5. Investments

Available-For-Sale Investments

Investments classified as available-for-sale securities were as follows:


	December 31, 2019
			Gross Unrealized		Gross Unrealized
	Amortized Cost		Gains		(Losses)		Fair Value
Investments - debt securities:
Corporate debt securities	$	178	$	—	$	(125)	$	53
		178		—		(125)		53
Restricted investments:
Short-term bond		2,239		11		—		2,250
Money market fund		114		—		—		114
		2,353		11		—		2,364
	$	2,531	$	11	$	(125)	$	2,417


	December 31, 2018
			Gross Unrealized		Gross Unrealized
	Amortized Cost		Gains		(Losses)		Fair Value
Investments - debt securities:
U.S. Treasury Bills	$	6,936	$	1	$	—	$	6,937
Corporate debt securities		2,908		—		(887)		2,021
		9,844		1		(887)		8,958
Restricted investments:
Short-term bond		3,274		—		(9)		3,265
Money market fund		167		—		—		167
		3,441		—		(9)		3,432
	$	13,285	$	1	$	(896)	$	12,390

During 2019, net realized gains from the sale of available-for-sale securities were $0.1 million, proceeds from the sale of available-for-sale securities were $4.0 million, proceeds from the maturity of available-for-sale securities were $7.0 million and purchases of available-for-sale securities were $0.1 million.

During 2018, net realized losses from the sale of available-for-sale securities were $1.0 million, proceeds from the sale of available-for-sale securities were $64.7 million, proceeds from the maturity of available-for-sale securities were $10.0 million and purchases of available-for-sale securities were $7.0 million.

The following table provides the available-for-sale investments unrealized loss position and related fair values:


	December 31, 2019
	Less Than 12 Months				12 Months or Greater
			Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses
Investments - debt securities:
Corporate debt securities	$	—	$	—	$	53	$	125


	December 31, 2018
	Less Than 12 Months				12 Months or Greater
			Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses
Investments - debt securities:
Corporate debt securities	$	—	$	—	$	1,843	$	887
Restricted investments:
Short-term bond		—		—		3,265		9
	$	—	$	—	$	5,108	$	896

As of December 31, 2019, the Company had unrealized losses of $0.1 million related to corporate debt securities. The Company had unrealized losses of $0.9 million as of December 31, 2018 related to corporate debt securities and restricted investments. As of December 31, 2019 and 2018, the Company did not intend to sell the investments with a material unrealized loss and it is more likely than not that the Company will not be required to sell any of these securities prior to their anticipated recovery. During 2018, the Company determined that unrealized losses related to its corporate debt securities were other-than-temporary and recorded an impairment of $2.3 million for credit-related loss in investment income, net in the Company’s consolidated statements of income.

The amortized cost and estimated fair value of investments – debt securities and restricted investments classified as available-for-sale, by contractual maturity are shown in the following table. Actual maturities may differ from contractual maturities since certain borrowers have the right to call or prepay obligations.


	December 31, 2019
	Amortized Cost		Fair Value
Due in one year or less	$	178	$	53
Restricted investments		2,353		2,364
	$	2,531	$	2,417

Investments – Equity Securities

As of December 31, 2019 and 2018, investments – equity securities included $9.7 million and $36.1 million, respectively, of preferred stock investments recorded at fair value. During 2019 and 2018, the Company had net unrealized losses on investments – equity securities of $5.3 million and $3.0 million respectively, which were included within investment income, net on the consolidated statements of income. Prior to 2018, unrealized gains and losses related to investments – equity securities were recognized in other comprehensive income (loss). As of January 1, 2018, the outstanding unrealized losses of $0.9 million were reclassified to retained earnings with the adoption of ASU 2016-01.

Investment Management Agreement

Mr. Bruce R. Berkowitz is the Chairman of the Company’s Board. He is the Manager of, and controls entities that own and control, Fairholme Holdings, LLC, which wholly owns FCM. Mr. Berkowitz is the Chief Investment Officer of FCM, which has provided investment advisory services to the Company since April 2013. FCM does not receive any compensation for services as the Company’s investment advisor. As of December 31, 2019, clients of FCM, including Mr. Berkowitz, beneficially owned approximately 44.30% of the Company’s common stock. FCM and its client, The Fairholme Fund, a series of the Fairholme Funds, Inc., may be deemed affiliates of the Company.

Pursuant to the terms of the Investment Management Agreement, as amended, with the Company, FCM agreed to supervise and direct the investment accounts established by the Company in accordance with the investment guidelines and restrictions approved by the Company. The investment guidelines are set forth in the Investment Management Agreement and require that, as of the date of any investment: (i) no more than 15% of the investment account may be invested in securities of any one issuer (excluding the U.S. Government), (ii) any investment in any one issuer (excluding the U.S. Government) that exceeds 10% of the investment account, but not 15%, requires the consent of at least two members of the Investment Committee, (iii) 25% of the investment account must be held in cash and cash equivalents, (iv) the investment account is permitted to be invested in common equity securities; however, common stock investments shall be limited to exchange-traded common equities, shall not exceed 5% ownership of a single issuer and, cumulatively, the common stock held in the Company’s investment portfolio shall not exceed $100.0 million market value and (v) the aggregate market value of investments in common stock, preferred stock or other equity investments cannot exceed 25% of the market value of the Company’s investment portfolio at the time of purchase.