Note 2 - Investments

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

2. INVESTMENTS

The Company’s investments are primarily composed of fixed income debt securities and common and preferred equity securities. We carry our equity securities at fair value and categorize all our fixed maturity debt securities as available-for-sale (AFS), which are carried at fair value. When available, quoted market prices are obtained to determine fair value for the Company’s investments. If a quoted market price is not available, fair value is estimated using a secondary pricing source or using quoted market prices of similar securities. The Company has no investment securities for which fair value is determined using Level 3 inputs as defined in Note 3 – Fair Value Disclosures. Realized gains and losses on disposition of investments are based on specific identification of the investments sold on the settlement date, which does not differ significantly from trade date accounting.

Available-for-Sale Fixed Maturity and Equity Securities

The following tables are a summary of the proceeds from sales, maturities, and calls of AFS fixed maturity and equity securities and the related gross realized gains and losses.

	For the Three-Months Ended March 31,
								Net Realized
	Proceeds		Gains		Losses			Gains (Losses)
2023
Fixed maturity securities	$	3,830,441	$	—	$	(40,520	)	$	(40,520	)
Common stocks		778,071		126,001		(185,458	)		(59,457	)
Preferred stocks		95,628		24,412		—			24,412
2022
Fixed maturity securities	$	2,445,125	$	9,727	$	—		$	9,727
Common stocks		636,104		204,190		(8,070	)		196,120
Preferred stocks		365,508		7,745		(6,007	)		1,738

The amortized cost and estimated fair value of fixed income securities at March 31, 2023, by contractual maturity, are shown as follows:

	Amortized Cost		Fair Value
Due in one year or less	$	2,001,003	$	1,974,481
Due after one year through five years		15,987,197		15,341,170
Due after five years through 10 years		19,663,932		17,803,642
Due after 10 years		25,844,312		21,805,280
Asset and mortgage-backed securities without a specific due date		42,847,960		40,259,680
Redeemable preferred stocks		308,444		297,584
Total fixed maturity securities	$	106,652,848	$	97,481,837

Expected maturities may differ from contractual maturities due to call provisions on some existing securities.

The following table is a schedule of amortized cost and estimated fair values of investments in securities classified as available for sale at March 31, 2023 and December 31, 2022

					Gross Unrealized
	Amortized Cost		Fair Value		Gains		Losses
2023
Fixed maturity securities:
U.S. Treasury	$	1,352,511	$	1,270,102	$	—	$	(82,409	)
MBS/ABS/CMBS		42,847,960		40,259,680		94,625		(2,682,905	)
Corporate		41,385,970		37,979,132		99,207		(3,506,045	)
Municipal		20,757,963		17,675,339		138,836		(3,221,460	)
Redeemable preferred stock		308,444		297,584		—		(10,860	)
Total fixed maturity securities	$	106,652,848	$	97,481,837	$	332,668	$	(9,503,679	)

					Gross Unrealized
	Amortized Cost		Fair Value		Gains		Losses
2022
Fixed maturity securities:
U.S. Treasury	$	1,352,752	$	1,252,960	$	—	$	(99,792	)
MBS/ABS/CMBS		41,858,596		38,803,341		51,477		(3,106,732	)
Corporate		39,716,139		35,602,055		38,867		(4,152,951	)
Municipal		21,437,389		17,541,694		78,117		(3,973,812	)
Redeemable preferred stock		215,805		188,921		—		(26,884	)
Total fixed maturity securities	$	104,580,681	$	93,388,971	$	168,461	$	(11,360,171	)

All the Company’s collateralized securities carry an average credit rating of AA+ by one or more major rating agencies and continue to pay according to contractual terms. Included within MBS/ABS/CMBS, as defined in Note 3 – Fair Value Disclosures, are asset backed securities with fair values of $7,877,374 and $10,567,904, residential mortgage-backed securities of $23,391,756 and $19,288,540, and commercial mortgage-backed securities of $8,990,549 and $8,946,897 at March 31, 2023 and December 31, 2022, respectively.

ANALYSIS

The following tables are also used as part of the impairment analysis and display the total value of securities that were in an unrealized loss position as of March 31, 2023 and December 31, 2022. The tables segregate the securities based on type, noting the fair value, amortized cost, and unrealized loss on each category of investment as well as in total. The table further classifies the securities based on the length of time they have been in an unrealized loss position.

	March 31, 2023									December 31, 2022
				12 Months									12 Months
	< 12 Months			& Greater			Total			< 12 Months			& Greater			Total
Fixed Maturity Securities:
U.S. Treasury
Fair value	$	—		$	1,270,102		$	1,270,102		$	615,367		$	637,594		$	1,252,961
Amortized cost		—			1,352,510			1,352,510			652,424			700,329			1,352,753
Unrealized loss		—			(82,409	)		(82,409	)		(37,057	)		(62,735	)		(99,792	)
MBS/ABS/CMBS
Fair value		8,486,970			23,680,223			32,167,193			21,199,819			12,833,310			34,033,129
Amortized cost		8,765,241			26,084,857			34,850,098			22,564,779			14,575,082			37,139,861
Unrealized loss		(278,271	)		(2,404,634	)		(2,682,905	)		(1,364,960	)		(1,741,772	)		(3,106,732	)
Corporate
Fair value		17,022,608			16,761,188			33,783,797			27,688,403			5,829,396			33,517,799
Amortized cost		17,757,398			19,532,444			37,289,842			30,584,890			7,085,860			37,670,750
Unrealized loss		(734,790	)		(2,771,256	)		(3,506,045	)		(2,896,487	)		(1,256,464	)		(4,152,951	)
Municipal
Fair value		2,456,155			10,316,853			12,773,008			11,502,050			2,079,831			13,581,881
Amortized cost		2,660,564			13,333,904			15,994,468			14,590,996			2,964,697			17,555,693
Unrealized loss		(204,409	)		(3,017,050	)		(3,221,460	)		(3,088,946	)		(884,866	)		(3,973,812	)
Redeemable preferred stock
Fair value		297,584			—			297,584			188,921			—			188,921
Amortized cost		308,444			—			308,444			215,805			—			215,805
Unrealized loss		(10,860	)		—			(10,860	)		(26,884	)		—			(26,884	)
Total
Fair value		28,263,317			52,028,366			80,291,683			61,194,560			21,380,131			82,574,691
Amortized cost		29,491,647			60,303,715			89,795,362			68,608,894			25,325,968			93,934,862
Unrealized loss		(1,228,329	)	$	(8,275,349	)	$	(9,503,679	)	$	(7,414,334	)	$	(3,945,837	)	$	(11,360,171	)

The fixed income portfolio contained 232 securities in an unrealized loss position as of March 31, 2023. Of these 232 securities, 136 have been in an unrealized loss position for 12 consecutive months or longer and represent $8,275,349 in unrealized losses. All fixed income securities in the investment portfolio continue to pay the expected coupon payments under the contractual terms of the securities. Credit-related impairments on fixed income securities that we do not plan to sell, and for which we are not more likely than not to be required to sell, are recognized in net earnings. Any non-credit related impairment is recognized in comprehensive earnings. Based on management’s analysis, the fixed income portfolio is of a high credit quality, and it is believed it will recover the amortized cost basis of the fixed income securities. Management monitors the credit quality of the fixed income investments to assess if it is probable that the Company will receive its contractual or estimated cash flows in the form of principal and interest.

There were no other-than-temporary impairment losses recognized in net earnings during the three months ended March 31, 2023 and March 31, 2022. For all fixed income securities at a loss at March 31, 2023, management believes it is probable that the Company will receive all contractual payments in the form of principal and interest. In addition, the Company is not required to, nor does it intend to sell these investments prior to recovering the entire amortized cost basis for each security, which may be at maturity. The fixed income securities in an unrealized loss position were not other-than-temporarily impaired at March 31, 2023 and December 31, 2022.

UNREALIZED GAINS AND LOSSES ON EQUITY SECURITIES

Net unrealized gains recognized during the three months ended March 31, 2023 on equity securities held as of March 31, 2023 were $639,418. Net unrealized losses recognized during the three months ended March 31, 2022 on equity securities held as of March 31, 2022 were $1,292,692.

Other Invested Assets

Other invested assets as of March 31, 2023 and December 31, 2022 were $5,073,580 and $4,722,137, respectively.

Other invested assets as of  March 31, 2023 include privately held investments of $214,630 and notes receivable of $4,433,950, compared to $214,630 and $4,082,507, respectively, at December 31, 2022. Most of the notes bear interest between 3.9% and 7.25%. One note has interest at prime minus 25 basis points with a floor of 4.0%. For the three months ended March 31, 2023, $11,224 in note payments were received and $2,667 in accrued escrow and interest receivable was recorded. Comparatively, as of December 31, 2022, $244,046 in note payments were received and $10,496 in accrued escrow and interest receivable was recorded. The Company had no allowance recorded related to uncollectible note receivables at  March 31, 2023 and December 31, 2022.

In addition, other invested assets include a membership in the Federal Home Loan Bank of Chicago (FHLBC) with a carrying value of $425,000 as of March 31, 2023 and December 31, 2022.

In November 2021, we agreed to commit up to $10.0 million to a private investment fund, subject to regulatory approval, which may be callable from time to time by such fund. As of March 31, 2023 and December 31, 2022, no calls were received.