Investments

12 Months Ended

Dec. 31, 2020

Available-for-sale securities

See Note 5, "Fair Value" for additional fair value disclosures. The following tables summarize the cost and fair value, net of credit loss allowance, of our available-for-sale securities as of:



	December 31, 2020
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value






Corporate debt securities	$	546,096	$	21,843	$	1,514	$	566,425
Residential mortgage-backed securities	108,840		3,373		34		112,179
Commercial mortgage-backed securities	115,346		5,090		235		120,201
Collateralized debt obligations	110,121		657		331		110,447
Other debt securities	18,387		606		9		18,984
Total available-for-sale securities, net	$	898,790	$	31,569	$	2,123	$	928,236



	December 31, 2019
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value






Corporate debt securities	$	450,295	$	6,289	$	1,704	$	454,880
Residential mortgage-backed securities	124,337		1,056		50		125,343
Commercial mortgage-backed securities	67,210		479		148		67,541
Collateralized debt obligations	78,059		44		247		77,856
Other debt securities	5,049		71		39		5,081
Total available-for-sale securities, net	$	724,950	$	7,939	$	2,188	$	730,701

The amortized cost and estimated fair value of available-for-sale securities at December 31, 2020, are shown below by remaining contractual term to maturity. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.



	December 31, 2020
	Amortized		Estimated
(in thousands)	cost		fair value

Due in one year or less	$	17,393	$	17,553
Due after one year through five years	419,019		435,504
Due after five years through ten years	185,849		189,711
Due after ten years	276,529		285,468
Total available-for-sale securities (1)	$	898,790	$	928,236

(1)The contractual maturities of our available-for-sale securities are included in the table. However, given our intent to sell certain impaired securities, these securities are classified as current assets in our Statements of Financial Position at December 31, 2020.

The below securities have been evaluated and determined to be temporary declines in fair value for which we expect to recover our entire principal plus interest. The following tables present available-for-sale securities based on length of time in a gross unrealized loss position as of:



	December 31, 2020
	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		No. of
(dollars in thousands)	value		losses		value		losses		value		losses		holdings




Corporate debt securities	$	39,693	$	644	$	7,952	$	870	$	47,645	$	1,514	257
Residential mortgage-backed securities	8,163		34		0		0		8,163		34		13
Commercial mortgage-backed securities	16,582		235		0		0		16,582		235		31
Collateralized debt obligations	50,036		232		10,899		99		60,935		331		65
Other debt securities	1,019		9		0		0		1,019		9		4
Total available-for-sale securities	$	115,493	$	1,154	$	18,851	$	969	$	134,344	$	2,123	370



Quality breakdown of available-for-sale securities:
Investment grade	$	86,807	$	561	$	10,899	$	99	$	97,706	$	660	119
Non-investment grade	28,686		593		7,952		870		36,638		1,463		251
Total available-for-sale securities	$	115,493	$	1,154	$	18,851	$	969	$	134,344	$	2,123	370



	December 31, 2019
	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		No. of
(dollars in thousands)	value		losses		value		losses		value		losses		holdings




Corporate debt securities	$	25,804	$	342	$	15,699	$	1,362	$	41,503	$	1,704	158
Residential mortgage-backed securities	16,712		50		0		0		16,712		50		7
Commercial mortgage-backed securities	21,981		147		372		1		22,353		148		30
Collateralized debt obligations	20,889		33		41,010		214		61,899		247		49
Other debt securities	2,350		39		0		0		2,350		39		2
Total available-for-sale securities	$	87,736	$	611	$	57,081	$	1,577	$	144,817	$	2,188	246



Quality breakdown of available-for-sale securities:
Investment grade	$	76,315	$	287	$	46,390	$	218	$	122,705	$	505	100
Non-investment grade	11,421		324		10,691		1,359		22,112		1,683		146
Total available-for-sale securities	$	87,736	$	611	$	57,081	$	1,577	$	144,817	$	2,188	246

Credit loss allowance on investments

As of December 31, 2020, the current expected credit loss allowance on agent loans is $1.1 million and the credit loss allowance on available-for-sale securities is $0.2 million.

Net investment income

Investment income, net of expenses, was generated from the following portfolios for the years ended December 31:




(in thousands)	2020		2019		2018

Available-for-sale securities (1)	$	22,631	$	22,496	$	24,978
Equity securities	4,147		1,418		628
Cash equivalents and other	4,436		11,206		4,806
Total investment income	31,214		35,120		30,412
Less: investment expenses	1,461		1,061		1,025
Investment income, net of expenses	$	29,753	$	34,059	$	29,387

(1) Includes interest earned on note receivable from EFL of $1.6 million in 2018. The note was repaid in full in 2018.

Realized investment gains (losses)

Realized gains (losses) on investments were as follows for the years ended December 31:




(in thousands)	2020		2019		2018
Available-for-sale securities:

Gross realized gains	$	3,920	$	6,258	$	1,892
Gross realized losses	(2,585)		(1,639)		(3,189)
Net realized gains (losses) on available-for-sale securities	1,335		4,619		(1,297)



Equity securities	5,056		1,484		(819)









Miscellaneous	1		0		106




Net realized investment gains (losses)	$	6,392	$	6,103	$	(2,010)

The portion of net unrealized gains and losses recognized during the reporting period related to equity securities held at the reporting date is calculated as follows for the years ended December 31:



(in thousands)	2020		2019		2018
Equity securities:
Net gains (losses) recognized during the period	$	5,056	$	1,484	$	(819)
Less: net (losses) gains recognized on securities sold	(469)		360		(86)
Net unrealized gains (losses) recognized on securities held at reporting date	$	5,525	$	1,124	$	(733)

Net impairment losses recognized in earnings

Upon adoption of ASU 2016-13 on January 1, 2020, impairments on available-for-sale securities that are deemed to be credit related are recognized in earnings with a corresponding available-for-sale security allowance. All unrealized losses related to factors other than credit are recorded in other comprehensive income. Prior to January 1, 2020, we had the intent to sell all credit-impaired available-for-sale securities; therefore, the entire amount of the impairment charges was included in earnings and no impairments were recognized in other comprehensive income. See also Note 2, "Significant Accounting Policies".

Impairments on available-for-sale securities and agent loans were as follows for the years ended December 31:



(in thousands)	2020		2019		2018
Available-for-sale securities:
Intent to sell	$	2,274	$	195	$	1,581
Credit impaired	707		—		—
Total available-for-sale securities	2,981		195		1,581
Agent loans - expected credit losses	297		—		—
Net impairment losses recognized in earnings	$	3,278	$	195	$	1,581