Investments

12 Months Ended

Dec. 31, 2022

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, 2022
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value



Corporate debt securities	$	588,536	$	657	$	35,811	$	553,382
Collateralized debt obligations	107,730		11		5,204		102,537
Commercial mortgage-backed securities	73,855		157		7,958		66,054
Residential mortgage-backed securities	166,412		72		16,069		150,415
Other debt securities	24,602		0		2,329		22,273

Total available-for-sale securities, net	$	961,135	$	897	$	67,371	$	894,661



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



Corporate debt securities	$	565,997	$	9,663	$	2,495	$	573,165
Collateralized debt obligations	115,344		456		338		115,462
Commercial mortgage-backed securities	88,636		1,465		777		89,324
Residential mortgage-backed securities	140,217		1,007		1,302		139,922
Other debt securities	23,859		197		136		23,920
U.S. Treasury	4,226		73		7		4,292
Total available-for-sale securities, net	$	938,279	$	12,861	$	5,055	$	946,085

The amortized cost and estimated fair value of available-for-sale securities at December 31, 2022 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, 2022
	Amortized		Estimated
(in thousands)	cost		fair value

Due in one year or less	$	24,580	$	24,089
Due after one year through five years	427,919		403,985
Due after five years through ten years	198,287		186,693
Due after ten years	310,349		279,894
Total available-for-sale securities, net (1)	$	961,135	$	894,661

(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 Statement of Financial Position at December 31, 2022.

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, 2022
	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	$	397,511	$	21,371	$	121,094	$	14,440	$	518,605	$	35,811	916
Collateralized debt obligations	44,823		2,529		55,335		2,675		100,158		5,204		159
Commercial mortgage-backed securities	41,139		5,124		15,864		2,834		57,003		7,958		131
Residential mortgage-backed securities	109,499		9,131		31,465		6,938		140,964		16,069		161
Other debt securities	15,682		1,323		6,591		1,006		22,273		2,329		46

Total available-for-sale securities	$	608,654	$	39,478	$	230,349	$	27,893	$	839,003	$	67,371	1,413
Quality breakdown of available-for-sale securities:
Investment grade	$	525,805	$	31,904	$	215,742	$	25,205	$	741,547	$	57,109	761
Non-investment grade	82,849		7,574		14,607		2,688		97,456		10,262		652
Total available-for-sale securities	$	608,654	$	39,478	$	230,349	$	27,893	$	839,003	$	67,371	1,413



	December 31, 2021
	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	$	179,281	$	1,912	$	12,494	$	583	$	191,775	$	2,495	441
Collateralized debt obligations	64,270		278		9,370		60		73,640		338		104
Commercial mortgage-backed securities	28,001		595		917		182		28,918		777		61
Residential mortgage-backed securities	89,460		1,278		441		24		89,901		1,302		98
Other debt securities	14,576		136		0		0		14,576		136		24
U.S. Treasury	388		7		0		0		388		7		1
Total available-for-sale securities	$	375,976	$	4,206	$	23,222	$	849	$	399,198	$	5,055	729
Quality breakdown of available-for-sale securities:
Investment grade	$	330,697	$	3,801	$	17,112	$	434	$	347,809	$	4,235	366
Non-investment grade	45,279		405		6,110		415		51,389		820		363
Total available-for-sale securities	$	375,976	$	4,206	$	23,222	$	849	$	399,198	$	5,055	729

Credit loss allowance on investments

The current expected credit loss allowance on agent loans was $1.0 million at both December 31, 2022 and December 31, 2021. The current expected credit loss on available-for-sale securities was $0.2 million at December 31, 2022 and less than $0.1 million at December 31, 2021.

Net investment income

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




(in thousands)	2022		2021		2020

Available-for-sale securities	$	31,913	$	23,795	$	22,631
Equity securities	3,904		4,321		4,147
Limited partnerships	(10,446)		31,701		(602)
Cash equivalents and other	4,510		3,609		5,038
Total investment income	29,881		63,426		31,214
Less: investment expenses	1,296		1,249		1,461
Net investment income	$	28,585	$	62,177	$	29,753

We include equity in (losses) earnings of limited partnerships, which includes both realized gains (losses) and unrealized valuation changes, in "Net investment income" in our Statements of Operations. In January 2023, the general partner of one of our private equity limited partnerships informed us of a significant decrease in the fair value of one of their underlying investments. The unrealized loss is estimated to be $11 million and will be recorded in net investment income (loss) in our first quarter 2023 financial statements consistent with our policy of recording limited partnership results on a quarter lag. Our limited partnership investments are included in the line item "Other assets" in the Statements of Financial Position. We have made no new significant limited partnership commitments since 2006, and the balance of limited partnership investments is expected to decline over time as additional distributions are received.

Net realized and unrealized investment (losses) gains

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




(in thousands)	2022		2021		2020
Available-for-sale securities:

Gross realized gains	$	1,169	$	6,884	$	3,920
Gross realized losses	(15,219)		(1,753)		(2,585)
Net realized (losses) gains on available-for-sale securities	(14,050)		5,131		1,335



Equity securities	(13,238)		(186)		5,056









Miscellaneous	2		1		1




Net realized and unrealized investment (losses) gains	$	(27,286)	$	4,946	$	6,392

The portion of net unrealized (losses) gains 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)	2022		2021		2020
Equity securities:
Net (losses) gains recognized during the period	$	(13,238)	$	(186)	$	5,056
Less: net losses recognized on securities sold	(1,866)		(76)		(469)
Net unrealized (losses) gains recognized on securities held at reporting date	$	(11,372)	$	(110)	$	5,525

Net impairment (losses) recoveries recognized in earnings

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



(in thousands)	2022		2021		2020
Available-for-sale securities:
Intent to sell	$	(167)	$	(10)	$	(2,274)
Credit (impaired) recovered	(500)		67		(707)
Total available-for-sale securities	(667)		57		(2,981)

Agent loans - expected credit recoveries (losses)	0		152		(297)
Net impairment (losses) recoveries recognized in earnings	$	(667)	$	209	$	(3,278)