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Investments | 9 Months Ended
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Sep. 30, 2024
Investments, Debt and Equity Securities [Abstract] |
Investments | 3 — Investments During the second quarter of 2024, the Company diversified its investment portfolio, purchasing fixed maturity securities and, to a much lesser extent, equity securities, with the fixed maturity securities classified as available-for-sale. During the third quarter of 2024, in conjunction with the acquisition of Drivers Edge, the Company acquired additional fixed maturity securities, classified as available-for-sale. Refer to Note 8 — Acquisition for additional information related to the acquisition of Drivers Edge. The Company also holds fixed maturity securities consisting of Canadian Sovereign, Provincial, and Municipal bonds. Prior to the second quarter of 2024, these investments were classified as held-to-maturity because the Company had the intent and ability to hold the investments to maturity. However, in the second quarter of 2024, these investments were reclassified as available-for-sale because management now intends to opportunistically sell bonds from this portfolio in connection with the diversification of the Company's investment portfolio. As a result of this reclassification, the Company recognized an unrealized loss of $0.2 million in the Condensed Consolidated Statements of Comprehensive Income in the second quarter of 2024. As of September 30, 2024, all fixed maturity securities had an investment grade rating from at least one nationally recognized rating organization. Available-for-sale investments The following table summarizes the Company's available-for-sale investments as of September 30, 2024:
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  |  |  | Estimated Fair Value
Fixed maturity securities: | in thousands
Corporate | $ | 209,096 |  |  | $ | 4,895 |  |  | $ | (27) |  |  |  |  | $ | 213,964 |
U.S. Treasury | 108,530 |  |  | 1,054 |  |  | (23) |  |  |  |  | 109,561 |
States and municipalities | 38,211 |  |  | 1,718 |  |  | — |  |  |  |  | 39,929 |
Foreign | 18,632 |  |  | 56 |  |  | (54) |  |  |  |  | 18,634 |
Asset-backed securities | 25,126 |  |  | 650 |  |  | (9) |  |  |  |  | 25,767 |
Mortgage-backed securities | 111,585 |  |  | 2,804 |  |  | (32) |  |  |  |  | 114,357 |
Total fixed maturity securities | $ | 511,180 |  |  | $ | 11,177 |  |  | $ | (145) |  |  |  |  | $ | 522,212 |
On a quarterly basis, fixed maturity securities with unrealized losses are reviewed to determine whether the decline in fair value is attributable to a material credit loss. As of September 30, 2024, no credit loss allowance was recorded and all unrealized losses on available-for-sale fixed maturity securities were in such position for less than one year. It is management's intent to hold these investments to recovery, or maturity, if necessary, to recover the decline in valuation as prices accrete to par. The following table summarizes the contractual maturities of the Company's available-for-sale investments as of September 30, 2024:
| Amortized Cost |  | Estimated Fair Value
| in thousands
Due in one year or less | $ | 50,130 |  |  | $ | 50,247 |
Due after one year through five years | 239,695 |  |  | 244,116 |
Due after five years through ten years | 76,631 |  |  | 79,357 |
Due after ten years | 8,013 |  |  | 8,368 |
Mortgage-backed and asset-backed securities | 136,711 |  |  | 140,124 |
Total fixed maturity securities | $ | 511,180 |  |  | $ | 522,212 |
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. Held-to-maturity investments The following table summarizes the fair value and related carrying amount of the Company's held-to-maturity investments as of December 31, 2023:
|  |  |  |  | Carrying Amount |  | Estimated Fair Value
|  |  |  |  | in thousands
Short-term |  |  |  |  | $ | 10,946 |  |  | $ | 10,864 |
Long-term |  |  |  |  | 5,526 |  |  | 5,398 |
Total |  |  |  |  | $ | 16,472 |  |  | $ | 16,262 |
Net investment income The following table presents the components of net investment income for the three and nine months ended September 30, 2024 and 2023:
| Three months ended September 30, |  | Nine months ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Interest income: | in thousands
Cash and cash equivalents and restricted cash and cash equivalents | $ | 4,514 |  |  | $ | 7,084 |  |  | $ | 21,154 |  |  | $ | 17,990 |
Fixed maturity securities | 5,127 |  |  | 121 |  |  | 8,921 |  |  | 344 |
Total interest income | 9,641 |  |  | 7,205 |  |  | 30,075 |  |  | 18,334 |
Dividends on equity securities | 34 |  |  | — |  |  | 58 |  |  | — |
Gross investment income | 9,675 |  |  | 7,205 |  |  | 30,133 |  |  | 18,334 |
Investment expenses | (91) |  |  | — |  |  | (213) |  |  | — |
Net investment income | $ | 9,584 |  |  | $ | 7,205 |  |  | $ | 29,920 |  |  | $ | 18,334 |
Net realized and unrealized gains (losses) on investments The table below presents the components of pre-tax net investment gains (losses) included in Net Income in the Condensed Consolidated Statements of Operations and the pre-tax change in net unrealized gains (losses) included in the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2024. The gross amounts of realized investment gains and losses on fixed maturity securities were not material to the Condensed Consolidated Financial Statements and are presented on a net basis in the table below.
| Three months ended |  | Nine months ended
| September 30, 2024
Fixed maturity securities: | in thousands
Net realized investment gains (losses) | $ | 700 |  |  | $ | 731 |
Equity securities: |  |  |
Total change in fair value of equity securities | 574 |  |  | 1,052 |
Net investment gains (losses) | $ | 1,274 |  |  | $ | 1,783 |
Change in net unrealized gains (losses) on available-for-sale investments included in Other comprehensive income (loss): |  |  |
Fixed maturity securities | $ | 10,081 |  |  | $ | 11,032 |

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