INVESTMENTS

The amortized cost, gross unrealized gains and losses, and estimated fair value of the Company's available-for-sale investments at September 30, 2019 and December 31, 2018 are summarized in the tables shown below:



(in thousands)	September 30, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Fixed maturities:
U.S. government, government agencies and authorities	$	11,544	$	59	$	9	$	11,594
States, municipalities and political subdivisions	603		1		2		602
Mortgage-backed	2,137		2		17		2,122
Corporate	2,985		10		4		2,991
Total fixed maturities	$	17,269	$	72	$	32	$	17,309



(in thousands)	December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Fixed maturities:
U.S. government, government agencies and authorities	$	5,594	$	1	$	48	$	5,547
States, municipalities and political subdivisions	621		—		14		607
Mortgage-backed	3,256		—		70		3,186
Corporate	2,961		—		41		2,920
Total fixed maturities	12,432		1		173		12,260

The table below summarizes the Company's fixed maturities at September 30, 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.



(in thousands)	September 30, 2019
	Amortized Cost		Estimated Fair Value
Due in one year or less	$	9,124	$	9,148
Due after one year through five years	6,912		6,937
Due after five years through ten years	181		180
Due after ten years	1,052		1,044
Total	$	17,269	$	17,309

The following tables highlight the aggregate unrealized loss position, by security type, of available-for-sale investments in unrealized loss positions as of September 30, 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.



(in thousands)									September 30, 2019
	Less than 12 Months				Greater than 12 Months				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Fixed maturities:
U.S. government, government agencies and authorities	$	700	$	2	$	1,501	$	7	$	2,201	$	9
States, municipalities and political subdivisions	—		—		453		2		453		2
Mortgage-backed	150		—		1,394		17		1,544		17
Corporate	270		1		753		3		1,023		4
Total fixed maturities	$	1,120	$	3	$	4,101	$	29	$	5,221	$	32



(in thousands)									December 31, 2018
	Less than 12 Months				Greater than 12 Months				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Fixed maturities:
U.S. government, government agencies and authorities	$	1,497	$	1	$	2,609	$	47	$	4,106	$	48
States, municipalities and political subdivisions	—		—		606		14		606		14
Mortgage-backed	800		1		2,134		69		2,934		70
Corporate	595		1		2,151		40		2,746		41
Total fixed maturities	$	2,892	$	3	$	7,500	$	170	$	10,392	$	173

There are approximately 33 and 64 individual available-for-sale investments that were in unrealized loss positions as of September 30, 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:


•	identifying all unrealized loss positions that have existed for at least six months;


•	identifying other circumstances management believes may affect the recoverability of the unrealized loss positions;


•	obtaining a valuation analysis from third-party investment managers regarding the intrinsic value of these investments based on their knowledge and experience together with market-based valuation techniques;


•	reviewing the trading range of certain investments over the preceding calendar period;


•	assessing if declines in market value are other-than-temporary for debt instruments based on the investment grade credit ratings from third-party rating agencies;


•	assessing if declines in market value are other-than-temporary for any debt instrument with a non-investment grade credit rating based on the continuity of its debt service record;


•	determining the necessary provision for declines in market value that are considered other-than-temporary based on the analyses performed; and


•	assessing the Company's ability and intent to hold these investments at least until any potential investment impairment is recovered.

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:


•	the opinions of professional investment managers could be incorrect;


•	the past trading patterns of individual investments may not reflect future valuation trends;


•	the credit ratings assigned by independent credit rating agencies may be incorrect due to unforeseen or unknown facts related to a company's financial situation; and


•	the debt service pattern of non-investment grade instruments may not reflect future debt service capabilities and may not reflect a company's unknown underlying financial problems.

As a result of the analysis performed by the Company to determine declines in market value that are other-than-temporary, the Company recorded no write-downs for other-than-temporary impairment related to limited liability investments for the three months ended September 30, 2019 and September 30, 2018, respectively ($0.1 million year to date compared to zero prior year to date). There were no write-downs recorded for other-than-temporary impairments related to available-for sale investments for the three and nine months ended September 30, 2019 and September 30, 2018, respectively.

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 September 30, 2019 and December 31, 2018, the carrying value of limited liability investments totaled $3.8 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 September 30, 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 September 30, 2019 and December 31, 2018, the carrying value of the Company's limited liability investments, at fair value was $29.6 million and $26.0 million, respectively. The Company recorded impairments related to limited liability investments, at fair value of $0.0 million and $0.1 million for the three months ended September 30, 2019 and September 30, 2018, respectively, ($0.0 million and $0.1 million for the nine months ended September 30, 2019 and September 30, 2018, respectively), which are included in (loss) gain on change in fair value of limited liability investments, at fair value in the consolidated statements of operations. At September 30, 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 September 30, 2019 and December 31, 2018, the carrying value of the Company's investments in private companies totaled $2.0 million and $3.1 million, respectively. For the three months ended September 30, 2019 and September 30, 2018, the Company recorded adjustments of $0.2 million and $0.0 million, respectively, ($0.2 million and $0.1 million for the nine months ended September 30, 2019 and September 30, 2018, respectively), to adjust the fair value of certain investments in private companies for observable price changes, which are included in net change in unrealized (loss) gain on private company investments in the consolidated statements of operations.

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:


•	the opinions of external investment and portfolio managers;


•	the financial condition and prospects of the investee;


•	recent operating trends and forecasted performance of the investee;


•	current market conditions in the geographic area or industry in which the investee operates;


•	changes in credit ratings; and


•	changes in the regulatory environment.

As a result of the analysis performed, the Company recorded impairments related to investments in private companies of $0.2 million and zero for the three months ended September 30, 2019 and September 30, 2018, respectively, ($0.2 million and zero for the nine months ended September 30, 2019 and September 30, 2018, respectively), which are included in net change in unrealized (loss) gain on private company investments in the consolidated statements of operations.

Real estate investments are reported at fair value. As of September 30, 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 September 30, 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. During the third quarter of 2018, the Company entered into an agreement with PIH to cancel the $12.00 per share, $15.00 per share and $18.00 per share performance share grant agreement in exchange for cash consideration of $1.0 million. For the three and nine months ended September 30, 2018, the Company recorded a gain, included in (loss) gain on change in fair value of equity investments in the consolidated statements of operations, of $1.0 million and $1.3 million, respectively, related to these transactions. No shares were received by the Company under either of the performance share grant agreements as of September 30, 2019.

Net investment income for the three and nine months ended September 30, 2019 and September 30, 2018 is comprised as follows:



(in thousands)	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Investment income:
Interest from fixed maturities	$	136		$	73		$	331		$	163
Dividends	69			79			197			235
Income from limited liability investments	20			22			34			203
Income from limited liability investments, at fair value	372			236			839			937
Income from real estate investments	200			200			600			600
Other	105			23			395			160
Gross investment income	902			633			2,396			2,298
Investment expenses	(5		)	(4		)	(51		)	(21		)
Net investment income	$	897		$	629		$	2,345		$	2,277

Gross realized gains and losses on available-for-sale investments and limited liability investments for the three and nine months ended September 30, 2019 and September 30, 2018 are comprised as follows:



(in thousands)	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Gross realized gains	$	1,004		$	—		$	1,363		$	398
Gross realized losses	(3		)	(414		)	(603		)	(415		)
Net realized gains gains	$	1,001		$	(414	)	$	760		$	(17	)

(Loss) gain on change in fair value of equity investments for the three and nine months ended September 30, 2019 and September 30, 2018 is comprised as follows:



(in thousands)	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Net (losses) gains recognized on equity investments sold during the period	$	(11	)	$	905		$	(112	)	$	1,450
Change in unrealized (losses) gains on equity investments held at end of the period	(27		)	(568		)	89			(369		)
(Loss) gain on change in fair value of equity investments	$	(38	)	$	337		$	(23	)	$	1,081

Short-term investments and fixed maturities with an estimated fair value of $0.2 million and $0.2 million at September 30, 2019 and December 31, 2018, respectively, were on deposit with state and provincial regulatory authorities. The Company also has restricted cash of $20.8 million and $17.0 million at September 30, 2019 and December 31, 2018, respectively. Included in restricted cash are (i) $5.1 million and $5.0 million at September 30, 2019 and December 31, 2018, respectively, held in escrow as part of the transaction to sell Mendota; (ii) $13.5 million and $10.0 million at September 30, 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 September 30, 2019 and December 31, 2018, respectively, on deposit with state and provincial regulatory authorities; and (iv) $0.3 million and $0.1 million at September 30, 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.