Investments (Tables)

9 Months Ended

Sep. 30, 2018

The following is a summary of available-for-sale securities at September 30, 2018 and December 31, 2017:

	Fair Value		Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Net Unrealized Gains (Losses)
September 30, 2018 ¹
Fixed maturities
Agency collateralized mortgage obligations	$	10,471	$	10,499	$	183	$	(211)	$	(28)
Agency mortgage-backed securities		36,181		37,179		6		(1,004)		(998)
Asset-backed securities		53,881		53,603		533		(255)		278
Bank loans		17,067		16,923		166		(22)		144
Certificates of deposit		3,126		3,123		3		–		3
Collateralized mortgage obligations		5,131		4,755		405		(29)		376
Corporate securities		198,698		202,977		315		(4,594)		(4,279)
Mortgage-backed securities		32,790		32,360		807		(377)		430
Municipal obligations		30,594		30,602		279		(287)		(8)
Non-U.S. government obligations		39,750		40,947		180		(1,377)		(1,197)
U.S. government obligations		163,272		165,130		6		(1,864)		(1,858)
Total fixed maturities	$	590,961	$	598,098	$	2,883	$	(10,020)	$	(7,137)

	Fair Value		Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Net Unrealized Gains (Losses)
December 31, 2017 ¹
Fixed maturities
Agency collateralized mortgage obligations	$	16,586	$	15,839	$	818	$	(71)	$	747
Agency mortgage-backed securities		27,075		27,180		47		(152)		(105)
Asset-backed securities		43,469		42,861		749		(141)		608
Bank loans		19,488		19,271		266		(49)		217
Certificates of deposit		3,135		3,124		11		–		11
Collateralized mortgage obligations		6,492		6,079		451		(38)		413
Corporate securities		198,349		198,419		1,602		(1,672)		(70)
Mortgage-backed securities		24,204		23,656		933		(385)		548
Municipal obligations		96,650		97,059		322		(731)		(409)
Non-U.S. government obligations		37,394		37,971		475		(1,052)		(577)
U.S. government obligations		49,011		49,558		–		(547)		(547)
Total fixed maturities		521,853		521,017		5,674		(4,838)		836
Equity securities:
Consumer		46,578		23,565		24,031		(1,018)		23,013
Energy		10,278		6,763		3,602		(87)		3,515
Financial		45,470		31,859		13,937		(326)		13,611
Industrial		25,402		8,949		16,793		(340)		16,453
Technology		13,061		5,768		7,401		(108)		7,293
Funds (e.g. mutual funds, closed end funds, ETFs)		50,291		46,177		4,153		(39)		4,114
Other		10,683		7,670		3,313		(300)		3,013
Total equity securities		201,763		130,751		73,230		(2,218)		71,012

Total	$	723,616	$	651,768	$	78,904	$	(7,056)	$	71,848

Effective January 1, 2018, the Company adopted ASU 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note 1 – Summary of Significant Accounting Policies - Recently Adopted Accounting Pronouncements for further discussion.

Fixed Maturity and Equity Security Investments in Unrealized Loss Position

The following table summarizes, for available-for-sale fixed maturities in an unrealized loss position at September 30, 2018 and available-for-sale fixed maturities and equity securities in an unrealized loss position at December 31, 2017, respectively, the aggregate fair value and gross unrealized loss categorized by the duration individual securities have been continuously in an unrealized loss position

	September 30, 2018						December 31, 2017
	Number of Securities		Fair Value		Gross Unrealized Loss		Number of Securities		Fair Value		Gross Unrealized Loss
Fixed maturity securities:
12 months or less		486	$	431,601	$	(7,330)		459	$	313,421	$	(2,683)
Greater than 12 months		135		81,091		(2,690)		112		75,638		(2,155)
Total fixed maturities		621		512,692		(10,020)		571		389,059		(4,838)

Equity securities ¹:
12 months or less		–		–		–		65		46,654		(2,218)
Greater than 12 months		–		–		–		–		–		–
Total equity securities		–		–		–		65		46,654		(2,218)
Total fixed maturity and equity securities		621	$	512,692	$	(10,020)		636	$	435,713	$	(7,056)

Fair Value and Cost or Amortized Cost of Fixed Maturity Investments by Contractual Maturity

Pre-refunded municipal bonds are classified based on their pre-refunded call dates.

	Fair Value		Cost or Amortized Cost
One year or less	$	47,012	$	47,538
Excess of one year to five years		298,807		303,274
Excess of five years to ten years		104,228		106,384
Excess of ten years		2,460		2,506
Contractual maturities		452,507		459,702
Asset-backed securities		138,454		138,396
Total	$	590,961	$	598,098

Net Realized and Unrealized Gains (Losses) on Investments

Following is a summary of the components of net realized and unrealized gains (losses) on investments for the periods presented in the accompanying condensed consolidated statements of operations.

	Three Months Ended September 30				Nine Months Ended September 30
	2018		2017		2018		2017
Gross gains on available-for-sale investments sold during the period:
Fixed maturities	$	2,690	$	3,852	$	8,824	$	9,544
Equity securities ¹		–		4,103		–		8,601
Total gains		2,690		7,955		8,824		18,145

Gross losses on available-for-sale investments sold during the period:
Fixed maturities	$	(2,743)		(3,973)	$	(8,539)		(10,112)
Equity securities ¹		–		(498)		–		(945)
Total losses		(2,743)		(4,471)		(8,539)		(11,057)

Other-than-temporary impairments		–		(38)		–		(69)

Change in value of limited partnership investments		(1,073)		2,498		(6,518)		8,515

Gains (losses) on equity securities:
Realized gains on equity securities sold during the period ²		502		–		1,455		–
Unrealized gains (losses) on equity securities held at the end of the period		2,997		–		(817)		–
Realized and unrealized losses on equity securities held at the end of the period		3,499		–		638		–

Net realized and unrealized gains (losses) on investments	$	2,373	$	5,944	$	(5,595)	$	15,534

During the three and nine months ended September 30, 2018, the Company sold $30,135 and $117,692 in equity securities, resulting in realized gains of $5,721 and $50,848, respectively. The majority of these gains were included in unrealized gains within other comprehensive income at December 31, 2017 and, as a result of the adoption of ASU 2016-01, were reclassified to retained earnings as of January 1, 2018 and were therefore not recognized in the condensed consolidated statements of operations for the three and nine months ended September 30, 2018.