Investments

12 Months Ended

Dec. 31, 2020

Investments [Abstract]

Investments

2. Investments:

The cost or amortized cost and the estimated fair value of investments in debt and equity securities by category is as follows (in thousands):

			Gross		Gross
		Cost/Amortized	Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
As of December 31, 2020
U.S. Treasury securities and obligations of U.S. Government	$	179,259	$	487	$	-	$	179,746
Corporate bonds		214,666		5,086		(384)		219,368
Corporate bank loans		53,650		3		(871)		52,782
Municipal bonds		49,833		756		(50)		50,539
Mortgage-backed		4,759		114		(29)		4,844
Total debt securities		502,167		6,446		(1,334)		507,279
Total equity securities		26,988		5,648		(3,248)		29,388
Total other investments		—		—		—		—
Total investments	$	529,155	$	12,094	$	(4,582)	$	536,667
As of December 31, 2019
U.S. Treasury securities and obligations of U.S. Government	$	66,441	$	162	$	(3)	$	66,600
Corporate bonds		297,601		3,387		(163)		300,825
Corporate bank loans		115,669		556		(468)		115,757
Municipal bonds		81,787		1,531		(48)		83,270
Mortgage-backed		8,000		46		(219)		7,827
Total debt securities		569,498		5,682		(901)		574,279
Total equity securities		71,895		35,028		(7,708)		99,215
Total other investments		3,763		—		(1,594)		2,169
Total investments	$	645,156	$	40,710	$	(10,203)	$	675,663

Major categories of net investment income are summarized as follows (in thousands):

	Twelve Months Ended December 31,
	2020		2019
U.S. Treasury securities and obligations of U.S. Government	$	885	$	916
Corporate bonds		7,223		7,317
Corporate bank loans		1,688		6,028
Municipal bonds		2,347		3,907
Mortgage-backed		192		311
Equity securities		1,369		2,364
Cash and cash equivalents		—		766
		13,704		21,609
Investment expenses		(784)		(1,005)
Investment income, net of expenses	$	12,920	$	20,604

No investments in any entity or its affiliates exceeded 10% of stockholders’ equity at December 31, 2020 or 2019.

Major categories of net investment gains (losses) on investments are summarized as follows (in thousands):

	Year Ended December 31,
	2020		2019
U.S. Treasury securities and obligations of U.S. Government	$	(3)	$	—
Corporate bonds		959		235
Corporate bank loans		40		(34)
Municipal bonds		1,397		4,270
Mortgage-backed		—		—
Equity securities		3,472		(7)
Other investments		(3,740)		—
Gain on investments		2,125		4,464
Other-than-temporary impairments		(1,692)		—
Unrealized (losses) gains on equity securities		(24,921)		15,133
Unrealized gains on other investments		1,594		1,021
Investment (losses) gains, net	$	(22,894)	$	20,618

We realized gross gains on investments of $22.8 million and $5.0 million during the years ended December 31, 2020 and 2019, respectively, of which $21.0 million and $4.1 million were from the sales of securities during the years ended December 31, 2020 and 2019, respectively. We realized gross losses on investments of $20.7 million and $0.5 million during the years ended December 31, 2020 and 2019, respectively, of which $20.2 million and $0.1 million was from the sale of securities during the years ended December 31, 2020 and 2019, respectively. We recorded proceeds from the sale of investment securities of $155.0 million and $13.0 million during the years ended December 31, 2020 and 2019, respectively.  Realized investment gains and losses are recognized in operations on the first in-first out method.

The following schedules summarize the gross unrealized losses showing the length of time that investments have been continuously in an unrealized loss position as of December 31, 2020 and December 31, 2019 (in thousands):

	As of December 31, 2020
	12 months or less				Longer than 12 months				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
U.S. Treasury securities and obligations of U.S. Government	$	—	$	—	$	—	$	—	$	—	$	—
Corporate bonds		7,801		(186)		3,556		(198)		11,357		(384)
Corporate bank loans		45,233		(559)		4,144		(312)		49,377		(871)
Municipal bonds		2,859		(33)		1,154		(17)		4,013		(50)
Mortgage-backed		635		(25)		14		(4)		649		(29)
Total debt securities		56,528		(803)		8,868		(531)		65,396		(1,334)
Total equity securities		9,572		(1,610)		1,848		(1,638)		11,420		(3,248)
Total other investments		—		—		—		—		—		—
Total investments	$	66,100	$	(2,413)	$	10,716	$	(2,169)	$	76,816	$	(4,582)

	As of December 31, 2019
	12 months or less				Longer than 12 months				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
U.S. Treasury securities and obligations of U.S. Government	$	—	$	—	$	5,513	$	(3)	$	5,513	$	(3)
Corporate bonds		27,268		(144)		1,150		(19)		28,418		(163)
Corporate bank loans		9,000		(41)		10,228		(427)		19,228		(468)
Municipal bonds		4,808		(29)		1,618		(19)		6,426		(48)
Mortgage-backed		1,712		(101)		562		(118)		2,274		(219)
Total debt securities		42,788		(315)		19,071		(586)		61,859		(901)
Total equity securities		10,905		(2,363)		6,093		(5,345)		16,998		(7,708)
Total other investments		—		—		2,169		(1,594)		2,169		(1,594)
Total investments	$	53,693	$	(2,678)	$	27,333	$	(7,525)	$	81,026	$	(10,203)

We held a total of 81 debt securities with an unrealized loss, of which 64 were in an unrealized loss position for less than one year and 17 were in an unrealized loss position for a period of one year or greater, as of December 31, 2020. We held a total of 61 debt securities with an unrealized loss, of which 41 were in an unrealized loss position for less than one year and 20 were in an unrealized loss position for a period of one year or greater, as of December 31, 2019. We held a total of 13 equity securities with an unrealized loss, of which six were in an unrealized loss position for less than one year and seven were in an unrealized loss position for a period of one year or greater, as of December 31, 2020. We held a total of nine equity securities with an unrealized loss, of which seven were in an unrealized loss position for less than one year and two were in an unrealized loss position for a period of one year or greater, as of December 31, 2019. We consider these losses as a temporary decline in value as they are on securities that we do not intend to sell and do not believe we will be required to sell prior to recovery of our amortized cost basis. The gross unrealized losses on the debt security positions at December 31, 2020 were due predominately to normal market and interest rate fluctuations and we see no other indications that the decline in values of these securities is other-than-temporary.

Based on evidence gathered through our normal credit evaluation process, we presently expect that all debt securities held in our investment portfolio will be paid in accordance with their contractual terms. Nonetheless, it is at least reasonably possible that the performance of certain issuers of these debt securities will be worse than currently expected resulting in future write-downs within our portfolio of debt securities.

We complete a detailed analysis each quarter to assess whether any decline in the fair value of any debt security below cost is deemed other-than-temporary. All debt securities with an unrealized loss are reviewed. We recognize an impairment loss when a debt security’s value declines below cost, adjusted for accretion, amortization and previous other-than-temporary impairments and it is determined that the decline is other-than-temporary.  We recognized $1.7 million of other-than-temporary impairment on debt securities during 2020. We did not recognize an impairment loss during 2019.

Debt Investments: We assess whether we intend to sell, or it is more likely than not that we will be required to sell, a fixed maturity investment before recovery of its amortized cost basis less any current period credit losses. For fixed maturity investments that are considered other-than-temporarily impaired and that we do not intend to sell and will not be required to sell, we separate the amount of the impairment into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the investment’s amortized cost basis and the present value of its expected future cash flows. The remaining difference between the investment’s fair value and the present value of future expected cash flows is recognized in other comprehensive income.  During 2020 we disposed of one previously impaired security and recognized no gain or loss on disposal.  During 2019 we disposed of six previously impaired securities and recognized a realized gain of $4.1 million.

Equity Investments: Equity investments that are not consolidated or accounted for under the equity method of accounting are measured at fair value with changes in fair value recognized in net income each reporting period.  Equity securities with readily determinable fair values are not required to be evaluated for other-than-temporary-impairment.

Details regarding the carrying value of the other invested assets portfolio as of December 31, 2020 and 2019 were as follows:

	December 31,		December 31,
	2020		2019
Investment Type
Equity warrant	$	—	$	2,169
Total other investments	$	—	$	2,169

We acquired this equity warrant in an active market and disposed of it during the fourth quarter of 2020. It entitled us to buy the underlying common stock of a publicly traded company at a fixed exercise price until the expiration date of January 19, 2021.

The amortized cost and estimated fair value of debt securities at December 31, 2020 by contractual maturity are as follows. Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without penalties.

	Amortized Cost		Fair Value
	(in thousands)
Due in one year or less	$	255,768	$	257,246
Due after one year through five years		200,343		203,625
Due after five years through ten years		28,632		28,363
Due after ten years		12,665		13,202
Mortgage-backed		4,759		4,843
	$	502,167	$	507,279

We have certain of our securities pledged for the benefit of various state insurance departments and reinsurers. These securities are included with our available-for-sale debt securities because we have the ability to trade these securities. We retain the interest earned on these securities. These securities had a carrying value of $29.7 million at December 31, 2020 and a carrying value of $28.9 million at December 31, 2019.