Investments

6 Months Ended

Jun. 30, 2019

Investments, Debt and Equity Securities [Abstract]

We have designated our investment portfolio as available-for-sale and report it at fair value. The related unrealized gains and losses are, after considering the related tax expense or benefit, recognized through comprehensive income and loss, and on an accumulated basis in shareholders' equity. Net realized investment gains and losses are reported in earnings based on specific identification of securities sold or other-than-temporarily impaired.

Fair Values and Gross Unrealized Gains and Losses on Investments



	Amortized Cost		Gross Unrealized					Fair Value
	Amortized Cost		Gains		Losses			Fair Value
As of June 30, 2019	(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies	$	48,193	$	688	$	(116	)	$	48,765
Municipal debt securities	91,650		1,497		(73		)	93,074
Corporate debt securities	634,188		18,569		(785		)	651,972
Asset-backed securities	168,251		3,216		(36		)	171,431
Total bonds	942,282		23,970		(1,010		)	965,242
Short-term investments	52,261		104		—			52,365
Total investments	$	994,543	$	24,074	$	(1,010	)	$	1,017,607



	Amortized Cost		Gross Unrealized					Fair Value
	Amortized Cost		Gains		Losses			Fair Value
As of December 31, 2018	(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies	$	48,171	$	35	$	(1,376	)	$	46,830
Municipal debt securities	92,014		206		(963		)	91,257
Corporate debt securities	554,079		847		(11,688		)	543,238
Asset-backed securities	171,990		792		(1,457		)	171,325
Total bonds	866,254		1,880		(15,484		)	852,650
Short-term investments	58,733		107		—			58,840
Total investments	$	924,987	$	1,987	$	(15,484	)	$	911,490

We did not own any mortgage-backed securities in our asset-backed securities portfolio at June 30, 2019 or December 31, 2018.

The following table presents a breakdown of the fair value of our corporate debt securities by issuer industry group as of June 30, 2019 and December 31, 2018:



	June 30, 2019		December 31, 2018
Financial	38	%	38	%
Consumer	27		27
Communications	10		12
Utilities	9		7
Industrial	8		7
Technology	6		6
Energy	1		2
Other	1		1
Total	100	%	100	%

As of June 30, 2019 and December 31, 2018, approximately $5.5 million and $5.3 million, respectively, of our cash and investments were held in the form of U.S. Treasury securities on deposit with various state insurance departments to satisfy regulatory requirements.

Scheduled Maturities

The amortized cost and fair values of available-for-sale securities as of June 30, 2019 and December 31, 2018, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Because most asset-backed securities provide for periodic payments throughout their lives, they are listed below in a separate category.



As of June 30, 2019	Amortized Cost		Fair Value
	(In Thousands)
Due in one year or less	$	99,314	$	99,375
Due after one through five years	412,820		420,131
Due after five through ten years	300,990		312,792
Due after ten years	13,168		13,878
Asset-backed securities	168,251		171,431
Total investments	$	994,543	$	1,017,607



As of December 31, 2018	Amortized Cost		Fair Value
	(In Thousands)
Due in one year or less	$	76,087	$	76,104
Due after one through five years	352,282		347,701
Due after five through ten years	318,728		310,633
Due after ten years	5,900		5,727
Asset-backed securities	171,990		171,325
Total investments	$	924,987	$	911,490

Aging of Unrealized Losses

As of June 30, 2019, the investment portfolio had gross unrealized losses of $1.0 million, of which $0.8 million had been in an unrealized loss position for a period of 12 months or greater. We did not consider these securities to be other-than-temporarily impaired as of June 30, 2019. We based our conclusion that these investments were not other-than-temporarily impaired as of June 30, 2019 on the following facts: (i) the unrealized losses were primarily caused by interest rate movements and market fluctuations in credit spreads since the purchase date; (ii) we do not intend to sell these investments; and (iii) we do not believe that it is more likely than not that we will be required to sell these investments before recovery of our amortized cost basis, which may not occur until maturity. For those securities in an unrealized loss position, the length of time the securities were in such a position is as follows:



	Less Than 12 Months						12 Months or Greater						Total
	# of Securities	Fair Value		Unrealized Losses			# of Securities	Fair Value		Unrealized Losses			# of Securities	Fair Value		Unrealized Losses
As of June 30, 2019		(Dollars in Thousands)
U.S. Treasury securities and obligations of U.S. government agencies	—	$	—	$	—		5	$	13,750	$	(116	)	5	$	13,750	$	(116	)
Municipal debt securities⁽¹⁾	1	2,000		—			10	15,025		(73		)	11	17,025		(73		)
Corporate debt securities	13	24,737		(199		)	33	51,099		(586		)	46	75,836		(785		)
Asset-backed securities	2	8,786		(33		)	6	1,953		(3		)	8	10,739		(36		)
Total	16	$	35,523	$	(232	)	54	$	81,827	$	(778	)	70	$	117,350	$	(1,010	)


⁽¹⁾	Includes securities with unrealized losses of less than 12 months which are not identifiable in the schedule due to rounding.



	Less Than 12 Months						12 Months or Greater						Total
	# of Securities	Fair Value		Unrealized Losses			# of Securities	Fair Value		Unrealized Losses			# of Securities	Fair Value		Unrealized Losses
As of December 31, 2018		(Dollars in Thousands)
U.S. Treasury securities and obligations of U.S. government agencies	—	$	—	$	—		19	$	41,817	$	(1,376	)	19	$	41,817	$	(1,376	)
Municipal debt securities	4	7,409		(11		)	31	58,658		(952		)	35	66,067		(963		)
Corporate debt securities	118	226,477		(3,952		)	126	221,675		(7,736		)	244	448,152		(11,688		)
Asset-backed securities	25	36,017		(1,136		)	22	33,988		(321		)	47	70,005		(1,457		)
Total	147	$	269,903	$	(5,099	)	198	$	356,138	$	(10,385	)	345	$	626,041	$	(15,484	)

Net Investment Income

The following table presents the components of net investment income:



	For the three months ended June 30,						For the six months ended June 30,
	2019			2018			2019			2018
	(In Thousands)
Investment income	$	7,741		$	5,937		$	15,237		$	10,719
Investment expenses	(112		)	(202		)	(225		)	(410		)
Net investment income	$	7,629		$	5,735		$	15,012		$	10,309

The following table presents the components of net realized investment losses:



	For the three months ended June 30,					For the six months ended June 30,
	2019			2018		2019			2018
	(In Thousands)
Gross realized investment gains	$	22		$	59	$	217		$	59
Gross realized investment losses	(135		)	—		(517		)	—
Net realized investment losses	$	(113	)	$	59	$	(300	)	$	59

Investment Securities - Other-than-Temporary Impairment (OTTI)

As of June 30, 2019, we held no other-than-temporarily impaired securities. During the six months ended June 30, 2019, we recognized a $0.4 million OTTI loss in earnings related to the planned sale of a security in a loss position that was disposed of in April 2019. We did not recognize any OTTI losses for the three months ended June 30, 2019 or the three and six months ended June 30, 2018. There were no credit losses recognized in earnings for which a portion of an OTTI loss was recognized in accumulated other comprehensive income (loss) for the three or six months ended June 30, 2019.