Investments

9 Months Ended

Sep. 30, 2023

Available-for-sale securities

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


	September 30, 2023
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value




Corporate debt securities	$	596,538	$	776	$	30,347	$	566,967
Collateralized debt obligations	113,252		64		2,828		110,488
Commercial mortgage-backed securities	78,491		90		6,549		72,032
Residential mortgage-backed securities	173,529		11		23,146		150,394
Other debt securities	16,298		0		942		15,356

Total available-for-sale securities, net	$	978,108	$	941	$	63,812	$	915,237


	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

The amortized cost and estimated fair value of available-for-sale securities at September 30, 2023 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.


	September 30, 2023
	Amortized		Estimated
(in thousands)	cost		fair value
Due in one year or less	$	63,056	$	61,957
Due after one year through five years	431,382		409,557
Due after five years through ten years	171,654		164,848
Due after ten years	312,016		278,875
Total available-for-sale securities, net (1)	$	978,108	$	915,237

(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 September 30, 2023.

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:


	September 30, 2023
	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	$	173,565	$	4,529	$	345,584	$	25,818	$	519,149	$	30,347	832
Collateralized debt obligations	7,010		39		93,940		2,789		100,950		2,828		154
Commercial mortgage-backed securities	33,208		1,064		30,692		5,485		63,900		6,549		156
Residential mortgage-backed securities	48,919		3,118		97,676		20,028		146,595		23,146		182
Other debt securities	7,605		121		7,752		821		15,357		942		39

Total available-for-sale securities	$	270,307	$	8,871	$	575,644	$	54,941	$	845,951	$	63,812	1,363
Quality breakdown of available-for-sale securities:
Investment grade	$	241,402	$	8,142	$	523,719	$	48,245	$	765,121	$	56,387	814
Non-investment grade	28,905		729		51,925		6,696		80,830		7,425		549
Total available-for-sale securities	$	270,307	$	8,871	$	575,644	$	54,941	$	845,951	$	63,812	1,363


	December 31, 2022
	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	$	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

Credit loss allowance on investments

The current expected credit loss allowance on agent loans was $1.0 million at both September 30, 2023 and December 31, 2022. The current expected credit loss allowance on available-for-sale securities was $0.4 million at September 30, 2023 and $0.2 million at December 31, 2022.

Net investment income

Investment income (loss), net of expenses, was generated from the following portfolios:


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2023		2022		2023		2022
Available-for-sale securities	$	11,037	$	8,546	$	31,404	$	21,919
Equity securities	1,161		979		3,260		2,942
Limited partnerships (1)	(13)		(4,643)		(10,725)		(2,158)
Cash equivalents and other	2,687		1,251		6,714		2,901
Total investment income	14,872		6,133		30,653		25,604
Less: investment expenses	230		299		293		998
Net investment income	$	14,642	$	5,834	$	30,360	$	24,606

(1)Limited partnership losses include 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. 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

Realized and unrealized gains (losses) on investments were as follows:


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2023		2022		2023		2022
Available-for-sale securities:
Gross realized gains	$	213	$	146	$	519	$	1,055
Gross realized losses	(2,693)		(4,752)		(6,714)		(10,163)
Net realized losses on available-for-sale securities	(2,480)		(4,606)		(6,195)		(9,108)
Equity securities	244		(1,624)		(3,060)		(14,727)
Miscellaneous	9		0		9		2
Net realized and unrealized investment losses	$	(2,227)	$	(6,230)	$	(9,246)	$	(23,833)

The portion of net unrealized gains (losses) recognized during the reporting period related to equity securities held at the reporting date is calculated as follows:


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2023		2022		2023		2022
Equity securities:
Net gains (losses) recognized during the period	$	244	$	(1,624)	$	(3,060)	$	(14,727)
Less: net gains (losses) recognized on securities sold	91		243		(2,636)		(1,327)
Net unrealized gains (losses) recognized on securities held at reporting date	$	153	$	(1,867)	$	(424)	$	(13,400)

Net impairment losses recognized in earnings

Impairments on available-for-sale securities were as follows:


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2023		2022		2023		2022
Available-for-sale securities:
Intent to sell	$	(58)	$	(45)	$	(1,639)	$	(146)
Credit	(55)		(130)		(278)		(283)


Net impairment losses recognized in earnings	$	(113)	$	(175)	$	(1,917)	$	(429)