Derivative Financial Instruments

6 Months Ended

Jun. 30, 2021

General Discussion of Derivative Instruments and Hedging Activities [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

The Company is exposed to certain risks relating to its ongoing business operations. The primary risk managed by using derivative instruments is equity price risk. Equity contracts (options sold) on various equity securities are intended to manage the price risk associated with forecasted purchases or sales of such securities. From time to time, the Company also enters into derivative contracts to enhance returns on its investment portfolio.

The following tables present the location and amounts of derivative fair values in the consolidated balance sheets and derivative gains or losses in the consolidated statements of operations:

	Derivatives
	June 30, 2021		December 31, 2020
	(Amount in thousands)
Options sold - Other liabilities	$	167	$	—
Total	$	167	$	—

	Gains Recognized in Net Income
	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Amounts in thousands)
Options sold - Net realized investment gains (losses)	$	323	$	8,944	783		10,656
Total	$	323	$	8,944	$	783	$	10,656

Most options sold consist of covered calls. The Company writes covered calls on underlying equity positions held as an enhanced income strategy that is permitted for the Company’s insurance subsidiaries under statutory regulations. The Company manages the risk associated with covered calls through strict capital limitations and asset diversification throughout various industries. See Note 5. Fair Value Measurements for additional disclosures regarding options sold.