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Summary of Investments
 3 Months Ended
Mar. 31, 2020
Investments, Debt and Equity Securities [Abstract]  
Summary of Investments SUMMARY OF INVESTMENTS
Fair Value of Investments
A reconciliation of the amortized cost (cost for equity securities) to fair value of investments in available-for-sale fixed maturity and equity securities, presented on a consolidated basis, as of March 31, 2020 and December 31, 2019, is provided below:
March 31, 2020
 
 
 
 
 
Type of Investment
Cost or Amortized Cost
 
Gross Unrealized Appreciation
 
Gross Unrealized Depreciation
 
Fair Value
 
Allowance for Credit Losses
 
Carrying Value
AVAILABLE-FOR-SALE
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities:
 
 
 
 
 
 
 
 
 
 
 
Bonds
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury
$
49,068

 
$
1,026

 
$
—

 
$
50,094

 
$
—

 
$
50,094

U.S. government agency
75,504

 
4,184

 
—

 
79,688

 
—

 
79,688

States, municipalities and political subdivisions
 
 
 
 
 
 
 
 
 
 
 
General obligations:
 
 
 
 
 
 
 
 
 
 
 
Midwest
85,521

 
2,925

 
—

 
88,446

 
—

 
88,446

Northeast
30,067

 
1,071

 
—

 
31,138

 
—

 
31,138

South
111,497

 
3,579

 
—

 
115,076

 
—

 
115,076

West
105,363

 
4,712

 
—

 
110,075

 
—

 
110,075

Special revenue:
 
 
 
 
 
 
 
 
 
 
 
Midwest
130,758

 
6,740

 
—

 
137,498

 
—

 
137,498

Northeast
58,540

 
2,892

 
—

 
61,432

 
—

 
61,432

South
223,360

 
10,617

 
48

 
233,929

 
—

 
233,929

West
137,256

 
6,051

 
—

 
143,307

 
—

 
143,307

Foreign bonds
4,935

 
179

 
2

 
5,112

 
—

 
5,112

Public utilities
74,192

 
2,072

 
424

 
75,840

 
—

 
75,840

Corporate bonds

 

 

 

 
 
 
 
Energy
27,124

 
236

 
1,360

 
26,000

 
16

 
25,984

Industrials
56,173

 
1,640

 
380

 
57,433

 
—

 
57,433

Consumer goods and services
47,109

 
1,925

 
263

 
48,771

 
—

 
48,771

Health care
9,006

 
368

 
—

 
9,374

 
—

 
9,374

Technology, media and telecommunications
34,185

 
1,618

 
272

 
35,531

 
11

 
35,520

Financial services
100,666

 
2,678

 
794

 
102,550

 
32

 
102,518

Mortgage-backed securities
5,929

 
205

 
4

 
6,130

 
—

 
6,130

Collateralized mortgage obligations
 
 
 
 
 
 
 
 
 
 
 
Government national mortgage association
76,808

 
5,334

 
30

 
82,112

 
—

 
82,112

Federal home loan mortgage corporation
114,099

 
4,494

 
7

 
118,586

 
—

 
118,586

Federal national mortgage association
76,401

 
4,000

 
26

 
80,375

 
—

 
80,375

Asset-backed securities
314

 
607

 
—

 
921

 
—

 
921

Total Available-for-Sale Fixed Maturities
$
1,633,875

 
$
69,153

 
$
3,610

 
$
1,699,418

 
$
59

 
$
1,699,359



December 31, 2019
 
Type of Investment
Cost or Amortized Cost
 
Gross Unrealized Appreciation
 
Gross Unrealized Depreciation
 
Fair Value
AVAILABLE-FOR-SALE

 

 

 

Fixed maturities:

 

 

 

Bonds

 

 

 

U.S. Treasury
$
69,300

 
$
203

 
$
12

 
$
69,491

U.S. government agency
97,962

 
2,344

 
104

 
100,202

States, municipalities and political subdivisions
 
 
 
 
 
 
 
General obligations:
 
 
 
 
 
 
 
Midwest
85,607

 
2,987

 
—

 
88,594

Northeast
30,120

 
1,150

 
—

 
31,270

South
111,688

 
3,515

 
—

 
115,203

West
105,569

 
4,748

 
—

 
110,317

Special revenue:
 
 
 
 
 
 
 
Midwest
133,717

 
6,175

 
—

 
139,892

Northeast
58,665

 
2,878

 
—

 
61,543

South
224,214

 
10,452

 
—

 
234,666

West
138,557

 
6,287

 
—

 
144,844

Foreign bonds
4,936

 
181

 
—

 
5,117

Public utilities
60,950

 
2,701

 
—

 
63,651

Corporate bonds

 


 

 

Energy
28,695

 
1,429

 
—

 
30,124

Industrials
52,249

 
1,766

 
—

 
54,015

Consumer goods and services
47,131

 
2,335

 
—

 
49,466

Health care
8,998

 
482

 
—

 
9,480

Technology, media and telecommunications
25,931

 
1,739

 
—

 
27,670

Financial services
96,613

 
3,870

 
230

 
100,253

Mortgage-backed securities
6,250

 
127

 
21

 
6,356

Collateralized mortgage obligations
 
 
 
 
 
 
 
Government national mortgage association
78,400

 
2,053

 
97

 
80,356

Federal home loan mortgage corporation
123,572

 
1,150

 
220

 
124,502

Federal national mortgage association
70,322

 
1,631

 
108

 
71,845

Asset-backed securities
314

 
436

 
—

 
750

Total Available-for-Sale Fixed Maturities
$
1,659,760

 
$
60,639

 
$
792

 
$
1,719,607


Maturities
The amortized cost and fair value of held-to-maturity, available-for-sale and trading fixed maturity securities at March 31, 2020, by contractual maturity, are shown in the following tables. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Asset-backed securities, mortgage-backed securities and collateralized mortgage obligations may be subject to prepayment risk and are therefore not categorized by contractual maturity.
Maturities
 
 
 
 
 
 
 
 
 
 
Available-For-Sale
 
Trading
March 31, 2020
 
Amortized Cost
 
Fair Value
 
Amortized Cost
 
Fair Value
Due in one year or less
 
$
67,835

 
$
68,253

 
$
2,211

 
$
3,156

Due after one year through five years
 
276,483

 
282,037

 
7,190

 
6,694

Due after five years through 10 years
 
465,814

 
484,021

 
—

 
—

Due after 10 years
 
550,192

 
576,983

 
1,101

 
1,358

Asset-backed securities
 
314

 
921

 
—

 
—

Mortgage-backed securities
 
5,929

 
6,130

 
—

 
—

Collateralized mortgage obligations
 
267,308

 
281,073

 
—

 
—

Allowance for credit losses
 
—

 
(59
)
 
—

 
—

 
 
$
1,633,875

 
$
1,699,359

 
$
10,502

 
$
11,208


Net Realized Investment Gains and Losses
Net realized gains on disposition of investments are computed using the specific identification method and are included in the computation of net income. A summary of the components of net realized investment gains (losses) is as follows:
 
Three Months Ended March 31,
 
2020
 
2019
Net realized investment gains (losses):
 
 
 
Fixed maturities:
 
 
 
Available-for-sale
$
(30
)
 
$
150

Allowance for credit losses
(59
)
 
—

Trading securities
 
 
 
Change in fair value
(2,608
)
 
1,746

Sales
151

 
—

Equity securities
 
 
 
Change in fair value
(90,647
)
 
24,634

Sales
(181
)
 
198

Mortgage loans allowance for credit losses
(5
)
 
(15
)
Cash equivalents
—

 
—

Real estate
(28
)
 
—

Total net realized investment gains (losses)
$
(93,407
)
 
$
26,713



The proceeds and gross realized gains on the sale of available-for-sale fixed maturity securities are as follows:
 
Three Months Ended March 31,
 
2020
 
2019
Proceeds from sales
$
11,910

 
$
36,490

Gross realized gains
172

 
30

Gross realized losses
382

 
13


Our investment portfolio includes trading securities with embedded derivatives. These securities are primarily convertible securities which are recorded at fair value. Income or loss, including the change in the fair value of these trading securities, is recognized currently in earnings as a component of net realized investment gains. Our portfolio of trading securities had a fair value of $11,208 and $15,256 at March 31, 2020 and December 31, 2019, respectively.
Funding Commitment

Pursuant to an agreement with one of our limited liability partnership investments, we are contractually committed through July 31, 2028 to make capital contributions upon request of the partnership. Our remaining potential contractual obligation was $12,583 at March 31, 2020.

In addition, the Company invested $25,000 in December 2019 in a limited liability partnership investment fund which is subject to a 3-year lockup with a 60 day minimum notice, with 4 possible repurchase dates per year, after the 3-year lockup period is met. There are no remaining contractual obligations with this investment.
Unrealized Appreciation
A summary of the changes in net unrealized investment appreciation during the reporting period is as follows:
 
Three Months Ended March 31,
 
2020
 
2019
Change in net unrealized investment appreciation
 
 
 
Available-for-sale fixed maturities
$
5,696


$
33,264

Income tax effect
(1,196
)

(6,985
)
Total change in net unrealized investment appreciation, net of tax
$
4,500

 
$
26,279


Credit Risk
An allowance for credit losses is recorded based on a number of factors including the current economic conditions, management's expectations of future economic conditions and performance indicators, such as market value vs. amortized cost, investment spreads widening or contracting, rating actions, payment and default history. The following table contains a rollforward of the allowance for credit losses for available-for-sale fixed maturity securities at March 31, 2020:
Rollforward of allowance for credit losses for available-for-sale fixed maturity securities:
 
 
As of
 
 
March 31, 2020
Beginning balance, January 1, 2020
 
$
—

Additions to the allowance for credit losses for which credit losses were not previously recorded
 
59

Reductions for securities sold during the period (realized)
 
—

Writeoffs charged against the allowance
 
—

Recoveries of amounts previously written off
 
—

Ending balance, March 31, 2020
 
$
59









The following tables summarize our fixed maturity securities that were in an unrealized loss position reported on a consolidated basis at March 31, 2020 and December 31, 2019. The securities are presented by the length of time they have been continuously in an unrealized loss position. Non-credit related unrealized losses are recognized as a component of other comprehensive income and represent other market movements that are not credit related, for example interest rate changes. We have no intent to sell, and it is more likely than not that we will not be required to sell, these securities until the fair value recovers to at least equal our cost basis or the securities mature.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31, 2020
Less than 12 months
 
12 months or longer
 
Total
Type of Investment
Number
of Issues
 
Fair
Value
 
Gross Unrealized
Depreciation
 
Number
of Issues
 
Fair
Value
 
Gross Unrealized Depreciation
 
Fair
Value
 
Gross Unrealized Depreciation
AVAILABLE-FOR-SALE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bonds
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
States, municipalities and political subdivisions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Special revenue - south
2

 
$
5,386

 
$
48

 
—

 
—

 
—

 
$
5,386

 
$
48

Foreign bonds
1

 
597

 
2

 
—

 
—

 
—

 
597

 
2

Public utilities
8

 
20,882

 
424

 
—

 
—

 
—

 
20,882

 
424

Corporate bonds
 
 
 
 
 
 
 
 
 
 
 
 


 


Energy
6

 
12,042

 
980

 
—

 
—

 
—

 
12,042

 
980

Industrials
5

 
13,052

 
380

 
—

 
—

 
—

 
13,052

 
380

Consumer goods and services
7

 
11,765

 
263

 
—

 
—

 
—

 
11,765

 
263

Technology, media and telecommunications
3

 
6,919

 
166

 
—

 
—

 
—

 
6,919

 
166

Financial services
8

 
20,728

 
216

 
—

 
—

 
—

 
20,728

 
216

Mortgage-backed securities
—

 
—

 
—

 
8

 
279

 
4

 
279

 
4

Collateralized mortgage obligations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government national mortgage association
1

 
1,525

 
28

 
2

 
542

 
2

 
2,067

 
30

Federal home loan mortgage corporation
2

 
2,237

 
6

 
1

 
116

 
1

 
2,353

 
7

Federal national mortgage association
1

 
2,337

 
26

 
—

 
—

 
—

 
2,337

 
26

Total Available-for-Sale Fixed Maturities
44

 
$
97,470

 
$
2,539

 
11

 
$
937

 
$
7

 
$
98,407

 
$
2,546



The unrealized losses on our investments in available-for-sale fixed maturities were the result of interest rate movements. We have no intent to sell, and it is more likely than not that we will not be required to sell, these securities until the fair value recovers to at least equal our cost basis or the securities mature.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2019
Less than 12 months
 
12 months or longer
 
Total
Type of Investment
Number
of Issues
 
Fair
Value
 
Gross Unrealized Depreciation
 
Number
of Issues
 
Fair
Value
 
Gross Unrealized Depreciation
 
Fair
Value
 
Gross Unrealized Depreciation
AVAILABLE-FOR-SALE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bonds
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury
—

 
$
—

 
$
—

 
2

 
$
4,733

 
$
12

 
$
4,733

 
$
12

U.S. government agency
3

 
13,846

 
104

 
—

 
—

 
—

 
13,846

 
104

Corporate bonds
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial services
3

 
10,906

 
142

 
1

 
4,913

 
88

 
15,819

 
230

Mortgage-backed securities
—

 
—

 
—

 
13

 
1,585

 
21

 
1,585

 
21

Government national mortgage association
2

 
8,444

 
38

 
5

 
3,053

 
59

 
11,497

 
97

Federal home loan mortgage corporation
12

 
50,829

 
183

 
3

 
4,844

 
37

 
55,673

 
220

Federal national mortgage association
4

 
23,515

 
90

 
3

 
1,102

 
18

 
24,617

 
108

Total Available-for-Sale Fixed Maturities
24

 
$
107,540

 
$
557

 
27

 
$
20,230

 
$
235

 
$
127,770

 
$
792