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Note 2 - Investments

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

2. Investments

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

						*Gross*				*Gross*				*Allowance*
		*Amortized*				*Unrealized*				*Unrealized*				*for*				*Fair*
September 30, 2023		*Cost or Cost*				*Gains*				*Losses*				*Credit Losses*				*Value*
		(in thousands)
Fixed maturities:
U.S. Governments		$	44,783			$	—			$	(2,093	)		$	—			$	42,690
States, territories, and possessions			5,842				—				(629	)			—				5,213
Political subdivisions			4,433				—				(585	)			—				3,848
Special revenue excluding mortgage/asset-backed securities			33,236				—				(5,368	)			—				27,868
Corporate and other			305,998				175				(28,336	)			(904	)			276,933
Mortgage/asset-backed securities			253,287				316				(18,248	)			—				235,355
Total available-for-sale investments		$	647,579			$	491			$	(55,259	)		$	(904	)		$	591,907

						*Gross*				*Gross*				*Allowance*
		*Amortized*				*Unrealized*				*Unrealized*				*for*				*Fair*
December 31, 2022		*Cost or Cost*				*Gains*				*Losses*				*Credit 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
Corporate and other			278,164				79				(23,912	)			(236	)			254,095
Mortgage/asset-backed securities			184,578				251				(14,862	)			—				169,967
Total available-for-sale investments		$	561,580			$	407			$	(46,687	)		$	(236	)		$	515,064

Security holdings in an unrealized loss position

As of September 30, 2023, the Company held 578 fixed maturity securities in an unrealized loss position with a total estimated fair value of $549.4 million and total gross unrealized losses of $55.3 million. 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.

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 September 30, 2023 and December 31, 2022, are as follows:

		*Less Than 12 Months*								*More Than 12 Months*								*Total*
		*Fair*				*Unrealized*				*Fair*				*Unrealized*				*Fair*				*Unrealized*
September 30, 2023		*Value*				*Losses*				*Value*				*Losses*				*Value*				*Losses*
		(in thousands)
Fixed maturity securities:
U.S. Governments		$	2,338			$	(12	)		$	40,352			$	(2,081	)		$	42,690			$	(2,093	)
States, territories, and possessions			2,041				(30	)			3,172				(599	)			5,213				(629	)
Political subdivisions			—				—				3,848				(585	)			3,848				(585	)
Special revenue excluding mortgage/asset-backed securities			2,617				(148	)			25,251				(5,220	)			27,868				(5,368	)
Corporate and other			66,836				(3,296	)			197,097				(25,040	)			263,933				(28,336	)
Mortgage/asset-backed securities			88,543				(2,414	)			117,318				(15,834	)			205,861				(18,248	)
Total available-for-sale investments		$	162,375			$	(5,900	)		$	387,038			$	(49,359	)		$	549,413			$	(55,259	)

		*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	)
Corporate and other			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 available-for-sale investments		$	384,693			$	(31,558	)		$	99,986			$	(15,365	)		$	484,679			$	(46,923	)

The Company reviews all securities with unrealized losses on a quarterly basis to assess whether the decline in the securities fair value necessitates the recognition of an allowance for credit losses. The Company considers numerous factors in its review as described in Footnote 1 of the Notes to the Consolidated Financial Statements in the 2022 Annual Report on Form 10-K.

The Company has recorded an allowance for credit losses for two investment securities. Based on the Company’s review as of September 30, 2023, for the remainder of 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 September 30, 2023, by contractual maturity, are shown below.

		*Amortized*				*Fair*
		*Cost*				*Value*
		(in thousands)
Due within one year		$	42,127			$	40,783
Due after one year through five years			183,123				170,789
Due after five years through ten years			131,751				114,833
Due after ten years			37,291				30,147
Mortgage and asset-backed securities			253,287				235,355
		$	647,579			$	591,907

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

Net investment income summary

Net investment income is summarized as follows:

		*Three Months Ended*								*Nine Months Ended*
		*September 30,*								*September 30,*
		*2023*				*2022*				*2023*				*2022*
		(in thousands)								(in thousands)
Interest income		$	5,952			$	3,688			$	16,468			$	9,328
Dividend income			211				178				602				518
Investment expense			(134	)			(122	)			(380	)			(384	)
Net investment income		$	6,029			$	3,744			$	16,690			$	9,462

Net realized and unrealized investment gains and losses

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

		*Three Months Ended*								*Nine Months Ended*
		*September 30,*								*September 30,*
		*2023*				*2022*				*2023*				*2022*
		(in thousands)								(in thousands)
Realized gains:
Gains on sales of fixed maturity securities		$	—			$	2			$	65			$	10
Gains on sales of equity securities			—				—				—				—
Total realized gains			—				2				65				10
Realized losses:
Losses on sales of fixed maturity securities			—				(195	)			(32	)			(309	)
Losses on sales of equity securities			—				—				—				—
Total realized losses			—				(195	)			(32	)			(309	)
Net realized investment gains			—				(193	)			33				(299	)
Change in allowance for credit losses			—				—				(667	)			—
Net unrealized (losses) gains on equity securities			(1,299	)			(2,163	)			608				(8,070	)
Net unrealized losses on equity method investment			(77	)			—				(77	)			—
Net realized and unrealized gains (losses) on investments		$	(1,376	)		$	(2,356	)		$	(103	)		$	(8,369	)

Realized gains and losses on disposition of investments are based on specific identification of the investments sold on the settlement date.

Proceeds from the sale of fixed maturity securities were insignificant for the three months ended September 30, 2023 and 2022, respectively.

Proceeds from the sale of fixed maturity securities were $9.8 million and $5.8 million for the nine months ended September 30, 2023 and 2022, 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 balance sheet. As of September 30, 2023 and December 31, 2022, the carrying value of securities on deposit with state regulatory authorities was $8.6 million and $8.5 million, respectively.