municipalities and political subdivisions
 
124,728

 
1,470

 
(2,960
)
 
123,238

Corporate and other securities
 
118,473

 
550

 
(233
)
 
118,790

Asset-backed securities
 
73,317

 
241

 
(264
)
 
73,294

Residential mortgage-backed securities
 
84,902

 
585

 
(1,684
)
 
83,803

Total fixed maturities
 
413,526

 
2,854

 
(5,157
)
 
411,223

 
 
 
 
 
 
 
 
 
Equity securities:
 
 
 
 
 
 
 
 
Exchange traded funds
 
14,350

 
4,026

 
(2
)
 
18,374

Total available-for-sale investments
 
$
427,876

 
$
6,880

 
$
(5,159
)
 
$
429,597


Available-for-sale securities in a loss position
The Company regularly reviews all securities with unrealized losses to assess whether the decline in the securities’ fair value is deemed to be an OTTI. The Company considers a number of factors in completing its OTTI review, including the length of time and the extent to which fair value has been below cost and the financial condition of an issuer. In addition to specific issuer information, the Company also evaluates the current market and interest rate environment. Generally, a change in a security’s value caused by a change in the market or interest rate environment does not constitute an OTTI, but rather a temporary decline in fair value.
For fixed maturities, the Company considers whether it intends to sell the security or if it is more likely than not that it will be required to sell the security before recovery, the credit quality of the issuer and the ability to recover all amounts outstanding when contractually due. When assessing whether it intends to sell a fixed maturity security or if it is likely to be required to sell a fixed maturity security before recovery of its amortized cost, the Company evaluates facts and circumstances including, but not limited to, decisions to reposition the investment portfolio, potential sales of investments to meet cash flow needs and potential sales of investments to capitalize on favorable pricing. For equity securities, the Company considers the near-term prospects of an issuer and its ability and intent to hold the security for a period of time sufficient to allow for anticipated recovery.
For fixed maturities where a decline in fair value is considered to be other-than-temporary and the Company intends to sell the security, or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost, an impairment is recognized in net income based on the fair value of the security at the time of assessment, resulting in a new cost basis for the security. If the decline in fair value of a fixed maturity security below its amortized cost is considered to be other-than-temporary based upon other considerations, the Company compares the estimated present value of the cash flows expected to be collected to the amortized cost of the security. The extent to which the estimated present value of the cash flows expected to be collected is less than the amortized cost of the security represents the credit-related portion of the OTTI, which is recognized in net income, resulting in a new cost basis for the security. Any remaining decline in fair value represents the noncredit portion of the OTTI, which is recognized in other comprehensive income. For equity securities, a decline in fair value that is considered to be other-than-temporary is recognized in net income based on the fair value of the security at the time of assessment, resulting in a new cost basis for the security.
The following tables summarize gross unrealized losses and fair value for available-for-sale securities by length of time that the securities have continuously been in an unrealized loss position:
 
 
December 31, 2017
 
 
Less than 12 Months
 
12 Months or Longer
 
Total
 
 
Estimated Fair Value
 
Gross Unrealized Holding Losses
 
Estimated Fair Value
 
Gross Unrealized Holding Losses
 
Estimated Fair Value
 
Gross Unrealized Holding Losses
 
 
(in thousands)
Fixed maturities:
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities and obligations of U.S. government agencies
 
$
3,497

 
$
(2
)
 
$
5,488

 
$
(12
)
 
$
8,985

 
$
(14
)
Obligations of states, municipalities and political subdivisions
 
7,258

 
(36
)
 
38,143

 
(376
)
 
45,401

 
(412
)
Corporate and other securities
 
30,944

 
(98
)
 
13,444

 
(74
)
 
44,388

 
(172
)
Asset-backed securities
 
27,609

 
(108
)
 
10,706

 
(160
)
 
38,315

 
(268
)
Residential mortgage-backed securities
 
9,081

 
(83
)
 
57,262

 
(1,295
)
 
66,343

 
(1,378
)
Total fixed maturities
 
78,389

 
(327
)
 
125,043

 
(1,917
)
 
203,432

 
(2,244
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity securities:
 
 
 
 
 
 
 
 
 
 
 
 
Exchange traded funds
 
130

 
—

 
—

 
—

 
130

 
—

Nonredeemable preferred stock
 
10,649

 
(231
)
 
—

 
—

 
10,649

 
(231
)
Total equity securities
 
10,779

 
(231
)
 
—

 
—

 
10,779

 
(231
)
Total available-for-sale securities
 
$
89,168

 
$
(558
)
 
$
125,043

 
$
(1,917
)
 
$
214,211

 
$
(2,475
)


At December 31, 2017, the Company held 195 fixed maturity securities with a total estimated fair value of $203.4 million and gross unrealized losses of $2.2 million. Of those securities, 126 were in a continuous unrealized loss position for greater than one year. Unrealized losses were caused by interest rate changes or other market factors and were not credit specific issues. At December 31, 2017, 91.1% of the Company’s fixed maturity securities were rated "A-" or better and all of Company's fixed-maturity securities made expected coupon payments under the contractual terms of the securities. At December 31, 2017, the Company held 13 securities in its equity portfolio with a total estimated fair value of $10.8 million and gross unrealized losses of $0.2 million. None of these securities were in a continuous unrealized loss position for greater than one year. Based on its review, the Company concluded that there were no other-than-temporary impairments from fixed maturity or equity securities with unrealized losses for the year ended December 31, 2017.

 
 
December 31, 2016
 
 
Less than 12 Months
 
12 Months or Longer
 
Total
 
 
Estimated Fair Value
 
Gross Unrealized Holding Losses
 
Estimated Fair Value
 
Gross Unrealized Holding Losses
 
Estimated Fair Value
 
Gross Unrealized Holding Losses
 
 
(in thousands)
Fixed maturities:
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities and obligations of U.S. government agencies
 
$
8,980

 
$
(16
)
 
$
—

 
$
—

 
$
8,980

 
$
(16
)
Obligations of states, municipalities and political subdivisions
 
70,727

 
(2,960
)
 
—

 
—

 
70,727

 
(2,960
)
Corporate and other securities
 
50,274

 
(145
)
 
12,375

 
(88
)
 
62,649

 
(233
)
Asset-backed securities
 
14,750

 
(232
)
 
9,961

 
(32
)
 
24,711

 
(264
)
Residential mortgage-backed securities
 
65,439

 
(1,403
)
 
7,186

 
(281
)
 
72,625

 
(1,684
)
Total fixed maturities
 
210,170

 
(4,756
)
 
29,522

 
(401
)
 
239,692

 
(5,157
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity securities:
 
 
 
 
 
 
 
 
 
 
 
 
Exchange traded funds
 
388

 
(2
)
 
—

 
—

 
388

 
(2
)
Total available-for-sale securities
 
$
210,558

 
$
(4,758
)
 
$
29,522

 
$
(401
)
 
$
240,080

 
$
(5,159
)

At December 31, 2016, the Company held 231 fixed maturity securities with a total estimated fair value of $239.7 million and gross unrealized losses of $5.2 million. Of these securities, 24 were in a continuous unrealized loss position for greater than one year. Unrealized losses were caused by interest rate changes or other market factors and were not credit specific issues. At December 31, 2016, 92.6% of the Company’s fixed maturity securities were rated "A-" or better and all of Company's fixed-maturity securities made expected coupon payments under the contractual terms of the securities. Based on its review, the Company concluded that none of the fixed maturity securities with an unrealized loss at December 31, 2016 experienced an other-than-temporary impairment.
Within its equity security portfolio, the Company holds an ETF with exposure across developed and emerging non-U.S. equity markets around the world. This ETF had been in an unrealized loss position for greater than one year and, management concluded based upon its review, it was other-than-temporarily impaired. The Company recognized an impairment loss of $0.3 million on this fund for the year ended December 31, 2016.
Contractual maturities of available-for-sale fixed maturity securities
The amortized cost and estimated fair value of available-for-sale fixed maturity securities at December 31, 2017 are summarized, by contractual maturity, as follows:
 
 
Amortized
 
Estimated
 
 
Cost
 
Fair Value
 
 
(in thousands)
Due in one year or less
 
$
50,020

 
$
49,973

Due after one year through five years
 
28,979

 
29,299

Due after five years through ten years
 
28,733

 
29,800

Due after ten years
 
133,612

 
135,983

Asset-backed securities
 
95,223

 
95,360

Residential mortgage-backed securities
 
85,688

 
84,776

Total fixed maturities
 
$
422,255

 
$
425,191


Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties, and the lenders may have the right to put the securities back to the borrower.
Net investment income
The following table presents the components of net investment income:
 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
 
 
(in thousands)
Interest:
 
 
 
 
 
 
Taxable bonds
 
$
6,233

 
$
6,031

 
$
4,509

Municipal bonds (tax exempt)
 
3,619

 
1,808

 
1,514

Dividends on equity securities
 
1,041

 
442

 
372

Cash equivalents and short-term investments
 
678

 
93

 
9

Gross investment income
 
11,571

 
8,374

 
6,404

Investment expenses
 
(1,002
)
 
(887
)
 
(761
)
Net investment income
 
$
10,569

 
$
7,487

 
$
5,643


Net investment gains and losses
The following table presents net investment gains on investments:
 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
 
 
(in thousands)
Realized gains:
 
 
 
 
 
 
Sales of fixed maturities
 
$
220

 
$
479

 
$
63

Sales of short-term and other
 
—

 
2

 
6

Total realized gains
 
220

 
481

 
69

 
 
 
 
 
 
 
Realized losses:
 
 
 
 
 
 
Sales of fixed maturities
 
(69
)
 
(29
)
 
(10
)
Other-than-temporary impairments
 
—

 
(276
)
 
—

Total realized losses
 
(69
)
 
(305
)
 
(10
)
Net investment gains
 
$
151

 
$
176

 
$
59


Change in unrealized gains (losses) of investments
The following table presents the change in available-for-sale gross unrealized gains or losses by investment type:
 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
 
 
(in thousands)
Change in net unrealized gains (losses):
 
 
 
 
 
 
Fixed maturities
 
$
5,239

 
$
(2,952
)
 
$
(1,937
)
Equity securities
 
4,192

 
1,968

 
(468
)
Net increase (decrease)
 
$
9,431

 
$
(984
)
 
$
(2,405
)

Insurance – statutory deposits
The Company had invested assets with a carrying value of $7.1 million and $7.0 million on deposit with state regulatory authorities at December 31, 2017 and 2016, respectively.
Payable for investments purchased
The Company recorded a payable for investments purchased, not yet settled, of $1.0 million at December 31, 2017 and $0.6 million at December 31, 2016. These payable were included in the "other liabilities" line item of the balance sheet and were treated as a non-cash transaction for purposes of cash flow presentation.