Investments

3 Months Ended

Mar. 31, 2022

5 -	Investments

The amortized cost and estimated fair values of our fixed maturities at March 31, 2022 were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
Held to Maturity
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	89,848	$	310	$	4,139	$	86,019
Obligations of states and political subdivisions		395,793		5,884		21,439		380,238
Corporate securities		190,105		2,594		5,844		186,855
Mortgage-backed securities		14,945		6		156		14,795
Totals	$	690,691	$	8,794	$	31,578	$	667,907

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
Available for Sale
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	37,003	$	—	$	2,258	$	34,745
Obligations of states and political subdivisions		57,822		456		1,973		56,305
Corporate securities		219,350		1,307		5,484		215,173
Mortgage-backed securities		219,597		134		9,059		210,672
Totals	$	533,772	$	1,897	$	18,774	$	516,895

At March 31, 2022, our holdings of obligations of states and political subdivisions included general obligation bonds with an aggregate fair value of $283.6 million and an amortized cost of $296.1 million. Our holdings at March 31, 2022 also included special revenue bonds with an aggregate fair value of $152.9 million and an amortized cost of $157.5 million. With respect to both categories of those bonds at March 31, 2022, we held no securities of any issuer that comprised more than 10% of our holdings of either bond category. Education bonds and water and sewer utility bonds represented 48% and 35%, respectively, of our total investments in special revenue bonds based on the carrying values of these investments at March 31, 2022. Many of the issuers of the special revenue bonds we held at March 31, 2022 have the authority to impose ad valorem taxes. In that respect, many of the special revenue bonds we held at March 31, 2022 are similar to general obligation bonds.

The amortized cost and estimated fair values of our fixed maturities at December 31, 2021 were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
Held to Maturity
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	89,268	$	1,923	$	1,015	$	90,176
Obligations of states and political subdivisions		371,436		17,857		948		388,345
Corporate securities		191,147		11,576		773		201,950
Mortgage-backed securities		16,254		676		—		16,930
Totals	$	668,105	$	32,032	$	2,736	$	697,401

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
Available for Sale
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	32,501	$	144	$	461	$	32,184
Obligations of states and political subdivisions		55,459		2,002		83		57,378
Corporate securities		215,669		6,817		874		221,612
Mortgage-backed securities		219,664		3,001		1,210		221,455
Totals	$	523,293	$	11,964	$	2,628	$	532,629

At December 31, 2021, our holdings of obligations of states and political subdivisions included general obligation bonds with an aggregate fair value of $284.9 million and an amortized cost of $272.7 million. Our holdings also included special revenue bonds with an aggregate fair value of $160.8 million and an amortized cost of $154.2 million. With respect to both categories of bonds, we held no securities of any issuer that comprised more than 10% of that category at December 31, 2021. Education bonds and water and sewer utility bonds represented 48% and 35%, respectively, of our total investments in special revenue bonds based on their carrying values at December 31, 2021. Many of the issuers of the special revenue bonds we held at December 31, 2021 have the authority to impose ad valorem taxes. In that respect, many of the special revenue bonds we held are similar to general obligation bonds.

We have segregated within accumulated other comprehensive (loss) income the net unrealized losses of $15.1 million arising prior to the November 30, 2013 reclassification date for fixed maturities reclassified from available for sale to held to maturity. We are amortizing this balance over the remaining life of the related securities as an adjustment of yield in a manner consistent with the accretion of discount on the same fixed maturities. We recorded amortization of $ 149,475 and $371,265 in other comprehensive loss during the three months ended March 31, 2022 and 2021, respectively. At March 31, 2022 and December 31, 2021, net unrealized losses of $5.0 million and $5.2 million, respectively, remained within accumulated other comprehensive (loss) income.

We show below the amortized cost and estimated fair value of our fixed maturities at March 31, 2022 by contractual maturity. Expected maturities may differ from contractual maturities because issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties

	Amortized Cost		Estimated Fair Value
	(in thousands)
Held to maturity
Due in one year or less	$	60,854	$	62,484
Due after one year through five years		84,257		85,415
Due after five years through ten years		223,309		216,052
Due after ten years		307,326		289,161
Mortgage-backed securities		14,945		14,795
Total held to maturity	$	690,691	$	667,907

Available for sale
Due in one year or less	$	29,090	$	29,320
Due after one year through five years		148,499		145,592
Due after five years through ten years		105,650		101,917
Due after ten years		30,936		29,394
Mortgage-backed securities		219,597		210,672
Total available for sale	$	533,772	$	516,895

The cost and estimated fair values of our equity securities at March 31, 2022 were as follows:

	Cost		Gross Gains		Gross Losses		Estimated Fair Value
	(in thousands)
Equity securities	$	35,307	$	18,795	$	56	$	54,046

The cost and estimated fair values of our equity securities at December 31, 2021 were as follows:

	Cost		Gross Gains		Gross Losses		Estimated Fair Value
	(in thousands)
Equity securities	$	43,263	$	20,413	$	256	$	63,420

We present below gross gains and losses from investments and the change in the difference between fair value and cost of investments:

	Three Months Ended March 31,
	2022			2021
	(in thousands)
Gross realized gains:
Fixed maturities	$	234		$	193
Equity securities		843			73
Real estate		477			—
		1,554			266
Gross realized losses:
Fixed maturities		69			222
Equity securities		824			—
		893			222
Net realized gains		661			44
Gross unrealized gains on equity securities		716			3,204
Gross unrealized losses on equity securities		(1,453	)		(779	)
Net investment (losses) gains	$	(76	)	$	2,469

We held fixed maturities with unrealized losses representing declines that we considered temporary at March 31, 2022 as follows:

	Less Than 12 Months				More Than 12 Months
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	52,488	$	2,816	$	31,710	$	3,581
Obligations of states and political subdivisions		231,429		19,976		28,289		3,436
Corporate securities		188,463		8,531		25,649		2,797
Mortgage-backed securities		192,115		7,590		14,313		1,625
Totals	$	664,495	$	38,913	$	99,961	$	11,439

We held fixed maturities with unrealized losses representing declines that we considered temporary at December 31, 2021 as follows:

	Less Than 12 Months				More Than 12 Months
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	27,691	$	412	$	28,426	$	1,064
Obligations of states and political subdivisions		56,655		899		7,091		132
Corporate securities		92,737		1,610		1,463		37
Mortgage-backed securities		90,006		1,128		2,361		82
Totals	$	267,089	$	4,049	$	39,341	$	1,315

We make estimates concerning the valuation of our investments and the recognition of other-than-temporary declines in the value of our investments. For equity securities, we measure investments at fair value, and we recognize changes in fair value in our results of operations. With respect to a debt security that is in an unrealized loss position, we first assess if we intend to sell the debt security. If we determine we intend to sell the debt security, we recognize the impairment loss in our results of operations. If we do not intend to sell the debt security, we determine whether it is more likely than not that we will be required to sell the debt security prior to recovery. If we determine it is more likely than not that we will be required to sell the debt security prior to recovery, we recognize the impairment loss in our results of operations. If we determine it is more likely than not that we will not be required to sell the debt security prior to recovery, we then evaluate whether a credit loss has occurred with respect to that security. We determine whether a credit loss has occurred by comparing the amortized cost of the debt security to the present value of the cash flows we expect to collect. If we expect a cash flow shortfall, we consider that a credit loss has occurred. If we determine that a credit loss has occurred, we consider the impairment to be other than temporary. We then recognize the amount of the impairment loss related to the credit loss in our results of operations, and we recognize the remaining portion of the impairment loss in our other comprehensive income, net of applicable taxes. In addition, we may write down securities in an unrealized loss position based on a number of other factors, including when the fair value of an investment is significantly below its cost, when the financial condition of the issuer of a security has deteriorated, the occurrence of industry, issuer or geographic events that have negatively impacted the value of a security and rating agency downgrades. We held 593 debt securities that were in an unrealized loss position at March 31, 2022. Based upon our analysis of general market conditions and underlying factors impacting these debt securities, we considered these declines in value to be temporary.

We amortize premiums and discounts on debt securities over the life of the security as an adjustment to yield using the effective interest method. We compute realized investment gains and losses using the specific identification method.

We amortize premiums and discounts on mortgage-backed debt securities using anticipated prepayments.