Investments

9 Months Ended

Sep. 30, 2024

Investments, Debt and Equity Securities [Abstract]

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