INVESTMENTS

3 Months Ended

Mar. 31, 2022

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 (loss). 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 March 31, 2022 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	$	5,172	$	46	$	196	$	5,022


Agency mortgage backed securities	19,469		63		990		18,542
Asset backed securities	4,567		6		142		4,431
Private label mortgage backed securities	3,743		4		199		3,548
Corporate bonds	49,655		814		1,479		48,990

States, municipalities and political subdivisions	9,630		15		795		8,850

Total Fixed Maturities	92,236		948		3,801		89,383
Equity securities	1,609		2,474		—		4,083
Total	$	93,845	$	3,422	$	3,801	$	93,466

The amortized cost and aggregate fair values of investments in held-to-maturity securities as of March 31, 2022 are as follows:


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

Agency mortgage backed securities	$	581	$	12	$	3	$	590



Total	$	581	$	12	$	3	$	590

The amortized cost and aggregate fair values of investments in available-for-sale securities as of December 31, 2021 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	$	5,171	$	173	$	19	$	5,325
Agency mortgage backed securities	18,407		333		217		18,523
Asset backed securities	4,710		63		17		4,756
Private label mortgage backed securities	2,878		17		38		2,857
Corporate bonds	51,391		2,635		418		53,608
States, municipalities and political subdivisions	9,629		131		86		9,674

Total Fixed Maturities	92,186		3,352		795		94,743
Equity securities	1,609		2,368		—		3,977
Total	$	93,795	$	5,720	$	795	$	98,720

The amortized cost and aggregate fair values of investments in held-to-maturity securities as of December 31, 2021 are as follows:


($ in thousands) Held-to-maturity securities:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Agency mortgage backed securities	$	608	$	42	$	—	$	650



Total	$	608	$	42	$	—	$	650

The amortized cost and aggregate fair value of debt securities at March 31, 2022, 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	$	3,103	$	3,122
Due after one year through five years	20,896		21,060
Due after five years through ten years	21,688		21,402
Due after ten years	46,549		43,799
Total	$	92,236	$	89,383

Held-to-maturity securities:

Due after one year through five years	$	6	$	6
Due after five years through ten years	3		3
Due after ten years	572		581
Total	$	581	$	590

A summary of securities available-for-sale with unrealized losses as of March 31, 2022, 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
March 31, 2022	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Total Securities in a Loss Position
U.S. Government corporations and agencies	$	3,263	$	196	$	—	$	—	$	3,263	$	196	3
Agency mortgage backed securities	15,030		856		1,076		134		16,106		990		45
Asset backed securities	4,073		142		—		—		4,073		142		8
Private label mortgage backed securities	3,505		199		—		—		3,505		199		5
Corporate bonds	20,900		1,227		1,403		252		22,303		1,479		35



States, municipalities and political subdivisions	5,517		705		716		90		6,233		795		11



	$	52,288	$	3,325	$	3,195	$	476	$	55,483	$	3,801	107

A summary of held-to-maturity securities with unrealized losses as of March 31, 2022, 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
March 31, 2022	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	$	209	$	3	$	—	$	—	$	209	$	3	1






	$	209	$	3	$	—	$	—	$	209	$	3	1

A summary of securities available-for-sale with unrealized losses as of December 31, 2021, 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, 2021	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Total Securities in a Loss Position
U.S. Government corporations and agencies	$	1,814	$	19	$	—	$	—	$	1,814	$	19	2
Agency mortgage backed securities	10,129		217		—		—		10,129		217		19
Asset backed securities	1,501		17		—		—		1,501		17		3
Private label mortgage backed securities	1,963		38		—		—		1,963		38		2
Corporate bonds	11,121		418		—		—		11,121		418		18



States, municipalities and political subdivisions	3,629		77		798		9		4,427		86		7



	$	30,157	$	786	$	798	$	9	$	30,955	$	795	51

There were no securities held-to-maturity with unrealized losses as of December 31, 2021.

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 (loss), 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 4% 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 three months ended March 31, 2022, the Company realized no other-than-temporary impairments. For the year ended December 31, 2021, the Company realized no other-than-temporary impairments. At March 31, 2022, the three largest losses not realized as an impairment in the fixed maturity portfolio totaled $158,000, $147,000 and $138,000. After evaluation by management, it was determined that each of these losses were driven by changes in market interest rates. Management currently has the intent and ability to hold these investments until recovery so no other-than-temporary impairments were recognized. At December 31, 2021, the three largest losses not realized as an impairment in the fixed maturity portfolio totaled $105,000, $44,000 and $39,000.

Major categories of investment income are summarized as follows:


($ in thousands)	Three months ended March 31,
		2022		2021
Fixed maturities		$	814	$	757
Equity securities		42		49
Mortgage loans on real estate		2		2

Policy loans		33		34

Other		16		2
		907		844
Less: Investment expenses		39		40
Net investment income		$	868	$	804

Major categories of investment gains (losses) are summarized as follows:


($ in thousands)	Three months ended March 31,
		2022		2021
Realized gains on fixed maturities		$	3	$	—
Realized gains on equity securities		—		357
Gains (losses) on trading securities		(12)		7
Change in fair value of equity securities		106		3
Change in surrender value of company owned life insurance		(369)		(57)



Net investment gains (losses)		$	(272)	$	310

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


($ in thousands)	March 31, 2022		March 31, 2021
Fixed maturities	$	(5,410)	$	(2,069)
Deferred income tax	1,136		434
Change in net unrealized gains (losses) on available-for-sale securities	$	(4,274)	$	(1,635)