Investments

9 Months Ended

Sep. 30, 2023

Investments [Abstract]

Investments

6. 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
		Cost/Amortized	Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
As of September 30, 2023
U.S. Treasury securities and obligations of U.S. Government	$	22,890	$	-	$	(212)	$	22,678
Corporate bonds		172,385		267		(2,405)		170,247
Corporate bank loans		47,334		52		(227)		47,159
Municipal bonds		26,953		29		(578)		26,404
Mortgage-backed		1,413		6		(223)		1,196
Total debt securities		270,975		354		(3,645)		267,684
Total equity securities		21,142		3,673		(5,056)		19,759
Total investments	$	292,117	$	4,027	$	(8,701)	$	287,443
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 September 30, 2023, the Company had negative total stockholders’ equity and thus all investment holdings qualified as being greater than 10% of stockholders’ equity. Our investment portfolio contains 320 distinct issuers, of which 93% by dollar value was in debt securities with the remaining amount in equity securities. Of the debt securities invested in 297 issuers, 82% by dollar value was considered investment grade.

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
U.S. Treasury securities and obligations of U.S. Government	$	—	$	300	$	(22)	$	300
Corporate bonds		(13)		160		(1,175)		172
Corporate bank loans		4		39		(151)		66
Municipal bonds		168		(4)		164		(12)
Mortgage-backed		—		9		—		—
Equity securities		(153)		—		460		1,141
(Loss) Gain on investments		6		504		(724)		1,667
Unrealized gains (losses) on equity securities		138		(3,325)		476		(8,431)
Investment gains (losses), net	$	144	$	(2,821)	$	(248)	$	(6,764)

We realized gross gains on investments of $0.25 million and $0.5 million during the three months ended September 30, 2023 and 2022, respectively, and $1.8 million and $1.7 million during the nine months ended September 30, 2023 and 2022, respectively. We realized gross losses on investments of $0.24 million and $5 thousand for the three months ended September 30, 2023 and 2022, respectively, and $2.5 million and $26 thousand during the nine months ended September 30, 2023 and 2022, respectively. We recorded proceeds from the sale of investment securities of $3.1 million and $0.2 million during the three months ended September 30, 2023 and 2022, respectively, and $61.6 million and $4.7 million during the nine months ended September 30, 2023 and 2022, 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 September 30, 2023 and December 31, 2022 (in thousands):

	As of September 30, 2023
	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	$	21,536	$	(191)	$	1,141	$	(21)	$	22,677	$	(212)
Corporate bonds		3,845		(64)		162,274		(2,341)		166,119		(2,405)
Corporate bank loans		7,682		(34)		22,703		(193)		30,385		(227)
Municipal bonds		3,693		(21)		6,825		(557)		10,518		(578)
Mortgage-backed		5		(1)		1,179		(222)		1,184		(223)
Total debt securities		36,761		(311)		194,122		(3,334)		230,883		(3,645)
Total equity securities		888		(65)		5,255		(4,991)		6,143		(5,056)
Total investments	$	37,649	$	(376)	$	199,377	$	(8,325)	$	237,026	$	(8,701)

	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)

We had a total of 197 debt securities with an unrealized loss position, of which 76 were in an unrealized loss position for less than one year and 121 were in an unrealized loss position for a period of one year or greater, as of September 30, 2023.  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 consider these unrealized 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 September 30, 2023 and December 31, 2022 were due predominately to market and interest rate fluctuations occurring in the ordinary course of business. Should we determine that a debt security in an unrealized loss position is likely to be sold before recovery of our amortized cost basis, we would recognize the unrealized loss.

Additionally, in accordance with ASU 2016-13, the Company estimates what is expected to not be collectable over the remaining life of its debt securities that are in an unrealized loss position by employing qualitative analysis without regard for time spent in an unrealized loss position. The significant inputs used to determine the amount of expected credit loss in our debt security portfolio begins with an analysis of held securities experiencing credit rating downgrades in the current reporting period.  Further inputs, such as performance indicators of the issuer’s business model, underlying assets, credit support and debt leverage are gathered as necessary based on our initial analysis step. If warranted, updated cash flow expectations are developed based on the aforementioned inputs. The Company concluded that based on current evidence there is no expected credit loss allowance necessary as of September 30, 2023. We presently expect that all debt securities held in our investment portfolio will be paid in accordance with their contractual terms.

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 September 30, 2023 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	$	174,304	$	172,582
Due after one year through five years		78,754		77,939
Due after five years through ten years		9,421		9,323
Due after ten years		7,083		6,644
Mortgage-backed		1,413		1,196
	$	270,975	$	267,684