Investments |
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS | INVESTMENTS The amortized cost, gross unrealized gains and losses, and estimated fair value of the Company's available-for-sale investments at March 31, 2019 and December 31, 2018 are summarized in the tables shown below:
The table below summarizes the Company's fixed maturities at March 31, 2019 by contractual maturity periods. Actual results may differ as issuers may have the right to call or prepay obligations, with or without penalties, prior to the contractual maturity of these obligations.
The following tables highlight the aggregate unrealized loss position, by security type, of available-for-sale investments in unrealized loss positions as of March 31, 2019 and December 31, 2018. The tables segregate the holdings based on the period of time the investments have been continuously held in unrealized loss positions.
There are approximately 51 and 64 individual available-for-sale investments that were in unrealized loss positions as of March 31, 2019 and December 31, 2018, respectively. The establishment of an other-than-temporary impairment on an investment requires a number of judgments and estimates. The Company performs a quarterly analysis of the individual investments to determine if declines in market value are other-than-temporary. The analysis includes some or all of the following procedures as deemed appropriate by the Company:
The risks and uncertainties inherent in the assessment methodology used to determine declines in market value that are other-than-temporary include, but may not be limited to, the following:
As a result of the analysis performed by the Company to determine declines in market value that are other-than-temporary, the Company recorded write-downs of $0.1 million and zero for other-than-temporary impairment related to limited liability investments for the three months ended March 31, 2019 and March 31, 2018, respectively. There were no write-downs for other-than-temporary impairments related to available-for sale investments recorded for the three months ended March 31, 2019 and March 31, 2018. The Company has reviewed currently available information regarding investments with estimated fair values less than their carrying amounts and believes these unrealized losses are not other-than-temporary and are primarily due to temporary market and sector-related factors rather than to issuer-specific factors. The Company does not intend to sell those investments, and it is not likely it will be required to sell those investments before recovery of its amortized cost. The Company does not have any exposure to subprime mortgage-backed investments. Limited liability investments include investments in limited liability companies and limited partnerships. The Company's interests in these investments are not deemed minor and, therefore, are accounted for under the equity method of accounting. The most recently available financial statements are used in applying the equity method. The difference between the end of the reporting period of the limited liability entities and that of the Company is no more than three months. As of March 31, 2019 and December 31, 2018, the carrying value of limited liability investments totaled $4.7 million and $4.8 million, respectively. Income or loss from limited liability investments is recognized based on the Company's share of the earnings of the limited liability entities and is included in net investment income in the consolidated statements of operations. At March 31, 2019, the Company has no unfunded commitments related to limited liability investments. Limited liability investments, at fair value represents the Company's investment in 26.7% of the outstanding units of 1347 Investors LLC ("1347 Investors") as well as the underlying investments of the Company’s consolidated entities Net Lease Investment Grade Portfolio LLC ("Net Lease") and Argo Holdings Fund I, LLC ("Argo Holdings"). The fair value of the Company's investment in 1347 Investors is calculated based on a model that distributes the net equity of 1347 Investors to all classes of membership interests. The model uses quoted market prices and significant market observable inputs. The most significant input to the model is the observed stock price of Limbach Holdings, Inc. ("Limbach") common stock. During the fourth quarter of 2019, the Company’s investment in 1347 Investors was dissolved, which resulted in the Company holding shares of Limbach common stock directly. During the third and fourth quarters of 2019 and through the first quarter of 2020, the Limbach common stock price has declined, which has resulted in the Company recording loss on change in fair value related to its investment in 1347 Investors and Limbach of $2.7 million, $0.7 million and $0.6 million, respectively. As of March 31, 2019 and December 31, 2018, the carrying value of the Company's limited liability investments, at fair value was $30.1 million and $26.0 million, respectively. The Company recorded impairments related to limited liability investments, at fair value of zero and $0.0 million for the three months ended March 31, 2019 and March 31, 2018, respectively. At March 31, 2019, the Company has unfunded commitments totaling $0.6 million to fund limited liability investments, at fair value, all of which related to the Company’s commitment to Argo Holdings. On December 4, 2019, Argo Management informed members of Argo Holdings that no more requests for funds are planned. Investments in private companies consist of convertible preferred stocks and notes in privately owned companies and investments in limited liability companies in which the Company’s interests are deemed minor. The Company's investments in private companies do not have readily determinable fair values. The Company has elected to record investments in private companies at cost, adjusted for observable price changes and impairments. As of March 31, 2019 and December 31, 2018, the carrying value of the Company's investments in private companies totaled $2.9 million and $3.1 million, respectively. Included in net change in unrealized gain on private company investments in the consolidated statements of operations are $0.0 million and zero for observable price changes related to investments in private companies during the three months ended March 31, 2019 and March 31, 2018. The Company performs a quarterly impairment analysis of its investments in private companies. The analysis includes some or all of the following procedures as deemed appropriate by the Company:
As a result of the analysis performed, the Company recorded no write-downs for other-than-temporary impairments related to investments in private companies for the three months ended March 31, 2019 and March 31, 2018. Real estate investments are reported at fair value. As of March 31, 2019 and December 31, 2018, the carrying value of the Company's real estate investments totaled $10.7 million and $10.7 million, respectively. Other investments include collateral loans and are reported at their unpaid principal balance. As of March 31, 2019 and December 31, 2018, the carrying value of other investments totaled $0.8 million and $2.1 million, respectively. The Company had previously entered into two separate performance share grant agreements with 1347 Property Insurance Holdings, Inc. ("PIH"), whereby the Company will be entitled to receive up to an aggregate of 475,000 shares of PIH common stock upon achievement of certain milestones for PIH’s stock price. Pursuant to the performance share grant agreements, if at any time the last sales price of PIH’s common stock equals or exceeds: (i) $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period, the Company will receive 100,000 shares of PIH common stock; (ii) $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period, the Company will receive 125,000 shares of PIH common stock (in addition to the 100,000 shares of common stock earned pursuant to clause (i) herein); (iii) $15.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period, the Company will receive 125,000 shares of PIH common stock (in addition to the 225,000 shares of common stock earned pursuant to clauses (i) and (ii) herein); and (iv) $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period, the Company will receive 125,000 shares of PIH common stock (in addition to the 350,000 shares of common stock earned pursuant to clauses (i), (ii) and (iii) herein). To the extent shares of PIH common stock are granted to the Company under either of the performance share grant agreements, they will be recorded at the time the shares are granted and will have a valuation equal to the last sales price of PIH common stock on the day prior to such grant. On January 2, 2018, the Company entered into an agreement with PIH to cancel the $10.00 per share performance shares grant agreement in exchange for cash consideration of $0.3 million. For the three months ended March 31, 2018, the Company recorded a gain, included in gain on change in fair value of equity investments in the consolidated statements of operations, of $0.3 million related to this transaction. No shares were received by the Company under either of the performance share grant agreements as of March 31, 2019. Net investment income for the three months ended March 31, 2019 and March 31, 2018 is comprised as follows:
Gross realized gains and losses on available-for-sale investments and limited liability investments for the three months ended March 31, 2019 and March 31, 2018 are comprised as follows:
Gain on change in fair value of equity investments for the three months ended March 31, 2019 and March 31, 2018 is comprised as follows:
Short-term investments and fixed maturities with an estimated fair value of $0.2 million and $0.2 million at March 31, 2019 and December 31, 2018, respectively, were on deposit with state and provincial regulatory authorities. The Company also has restricted cash of $17.2 million and $17.0 million at March 31, 2019 and December 31, 2018, respectively. Included in restricted cash are (i) $5.0 million and $5.0 million at March 31, 2019 and December 31, 2018, respectively, held in escrow as part of the transaction to sell Mendota; (ii) $9.9 million and $10.0 million at March 31, 2019 and December 31, 2018, respectively, held as deposits by IWS Acquisition Corporation ("IWS"), Professional Warranty Service Corporation ("PWSC"), and Geminus; (iii) $1.9 million and $1.9 million at March 31, 2019 and December 31, 2018, respectively, on deposit with state and provincial regulatory authorities; and (iv) $0.4 million and $0.1 million at March 31, 2019 and December 31, 2018, respectively, pledged to third-parties as deposits or to collateralize liabilities. Collateral pledging transactions are conducted under terms that are common and customary to standard collateral pledging and are subject to the Company's standard risk management controls. |