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Investments | 3 Months Ended
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Mar. 31, 2020
Investments Debt And Equity Securities [Abstract] |
Investments | Note 4. Investments The gross unrecognized gains and losses on, and the amortized cost, allowance for credit losses, and fair value of, those investments classified as held-to-maturity at March 31, 2020 are summarized as follows:
|  | Amortized Cost |  |  | Gross Unrecognized Gains |  |  | Gross Unrecognized Losses |  |  | Allowance for Credit Losses |  |  | Fair Value |
|  | (in thousands) |
States and political subdivisions |  | $ | 483,340 |  |  | $ | 21,875 |  |  | $ | (145 | ) |  | $ | (50 | ) |  | $ | 505,020 |
Corporate bonds |  |  | 100,969 |  |  |  | 1,200 |  |  |  | (790 | ) |  |  | (215 | ) |  |  | 101,164 |
U.S. agency-based mortgage-backed securities |  |  | 10,352 |  |  |  | 720 |  |  |  | — |  |  |  | — |  |  |  | 11,072 |
U.S. Treasury securities and obligations of U.S. government agencies |  |  | 13,721 |  |  |  | 513 |  |  |  | — |  |  |  | — |  |  |  | 14,234 |
Asset-backed securities |  |  | 208 |  |  |  | — |  |  |  | — |  |  |  | (10 | ) |  |  | 198 |
Totals |  | $ | 608,590 |  |  | $ | 24,308 |  |  | $ | (935 | ) |  | $ | (275 | ) |  | $ | 631,688 |
The gross unrealized gains and losses on, and the amortized cost, allowance for credit losses, and fair value of, those investments classified as available-for-sale at March 31, 2020 are summarized as follows:
|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |  |  | Allowance for Credit Losses |
|  | (in thousands) |
States and political subdivisions |  | $ | 225,122 |  |  | $ | 12,798 |  |  | $ | (6 | ) |  | $ | 237,914 |  |  | $ | — |
Corporate bonds |  |  | 111,249 |  |  |  | 2,887 |  |  |  | (323 | ) |  |  | 113,813 |  |  |  | — |
U.S. agency-based mortgage-backed securities |  |  | 33,400 |  |  |  | 813 |  |  |  | — |  |  |  | 34,213 |  |  |  | — |
U.S. Treasury securities and obligations of U.S. government agencies |  |  | 31,900 |  |  |  | 1,196 |  |  |  | — |  |  |  | 33,096 |  |  |  | — |
Totals |  | $ | 401,671 |  |  | $ | 17,694 |  |  | $ | (329 | ) |  | $ | 419,036 |  |  | $ | — |
The gross unrealized gains and losses on, and the cost of equity securities at March 31, 2020 are summarized as follows:
|  | Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
|  | (in thousands) |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Domestic common stock |  | $ | 33,227 |  |  | $ | — |  |  | $ | (5,317 | ) |  | $ | 27,910 |
Total equity securities |  | $ | 33,227 |  |  | $ | — |  |  | $ | (5,317 | ) |  | $ | 27,910 |
The gross unrealized gains and losses on, and the amortized cost and fair value of, those investments classified as held-to-maturity at December 31, 2019 are summarized as follows:
|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
|  | (in thousands) |
States and political subdivisions |  | $ | 466,270 |  |  | $ | 19,570 |  |  | $ | (193 | ) |  | $ | 485,647 |
Corporate bonds |  |  | 109,241 |  |  |  | 1,684 |  |  |  | — |  |  |  | 110,925 |
U.S. agency-based mortgage-backed securities |  |  | 10,967 |  |  |  | 544 |  |  |  | — |  |  |  | 11,511 |
U.S. Treasury securities and obligations of U.S. government agencies |  |  | 12,723 |  |  |  | 330 |  |  |  | (12 | ) |  |  | 13,041 |
Asset-backed securities |  |  | 220 |  |  |  | — |  |  |  | (1 | ) |  |  | 219 |
Totals |  | $ | 599,421 |  |  | $ | 22,128 |  |  | $ | (206 | ) |  | $ | 621,343 |
The gross unrealized gains and losses on, and the amortized cost and fair value of, those investments classified as available-for-sale at December 31, 2019 are summarized as follows:
|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
|  | (in thousands) |
States and political subdivisions |  | $ | 225,895 |  |  | $ | 11,906 |  |  | $ | (26 | ) |  | $ | 237,775 |
Corporate bonds |  |  | 130,453 |  |  |  | 3,326 |  |  |  | (1 | ) |  |  | 133,778 |
U.S. agency-based mortgage-backed securities |  |  | 29,499 |  |  |  | 64 |  |  |  | (96 | ) |  |  | 29,467 |
U.S. Treasury securities and obligations of U.S. government agencies |  |  | 39,851 |  |  |  | 317 |  |  |  | (42 | ) |  |  | 40,126 |
Totals |  | $ | 425,698 |  |  | $ | 15,613 |  |  | $ | (165 | ) |  | $ | 441,146 |
The gross unrealized gains and losses on, and the cost of equity securities at December 31, 2019 are summarized as follows:
|  | Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
|  | (in thousands) |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Domestic common stock |  | $ | 24,457 |  |  | $ | 3,446 |  |  | $ | — |  |  | $ | 27,903 |
Total equity securities |  | $ | 24,457 |  |  | $ | 3,446 |  |  | $ | — |  |  | $ | 27,903 |
A summary of the carrying amounts and fair value of investments in fixed maturity securities, classified as held-to-maturity by contractual maturity, is as follows:
|  | March 31, 2020 |  |  | December 31, 2019 |
|  | Carrying Amount |  |  | Fair Value |  |  | Carrying Amount |  |  | Fair Value |
|  | (in thousands) |
Maturity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Within one year |  | $ | 84,032 |  |  | $ | 84,737 |  |  | $ | 49,967 |  |  | $ | 50,348 |
After one year through five years |  |  | 184,810 |  |  |  | 188,832 |  |  |  | 198,025 |  |  |  | 202,109 |
After five years through ten years |  |  | 91,537 |  |  |  | 94,545 |  |  |  | 110,460 |  |  |  | 113,877 |
After ten years |  |  | 237,386 |  |  |  | 252,304 |  |  |  | 229,782 |  |  |  | 243,279 |
U.S. agency-based mortgage-backed securities |  |  | 10,352 |  |  |  | 11,072 |  |  |  | 10,967 |  |  |  | 11,511 |
Asset-backed securities |  |  | 198 |  |  |  | 198 |  |  |  | 220 |  |  |  | 219 |
Totals |  | $ | 608,315 |  |  | $ | 631,688 |  |  | $ | 599,421 |  |  | $ | 621,343 |
A summary of the amortized cost and fair value of investments in fixed maturity securities, classified as available-for-sale by contractual maturity, is as follows:
|  | March 31, 2020 |  |  | December 31, 2019 |
|  | Amortized Cost |  |  | Fair Value |  |  | Amortized Cost |  |  | Fair Value |
|  | (in thousands) |
Maturity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Within one year |  | $ | 45,964 |  |  | $ | 46,148 |  |  | $ | 27,160 |  |  | $ | 27,194 |
After one year through five years |  |  | 117,341 |  |  |  | 120,232 |  |  |  | 144,142 |  |  |  | 146,469 |
After five years through ten years |  |  | 40,164 |  |  |  | 42,920 |  |  |  | 47,175 |  |  |  | 49,419 |
After ten years |  |  | 164,802 |  |  |  | 175,523 |  |  |  | 177,722 |  |  |  | 188,597 |
U.S. agency-based mortgage-backed securities |  |  | 33,400 |  |  |  | 34,213 |  |  |  | 29,499 |  |  |  | 29,467 |
Totals |  | $ | 401,671 |  |  | $ | 419,036 |  |  | $ | 425,698 |  |  | $ | 441,146 |
The following table summarizes the fair value and gross unrealized losses on securities classified as available-for-sale, aggregated by major investment category and length of time that the individual securities have been in a continuous unrealized loss position as of March 31, 2020:
|  | Less Than 12 Months |  |  | 12 Months or Greater |  |  | Total |
|  | Fair Value of Investments with Unrealized Losses |  |  | Gross Unrealized Losses |  |  | Fair Value of Investments with Unrealized Losses |  |  | Gross Unrealized Losses |  |  | Fair Value of Investments with Unrealized Losses |  |  | Gross Unrealized Losses |
|  | (in thousands) |
March 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available-for-Sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed maturity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions |  | $ | 6,260 |  |  | $ | 6 |  |  | $ | — |  |  | $ | — |  |  | $ | 6,260 |  |  | $ | 6 |
Corporate bonds |  |  | 23,585 |  |  |  | 323 |  |  |  | — |  |  |  | — |  |  |  | 23,585 |  |  |  | 323 |
U.S. agency-based mortgage-backed securities |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
U.S. Treasury securities and obligations of U.S. government agencies |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total available-for-sale securities |  | $ | 29,845 |  |  | $ | 329 |  |  | $ | — |  |  | $ | — |  |  | $ | 29,845 |  |  | $ | 329 |
At March 31, 2020, we held 20 individual fixed maturity securities classified as available-for-sale that were in an unrealized loss position, of which no individual fixed maturity security classified as available-for-sale was in a continuous unrealized loss position for longer than 12 months. The following table summarizes the fair value and gross unrealized losses on securities, aggregated by major investment category and length of time that the individual securities have been in a continuous unrealized loss position as of December 31, 2019:
|  | Less Than 12 Months |  |  | 12 Months or Greater |  |  | Total |
|  | Fair Value of Investments with Unrealized Losses |  |  | Gross Unrealized Losses |  |  | Fair Value of Investments with Unrealized Losses |  |  | Gross Unrealized Losses |  |  | Fair Value of Investments with Unrealized Losses |  |  | Gross Unrealized Losses |
|  | (in thousands) |
December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Held-to-Maturity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed maturity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions |  | $ | 21,074 |  |  | $ | 193 |  |  | $ | — |  |  | $ | — |  |  | $ | 21,074 |  |  | $ | 193 |
U.S. Treasury securities and obligations of U.S. government agencies |  |  | — |  |  |  | — |  |  |  | 3,243 |  |  |  | 12 |  |  |  | 3,243 |  |  |  | 12 |
Asset-backed securities |  |  | — |  |  |  | — |  |  |  | 68 |  |  |  | 1 |  |  |  | 68 |  |  |  | 1 |
Total held-to-maturity securities |  |  | 21,074 |  |  |  | 193 |  |  |  | 3,311 |  |  |  | 13 |  |  |  | 24,385 |  |  |  | 206 |
Available-for-Sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed maturity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions |  | $ | 4,140 |  |  | $ | 26 |  |  | $ | — |  |  | $ | — |  |  | $ | 4,140 |  |  | $ | 26 |
Corporate bonds |  |  | 6,426 |  |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | 6,426 |  |  |  | 1 |
U.S. agency-based mortgage-backed securities |  |  | 13,007 |  |  |  | 95 |  |  |  | 1,152 |  |  |  | 1 |  |  |  | 14,159 |  |  |  | 96 |
U.S. Treasury securities and obligations of U.S. government agencies |  |  | — |  |  |  | — |  |  |  | 17,068 |  |  |  | 42 |  |  |  | 17,068 |  |  |  | 42 |
Total available-for-sale securities |  |  | 23,573 |  |  |  | 122 |  |  |  | 18,220 |  |  |  | 43 |  |  |  | 41,793 |  |  |  | 165 |
Total |  | $ | 44,647 |  |  | $ | 315 |  |  | $ | 21,531 |  |  | $ | 56 |  |  | $ | 66,178 |  |  | $ | 371 |
The following table illustrates the changes in the allowance for credit losses by major security type of the investments classified as held-to-maturity for the period ended March 31, 2020.
|  | States and Political Subdivisions |  |  | Corporate Bonds |  |  | U.S. Agency- Based Mortgage- Backed Securities |  |  | U.S. Treasury Securities and Obligations of U.S. Government Agencies |  |  | Asset- Backed Securities |  |  | Totals |
|  | (in thousands) |
Balance at January 1, 2020 |  | $ | 45 |  |  | $ | 245 |  |  | $ | — |  |  | $ | — |  |  | $ | 11 |  |  | $ | 301 |
Provision for credit loss expense (benefit) |  |  | 5 |  |  |  | (30 | ) |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | (26 | )
Allowance for securities purchased with credit deterioration |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Securities charged off |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Recoveries |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Balance at March 31, 2020 |  | $ | 50 |  |  | $ | 215 |  |  | $ | — |  |  | $ | — |  |  | $ | 10 |  |  | $ | 275 |
The Company has established an allowance for credit losses on 419 held-to-maturity securities totaling $275 thousand. The majority of those securities were corporate bonds and states and political subdivisions at 48 and 368, respectively. The Company has no allowance for credit losses on investments classified as available-for-sale for the period ended March 31, 2020. The credit rating used for held-to-maturity fixed income securities is the rating for each security as published by Moody’s, S&P, and Fitch to determine the probability of default. If there are two ratings, the lower rating is used. If there are three ratings, the median rating is used. If there is one rating, that rating is used. For corporate fixed income securities the probability of default (given a rating) comes from Moody’s annual study of corporate bond defaults published each February. The maximum maturity using the default rate is 20 years (any maturity greater than 20 years will use the 20-year rate). For municipal fixed income securities the probability of default (given a rating) comes from Moody’s annual study of municipal bond defaults published each July/August. For municipal fixed income securities the probability of default (given a rating) comes from Moody’s annual study of municipal bond defaults published each July/August. The calculation of the credit loss allowance takes the amortized cost of the fixed income security and assumes default and recovery based on the average recovery rates from the Moody’s default studies. The amortized cost of the security, minus the amount recovered, is the estimated full amount the Company could lose in a default scenario. Then this amount is multiplied by the probability of default to determine the allowance for credit loss. The lower the security is rated, the higher likelihood of default, and therefore a higher allowance for credit loss. The longer to the maturity date of a security, the higher the default risk. The table below presents the amortized cost of held-to-maturity securities aggregated by credit quality indicator as of March 31, 2020.
|  | States and Political Subdivisions |  |  | Corporate Bonds |  |  | U.S. Agency- Based Mortgage- Backed Securities |  |  | U.S. Treasury Securities and Obligations of U.S. Government Agencies |  |  | Asset-Backed Securities |  |  | Totals |
|  | Amortized cost |
|  | (in thousands) |
AAA/AA/A ratings |  | $ | 480,900 |  |  | $ | 39,849 |  |  | $ | 10,352 |  |  | $ | 13,721 |  |  | $ | 143 |  |  | $ | 544,965 |
Baa/BBB ratings |  |  | 2,440 |  |  |  | 61,120 |  |  |  | — |  |  |  | — |  |  |  | 18 |  |  |  | 63,578 |
B ratings |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 47 |  |  |  | 47 |
Total |  | $ | 483,340 |  |  | $ | 100,969 |  |  | $ | 10,352 |  |  | $ | 13,721 |  |  | $ | 208 |  |  | $ | 608,590 |
Net realized gains in the three months ended March 31, 2020 were $1.0 million. Net realized gains in the three months ended March 31, 2019 were immaterial. During the first quarter of 2020, we recognized through income $8.8 million of net unrealized losses on equity securities held as of March 31, 2020. During the first quarter of 2019, we recognized through income $2.2 million of net unrealized gains on equity securities held as of March 31, 2019. Investment income is recognized as it is earned. The discount or premium on fixed maturity securities is amortized using the “constant yield” method. Anticipated prepayments, where applicable, are considered when determining the amortization of premiums or discounts. Realized investment gains and losses are determined using the specific identification method.

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- Definition The entire disclosure for investments in certain debt and equity securities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -URI http://asc.fasb.org/subtopic&trid=2209399 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -URI http://asc.fasb.org/subtopic&trid=2324412 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -URI http://asc.fasb.org/topic&trid=2196928 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 940 -SubTopic 320 -URI http://asc.fasb.org/subtopic&trid=2176304 + Details
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