Investments

9 Months Ended

Sep. 30, 2021

Investments [Abstract]

Investments

6. Investments

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

			Gross		Gross
		Amortized Cost/	Unrealized		Unrealized
	Carrying Value		Gains		Losses		Fair Value
As of September 30, 2021
U.S. Treasury securities and obligations of U.S. Government	$	66,354	$	142	$	—	$	66,496
Corporate bonds		119,341		2,829		(73)		122,097
Corporate bank loans		86,749		117		(532)		86,334
Municipal bonds		40,618		421		(68)		40,971
Mortgage-backed		1,967		55		(4)		2,018
Total debt securities		315,029		3,564		(677)		317,916
Total equity securities		39,129		8,148		(1,915)		45,362
Total investments	$	354,158	$	11,712	$	(2,592)	$	363,278
			Gross		Gross
		Amortized Cost/	Unrealized		Unrealized
As of December 31, 2020	Carrying Value		Gains		Losses		Fair Value
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 investments	$	529,155	$	12,094	$	(4,582)	$	536,667

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
U.S. Treasury securities and obligations of U.S. Government	$	—	$	(3)	$	—	$	(3)
Corporate bonds		133		352		494		766
Corporate bank loans		14		66		105		(19)
Municipal bonds		(18)		(25)		(12)		1,397
Equity securities		930		—		4,701		3,471
Gain on investments		1,059		390		5,288		5,612
Other-than-temporary impairments		—		(1,692)		—		(1,692)
Unrealized losses on other investments		—		(262)		—		(2,136)
Unrealized (losses) gains on equity investments		(1,592)		937		3,834		(29,683)
Investment (losses) gains, net	$	(533)	$	(627)	$	9,122	$	(27,899)

We realized gross gains on investments of $1.1 million and $0.5 million during the three months ended September 30, 2021 and 2020, respectively and $5.8 million and $22.4 million for the nine months ended September 30, 2021 and 2020, respectively. We did not realize gross losses on investments for the three months ended September 30, 2021 and realized gross losses on investments of $0.1 million for the three months ended September 30, 2020. We realized gross losses on investments of $0.5 million and $16.8 million for the nine months ended September 30, 2021 and 2020, respectively. We recorded proceeds from the sale of investment securities of $1.1 million and $47.4 million during the three months ended September 30, 2021 and 2020, respectively and $16.9 million and $155.0 million for the nine months

ended September 30, 2021 and 2020, 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 September 30, 2021 and December 31, 2020 (in thousands):

	As of September 30, 2021
	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		—		—		2,592		(73)		2,592		(73)
Corporate bank loans		27,235		(125)		20,443		(407)		47,678		(532)
Municipal bonds		4,000		(57)		999		(11)		4,999		(68)
Mortgage-backed		—		—		11		(4)		11		(4)
Total debt securities		31,235		(182)		24,045		(495)		55,280		(677)
Total equity securities		9,514		(335)		4,143		(1,580)		13,657		(1,915)
Total investments with unrealized losses	$	40,749	$	(517)	$	28,188	$	(2,075)	$	68,937	$	(2,592)

	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 investments with unrealized losses	$	66,100	$	(2,413)	$	10,716	$	(2,169)	$	76,816	$	(4,582)

We had a total of 86 debt securities with an unrealized loss, of which 58 were in an unrealized loss position for less than one year and 28 were in an unrealized loss position for a period of one year or greater, as of September 30, 2021.  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 consider these losses as a temporary decline in value as they are predominately 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 September 30, 2021 and December 31, 2020 were due predominately to 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 did not recognize any impairment loss on debt securities during the nine months ended September 30, 2021. We recognized $1.7 million of other-than-temporary impairment on debt securities during the nine months ended September 30, 2020.

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 the nine months ended September 30, 2021 we disposed of $0.6 million of previously impaired securities. During the nine months ended September 30, 2020, we did not dispose of any previously impaired securities.  

Equity Investments: Equity investments that are not consolidated or accounted for under the equity method of accounting with readily determinable fair values are not required to be evaluated for other-than-temporary-impairment.

The amortized cost and estimated fair value of debt securities at September 30, 2021 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	$	125,303	$	126,261
Due after one year through five years		114,399		116,086
Due after five years through ten years		64,251		64,191
Due after ten years		9,109		9,360
Mortgage-backed		1,967		2,018
	$	315,029	$	317,916