Note 7 - Investments

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Investment [Text Block]

The amortized cost, gross unrealized gains and losses, and estimated fair value of the Company's available-for-sale investments at December 31, 2022 and December 31, 2021 are summarized in the tables shown below:

(in thousands)	December 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated Fair
	Cost		Gains		Losses		Value
Fixed maturities:
U.S. government, government agencies and authorities	$	15,797	$	—	$	717	$	15,080
States, municipalities and political subdivisions		2,390		—		158		2,232
Mortgage-backed		9,058		1		647		8,412
Asset-backed		1,682		—		72		1,610
Corporate		11,200		1		944		10,257
Total fixed maturities	$	40,127	$	2	$	2,538	$	37,591

(in thousands)	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated Fair
	Cost		Gains		Losses		Value
Fixed maturities:
U.S. government, government agencies and authorities	$	16,276	$	31	$	84	$	16,223
States, municipalities and political subdivisions		1,880		3		5		1,878
Mortgage-backed		7,679		18		68		7,629
Asset-backed		449		—		4		445
Corporate		9,605		15		129		9,491
Total fixed maturities	$	35,889	$	67	$	290	$	35,666

The table below summarizes the Company's fixed maturities at December 31, 2022 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)	December 31, 2022
			Estimated Fair
	Amortized Cost		Value
Due in one year or less	$	7,163	$	7,034
Due after one year through five years		26,317		24,628
Due after five years through ten years		2,239		1,982
Due after ten years		4,408		3,947
Total	$	40,127	$	37,591

The following tables highlight the aggregate unrealized loss position, by security type, of available-for-sale investments in unrealized loss positions as of December 31, 2022 and December 31, 2021. The tables segregate the holdings based on the period of time the investments have been continuously held in unrealized loss positions.

(in thousands)									December 31, 2022
	Less than 12 Months				Greater than 12 Months				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
	Fair Value		Loss		Fair Value		Loss		Fair Value		Loss
Fixed maturities:
U.S. government, government agencies and authorities	$	4,543	$	126	$	10,537	$	591	$	15,080	$	717
States, municipalities and political subdivisions		1,040		73		937		85		1,977		158
Mortgage-backed		2,248		93		5,756		554		8,004		647
Asset-backed		1,251		39		299		33		1,550		72
Corporate		3,244		155		6,760		789		10,004		944
Total fixed maturities	$	12,326	$	486	$	24,289	$	2,052	$	36,615	$	2,538

(in thousands)									December 31, 2021
	Less than 12 Months				Greater than 12 Months				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
	Fair Value		Loss		Fair Value		Loss		Fair Value		Loss
Fixed maturities:
U.S. government, government agencies and authorities	$	12,077	$	84	$	—	$	—	$	12,077	$	84
States, municipalities and political subdivisions		846		5		—		—		846		5
Mortgage-backed		5,388		68		—		—		5,388		68
Asset-backed		445		4		—		—		445		4
Corporate		7,542		129		—		—		7,542		129
Total fixed maturities	$	26,298	$	290	$	—	$	—	$	26,298	$	290

There are approximately208 and 138 individual available-for-sale investments that were in unrealized loss positions as of December 31, 2022 and December 31, 2021, 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. Refer to "Significant Accounting Policies and Critical Estimates" section of Management's Discussion & Analysis for further information regarding the Company's detailed analysis and factors considered in establishing an other-than-temporary impairment on an investment.

As a result of the analysis performed by the Company to determine declines in market value that are other-than-temporary, the Company did not record any write-downs for other-than-temporary impairment related to available-for sale investments, limited liability investments, investments in private companies and other investments for the years ended December 31, 2022 and December 31, 2021.  

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.

As of December 31, 2022 and December 31, 2021, the carrying value of limited liability investments totaled $1.0 million and $1.9 million, respectively. At December 31, 2022, the Company has no unfunded commitments related to limited liability investments.  

Limited liability investments, at fair value represents the underlying investments of the Company’s consolidated entities Net Lease and Argo Holdings.  As of December 31, 2022 and December 31, 2021, the carrying value of the Company's limited liability investments, at fair value was $17.1 million and $18.8 million, respectively.  The Company recorded impairments related to limited liability investments, at fair value of less than $0.1 million and $0.1 million for the years ended  December 31, 2022 and December 31, 2021, 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  December 31, 2022, the Company has no unfunded commitments related to limited liability investments, at fair value.

The Company consolidates the financial statements of Net Lease on a three-month lag. Net Lease owns investments in limited liability companies that hold investment properties.

• During 2021, one of Net Lease’s limited liability companies sold their investment property for $14.3 million.  A portion of the proceeds from the sale were distributed to Net Lease.  As a result of the distribution, Net Lease recorded a gain of $0.8 million related to its investment in the limited liability company, with an offsetting change in unrealized gain of $0.8 million, which collectively are included in net investment income in the consolidated statement of operations for the year ended December 31, 2021. 

• During the fourth quarter of 2020, one of Net Lease's limited liability companies sold their investment property.  As a result of the three-month lag, the Company recorded this transaction in its first quarter 2021 financial statements.  A portion of the proceeds from the sale were distributed to Net Lease who used them primarily to repay their $9.0 million mezzanine loan. As a result of the distribution, Net Lease recorded a gain of $1.2 million related to its investment in the limited liability company, with an offsetting change in unrealized gain of $1.2 million, which collectively are included in net investment income in the consolidated statement of operations for the for the year ended  December 31, 2021. 

• Net Lease sold its final property in February 2023. 

As of December 31, 2022 and December 31, 2021, the carrying value of the Company’s investments in private companies totaled $0.8 million. For the years ended December 31, 2022 and December 31, 2021, the Company did not record any adjustments to the fair value of its investments in private companies for observable price changes.

The Company performs a quarterly impairment analysis of its investments in private companies. As a result of the analysis performed, the Company did not record any impairments related to investments in private companies for the years ended December 31, 2022 and December 31, 2021.

Real estate investments represent investment real estate properties held by the Company’s consolidated subsidiary, Flower.  As of December 31, 2022 and December 31, 2021, the carrying value of the Company’s real estate investments was zero and $10.7 million, respectively.  The Company consolidates the financial statements of Flower on a three-month lag.  On September 29, 2022, Flower sold their investment real estate properties for $12.2 million.  A portion of the proceeds from the sale were used to repay the Flower note payable with an unpaid principal balance of $5.9 million at the transaction date.  Flower recorded a gain of $1.5 million related to the sale, which is included in gain on change in fair value of real estate investments in the consolidated statement of operations for the year ended December 31, 2022.  

Net investment income for the years ended December 31, 2022 and December 31, 2021, respectively, is comprised as follows:

(in thousands)	Years ended December 31,
	2022			2021
Investment income
Interest from fixed maturities	$	556		$	242
Dividends		159			125
Income from limited liability investments		293			27
Income from limited liability investments, at fair value		4			106
Income from real estate investments		795			800
Other		612			364
Gross investment income		2,419			1,664
Investment expenses		(114	)		(89	)
Net investment income	$	2,305		$	1,575

Gross realized gains and losses on available-for-sale investments, limited liability investments, limited liability investments, at fair value and investments in private companies for the years ended December 31, 2022 and December 31, 2021 is comprised as follows:

(in thousands)	Years ended December 31,
	2022			2021
Gross realized gains	$	1,648		$	1,917
Gross realized losses		(439	)		(108	)
Net realized gains	$	1,209		$	1,809

(Loss) gain on change in fair value of equity investments for the years ended December 31, 2022 and December 31, 2021 is comprised as follows:

(in thousands)	Years ended December 31,
	2022			2021
Net gain recognized on equity investments sold during the period	$	—		$	13
Change in unrealized losses on equity investments held at end of the period		(26	)		(255	)
Loss on change in fair value of equity investments	$	(26	)	$	(242	)