Investments

12 Months Ended

Dec. 31, 2022

Investments [Abstract]

Investments

2. Investments:

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

			Gross		Gross
		Cost/Amortized	Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
As of December 31, 2022
U.S. Treasury securities and obligations of U.S. Government	$	80,616	$	9	$	(647)	$	79,978
Corporate bonds		240,185		625		(5,766)		235,044
Corporate bank loans		76,418		6		(1,241)		75,183
Municipal bonds		35,390		51		(423)		35,018
Mortgage-backed		1,510		6		(142)		1,374
Total debt securities		434,119		697		(8,219)		426,597
Total equity securities		30,058		3,981		(5,840)		28,199
Total investments	$	464,177	$	4,678	$	(14,059)	$	454,796
As of December 31, 2021
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

The Company’s sources of net investment income are summarized as follows (in thousands):

	Twelve Months Ended December 31,
	2022		2021
U.S. Treasury securities and obligations of U.S. Government	$	285	$	578
Corporate bonds		6,607		4,371
Corporate bank loans		3,128		1,427
Municipal bonds		1,491		1,713
Mortgage-backed		47		80
Equity securities		2,050		2,404
Cash and cash equivalents		579		13
		14,187		10,586
Investment expenses		(733)		(871)
Investment income, net of expenses	$	13,454	$	9,715

As of December 31, 2022, the Company had combined investments in two unaffiliated issuers, AT&T Inc. and Pilot Travel Centers LLC,  that represented 11.0% and 15.8%, respectively, of stockholders’ equity. Our investment in AT&T consists of both common stock and investment grade debt securities, representing 29.9% and 70.1%, respectively, of our total investment in AT&T.  Our investment in Pilot Travel Centers LLC consists solely of three investment grade debt security holdings. The Company had no investments in any entity or its affiliates that exceeded 10% of stockholders’ equity at December 31, 2021.

The Company’s sources of net investment gains (losses) on investments are summarized as follows (in thousands):

	Year Ended December 31,
	2022		2021
U.S. Treasury securities and obligations of U.S. Government	$	(24)	$	—
Corporate bonds		183		494
Corporate bank loans		68		124
Municipal bonds		(14)		(25)
Mortgage-backed		—		—
Equity securities		2,931		5,453
Other investments		—		—
Gain on investments		3,144		6,046
Unrealized (losses) gains on equity securities		(8,434)		4,176
Investment gains (losses), net	$	(5,290)	$	10,222

We realized gross gains on investments of $4.6 million and $6.7 million during the years ended December 31, 2022 and 2021, respectively, of which $3.7 million and $5.9 million were from the sales of securities during the years ended December 31, 2022 and 2021, respectively. We realized gross losses on investments of $1.5 million and $0.7 million during the years ended December 31, 2022 and 2021, respectively, of which $1.4 million and $0.5 million was from the sale of securities during the years ended December 31, 2022 and 2021, respectively. We recorded proceeds from the sale of investment securities of $37.2 million and $23.1 million during the years ended December 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 December 31, 2022 and December 31, 2021 (in thousands):

	As of December 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	$	17,543	$	(67)	$	37,622	$	(580)	$	55,165	$	(647)
Corporate bonds		232,722		(5,764)		99		(2)		232,821		(5,766)
Corporate bank loans		37,339		(678)		36,107		(563)		73,446		(1,241)
Municipal bonds		10,293		(383)		2,275		(40)		12,568		(423)
Mortgage-backed		1,348		(136)		7		(6)		1,355		(142)
Total debt securities		299,245		(7,028)		76,110		(1,191)		375,355		(8,219)
Total equity securities		8,118		(3,835)		3,211		(2,005)		11,329		(5,840)
Total investments	$	307,363	$	(10,863)	$	79,321	$	(3,196)	$	386,684	$	(14,059)

	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 held a total of 228 debt securities with an unrealized loss, of which 181 were in an unrealized loss position for less than one year and 47 were in an unrealized loss position for a period of one year or greater, as of December 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 held a total of 17 equity securities with an unrealized loss, of which 8 were in an unrealized loss position for less than one year and 9 were in an unrealized loss position for a period of one year or greater, as of December 31, 2022. We held a total of 14 equity securities with an unrealized loss, of which 10 were in an unrealized loss position for less than one year and 4 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 December 31, 2022 were due predominately to normal 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 an impairment loss during 2022 or 2021.

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.  During 2022 we disposed of one previously impaired security and recognized no gain or loss on disposal.  During 2021 we did not dispose of any previously impaired security.

Equity Investments: Equity investments that are not consolidated or accounted for under the equity method of accounting are measured at fair value with changes in fair value recognized in net income each reporting period.  Equity securities 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 December 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	$	162,456	$	160,486
Due after one year through five years		210,415		206,127
Due after five years through ten years		53,198		52,370
Due after ten years		6,540		6,240
Mortgage-backed		1,510		1,374
	$	434,119	$	426,597

We have certain of our securities pledged for the benefit of various state insurance departments and reinsurers. These securities are included with our available-for-sale debt securities because we have the ability to trade these securities. We retain the interest earned on these securities. These securities had a carrying value of $40.9 million at December 31, 2022 and a carrying value of $30.0 million at December 31, 2021.