INVESTMENTS

12 Months Ended

Dec. 31, 2019

5. INVESTMENTS

Unrealized Gains and Losses

The difference between amortized cost or cost and estimated fair value and gross unrealized gains and losses, by major investment category, consisted of the following:

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	Amortized		Gross		Gross
	Cost		Unrealized		Unrealized
	or Cost		Gains		Losses		Fair Value
	(In thousands)
December 31, 2019
Debt securities - available-for-sale:
United States government obligations and authorities	$	191,546	$	3,073	$	426	$	194,193
Obligations of states and political subdivisions	23,748		294		22		24,020
Corporate	268,182		10,252		132		278,302
International	29,169		593		12		29,750
	512,645		14,212		592		526,265

Debt securities - held-to-maturity:
United States government obligations and authorities	3,585		12		39		3,558
Corporate	697		20		—		717
International	55		1		—		56
	4,337		33		39		4,331
Total investments, excluding equity securities	$	516,982	$	14,245	$	631	$	530,596


	Amortized		Gross		Gross
	Cost		Unrealized		Unrealized
	or Cost		Gains		Losses		Fair Value
	(In thousands)
December 31, 2018
Debt securities - available-for-sale:
United States government obligations and authorities	$	127,928	$	1,091	$	1,151	$	127,868
Obligations of states and political subdivisions	9,870		27		130		9,767
Corporate	273,192		510		4,971		268,731
International	22,674		12		411		22,275
	433,664		1,640		6,663		428,641

Debt securities - held-to-maturity:
United States government obligations and authorities	$	4,085	$	1	$	158	$	3,928
Corporate	986		2		6		982
International	55		—		1		54
	5,126		3		165		4,964
Total investments, excluding equity securities	$	438,790	$	1,643	$	6,828	$	433,605

Net Realized and Unrealized Gains and Losses

The Company calculates the gain or loss realized on the sale of investments by comparing the sales price (fair value) to the cost or amortized cost of the security sold. Net realized gains and losses on investments are determined in accordance with the specific identification method.

Net realized and unrealized gains (losses) recognized in earnings, by major investment category, consisted of the following:

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	Year Ended December 31,
	2019		2018		2017
	(In thousands)
Gross realized and unrealized gains:
Debt securities	$	2,829	$	423	$	1,814
Equity securities	5,928		2,374		9,944
Total gross realized and unrealized gains	8,757		2,797		11,758

Gross realized and unrealized losses:
Debt securities	(664)		(3,990)		(1,671)
Equity securities	(1,009)		(2,951)		(1,539)
Total gross realized and unrealized losses	(1,673)		(6,941)		(3,210)
Net realized and unrealized gains (losses) on investments	$	7,084	$	(4,144)	$	8,548

The above line item, net realized and unrealized gains (losses) on investments, includes the following equity securities gains (losses) recognized in earnings:


	Year Ended December 31,
	2019		2018
	(In thousands)
Net realized and unrealized gains (losses)	$	4,919	$	(577)
Less:
Net realized and unrealized gains (losses) on securities sold	672		732
Net unrealized gains (losses) still held as of the end-of-period	$	4,247	$	(1,309)

Contractual Maturity

Actual maturities may differ from contractual maturities because issuers may have the right to call or pre-pay obligations.

Amortized cost and estimated fair value of debt securities, by contractual maturity, consisted of the following:


	December 31, 2019
	Amortized
	Cost		Fair Value
	(In thousands)
Securities with Maturity Dates
Debt securities, available-for-sale:
One year or less	$	22,642	$	22,703
Over one through five years	210,100		214,405
Over five through ten years	135,374		141,094
Over ten years	144,529		148,063
	512,645		526,265
Debt securities, held-to-maturity:
One year or less	330		331
Over one through five years	3,833		3,824
Over five through ten years	69		71
Over ten years	105		105
	4,337		4,331
Total	$	516,982	$	530,596

Net Investment Income

Net investment income consisted of the following:


	Year Ended December 31,
	2019		2018		2017
	(In thousands)
Interest income	$	15,605	$	12,253	$	9,776
Dividends income	296		207		478
Net investment income	$	15,901	$	12,460	$	10,254

Aging of Gross Unrealized Losses

Gross unrealized losses and related fair values for debt securities, grouped by duration of time in a continuous unrealized loss position, consisted of the following:


	Less than 12 months						12 months or longer						Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
					(In thousands)
December 31, 2019
Debt securities - available-for-sale:
United States government obligations and authorities	$	49,833	$	409	$	2,218	$	17	$	52,051	$	426
Obligations of states and political subdivisions	6,810		22		—		—		6,810		22
Corporate	15,872		94		7,694		38		23,566		132
International	3,856		10		179		2		4,035		12
	76,371		535		10,091		57		86,462		592

Debt securities, held-to-maturity:
United States government obligations and authorities	—		—		2,287		39		2,287		39

Corporate	—		—		—		—		—		—
International	—		—		—		—		—		—
	—		—		2,287		39		2,287		39
Total investments, excluding equity securities	$	76,371	$	535	$	12,378	$	96	$	88,749	$	631


	Less than 12 months						12 months or longer						Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
					(In thousands)
December 31, 2018
Debt securities - available-for-sale:
United States government obligations and authorities	$	22,673	$	246	$	29,727	$	905	$	52,400	$	1,151
Obligations of states and political subdivisions	3,254		18		4,786		112		8,040		130
Corporate	160,361		3,058		53,232		1,913		213,593		4,971
International	15,608		217		4,678		194		20,286		411
	201,896		3,539		92,423		3,124		294,319		6,663

Debt securities, held-to-maturity:
United States government obligations and authorities	229		1		3,113		157		3,342		158

Corporate	591		6		90		—		681		6
International	54		1		—		—		54		1
	874		8		3,203		157		4,077		165
Total investments, excluding equity securities	$	202,770	$	3,547	$	95,626	$	3,281	$	298,396	$	6,828

As of December 31, 2019, the Company held a total of 203 debt securities that were in an unrealized loss position, of which 24 securities were in an unrealized loss position continuously for 12 months or more. As of December 31, 2018, the Company held a total of 1,222 debt securities that were in an unrealized loss position, of which 371 securities were in an unrealized loss position continuously for 12 months or more. The unrealized losses associated with these securities consisted primarily of losses related to corporate securities.

The Company holds some of its debt securities as available-for-sale and as such, these securities are recorded at fair value. The Company continually monitors the difference between cost and the estimated fair value of its investments, which involves uncertainty as to whether declines in value are temporary in nature. If the decline of a particular investment is deemed temporary, the Company records the decline as an unrealized loss in shareholders’ equity. If the decline is deemed to be other than temporary, the Company will write the security’s cost-basis or amortized cost-basis down to the fair value of the investment and recognizes an OTTI loss in the Company’s consolidated statement of operations. Additionally, any portion of such decline related to debt securities that is believed to arise from factors other than credit will be recorded as a component of other comprehensive income rather than charged against income. The Company did not have any OTTI losses on its available-for-sale securities for the years ended December 31, 2019, 2018 and 2017, respectively.

As discussed in Note 2 above, beginning January 1, 2018, the Company’s equity investments are measured at fair value through net income (loss). The Company did not have any OTTI losses on its equity securities for the year ended December 31, 2017.

Collateral Deposits

Cash and cash equivalents and investments, the majority of which were debt securities, with fair values of $11.2 million and $10.3 million were deposited with governmental authorities and into custodial bank accounts as required by law or contractual obligations, as of December 31, 2019 and 2018, respectively.