Investments

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

2. Investments

The amortized cost and fair value of fixed maturities securities and short-term investments are as follows (in millions):


	June 30, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Fixed maturities available-for-sale:
U.S. government and agencies	$	20.4	$	—	$	(0.5)	$	19.9
States and other territories	10.3		—		(0.6)		9.7
Corporate securities	66.4		0.1		(2.4)		64.1
Foreign securities	0.9		—		(0.1)		0.8
Residential mortgage-backed securities	21.7		—		(1.6)		20.1
Commercial mortgage-backed securities	7.8		—		(0.7)		7.1
Asset backed securities	14.3		—		(0.4)		13.9
Total fixed maturities available-for-sale	141.8		0.1		(6.3)		135.6
Short-term investments:
U.S. government and agencies	109.5		—		(0.1)		109.4
Commercial paper	94.7		—		(0.1)		94.6
Corporate securities	24.9		—		(0.1)		24.8
Total short-term investments	229.1		—		(0.3)		228.8
Total	$	370.9	$	0.1	$	(6.6)	$	364.4


	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Fixed maturities available-for-sale:
U.S. government and agencies	21.6		$	—	$	(0.5)	$	21.1
States and other territories	8.9		—		(0.6)		8.3

Corporate securities	54.8		0.1		(2.4)		52.5
Foreign securities	0.9		—		(0.1)		0.8
Residential mortgage-backed securities	20.4		0.1		(1.6)		18.9
Commercial mortgage-backed securities	6.5		—		(0.7)		5.8
Asset backed securities	14.2		—		(0.5)		13.7

Total fixed maturities available-for-sale	127.3		0.2		(6.4)		121.1
Short-term investments:
U.S. government and agencies	129.1		—		(0.2)		128.9
Commercial paper	147.1		—		(0.6)		146.5
Corporate securities	49.4		—		—		49.4
Total short-term investments	325.6		—		(0.8)		324.8
Total	$	452.9	$	0.2	$	(7.2)	$	445.9

The following tables present the gross unrealized losses and related fair values for the Company’s investments in available-for-sale debt securities and short-term investments, grouped by duration of time in a continuous unrealized loss position as of June 30, 2023, and December 31, 2022 (in millions):


	June 30, 2023
	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Fixed maturities available-for-sale:
U.S. government and agencies	$	12.1	$	(0.2)	$	7.6	$	(0.2)	$	19.7	$	(0.5)
States and other territories	1.5		—		8.3		(0.6)		9.8		(0.6)

Corporate securities	5.5		(0.1)		58.5		(2.3)		64.0		(2.4)
Foreign securities	—		—		0.8		(0.1)		0.8		(0.1)
Residential mortgage-backed securities	—		—		20.1		(1.6)		20.1		(1.6)
Commercial mortgage-backed securities	—		—		7.0		(0.7)		7.0		(0.7)
Asset backed securities	—		—		13.9		(0.4)		13.9		(0.4)
Short-term investments:
U.S. government and agencies	27.0		(0.1)		—		—		27.0		(0.1)
Commercial paper	94.7		(0.1)		—		—		94.7		(0.1)
Corporate securities	24.9		(0.1)		—		—		24.9		(0.1)
Total	$	165.7	$	(0.6)	$	116.2	$	(5.9)	$	281.9	$	(6.6)


	December 31, 2022
	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Fixed maturities available-for-sale:
U.S. government and agencies	$	17.9	$	(0.4)	$	1.1	$	(0.1)	$	19.0	$	(0.5)
States and other territories	3.6		(0.1)		4.6		(0.5)		8.2		(0.6)

Corporate securities	30.5		(1.5)		11.1		(0.9)		41.6		(2.4)
Foreign securities	—		—		0.8		(0.1)		0.8		(0.1)
Residential mortgage-backed securities	6.3		(0.3)		7.6		(1.3)		13.9		(1.6)
Commercial mortgage-backed securities	1.9		—		3.9		(0.7)		5.8		(0.7)
Asset backed securities	5.5		(0.2)		3.7		(0.3)		9.2		(0.5)
Short-term investments:
U.S. government and agencies	129.1		(0.2)		—		—		129.1		(0.2)
Commercial paper	147.1		(0.6)		—		—		147.1		(0.6)
Total	$	341.9	$	(3.3)	$	32.8	$	(3.9)	$	374.7	$	(7.2)

The Company has determined that unrealized losses as of June 30, 2023 and December 31, 2022 resulted from the interest rate environment, rather than a deterioration of the creditworthiness of the issuers. Therefore, an allowance for credit losses was not necessary as it is more likely than not that the Company will not be required to sell the investments before the recovery of the amortized cost basis or until maturity. As of June 30, 2023, none of our fixed maturity portfolio was unrated or rated below investment grade.

The amortized cost and fair value of fixed maturities securities by contractual maturity are as follows (in millions):


	June 30, 2023
	Amortized Cost		Fair Value
Due to mature:
One year or less	$	19.5	$	19.1
After one year through five years	73.9		70.9
After five years	4.6		4.4

Residential mortgage-backed securities	21.7		20.2
Commercial mortgage-backed securities	7.8		7.1
Asset backed securities	14.3		13.9

Total fixed maturities available-for-sale	$	141.8	$	135.6

Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

Net realized gains and losses on fixed maturity securities were insignificant for the three and six months ended June 30, 2023 and 2022, respectively.

The Company’s net investment income is comprised of the following (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Interest on cash and cash equivalents	$	1.3	$	0.2	$	2.5	$	0.2
Fixed maturities income	1.2		0.2		2.6		0.5
Short-term investment income	3.0		0.7		6.0		0.9
Total gross investment income	5.5		1.1		11.1		1.6
Investment expenses	(0.1)		—		(0.3)		(0.1)
Net investment income	$	5.4	$	1.1	$	10.8	$	1.5

Pursuant to certain regulatory requirements, the Company is required to hold assets on deposit with various state insurance departments for the benefit of policyholders. These special deposits are included in cash and cash equivalents, fixed maturities, or short-term investments on the consolidated balance sheets. The carrying value of securities on deposit with state regulatory authorities total $13.0 million and $12.6 million as of June 30, 2023 and December 31, 2022, respectively.