2. INVESTMENTS

NET INVESTMENT INCOME

A summary of net investment income for the years ended December 31, 2020 and 2019 is as follows:



	2020		2019
AFS, fixed maturity securities	$	2,975,341	$	2,998,342
Investment property		770,981		610,642
Equity securities		556,920		300,584
Cash and short-term investments		34,460		75,585
Investment revenue		4,337,702		3,985,153
Less investment expenses		(840,000)		(800,000)
Net investment income	$	3,497,702	$	3,185,153

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, 2020 and 2019.


							Net Realized
	Proceeds		Gains		Losses		Gains (Losses)
2020
Fixed maturity securities	$	17,174,787	$	574,697	$	(926)	$	573,771
Common stocks		5,224,984		618,946		(1,435,514)		(816,568)
Preferred stocks		297,609		8,887		(11,412)		(2,525)
2019
Fixed maturity securities	$	27,033,200	$	321,032	$	(36,260)	$	284,772
Common stocks		8,238,753		1,443,507		(527,514)		915,993

The amortized cost and estimated fair value of fixed income securities at December 31, 2020, are shown as follows:



	Amortized Cost		Fair Value
Due in one year or less	$	1,000,699	$	1,022,316
Due after one year through five years		20,290,337		21,819,449
Due after five years through 10 years		15,176,189		17,064,205
Due after 10 years		21,560,825		23,848,853
Asset and mortgage backed securities without a specific due date		40,509,172		41,743,304
Redeemable preferred stocks		215,805		242,439
Total fixed maturity securities	$	98,753,027	$	105,740,566

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, 2020 and 2019.



					Gross Unrealized
	Amortized Cost		Fair Value		Gains		Losses
2020
Fixed maturity securities:
U.S. Treasury	$	1,352,758	$	1,385,406	$	33,336	$	(688)
MBS/ABS/CMBS		40,509,172		41,743,304		1,367,411		(133,279)
Corporate		39,186,671		43,580,743		4,429,000		(34,928)
Municipal		17,488,621		18,788,674		1,316,358		(16,305)
Redeemable preferred stock		215,805		242,439		26,634		—
Total fixed maturity securities	$	98,753,027	$	105,740,566	$	7,172,739	$	(185,200)



					Gross Unrealized
	Amortized Cost		Fair Value		Gains		Losses
2019
Fixed maturity securities:
U.S. Treasury	$	800,462	$	800,219	$	684	$	(927)
MBS/ABS/CMBS		33,802,911		34,290,995		540,743		(52,659)
Corporate		39,442,202		41,915,103		2,482,378		(9,477)
Municipal		14,302,840		15,081,255		808,081		(29,666)
Total fixed maturity securities	$	88,348,415	$	92,087,572	$	3,831,886	$	(92,729)

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

All of 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 $16,220,343 and $9,909,462 and commercial mortgage backed securities of $12,721,455 and $13,408,898 at December 31, 2020 and 2019, 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, 2020 and 2019. 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, 2020						December 31, 2019
			12 Months						12 Months
	< 12 Months		& Greater		Total		< 12 Months		& Greater		Total
Fixed Maturity Securities:
U.S. Treasury
Fair value	$	299,391	$	—	$	299,391	$	—	$	699,391	$	699,391
Amortized cost		300,078		—		300,078		—		700,318		700,318
Unrealized loss		(688)		—		(688)		—		(927)		(927)
MBS/ABS/CMBS
Fair value		7,120,339		2,010,434		9,130,773		6,398,581		5,056,732		11,455,313
Amortized cost		7,236,360		2,027,692		9,264,052		6,420,488		5,087,484		11,507,972
Unrealized loss		(116,021)		(17,258)		(133,279)		(21,907)		(30,752)		(52,659)
Corporate
Fair value		1,739,691		—		1,739,691		1,396,706		—		1,396,706
Amortized cost		1,774,619		—		1,774,619		1,406,183		—		1,406,183
Unrealized loss		(34,928)		—		(34,928)		(9,477)		—		(9,477)
Municipal
Fair value		756,678		—		756,678		1,969,468		—		1,969,468
Amortized cost		772,984		—		772,984		1,999,134		—		1,999,134
Unrealized loss		(16,306)		—		(16,306)		(29,666)		—		(29,666)
Total
Fair value		9,916,099		2,010,434		11,926,533		9,764,755		5,756,123		15,520,878
Amortized cost		10,084,041		2,027,692		12,111,733		9,825,805		5,787,802		15,613,607
Unrealized loss	$	(167,942)	$	(17,258)	$	(185,200)	$	(61,050)	$	(31,679)	$	(92,729)

As of December 31, 2020, the Company held 111 equity securities that were in unrealized loss positions. Of these 111 securities, 35 were in an unrealized loss position for 12 consecutive months or longer prior to December 31, 2019.

The fixed income portfolio contained 26 securities in an unrealized loss position as of December 31, 2020. Of these 26 securities, 4 have been in an unrealized loss position for 12 consecutive months or longer and represent $17,258 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 year ended December 31, 2020 and 2019. For all fixed income securities at a loss at December 31, 2020, 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 December 31, 2020 and December 31, 2019.

As required by law, certain fixed maturity investments amounting to $3,916,710 and $3,827,627 at December 31, 2020 and 2019, respectively, were on deposit with either regulatory authorities or banks.

UNREALIZED GAINS AND LOSSES ON EQUITY SECURITIES

Net unrealized gains for the twelve months ended December 31, 2020 and 2019 for equity securities held as of December 31, 2020 and December 31, 2019 were $2,167,417 and $2,350,513, respectively.

OTHER INVESTED ASSETS

Other invested assets as of December 31, 2020 and December 31, 2019 were $1,772,867 and $877,900, respectively.

Other invested assets include membership in the Federal Home Loan Bank of Chicago (FHLBC), which occurred in February 2018. Our $200,000 investment in FHLBC stock is carried at cost. Due to the nature of our membership in the FHLBC, the carrying amount approximates fair value.

In addition, other invested assets include privately held investments of $204,000 and notes issued. Two of the notes, issued for $625,000 and $650,000 on July 30, 2019 and January 28, 2020, respectively, bear interest at 6.5% and are amortized over 20 years with a balloon payment due July 30, 2029. A third note was issued for $94,000 on October 30, 2020 and bears interest at 6.0% and is amortized over 29 years with monthly payments due beginning July 31, 2021. The Company had no allowance recorded related to uncollectible notes receivables at December 31, 2020 and 2019.

PROPERTY HELD FOR INVESTMENT

As of December 31, 2020, investment property comprised of one storage facility in Davenport, Iowa and 65 apartment rental units located in Milan, Illinois; Moline, Illinois; Rock Island, Illinois; Silvis, Illinois; and Le Claire, Iowa. As of December 31, 2019, investment property comprised of 67 apartment rental units located in Milan, Illinois; Moline, Illinois; Rock Island, Illinois; Silvis, Illinois; and Le Claire, Iowa. Property held for investment is net of accumulated depreciation of $465,364 and $332,218 as of December 31, 2020, and 2019, respectively. Related depreciation expense was $144,545 and $109,393 for the years ended December 31, 2020, and 2019, respectively.