Investments

3 Months Ended

Mar. 31, 2022

Investments [Abstract]

Investments

4. Investments

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

			Gross		Gross
		Amortized Cost/	Unrealized		Unrealized
	Carrying Value		Gains		Losses		Fair Value
As of March 31, 2022
U.S. Treasury securities and obligations of U.S. Government	$	43,175	$	-	$	(692)	$	42,483
Corporate bonds		221,775		1,454		(1,109)		222,120
Corporate bank loans		81,024		9		(1,015)		80,018
Municipal bonds		41,862		144		(117)		41,889
Mortgage-backed		1,746		11		(13)		1,744
Total debt securities		389,582		1,618		(2,946)		388,254
Total equity securities		46,125		9,833		(3,354)		52,604
Total investments	$	435,707	$	11,451	$	(6,300)	$	440,858
				Gross		Gross
		Amortized Cost/		Unrealized		Unrealized
As of December 31, 2021		Carrying Value		Gains		Losses		Fair Value
U.S. Treasury securities and obligations of U.S. Government	$	63,098	$	56	$	(170)	$	62,984
Corporate bonds		103,515		2,115		(49)		105,581
Corporate bank loans		81,570		84		(465)		81,189
Municipal bonds		38,162		372		(70)		38,464
Mortgage-backed		1,830		29		(4)		1,855
Total debt securities		288,175		2,656		(758)		290,073
Total equity securities		42,120		9,355		(2,780)		48,695
Total investments	$	330,295	$	12,011	$	(3,538)	$	338,768

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

	Three Months Ended March 31,
	2022		2021
Corporate bonds	$	12	$	197
Corporate bank loans		5		51
Municipal bonds		—		(9)
Equity securities		129		1,164
Gain on investments		146		1,403
Unrealized (losses) gain on equity investments		(95)		4,376
Investment gains, net	$	51	$	5,779

We realized gross gains on investments of $152 thousand and $1.5 million during the three months ended March 31, 2022 and 2021, respectively. We realized gross losses on investments of $6 thousand and $0.1 million for the three months ended March 31, 2022 and 2021, respectively. We recorded proceeds from the sale of investment securities of $0.5 million and $1.2 million during the three months ended March 31, 2022 and 2021, respectively. 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, 2022 and December 31, 2021 (in thousands):

	As of March 31, 2022
	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	$	42,483	$	(692)	$	—	$	—	$	42,483	$	(692)
Corporate bonds		130,766		(1,089)		1,149		(20)		131,915		(1,109)
Corporate bank loans		45,991		(480)		28,458		(535)		74,449		(1,015)
Municipal bonds		9,149		(106)		838		(11)		9,987		(117)
Mortgage-backed		1,669		(8)		9		(5)		1,678		(13)
Total debt securities		230,058		(2,375)		30,454		(571)		260,512		(2,946)
Total equity securities		14,165		(1,484)		3,922		(1,870)		18,087		(3,354)
Total investments	$	244,223	$	(3,859)	$	34,376	$	(2,441)	$	278,599	$	(6,300)

	As of December 31, 2021
	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	$	43,273	$	(170)	$	—	$	—	$	43,273	$	(170)
Corporate bonds		-		-		2,245		(49)		2,245		(49)
Corporate bank loans		42,256		(177)		16,763		(288)		59,019		(465)
Municipal bonds		3,321		(58)		1,038		(12)		4,359		(70)
Mortgage-backed		-		-		10		(4)		10		(4)
Total debt securities		88,850		(405)		20,056		(353)		108,906		(758)
Total equity securities		6,221		(710)		5,055		(2,070)		11,276		(2,780)
Total investments	$	95,071	$	(1,115)	$	25,111	$	(2,423)	$	120,182	$	(3,538)

We had a total of 197 debt securities with an unrealized loss, of which 164 were in an unrealized loss position for less than one year and 33 were in an unrealized loss position for a period of one year or greater, as of March 31, 2022.  We held a total of 100 debt securities with an unrealized loss, of which 74 were in an unrealized loss position for less than one year and 26 were in an unrealized loss position for a period of one year or greater, as of December 31, 2021. We consider these losses as a temporary decline in value as they are on securities 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. The gross unrealized losses on the debt security positions at March 31, 2022 and December 31, 2021 were due predominately to market and interest rate fluctuations and we see no other indications that the decline in values of these securities is other-than-temporary.

Based on evidence gathered through our normal credit evaluation process, we presently expect that all debt securities held in our investment portfolio will be paid in accordance with their contractual terms. Nonetheless, it is at least reasonably possible that the performance of certain issuers of these debt securities will be worse than currently expected resulting in future write-downs within our portfolio of debt securities.

We complete a detailed analysis each quarter to assess whether any decline in the fair value of any debt security below cost is deemed other-than-temporary. All debt securities with an unrealized loss are reviewed. We recognize an impairment loss when a debt security’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 did not recognize any impairment loss on debt securities during the three months ended March 31, 2022 and 2021, respectively.

Debt Investments: 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. We did not dispose of any previously impaired securities during the three months ended March 31, 2022 or 2021, respectively.  

Equity Investments: Equity investments that are not consolidated or accounted for under the equity method of accounting with readily determinable fair values are not required to be evaluated for other-than-temporary-impairment.

The amortized cost and estimated fair value of debt securities at March 31, 2022 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 Cost		Fair Value
	(in thousands)
Due in one year or less	$	98,318	$	98,804
Due after one year through five years		222,617		221,341
Due after five years through ten years		59,833		59,300
Due after ten years		7,068		7,065
Mortgage-backed		1,746		1,744
	$	389,582	$	388,254