Note 2 - Investments

3 Months Ended

Mar. 31, 2024

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)
2024
Fixed maturity securities	$	4,294,521	$	1,167	$	—		$	1,167
Common stocks		705,443		249,637		(70,057	)		179,580
Preferred stocks		245,513		1,409		(31,470	)		(30,061	)
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

The amortized cost and estimated fair value of fixed income securities at  March 31, 2024, by contractual maturity, are shown as follows:

	Amortized Cost		Fair Value
Due in one year or less	$	3,548,339	$	3,498,321
Due after one year through five years		15,222,260		14,582,221
Due after five years through 10 years		24,129,964		22,440,674
Due after 10 years		26,891,230		22,631,543
Asset and mortgage-backed securities without a specific due date		48,381,623		45,834,486
Redeemable preferred stocks		186,393		181,040
Total fixed maturity securities	$	118,359,809	$	109,168,285

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, 2024 and December 31, 2023:

					Gross Unrealized
	Amortized Cost		Fair Value		Gains		Losses
2024
Fixed maturity securities:
U.S. Treasury	$	1,351,519	$	1,295,211	$	—	$	(56,308	)
MBS/ABS/CMBS		48,381,623		45,834,486		291,072		(2,838,209	)
Corporate		45,827,528		42,444,447		104,428		(3,487,509	)
Municipal		22,612,746		19,413,101		125,472		(3,325,117	)
Redeemable preferred stock		186,393		181,040		—		(5,353	)
Total fixed maturity securities	$	118,359,809	$	109,168,285	$	520,972	$	(9,712,496	)

					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	)

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 $8,192,160 and $8,462,540, residential mortgage-backed securities of $32,154,992 and $32,928,128, and commercial mortgage-backed securities of $5,487,334 and $5,629,659 at March 31, 2024 and December 31, 2023, respectively. The Company has recorded no current expected credit loss (CECL) allowances related to available for sale investments at March 31, 2024 and December 31, 2023, respectively.

ANALYSIS

The following tables display the total value of securities that were in an unrealized loss position as of March 31, 2024 and December 31, 2023. 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 tables further classifies the securities based on the length of time they have been in an unrealized loss position.

	March 31, 2024									December 31, 2023
				12 Months									12 Months
	< 12 Months			& Greater			Total			< 12 Months			& Greater			Total
Fixed Maturity Securities:
U.S. Treasury
Fair value	$	—		$	1,295,211		$	1,295,211		$	—		$	1,289,774		$	1,289,774
Amortized cost		—			1,351,519			1,351,519			—			1,351,768			1,351,768
Unrealized loss		—			(56,308	)		(56,308	)		—			(61,994	)		(61,994	)
MBS/ABS/CMBS
Fair value		8,671,226			20,894,107			29,565,333			8,345,340			24,323,865			32,669,205
Amortized cost		8,780,692			23,622,850			32,403,542			8,462,010			26,870,852			35,332,862
Unrealized loss		(109,466	)		(2,728,743	)		(2,838,209	)		(116,670	)		(2,546,987	)		(2,663,657	)
Corporate
Fair value		5,126,823			31,263,210			36,390,033			477,051			33,352,754			33,829,805
Amortized cost		5,205,614			34,671,928			39,877,542			478,370			36,421,621			36,899,991
Unrealized loss		(78,791	)		(3,408,718	)		(3,487,509	)		(1,319	)		(3,068,867	)		(3,070,186	)
Municipal
Fair value		1,276,758			12,114,730			13,391,488			—			12,149,238			12,149,238
Amortized cost		1,283,254			15,433,351			16,716,605			—			15,442,384			15,442,384
Unrealized loss		(6,496	)		(3,318,621	)		(3,325,117	)		—			(3,293,146	)		(3,293,146	)
Redeemable preferred stock
Fair value		121,500			59,540			181,040			149,240			21,320			170,560
Amortized cost		123,188			63,205			186,393			161,549			24,844			186,393
Unrealized loss		(1,688	)		(3,665	)		(5,353	)		(12,309	)		(3,524	)		(15,833	)
Total
Fair value		15,196,307			65,626,798			80,823,105			8,971,631			71,136,951			80,108,582
Amortized cost		15,392,748			75,142,853			90,535,601			9,101,929			80,111,469			89,213,398
Unrealized loss	$	(196,441	)	$	(9,516,055	)	$	(9,712,496	)	$	(130,298	)	$	(8,974,518	)	$	(9,104,816	)

The fixed income portfolio contained 219 securities in an unrealized loss position as of March 31, 2024. Of these 219 securities, 192 have been in an unrealized loss position for 12 consecutive months or longer and represent $9,516,055 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. Current unrealized losses are the result of rising interest rates. 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 from the fixed income portfolio recognized in net earnings during the three months ended March 31, 2024 and 2023. 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.

UNREALIZED GAINS AND LOSSES ON INVESTMENTS

Net unrealized gains recognized during the three months ended March 31, 2024 on equity securities and limited partnership investments were $1,273,890. Net unrealized gains recognized during the three months ended March 31, 2023 on investments held as of March 31, 2023 were $639,418.

Other Invested Assets

Other invested assets as of March 31, 2024 and December 31, 2023 were $9,040,528 and $8,898,409, respectively. These amounts were net of $39,000 in CECL allowances. Other invested assets as of  March 31, 2024 include privately held investments of $2,414,810, notes receivable of $5,420,520, Funds at Lloyd's of $819,198 and a $425,000 membership in the Federal Home Loan Bank of Chicago (FHLBC). As of  December 31, 2023, privately held investments were $2,197,232, notes receivable were $5,495,978, Funds at Lloyd's were 819,198, and the membership in FHLBC was $425,000.

As of  March 31, 2024, privately held investments are comprised of a $1,950,380 limited partnership accounted for under the equity method with a three month lag, a $250,000 SAFE investment carried at cost, and $214,430 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. As of  March 31, 2024, the Company has received calls for $1,949,134 for a limited partnership from the private investment fund. Our balance available for future endeavors with the private investment fund is $8,050,866 as of  March 31, 2024. 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. As of  December 31, 2023, the Company received calls for $1,949,134 for the limited partnership and our balance available for future endeavors was $8,050,866.

Notes receivable are carried at outstanding value plus accrued interest. As of  March 31, 2024, most of the notes receivable bear interest between 3.9% and 8.25%. One note has interest at prime minus 25 basis points with a floor of 4.0%. For the three months ended March 31, 2024, $75,458 in note payments were received and $0 in accrued principal and interest receivable was recorded. The Company had $39,000 in CECL allowances recorded related to uncollectible note receivables at  March 31, 2024.

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