The gross unrealized gains and losses on investments in fixed maturity securities, including redeemable preferred stocks that have characteristics of fixed maturities, and equity securities, including interests in mutual funds, and other invested assets, were as follows for the periods indicated.

(1)

Residential mortgage-backed securities consists primarily of obligations of U.S. Government agencies including collateralized mortgage obligations issued, guaranteed and/or insured by the following issuers: Government National Mortgage Association (GNMA), Federal Home Loan Mortgage Corporation (FHLMC), Federal National Mortgage Association (FNMA) and the Federal Home Loan Bank (FHLB).

(2)	Equity securities include common stock, preferred stock, mutual funds and interests in mutual funds held to fund the Company’s executive deferred compensation plan.

(3)	The Company’s investment portfolio included 1,195 and 444 securities in an unrealized loss position at December 31, 2022 and December 31, 2021, respectively.

(4)	Other invested assets are accounted for under the equity method which approximates fair value.

The amortized cost and the estimated fair value of fixed maturity securities, by maturity, are shown below for the period indicated. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	As of December 31, 2022
	Amortized		Estimated
	Cost		Fair Value
Due in one year or less	$	4,899	$	4,665
Due after one year through five years		289,109		269,852
Due after five years through ten years		328,816		296,368
Due after ten years through twenty years		38,044		34,623
Due after twenty years		1,570		1,483
Asset-backed securities		490,341		443,164
Totals	$	1,152,779	$	1,050,155

The gross realized gains and losses on sales of investments were as follows for the periods indicated.


	Years Ended December 31,
	2022		2021		2020
Gross realized gains
Fixed maturity securities	$	1,511	$	3,666	$	1,645
Equity securities		12,367		12,275		6,864
Gross realized losses
Fixed maturity securities		(2,987)		(1,036)		(2,166)
Equity securities		(1,701)		(20)		(5,386)
Net realized gains on investments	$	9,190	$	14,885	$	957

In the normal course of business, the Company enters into transactions involving various types of financial instruments, including investments in fixed maturities and equity securities. Investment transactions have credit exposure to the extent that a counter party may default on an obligation to the Company. Credit risk is a consequence of carrying, trading and investing in securities. To manage credit risk, the Company focuses on higher quality fixed income securities, reviews the credit strength of all companies in which it invests, limits its exposure in any one investment and monitors the portfolio quality, taking into account credit ratings assigned by recognized statistical rating organizations.

The following tables as of December 31, 2022 and 2021 present the gross unrealized losses included in the Company’s investment portfolio and the fair value of those securities aggregated by investment category. The tables also present the length of time that they have been in a continuous unrealized loss position.

As of December 31, 2022

Less than 12 Months

12 Months or More

Total

Estimated

Unrealized

Estimated

Unrealized

Estimated

Unrealized

Fair Value

Losses

Fair Value

Losses

Fair Value

Losses

U.S. Treasury securities

1,669

156

—

1,669

156

Obligations of states and political subdivisions

34,178

2,504

3,072

1,028

37,250

3,532

Residential mortgage-backed securities

140,855

12,254

70,956

13,507

211,811

25,761

Commercial mortgage-backed securities

110,073

11,632

24,653

4,847

134,726

16,479

Other asset-backed securities

41,113

2,358

27,618

3,071

68,731

5,429

Corporate and other securities

386,401

28,048

131,046

24,055

517,447

52,103

Subtotal, fixed maturity securities

714,289

56,952

257,345

46,508

971,634

103,460

Equity securities

116,881

21,198

6,209

1,948

123,090

23,146

Total temporarily impaired securities

831,170

78,150

263,554

48,456

1,094,724

126,606


	As of December 31, 2021
	Less than 12 Months				12 Months or More				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
U.S. Treasury securities	$	—	$	—	$	—	$	—	$	—	$	—
Obligations of states and political subdivisions		2,985		85		1,012		38		3,997		123
Residential mortgage-backed securities		97,116		1,502		11		1		97,127		1,503
Commercial mortgage-backed securities		29,660		442		—		—		29,660		442
Other asset-backed securities		39,266		255		—		—		39,266		255
Corporate and other securities		181,470		3,140		11,436		347		192,906		3,487
Subtotal, fixed maturity securities		350,497		5,424		12,459		386		362,956		5,810
Equity securities		19,457		1,559		1,029		205		20,486		1,764
Total temporarily impaired securities	$	369,954	$	6,983	$	13,488	$	591	$	383,442	$	7,574

At December 31, 2022, U.S. Government residential mortgage backed securities with a fair value of $40,195 are pledged as collateral for a borrowing with the Federal Home Loan Bank of Boston (“FHLB-Boston”) as described in Note 10 – Debt. These securities are included in fixed maturity securities on the Company’s Consolidated Balance Sheets.

Impairments

For fixed maturities that the Company does not intend to sell or for which it is more likely than not that the Company would not be required to sell before an anticipated recovery in value, the Company separates the credit loss component of the impairment from the amount related to all other factors. The expected credit loss component is recognized as an allowance for expected credit losses. The allowance is adjusted for any additional credit losses and subsequent recoveries, which are booked in income as either credit loss expense or credit loss benefit, respectively. Upon recognizing a credit loss, the cost basis is not adjusted. The impairment related to all other factors (non-credit factors) is reported in other comprehensive income.

For fixed maturities where the Company records a credit loss, a determination is made as to the cause of the impairment and whether the Company expects a recovery in the value. For fixed maturities where the Company expects a recovery in value, the constant effective yield method is utilized, and the investment is amortized to par.

For fixed maturity investments the Company intends to sell or for which it is more likely than not that the Company will be required to sell before an anticipated recovery in value, the full amount of the impairment is included in credit loss expense. The new cost basis of the investment is the previous amortized cost basis less the impairment recognized in credit loss expense. The new cost basis is not adjusted for any subsequent recoveries in fair value.

The Company uses a systematic methodology to evaluate declines in fair values below cost or amortized cost of our investments. Some of the factors considered in assessing impairment of fixed maturities due to credit losses include the extent to which the fair value is less than amortized cost, the financial condition of and the near and long-term prospects of the issuer, whether the debtor is current on its contractually obligated interest and principal payments, changes to the rating of the security by a rating agency, the historical volatility of the fair value of the security and whether it is more like than not that the Company will be required to sell the investment prior to an anticipated recovery in value.

As of December 31, 2022, the Company concluded that $678 of unrealized losses were due to credit factors and were recorded as an allowance for expected credit losses, compared to $691 as of December 31, 2021. The Company concluded that outside of the securities that were recognized as credit impaired, the unrealized losses recorded on the fixed maturity portfolio at December 31, 2022 and 2021 resulted from fluctuations in market interest rates and other temporary market conditions as opposed to fundamental changes in the credit quality of the issuers of such securities. Based upon the analysis performed, the Company’s decision to hold these securities, the Company’s current level of liquidity and our history of positive operating cash flows, management believes it is more likely than not that it will not be required to sell any of its securities before the anticipated recovery in the fair value to its amortized cost basis.

The following tables represent a reconciliation of the beginning and ending balances of the allowance for expected credit losses on fixed maturities classified as available for sale.


		Year Ended December 31,
		2022		2021
Beginning of period	$	691	$	1,054
Credit losses on securities with no previously recorded credit losses		193		9
Net increases (decreases) in allowance on previously impaired securities		98		(137)
Reduction due to sales		(304)		(235)
Writeoffs charged against allowance		—		—
Recoveries of amounts previously written off		—		—
Ending balance of period	$	678	$	691

The Company holds no subprime mortgage debt securities. All of the Company’s holdings in mortgage-backed securities are either U.S. Government or Agency guaranteed or are rated investment grade by either Moody’s or Standard & Poor’s.

Net Investment Income

The components of net investment income were as follows for the periods indicated.


	Years Ended December 31,
	2022		2021		2020
Interest on fixed maturity securities	$	40,886	$	36,160	$	37,727
Dividends on equity securities		6,746		6,421		5,044
Equity in earnings of other invested assets		2,304		4,895		1,378
Interest on other assets		61		22		27
Total Investment Income		49,997		47,498		44,176
Investment expenses		3,272		3,363		3,131
Net investment income	$	46,725	$	44,135	$	41,045