2. Investments The amortized cost and fair value of fixed maturities securities and short-term investments are as follows (in millions): | | | | | | | | | | | | | | | | | | | | | | | | | September 30, 2024 | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value | | Fixed maturities available-for-sale: | | | | | | | | | U.S. government and agencies | $ | 17.5 | | | $ | 0.2 | | | $ | (0.1) | | | $ | 17.6 | | | States and other territories | 8.1 | | | — | | | (0.2) | | | 7.9 | | | Corporate securities | 133.6 | | | 2.3 | | | (0.6) | | | 135.3 | | | Foreign securities | 0.9 | | | — | | | — | | | 0.9 | | | Residential mortgage-backed securities | 19.1 | | | 0.2 | | | (1.0) | | | 18.3 | | | Commercial mortgage-backed securities | 7.5 | | | — | | | (0.3) | | | 7.2 | | | Asset backed securities | 14.6 | | | 0.1 | | | (0.1) | | | 14.6 | | | Total fixed maturities available-for-sale | 201.3 | | | 2.8 | | | (2.3) | | | 201.8 | | | Short-term investments: | | | | | | | | | U.S. government and agencies | 105.0 | | | — | | | — | | | 105.0 | | | Commercial paper | 17.1 | | | — | | | — | | | 17.1 | | | Corporate securities | 30.3 | | | 0.1 | | | — | | | 30.4 | | | Total short-term investments | 152.4 | | | 0.1 | | | — | | | 152.5 | | | Total | $ | 353.7 | | | $ | 2.9 | | | $ | (2.3) | | | $ | 354.3 | |
| | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2023 | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value | | Fixed maturities available-for-sale: | | | | | | | | | U.S. government and agencies | $ | 18.6 | | | $ | — | | | $ | (0.2) | | | $ | 18.4 | | | States and other territories | 9.3 | | | — | | | (0.4) | | | 8.9 | | | | | | | | | | | Corporate securities | 91.3 | | | 1.1 | | | (1.3) | | | 91.1 | | | Foreign securities | 0.9 | | | — | | | — | | | 0.9 | | | Residential mortgage-backed securities | 20.7 | | | 0.1 | | | (1.3) | | | 19.5 | | | Commercial mortgage-backed securities | 7.7 | | | — | | | (0.6) | | | 7.1 | | | Asset backed securities | 16.1 | | | — | | | (0.3) | | | 15.8 | | | | | | | | | | | Total fixed maturities available-for-sale | 164.6 | | | 1.2 | | | (4.1) | | | 161.7 | | | Short-term investments: | | | | | | | | | U.S. government and agencies | 137.7 | | | — | | | — | | | 137.7 | | | Commercial paper | 34.5 | | | — | | | — | | | 34.5 | | | Corporate securities | 14.9 | | | — | | | — | | | 14.9 | | | Total short-term investments | 187.1 | | | — | | | — | | | 187.1 | | | Total | $ | 351.7 | | | $ | 1.2 | | | $ | (4.1) | | | $ | 348.8 | |
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 September 30, 2024, and December 31, 2023 (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | September 30, 2024 | | 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 | $ | 1.2 | | | $ | — | | | $ | 2.4 | | | $ | (0.1) | | | $ | 3.7 | | | $ | (0.1) | | | States and other territories | — | | | — | | | 5.5 | | | (0.2) | | | 5.5 | | | (0.2) | | | | | | | | | | | | | | | Corporate securities | 9.3 | | | (0.1) | | | 30.4 | | | (0.5) | | | 39.6 | | | (0.6) | | | Foreign securities | | | | | 0.9 | | | — | | | 0.9 | | | — | | | Residential mortgage-backed securities | — | | | — | | | 10.8 | | | (1.0) | | | 10.8 | | | (1.0) | | | Commercial mortgage-backed securities | — | | | — | | | 4.1 | | | (0.3) | | | 4.1 | | | (0.3) | | | Asset backed securities | — | | | — | | | 5.8 | | | (0.1) | | | 5.8 | | | (0.1) | | | Short-term investments: | | | | | | | | | | | | | U.S. government and agencies | — | | | — | | | — | | | — | | | — | | | — | | | Commercial paper | 2.3 | | | — | | | — | | | — | | | 2.3 | | | — | | | Corporate securities | 7.5 | | | — | | | — | | | — | | | 7.5 | | | — | | | Total | $ | 20.3 | | | $ | (0.1) | | | $ | 59.9 | | | $ | (2.2) | | | $ | 80.2 | | | $ | (2.3) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 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 | $ | 4.3 | | | $ | — | | | $ | 10.5 | | | $ | (0.2) | | | $ | 14.8 | | | $ | (0.2) | | | States and other territories | 1.5 | | | — | | | 7.4 | | | (0.4) | | | 8.9 | | | (0.4) | | | | | | | | | | | | | | | Corporate securities | 5.7 | | | — | | | 37.4 | | | (1.3) | | | 43.1 | | | (1.3) | | | Foreign securities | — | | | — | | | 0.9 | | | — | | | 0.9 | | | — | | | Residential mortgage-backed securities | — | | | — | | | 11.6 | | | (1.3) | | | 11.6 | | | (1.3) | | | Commercial mortgage-backed securities | 0.4 | | | — | | | 5.8 | | | (0.6) | | | 6.2 | | | (0.6) | | | Asset backed securities | 1.6 | | | — | | | 8.2 | | | (0.3) | | | 9.8 | | | (0.3) | | | Short-term investments: | | | | | | | | | | | | | U.S. government and agencies | 137.7 | | | — | | | — | | | — | | | 137.7 | | | — | | | Commercial paper | 34.5 | | | — | | | — | | | — | | | 34.5 | | | — | | Corporate securities | 14.9 | | | — | | | — | | | — | | | 14.9 | | | — | | | Total | $ | 200.6 | | | $ | — | | | $ | 81.8 | | | $ | (4.1) | | | $ | 282.4 | | | $ | (4.1) | |
The Company has determined that unrealized losses as of September 30, 2024 and December 31, 2023 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 September 30, 2024, none of the Company’s 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): | | | | | | | | | | | | | September 30, 2024 | | Amortized Cost | | Fair Value | | Due to mature: | | | | | One year or less | $ | 30.0 | | | $ | 29.7 | | | After one year through five years | 108.1 | | | 108.6 | | | After five years | 17.9 | | | 18.9 | | | After ten years | 4.1 | | | 4.5 | | | Residential mortgage-backed securities | 19.1 | | | 18.3 | | | Commercial mortgage-backed securities | 7.5 | | | 7.2 | | | Asset backed securities | 14.6 | | | 14.6 | | | | | | | Total fixed maturities available-for-sale | $ | 201.3 | | | $ | 201.8 | |
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 nine months ended September 30, 2024 and 2023, respectively. The Company’s net investment income is comprised of the following (in millions): | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended September 30, | | Nine Months Ended September 30, | | 2024 | | 2023 | | 2024 | | 2023 | | Interest on cash and cash equivalents | $ | 2.3 | | | $ | 2.2 | | | $ | 7.3 | | | $ | 4.7 | | | Fixed maturities income | 1.9 | | | 1.5 | | | 5.6 | | | 4.1 | | | Short-term investment income | 2.1 | | | 2.1 | | | 5.6 | | | 8.1 | | | Total gross investment income | 6.3 | | | 5.8 | | | 18.5 | | | 16.9 | | | Investment expenses | (0.1) | | | (0.1) | | | (0.3) | | | (0.4) | | | Net investment income | $ | 6.2 | | | $ | 5.7 | | | $ | 18.2 | | | $ | 16.5 | |
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 condensed consolidated balance sheets. The carrying value of securities on deposit with state regulatory authorities total $9.3 million and $12.9 million as of September 30, 2024 and December 31, 2023, respectively.
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