Investments

6 Months Ended

Jun. 30, 2024

5 -	Investments

The amortized cost and estimated fair values of our fixed maturities at June 30, 2024 were as follows:

	Carrying Value		Allowance for Credit Losses		Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Estimated Fair Value
					(in thousands)
Held to Maturity
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	93,404	$	56		$	93,460		$	9		$	9,476		$	83,993
Obligations of states and political subdivisions		376,833		269			377,102			625			53,705			324,022
Corporate securities		207,881		1,021			208,902			164			15,883			193,183
Mortgage-backed securities		12,462		8			12,470			—			422			12,048
Totals	$	690,580	$	1,354		$	691,934		$	798		$	79,486		$	613,246

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
Available for Sale
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	94,952	$	42	$	4,476	$	90,518
Obligations of states and political subdivisions		41,827		9		4,503		37,333
Corporate securities		207,842		54		13,258		194,638
Mortgage-backed securities		302,528		106		20,955		281,679
Totals	$	647,149	$	211	$	43,192	$	604,168

At June 30, 2024, our holdings of obligations of states and political subdivisions included general obligation bonds with an aggregate fair value of $235.3 million and an amortized cost of $274.4 million. Our holdings at June 30, 2024 also included special revenue bonds with an aggregate fair value of $126.1 million and an amortized cost of $144.5 million. With respect to both categories of those bonds at June 30, 2024, we held no securities of any issuer that comprised more than 10% of our holdings of either bond category. Education bonds and water and sewer utility bonds represented 45% and 35%, respectively, of our total investments in special revenue bonds based on the carrying values of these investments at June 30, 2024. Many of the issuers of the special revenue bonds we held at June 30, 2024 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.

The amortized cost and estimated fair values of our fixed maturities at December 31, 2023 were as follows:

	Carrying Value		Allowance for Credit Losses		Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Estimated Fair Value
					(in thousands)
Held to Maturity
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	91,518	$	54		$	91,572		$	—		$	8,885		$	82,687
Obligations of states and political subdivisions		376,898		266			377,164			1,449			46,845			331,768
Corporate securities		201,847		1,000			202,847			207			14,805			188,249
Mortgage-backed securities		9,234		6			9,240			—			418			8,822
Totals	$	679,497	$	1,326		$	680,823		$	1,656		$	70,953		$	611,526

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
Available for Sale
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	89,367	$	199	$	4,147	$	85,419
Obligations of states and political subdivisions		41,958		12		3,854		38,116
Corporate securities		211,882		100		15,189		196,793
Mortgage-backed securities		286,520		594		18,094		269,020
Totals	$	629,727	$	905	$	41,284	$	589,348

At December 31, 2023, our holdings of obligations of states and political subdivisions included general obligation bonds with an aggregate fair value of $245.1 million and an amortized cost of $278.3 million. Our holdings also included special revenue bonds with an aggregate fair value of $124.8 million and an amortized cost of $140.8 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, 2023. Education bonds and water and sewer utility bonds represented 47% and 35%, respectively, of our total investments in special revenue bonds based on their carrying values at December 31, 2023. Many of the issuers of the special revenue bonds we held at December 31, 2023 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 loss 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 $97,684 and $134,775 in other comprehensive loss during the six months ended June 30, 2024 and 2023, respectively. At June 30, 2024 and December 31, 2023, net unrealized losses of $1.2 million and $1.3 million, respectively, remained within accumulated other comprehensive loss.

We show below the amortized cost and estimated fair value of our fixed maturities at June 30, 2024 by contractual maturity. Expected maturities may differ from contractual maturities because issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Estimated Fair Value
	(in thousands)
Held to maturity
Due in one year or less	$	38,451	$	37,894
Due after one year through five years		130,089		121,597
Due after five years through ten years		242,095		219,387
Due after ten years		268,829		222,320
Mortgage-backed securities		12,470		12,048
Total held to maturity	$	691,934	$	613,246

Available for sale
Due in one year or less	$	57,703	$	56,838
Due after one year through five years		171,272		161,287
Due after five years through ten years		92,540		84,403
Due after ten years		23,106		19,961
Mortgage-backed securities		302,528		281,679
Total available for sale	$	647,149	$	604,168

The cost and estimated fair values of our equity securities at June 30, 2024 were as follows:

	Cost		Gross Gains		Gross Losses		Estimated Fair Value
	(in thousands)
Equity securities	$	22,524	$	10,042	$	110	$	32,456

The cost and estimated fair values of our equity securities at December 31, 2023 were as follows:

	Cost		Gross Gains		Gross Losses		Estimated Fair Value
	(in thousands)
Equity securities	$	18,844	$	7,059	$	—	$	25,903

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
	(in thousands)						(in thousands)
Gross realized gains:
Fixed maturities	$	82		$	419		$	5		$	441
Equity securities		—			—			—			285
		82			419			5			726
Gross realized losses:
Fixed maturities		—			272			—			2,494
Equity securities		—			5			—			51
		—			277			—			2,545
Net realized gains (losses)		82			142			5			(1,819	)
Gross unrealized gains on equity securities		727			2,473			2,983			4,675
Gross unrealized losses on equity securities		(47	)		(142	)		(110	)		(627	)
Fixed maturities - credit impairment charges		(25	)		31			(28	)		(56	)
Net investment gains	$	737		$	2,504		$	2,850		$	2,173

We held fixed maturities with unrealized losses at June 30, 2024 as follows:

	Less Than 12 Months				More Than 12 Months
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	40,893	$	316	$	127,737	$	13,636
Obligations of states and political subdivisions		48,038		1,069		286,569		57,139
Corporate securities		43,123		1,031		327,109		28,110
Mortgage-backed securities		64,748		407		207,386		20,970
Totals	$	196,802	$	2,823	$	948,801	$	119,855

We held fixed maturities with unrealized losses at December 31, 2023 as follows:

	Less Than 12 Months				More Than 12 Months
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	32,224	$	217	$	116,538	$	12,815
Obligations of states and political subdivisions		13,097		68		307,429		50,631
Corporate securities		13,066		324		353,863		29,670
Mortgage-backed securities		46,964		221		178,113		18,291
Totals	$	105,351	$	830	$	955,943	$	111,407

We make estimates concerning the valuation of our investments and, as applicable, the recognition of 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 an available-for-sale 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 the 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 with respect to that security. 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 establish an allowance for credit loss. We then recognize the amount of the allowance in our results of operations, and we recognize the remaining portion of the impairment loss in our other comprehensive income, net of applicable taxes. We regularly review the allowance for credit losses and recognize changes in the allowance in our results of operations. 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, issuer or geographic events that have negatively impacted the value of a security and rating agency downgrades. For held-to-maturity debt securities, we make estimates concerning expected credit losses at an aggregated level rather that monitoring individual debt securities for credit losses. We establish an allowance for expected credit losses based on an ongoing review of securities held, historical loss data, changes in issuer credit standing and other relevant factors. We utilize a probability-of-default methodology, which reflects current and forecasted economic conditions, to estimate the allowance for expected credit losses and recognize changes to the allowance in our results of operations. We held 916 debt securities that were in an unrealized loss position at June 30, 2024. 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 amortize premiums and discounts on debt securities over the life of the security as an adjustment to yield using the effective interest method. We compute realized investment gains and losses using the specific identification method.

We amortize premiums and discounts on mortgage-backed debt securities using anticipated prepayments.