Investments

12 Months Ended

Dec. 31, 2021

4 - Investments

The amortized cost and estimated fair values of our fixed maturities at December 31, 2021 and 2020 are as follows:

	2021
Held to Maturity	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	89,267,988	$	1,922,976	$	1,015,040	$	90,175,924
Obligations of states and political subdivisions		371,435,776		17,856,745		948,113		388,344,408
Corporate securities		191,147,051		11,576,693		772,809		201,950,935
Mortgage-backed securities		16,253,753		675,944		—		16,929,697
Totals	$	668,104,568	$	32,032,358	$	2,735,962	$	697,400,964

	2021
Available for Sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	32,501,080	$	144,377	$	460,831	$	32,184,626
Obligations of states and political subdivisions		55,458,687		2,002,035		82,631		57,378,091
Corporate securities		215,668,644		6,817,036		874,405		221,611,275
Mortgage-backed securities		219,664,635		3,000,806		1,210,418		221,455,023
Totals	$	523,293,046	$	11,964,254	$	2,628,285	$	532,629,015

	2020
Held to Maturity	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	77,435,268	$	3,983,890	$	223,564	$	81,195,594
Obligations of states and political subdivisions		312,319,238		23,211,483		142,750		335,387,971
Corporate securities		173,269,560		18,172,244		205,761		191,236,043
Mortgage-backed securities		23,585,373		1,235,840		—		24,821,213
Totals	$	586,609,439	$	46,603,457	$	572,075	$	632,640,821

	2020
Available for Sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	47,511,872	$	423,855	$	121,015	$	47,814,712
Obligations of states and political subdivisions		66,286,667		2,690,335		11,765		68,965,237
Corporate securities		202,396,309		10,496,218		184,464		212,708,063
Mortgage-backed securities		218,763,252		6,901,676		16,923		225,648,005
Totals	$	534,958,100	$	20,512,084	$	334,167	$	555,136,017

At December 31, 2021, our holdings of obligations of states and political subdivisions included general obligation bonds with an aggregate fair value of $284.9 million and an amortized cost of $272.7 million. Our holdings also included special revenue bonds with an aggregate fair value of $160.8 million and an amortized cost of $154.2 million. With respect to both categories of bonds, we held no securities of any issuer that comprised more than 10% of that category at December 31, 2021. Education bonds and water and sewer utility bonds represented 48% and 35%, respectively, of our total investments in special revenue bonds based on their carrying values at December 31, 2021. Many of the issuers of the special revenue bonds we held at December 31, 2021 have the authority to impose ad valorem taxes. In that respect, many of the special revenue bonds we held are similar to general obligation bonds.

At December 31, 2020, our holdings of obligations of states and political subdivisions included general obligation bonds with an aggregate fair value of $263.6 million and an amortized cost of $247.5 million. Our holdings also included special revenue bonds with an aggregate fair value of $140.8 million and an amortized cost of $131.1 million. With respect to both categories of bonds, we held no securities of any issuer that comprised more than 10% of that category at December 31, 2020. Education bonds and water and sewer utility bonds represented 44% and 39%, respectively, of our total investments in special revenue bonds based on their carrying values at December 31, 2020. Many of the issuers of the special revenue bonds we held at December 31, 2020 have the authority to impose ad valorem taxes. In that respect, many of the special revenue bonds we held are similar to general obligation bonds.

We have segregated within accumulated other comprehensive income the net unrealized losses of $15.1 million arising prior to the November 30, 2013 reclassification date for fixed maturities reclassified from available for sale to held to maturity. We are amortizing this balance over the remaining life of the related securities as an adjustment of yield in a manner consistent with the accretion of discount on the same fixed maturities. We recorded amortization of $897,073, $1.4 million and $1.2 million in other comprehensive income in 2021, 2020 and 2019, respectively. At December 31, 2021 and 2020, net unrealized losses of $5.2 million and $6.1 million, respectively, remained within accumulated other comprehensive income.

We set forth below the amortized cost and estimated fair value of fixed maturities at December 31, 2021 by contractual maturity. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Estimated Fair Value
Held to maturity
Due in one year or less	$	29,359,965	$	30,170,296
Due after one year through five years		84,797,619		89,011,185
Due after five years through ten years		229,972,129		238,657,219
Due after ten years		307,721,102		322,632,567
Mortgage-backed securities		16,253,753		16,929,697
Total held to maturity	$	668,104,568	$	697,400,964
Available for sale
Due in one year or less	$	19,157,465	$	19,411,213
Due after one year through five years		124,209,793		128,340,492
Due after five years through ten years		130,046,327		132,293,644
Due after ten years		30,214,826		31,128,643
Mortgage-backed securities		219,664,635		221,455,023
Total available for sale	$	523,293,046	$	532,629,015

The cost and estimated fair values of our equity securities at December 31, 2021 were as follows:

	Cost		Gross Gains		Gross Losses		Estimated Fair Value

Equity securities	$	43,262,577	$	20,413,667	$	256,271	$	63,419,973

The cost and estimated fair values of our equity securities at December 31, 2020 were as follows:

	Cost		Gross Gains		Gross Losses		Estimated Fair Value

Equity securities	$	42,409,750	$	17,103,055	$	956,632	$	58,556,173

The amortized cost of fixed maturities on deposit with various regulatory authorities at December 31, 2021 and 2020 amounted to $8,852,886 and $9,114,791, respectively.

We derived net investment income, consisting primarily of interest and dividends, from the following sources:

	2021			2020			2019
Fixed maturities	$	32,343,878		$	30,750,231		$	29,969,774
Equity securities		1,437,948			1,386,343			1,268,056
Short-term investments		321,117			427,392			1,243,104
Other		29,250			29,250			29,251
Investment income		34,132,193			32,593,216			32,510,185
Investment expenses		(3,006,562	)		(3,088,750	)		(2,995,230	)
Net investment income	$	31,125,631		$	29,504,466		$	29,514,955

We present below gross gains and losses from investments and the change in the difference between fair value and cost of investments:

	2021			2020			2019
Gross realized gains:
Fixed maturities	$	676,724		$	818,350		$	470,983
Equity securities		1,430,465			106,075			1,546,598
Investment in affiliate		—			—			12,662,147
		2,107,189			924,425			14,679,728
Gross realized losses:
Fixed maturities		294,126			246,243			323,746
Equity securities		462,335			3,555,304			1,270,301
		756,461			3,801,547			1,594,047
Net realized gains (losses)		1,350,728			(2,877,122	)		13,085,681
Gross unrealized gains on equity securities		5,627,949			8,426,806			8,924,687
Gross unrealized losses on equity securities		(501,391	)		(2,771,765	)		(25,751	)
Net investment gains	$	6,477,286		$	2,777,919		$	21,984,617

Change in difference between fair value and cost of investments:
Fixed maturities	$	(27,576,934	)	$	33,876,212		$	38,647,456
Equity securities		4,010,973			4,088,003			9,334,127
Totals	$	(23,565,961	)	$	37,964,215		$	47,981,583

We held fixed maturities with unrealized losses representing declines that we considered temporary at December 31, 2021 as follows:

	Less than 12 months				12 months or longer
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	27,691,051	$	412,055	$	28,426,248	$	1,063,816
Obligations of states and political subdivisions		56,654,480		899,139		7,090,499		131,605
Corporate securities		92,736,747		1,609,931		1,462,717		37,283
Mortgage-backed securities		90,006,234		1,128,197		2,361,232		82,221
Totals	$	267,088,512	$	4,049,322	$	39,340,696	$	1,314,925

We held fixed maturities with unrealized losses representing declines that we considered temporary at December 31, 2020 as follows:

	Less than 12 months				12 months or longer
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	29,144,224	$	344,579	$	—	$	—
Obligations of states and political subdivisions		9,361,435		154,515		—		—
Corporate securities		26,142,933		114,606		8,229,646		275,619
Mortgage-backed securities		3,091,272		15,425		236,560		1,498
Totals	$	67,739,864	$	629,125	$	8,466,206	$	277,117

We make estimates concerning the valuation of our investments and the recognition of other-than-temporary declines in the value of our investments. For equity securities, we measure investments at fair value, and we recognize changes in fair value in our results of operations. With respect to a debt security that is in an unrealized loss position, we first assess if we intend to sell the debt security. If we determine we intend to sell the debt security, we recognize the impairment loss in our results of operations. If we do not intend to sell the debt security, we determine whether it is more likely than not that we will be required to sell the debt security prior to recovery. If we determine it is more likely than not that we will be required to sell the debt security prior to recovery, we recognize an impairment loss in our results of operations. If we determine it is more likely than not that we will not be required to sell the debt security prior to recovery, we then evaluate whether a credit loss has occurred. We determine whether a credit loss has occurred by comparing the amortized cost of the debt security to the present value of the cash flows we expect to collect. If we expect a cash flow shortfall, we consider that a credit loss has occurred. If we determine that a credit loss has occurred, we consider the impairment to be other than temporary. We then recognize the amount of the impairment loss related to the credit loss in our results of operations, and we recognize the remaining portion of the impairment loss in our other comprehensive income, net of applicable taxes. In addition, we may write down securities in an unrealized loss position based on a number of other factors, including when the fair value of an investment is significantly below its cost, when the financial condition of the issuer of a security has deteriorated, the occurrence of industry, company or geographic events that have negatively impacted the value of a security and rating agency downgrades. We held 150 debt securities that were in an unrealized loss position at December 31, 2021. Based upon our analysis of general market conditions and underlying factors impacting these debt securities, we considered these declines in value to be temporary.

We did not recognize any impairment losses in 2021, 2020 or 2019. We had no sales or transfers from our held to maturity portfolio in 2021, 2020 or 2019. We had no derivative instruments or hedging activities during 2021, 2020 or 2019.