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.