INVESTMENTS

9 Months Ended

Sep. 30, 2020

INVESTMENTS Our investment in available-for-sale securities, which are reported at fair value, includes fixed maturity securities and equity securities. Net unrealized gains or losses on fixed maturities are reported after-tax as a component of other comprehensive income. Changes in fair value of equity securities are reported in investment gains/losses as a component of net income.

The amortized cost and aggregate fair values of investments in available-for-sale securities as of September 30, 2020 are as follows:


($ in thousands) Available-for-sale securities:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. Government corporations and agencies	$	4,527	$	343	$	—	$	4,870


Agency mortgage backed securities	23,769		1,033		88		24,714
Asset backed securities	9,456		123		349		9,230
Private label mortgage backed securities	1,429		47		11		1,465
Corporate bonds	37,441		3,351		265		40,527

States, municipalities and political subdivisions	5,069		163		30		5,202
Foreign governments	841		118		—		959
Total Fixed Maturities	82,532		5,178		743		86,967
Equity securities	2,127		2,924		21		5,030
Total	$	84,659	$	8,102	$	764	$	91,997

The amortized cost and aggregate fair values of investments in held-to-maturity securities as of September 30, 2020 are as follows:


($ in thousands) Held-to-maturity securities:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

Agency mortgage backed securities	$	1,019	$	88	$	—	$	1,107



Total	$	1,019	$	88	$	—	$	1,107

The amortized cost and aggregate fair values of investments in available-for-sale securities as of December 31, 2019 are as follows:


($ in thousands) Available-for-sale securities:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. Government corporations and agencies	$	4,131	$	150	$	—	$	4,281
Agency mortgage backed securities	32,283		861		157		32,987
Asset backed securities	10,307		71		104		10,274
Private label mortgage backed securities	6,815		441		4		7,252
Corporate bonds	36,074		1,816		70		37,820
States, municipalities and political subdivisions	6,669		109		1		6,777
Foreign governments	823		46		—		869
Total Fixed Maturities	97,102		3,494		336		100,260
Equity securities	2,127		3,176		—		5,303
Total	$	99,229	$	6,670	$	336	$	105,563

The amortized cost and aggregate fair values of investments in held-to-maturity securities as of December 31, 2019 are as follows:


($ in thousands) Held-to-maturity securities:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Agency mortgage backed securities	$	1,290	$	55	$	—	$	1,345



Total	$	1,290	$	55	$	—	$	1,345

The amortized cost and aggregate fair value of debt securities at September 30, 2020, by contractual maturity, are presented in the following table. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.



($ in thousands)	Amortized Cost		Fair Value
Available-for-sale securities:
Due in one year or less	$	260	$	261
Due after one year through five years	18,449		19,374
Due after five years through ten years	26,124		27,471
Due after ten years	37,699		39,861
Total	$	82,532	$	86,967

Held-to-maturity securities:

Due after one year through five years	$	20	$	21
Due after five years through ten years	3		4
Due after ten years	996		1,082
Total	$	1,019	$	1,107

A summary of securities available-for-sale with unrealized losses as of September 30, 2020, along with the related fair value, aggregated by the length of time that investments have been in a continuous unrealized loss position, is as follows:


($ in thousands)	Less than 12 months				12 months or longer				Total
September 30, 2020	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Total Securities in a Loss Position

Agency mortgage backed securities	$	4,896	$	80	$	4	$	8	$	4,900	$	88	10
Asset backed securities	3,529		143		1,770		206		5,299		349		7
Private label mortgage backed securities	924		11		—		—		924		11		1
Corporate bonds	4,366		256		491		9		4,857		265		9



States, municipalities and political subdivisions	778		30		—		—		778		30		1


Equity securities	137		21		—		—		137		21		2
	$	14,630	$	541	$	2,265	$	223	$	16,895	$	764	30

There were no securities held-to-maturity with unrealized losses as of September 30, 2020.

A summary of securities available-for-sale with unrealized losses as of December 31, 2019, along with the related fair value, aggregated by the length of time that investments have been in a continuous unrealized loss position, is as follows:


($ in thousands)	Less than 12 months				12 months or longer				Total
December 31, 2019	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Total Securities in a Loss Position

Agency mortgage backed securities	$	5,663	$	104	$	1,751	$	53	$	7,414	$	157	18
Asset backed securities	4,241		33		1,579		71		5,820		104		9
Private label mortgage backed securities	1,060		4		—		—		1,060		4		1
Corporate bonds	6,363		54		1,484		16		7,847		70		14



States, municipalities and political subdivisions	512		1		—		—		512		1		1



	$	17,839	$	196	$	4,814	$	140	$	22,653	$	336	43

There were no securities held-to-maturity with unrealized losses as of December 31, 2019.

The Company conducts periodic reviews to identify and evaluate securities in an unrealized loss position in order to identify other-than-temporary impairments. For securities in an unrealized loss position, the Company assesses whether the Company has the intent to sell the security or more-likely-than-not will be required to sell the security before the anticipated recovery. If either of these conditions is met, the Company is required to recognize an other-than-temporary impairment with the entire unrealized loss reported in earnings. For securities in an unrealized loss position that do not meet these conditions, the Company assesses whether the impairment of a security is other-than-temporary. If the impairment is determined to be other-than-temporary, the Company is required to separate the other-than-temporary impairments into two components: the amount representing the credit loss and the amount related to all other factors. The credit loss is the portion of the amortized book value in excess of the net present value of the projected future cash flows discounted at the effective interest rate implicit in the debt security prior to impairment. The credit loss component of other-than-temporary impairments is reported in earnings, whereas the amount relating to factors other than credit losses are recorded in other comprehensive income, net of taxes.

Management has evaluated each security in a significant unrealized loss position in the fixed maturity investment portfolio. The Company has no material exposure to sub-prime mortgage loans and approximately 6% of the fixed income investment portfolio is rated below investment grade. Based on a review of the available financial information, the prospect for future earnings of each company and consideration of the Company’s intent and ability to hold the securities until market values recovered, it was determined that the securities in an accumulated loss position in the portfolio were temporary impairments.

For the nine months ended September 30, 2020, the Company realized no other-than-temporary impairments. For the year ended December 31, 2019, the Company realized no other-than-temporary impairments. At September 30, 2020, the three largest losses not realized as an impairment in the fixed maturity portfolio totaled $182,000, $126,000 and $92,000. After evaluation by management, it was determined that each of these losses were driven by changes in market interest rates and, in some cases, a lack of liquidity in some sectors driven by market dislocation. However, management currently has the intent and ability to hold these investments until recovery so no other-than-temporary impairments were recognized. At December 31, 2019, the three largest losses not realized as an impairment in the fixed maturity portfolio totaled $60,000, $23,000 and $20,000.

Major categories of investment income are summarized as follows:


($ in thousands)	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
Fixed maturities	$	824	$	960	$	2,696	$	2,831
Equity securities	30		19		102		66
Mortgage loans on real estate	1		2		5		6
Investment real estate	—		—		1		3
Policy loans	36		37		108		106

Other	28		6		6		13
	919		1,024		2,918		3,025
Less: Investment expenses	35		35		109		117
Net investment income	$	884	$	989	$	2,809	$	2,908

Major categories of investment gains and losses are summarized as follows:


($ in thousands)	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
Realized gains (losses) on fixed maturities	$	1,091	$	(24)	$	1,107	$	(9)

Gains (losses) on trading securities	5		1		(1)		9
Change in fair value of equity securities	223		(80)		(272)		72
Change in surrender value of company owned life insurance	125		(14)		165		256
Realized gain on company owned life insurance	—		—		—		1,792
Other losses principally real estate	(14)		—		(11)		—

Net investment gains (losses)	$	1,430	$	(117)	$	988	$	2,120

An analysis of the net change in unrealized gains (losses) on available-for-sale securities follows:


($ in thousands)	September 30, 2020		September 30, 2019
Fixed maturities	$	1,277	$	5,343
Deferred income tax	(268)		(1,122)
Change in net unrealized gains on available-for-sale securities	$	1,009	$	4,221