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Investments
 6 Months Ended
Jun. 30, 2023
Investments, Debt and Equity Securities [Abstract]  
Investments

2. Investments

Results for reporting periods occurring before January 1, 2023 continue to be reported in accordance with previously applicable U.S. GAAP and note presented under ASC 326, which was adopted by the Company on January 1, 2023. The Company analyzed its investment portfolio in accordance with its credit loss review policy and determined it did not need to record a credit loss for the three and six months ended June 30, 2023. The Company holds only investment grade securities from high credit quality issuers. The gross unrealized losses of $15.4 million as of June 30, 2023, from the Company's available-for-sale securities are due to market conditions and interest rate changes.

The cost or amortized cost, gross unrealized gains or losses, and estimated fair value of the investments in securities classified as available for sale at June 30, 2023 and December 31, 2022 were as follows (dollars in thousands):

 

 

 

June 30, 2023

 

 

 

Cost or

 

 

Gross Unrealized

 

 

Estimated

 

 

 

Amortized Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Debt Securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government

 

$

6,228

 

 

$

—

 

 

$

(278

)

 

$

5,950

 

State and local government

 

 

25,650

 

 

 

1

 

 

 

(3,953

)

 

 

21,698

 

Corporate debt

 

 

34,046

 

 

 

—

 

 

 

(4,434

)

 

 

29,612

 

Asset-backed securities

 

 

20,550

 

 

 

—

 

 

 

(1,027

)

 

 

19,523

 

Mortgage-backed securities

 

 

27,879

 

 

 

—

 

 

 

(4,994

)

 

 

22,885

 

Commercial mortgage-backed securities

 

 

3,410

 

 

 

—

 

 

 

(151

)

 

 

3,259

 

Collateralized mortgage obligations

 

 

3,604

 

 

 

—

 

 

 

(535

)

 

 

3,069

 

Total debt securities available for sale

 

$

121,367

 

 

$

1

 

 

$

(15,372

)

 

$

105,996

 

 

 

 

 

December 31, 2022

 

 

 

Cost or

 

 

Gross Unrealized

 

 

Estimated

 

 

 

Amortized Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Debt Securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government

 

$

7,833

 

 

$

—

 

 

$

(335

)

 

$

7,498

 

State and local government

 

 

25,487

 

 

 

1

 

 

 

(4,672

)

 

 

20,816

 

Corporate debt

 

 

35,347

 

 

 

—

 

 

 

(4,788

)

 

 

30,559

 

Asset-backed securities

 

 

21,742

 

 

 

—

 

 

 

(1,246

)

 

 

20,496

 

Mortgage-backed securities

 

 

29,194

 

 

 

—

 

 

 

(5,157

)

 

 

24,037

 

Commercial mortgage-backed securities

 

 

3,414

 

 

 

—

 

 

 

(186

)

 

 

3,228

 

Collateralized mortgage obligations

 

 

4,102

 

 

 

—

 

 

 

(535

)

 

 

3,567

 

Total debt securities available for sale

 

$

127,119

 

 

$

1

 

 

$

(16,919

)

 

$

110,201

 

 

The following table summarizes the aggregate fair value and gross unrealized losses, by security type, of the available-for-sale securities in unrealized loss positions. The table segregates the holdings based on the length of time that individual securities have been in a continuous unrealized loss position (dollars in thousands):

 

 

 

June 30, 2023

 

 

 

Less than 12 months

 

 

Greater than 12 months

 

 

Total

 

 

 

No. of
Issues

 

 

Fair Value of
Investments
with Unrealized
Losses

 

 

Gross
Unrealized
Losses

 

 

No. of
Issues

 

 

Fair Value of
Investments
with Unrealized
Losses

 

 

Gross
Unrealized
Losses

 

 

No. of
Issues

 

 

Fair Value of
Investments
with Unrealized
Losses

 

 

Gross
Unrealized
Losses

 

Debt Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government

 

 

3

 

 

$

1,882

 

 

$

(35

)

 

 

9

 

 

$

4,068

 

 

$

(243

)

 

 

12

 

 

$

5,950

 

 

$

(278

)

State and local government

 

 

9

 

 

 

2,643

 

 

 

(40

)

 

 

114

 

 

 

18,879

 

 

 

(3,913

)

 

 

123

 

 

 

21,522

 

 

 

(3,953

)

Corporate debt

 

 

2

 

 

 

346

 

 

 

(4

)

 

 

64

 

 

 

29,266

 

 

 

(4,430

)

 

 

66

 

 

 

29,612

 

 

 

(4,434

)

Asset-backed securities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

25

 

 

 

19,523

 

 

 

(1,027

)

 

 

25

 

 

 

19,523

 

 

 

(1,027

)

Mortgage-backed securities

 

 

22

 

 

 

140

 

 

 

(5

)

 

 

48

 

 

 

22,746

 

 

 

(4,989

)

 

 

70

 

 

 

22,886

 

 

 

(4,994

)

Commercial mortgage-backed securities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

 

 

3,238

 

 

 

(151

)

 

 

4

 

 

 

3,238

 

 

 

(151

)

Collateralized mortgage obligations

 

 

7

 

 

 

137

 

 

 

(7

)

 

 

26

 

 

 

2,953

 

 

 

(528

)

 

 

33

 

 

 

3,090

 

 

 

(535

)

Total debt securities available for sale

 

 

43

 

 

$

5,148

 

 

$

(91

)

 

 

290

 

 

$

100,673

 

 

$

(15,281

)

 

 

333

 

 

$

105,821

 

 

$

(15,372

)

 

 

 

December 31, 2022

 

 

 

Less than 12 months

 

 

Greater than 12 months

 

 

Total

 

 

 

No. of
Issues

 

 

Fair Value of
Investments
with Unrealized
Losses

 

 

Gross
Unrealized
Losses

 

 

No. of
Issues

 

 

Fair Value of
Investments
with Unrealized
Losses

 

 

Gross
Unrealized
Losses

 

 

No. of
Issues

 

 

Fair Value of
Investments
with Unrealized
Losses

 

 

Gross
Unrealized
Losses

 

Debt Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government

 

 

8

 

 

$

3,534

 

 

$

(135

)

 

 

5

 

 

$

3,964

 

 

$

(200

)

 

 

13

 

 

$

7,498

 

 

$

(335

)

State and local government

 

 

77

 

 

 

12,966

 

 

 

(2,318

)

 

 

45

 

 

 

7,147

 

 

 

(2,354

)

 

 

122

 

 

 

20,113

 

 

 

(4,672

)

Corporate debt

 

 

27

 

 

 

10,069

 

 

 

(1,373

)

 

 

42

 

 

 

20,890

 

 

 

(3,415

)

 

 

69

 

 

 

30,959

 

 

 

(4,788

)

Asset-backed securities

 

 

6

 

 

 

3,188

 

 

 

(76

)

 

 

20

 

 

 

17,308

 

 

 

(1,170

)

 

 

26

 

 

 

20,496

 

 

 

(1,246

)

Mortgage-backed securities

 

 

57

 

 

 

4,006

 

 

 

(573

)

 

 

12

 

 

 

20,031

 

 

 

(4,584

)

 

 

69

 

 

 

24,037

 

 

 

(5,157

)

Commercial mortgage-backed securities

 

 

4

 

 

 

3,205

 

 

 

(186

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

 

 

3,205

 

 

 

(186

)

Collateralized mortgage obligations

 

 

26

 

 

 

1,789

 

 

 

(196

)

 

 

9

 

 

 

1,802

 

 

 

(339

)

 

 

35

 

 

 

3,591

 

 

 

(535

)

Total debt securities available for sale

 

 

205

 

 

$

38,757

 

 

$

(4,857

)

 

 

133

 

 

$

71,142

 

 

$

(12,062

)

 

 

338

 

 

$

109,899

 

 

$

(16,919

)

 

The Company’s sources of net investment income and losses are as follows (dollars in thousands):

 

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Debt securities

 

$

1,026

 

 

$

596

 

 

$

1,879

 

 

$

1,178

 

Equity securities

 

 

7

 

 

 

10

 

 

 

18

 

 

 

38

 

Cash, cash equivalents and short-term investments

 

 

381

 

 

 

36

 

 

 

884

 

 

 

37

 

Total investment income

 

 

1,414

 

 

 

642

 

 

 

2,781

 

 

 

1,253

 

Investment expenses

 

 

(60

)

 

 

(78

)

 

 

(120

)

 

 

(182

)

Net investment income

 

$

1,354

 

 

$

564

 

 

$

2,661

 

 

$

1,071

 

 

The following table summarizes the gross realized gains and losses from sales, calls and maturities of available-for-sale debt and equity securities (dollars in thousands):

 

 

 

Three Months Ended
June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

Gross realized gains

 

$

—

 

 

$

6

 

 

$

—

 

 

$

6

 

Gross realized losses

 

 

—

 

 

 

(155

)

 

 

—

 

 

 

(155

)

Total debt securities

 

 

—

 

 

 

(149

)

 

 

—

 

 

 

(149

)

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

Gross realized gains

 

$

—

 

 

 

356

 

 

$

—

 

 

 

375

 

Gross realized losses

 

 

—

 

 

 

(1,643

)

 

 

—

 

 

 

(1,731

)

Total equity securities

 

 

—

 

 

 

(1,287

)

 

 

—

 

 

 

(1,356

)

Total net realized investment gains (losses)

 

$

—

 

 

$

(1,436

)

 

$

—

 

 

$

(1,505

)

 

Proceeds from available-for-sale debt securities were $51.2 million and $27.2 million for the six months ended June 30, 2023 and 2022, respectively.

There were no gross realized gains or losses from the sale of available-for-sale debt securities for the three and six months ended June 30, 2023. The gross realized gains and losses from the sale of available-for-sale debt securities for three and six months ended June 30, 2022, were $5,000 and $155,000, respectively.

As of June 30, 2023 and 2022, there were $0 of payables from securities purchased, respectively. There were $0 and $6.9 million of receivables from securities sold as of June 30, 2023, and 2022, respectively.

The Company's gross unrealized gains related to its equity investments were $494,000 and $0 as of June 30, 2023 and December 31, 2022, respectively. The Company’s gross unrealized losses related to its equity investments were $450,000 and $638,000 as of June 30, 2023 and December 31, 2022, respectively. The Company also carries other equity investments that do not have a readily determinable fair value at cost, less impairment or observable changes in price. We review these investments for impairment during each reporting period. There were no impairments or observable changes in price recorded during 2023 related to the Company's equity securities without readily determinable fair value. These investments are included in Other Assets in the Consolidated Balance Sheets and amounted to $1.5 million as of June 30, 2023 and $1.8 million as of December 31, 2022.

The table below summarizes the amortized cost and fair value of available-for-sale debt securities by contractual maturity at June 30, 2023. Actual maturities may differ from contractual maturities because certain borrowers 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

 

$

3,444

 

 

$

3,389

 

Due after one year through five years

 

 

30,690

 

 

 

28,173

 

Due after five years through ten years

 

 

20,645

 

 

 

17,160

 

Due after ten years

 

 

11,145

 

 

 

8,538

 

Securities with contractual maturities

 

 

65,924

 

 

 

57,260

 

Asset-backed securities

 

 

20,550

 

 

 

19,523

 

Mortgage-backed securities

 

 

27,879

 

 

 

22,885

 

Commercial mortgage-backed securities

 

 

3,410

 

 

 

3,259

 

Collateralized mortgage obligations

 

 

3,604

 

 

 

3,069

 

Total debt securities

 

$

121,367

 

 

$

105,996

 

 

At June 30, 2023 and December 31, 2022, the Insurance Company Subsidiaries had $7.7 million and $8.0 million, respectively, on deposit in trust accounts to meet the deposit requirements of various state insurance departments. At June 30, 2023 and December 31, 2022, the Company had $102.8 million and $95.7 million, respectively, held in trust accounts to meet collateral requirements with other third-party insurers, relating to various fronting arrangements. There are withdrawal and other restrictions on these deposits, including the type of investments that may be held, however, the Company may generally invest in high-grade bonds and short-term investments and earn interest on the funds.