Investments

3 Months Ended

Mar. 31, 2021

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:



	March 31, 2021
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value






Corporate debt securities	$	535,737	$	16,149	$	2,071	$	549,815
Residential mortgage-backed securities	104,937		2,123		411		106,649
Commercial mortgage-backed securities	112,028		2,413		476		113,965
Collateralized debt obligations	114,819		634		246		115,207
Other debt securities	21,912		435		56		22,291
U.S. Treasury	10,509		13		127		10,395



Total available-for-sale securities, net	$	899,942	$	21,767	$	3,387	$	918,322



	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

The amortized cost and estimated fair value of available-for-sale securities at March 31, 2021 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.



	March 31, 2021
	Amortized		Estimated
(in thousands)	cost		fair value

Due in one year or less	$	16,625	$	16,813
Due after one year through five years	421,401		433,929
Due after five years through ten years	187,492		189,327
Due after ten years	274,424		278,253
Total available-for-sale securities (1)	$	899,942	$	918,322

(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 March 31, 2021.

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:



	March 31, 2021
	Less than 12 months				12 months or longer				Total
(dollars in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses		No. of holdings





Corporate debt securities	$	123,931	$	1,345	$	11,703	$	726	$	135,634	$	2,071	399
Residential mortgage-backed securities	31,246		411		0		0		31,246		411		41
Commercial mortgage-backed securities	23,116		463		1,186		13		24,302		476		60
Collateralized debt obligations	34,317		126		24,958		120		59,275		246		62
Other debt securities	7,330		56		0		0		7,330		56		10
U.S. Treasury	6,276		127		0		0		6,276		127		2



Total available-for-sale securities	$	226,216	$	2,528	$	37,847	$	859	$	264,063	$	3,387	574
Quality breakdown of available-for-sale securities:
Investment grade	$	194,135	$	2,165	$	26,334	$	135	$	220,469	$	2,300	220
Non-investment grade	32,081		363		11,513		724		43,594		1,087		354
Total available-for-sale securities	$	226,216	$	2,528	$	37,847	$	859	$	264,063	$	3,387	574



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

Credit loss allowance on investments

As of March 31, 2021 and December 31, 2020, the current expected credit loss allowance on agent loans was $1.1 million in both periods. The current expected credit loss on available-for-sale securities was less than $0.1 million at March 31, 2020, and $0.2 million at December 31, 2020.

Net investment income

Investment income (loss), net of expenses, was generated from the following portfolios for the three months ended March 31:




(in thousands)	2021		2020

Available-for-sale securities	$	6,197	$	5,788
Equity securities	1,202		856
Limited partnerships(1)	9,046		(3,705)
Cash equivalents and other	977		1,974
Total investment income	17,422		4,913
Less: investment expenses	325		249
Investment income, net of expenses	$	17,097	$	4,664

(1)Equity in earnings (losses) of limited partnerships includes both realized gains (losses) and unrealized valuation changes. Our limited partnership investments are included in the line item "Other assets" in the Statements of Financial Position.

Realized investment gains (losses)

Realized gains (losses) on investments were as follows for the three months ended March 31:




(in thousands)	2021		2020

Available-for-sale securities:

Gross realized gains	$	1,923	$	1,074
Gross realized losses	(440)		(459)
Net realized gains on available-for-sale securities	1,483		615




Equity securities(1)	(679)		(11,422)










Miscellaneous	0		1
Net realized investment gains (losses)	$	804	$	(10,806)

(1)The increase in net losses recognized on equity securities in the first quarter of 2020 is primarily due to the financial market volatility resulting from the COVID-19 pandemic.

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 three months ended March 31:



(in thousands)	2021		2020
Equity securities:
Net losses recognized during the period(1)	$	(679)	$	(11,422)
Less: net losses recognized on securities sold	(289)		(37)
Net unrealized losses recognized on securities held at reporting date	$	(390)	$	(11,385)

(1)The increase in net losses recognized on equity securities in the first quarter of 2020 is primarily due to the financial market volatility resulting from the COVID-19 pandemic.

Net impairment recoveries (losses) recognized in earnings

Impairments on available-for-sale securities and agent loans were as follows for the three months ended March 31:




(in thousands)	2021		2020
Available-for-sale securities:
Intent to sell	$	—	$	(2,242)
Credit impaired	87		(641)
Total available-for-sale securities	87		(2,883)
Agent loans - expected credit losses	—		(170)
Net impairment recoveries (losses) recognized in earnings	$	87	$	(3,053)