Summary of Investments

9 Months Ended

Sep. 30, 2021

Investments, Debt and Equity Securities [Abstract]

SUMMARY OF INVESTMENTS

Fair Value of Investments

A reconciliation of the amortized cost to fair value of investments in available-for-sale fixed maturity and short-term investments, presented on a consolidated basis, as of September 30, 2021 and December 31, 2020, is provided below:


September 30, 2021
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	$	53,543	$	283	$	448	$	53,378	$	—	$	53,378
U.S. government agency	55,142		2,646		644		57,144		—		57,144
States, municipalities and political subdivisions
General obligations:
Midwest	68,996		2,714		—		71,710		—		71,710
Northeast	26,562		811		—		27,373		—		27,373
South	92,091		4,196		—		96,287		—		96,287
West	95,022		5,549		—		100,571		—		100,571
Special revenue:
Midwest	118,800		7,473		—		126,273		—		126,273
Northeast	55,940		4,072		—		60,012		—		60,012
South	201,920		14,723		87		216,556		—		216,556
West	127,709		8,119		—		135,828		—		135,828
Foreign bonds	30,331		1,008		175		31,164		—		31,164
Public utilities	95,948		5,138		281		100,805		—		100,805
Corporate bonds
Energy	28,060		2,263		65		30,258		—		30,258
Industrials	52,097		2,783		137		54,743		—		54,743
Consumer goods and services	60,554		2,477		757		62,274		—		62,274
Health care	27,385		639		531		27,493		—		27,493
Technology, media and telecommunications	53,421		3,707		740		56,388		—		56,388
Financial services	90,400		5,336		308		95,428		—		95,428
Mortgage-backed securities	22,251		249		127		22,373		—		22,373
Collateralized mortgage obligations
Government national mortgage association	115,576		3,038		1,358		117,256		—		117,256
Federal home loan mortgage corporation	127,461		1,089		1,588		126,962		—		126,962
Federal national mortgage association	55,697		1,252		532		56,417		—		56,417
Asset-backed securities	322		586		—		908		—		908

Total Available-for-Sale Fixed Maturities	$	1,655,228	$	80,151	$	7,778	$	1,727,601	$	—	$	1,727,601
Short-Term Investments	$	175	$	—	—		$	175	$	—	$	175
Total Available-for-Sale Investments	$	1,655,403	$	80,151	$	7,778	$	1,727,776	$	—	$	1,727,776


December 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	$	149,481	$	482	$	25	$	149,938	$	—	$	149,938
U.S. government agency	60,502		4,016		—		64,518		—		64,518
States, municipalities and political subdivisions
General obligations:
Midwest	77,933		4,047		—		81,980		—		81,980
Northeast	29,071		1,379		—		30,450		—		30,450
South	104,522		5,448		—		109,970		—		109,970
West	102,590		7,431		—		110,021		—		110,021
Special revenue:
Midwest	115,956		9,142		—		125,098		—		125,098
Northeast	56,317		4,759		—		61,076		—		61,076
South	208,739		17,967		—		226,706		—		226,706
West	129,417		9,982		—		139,399		—		139,399
Foreign bonds	27,799		1,805		2		29,602		—		29,602
Public utilities	76,114		7,388		—		83,502		—		83,502
Corporate bonds
Energy	22,441		2,895		—		25,336		—		25,336
Industrials	39,513		3,744		—		43,257		—		43,257
Consumer goods and services	46,521		4,046		—		50,567		—		50,567
Health care	6,678		898		—		7,576		—		7,576
Technology, media and telecommunications	37,270		4,381		15		41,636		—		41,636
Financial services	93,736		7,564		269		101,031		5		101,026
Mortgage-backed securities	20,305		326		54		20,577		—		20,577
Collateralized mortgage obligations
Government national mortgage association	81,758		4,439		45		86,152		—		86,152
Federal home loan mortgage corporation	151,362		2,239		758		152,843		—		152,843
Federal national mortgage association	81,952		2,013		683		83,282		—		83,282
Asset-backed securities	314		612		—		926		—		926

Total Available-for-Sale Fixed Maturities	$	1,720,291	$	107,003	$	1,851	$	1,825,443	$	5	$	1,825,438

Maturities

The amortized cost and fair value of available-for-sale fixed maturity securities at September 30, 2021, 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
September 30, 2021	Amortized Cost		Fair Value
Due in one year or less	$	55,041	$	55,699
Due after one year through five years	469,238		492,892
Due after five years through 10 years	353,810		373,415
Due after 10 years	455,832		481,679
Asset-backed securities	322		908
Mortgage-backed securities	22,251		22,373
Collateralized mortgage obligations	298,734		300,635
	$	1,655,228	$	1,727,601

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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net realized investment gains (losses):
Fixed maturities:
Available-for-sale	$	294	$	52	$	(207)	$	52
Allowance for credit losses	170		2		5		(8)

Trading Securities	—		382		—		(780)

Equity securities
Change in the fair value	(1,314)		21,962		20,513		(38,876)
Sales	(1,168)		(7,186)		8,183		(22,772)
Mortgage loans allowance for credit losses	5		—		5		(4)





Real estate	(256)		—		(256)		(28)
Total net realized investment gains (losses)	$	(2,269)	$	15,212	$	28,243	$	(62,416)

The proceeds and gross realized gains on the sale of available-for-sale fixed maturity securities are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Proceeds from sales	$	53,973	$	—	$	170,637	$	16,907
Gross realized gains	690		—		843		198
Gross realized losses	396		—		1,051		495

Funding Commitment

Pursuant to an agreement with one of our limited liability partnership investments, we are contractually committed through July 10, 2030 to make capital contributions upon request of the partnership. Our remaining potential contractual obligation was $2,636 at September 30, 2021.

In addition, the Company invested $25,000 in December 2019 in a limited liability partnership investment fund which is subject to a three-year lockup with a 60 day minimum notice, with four possible repurchase dates per year, after the three-year lockup period is met. The fair value of the investment at September 30, 2021 was $24,786 and there are no remaining capital contributions with this investment.

Unrealized Appreciation

A summary of the changes in net unrealized investment appreciation during the reporting period is as follows:


	Nine Months Ended September 30,
	2021		2020
Change in net unrealized investment appreciation
Available-for-sale fixed maturities	$	(32,779)	$	44,574
Income tax effect	6,886		(9,361)
Total change in net unrealized investment appreciation, net of tax	$	(25,893)	$	35,213

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 September 30, 2021:


Rollforward of allowance for credit losses for available-for-sale fixed maturity securities:
	As of
	September 30, 2021
Beginning balance, January 1, 2021	$	5
Additions to the allowance for credit losses for which credit losses were not previously recorded	—


Recoveries of amounts previously written off	(5)
Ending balance, September 30, 2021	$	—

The following tables summarize our fixed maturity securities that were in an unrealized loss position reported on a consolidated basis at September 30, 2021 and December 31, 2020. 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.



September 30, 2021	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	7	$	42,264	$	437	1	$	3,695	$	11	$	45,959	$	448
U.S. government agency	3	14,998		644		—	—		—		14,998		644
States, municipalities and political subdivisions





Special revenue


Special revenue - south	1	1,186		87		—	—		—		1,186		87

Foreign bonds	4	9,719		175		—	—		—		9,719		175
Public utilities	7	19,341		281		—	—		—		19,341		281
Corporate bonds
Energy	1	2,942		65		—	—		—		2,942		65
Industrials	2	5,915		137		—	—		—		5,915		137
Consumer goods and services	7	16,348		757		—	—		—		16,348		757
Health care	3	20,517		531		—	—		—		20,517		531
Technology, media and telecommunications	5	11,264		740		—	—		—		11,264		740
Financial services	3	6,457		52		1	4,744		256		11,201		308
Mortgage-backed securities	7	15,181		127		—	—		—		15,181		127
Collateralized mortgage obligations
Federal home loan mortgage corporation	21	71,358		1,191		4	18,604		397		89,962		1,588
Federal national mortgage association	8	27,410		438		4	4,559		94		31,969		532
Government national mortgage association	9	48,566		1,358		—	—		—		48,566		1,358


Total Available-for-Sale Fixed Maturities	88	$	313,466	$	7,020	10	$	31,602	$	758	$	345,068	$	7,778

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, 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
U.S. Treasury	5	$	86,371	$	25	—	$	—	$	—	$	86,371	$	25












Foreign bonds	1	2,000		2		—	—		—		2,000		2






Technology, media and telecommunications	1	2,020		15		—	—		—		2,020		15
Financial services	1	2,995		5		1	3,000		7		5,995		12
Mortgage-backed securities	2	8,099		53		5	118		1		8,217		54
Collateralized mortgage obligations
Federal home loan mortgage corporation	24	97,691		758		1	26		—		97,717		758
Federal national mortgage association	10	44,677		683		—	—		—		44,677		683
Government national mortgage association	2	12,394		45		1	24		—		12,418		45


Total Available-for-Sale Fixed Maturities	46	$	256,247	$	1,586	8	$	3,168	$	8	$	259,415	$	1,594