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Investments
 3 Months Ended
Mar. 31, 2018
Investments [Abstract]  
Investments

4. Investments



The amortized cost and estimated fair value of investments in debt and equity securities by category is as follows (in thousands):





 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

Gross

 

Gross

 

 



 

Amortized

 

Unrealized

 

Unrealized

 

Fair

As of March 31, 2018

 

Cost

 

Gains

 

Losses

 

Value

U.S. Treasury securities and obligations of U.S. Government

 

$

 49,972 

 

$

 -

 

$

 (554)

 

$

 49,418 

Corporate bonds

 

 

 257,521 

 

 

 557 

 

 

 (1,893)

 

 

 256,185 

Collateralized corporate bank loans

 

 

 137,713 

 

 

 827 

 

 

 (133)

 

 

 138,407 

Municipal bonds

 

 

 135,256 

 

 

 2,753 

 

 

 (821)

 

 

 137,188 

Mortgage-backed

 

 

 15,019 

 

 

 28 

 

 

 (399)

 

 

 14,648 



 

 

 

 

 

 

 

 

 

 

 

 

Total debt securities

 

 

 595,481 

 

 

 4,165 

 

 

 (3,800)

 

 

 595,846 



 

 

 

 

 

 

 

 

 

 

 

 

      Total equity securities

 

 

 35,762 

 

 

 21,238 

 

 

 (4,185)

 

 

 52,815 



 

 

 

 

 

 

 

 

 

 

 

 

      Total other investments

 

 

 3,763 

 

 

 -

 

 

 (302)

 

 

 3,461 



 

 

 

 

 

 

 

 

 

 

 

 

Total investments

 

$

 635,006 

 

$

 25,403 

 

$

 (8,287)

 

$

 652,122 



 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities and obligations of U.S. Government

 

$

 50,088 

 

$

 7 

 

$

 (148)

 

$

 49,947 

Corporate bonds

 

 

 278,611 

 

 

 1,204 

 

 

 (742)

 

 

 279,073 

Collateralized corporate bank loans

 

 

 125,536 

 

 

 702 

 

 

 (301)

 

 

 125,937 

Municipal bonds

 

 

 134,052 

 

 

 709 

 

 

 (505)

 

 

 134,256 

Mortgage-backed

 

 

 16,712 

 

 

 37 

 

 

 (216)

 

 

 16,533 



 

 

 

 

 

 

 

 

 

 

 

 

Total debt securities

 

 

 604,999 

 

 

 2,659 

 

 

 (1,912)

 

 

 605,746 



 

 

 

 

 

 

 

 

 

 

 

 

      Total equity securities

 

 

 30,253 

 

 

 23,014 

 

 

 (1,504)

 

 

 51,763 



 

 

 

 

 

 

 

 

 

 

 

 

      Total other investments

 

 

 3,763 

 

 

 61 

 

 

 -

 

 

 3,824 



 

 

 

 

 

 

 

 

 

 

 

 

Total investments

 

$

 639,015 

 

$

 25,734 

 

$

 (3,416)

 

$

 661,333 

Major categories of net investment gains (losses) on investments are summarized as follows (in thousands):





 

 

 

 

 

 

 



 

Three Months Ended March 31,

 



 

2018

 

2017

 



 

 

 

 

 

 

 

U.S. Treasury securities and  obligations of U.S. Government

 

$

-

 

$

-

 

Corporate bonds

 

 

 (8)

 

 

 130 

 

Collateralized corporate bank loans

 

 

 12 

 

 

 28 

 

Municipal bonds

 

 

 (21)

 

 

 (17)

 

Mortgage-backed

 

 

 2 

 

 

 -

 

Equity securities

 

 

 -

 

 

 2,360 

 

Other investments

 

 

 -

 

 

 -

 

Realized (losses) gain on investments

 

 

 (15)

 

 

 2,501 

 

Unrealized losses on other investments

 

 

 (363)

 

 

 (441)

 

Unrealized losses on equity investments

 

 

 (4,457)

 

 

 -

 

Investment (losses) gains, net

 

$

 (4,835)

 

$

 2,060 

 



We realized gross gains on investments of $60 thousand and $2.6 million during the three months ended March 31, 2018 and 2017, respectively.  We realized gross losses on investments of $75 thousand and $0.1 million for the three months ended March 31, 2018 and 2017. We had no proceeds from the sale of investment securities during the three months ended March 31, 2018. We recorded proceeds from the sale of investment securities of $7.8 million during the three months ended March 31, 2017.  Realized investment gains and losses are recognized in operations on the first in-first out method.

 



The following schedules summarize the gross unrealized losses showing the length of time that investments have been continuously in an unrealized loss position as of March 31, 2018 and December 31, 2017 (in thousands):







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

As of March 31, 2018



 

12 months or less

 

Longer than 12 months

 

Total



 

 

 

Unrealized

 

 

 

Unrealized

 

 

 

Unrealized



 

Fair Value

 

Losses

 

Fair Value

 

Losses

 

Fair Value

 

Losses



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities and obligations of U.S. Government

 

$

 47,418 

 

$

 (553)

 

$

 1,999 

 

$

 (1)

 

$

 49,417 

 

$

 (554)

Corporate bonds

 

 

 218,114 

 

 

 (1,861)

 

 

 1,385 

 

 

 (32)

 

 

 219,499 

 

 

 (1,893)

Collateralized corporate bank loans

 

 

 16,828 

 

 

 (43)

 

 

 8,006 

 

 

 (90)

 

 

 24,834 

 

 

 (133)

Municipal bonds

 

 

 38,925 

 

 

 (607)

 

 

 10,232 

 

 

 (214)

 

 

 49,157 

 

 

 (821)

Mortgage-backed

 

 

 4,760 

 

 

 (123)

 

 

 4,952 

 

 

 (276)

 

 

 9,712 

 

 

 (399)

    Total debt securities

 

 

 326,045 

 

 

 (3,187)

 

 

 26,574 

 

 

 (613)

 

 

 352,619 

 

 

 (3,800)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Total equity securities

 

 

 12,444 

 

 

 (4,185)

 

 

 -

 

 

 -

 

 

 12,444 

 

 

 (4,185)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Total other investments

 

 

 3,461 

 

 

 (302)

 

 

 -

 

 

 -

 

 

 3,461 

 

 

 (302)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total investments

 

$

 341,950 

 

$

 (7,674)

 

$

 26,574 

 

$

 (613)

 

$

 368,524 

 

$

 (8,287)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

As of December 31, 2017



 

12 months or less

 

Longer than 12 months

 

Total



 

 

 

Unrealized

 

 

 

Unrealized

 

 

 

Unrealized



 

Fair Value

 

Losses

 

Fair Value

 

Losses

 

Fair Value

 

Losses

U.S. Treasury securities and obligations of U.S. Government

 

$

 28,825 

 

$

 (145)

 

$

 1,997 

 

$

 (3)

 

$

 30,822 

 

$

 (148)

Corporate bonds

 

 

 176,061 

 

 

 (736)

 

 

 2,378 

 

 

 (6)

 

 

 178,439 

 

 

 (742)

Collateralized corporate bank loans

 

 

 30,008 

 

 

 (280)

 

 

 2,517 

 

 

 (21)

 

 

 32,525 

 

 

 (301)

Municipal bonds

 

 

 35,200 

 

 

 (370)

 

 

 8,917 

 

 

 (135)

 

 

 44,117 

 

 

 (505)

Mortgage-backed

 

 

 6,419 

 

 

 (127)

 

 

 1,415 

 

 

 (89)

 

 

 7,834 

 

 

 (216)

    Total debt securities

 

 

 276,513 

 

 

 (1,658)

 

 

 17,224 

 

 

 (254)

 

 

 293,737 

 

 

 (1,912)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Total equity securities

 

 

 8,375 

 

 

 (1,504)

 

 

 -

 

 

 -

 

 

 8,375 

 

 

 (1,504)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Total other investments

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total investments

 

$

 284,888 

 

$

 (3,162)

 

$

 17,224 

 

$

 (254)

 

$

 302,112 

 

$

 (3,416)



At March 31, 2018, the gross unrealized losses more than twelve months old were attributable to 41 debt security positions.  At December 31, 2017, the gross unrealized losses more than twelve months old were attributable to 25 debt security positions. We consider these losses as a temporary decline in value as they are predominately on bonds that we do not intend to sell and do not believe we will be required to sell prior to recovery of our amortized cost basis.  We see no other indications that the decline in values of these securities is other-than-temporary.



We complete a detailed analysis each quarter to assess whether any decline in the fair value of any fixed maturity investment below cost is deemed other-than-temporary. All fixed maturity investments with an unrealized loss are reviewed.  We recognize an impairment loss when an investment's value declines below cost, adjusted for accretion, amortization and previous other-than-temporary impairments, and it is determined that the decline is other-than-temporary. 



We assess whether we intend to sell, or it is more likely than not that we will be required to sell, a fixed maturity investment before recovery of its amortized cost basis less any current period credit losses.  For fixed maturity investments that are considered other-than-temporarily impaired and that we do not intend to sell and will not be required to sell, we separate the amount of the impairment into the amount that is credit related (credit loss component) and the amount due to all other factors.  The credit loss component is recognized in earnings and is the difference between the investment’s amortized cost basis and the present value of its expected future cash flows.  The remaining difference between the investment’s fair value and the present value of future expected cash flows is recognized in other comprehensive income.

 

Details regarding the carrying value of the other investments portfolio as of March 31, 2018 and December 31, 2017 are as follows (in thousands):







 

 

 

 

 

 



 

March 31,

 

December 31,



 

2018

 

2017

Investment Type

 

 

 

 

 

 

Equity warrant

 

$

 3,461 

 

$

 3,824 

Total other investments

 

$

 3,461 

 

$

 3,824 



We acquired this warrant in an active market.  The warrant entitles us to buy the underlying common stock of a publicly traded company at a fixed price until the expiration date of January 19, 2021.



The amortized cost and estimated fair value of debt securities at March 31, 2018 by contractual maturity are as follows. Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without penalties.







 

 

 

 

 

 



 

 

 

 

 

 



 

Amortized

 

Fair



 

Cost

 

Value



 

(in thousands)

Due in one year or less

 

$

 130,123 

 

$

 129,929 

Due after one year through five years

 

 

 276,426 

 

 

 277,296 

Due after five years through ten years

 

 

 134,924 

 

 

 135,509 

Due after ten years

 

 

 38,989 

 

 

 38,464 

Mortgage-backed

 

 

 15,019 

 

 

 14,648 



 

$

 595,481 

 

$

 595,846