XML 38 R27.htm IDEA: XBRL DOCUMENT v3.21.2
Investments (Tables)
 9 Months Ended
Sep. 30, 2021
Investments Debt And Equity Securities [Abstract]  
Schedule of Amortized Cost and Estimated Fair Value of Company's Fixed Maturities Securities

The amortized cost and estimated fair value of the Company’s fixed maturities securities were as follows as of September 30, 2021 and December 31, 2020:

 

(Dollars in thousands)

 

Amortized

Cost

 

 

Allowance for Expected Credit Losses

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

Losses

 

 

Estimated

Fair Value

 

As of September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed maturities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

115,319

 

 

$

—

 

 

$

990

 

 

$

(1,632

)

 

$

114,677

 

Agency obligations

 

 

8,781

 

 

 

—

 

 

 

1

 

 

 

(151

)

 

 

8,631

 

Obligations of states and political subdivisions

 

 

53,188

 

 

 

—

 

 

 

1,916

 

 

 

(163

)

 

 

54,941

 

Mortgage-backed securities

 

 

268,484

 

 

 

—

 

 

 

3,686

 

 

 

(1,417

)

 

 

270,753

 

Asset-backed securities

 

 

174,837

 

 

 

—

 

 

 

1,121

 

 

 

(436

)

 

 

175,522

 

Commercial mortgage-backed securities

 

 

124,137

 

 

 

—

 

 

 

3,623

 

 

 

(266

)

 

 

127,494

 

Corporate bonds

 

 

298,722

 

 

 

—

 

 

 

9,628

 

 

 

(1,249

)

 

 

307,101

 

Foreign corporate bonds

 

 

137,644

 

 

 

—

 

 

 

3,548

 

 

 

(342

)

 

 

140,850

 

Total fixed maturities

 

$

1,181,112

 

 

$

—

 

 

$

24,513

 

 

$

(5,656

)

 

$

1,199,969

 

 

(Dollars in thousands)

 

Amortized

Cost

 

 

Allowance for Expected Credit Losses

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

Losses

 

 

Estimated

Fair Value

 

As of December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed maturities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

195,444

 

 

$

—

 

 

$

3,125

 

 

$

(1,089

)

 

$

197,480

 

Obligations of states and political subdivisions

 

 

58,140

 

 

 

—

 

 

 

3,170

 

 

 

(67

)

 

 

61,243

 

Mortgage-backed securities

 

 

351,453

 

 

 

—

 

 

 

7,876

 

 

 

(551

)

 

 

358,778

 

Asset-backed securities

 

 

116,349

 

 

 

—

 

 

 

1,890

 

 

 

(646

)

 

 

117,593

 

Commercial mortgage-backed securities

 

 

105,509

 

 

 

—

 

 

 

6,094

 

 

 

(644

)

 

 

110,959

 

Corporate bonds

 

 

223,387

 

 

 

—

 

 

 

17,703

 

 

 

(373

)

 

 

240,717

 

Foreign corporate bonds

 

 

98,727

 

 

 

—

 

 

 

5,716

 

 

 

(27

)

 

 

104,416

 

Total fixed maturities

 

$

1,149,009

 

 

$

—

 

 

$

45,574

 

 

$

(3,397

)

 

$

1,191,186

 
Schedule Of Investments In Equity Securities

As of September 30, 2021 and December 31, 2020, the Company’s investments in equity securities consist of the following:

 

(Dollars in thousands)

 

September 30, 2021

 

 

December 31, 2020

 

Common stock

 

$

67,209

 

 

$

60,379

 

Preferred stock

 

 

23,085

 

 

 

11,683

 

Index funds that invest in fixed maturities

 

 

—

 

 

 

26,928

 

Total

 

$

90,294

 

 

$

98,990

 
Summary of Amortized Cost and Estimated Fair Value Through Fixed Maturities

 

The amortized cost and estimated fair value of the Company’s fixed maturities portfolio classified as available for sale at September 30, 2021, by contractual maturity, are shown below.  Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

(Dollars in thousands)

 

Amortized

Cost

 

 

Estimated

Fair Value

 

Due in one year or less

 

$

37,578

 

 

$

37,927

 

Due in one year through five years

 

 

263,900

 

 

 

271,239

 

Due in five years through ten years

 

 

238,060

 

 

 

240,139

 

Due in ten years through fifteen years

 

 

20,287

 

 

 

20,681

 

Due after fifteen years

 

 

53,829

 

 

 

56,214

 

Mortgage-backed securities

 

 

268,484

 

 

 

270,753

 

Asset-backed securities

 

 

174,837

 

 

 

175,522

 

Commercial mortgage-backed securities

 

 

124,137

 

 

 

127,494

 

Total

 

$

1,181,112

 

 

$

1,199,969

 
Summary of Securities With Gross Unrealized Losses

The following table contains an analysis of the Company’s fixed income securities with gross unrealized losses that are not deemed to have credit losses, categorized by the period that the securities were in a continuous loss position as of September 30, 2021.  The fair value amounts reported in the table are estimates that are prepared using the process described in Note 5.

 

 

 

Less than 12 months

 

 

12 months or longer

 

 

Total

 

(Dollars in thousands)

 

Fair Value

 

 

Gross

Unrealized

Losses

 

 

Fair Value

 

 

Gross

Unrealized

Losses

 

 

Fair Value

 

 

Gross

Unrealized

Losses

 

Fixed maturities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

76,255

 

 

$

(1,587

)

 

$

325

 

 

$

(45

)

 

$

76,580

 

 

$

(1,632

)

Agency obligations

 

 

8,067

 

 

 

(151

)

 

 

—

 

 

 

—

 

 

 

8,067

 

 

 

(151

)

Obligations of states and political subdivisions

 

 

10,161

 

 

 

(163

)

 

 

—

 

 

 

—

 

 

 

10,161

 

 

 

(163

)

Mortgage-backed securities

 

 

130,731

 

 

 

(1,387

)

 

 

3,043

 

 

 

(30

)

 

 

133,774

 

 

 

(1,417

)

Asset-backed securities

 

 

75,071

 

 

 

(178

)

 

 

10,755

 

 

 

(258

)

 

 

85,826

 

 

 

(436

)

Commercial mortgage-backed securities

 

 

22,412

 

 

 

(117

)

 

 

1,314

 

 

 

(149

)

 

 

23,726

 

 

 

(266

)

Corporate bonds

 

 

82,439

 

 

 

(1,155

)

 

 

3,269

 

 

 

(94

)

 

 

85,708

 

 

 

(1,249

)

Foreign corporate bonds

 

 

41,891

 

 

 

(335

)

 

 

367

 

 

 

(7

)

 

 

42,258

 

 

 

(342

)

Total fixed maturities

 

$

447,027

 

 

$

(5,073

)

 

$

19,073

 

 

$

(583

)

 

$

466,100

 

 

$

(5,656

)

 

The following table contains an analysis of the Company’s fixed income securities with gross unrealized losses that are not deemed to have credit losses, categorized by the period that the securities were in a continuous loss position as of December 31, 2020.  The fair value amounts reported in the table are estimates that are prepared using the process described in Note 5.  

 

 

 

Less than 12 months

 

 

12 months or longer

 

 

Total

 

(Dollars in thousands)

 

Fair Value

 

 

Gross

Unrealized

Losses

 

 

Fair Value

 

 

Gross

Unrealized

Losses

 

 

Fair Value

 

 

Gross

Unrealized

Losses

 

Fixed maturities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

81,999

 

 

$

(1,089

)

 

$

—

 

 

$

—

 

 

$

81,999

 

 

$

(1,089

)

Obligations of states and political subdivisions

 

 

2,588

 

 

 

(67

)

 

 

—

 

 

 

—

 

 

 

2,588

 

 

 

(67

)

Mortgage-backed securities

 

 

57,350

 

 

 

(551

)

 

 

4

 

 

 

—

 

 

 

57,354

 

 

 

(551

)

Asset-backed securities

 

 

22,268

 

 

 

(389

)

 

 

13,354

 

 

 

(257

)

 

 

35,622

 

 

 

(646

)

Commercial mortgage-backed securities

 

 

10,294

 

 

 

(526

)

 

 

1,154

 

 

 

(118

)

 

 

11,448

 

 

 

(644

)

Corporate bonds

 

 

7,783

 

 

 

(373

)

 

 

—

 

 

 

—

 

 

 

7,783

 

 

 

(373

)

Foreign corporate bonds

 

 

885

 

 

 

(27

)

 

 

—

 

 

 

—

 

 

 

885

 

 

 

(27

)

Total fixed maturities

 

$

183,167

 

 

$

(3,022

)

 

$

14,512

 

 

$

(375

)

 

$

197,679

 

 

$

(3,397

)

 
Schedule of Accumulated Other Comprehensive Income, Net of Tax

 

Accumulated other comprehensive income, net of tax, as of September 30, 2021 and December 31, 2020 was as follows:

 

(Dollars in thousands)

 

September 30, 2021

 

 

December 31, 2020

 

Net unrealized gains (losses) from:

 

 

 

 

 

 

 

 

Fixed maturities

 

$

18,857

 

 

$

42,177

 

Foreign currency fluctuations

 

 

(249

)

 

 

161

 

Deferred taxes

 

 

(3,572

)

 

 

(8,030

)

Accumulated other comprehensive income, net of tax

 

$

15,036

 

 

$

34,308

 
Changes In Accumulated Other Comprehensive Income

The following tables present the changes in accumulated other comprehensive income, net of tax, by components, for the quarters and nine months ended September 30, 2021 and 2020:

 

Quarter Ended September 30, 2021

(Dollars In Thousands)

 

Unrealized Gains and Losses on Available for Sale Securities

 

 

Foreign Currency Items

 

 

Accumulated Other Comprehensive Income

 

Beginning balance, net of tax

 

$

19,001

 

 

$

(33

)

 

$

18,968

 

Other comprehensive income before reclassification, before tax

 

 

(3,190

)

 

 

(208

)

 

 

(3,398

)

Amounts reclassified from accumulated other comprehensive income, before tax

 

 

(1,447

)

 

 

—

 

 

 

(1,447

)

Other comprehensive income, before tax

 

 

(4,637

)

 

 

(208

)

 

 

(4,845

)

Income tax benefit

 

 

869

 

 

 

44

 

 

 

913

 

Ending balance, net of tax

 

$

15,233

 

 

$

(197

)

 

$

15,036

 

 

Quarter Ended September 30, 2020

(Dollars In Thousands)

 

Unrealized Gains and Losses on Available for Sale Securities

 

 

Foreign Currency Items

 

 

Accumulated Other Comprehensive Income

 

Beginning balance, net of tax

 

$

38,736

 

 

$

(1,043

)

 

$

37,693

 

Other comprehensive income before reclassification, before tax

 

 

1,852

 

 

 

456

 

 

 

2,308

 

Amounts reclassified from accumulated other comprehensive income, before tax

 

 

(2,276

)

 

 

—

 

 

 

(2,276

)

Other comprehensive income, before tax

 

 

(424

)

 

 

456

 

 

 

32

 

Income tax (expense) benefit

 

 

(2,128

)

 

 

123

 

 

 

(2,005

)

Ending balance, net of tax

 

$

36,184

 

 

$

(464

)

 

$

35,720

 

 

Nine Months Ended September 30, 2021

(Dollars In Thousands)

 

Unrealized Gains and Losses on Available for Sale Securities

 

 

Foreign Currency Items

 

 

Accumulated Other Comprehensive Income

 

Beginning balance, net of tax

 

$

34,181

 

 

$

127

 

 

$

34,308

 

Other comprehensive income before reclassification, before tax

 

 

(22,579

)

 

 

(410

)

 

 

(22,989

)

Amounts reclassified from accumulated other comprehensive income, before tax

 

 

(741

)

 

 

—

 

 

 

(741

)

Other comprehensive income, before tax

 

 

(23,320

)

 

 

(410

)

 

 

(23,730

)

Income tax (expense) benefit

 

 

4,372

 

 

 

86

 

 

 

4,458

 

Ending balance, net of tax

 

$

15,233

 

 

$

(197

)

 

$

15,036

 

 

Nine Months Ended September 30, 2020

(Dollars In Thousands)

 

Unrealized Gains and Losses on Available for Sale Securities

 

 

Foreign Currency Items

 

 

Accumulated Other Comprehensive Income

 

Beginning balance, net of tax

 

$

18,641

 

 

$

(1,032

)

 

$

17,609

 

Other comprehensive income before reclassification, before tax

 

 

38,773

 

 

 

445

 

 

 

39,218

 

Amounts reclassified from accumulated other comprehensive income, before tax

 

 

(17,028

)

 

 

—

 

 

 

(17,028

)

Other comprehensive income, before tax

 

 

21,745

 

 

 

445

 

 

 

22,190

 

Income tax (expense) benefit

 

 

(4,202

)

 

 

123

 

 

 

(4,079

)

Ending balance, net of tax

 

$

36,184

 

 

$

(464

)

 

$

35,720

 

 
Reclassifications Out of Accumulated Other Comprehensive Income

The reclassifications out of accumulated other comprehensive income for the quarters and nine months ended September 30, 2021 and 2020 were as follows:

 

 

 

 

 

Amounts Reclassified from

Accumulated Other

Comprehensive Income

 

(Dollars in thousands)

 

 

 

Quarters Ended September 30,

 

Details about Accumulated Other

Comprehensive Income Components

 

Affected Line Item in the Consolidated

Statements of Operations

 

2021

 

 

2020

 

Unrealized gains and losses on available for sale securities

 

Other net realized investment (gains) losses

 

$

(1,447

)

 

$

(2,276

)

 

 

Income tax expense (benefit)

 

 

315

 

 

 

172

 

 

 

Total reclassifications, net of tax

 

$

(1,132

)

 

$

(2,104

)

 

 

 

 

 

Amounts Reclassified from

Accumulated Other

Comprehensive Income

 

(Dollars in thousands)

 

 

 

Nine Months Ended September 30,

 

Details about Accumulated Other

Comprehensive Income Components

 

Affected Line Item in the Consolidated

Statements of Operations

 

2021

 

 

2020

 

Unrealized gains and losses on available for sale securities

 

Other net realized investment (gains) losses

 

$

(741

)

 

$

(17,028

)

 

 

Income tax expense (benefit)

 

 

130

 

 

 

3,823

 

 

 

Total reclassifications, net of tax

 

$

(611

)

 

$

(13,205

)

 
Components of Net Realized Investment Gains (Losses)

 

The components of net realized investment gains (losses) for the quarters and nine months ended September 30, 2021 and 2020 were as follows:

 

 

 

Quarters Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in thousands)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Fixed maturities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross realized gains

 

$

3,364

 

 

$

2,705

 

 

$

9,042

 

 

$

21,685

 

Gross realized losses

 

 

(1,917

)

 

 

(429

)

 

 

(8,301

)

 

 

(4,657

)

Net realized gains (losses)

 

 

1,447

 

 

 

2,276

 

 

 

741

 

 

 

17,028

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross realized gains

 

 

1,629

 

 

 

4,942

 

 

 

8,577

 

 

 

14,669

 

Gross realized losses

 

 

(3,291

)

 

 

(55

)

 

 

(2,476

)

 

 

(31,870

)

Net realized gains (losses)

 

 

(1,662

)

 

 

4,887

 

 

 

6,101

 

 

 

(17,201

)

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross realized gains

 

 

1,267

 

 

 

1,520

 

 

 

4,985

 

 

 

19,514

 

Gross realized losses

 

 

(1,362

)

 

 

(1,360

)

 

 

(4,485

)

 

 

(41,673

)

Net realized gains (losses) (1)

 

 

(95

)

 

 

160

 

 

 

500

 

 

 

(22,159

)

Total net realized investment gains (losses)

 

$

(310

)

 

$

7,323

 

 

$

7,342

 

 

$

(22,332

)

 

(1)

Includes periodic net interest settlements related to the derivatives of $1.4 million for the quarters ended September 30, 2021 and 2020, respectively, and $4.2 million and $3.1 million for the nine months ended September 30, 2021 and 2020, respectively.
Summary of Calculation of Realized Gains and Losses

The following table shows the calculation of the portion of realized gains and losses related to equity securities held as of September 30, 2021 and 2020:

 

 

 

Quarters Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in thousands)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net gains (losses) recognized during the period on equity securities

 

$

(1,662

)

 

$

4,887

 

 

$

6,101

 

 

$

(17,201

)

Less: net gains (losses) recognized during the period on equity securities sold during the period

 

 

1,005

 

 

 

3,419

 

 

 

3,810

 

 

 

(366

)

Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date

 

$

(2,667

)

 

$

1,468

 

 

$

2,291

 

 

$

(16,835

)
Proceeds from Sales and Redemptions of Available-for-Sale Securities

 

The proceeds from sales and redemptions of available for sale and equity securities resulting in net realized investment gains (losses) for the nine months ended September 30, 2021 and 2020 were as follows:

 

 

 

Nine Months Ended September 30,

 

(Dollars in thousands)

 

2021

 

 

2020

 

Fixed maturities

 

$

889,080

 

 

$

600,962

 

Equity securities

 

 

48,661

 

 

 

563,926

 
Schedule of Investment Income

 

The sources of net investment income for the quarters and nine months ended September 30, 2021 and 2020 were as follows:

 

 

 

Quarters Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in thousands)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Fixed maturities

 

$

6,197

 

 

$

7,421

 

 

$

19,672

 

 

$

25,013

 

Equity securities

 

 

699

 

 

 

1,390

 

 

 

1,992

 

 

 

4,161

 

Cash and cash equivalents

 

 

64

 

 

 

260

 

 

 

328

 

 

 

492

 

Other invested assets

 

 

3,050

 

 

 

3,485

 

 

 

9,835

 

 

 

(8,004

)

Total investment income

 

 

10,010

 

 

 

12,556

 

 

 

31,827

 

 

 

21,662

 

Investment expense

 

 

(666

)

 

 

(810

)

 

 

(2,014

)

 

 

(2,146

)

Net investment income

 

$

9,344

 

 

$

11,746

 

 

$

29,813

 

 

$

19,516

 
Schedule of Total Investment Return

 

The Company’s total investment return on a pre-tax basis for the quarters and nine months ended September 30, 2021 and 2020 were as follows:

 

 

 

Quarters Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in thousands)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net investment income

 

$

9,344

 

 

$

11,746

 

 

$

29,813

 

 

$

19,516

 

Net realized investment gains (losses)

 

 

(310

)

 

 

7,323

 

 

 

7,342

 

 

 

(22,332

)

Change in unrealized holding gains (losses)

 

 

(4,845

)

 

 

32

 

 

 

(23,730

)

 

 

22,190

 

Net realized and unrealized investment returns

 

 

(5,155

)

 

 

7,355

 

 

 

(16,388

)

 

 

(142

)

Total investment return

 

$

4,189

 

 

$

19,101

 

 

$

13,425

 

 

$

19,374

 

Total investment return % (1)

 

 

0.3

%

 

 

1.2

%

 

 

0.9

%

 

 

1.3

%

Average investment portfolio (2)

 

$

1,481,220

 

 

$

1,541,227

 

 

$

1,468,080

 

 

$

1,528,005

 

 

(1)

Not annualized.

(2)

Average of total cash and invested assets, net of receivable/payable for securities purchased and sold, as of the beginning and end of the period.
Summary of Estimated Fair Values of Bonds Held on Deposit The fair values were as follows as of September 30, 2021 and December 31, 2020:

 

 

 

Estimated Fair Value

 

(Dollars in thousands)

 

September 30, 2021

 

 

December 31, 2020

 

On deposit with governmental authorities

 

$

26,468

 

 

$

26,966

 

Held in trust pursuant to third party requirements

 

 

79,947

 

 

 

100,234

 

Letter of credit held for third party requirements

 

 

2,512

 

 

 

3,970

 

Securities held as collateral

 

 

—

 

 

 

494

 

Total

 

$

108,927

 

 

$

131,664