Investments

12 Months Ended

Dec. 31, 2021

Investments [Abstract]

Investments

Note 2. Investments

The following tables set forth the estimated fair value, gross unrealized gains, gross unrealized losses and cost or amortized cost of the Company’s investments in fixed maturities and equity securities, aggregated by type and industry, as of December 31, 2021 and December 31, 2020.

Fixed maturities were comprised of the following:

	2021
	Estimated Fair Value		Gross Unrealized Gains		Gross Unrealized Losses		Amortized Cost
Fixed maturities:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	50,298	$	763	$	416	$	49,951
Obligations of states and political subdivisions		11,644		749		—		10,895
Corporate securities:
Utilities and telecom		29,717		2,961		44		26,800
Financial services		70,921		6,759		48		64,210
Other business – diversified		40,216		4,631		106		35,691
Other consumer – diversified		57,940		7,185		103		50,858
Total corporate securities		198,794		21,536		301		177,559
Redeemable preferred stocks:
Other consumer – diversified		250		58		—		192
Total redeemable preferred stocks		250		58		—		192
Total fixed maturities	$	260,986	$	23,106	$	717	$	238,597

	2020
	Estimated Fair Value		Gross Unrealized Gains		Gross Unrealized Losses		Amortized Cost
Fixed maturities:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	30,762	$	1,381	$	26	$	29,407
Obligations of states and political subdivisions		11,802		898		—		10,904
Corporate securities:
Utilities and telecom		30,359		4,423		—		25,936
Financial services		78,258		9,811		6		68,453
Other business – diversified		41,145		5,689		15		35,471
Other consumer – diversified		61,530		9,479		47		52,098
Total corporate securities		211,292		29,402		68		181,958
Redeemable preferred stocks:
Other consumer – diversified		250		58		—		192
Total redeemable preferred stocks		250		58		—		192
Total fixed maturities	$	254,106	$	31,739	$	94	$	222,461

Bonds having an amortized cost of $11,169 and $10,670 and included in the tables above were on deposit with insurance regulatory authorities at December 31, 2021 and 2020, respectively, in accordance with statutory requirements.  Additionally, bonds having an amortized cost of $5,371 and $1,997 and included in the tables above were pledged as collateral to FHLB at December 31, 2021 and 2020, respectively.

	2021
	Estimated Fair Value		Gross Unrealized Gains		Gross Unrealized Losses		Cost or Amortized Cost
Equity securities:
Common and non-redeemable preferred stocks:
Financial services		799		525		—		274
Other business – diversified		18,325		13,692		—		4,633
Total equity securities	$	19,124	$	14,217	$	—	$	4,907

	2020
	Estimated Fair Value		Gross Unrealized Gains		Gross Unrealized Losses		Cost or Amortized Cost
Equity securities:
Common and non-redeemable preferred stocks:
Financial services		2,111		351		—		1,760
Other business – diversified		16,605		11,972		—		4,633
Total equity securities	$	18,716	$	12,323	$	—	$	6,393

The carrying value and amortized cost of the Company’s investments in fixed maturities at December 31, 2021 and 2020 by contractual maturity were as follows. Actual maturities may differ from contractual maturities because issuers may call or prepay obligations with or without call or prepayment penalties.

	2021				2020
	Carrying Value		Amortized Cost		Carrying Value		Amortized Cost
Due in one year or less	$	1,734	$	1,730	$	2,041	$	2,015
Due after one year through five years		24,926		23,593		18,373		17,039
Due after five years through ten years		73,725		68,338		89,892		79,993
Due after ten years		122,045		106,181		124,609		104,527
Asset backed securities		38,556		38,755		19,191		18,887
Totals	$	260,986	$	238,597	$	254,106	$	222,461

The following tables present the Company’s unrealized loss aging for securities by type and length of time the security was in a continuous unrealized loss position as of December 31, 2021 and 2020.

	2021
	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	30,141	$	416	$	—	$	—	$	30,141	$	416
Corporate securities		3,326		49		4,761		252		8,087		301
Total temporarily impaired securities	$	33,467	$	465	$	4,761	$	252	$	38,228	$	717

	2020
	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	7,045	$	26	$	—	$	—	$	7,045	$	26
Corporate securities		4,602		68		—		—		4,602		68
Total temporarily impaired securities	$	11,647	$	94	$	—	$	—	$	11,647	$	94

The evaluation for an other than temporary impairment (“OTTI”) is a quantitative and qualitative process, which is subject to risks and uncertainties in the determination of whether declines in the fair value of investments are other than temporary. Potential risks and uncertainties include, among other things, changes in general economic conditions, an issuer’s financial condition or near term recovery prospects and the effects of changes in interest rates. In evaluating a potential impairment, the Company considers, among other factors, management’s intent and ability to hold the securities until price recovery, the nature of the investment and the expectation of prospects for the issuer and its industry, the status of an issuer’s continued satisfaction of its obligations in accordance with their contractual terms, and management’s expectation as to the issuer’s ability and intent to continue to do so, as well as ratings actions that may affect the issuer’s credit status.

There were no OTTI charges recorded during the years ended December 31, 2021 and  2020.

As of December 31, 2021 and 2020, there were sixty-one and twenty securities, respectively, in an unrealized loss position which primarily included certain of the Company’s investments in fixed maturities within the financial services, other diversified business and other diversified consumer sectors. The increase in the number and value of securities in an unrealized loss position during the year ended December 31, 2021, was primarily attributable to a decline in market values in certain of the Company’s fixed maturity securities as a result of a rising interest rate environment.  The Company does not currently intend to sell nor does it expect to be required to sell any of the securities in an unrealized loss position. Based upon the Company’s expected continuation of receipt of contractually required principal and interest payments and its intent and ability to retain the securities until price recovery, as well as the Company’s evaluation of other relevant factors, including those described above, the Company has deemed these securities to be temporarily impaired as of December 31, 2021.

Investment income was earned from the following sources:

	2021			2020
Fixed maturities	$	8,640		$	8,646
Equity securities		300			141
Other		(111	)		(788	)
		8,829			7,999
Investment expenses		301			255
Net investment income	$	8,528		$	7,744

A summary of realized investment gains (losses) follows:

	2021
	Fixed Maturities		Equity Securities		Other Invested Assets		Total
Gains	$	570	$	—	$	4,333	$	4,903
Losses		—		—		—		—
Realized investment gains, net	$	570	$	—	$	4,333	$	4,903

	2020
	Fixed Maturities			Equity Securities			Other Invested Assets		Total
Gains	$	835		$	88		$	6,948	$	7,871
Losses		(450	)		(1	)		—		(451	)
Realized investment gains, net	$	385		$	87		$	6,948	$	7,420

Proceeds from the sales of available-for-sale fixed maturities were as follows:

	2021		2020
Sales proceeds	$	9,244	$	18,504
Gross gains		454		835
Gross losses		—		(450	)

Proceeds from the sales of equity securities were as follows:

	2021		2020
Sales proceeds	$	61	$	5
Gross gains		—		—
Gross losses		—		(1	)

Proceeds from the sales of other invested assets were as follows:

	2021		2020
Sales proceeds	$	19,761	$	—
Gross gains		4,333		6,948
Gross losses		—		—

Sales of available-for-sale securities in 2021 and 2020 were primarily a result of improving the overall risk versus return profile of the portfolio. In addition, the Company sold its interest in a certain limited liability company held as other invested assets to a third-party. The transaction closed prior to December 31, 2020. The Company recorded gross realized gains on this sale of $6.9 million and proceeds of $12.7 million which settled after year end.

The following table presents the portion of unrealized gains (losses) related to equity securities still held for the years ended December 31, 2021 and 2020.

	2021		2020
Net realized and unrealized gains (losses) recognized during the period on equity securities	$	1,894	$	(3,344	)
Less: Net realized gains recognized during the period on equity securities sold during the period		—		87
Unrealized gains (losses) on equity securities, net	$	1,894	$	(3,431	)

The Company’s bond portfolio included 99% investment grade securities, as defined by the NAIC, at December 31, 2021.

Variable Interest Entities

The Company holds passive interests in a number of entities that are considered to be variable interest entities (“VIEs”) under GAAP guidance. The Company’s VIE interests principally consist of interests in limited partnerships and limited liability companies formed for the purpose of achieving diversified equity returns. The Company’s VIE interests, carried as a part of other invested assets, totaled $198 and $3,238 at December 31, 2021 and 2020, respectively. The Company’s VIE interests, carried as a part of investment in unconsolidated subsidiaries, totaled $1,238 at December 31, 2021 and 2020.

The Company does not have power over the activities that most significantly impact the economic performance of these VIEs and thus is not the primary beneficiary. Therefore, the Company has not consolidated these VIEs. The Company’s involvement with each VIE is limited to its direct ownership interest in the VIE. The Company has no arrangements with any of the VIEs to provide other financial support to or on behalf of the VIE. The Company’s maximum loss exposure relative to these investments was limited to the carrying value of the Company’s investment in the VIEs, which amount to $1,436 and $4,476, at December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020, the Company had outstanding commitments totaling $1,997, whereby the Company is committed to fund these investments and may be called by such VIEs during the commitment period to fund the purchase of new investments and partnership expenses.