Investments

6 Months Ended

Jun. 30, 2024

Investments [Abstract]

Investments

Note 3. Investments

The following tables set forth the estimated fair value, gross unrealized gains, gross unrealized losses, allowance for credit losses (“ACL”) and cost or amortized cost of the Company’s investments in fixed maturities and equity securities, aggregated by type and industry, as of June 30, 2024 and December 31, 2023.

Fixed maturities were comprised of the following:

	June 30, 2024
	Estimated Fair Value		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Cost or Amortized Cost
Fixed maturities:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	48,335	$	49	$	4,855	$	—	$	53,141
Obligations of states and political subdivisions		7,710		2		1,426		—		9,134
Corporate securities:
Utilities and telecom		22,879		81		3,175		—		25,973
Financial services		60,263		515		5,365		—		65,113
Other business – diversified		33,977		172		4,099		—		37,904
Other consumer – diversified		43,248		19		6,551		—		49,780
Total corporate securities		160,367		787		19,190		—		178,770
Redeemable preferred stocks:
Other consumer – diversified		224		31		—		—		193
Total redeemable preferred stocks		224		31		—		—		193
Total fixed maturities	$	216,636	$	869	$	25,471	$	—	$	241,238

	December 31, 2023
	Estimated Fair Value		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Cost or Amortized Cost
Fixed maturities:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	50,059	$	63	$	4,944	$	—	$	54,940
Obligations of states and political subdivisions		8,106		15		1,424		—		9,515
Corporate securities:
Utilities and telecom		21,309		143		2,582		—		23,748
Financial services		59,584		560		4,931		—		63,955
Other business – diversified		34,386		403		2,940		—		36,923
Other consumer – diversified		44,570		87		4,870		—		49,353
Total corporate securities		159,849		1,193		15,323		—		173,979
Redeemable preferred stocks:
Other consumer – diversified		205		13		—		—		192
Total redeemable preferred stocks		205		13		—		—		192
Total fixed maturities	$	218,219	$	1,284	$	21,691	$	—	$	238,626

Bonds having an amortized cost of $14,697 and $14,647 and included in the tables above were on deposit with insurance regulatory authorities as of June 30, 2024 and December 31, 2023, respectively, in accordance with statutory requirements. In addition, the Company maintains cash and cash equivalents on deposit with insurance regulatory authorities of $226 as of June 30, 2024 and December 31, 2023. Additionally, bonds having an amortized cost of $9,363 and $9,584 and included in the tables above were pledged as collateral to the Federal Home Loan Bank of Atlanta (“FHLB”) at June 30, 2024 and December 31, 2023, respectively.

Equity securities were comprised of the following:

	June 30, 2024
	Estimated Fair Value			Gross Unrealized Gains			Gross Unrealized Losses			Cost
Equity securities:
Common and non-redeemable preferred stocks:
Financial services		$	1,036		$	730		$	—		$	306
Communications			8,509			3,876			—			4,633
Total equity securities		$	9,545		$	4,606		$	—		$	4,939

	December 31, 2023
	Estimated Fair Value			Gross Unrealized Gains			Gross Unrealized Losses			Cost
Equity securities:
Common and non-redeemable preferred stocks:
Financial services		$	924		$	621		$	—		$	303
Communications			8,489			3,856			—			4,633
Total equity securities		$	9,413		$	4,477		$	—		$	4,936

The carrying value and amortized cost of the Company’s investments in fixed maturities at June 30, 2024 and December 31, 2023 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.

	June 30, 2024				December 31, 2023
	Carrying Value		Amortized Cost		Carrying Value		Amortized Cost
Due in one year or less	$	7,037	$	7,109	$	1,715	$	1,750
Due after one year through five years		60,553		63,194		60,423		62,423
Due after five years through ten years		29,893		32,847		33,596		36,752
Due after ten years		85,810		100,922		86,857		97,984
Asset backed securities		33,343		37,166		35,628		39,717
Totals	$	216,636	$	241,238	$	218,219	$	238,626

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 June 30, 2024 and December 31, 2023.

	June 30, 2024
	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	$	2,807	$	41	$	37,897	$	4,814	$	40,704	$	4,855
Obligations of states and political subdivisions		—		—		6,699		1,426		6,699		1,426
Corporate securities		15,679		661		133,004		18,529		148,683		19,190
Total temporarily impaired securities	$	18,486	$	702	$	177,600	$	24,769	$	196,086	$	25,471

	December 31, 2023
	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	$	5,194	$	37	$	39,476	$	4,907	$	44,670	$	4,944
Obligations of states and political subdivisions		1,145		3		5,936		1,421		7,081		1,424
Corporate securities		539		13		138,283		15,310		138,822		15,323
Total temporarily impaired securities	$	6,878	$	53	$	183,695	$	21,638	$	190,573	$	21,691

Analysis of Securities in Unrealized Loss Positions

As of June 30, 2024 and December 31, 2023, there were 225 and 222 securities, respectively, in an unrealized loss position which primarily included certain of the Company’s investments in fixed maturities within the utilities and telecom, financial services, other diversified business and other diversified consumer sectors. The unrealized losses on the Company’s fixed maturity securities investments have been primarily related to general market changes in interest rates and/or the levels of credit spreads rather than specific concerns with the issuer’s ability to pay interest and repay principal.

For any of its fixed maturity securities with significant declines in fair value, the Company performs detailed analyses to identify whether the drivers of the declines are due to general market drivers, such as the recent increases in interest rates, or due to credit-related factors. Identifying the drivers of the declines in fair value helps to align and allocate the Company’s resources to securities with real credit-related concerns that could impact the ultimate collection of principal and interest. For any significant declines in fair value determined to be non-interest rate or market related, the Company performs a more focused review of the related issuers’ specific credit profile.

For corporate issuers, the Company evaluates their assets, business profile including industry dynamics and competitive positioning, financial statements and other available financial data. For non-corporate issuers, the Company analyzes all reasonably available sources of credit support, including issuer-specific factors. The Company utilizes information available in the public domain and, for certain private placement issuers, from consultations with the issuers directly. The Company also considers ratings from Nationally Recognized Statistical Rating Organizations, as well as the specific characteristics of the security it owns including seniority in the issuer’s capital structure, covenant protections, or other relevant features. From these reviews, the Company evaluates the issuers’ continued ability to service the Company’s investment through payment of interest and principal.

Assuming no credit-related factors develop, unrealized gains and losses on fixed maturity securities are expected to diminish as investments near maturity. Based on its credit analysis, the Company believes that the issuers of its fixed maturity investments in the sectors shown in the table above have the ability to service their obligations to the Company. In addition, 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 recovery of their amortized cost bases, which may be at maturity.

However, from time to time the Company identifies certain available-for-sale fixed maturity securities where the amortized cost basis exceeds the present value of the cash flows expected to be collected due to credit related factors and as a result, a credit allowance will be estimated.  The Company had no ACL on its available-for-sale fixed maturities as of June 30, 2024 or December 31, 2023.

The following tables summarize realized investment gains (losses) for the three month and six month periods ended June 30, 2024 and 2023.

	Three Months Ended June 30, 2024
	Fixed Maturities				Equity Securities			Other Invested Assets			Total
Gains		$	15			$	—		$	—		$	15
Losses			(2	)			—			—			(2	)
Realized investment gains, net		$	13			$	—		$	—		$	13

	Three Months Ended June 30, 2023
	Fixed Maturities			Equity Securities			Other Invested Assets			Total
Gains		$	70		$	—		$	—		$	70
Losses			—			—			—			—
Realized investment gains, net		$	70		$	—		$	—		$	70

	Six Months Ended June 30, 2024
	Fixed Maturities				Equity Securities			Other Invested Assets			Total
Gains		$	15			$	—		$	—		$	15
Losses			(2	)			—			—			(2	)
Realized investment gains, net		$	13			$	—		$	—		$	13

	Six Months Ended June 30, 2023
	Fixed Maturities			Equity Securities			Other Invested Assets			Total
Gains		$	70		$	—		$	—		$	70
Losses			—			—			—			—
Realized investment gains, net		$	70		$	—		$	—		$	70

The following table presents the change in unrealized gains (losses) related to equity securities still held for the three month and six month periods ended June 30, 2024 and 2023.

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net realized and unrealized gains (losses) recognized during the period on equity securities	$	243	$	494	$	129	$	(1,881	)
Less: Net realized gains recognized during the period on equity securities sold during the period		—		—		—		—
Unrealized gains (losses) recognized during the reporting period on equity securities, net	$	243	$	494	$	129	$	(1,881	)

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 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 $6,063 and $6,381 as of June 30, 2024 and December 31, 2023, respectively. The Company’s VIE interests, carried as a part of investment in unconsolidated trusts, totaled $1,238 as of June 30, 2024 and December 31, 2023.

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’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 $7,301 and $7,619, as of June 30, 2024 and December 31, 2023, respectively. As of June 30, 2024 and December 31, 2023, the Company had outstanding commitments totaling $4,518, respectively, whereby the Company is committed to fund these investments and may be called by the partnership during the commitment period to fund the purchase of new investments and partnership expenses.