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Investments | 9 Months Ended
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Sep. 30, 2021
Investments Debt And Equity Securities [Abstract] |
Investments | Note 4. Investments The amortized cost, allowance for credit losses, carrying amount, gross unrecognized gains and losses, and the fair value of those investments classified as held-to-maturity at September 30, 2021 are summarized as follows:
|  | Amortized Cost |  |  | Allowance for Credit Losses |  |  | Carrying Amount |  |  | Gross Unrecognized Gains |  |  | Gross Unrecognized Losses |  |  | Fair Value |
|  | (in thousands) |
States and political subdivisions |  | $ | 469,445 |  |  | $ | (45 | ) |  | $ | 469,400 |  |  | $ | 25,849 |  |  | $ | (158 | ) |  | $ | 495,091 |
Corporate bonds |  |  | 51,974 |  |  |  | (123 | ) |  |  | 51,851 |  |  |  | 1,892 |  |  |  | (4 | ) |  |  | 53,739 |
U.S. agency-based mortgage-backed securities |  |  | 5,060 |  |  |  | — |  |  |  | 5,060 |  |  |  | 474 |  |  |  | — |  |  |  | 5,534 |
U.S. Treasury securities and obligations of U.S. government agencies |  |  | 14,801 |  |  |  | — |  |  |  | 14,801 |  |  |  | 167 |  |  |  | (4 | ) |  |  | 14,964 |
Asset-backed securities |  |  | 116 |  |  |  | (4 | ) |  |  | 112 |  |  |  | 5 |  |  |  | — |  |  |  | 117 |
Totals |  | $ | 541,396 |  |  | $ | (172 | ) |  | $ | 541,224 |  |  | $ | 28,387 |  |  | $ | (166 | ) |  | $ | 569,445 |
The amortized cost, gross unrealized gains and losses, fair value, and the allowance for credit losses of those investments classified as available-for-sale at September 30, 2021 are summarized as follows:
|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |  |  | Allowance for Credit Losses |
|  | (in thousands) |
States and political subdivisions |  | $ | 209,354 |  |  | $ | 15,010 |  |  | $ | (105 | ) |  | $ | 224,259 |  |  | $ | — |
Corporate bonds |  |  | 79,336 |  |  |  | 3,500 |  |  |  | (99 | ) |  |  | 82,737 |  |  |  | — |
U.S. agency-based mortgage-backed securities |  |  | 9,487 |  |  |  | 237 |  |  |  | (9 | ) |  |  | 9,715 |  |  |  | — |
U.S. Treasury securities and obligations of U.S. government agencies |  |  | 24,686 |  |  |  | 518 |  |  |  | (77 | ) |  |  | 25,127 |  |  |  | — |
Totals |  | $ | 322,863 |  |  | $ | 19,265 |  |  | $ | (290 | ) |  | $ | 341,838 |  |  | $ | — |
The cost, gross unrealized gains and losses, and the fair value of equity securities at September 30, 2021 are summarized as follows:
|  | Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
|  | (in thousands) |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Domestic common stock |  | $ | 40,674 |  |  | $ | 15,677 |  |  | $ | — |  |  | $ | 56,351 |
Total equity securities |  | $ | 40,674 |  |  | $ | 15,677 |  |  | $ | — |  |  | $ | 56,351 |
The amortized cost, allowance for credit losses, carrying amount, gross unrecognized gains and losses, and the fair value of those investments classified as held-to-maturity at December 31, 2020 are summarized as follows:
|  | Amortized Cost |  |  | Allowance for Credit Losses |  |  | Carrying Amount |  |  | Gross Unrecognized Gains |  |  | Gross Unrecognized Losses |  |  | Fair Value |
|  | (in thousands) |
States and political subdivisions |  | $ | 494,374 |  |  | $ | (42 | ) |  | $ | 494,332 |  |  | $ | 32,489 |  |  | $ | — |  |  | $ | 526,821 |
Corporate bonds |  |  | 69,981 |  |  |  | (225 | ) |  |  | 69,756 |  |  |  | 3,144 |  |  |  | — |  |  |  | 72,900 |
U.S. agency-based mortgage-backed securities |  |  | 7,261 |  |  |  | — |  |  |  | 7,261 |  |  |  | 645 |  |  |  | — |  |  |  | 7,906 |
U.S. Treasury securities and obligations of U.S. government agencies |  |  | 13,626 |  |  |  | — |  |  |  | 13,626 |  |  |  | 239 |  |  |  | — |  |  |  | 13,865 |
Asset-backed securities |  |  | 162 |  |  |  | (7 | ) |  |  | 155 |  |  |  | 7 |  |  |  | — |  |  |  | 162 |
Totals |  | $ | 585,404 |  |  | $ | (274 | ) |  | $ | 585,130 |  |  | $ | 36,524 |  |  | $ | — |  |  | $ | 621,654 |
The amortized cost, gross unrealized gains and losses, fair value, and the allowance for credit losses of those investments classified as available-for-sale at December 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 |  | $ | 256,492 |  |  | $ | 20,050 |  |  | $ | — |  |  | $ | 276,542 |  |  | $ | — |
Corporate bonds |  |  | 83,646 |  |  |  | 5,256 |  |  |  | (3 | ) |  |  | 88,899 |  |  |  | — |
U.S. agency-based mortgage-backed securities |  |  | 18,654 |  |  |  | 400 |  |  |  | (2 | ) |  |  | 19,052 |  |  |  | — |
U.S. Treasury securities and obligations of U.S. government agencies |  |  | 28,873 |  |  |  | 913 |  |  |  | — |  |  |  | 29,786 |  |  |  | — |
Totals |  | $ | 387,665 |  |  | $ | 26,619 |  |  | $ | (5 | ) |  | $ | 414,279 |  |  | $ | — |
The cost, gross unrealized gains and losses, and the fair value of equity securities at December 31, 2020 are summarized as follows:
|  | Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
|  | (in thousands) |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Domestic common stock |  | $ | 35,787 |  |  | $ | 7,650 |  |  | $ | — |  |  | $ | 43,437 |
Total equity securities |  | $ | 35,787 |  |  | $ | 7,650 |  |  | $ | — |  |  | $ | 43,437 |
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:
|  | September 30, 2021 |  |  | December 31, 2020 |
|  | Carrying Amount |  |  | Fair Value |  |  | Carrying Amount |  |  | Fair Value |
|  | (in thousands) |
Maturity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Within one year |  | $ | 57,626 |  |  | $ | 58,183 |  |  | $ | 54,316 |  |  | $ | 54,794 |
After one year through five years |  |  | 169,880 |  |  |  | 176,260 |  |  |  | 195,706 |  |  |  | 204,289 |
After five years through ten years |  |  | 105,046 |  |  |  | 110,513 |  |  |  | 107,347 |  |  |  | 113,643 |
After ten years |  |  | 203,500 |  |  |  | 218,838 |  |  |  | 220,345 |  |  |  | 240,860 |
U.S. agency-based mortgage-backed securities |  |  | 5,060 |  |  |  | 5,534 |  |  |  | 7,261 |  |  |  | 7,906 |
Asset-backed securities |  |  | 112 |  |  |  | 117 |  |  |  | 155 |  |  |  | 162 |
Totals |  | $ | 541,224 |  |  | $ | 569,445 |  |  | $ | 585,130 |  |  | $ | 621,654 |
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:
|  | September 30, 2021 |  |  | December 31, 2020 |
|  | Amortized Cost |  |  | Fair Value |  |  | Amortized Cost |  |  | Fair Value |
|  | (in thousands) |
Maturity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Within one year |  | $ | 32,152 |  |  | $ | 32,718 |  |  | $ | 69,177 |  |  | $ | 69,938 |
After one year through five years |  |  | 88,065 |  |  |  | 92,012 |  |  |  | 80,593 |  |  |  | 85,829 |
After five years through ten years |  |  | 56,405 |  |  |  | 58,625 |  |  |  | 53,835 |  |  |  | 57,829 |
After ten years |  |  | 136,754 |  |  |  | 148,768 |  |  |  | 165,406 |  |  |  | 181,631 |
U.S. agency-based mortgage-backed securities |  |  | 9,487 |  |  |  | 9,715 |  |  |  | 18,654 |  |  |  | 19,052 |
Totals |  | $ | 322,863 |  |  | $ | 341,838 |  |  | $ | 387,665 |  |  | $ | 414,279 |
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 September 30, 2021:
|  | 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) |
September 30, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available-for-Sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions |  | $ | 6,992 |  |  | $ | 105 |  |  | $ | — |  |  | $ | — |  |  | $ | 6,992 |  |  | $ | 105 |
Corporate bonds |  |  | 11,504 |  |  |  | 99 |  |  |  | — |  |  |  | — |  |  |  | 11,504 |  |  |  | 99 |
U.S. agency-based mortgage-backed securities |  |  | 1,337 |  |  |  | 9 |  |  |  | — |  |  |  | — |  |  |  | 1,337 |  |  |  | 9 |
U.S. Treasury securities and obligations of U.S. government agencies |  |  | 6,821 |  |  |  | 77 |  |  |  | — |  |  |  | — |  |  |  | 6,821 |  |  |  | 77 |
Total available-for-sale securities |  | $ | 26,654 |  |  | $ | 290 |  |  | $ | — |  |  | $ | — |  |  | $ | 26,654 |  |  | $ | 290 |
At September 30, 2021, we held 22 individual fixed maturity securities classified as available-for-sale that were in an unrealized loss position, of which none were in a continuous unrealized loss position for longer than 12 months. 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 December 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) |
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available-for-Sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds |  | $ | 2,515 |  |  | $ | 3 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,515 |  |  | $ | 3 |
U.S. agency-based mortgage-backed securities |  |  | 2,133 |  |  |  | 2 |  |  |  | — |  |  |  | — |  |  |  | 2,133 |  |  |  | 2 |
Total available-for-sale securities |  | $ | 4,648 |  |  | $ | 5 |  |  | $ | — |  |  | $ | — |  |  | $ | 4,648 |  |  | $ | 5 |
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 quarter ended September 30, 2021.
|  | 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 June 30, 2021 |  | $ | 41 |  |  | $ | 111 |  |  | $ | — |  |  | $ | — |  |  | $ | 5 |  |  | $ | 157 |
Provision for credit loss expense (benefit) |  |  | 4 |  |  |  | 12 |  |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | 15 |
Balance at September 30, 2021 |  | $ | 45 |  |  | $ | 123 |  |  | $ | — |  |  | $ | — |  |  | $ | 4 |  |  | $ | 172 |
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 nine months ended September 30, 2021.
|  | 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 December 31, 2020 |  | $ | 42 |  |  | $ | 225 |  |  | $ | — |  |  | $ | — |  |  | $ | 7 |  |  | $ | 274 |
Provision for credit loss expense (benefit) |  |  | 3 |  |  |  | (102 | ) |  |  | — |  |  |  | — |  |  |  | (3 | ) |  |  | (102 | )
Balance at September 30, 2021 |  | $ | 45 |  |  | $ | 123 |  |  | $ | — |  |  | $ | — |  |  | $ | 4 |  |  | $ | 172 |
The Company has established an allowance for credit losses on 378 held-to-maturity securities totaling $0.2 million. The majority of those securities were issued by states and political subdivisions (355 securities) and corporate bonds (20 securities). The Company has no allowance for credit losses on investments classified as available-for-sale for the period ended September 30, 2021. 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 (given a rating), the probability of default 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 (given a rating), the probability of default 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 September 30, 2021.
|  | 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 |  | $ | 466,450 |  |  | $ | 22,647 |  |  | $ | 5,060 |  |  | $ | 14,801 |  |  | $ | 79 |  |  | $ | 509,037 |
Baa/BBB ratings |  |  | 2,995 |  |  |  | 29,327 |  |  |  | — |  |  |  | — |  |  |  | 16 |  |  |  | 32,338 |
B ratings |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 21 |  |  |  | 21 |
Total |  | $ | 469,445 |  |  | $ | 51,974 |  |  | $ | 5,060 |  |  | $ | 14,801 |  |  | $ | 116 |  |  | $ | 541,396 |
Net realized losses in the quarter ended September 30, 2021 were immaterial. Net realized gains in the quarter ended September 30, 2020 were $0.3 million resulting from the call of fixed maturity securities. Net realized gains in the nine months ended September 30, 2021 were $1.5 million resulting primarily from the sale of fixed maturity securities classified as available-for-sale. Net realized gains in the nine months ended September 30, 2020 were $1.5 million resulting primarily from the sale of fixed maturity securities classified as available-for-sale and from called fixed maturity securities. During the third quarter of 2021, we recognized through income $0.8 million of net unrealized losses on equity securities held as of September 30, 2021. During the third quarter of 2020, we recognized through income $0.8 million of net unrealized gains on equity securities held as of September 30, 2020. During the nine months ended September 30, 2021, we recognized through income $8.0 million of net unrealized gains on equity securities held as of September 30, 2021. During the nine months ended September 30, 2020, we recognized through income $2.3 million of net unrealized losses on equity securities held as of September 30, 2020. 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 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher SEC -Name Regulation S-K (SK) -Number 229 -Section 1403 -Paragraph (b) + Details
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