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Investments

12 Months Ended

Dec. 31, 2022

Investments

3. Investments

The Company’s available-for-sale investments are summarized as follows:


					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
December 31, 2022		Cost or Cost			Gains			Losses			Value

		(in thousands)
Fixed maturities:
U.S. Governments		$	50,802		$	2		$	(2,253)		$	48,551
States, territories, and possessions			5,857			49			(552)			5,354
Political subdivisions			4,919			—			(621)			4,298
Special revenue excluding mortgage/asset-backed securities			37,260			26			(4,487)			32,799
Industrial and miscellaneous			278,164			79			(24,148)			254,095
Mortgage/asset-backed securities			184,578			251			(14,862)			169,967
Total available-for-sale investments		$	561,580		$	407		$	(46,923)		$	515,064


					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
December 31, 2021		Cost or Cost			Gains			Losses			Value

		(in thousands)
Fixed maturities:
U.S. Governments		$	16,713		$	347		$	(190)		$	16,870
States, territories, and possessions			3,789			288			(63)			4,014
Political subdivisions			6,295			107			(22)			6,380
Special revenue excluding mortgage/asset-backed securities			43,301			1,273			(76)			44,498
Industrial and miscellaneous			245,064			5,873			(1,891)			249,046
Mortgage/asset-backed securities			110,960			1,377			(463)			111,874
Total available-for-sale investments		$	426,122		$	9,265		$	(2,705)		$	432,682

Security holdings in an unrealized loss position

As of December 31, 2022, the Company held 543 fixed maturity securities in an unrealized loss position with a total estimated fair value of $484.7 million and total gross unrealized losses of $46.9 million. None of the fixed maturity securities with unrealized losses has ever missed, or been delinquent on, a scheduled principal or interest payment. As of December 31, 2021, the Company held 231 fixed maturity securities in an unrealized loss position with a total estimated fair value of $170.1 million and total gross unrealized losses of $2.7 million. None of the fixed maturity securities with unrealized losses has ever missed, or been delinquent on, a scheduled principal or interest payment.

The aggregate fair value and gross unrealized losses of the Company’s investments aggregated by investment category and the length of time these individual securities have been in a continuous unrealized loss position as of December 31, 2022 and 2021, are as follows:


		Less Than 12 Months						More Than 12 Months						Total
		Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
December 31, 2022		Value			Losses			Value			Losses			Value			Losses

		(in thousands)
Fixed maturity securities:
U.S. Governments		$	41,077		$	(1,523)		$	6,853		$	(730)		$	47,930		$	(2,253)
States, territories, and possessions			3,227			(552)			—			—			3,227			(552)
Political subdivisions			4,298			(621)			—			—			4,298			(621)
Special revenue excluding mortgage/asset-backed securities			25,091			(3,287)			5,080			(1,200)			30,171			(4,487)
Industrial and miscellaneous			192,185			(15,667)			55,605			(8,481)			247,790			(24,148)
Mortgage/asset-backed securities			118,815			(9,908)			32,448			(4,954)			151,263			(14,862)
Total		$	384,693		$	(31,558)		$	99,986		$	(15,365)		$	484,679		$	(46,923)


		Less Than 12 Months						More Than 12 Months						Total
		Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
December 31, 2021		Value			Losses			Value			Losses			Value			Losses

		(in thousands)
Fixed maturity securities:
U.S. Governments		$	5,968		$	(147)		$	1,457		$	(43)		$	7,425		$	(190)
States, territories, and possessions			1,444			(63)			—			—			1,444			(63)
Political subdivisions			1,815			(22)			—			—			1,815			(22)
Special revenue excluding mortgage/asset-backed securities			6,280			(76)			—			—			6,280			(76)
Industrial and miscellaneous			94,020			(1,468)			5,570			(423)			99,590			(1,891)
Mortgage/asset-backed securities			51,246			(412)			2,319			(51)			53,565			(463)
Total		$	160,773		$	(2,188)		$	9,346		$	(517)		$	170,119		$	(2,705)

The Company reviewed the above securities at each balance sheet date to consider whether it was necessary to recognize a credit loss related to any of these securities. An immaterial allowance for credit losses was recorded pertaining to one investment security as of December 31, 2022 and 2021. For the remaining securities, the Company determined that the fixed maturity securities’ unrealized losses were primarily the result of the interest rate environment and not the credit quality of the issuers. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before the recovery of their amortized cost basis.

Contractual maturities of available-for-sale fixed maturity securities

The amortized cost and fair value of fixed maturity securities at December 31, 2022, by contractual maturity, are shown below.


		Amortized			Fair
		Cost			Value

		(in thousands)
Due within one year		$	41,686		$	41,106
Due after one year through five years			182,785			170,399
Due after five years through ten years			126,990			112,822
Due after ten years			25,541			20,770
Mortgage and asset-backed securities			184,578			169,967
		$	561,580		$	515,064

Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations.

Change in unrealized gains (losses) of investments

The following table presents the change in available-for-sale gross unrealized gains or losses by investment type:


		Year Ended December 31,
		2022			2021			2020

		(in thousands)
Change in net unrealized gains (losses)
Fixed maturities		$	(53,076)		$	(10,148)		$	10,835
Net increase (decrease)		$	(53,076)		$	(10,148)		$	10,835

Net investment income summary

Net investment income is summarized as follows:


		Year Ended December 31,
		2022			2021			2020

		(in thousands)
Interest income		$	13,631		$	9,119		$	8,554
Dividend income			739			461			489
Investment management fees and expenses			(493)			(500)			(431)
Net investment income		$	13,877		$	9,080		$	8,612

Net realized and unrealized investment gains and losses

The following table presents net realized and unrealized investment gains and losses:


		Year Ended
		December 31,
		2022			2021			2020

			(in thousands)
Realized gains:
Gains on sales of fixed maturity securities		$	14		$	466		$	501
Gains on sales of equity securities			—			1,416			62
Total realized gains			14			1,882			563
Realized losses:
Losses on sales of fixed maturity securities			(2,340)			(1)			(46)
Losses on sales of equity securities			—			—			(68)
Total realized losses			(2,340)			(1)			(114)
Net realized investment gains (losses)			(2,326)			1,881			449
Net unrealized gains (losses) on equity securities			(5,203)			(604)			1,039
Net realized and unrealized gains (losses) on investments		$	(7,529)		$	1,277		$	1,488

Proceeds from the sale of fixed maturity securities were $19.7 million, $17.4 million and $39.8 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The Company places securities on statutory deposit with certain state agencies to retain the right to do business in those states. These securities are included in available-for-sale investments on the consolidated balance sheets. At December 31, 2022 and 2021, the carrying value of securities on deposit with state regulatory authorities was $8.5 million and $7.5 million, respectively.