Note 2 - Investments

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

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

2. INVESTMENTS

NET INVESTMENT INCOME

A summary of net investment income for the years ended December 31, 2023, and 2022 is as follows:

	2023			2022
AFS, fixed maturity securities	$	4,099,739		$	3,122,028
Investment property		953,532			904,533
Equity securities		838,959			778,707
Other Invested Assets		136,709			154,332
Cash and short-term investments		100,404			24,628
Investment revenue		6,129,343			4,984,228
Less investment expenses		(950,000	)		(950,000	)
Net investment income	$	5,179,343		$	4,034,228

INVESTMENT RELATED GAINS (LOSSES)

The following is a summary of the proceeds from sales, maturities, and calls of fixed maturity and equity securities and the related gross realized gains and losses for the years ended December 31, 2023, and 2022.

								Net Realized
	Proceeds		Gains		Losses			Gains (Losses)
2023
Fixed maturity securities	$	11,578,761	$	—	$	(58,760	)	$	(58,760	)
Common stocks		14,169,474		2,336,113		(1,627,268	)		708,845
Preferred stocks		337,440		29,371		(6,599	)		22,772
2022
Fixed maturity securities	$	17,820,507	$	107,368	$	(118,178	)	$	(10,810	)
Common stocks		4,402,327		1,213,519		(316,079	)		897,440
Preferred stocks		646,552		8,748		(20,908	)		(12,160	)

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

	Amortized Cost		Fair Value
Due in one year or less	$	4,747,381	$	4,693,100
Due after one year through five years		14,750,461		14,212,036
Due after five years through 10 years		23,879,765		22,518,014
Due after 10 years		26,372,013		22,341,659
Asset and mortgage-backed securities without a specific due date		49,400,028		47,020,328
Redeemable preferred stocks		186,393		170,560
Total fixed maturity securities	$	119,336,041	$	110,955,697

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 December 31, 2023, and 2022.

					Gross Unrealized
	Amortized Cost		Fair Value		Gains		Losses
2023
Fixed maturity securities:
U.S. Treasury	$	1,351,768	$	1,289,774	$	—	$	(61,994	)
MBS/ABS/CMBS		49,400,028		47,020,328		283,957		(2,663,657	)
Corporate		45,764,492		42,981,718		287,412		(3,070,186	)
Municipal		22,633,360		19,493,317		153,103		(3,293,146	)
Redeemable preferred stock		186,393		170,560		—		(15,833	)
Total fixed maturity securities	$	119,336,041	$	110,955,697	$	724,472	$	(9,104,816	)

					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	)

MORTGAGE-BACKED, COMMERCIAL MORTGAGE-BACKED AND ASSET-BACKED SECURITIES

All the Company’s collateralized securities carry an average credit rating of AA by one or more major rating agency and continue to pay according to contractual terms. Included within MBS/ABS/CMBS are residential mortgage backed securities with fair values of $32,928,128 and $19,288,540 and commercial mortgage backed securities of $5,629,659 and $8,946,897 at December 31, 2023, and 2022, respectively. The company has recorded no CECL allowances related to available for sale investments at December 31, 2023 and December 31, 2022, respectively.

UNREALIZED LOSSES ON AFS SECURITIES

The following table is also used as part of the impairment analysis and displays the total value of securities that were in an unrealized loss position as of December 31, 2023, and 2022. The table segregates 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.

	December 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	$	—		$	1,289,774		$	1,289,774		$	615,367		$	637,594		$	1,252,961
Amortized cost		—			1,351,768			1,351,768			652,424			700,329			1,352,753
Unrealized loss		—			(61,994	)		(61,994	)		(37,057	)		(62,735	)		(99,792	)
MBS/ABS/CMBS
Fair value		8,345,340			24,323,865			32,669,205			21,199,819			12,833,310			34,033,129
Amortized cost		8,462,010			26,870,852			35,332,862			22,564,779			14,575,082			37,139,861
Unrealized loss		(116,670	)		(2,546,987	)		(2,663,657	)		(1,364,960	)		(1,741,772	)		(3,106,732	)
Corporate
Fair value		477,051			33,352,754			33,829,805			27,688,403			5,829,396			33,517,799
Amortized cost		478,370			36,421,621			36,899,991			30,584,890			7,085,860			37,670,750
Unrealized loss		(1,319	)		(3,068,867	)		(3,070,186	)		(2,896,487	)		(1,256,464	)		(4,152,951	)
Municipal
Fair value		—			12,149,238			12,149,238			11,502,050			2,079,831			13,581,881
Amortized cost		—			15,442,384			15,442,384			14,590,996			2,964,697			17,555,693
Unrealized loss		—			(3,293,146	)		(3,293,146	)		(3,088,946	)		(884,866	)		(3,973,812	)
Redeemable preferred stock
Fair value		149,240			21,320			170,560			188,921			—			188,921
Amortized cost		161,549			24,844			186,393			215,805			—			215,805
Unrealized loss		(12,309	)		(3,524	)		(15,833	)		(26,884	)		—			(26,884	)
Total
Fair value		8,971,631			71,136,951			80,108,582			61,194,560			21,380,131			82,574,691
Amortized cost		9,101,929			80,111,469			89,213,398			68,608,894			25,325,968			93,934,862
Unrealized loss	$	(130,298	)	$	(8,974,518	)	$	(9,104,816	)	$	(7,414,334	)	$	(3,945,837	)	$	(11,360,171	)

The fixed income portfolio contained 221 securities in an unrealized loss position as of December 31, 2023. Of these 221 securities, 203 have been in an unrealized loss position for 12 consecutive months or longer and represent $8,974,518 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 CECL allowances related to the fixed income portfolio recognized in net earnings during the twelve months ended December 31, 2023 and no other-than-temporary impairment losses as of December 31, 2022. 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 a maturity.

As required by law, certain fixed maturity investments amounting to $3,351,574 and $3,290,386 at December 31, 2023, and 2022, respectively, were on deposit with regulatory authorities.

UNREALIZED GAINS AND LOSSES ON INVESTMENTS

Net unrealized gains and losses for the twelve months ended December 31, 2023, and 2022 for investments held as of December 31, 2023 and  December 31, 2022 were $1,135,905 in gains and $4,706,405 in losses, respectively.

OTHER INVESTED ASSETS

Other invested assets as of December 31, 2023 and  December 31, 2022 were $8,898,409 and $4,722,137, respectively. Other invested assets as of December 31, 2023 include privately held investments of $2,197,232, notes receivable of $5,495,979, Funds at Lloyd's of $819,198, and a $425,000 membership in the FHLBC. As of December 31, 2022, privately held investments were $214,630, notes receivable were $4,082,507, and the membership in FHLBC was $425,000.

As of December 31, 2023, privately held investments are comprised of a $1,734,622 limited partnership accounted for under the equity method with a three month lag, a $250,000 SAFE investment carried at cost, and $212,610 in stock carried at fair value. The limited partnership is considered a related party. 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. In May and December 2023, the Company received calls for $1.95 million for a limited partnership from the private investment fund. Our balance available for future endeavors with the private investment fund is $8.05 million as of December 31, 2023. As of December 31, 2022 no calls were received. As of December 31, 2022, the privately held investments were entirely stock carried at fair value.

As of December 31, 2023, most of the notes receivable bear interested between 3.9% and 8.25%. One note has interest at prime minus 25 basis points with a floor of 4.0%. For the twelve months ended December 31, 2023, $373,307 in note payments were received and $0 in accrued principal and interest was recorded. The Company had $39,000 in CECL allowances recorded related to uncollectible note receivables at December 31, 2023 and no CECL allowance at December 31, 2022.

The Funds at Lloyd's and membership in the FHLBC are carried at cost.

PROPERTY HELD FOR INVESTMENT

As of December 31, 2023, investment property comprised of 70 rental units consisting of single-family homes, duplexes, condominiums, senior living units, and a seven-plex property. These rentals are in Carbon Cliff, Illinois; Colona, Illinois; East Moline, Illinois; Milan, Illinois; Moline, Illinois; Rock Island, Illinois; Silvis, Illinois; and Le Claire, Iowa. Property held for investment is net of accumulated depreciation of $682,402 and $609,282 as of December 31, 2023, and 2022, respectively. Related depreciation expense was $179,277 and $169,199 for the years ended December 31, 2023, and 2022, respectively.