XML 21 R11.htm IDEA: XBRL DOCUMENT v3.22.2.2
Investments
6 Months Ended
Jun. 30, 2022
Marketable Securities [Abstract]  
Investments

Note 4. Investments

​

The cost or amortized cost and estimated fair value of investments as of June 30, 2022, and December 31, 2021 were as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Gross

​

Gross

​

​

​

​

​

Amortized

​

Unrealized

​

Unrealized

​

Estimated

(In thousands)

    

Cost

    

Gains

    

Losses

    

Fair Value

June 30, 2022:

 

​

  

 

​

  

 

​

  

 

​

  

Fixed maturities:

 

​

  

 

​

  

 

​

  

 

​

  

Bonds:

​

​

​

​

​

​

​

​

​

​

​

​

U.S. government obligations

​

$

1,825

​

$

262

​

$

58

​

$

2,029

Mortgage-backed securities

​

 

151,686

​

 

205

​

 

9,869

​

 

142,022

Asset-backed securities

​

​

39,680

​

​

166

​

​

2,778

​

​

37,068

Collateralized loan obligations

​

​

230,551

​

​

256

​

​

12,481

​

​

218,326

States and political subdivisions-general obligations

​

 

222

​

 

—

​

 

19

​

 

203

States and political subdivisions-special revenue

​

 

130

​

 

1

​

 

—

​

 

131

Corporate

​

 

39,575

​

 

412

​

 

4,955

​

 

35,032

Term loans

​

​

445,164

​

​

3,310

​

​

347

​

​

448,127

Redeemable preferred stock

​

​

14,230

​

​

53

​

​

2,750

​

​

11,533

Total fixed maturities

​

$

923,063

​

$

4,665

​

$

33,257

​

$

894,471

Mortgage loans on real estate, held for investment

​

​

193,902

​

​

—

​

​

—

​

​

193,902

Derivatives

​

​

23,561

​

​

1,966

​

​

18,337

​

​

7,190

Federal Home Loan Bank (FHLB) stock

​

​

500

​

​

—

​

​

—

​

​

500

Equity securities

​

​

12,762

​

​

—

​

​

837

​

​

11,925

Other invested assets

​

​

67,806

​

​

3,373

​

​

9

​

​

71,170

Investment escrow

​

​

1,491

​

​

—

​

​

—

​

​

1,491

Preferred stock

​

​

18,919

​

​

3,153

​

​

—

​

​

22,072

Notes receivable

​

​

6,111

​

​

—

​

​

—

​

​

6,111

Policy loans

​

​

22

​

​

—

​

​

—

​

​

22

Total investments

​

$

1,248,137

​

$

13,157

​

$

52,440

​

$

1,208,854

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2021:

​

 

  

​

 

  

​

 

  

​

 

  

Fixed maturities:

 

​

  

 

​

  

 

​

  

 

​

  

Bonds:

​

​

​

​

​

​

​

​

​

​

​

​

U.S. government obligations

​

$

1,855

​

$

32

​

$

5

​

$

1,882

Mortgage-backed securities

​

 

55,667

​

 

368

​

 

755

​

 

55,280

Asset-backed securities

​

​

24,675

​

​

443

​

​

167

​

​

24,951

Collateralized loan obligations

​

​

272,446

​

​

2,928

​

​

851

​

​

274,523

States and political subdivisions-general obligations

​

 

105

​

 

9

​

 

—

​

 

114

States and political subdivisions-special revenue

​

 

4,487

​

 

1,129

​

 

4

​

 

5,612

Corporate

​

 

35,392

​

 

1,846

​

 

99

​

 

37,139

Term loans

​

​

268,794

​

​

441

​

​

1,767

​

​

267,468

Trust preferred

​

​

2,218

​

​

19

​

​

—

​

​

2,237

Redeemable preferred stock

​

​

14,282

​

​

53

​

​

245

​

​

14,090

Total fixed maturities

​

$

679,921

​

$

7,268

​

$

3,893

​

$

683,296

Mortgage loans on real estate, held for investment

​

​

183,203

​

​

—

​

​

—

​

​

183,203

Derivatives

​

​

18,654

​

​

6,391

​

​

2,023

​

​

23,022

Federal Home Loan Bank (FHLB) stock

​

​

500

​

​

—

​

​

—

​

​

500

Equity securities

​

​

22,158

​

​

—

​

​

289

​

​

21,869

Other invested assets

​

​

34,491

​

​

813

​

​

11

​

​

35,293

Investment escrow

​

​

3,611

​

​

—

​

​

—

​

​

3,611

Preferred stock

​

​

14,885

​

​

3,801

​

​

—

​

​

18,686

Notes receivable

​

​

5,960

​

​

—

​

​

—

​

​

5,960

Policy loans

​

​

87

​

​

—

​

​

—

​

​

87

Total investments

​

$

963,470

​

$

18,273

​

$

6,216

​

$

975,527

​

​

The following table shows the distribution of the credit ratings of our portfolio of fixed maturity securities by carrying value as of June 30, 2022, and December 31, 2021.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

June 30, 2022

​

December 31, 2021

 

​

​

Carrying

​

​

​

Carrying

​

​

 

(In thousands)

    

Value

    

Percent

    

Value

    

Percent

 

AAA and U.S. Government

​

$

8,168

 

0.9

%  

$

2,674

 

0.4

%

AA

​

 

452

 

0.1

​

 

482

 

0.1

​

A

​

 

308,991

 

34.5

​

 

168,141

 

24.6

​

BBB

​

 

545,247

 

61.0

​

 

462,699

 

67.7

​

Total investment grade

​

 

862,858

 

96.5

​

 

633,996

 

92.8

​

BB and below

​

 

31,613

 

3.5

​

 

49,300

 

7.2

​

Total

​

$

894,471

 

100.0

%  

$

683,296

 

100.0

%

​

Reflecting the quality of securities maintained by us as of June 30, 2022, and December 31, 2021, 96.5% and 92.8%, respectively, of all fixed maturity securities were investment grade. The BB and below also includes maturities that have no rating.

The following table summarizes, for all fixed maturity securities in an unrealized loss position as of June 30, 2022, and December 31, 2021, the estimated fair value, pre-tax gross unrealized loss, and number of securities by consecutive months they have been in an unrealized loss position.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

June 30, 2022

​

December 31, 2021

​

​

​

​

​

Gross

​

Number

​

​

​

​

Gross

​

Number

​

​

Estimated

​

Unrealized

​

of

​

Estimated

​

Unrealized

​

of

(In thousands)

    

Fair Value

    

Loss

    

Securities(1)

    

Fair Value

    

Loss

    

Securities(1)

Fixed Maturities:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Less than 12 months:

 

​

  

 

​

  

 

 

  

 

​

  

 

​

  

​

 

  

U.S. government obligations

​

$

1,324

​

$

44

 

 

11

​

$

104

​

$

2

​

 

1

Mortgage-backed securities

​

 

129,114

​

 

9,869

 

 

59

​

 

35,403

​

 

755

​

 

35

Asset-backed securities

​

​

31,742

​

​

2,778

​

​

32

​

​

12,355

​

​

167

​

​

13

Collateralized loan obligations

​

​

195,384

​

​

11,683

​

​

25

​

​

90,731

​

​

851

​

​

115

States and political subdivisions-general obligations

​

​

136

​

​

10

​

​

7

​

​

—

​

 

—

​

 

—

States and political subdivisions-special revenue

​

 

—

​

​

—

 

 

—

​

 

217

​

 

4

​

 

1

Term loans

​

​

448,127

​

​

347

​

​

240

​

​

105,677

​

​

1,767

​

​

47

Redeemable preferred stock

​

​

11,532

​

​

2,750

​

​

9

​

​

10,837

​

​

245

​

​

6

Corporate

​

 

30,910

​

 

4,284

 

 

66

​

 

2,367

​

 

73

​

 

9

Greater than 12 months:

​

 

  

​

 

  

 

 

  

​

 

  

​

 

  

​

 

  

U.S. government obligations

​

 

152

​

 

14

 

 

4

​

 

66

​

 

3

​

 

3

Collateralized loan obligations

​

 

9,807

​

 

798

 

 

5

​

 

—

​

 

—

​

 

—

States and political subdivisions-special revenue

​

​

67

​

​

9

​

​

2

​

​

—

​

 

—

​

 

—

Corporate

​

 

1,538

​

​

671

 

 

7

​

 

324

​

​

26

​

 

2

Total fixed maturities

​

$

859,833

​

$

33,257

 

 

467

​

$

258,081

​

$

3,893

​

​

232

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(1)We may reflect a security in more than one aging category based on various purchase dates.

​

Our security positions resulted in a gross unrealized loss position as of June 30, 2022, that was greater than the gross unrealized loss position at December 31, 2021 due to increases in the Federal Reserve interest rates. We performed an analysis and determined that there were no additional indicators other than the increase in the interest rates that would indicate a cash flow testing analysis should be performed. No impairment was required as of June 30, 2022, or December 31, 2021.

​

See the discussion above under “Comprehensive loss” in Note 1 regarding unrealized gains/losses on investments that are owned by our reinsurers and the corresponding offset in the associated embedded derivatives.

​

The Company purchases and sells equipment leases in its investment portfolio. As of June 30, 2022, the Company owned several leases, all which were performing. No impairment was required as of June 30, 2022, or December 31, 2021.

​

The amortized cost and estimated fair value of fixed maturities as of June 30, 2022, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. No securities due in the next year are in an unrealized loss position, therefore no impairments were recognized as of June 30, 2022.

​

​

​

​

​

​

​

​

​

​

Amortized

​

Estimated

(In thousands)

    

Cost

    

Fair Value

Due in one year or less

​

$

30,870

​

$

30,505

Due after one year through five years

​

 

443,417

​

 

440,196

Due after five years through ten years

​

 

348,824

​

 

333,739

Due after ten years through twenty years

​

​

55,342

​

​

51,367

Due after twenty years

​

​

39,610

​

​

34,586

No maturity

​

​

5,000

​

​

4,078

​

​

$

923,063

​

$

894,471

​

The Company is required to hold assets on deposit for the benefit of policyholders in accordance with statutory rules and regulations. As of June 30, 2022, and December 31, 2021, these required deposits had a total amortized cost of $3.2 million and $3.0 million and fair values of $3.3 million and $3.0 million, respectively.

Mortgage Loans:

Mortgage loans consist of the following:

​

​

​

​

​

​

​

​

(In thousands)

​

June 30, 2022

​

​

December 31, 2021

​

​

​

​

​

​

​

1-4 Family

​

$

69,004

​

$

72,324

Hospitality

​

​

12,717

​

​

12,822

Land

​

​

32,522

​

​

15,904

Multifamily (5+)

​

​

27,497

​

​

31,583

Retail

​

​

17,909

​

​

17,655

Other

​

​

34,253

​

​

32,915

Total mortgage loans

​

$

193,902

​

$

183,203

​

Geographic Locations:

As of June 30, 2022, the commercial mortgages loans were secured by properties geographically dispersed throughout the United States with the largest concentrations in Delaware (40%), New York (27%), Arizona (5%), Maine (4%) and non-US  (10%). As of December 31, 2021, the commercial mortgages loans were secured by properties geographically dispersed with the largest concentrations in loans secured by properties in Delaware (34%) New York (32%), Arizona (4%), California (4%), and non-US (9%).

​

The loan-to-value ratio is expressed as a percentage of the amount of the loan relative to the value of the underlying property. A loan-to-value ratio in excess of 100% indicates the unpaid loan amount exceeds the underlying collateral. The following represents the loan-to-value ratio of the commercial mortgage loan portfolio, excluding those under development, net of valuation allowances. As of June 30, 2022, the Company held one asset valued at $7.7 million with an impairment of $0.5 million. No such valuations were established as of December 31, 2021.

​

​

​

​

​

​

​

(In thousands)

June 30, 2022

​

December 31, 2021

Loan-to-Value Ratio:

​

​

​

​

​

0%-59.99%

$

110,995

​

$

91,104

60%-69.99%

​

34,050

​

​

42,819

70%-79.99%

​

37,323

​

​

44,106

80% or greater

​

11,534

​

​

5,174

Total mortgage loans

$

193,902

​

$

183,203

​

The components of net investment income for the three and six months ended June 30, 2022 and 2021was as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended June 30, 

​

Six months ended June 30, 

(In thousands)

    

2022

    

2021

    

2022

    

2021

Fixed maturities

​

$

15,347

​

$

4,088

​

$

20,393

​

$

7,068

Mortgage loans

​

​

2,963

​

​

367

​

​

3,246

​

​

540

Other invested assets

​

​

3,705

​

​

96

​

​

2,632

​

​

152

Other interest income

​

 

(9,220)

​

 

81

​

 

(6,902)

​

 

152

Gross investment income

​

 

12,795

​

 

4,632

​

 

19,369

​

 

7,912

Less: investment expenses

​

 

(2,254)

​

 

(1,412)

​

 

(2,586)

​

 

(1,805)

Investment income, net of expenses

​

$

10,541

​

$

3,220

​

$

16,783

​

$

6,107

​

Proceeds for the three months ended June 30, 2022, and 2021 from sales of investments classified as available-for-sale were $94.0 million and $70.9 million, respectively. Gross gains of less than $0.1 million and $1.3 million and gross losses of $1.2 million and $0.3 million were realized on those sales during the three months ended June 30, 2022, and 2021, respectively. Proceeds for the six months ended June 30, 2022 and 2021 from sales of investments classified as available-for-sale were $187.6 million and $132.8 million, respectively. Gross gains of $1.5 million and $1.9 million and gross losses of $1.7 million and $0.5 million were realized on those sales during the six months ended June 30, 2022, and 2021, respectively.

The proceeds included those assets associated with the third-party reinsurers. The gains and losses relate only to the assets retained by American Life.