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Investments | 9 Months Ended
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Sep. 30, 2020
Investments Debt And Equity Securities [Abstract] |
Investments | Note 5 – Investments a) Available-for-Sale Fixed-Maturity Securities The Company holds investments in fixed-maturity securities that are classified as available-for-sale. At September 30, 2020 and December 31, 2019, the cost or amortized cost, allowance for credit loss, gross unrealized gains and losses, and estimated fair value of the Company’s available-for-sale securities by security type were as follows:
|  | Cost or Amortized |  |  | Allowance for Credit |  |  | Gross Unrealized |  |  | Gross Unrealized |  |  | Estimated Fair |
|  | Cost |  |  | Loss |  |  | Gain |  |  | Loss |  |  | Value |
As of September 30, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury and U.S. government agencies |  | $ | 11,629 |  |  | $ | — |  |  | $ | 253 |  |  | $ | — |  |  | $ | 11,882 |
Corporate bonds |  |  | 66,898 |  |  |  | (564 | ) |  |  | 1,619 |  |  |  | (128 | ) |  |  | 67,825 |
State, municipalities, and political subdivisions |  |  | 5,818 |  |  |  | — |  |  |  | 90 |  |  |  | — |  |  |  | 5,908 |
Exchange-traded debt |  |  | 6,786 |  |  |  | (32 | ) |  |  | 342 |  |  |  | (1 | ) |  |  | 7,095 |
Redeemable preferred stock |  |  | 35 |  |  |  | — |  |  |  | — |  |  |  | (2 | ) |  |  | 33 |
Total |  | $ | 91,166 |  |  | $ | (596 | ) |  | $ | 2,304 |  |  | $ | (131 | ) |  | $ | 92,743 |
As of December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury and U.S. government agencies |  | $ | 26,220 |  |  | $ | — |  |  | $ | 78 |  |  | $ | (3 | ) |  | $ | 26,295 |
Corporate bonds |  |  | 157,155 |  |  |  | — |  |  |  | 2,212 |  |  |  | (3 | ) |  |  | 159,364 |
State, municipalities, and political subdivisions |  |  | 7,763 |  |  |  | — |  |  |  | 149 |  |  |  | — |  |  |  | 7,912 |
Exchange-traded debt |  |  | 8,698 |  |  |  | — |  |  |  | 462 |  |  |  | (15 | ) |  |  | 9,145 |
Redeemable preferred stock |  |  | 118 |  |  |  | — |  |  |  | 5 |  |  |  | — |  |  |  | 123 |
Total |  | $ | 199,954 |  |  | $ | — |  |  | $ | 2,906 |  |  | $ | (21 | ) |  | $ | 202,839 |
Expected maturities will differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without penalties. The scheduled contractual maturities of fixed-maturity securities as of September 30, 2020 and December 31, 2019 are as follows:
|  | Amortized |  |  | Estimated |
|  | Cost |  |  | Fair Value |
As of September 30, 2020 |  |  |  |  |  |  |  |
Due in one year or less |  | $ | 34,594 |  |  | $ | 34,814 |
Due after one year through five years |  |  | 48,555 |  |  |  | 49,329 |
Due after five years through ten years |  |  | 3,109 |  |  |  | 3,410 |
Due after ten years |  |  | 4,908 |  |  |  | 5,190 |
|  | $ | 91,166 |  |  | $ | 92,743 |
|  | Amortized |  |  | Estimated |
|  | Cost |  |  | Fair Value |
As of December 31, 2019 |  |  |  |  |  |  |  |
Due in one year or less |  | $ | 63,135 |  |  | $ | 63,429 |
Due after one year through five years |  |  | 125,833 |  |  |  | 127,660 |
Due after five years through ten years |  |  | 6,896 |  |  |  | 7,350 |
Due after ten years |  |  | 4,090 |  |  |  | 4,400 |
|  | $ | 199,954 |  |  | $ | 202,839 |
Sales of Available-for-Sale Fixed-Maturity Securities Proceeds received, and the gross realized gains and losses from sales of available-for-sale securities, for the three and nine months ended September 30, 2020 and 2019 were as follows:
|  |  |  |  |  | Gross Realized |  |  | Gross Realized |
|  | Proceeds |  |  | Gains |  |  | Losses |
Three months ended September 30, 2020 |  | $ | 1,098 |  |  | $ | 13 |  |  | $ | (34 | )
Three months ended September 30, 2019 |  | $ | 2,240 |  |  | $ | 27 |  |  | $ | (1 | )
Nine months ended September 30, 2020 |  | $ | 79,284 |  |  | $ | 1,743 |  |  | $ | (610 | )
Nine months ended September 30, 2019 |  | $ | 5,225 |  |  | $ | 61 |  |  | $ | (2 | )
Gross Unrealized Losses for Available-for-Sale Fixed-Maturity Securities Securities with gross unrealized loss positions at September 30, 2020 and December 31, 2019, aggregated by investment category and length of time the individual securities have been in a continuous loss position, are as follows:
|  | Less Than Twelve Months |  |  | Twelve Months or Longer |  |  | Total |
|  | Gross |  |  | Estimated |  |  | Gross |  |  | Estimated |  |  | Gross |  |  | Estimated |
|  | Unrealized |  |  | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |  |  | Fair |
As of September 30, 2020 |  | Loss |  |  | Value |  |  | Loss |  |  | Value |  |  | Loss |  |  | Value |
Corporate bonds |  | $ | (128 | ) |  | $ | 4,759 |  |  | $ | — |  |  | $ | — |  |  | $ | (128 | ) |  | $ | 4,759 |
Exchange-traded debt |  |  | (1 | ) |  |  | 252 |  |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | 252 |
Redeemable preferred stock |  |  | (2 | ) |  |  | 33 |  |  |  | — |  |  |  | — |  |  |  | (2 | ) |  |  | 33 |
Total |  | $ | (131 | ) |  | $ | 5,044 |  |  | $ | — |  |  | $ | — |  |  | $ | (131 | ) |  | $ | 5,044 |
At September 30, 2020, there were 13 securities in an unrealized loss position. Of these securities, none had been in an unrealized loss position for 12 months or longer.
|  | Less Than Twelve Months |  |  | Twelve Months or Longer |  |  | Total |
|  | Gross |  |  | Estimated |  |  | Gross |  |  | Estimated |  |  | Gross |  |  | Estimated |
|  | Unrealized |  |  | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |  |  | Fair |
As of December 31, 2019 |  | Loss |  |  | Value |  |  | Loss |  |  | Value |  |  | Loss |  |  | Value |
U.S. Treasury and U.S. government agencies |  | $ | (3 | ) |  | $ | 2,292 |  |  | $ | — |  |  | $ | — |  |  | $ | (3 | ) |  | $ | 2,292 |
Corporate bonds |  |  | (3 | ) |  |  | 4,597 |  |  |  | — |  |  |  | — |  |  |  | (3 | ) |  |  | 4,597 |
Exchange-traded debt |  |  | (15 | ) |  |  | 345 |  |  |  | — |  |  |  | — |  |  |  | (15 | ) |  |  | 345 |
Total |  | $ | (21 | ) |  | $ | 7,234 |  |  | $ | — |  |  | $ | — |  |  | $ | (21 | ) |  | $ | 7,234 |
At December 31, 2019, there were eight securities in an unrealized loss position. Of these securities, none had been in an unrealized loss position for 12 months or longer. Allowance for Credit Losses of Available-for-Sale Fixed-Maturity Securities The Company regularly reviews its individual investment securities for credit impairment. The Company considers various factors in determining whether each individual security is impaired, including-
| • | the financial condition and near-term prospects of the issuer, including any specific events that may affect its operations or earnings;
| • | the extent to which the market value of the security has been below its cost or amortized cost;
| • | general market conditions and industry or sector specific factors and other qualitative factors;
| • | nonpayment by the issuer of its contractually obligated interest and principal payments; and
| • | the Company’s intent and ability to hold the investment for a period of time sufficient to allow for the recovery of costs.
The table below summarized the activity in the allowance for credit losses of available-for-sale securities for the three and nine months ended on September 30, 2020:
|  | 2020 |
Balance at January 1 |  | $ | — |
Credit loss expense |  |  | 439 |
Balance at March 31 |  | $ | 439 |
Credit loss expense |  |  | 87 |
Balance at June 30 |  | $ | 526 |
Credit loss expense |  |  | 70 |
Balance at September 30 |  | $ | 596 |
b) Equity Securities The Company holds investments in equity securities measured at fair values which are readily determinable. At September 30, 2020 and December 31, 2019, the cost, gross unrealized gains and losses, and estimated fair value of the Company’s equity securities were as follows:
|  |  |  |  |  | Gross Unrealized |  |  | Gross Unrealized |  |  | Estimated Fair |
|  | Cost |  |  | Gain |  |  | Loss |  |  | Value |
September 30, 2020 |  | $ | 39,861 |  |  | $ | 3,903 |  |  | $ | (1,062 | ) |  | $ | 42,702 |
December 31, 2019 |  | $ | 31,863 |  |  | $ | 3,652 |  |  | $ | (230 | ) |  | $ | 35,285 |
The table below presents the portion of unrealized gains and losses in the Company’s consolidated statement of income for the periods related to equity securities still held.
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Net gains (losses) recognized |  | $ | 1,521 |  |  | $ | 586 |  |  | $ | (2,363 | ) |  | $ | 6,616 |
Exclude: Net realized gains (losses) recognized for securities sold |  |  | 181 |  |  |  | (56 | ) |  |  | (1,782 | ) |  |  | (645 | )
Net unrealized gains (losses) recognized |  | $ | 1,340 |  |  | $ | 642 |  |  | $ | (581 | ) |  | $ | 7,261 |
Sales of Equity Securities Proceeds received, and the gross realized gains and losses from sales of equity securities, for the three and nine months ended September 30, 2020 and 2019 were as follows:
|  |  |  |  |  | Gross Realized |  |  | Gross Realized |
|  | Proceeds |  |  | Gains |  |  | Losses |
Three months ended September 30, 2020 |  | $ | 4,930 |  |  | $ | 244 |  |  | $ | (63 | )
Three months ended September 30, 2019 |  | $ | 1,504 |  |  | $ | 43 |  |  | $ | (99 | )
Nine months ended September 30, 2020 |  | $ | 17,385 |  |  | $ | 1,213 |  |  | $ | (2,995 | )
Nine months ended September 30, 2019 |  | $ | 34,345 |  |  | $ | 2,230 |  |  | $ | (2,875 | )
c) Limited Partnership Investments The Company has interests in limited partnerships that are not registered or readily tradeable on a securities exchange. These partnerships are private equity funds managed by general partners who make decisions with regard to financial policies and operations. As such, the Company is not the primary beneficiary and does not consolidate these partnerships. The following table provides information related to the Company’s investments in limited partnerships:
|  | September 30, 2020 |  |  | December 31, 2019 |
|  | Carrying |  |  | Unfunded |  |  |  |  |  |  | Carrying |  |  | Unfunded |  |  |  |  |
Investment Strategy |  | Value |  |  | Balance |  |  | (%)(a) |  |  | Value |  |  | Balance |  |  | (%)(a) |
Primarily in senior secured loans and, to a limited extent, in other debt and equity securities of private U.S. lower-middle-market companies. (b)(c)(e) |  | $ | 8,879 |  |  | $ | 2,085 |  |  |  | 15.37 |  |  | $ | 9,659 |  |  | $ | 2,085 |  |  |  | 15.37 |
Value creation through active distressed debt investing primarily in bank loans, public and private corporate bonds, asset-backed securities, and equity securities received in connection with debt restructuring. (b)(d)(e) |  |  | 5,633 |  |  |  | — |  |  |  | 1.76 |  |  |  | 5,985 |  |  |  | — |  |  |  | 1.76 |
High returns and long-term capital appreciation through investments in the power, utility and energy industries, and in the infrastructure sector. (b)(f)(g) |  |  | 6,640 |  |  |  | 1,401 |  |  |  | 0.18 |  |  |  | 9,188 |  |  |  | 1,391 |  |  |  | 0.18 |
Value-oriented investments in less liquid and mispriced senior and junior debts of private equity-backed companies. (b)(h)(i) |  |  | 4,355 |  |  |  | 406 |  |  |  | 0.47 |  |  |  | 1,602 |  |  |  | 3,106 |  |  |  | 0.47 |
Value-oriented investments in mature real estate private equity funds and portfolio globally. (b)(j) |  |  | 1,990 |  |  |  | 8,286 |  |  |  | 2.24 |  |  |  | 1,912 |  |  |  | 8,548 |  |  |  | 2.24 |
Total |  | $ | 27,497 |  |  | $ | 12,178 |  |  |  |  |  |  | $ | 28,346 |  |  | $ | 15,130 |  |  |  |  |
| (a) | Represents the Company’s percentage investment in the fund at each balance sheet date.
| (b) | Except under certain circumstances, withdrawals from the funds or any assignments are not permitted. Distributions, except income from late admission of a new limited partner, will be received when underlying investments of the funds are liquidated.
| (c) | Expected to have a ten-year term. Although the capital commitment period has expired, there are still follow-on investments and pending commitments that require additional fundings.
| (d) | Expected to have a three-year term from June 30, 2018. Although the capital commitment period has ended, the general partner could still request an additional funding of approximately $843 under certain circumstances.
| (e) | At the fund manager’s discretion, the term of the fund may be extended for up to two additional one-year periods.
| (f) | Expected to have a ten-year term. The capital commitment period has expired but the general partner may request additional funding for follow-on investment.
| (g) | With the consent of a supermajority of partners, the term of the fund may be extended for up to three additional one-year periods.
| (h) | Expected to have a six-year term from the commencement date, which can be extended for up to two additional one-year periods with the consent of either the advisory committee or a majority of limited partners.
| (i) | The capital commitment was extended and is now expected to expire on December 1, 2020.
| (j) | Expected to have an eight-year term from November 27, 2019.
The following is the summary of aggregated unaudited financial information of limited partnerships included in the investment strategy table above, which in certain cases is presented on a three-month lag due to the unavailability of information at the Company’s respective balance sheet dates. The financial statements of these limited partnerships are audited annually.
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Operating results: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total income |  | $ | 259,635 |  |  | $ | (100,043 | ) |  | $ | (1,421,381 | ) |  | $ | 147,858 |
Total expenses |  |  | (26,637 | ) |  |  | (27,212 | ) |  |  | (107,157 | ) |  |  | (108,385 | )
Net (loss) income |  | $ | 232,998 |  |  | $ | (127,255 | ) |  | $ | (1,528,538 | ) |  | $ | 39,473 |
|  | September 30, |  |  | December 31, |
|  | 2020 |  |  | 2019 |
Balance Sheet: |  |  |  |  |  |  |  |
Total assets |  | $ | 5,409,112 |  |  | $ | 6,850,913 |
Total liabilities |  | $ | 638,784 |  |  | $ | 549,562 |
For the three and nine months ended September 30, 2020, the Company recognized net investment income of $689 and net investment loss of $2,058, respectively, for these investments. During the three and nine months ended September 30, 2020, the Company received total cash distributions of $850 and $1,742, respectively, including returns on investment of $72 and $650, respectively. For the three and nine months ended September 30, 2019, the Company recognized net investment income of $476 and $1,308, respectively. During the three and nine months ended September 30, 2019, the Company received total cash distributions of $724 and $4,810, respectively. Cash distributions representing return on investment were $31 and $3,647 for the three and nine months ended September 30, 2019, respectively. At September 30, 2020 and December 31, 2019, the Company’s net cumulative contributed capital to the partnerships at each respective balance sheet date totaled $28,976 and $27,117, respectively, and the Company’s maximum exposure to loss aggregated $27,497 and $28,346, respectively. d) Investment in Unconsolidated Joint Venture Melbourne FMA, LLC, a wholly owned subsidiary, currently has an equity investment in FMKT Mel JV, a Florida limited liability company treated as a joint venture under U.S. GAAP. At September 30, 2020 and December 31, 2019, the Company’s maximum exposure to loss relating to the variable interest entity was $716 and $762, respectively, representing the carrying value of the investment. There were no cash distributions during the nine months ended September 30, 2020 and 2019. At September 30, 2020 and December 31, 2019, there was no undistributed income from this equity method investment. The following tables provide FMJV’s summarized unaudited financial results and the unaudited financial positions:
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Operating results: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total revenues and gain |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 2 |
Total expenses |  |  | (19 | ) |  |  | (18 | ) |  |  | (51 | ) |  |  | (80 | )
Net loss |  | $ | (19 | ) |  | $ | (18 | ) |  | $ | (51 | ) |  | $ | (78 | )
The Company’s share of net loss* |  | $ | (18 | ) |  | $ | (17 | ) |  | $ | (46 | ) |  | $ | (71 | )
| * | Included in net investment income in the Company’s consolidated statements of income.
|  | September 30, |  |  | December 31, |
|  | 2020 |  |  | 2019 |
Balance Sheet: |  |  |  |  |  |  |  |
Property and equipment, net |  | $ | 714 |  |  | $ | 741 |
Cash |  |  | 90 |  |  |  | 102 |
Other |  |  | 4 |  |  |  | 4 |
Total assets |  | $ | 808 |  |  | $ | 847 |
Other liabilities |  | $ | 12 |  |  | $ | — |
Members’ capital |  |  | 796 |  |  |  | 847 |
Total liabilities and members’ capital |  | $ | 808 |  |  | $ | 847 |
Investment in unconsolidated joint venture, at equity** |  | $ | 716 |  |  | $ | 762 |
| ** | Includes the 90% share of FMKT Mel JV’s operating results.
e) Assets Held for Sale On April 9, 2020, Greenleaf Capital, LLC decided to offer for sale its investment property in Riverview, Florida. The proceeds from the sale are expected to exceed the property’s carrying value of $4,519 and, accordingly, no impairment loss was recognized on the classification of this property as held for sale. f) Real Estate Investments Real estate investments consist of the following as of September 30, 2020 and December 31, 2019.
|  | September 30, |  |  | December 31, |
|  | 2020 |  |  | 2019 |
Land |  | $ | 36,239 |  |  | $ | 39,511 |
Land improvements |  |  | 11,422 |  |  |  | 11,907 |
Buildings |  |  | 23,006 |  |  |  | 24,086 |
Tenant and leasehold improvements |  |  | 1,263 |  |  |  | 1,487 |
Other |  |  | 6,442 |  |  |  | 3,489 |
Total, at cost |  |  | 78,372 |  |  |  | 80,480 |
Less: accumulated depreciation and amortization |  |  | (7,806 | ) |  |  | (6,717 | )
Real estate investments |  | $ | 70,566 |  |  | $ | 73,763 |
In July 2020, a portion of undeveloped land with a carrying value of $443 was acquired by the Florida Department of Transportation (“FDOT”) as part of the agreement described in Note 9 – “Property and Equipment, Net.” Depreciation and amortization expense related to real estate investments was $431 and $379 for the three months ended September 30, 2020 and 2019, respectively, and $1,318 and $1,133 for the nine months ended September 30, 2020 and 2019, respectively. During the second quarter of 2020, the Company classified the investment property as described earlier to assets held for sale. g) Net Investment Income (Loss) Net investment income (loss), by source, is summarized as follows:
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Available-for-sale fixed-maturity securities |  | $ | 771 |  |  | $ | 1,637 |  |  | $ | 3,529 |  |  | $ | 4,794 |
Equity securities |  |  | 336 |  |  |  | 305 |  |  |  | 970 |  |  |  | 979 |
Investment expense |  |  | (125 | ) |  |  | (114 | ) |  |  | (367 | ) |  |  | (349 | )
Limited partnership investments |  |  | 689 |  |  |  | 476 |  |  |  | (2,058 | ) |  |  | 1,308 |
Real estate investments |  |  | (34 | ) |  |  | (28 | ) |  |  | (299 | ) |  |  | 173 |
Loss from unconsolidated joint venture |  |  | (18 | ) |  |  | (17 | ) |  |  | (46 | ) |  |  | (71 | )
Cash and cash equivalents |  |  | 212 |  |  |  | 1,354 |  |  |  | 1,513 |  |  |  | 3,908 |
Short-term investments |  |  | 1 |  |  |  | 8 |  |  |  | 2 |  |  |  | 383 |
Net investment income |  | $ | 1,832 |  |  | $ | 3,621 |  |  | $ | 3,244 |  |  | $ | 11,125 |

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- Definition The entire disclosure for investment. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 321 -URI http://asc.fasb.org/topic&trid=75115024 Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -URI http://asc.fasb.org/topic&trid=2196928 Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 325 -URI http://asc.fasb.org/topic&trid=2197064 Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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