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Investments | 9 Months Ended
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Sep. 30, 2024
Investments [Abstract] |
Investments | Investments Fixed maturity securities See Note 5, "Fair Value" for additional fair value disclosures. The following tables summarize the amortized cost and estimated fair value, net of credit loss allowance, of our fixed maturity securities as of:
|  | September 30, 2024
(in thousands) |  | Amortized cost |  | Gross unrealized gains |  | Gross unrealized losses |  | Estimated fair value
Available-for-sale securities: |  |  |  |  |  |  |  |
Corporate debt securities (1) |  | $ | 643,288 |  |  | $ | 11,730 |  |  | $ | 6,505 |  |  | $ | 648,513 |
Collateralized debt obligations |  | 110,641 |  |  | 247 |  |  | 616 |  |  | 110,272 |
Commercial mortgage-backed securities |  | 136,370 |  |  | 3,555 |  |  | 2,570 |  |  | 137,355 |
Residential mortgage-backed securities |  | 145,864 |  |  | 292 |  |  | 10,981 |  |  | 135,175 |
Other debt securities |  | 25,542 |  |  | 573 |  |  | 438 |  |  | 25,677 |
Total available-for-sale securities, net |  | 1,061,705 |  |  | 16,397 |  |  | 21,110 |  |  | 1,056,992 |
Held-to-maturity securities - states & political subdivisions |  | 4,833 |  |  | 0 |  |  | 0 |  |  | 4,833 |
Total fixed maturity securities, net |  | $ | 1,066,538 |  |  | $ | 16,397 |  |  | $ | 21,110 |  |  | $ | 1,061,825 |
(1)This includes an estimated fair value of $8.1 million of securities lent under a securities lending agreement.
|  | December 31, 2023
(in thousands) |  | Amortized cost |  | Gross unrealized gains |  | Gross unrealized losses |  | Estimated fair value
Available-for-sale securities: |  |  |  |  |  |  |  |
Corporate debt securities |  | $ | 600,639 |  |  | $ | 4,594 |  |  | $ | 16,545 |  |  | $ | 588,688 |
Collateralized debt obligations |  | 114,400 |  |  | 156 |  |  | 2,088 |  |  | 112,468 |
Commercial mortgage-backed securities |  | 106,019 |  |  | 1,410 |  |  | 4,709 |  |  | 102,720 |
Residential mortgage-backed securities |  | 153,633 |  |  | 69 |  |  | 13,647 |  |  | 140,055 |
Other debt securities |  | 17,862 |  |  | 136 |  |  | 688 |  |  | 17,310 |
Total available-for-sale securities, net |  | $ | 992,553 |  |  | $ | 6,365 |  |  | $ | 37,677 |  |  | $ | 961,241 |
The amortized cost and estimated fair value of available-for-sale and held-to-maturity securities at September 30, 2024 are shown below by remaining contractual term to maturity. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
|  | September 30, 2024
|  | Amortized |  | Estimated
(in thousands) |  | cost |  | fair value
Available-for-sale securities: |  |  |  |
Due in one year or less |  | $ | 49,077 |  |  | $ | 48,447 |
Due after one year through five years |  | 453,677 |  |  | 456,863 |
Due after five years through ten years |  | 186,695 |  |  | 188,732 |
Due after ten years |  | 372,256 |  |  | 362,950 |
Total available-for-sale securities, net (1) (2) |  | 1,061,705 |  |  | 1,056,992 |
Held-to-maturity securities - due after ten years |  | 4,833 |  |  | 4,833 |
Total fixed maturity securities, net |  | $ | 1,066,538 |  |  | $ | 1,061,825 |
(1)The contractual maturities of our available-for-sale securities are included in the table. However, given our intent to sell certain impaired securities, these securities are classified as current assets in our Statement of Financial Position at September 30, 2024. (2)This includes an estimated fair value of $8.1 million of securities lent under a securities lending agreement. The below securities have been evaluated for credit impairment using criteria described within Note 2, "Significant Accounting Policies, of Notes to Financial Statements" included in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on February 26, 2024. The gross unrealized losses are primarily attributable to changes in interest rates and are not deemed to be credit-related. We do not have the intent to sell these securities and it is more likely than not that we would not be required to sell these securities before the anticipated recovery of the amortized cost basis. The following tables present available-for-sale securities based on length of time in a gross unrealized loss position as of:
|  | September 30, 2024
|  | Less than 12 months |  | 12 months or longer |  | Total
(dollars in thousands) |  | Fair value |  | Unrealized losses |  | Fair value |  | Unrealized losses |  | Fair value |  | Unrealized losses |  | No. of holdings
Corporate debt securities |  | $ | 56,346 |  |  | $ | 377 |  |  | $ | 170,974 |  |  | $ | 6,128 |  |  | $ | 227,320 |  |  | $ | 6,505 |  |  | 496 |
Collateralized debt obligations |  | 39,689 |  |  | 57 |  |  | 19,694 |  |  | 559 |  |  | 59,383 |  |  | 616 |  |  | 102 |
Commercial mortgage-backed securities |  | 6,367 |  |  | 48 |  |  | 25,992 |  |  | 2,522 |  |  | 32,359 |  |  | 2,570 |  |  | 85 |
Residential mortgage-backed securities |  | 18,780 |  |  | 82 |  |  | 97,271 |  |  | 10,899 |  |  | 116,051 |  |  | 10,981 |  |  | 152 |
Other debt securities |  | 1,439 |  |  | 14 |  |  | 5,473 |  |  | 424 |  |  | 6,912 |  |  | 438 |  |  | 29 |
Total available-for-sale securities |  | $ | 122,621 |  |  | $ | 578 |  |  | $ | 319,404 |  |  | $ | 20,532 |  |  | $ | 442,025 |  |  | $ | 21,110 |  |  | 864 |
Quality breakdown of available-for-sale securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment grade |  | $ | 100,964 |  |  | $ | 248 |  |  | $ | 288,847 |  |  | $ | 18,369 |  |  | $ | 389,811 |  |  | $ | 18,617 |  |  | 486 |
Non-investment grade |  | 21,657 |  |  | 330 |  |  | 30,557 |  |  | 2,163 |  |  | 52,214 |  |  | 2,493 |  |  | 378 |
Total available-for-sale securities |  | $ | 122,621 |  |  | $ | 578 |  |  | $ | 319,404 |  |  | $ | 20,532 |  |  | $ | 442,025 |  |  | $ | 21,110 |  |  | 864 |
|  | December 31, 2023
|  | Less than 12 months |  | 12 months or longer |  | Total
(dollars in thousands) |  | Fair value |  | Unrealized losses |  | Fair value |  | Unrealized losses |  | Fair value |  | Unrealized losses |  | No. of holdings
Corporate debt securities |  | $ | 50,853 |  |  | $ | 546 |  |  | $ | 338,322 |  |  | $ | 15,999 |  |  | $ | 389,175 |  |  | $ | 16,545 |  |  | 590 |
Collateralized debt obligations |  | 3,911 |  |  | 15 |  |  | 87,005 |  |  | 2,073 |  |  | 90,916 |  |  | 2,088 |  |  | 142 |
Commercial mortgage-backed securities |  | 9,148 |  |  | 157 |  |  | 30,145 |  |  | 4,552 |  |  | 39,293 |  |  | 4,709 |  |  | 108 |
Residential mortgage-backed securities |  | 30,271 |  |  | 297 |  |  | 101,761 |  |  | 13,350 |  |  | 132,032 |  |  | 13,647 |  |  | 164 |
Other debt securities |  | 2,084 |  |  | 62 |  |  | 7,475 |  |  | 626 |  |  | 9,559 |  |  | 688 |  |  | 32 |
Total available-for-sale securities |  | $ | 96,267 |  |  | $ | 1,077 |  |  | $ | 564,708 |  |  | $ | 36,600 |  |  | $ | 660,975 |  |  | $ | 37,677 |  |  | 1,036 |
Quality breakdown of available-for-sale securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment grade |  | $ | 87,774 |  |  | $ | 807 |  |  | $ | 517,090 |  |  | $ | 32,511 |  |  | $ | 604,864 |  |  | $ | 33,318 |  |  | 651 |
Non-investment grade |  | 8,493 |  |  | 270 |  |  | 47,618 |  |  | 4,089 |  |  | 56,111 |  |  | 4,359 |  |  | 385 |
Total available-for-sale securities |  | $ | 96,267 |  |  | $ | 1,077 |  |  | $ | 564,708 |  |  | $ | 36,600 |  |  | $ | 660,975 |  |  | $ | 37,677 |  |  | 1,036 |
Credit loss allowances The following tables present a roll-forward of the allowances for credit losses on fixed maturity securities and financing receivables:
|  | Three months ended September 30, 2024
(in thousands) |  | Available-for-sale securities |  | Held-to-maturity securities |  | Other loans receivable |  | Agent loans
Balance, beginning of period |  | $ | 503 |  |  | $ | 2,167 |  |  | $ | 11,438 |  |  | $ | 957 |
Provision and recoveries |  | 158 |  |  | 0 |  |  | 474 |  |  | 354 |
Sales/collections and write-offs |  | (231) |  |  | 0 |  |  | 0 |  |  | 0 |
Balance, end of period |  | $ | 430 |  |  | $ | 2,167 |  |  | $ | 11,912 |  |  | $ | 1,311 |
|  | Nine months ended September 30, 2024
(in thousands) |  | Available-for-sale securities |  | Held-to-maturity securities |  | Other loans receivable |  | Agent loans
Balance, beginning of period |  | $ | 597 |  |  | $ | 0 |  |  | $ | 11,081 |  |  | $ | 957 |
Provision and recoveries |  | 401 |  |  | 2,167 |  |  | 831 |  |  | 354 |
Sales/collections and write-offs |  | (568) |  |  | 0 |  |  | 0 |  |  | 0 |
Balance, end of period |  | $ | 430 |  |  | $ | 2,167 |  |  | $ | 11,912 |  |  | $ | 1,311 |
|  | Three months ended September 30, 2023
(in thousands) |  | Available-for-sale securities |  | Held-to-maturity securities |  | Other loans receivable |  | Agent loans
Balance, beginning of period |  | $ | 370 |  |  | $ | — |  |  | $ | 3,736 |  |  | $ | 957 |
Provision and recoveries |  | 55 |  |  | — |  |  | 2 |  |  | 0 |
Sales/collections and write-offs |  | (72) |  |  | — |  |  | 0 |  |  | 0 |
Balance, end of period |  | $ | 353 |  |  | $ | — |  |  | $ | 3,738 |  |  | $ | 957 |
|  | Nine months ended September 30, 2023
(in thousands) |  | Available-for-sale securities |  | Held-to-maturity securities |  | Other loans receivable |  | Agent loans
Balance, beginning of period |  | $ | 249 |  |  | $ | — |  |  | $ | 3,775 |  |  | $ | 957 |
Provision and recoveries |  | 278 |  |  | — |  |  | 61 |  |  | 0 |
Sales/collections and write-offs |  | (174) |  |  | — |  |  | (98) |  |  | 0 |
Balance, end of period |  | $ | 353 |  |  | $ | — |  |  | $ | 3,738 |  |  | $ | 957 |
Net investment income Investment income (loss), net of expenses, was generated from the following portfolios:
|  | Three months ended September 30, |  | Nine months ended September 30, |
(in thousands) |  | 2024 |  | 2023 |  | 2024 |  | 2023 |
Available-for-sale securities |  | $ | 12,891 |  |  | $ | 11,037 |  |  | $ | 36,611 |  |  | $ | 31,404 |  |
Equity securities |  | 1,119 |  |  | 1,161 |  |  | 3,536 |  |  | 3,260 |  |
Limited partnerships (1) |  | (127) |  |  | (13) |  |  | 134 |  |  | (10,725) |  |
Cash equivalents and other |  | 4,010 |  |  | 2,687 |  |  | 10,347 |  |  | 6,714 |  |
Total investment income |  | 17,893 |  |  | 14,872 |  |  | 50,628 |  |  | 30,653 |  |
Less: investment expenses |  | 571 |  |  | 230 |  |  | 1,393 |  |  | 293 |  |
Net investment income |  | $ | 17,322 |  |  | $ | 14,642 |  |  | $ | 49,235 |  |  | $ | 30,360 |  |
(1)Limited partnership (losses) income include both realized gains (losses) and unrealized valuation changes. Our limited partnership investments are included in the line item "Other assets" in the Statements of Financial Position. We have made no new significant limited partnership commitments since 2006, and the balance of limited partnership investments is expected to decline over time as additional distributions are received. Net realized and unrealized investment gains (losses) Realized and unrealized gains (losses) on investments were as follows:
|  | Three months ended September 30, |  | Nine months ended September 30, |
(in thousands) |  | 2024 |  | 2023 |  | 2024 |  | 2023 |
Available-for-sale securities: |  |  |  |  |  |  |  |  |
Gross realized gains |  | $ | 1,457 |  |  | $ | 213 |  |  | $ | 2,144 |  |  | $ | 519 |  |
Gross realized losses |  | (1,315) |  |  | (2,693) |  |  | (4,639) |  |  | (6,714) |  |
Net realized gains (losses) on available-for-sale securities |  | 142 |  |  | (2,480) |  |  | (2,495) |  |  | (6,195) |  |
Equity securities |  | 2,782 |  |  | 244 |  |  | 5,477 |  |  | (3,060) |  |
Miscellaneous |  | 1 |  |  | 9 |  |  | 1 |  |  | 9 |  |
Net realized and unrealized investment gains (losses) |  | $ | 2,925 |  |  | $ | (2,227) |  |  | $ | 2,983 |  |  | $ | (9,246) |  |
The portion of net unrealized gains (losses) recognized during the reporting period related to equity securities held at the reporting date is calculated as follows:
|  | Three months ended September 30, |  | Nine months ended September 30, |
(in thousands) |  | 2024 |  | 2023 |  | 2024 |  | 2023 |
Equity securities: |  |  |  |  |  |  |  |  |
Net gains (losses) recognized during the period |  | $ | 2,782 |  |  | $ | 244 |  |  | $ | 5,477 |  |  | $ | (3,060) |  |
Less: net gains (losses) recognized on securities sold |  | 146 |  |  | 91 |  |  | 883 |  |  | (2,636) |  |
Net unrealized gains (losses) recognized on securities held at reporting date |  | $ | 2,636 |  |  | $ | 153 |  |  | $ | 4,594 |  |  | $ | (424) |  |
Net impairment losses recognized in earnings Impairments on investments were as follows:
|  | Three months ended September 30, |  | Nine months ended September 30, |
(in thousands) |  | 2024 |  | 2023 |  | 2024 |  | 2023 |
Available-for-sale securities: |  |  |  |  |  |  |  |  |
Intent to sell |  | $ | (1) |  |  | $ | (58) |  |  | $ | (299) |  |  | $ | (1,639) |  |
Credit impaired |  | (158) |  |  | (55) |  |  | (401) |  |  | (278) |  |
Total available-for-sale securities |  | (159) |  |  | (113) |  |  | (700) |  |  | (1,917) |  |
Expected credit losses: |  |  |  |  |  |  |  |  |
Held-to-maturity securities |  | 0 |  |  | — |  |  | (2,167) |  |  | — |  |
Agent loans |  | (354) |  |  | 0 |  |  | (354) |  |  | 0 |  |
Other loans receivable |  | (185) |  |  | 0 |  |  | (542) |  |  | 0 |  |
Net impairment losses recognized in earnings |  | $ | (698) |  |  | $ | (113) |  |  | $ | (3,763) |  |  | $ | (1,917) |  |
Securities lending transactions As of September 30, 2024, the fair value of loaned securities, comprised of corporate debt securities, was $8.1 million and the related collateral received was $8.4 million. We received cash collateral of $7.9 million, which was reinvested in cash equivalents and is included with "Cash and cash equivalents" in our Statement of Financial Position. We also received $0.5 million of non-cash collateral that we are not permitted to sell or repledge, and there are no securities lending transactions that extend beyond one year from the reporting date. If we have to return cash collateral on short notice, we may have difficulty selling investments in a timely manner, be forced to sell them for less than we otherwise would have been able to realize, or both. In addition, in the event of such forced sale, for securities in an unrealized loss position, realized losses would be incurred on securities sold and impairments would be incurred, if there is a need to sell securities prior to recovery, which may negatively impact our financial condition.

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