Investments

12 Months Ended

Dec. 31, 2022

4 - Investments

The amortized cost and estimated fair values of our fixed maturities at December 31, 2022 and 2021 are as follows:

	2022
Held to Maturity	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	103,362,028	$	856	$	10,566,154	$	92,796,730
Obligations of states and political subdivisions		382,097,461		1,809,879		60,494,134		323,413,206
Corporate securities		190,948,922		—		20,510,543		170,438,379
Mortgage-backed securities		12,030,949		—		634,583		11,396,366
Totals	$	688,439,360	$	1,810,735	$	92,205,414	$	598,044,681

	2022
Available for Sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	68,537,456	$	108,683	$	5,124,827	$	63,521,312
Obligations of states and political subdivisions		45,448,157		33,994		5,326,367		40,155,784
Corporate securities		218,040,945		8,315		15,211,215		202,838,045
Mortgage-backed securities		239,886,169		155,278		22,764,657		217,276,790
Totals	$	571,912,727	$	306,270	$	48,427,066	$	523,791,931

	2021
Held to Maturity	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	89,267,988	$	1,922,976	$	1,015,040	$	90,175,924
Obligations of states and political subdivisions		371,435,776		17,856,745		948,113		388,344,408
Corporate securities		191,147,051		11,576,693		772,809		201,950,935
Mortgage-backed securities		16,253,753		675,944		—		16,929,697
Totals	$	668,104,568	$	32,032,358	$	2,735,962	$	697,400,964

	2021
Available for Sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	32,501,080	$	144,377	$	460,831	$	32,184,626
Obligations of states and political subdivisions		55,458,687		2,002,035		82,631		57,378,091
Corporate securities		215,668,644		6,817,036		874,405		221,611,275
Mortgage-backed securities		219,664,635		3,000,806		1,210,418		221,455,023
Totals	$	523,293,046	$	11,964,254	$	2,628,285	$	532,629,015

At December 31, 2022, our holdings of obligations of states and political subdivisions included general obligation bonds with an aggregate fair value of $240.7 million and an amortized cost of $283.5 million. Our holdings also included special revenue bonds with an aggregate fair value of $122.9 million and an amortized cost of $144.0 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, 2022. 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, 2022. Many of the issuers of the special revenue bonds we held at December 31, 2022 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.

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 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 $510,819, $897,073 and $1.4 million in other comprehensive income in 2022, 2021 and 2020, respectively. At December 31, 2022 and 2021, net unrealized losses of $4.7 million and $5.2 million, respectively, remained within accumulated other comprehensive (loss) income.

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

	Amortized Cost		Estimated Fair Value
Held to maturity
Due in one year or less	$	24,608,278	$	24,736,944
Due after one year through five years		86,581,717		83,910,606
Due after five years through ten years		245,818,039		218,039,676
Due after ten years		319,400,377		259,961,089
Mortgage-backed securities		12,030,949		11,396,366
Total held to maturity	$	688,439,360	$	598,044,681
Available for sale
Due in one year or less	$	14,601,260	$	14,485,681
Due after one year through five years		163,170,354		154,175,256
Due after five years through ten years		123,462,268		111,296,437
Due after ten years		30,792,676		26,557,767
Mortgage-backed securities		239,886,169		217,276,790
Total available for sale	$	571,912,727	$	523,791,931

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

	Cost		Gross Gains		Gross Losses		Estimated Fair Value

Equity securities	$	30,770,633	$	5,666,467	$	1,332,260	$	35,104,840

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

Equity securities	$	43,262,577	$	20,413,667	$	256,271	$	63,419,973

The amortized cost of fixed maturities on deposit with various regulatory authorities at December 31, 2022 and 2021 amounted to $9,473,047 and $8,852,886, respectively.

We derived net investment income, consisting primarily of interest and dividends, from the following sources:

	2022			2021			2020
Fixed maturities	$	34,945,437		$	32,343,878		$	30,750,231
Equity securities		897,429			1,437,948			1,386,343
Short-term investments		817,428			321,117			427,392
Other		29,250			29,250			29,250
Investment income		36,689,544			34,132,193			32,593,216
Investment expenses		(2,673,432	)		(3,006,562	)		(3,088,750	)
Net investment income	$	34,016,112		$	31,125,631		$	29,504,466

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

	2022			2021			2020
Gross realized gains:
Fixed maturities	$	1,149,761		$	676,724		$	818,350
Equity securities		1,765,923			1,430,465			106,075
Real estate		477,287			—			—
		3,392,971			2,107,189			924,425
Gross realized losses:
Fixed maturities		2,129,736			294,126			246,243
Equity securities		4,113,526			462,335			3,555,304
		6,243,262			756,461			3,801,547
Net realized (losses) gains		(2,850,291	)		1,350,728			(2,877,122	)
Gross unrealized gains on equity securities		258,532			5,627,949			8,426,806
Gross unrealized losses on equity securities		(7,593,038	)		(501,391	)		(2,771,765	)
Net investment (losses) gains	$	(10,184,797	)	$	6,477,286		$	2,777,919

Change in difference between fair value and cost of investments:
Fixed maturities	$	(177,147,840	)	$	(27,576,934	)	$	33,876,212
Equity securities		15,823,189			4,010,973			4,088,003
Totals	$	(161,324,651	)	$	(23,565,961	)	$	37,964,215

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

	Less than 12 months				12 months or longer
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	90,245,322	$	5,326,954	$	47,237,638	$	10,364,027
Obligations of states and political subdivisions		261,464,427		49,327,324		47,945,038		16,493,177
Corporate securities		298,706,256		22,272,711		72,959,284		13,449,047
Mortgage-backed securities		143,885,626		10,940,722		69,878,986		12,458,518
Totals	$	794,301,631	$	87,867,711	$	238,020,946	$	52,764,769

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

	Less than 12 months				12 months or longer
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	27,691,051	$	412,055	$	28,426,248	$	1,063,816
Obligations of states and political subdivisions		56,654,480		899,139		7,090,499		131,605
Corporate securities		92,736,747		1,609,931		1,462,717		37,283
Mortgage-backed securities		90,006,234		1,128,197		2,361,232		82,221
Totals	$	267,088,512	$	4,049,322	$	39,340,696	$	1,314,925

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 an 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. 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, company or geographic events that have negatively impacted the value of a security and rating agency downgrades. We held 882 debt securities that were in an unrealized loss position at December 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 did not recognize any impairment losses in 2022, 2021 or 2020. We had no sales or transfers from our held to maturity portfolio in 2022, 2021 or 2020. We had no derivative instruments or hedging activities during 2022, 2021 or 2020.