2. INVESTMENTS

The Company’s investments are primarily composed of fixed income debt securities and common and preferred stock 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 available-for-sale fixed maturity and equity securities and the related gross realized gains and losses.



	For the Three-Months Ended September 30,
							Net Realized
	Proceeds		Gains		Losses		Gains (Losses)
2019
Fixed maturity securities	$	5,771,988	$	99,445	$	(10,183)	$	89,262
Common stocks		1,320,803		185,319		(133,100)		52,219
2018
Fixed maturity securities	$	3,512,293	$	45,130	$	(30,165)	$	14,965
Common stocks		533,388		61,330		(60,591)		739
Preferred stocks		66,000		—		(675)		(675)



	For the Nine-Months Ended September 30,
							Net Realized
	Proceeds		Gains		Losses		Gains
2019
Fixed maturity securities	$	19,522,461	$	264,737	$	(26,332)	$	238,405
Common stocks		5,998,276		960,420		(457,702)		502,718
2018
Fixed maturity securities	$	10,181,569	$	97,917	$	(56,280)	$	41,637
Common stocks		9,367,763		1,164,192		(122,833)		1,041,359
Preferred stocks		3,927,722		86,862		(82,629)		4,233

The amortized cost and estimated fair value of fixed income securities at September 30, 2019, by contractual maturity, are shown as follows:



	Amortized Cost		Fair Value
Due in one year or less	$	3,706,721	$	3,724,171
Due after one year through five years		20,527,932		21,357,177
Due after five years through 10 years		14,516,310		15,749,391
Due after 10 years		13,833,858		15,217,981
Asset and mortgage backed securities without a specific due date		36,272,187		36,869,747
Total fixed maturity securities	$	88,857,008	$	92,918,467

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

The following table is a schedule of cost or amortized cost and estimated fair values of investments in securities classified as available for sale at September 30, 2019 and December 31, 2018:



	Cost or				Gross Unrealized
	Amortized Cost		Fair Value		Gains		Losses
2019
Fixed maturity securities:
U.S. Treasury	$	1,349,993	$	1,347,742	$	761	$	(3,012)
MBS/ABS/CMBS		36,272,188		36,869,747		655,901		(58,342)
Corporate		40,936,728		43,509,784		2,576,595		(3,539)
Municipal		10,298,099		11,191,194		893,095		—
Total AFS securities	$	88,857,008	$	92,918,467	$	4,126,352	$	(64,893)



	Cost or				Gross Unrealized
	Amortized Cost		Fair Value		Gains		Losses
2018
Fixed maturity securities:
U.S. Treasury	$	1,348,575	$	1,328,925	$	—	$	(19,650)
MBS/ABS/CMBS		34,372,133		33,799,024		33,955		(607,064)
Corporate		37,383,903		37,366,690		376,029		(393,242)
Municipal		16,148,295		16,486,520		398,569		(60,344)
Total fixed maturity securities		89,252,906		88,981,159		808,553		(1,080,300)
Equity securities:
Common stocks		13,572,713		11,843,223		406,812		(2,136,302)
Total equity securities1		13,572,713		11,843,223		406,812		(2,136,302)
Total AFS securities	$	102,825,619	$	100,824,382	$	1,215,365	$	(3,216,602)

1Effective January 1, 2019, the Company adopted ASU No. 2016-01. As a result, equity securities are no longer classified as available-for-sale. Prior periods have not been recast to conform to the current presentation.

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 residential mortgage backed securities with fair values of $13,386,554 and $13,696,585 and commercial mortgage backed securities of $12,545,859 and $10,126,352 at September 30, 2019 and December 31, 2018, respectively.

ANALYSIS

The following tables are also used as part of the impairment analysis and displays the total value of securities that were in an unrealized loss position as of September 30, 2019, and December 31, 2018. The tables segregate the securities based on type, noting the fair value, cost (or 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.



	September 30, 2019
			12 Months
	< 12 Months		& Greater		Total
Fixed Maturity Securities:
U.S. Treasury
Fair value	$	—	$	1,246,820	$	1,246,820
Cost or amortized cost		—		1,249,832		1,249,832
Unrealized loss		—		(3,012)		(3,012)
MBS/ABS/CMBS
Fair value		4,940,313		4,706,813		9,647,126
Cost or amortized cost		4,947,399		4,758,069		9,705,468
Unrealized loss		(7,086)		(51,256)		(58,342)
Corporate
Fair value		1,005,982		—		1,005,982
Cost or amortized cost		1,009,521		—		1,009,521
Unrealized loss		(3,539)		—		(3,539)
Total debt securities available for sale
Fair value		5,946,295		5,953,633		11,899,928
Cost or amortized cost		5,956,920		6,007,901		11,964,821
Unrealized loss		(10,625)		(54,268)		(64,893)


	December 31, 2018
			12 Months
	< 12 Months		& Greater		Total
U.S. Treasury
Fair value	$	—	$	1,328,925	$	1,328,925
Cost or amortized cost		—		1,348,575		1,348,575
Unrealized loss		—		(19,650)		(19,650)
MBS/ABS/CMBS
Fair value		16,890,857		11,956,493		28,847,350
Cost or amortized cost		17,039,357		12,415,057		29,454,414
Unrealized loss		(148,500)		(458,564)		(607,064)
Corporate
Fair value		14,304,322		5,745,289		20,049,611
Cost or amortized cost		14,550,153		5,892,700		20,442,853
Unrealized loss		(245,831)		(147,411)		(393,242)
Municipal
Fair value		3,069,720		838,980		3,908,700
Cost or amortized cost		3,100,036		869,008		3,969,044
Unrealized loss		(30,316)		(30,028)		(60,344)
Subtotal, fixed income
Fair value		34,264,899		19,869,687		54,134,586
Cost or amortized cost		34,689,546		20,525,340		55,214,886
Unrealized loss		(424,647)		(655,653)		(1,080,300)
Common stock1
Fair value		8,187,764				8,187,764
Cost or amortized cost		10,324,066		—		10,324,066
Unrealized loss		(2,136,302)		—		(2,136,302)
Total
Fair value		42,452,663		19,869,687		62,322,350
Cost or amortized cost		45,013,612		20,525,340		65,538,952
Unrealized loss	$	(2,560,949)	$	(655,653)	$	(3,216,602)

As of December 31, 2018, the Company held 200 equity securities that were in unrealized loss positions. Of these 200 securities, none were in an unrealized loss position for 12 consecutive months or longer prior to December 31, 2018.

The fixed income portfolio contained 31 securities in an unrealized loss position as of September 30, 2019. Of these 31 securities, 19 have been in an unrealized loss position for 12 consecutive months or longer and represent $54,268 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 first nine months ended September 30, 2019 and no other-than-temporary impairment losses recognized in net earnings for the same period of 2018. For all fixed income securities at a loss at September 30, 2019, 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 maturity. The fixed income securities in an unrealized loss position were not other-than-temporarily impaired at September 30, 2019 and December 31, 2018.

UNREALIZED GAINS AND LOSSES ON EQUITY SECURITIES

The portion of net unrealized losses for the three months ended September 30, 2019 for equity securities held as of September 30, 2019 was $7,603. The portion of net unrealized gains for the nine months ended September 30, 2019 for equity securities held as of September 30, 2019 was $1,716,124.

Other Invested Assets

Other invested assets include privately held investments, including membership in the Federal Home Loan Bank of Chicago (FHLBC), which occurred in February 2018, and a promissory note with the option to borrow up to $1,275,000. The Company funded $625,000 on July 30, 2019. The note bears interest at 6.5%, and is amortized over 20 years with a balloon payment due July 30, 2029. Our investment in FHLBC stock is carried at cost. Due to the nature of our membership in the FHLBC, the carrying amount approximates fair value. As of September 30, 2019, there were no investments pledged as collateral with the FHLBC. There may be investments pledged as collateral with the FHLBC to ensure timely access to the secured lending facility that ownership of FHLBC stock provides. As of and during the nine month periods ending September 30, 2019, there were no outstanding borrowings with the FHLBC.