Investments

6 Months Ended

12 Months Ended

Jun. 30, 2019

Dec. 31, 2018

2. Investments

The Company’s available‑for‑sale investments are summarized as follows:


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
June 30, 2019	Cost or Cost		Gains		Losses		Value
	(in thousands)
Fixed maturities:
U.S. Governments	$	13,331	$	392	$	(12)	$	13,711
States, territories, and possessions		2,302		116		—		2,418
Political subdivisions		1,930		14		(1)		1,943
Special revenue excluding mortgage/asset-backed securities		15,337		470		(4)		15,803
Industrial and miscellaneous		117,652		3,784		(32)		121,404
Mortgage/asset-backed securities		51,885		900		(3)		52,782
Total available-for-sale investments	$	202,437	$	5,676	$	(52)	$	208,061


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
December 31, 2018	Cost or Cost		Gains		Losses		Value
	(in thousands)
Fixed maturities:
U.S. Governments	$	15,299	$	96	$	(126)	$	15,269
States, territories, and possessions		1,227		—		(6)		1,221
Political subdivisions		825		—		(10)		815
Special revenue excluding mortgage/asset-backed securities		12,429		115		(91)		12,453
Industrial and miscellaneous		65,885		192		(951)		65,126
Mortgage/asset-backed securities		27,284		133		(81)		27,336
Total available-for-sale investments	$	122,949	$	536	$	(1,265)	$	122,220

Security holdings in an unrealized loss position

As of June 30, 2019, the Company held 42 fixed maturity securities in an unrealized loss position with a total estimated fair value of $15.9 million and total gross unrealized losses of $0.1 million. As of December 31, 2018, the Company held 173 fixed maturity securities in an unrealized loss position with a total estimated fair value of $73.8 million and total gross unrealized losses of $1.3 million.

The aggregate fair value and gross unrealized losses of the Company’s investments aggregated by investment category and the length of time these individual securities have been in a continuous unrealized loss position as of June 30, 2019 and December 31, 2018, are as follows:


	Less Than 12 Months				More Than 12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
June 30, 2019	Value		Losses		Value		Losses		Value		Losses
	(in thousands)
Fixed maturity securities:
U.S. Governments		—		—	$	3,302	$	(12)	$	3,302	$	(12)
States, territories, and possessions		—		—		—		—		—		—
Political subdivisions		—		—		550		(1)		550		(1)
Special revenue excluding mortgage/asset-backed securities		—		—		1,444		(4)		1,444		(4)
Industrial and miscellaneous		398		(2)		8,197		(30)		8,595		(32)
Mortgage/asset-backed securities		510		—		1,454		(3)		1,964		(3)
Total	$	908	$	(2)	$	14,947	$	(50)	$	15,855	$	(52)


	Less Than 12 Months				More Than 12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
December 31, 2018	Value		Losses		Value		Losses		Value		Losses
	(in thousands)
Fixed maturity securities:
U.S. Governments	$	1,970	$	(25)	$	6,197	$	(101)	$	8,167	$	(126)
States, territories, and possessions		719		(5)		501		(1)		1,220		(6)
Political subdivisions		264		(1)		550		(9)		814		(10)
Special revenue excluding mortgage/asset-backed securities		1,706		(14)		5,916		(77)		7,622		(91)
Industrial and miscellaneous		30,544		(556)		14,913		(395)		45,457		(951)
Mortgage/asset-backed securities		6,653		(39)		3,830		(42)		10,483		(81)
Total	$	41,856	$	(640)	$	31,907	$	(625)	$	73,763	$	(1,265)

The Company considers the following factors in determining whether declines in the fair value of investments are other‑than‑temporary:

The significance of the decline in fair value compared to the cost basis,

The time period during which there has been a significant decline in fair value,

Whether the unrealized loss is credit‑driven or a result of changes in market interest rates,

A fundamental analysis of the business prospects and financial condition of the issuer,

The Company’s intent to sell the securities as of each reporting date, and

If the Company does not expect to recover the entire amortized cost basis or cost of the investment.

Based on the Company’s reviews as of June 30, 2019 and December 31, 2018, the Company determined that the fixed maturity securities’ unrealized losses were primarily the result of the interest rate environment and not the credit quality of the issuers. None of the fixed maturity securities were determined to be other‑than‑temporarily impaired. The company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before the recovery of their amortized cost basis. Therefore, none of the fixed maturity securities were written down during the respective periods.

Contractual maturities of available‑for‑sale fixed maturity securities

The amortized cost and fair value of fixed maturity securities at June 30, 2019, by contractual maturity, are shown below.


	Amortized		Fair
	Cost		Value
	(in thousands)
Due within one year	$	5,594	$	5,592
Due after one year through five years		70,251		71,115
Due after five years through ten years		52,075		55,112
Due after ten years		22,632		23,460
Mortgage and asset-backed securities		51,885		52,782
	$	202,437	$	208,061

Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations.

Net investment income summary

Net investment income is summarized as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	(in thousands)				(in thousands)
Interest income	$	1,452	$	689	$	2,462	$	1,267
Dividend income		137		126		166		247
Investment expense		(106)		(86)		(185)		(168)
Net investment income	$	1,483	$	729	$	2,443	$	1,346

Net realized and unrealized investment gains and losses

The following table presents net realized and unrealized investment gains and losses:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
		(in thousands)				(in thousands)
Realized gains:
Gains on sales of fixed maturity securities	$	53	$	—	$	97	$	9
Gains on sales of equity securities		—		386		67		410
Total realized gains		53		386		164		419
Realized losses:
Losses on sales of fixed maturity securities		(3)		(113)		(69)		(156)
Losses on sales of equity securities		—		(3,621)		(156)		(4,066)
Total realized losses		(3)		(3,734)		(225)		(4,222)
Net realized investment gains (losses)		50		(3,348)		(61)		(3,803)
Net unrealized gains on equity securities		443		3,603		2,965		3,437
Net realized and unrealized gains (losses) on investments	$	493	$	255	$	2,904	$	(366)

The Company places securities on statutory deposit with certain state agencies to retain the right to do business in those states. These securities are included in available‑for‑sale investments on the balance sheet. At June 30, 2019 and December 31, 2018, the carrying value of securities on deposit with state regulatory authorities was $5.0 million.

3. Investments

The Company’s available‑for‑sale investments are summarized as follows:


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
December 31, 2018	Cost or Cost		Gains		Losses		Value
			(in thousands)
Fixed maturities:
U.S. Governments	$	15,299	$	96	$	(126)	$	15,269
States, territories, and possessions		1,227		—		(6)		1,221
Political subdivisions		825		—		(10)		815
Special revenue excluding mortgage/asset‑backed securities		12,429		115		(91)		12,453
Industrial and miscellaneous		65,885		192		(951)		65,126
Mortgage/asset‑backed securities		27,284		133		(81)		27,336
Total available‑for‑sale investments	$	122,949	$	536	$	(1,265)	$	122,220


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
December 31, 2017	Cost or Cost		Gains		Losses		Value
			(in thousands)
Fixed maturities:
U.S. Governments	$	13,393	$	—	$	(108)	$	13,285
States, territories, and possessions		3,188		10		(1)		3,197
Political subdivisions		4,118		—		(51)		4,067
Special revenue excluding mortgage/asset‑backed securities		24,039		42		(167)		23,914
Industrial and miscellaneous		44,582		150		(201)		44,531
Mortgage/asset‑backed securities		12,981		2		(64)		12,919
Total fixed maturities		102,301		204		(592)		101,913
Equity securities		19,569		4,126		(109)		23,586
Total available‑for‑sale investments	$	121,870	$	4,330	$	(701)	$	125,499

Security holdings in an unrealized loss position

As of December 31, 2018, the Company held 173 fixed maturity securities in an unrealized loss position with a total estimated fair value of $73.8 million and total gross unrealized losses of $1.3 million. None of the fixed maturity securities with unrealized losses has ever missed, or been delinquent on, a scheduled principal or interest payment. As of December 31, 2017, the Company held 125 fixed maturity securities in an unrealized loss position with a total estimated fair value of $80.2 million and total gross unrealized losses of $0.6 million. None of the fixed maturity securities with unrealized losses has ever missed, or been delinquent on, a scheduled principal or interest payment. As of December 31, 2017, the Company held 16 equity securities in an unrealized loss position with a total estimated fair value of $2.8 million and total gross unrealized losses of $0.1 million.


	Less Than 12 Months				More Than 12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
At December 31, 2018	Value		Losses		Value		Losses		Value		Losses
	(in thousands)
Fixed maturity securities:
U.S. Governments	$	1,970	$	(25)	$	6,197	$	(101)	$	8,167	$	(126)
States, territories, and possessions		719		(5)		501		(1)		1,220		(6)
Political subdivisions		264		(1)		550		(9)		814		(10)
Special revenue excluding mortgage/asset‑backed securities		1,706		(14)		5,916		(77)		7,622		(91)
Industrial and miscellaneous		30,544		(556)		14,913		(395)		45,457		(951)
Mortgage/asset‑backed securities		6,653		(39)		3,830		(42)		10,483		(81)
	$	41,856	$	(640)	$	31,907	$	(625)	$	73,763	$	(1,265)


	Less Than 12 Months				More Than 12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
At December 31, 2017	Value		Losses		Value		Losses		Value		Losses
	(in thousands)
Fixed maturity securities:
U.S. Governments	$	11,426	$	(89)	$	1,858	$	(19)	$	13,284	$	(108)
States, territories, and possessions		1,568		(1)		—		—		1,568		(1)
Political subdivisions		2,996		(24)		1,071		(27)		4,067		(51)
Special revenue excluding mortgage/asset‑backed securities		17,109		(129)		2,140		(38)		19,249		(167)
Industrial and miscellaneous		23,914		(137)		4,463		(64)		28,377		(201)
Mortgage/asset‑backed securities		7,588		(31)		3,298		(33)		10,886		(64)
Total fixed maturity		64,601		(411)		12,830		(181)		77,431		(592)
Equity securities		1,995		(57)		807		(52)		2,802		(109)
	$	66,596	$	(468)	$	13,637	$	(233)	$	80,233	$	(701)

The Company considers the following factors in determining whether declines in the fair value of investments are other‑than‑temporary:

The significance of the decline in fair value compared to the cost basis,

The time period during which there has been a significant decline in fair value,

Whether the unrealized loss is credit‑driven or a result of changes in market interest rates,

A fundamental analysis of the business prospects and financial condition of the issuer,

For fixed maturity securities, the Company’s intent to sell the securities as of each reporting date,

If the Company does not expect to recover the entire amortized cost basis or cost of the investment,

For equity securities, the general macro‑economic outlook for the underlying economy represented, and

For equity securities, the Company’s ability and intent to hold the investments for a period of time sufficient to allow for any anticipated recovery in fair value.

Based on the Company’s reviews as of December 31, 2018 and 2017, the Company determined that the fixed maturity securities’ unrealized losses were primarily the result of the interest rate environment and not the credit quality of the issuers. None of the fixed maturity securities were determined to be other‑than‑temporarily impaired. The company does not intend to sell the investments and it is not more likely than not that that the Company will be required to sell the investments before the recovery of their amortized cost basis. Therefore, none of the fixed maturity securities were written down during the respective years.

Based on the Company’s reviews as of December 31, 2017, the Company determined that the unrealized losses of the equity securities lots were temporary due to the severity of the declines. The Company had the ability and intent to hold these investments until a recovery of fair value. Therefore, none of the equity securities were written down at December 31, 2017 and the remaining unrealized losses of equity securities at that time were recognized to retained earnings upon adoption of ASU 2016‑01 on January 1, 2018. See “Recent Accounting Pronouncements.”

Contractual maturities of available‑for‑sale fixed maturity securities

The amortized cost and fair value of fixed maturity securities at December 31, 2018, by contractual maturity, are shown below.


	2018
	Amortized		Fair
	Cost		Value
	(in thousands)
Due within one year	$	2,621	$	2,614
Due after one year through five years		50,677		49,802
Due after five years through ten years		32,471		32,518
Due after ten years		9,896		9,950
Mortgage and asset‑backed securities		27,284		27,336
	$	122,949	$	122,220

Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations.

Change in unrealized gains (losses) of investments

The following table presents the change in available‑for‑sale gross unrealized gains or losses by investment type:


	Years Ended
	December 31,
	2018		2017		2016
	(in thousands)
Change in net unrealized gains (losses)
Fixed maturities	$	(341)	$	(6)	$	(60)
Equity securities		—		2,232		2,269
Net (decrease) increase	$	(341)	$	2,226	$	2,209

Net investment income summary

Net investment income is summarized as follows:


	Years Ended
	December 31,
	2018		2017		2016
	(in thousands)
Interest income	$	3,036	$	1,916	$	1,425
Dividend income		514		514		472
Less: investment expense		(312)		(305)		(282)
Net investment income	$	3,238	$	2,125	$	1,615

Net realized and unrealized investment gains and losses

The following table presents net realized and unrealized investment gains and losses:


	Years Ended
	December 31,
	2018		2017		2016
	(in thousands)
Realized gains:
Gains on sales of fixed maturity securities	$	19	$	3	$	56
Gains on sales of equity securities		4,287		802		592
Total realized gains		4,306		805		648
Realized losses:
Losses on sales of fixed maturity securities		(418)		(48)		—
Losses on sales of equity securities		(421)		(149)		(149)
Total realized losses		(839)		(197)		(149)
Net realized investment gains		3,467		608		499
Net unrealized losses on equity securities		(6,036)		—		—
Net realized and unrealized (losses) gains on investments	$	(2,569)	$	608	$	499

The Company places securities on statutory deposit with certain state agencies to retain the right to do business in those states. These securities are included in available‑for‑sale investments on the balance sheet. At December 31, 2018 and 2017, the carrying value of securities on deposit with state regulatory authorities was $5.0 million and $5.0 million, respectively.