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Investments | 12 Months Ended
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Dec. 31, 2022
Investments, Debt and Equity Securities [Abstract] |
Investments | 2. Investments Short-term investments held at December 31, 2022 include $9.9 million of corporate bonds, $3.0 million of U.S. Treasury securities and obligations of U.S. government agencies, and $1.2 million of obligations of states and political subdivisions. Short-term investments held at December 31, 2021 include $55.8 million of corporate bonds and $1.6 million of obligations of states and political subdivisions. 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, 2022 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 |  | $ | 415,136 |  |  | $ | (40 | ) |  | $ | 415,096 |  |  | $ | 922 |  |  | $ | (20,074 | ) |  | $ | 395,944 |
Corporate bonds |  |  | 59,903 |  |  |  | (196 | ) |  |  | 59,707 |  |  |  | 1 |  |  |  | (3,857 | ) |  |  | 55,851 |
U.S. agency-based mortgage-backed securities |  |  | 3,696 |  |  |  | — |  |  |  | 3,696 |  |  |  | 33 |  |  |  | (153 | ) |  |  | 3,576 |
U.S. Treasury securities and obligations of U.S. government agencies |  |  | 13,123 |  |  |  | — |  |  |  | 13,123 |  |  |  | 25 |  |  |  | (442 | ) |  |  | 12,706 |
Asset-backed securities |  |  | 69 |  |  |  | (3 | ) |  |  | 66 |  |  |  | 2 |  |  |  | (1 | ) |  |  | 67 |
Totals |  | $ | 491,927 |  |  | $ | (239 | ) |  | $ | 491,688 |  |  | $ | 983 |  |  | $ | (24,527 | ) |  | $ | 468,144 |
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, 2022 are summarized as follows:
|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |  |  | Allowance for Credit Losses |
|  | (in thousands) |
States and political subdivisions |  | $ | 166,019 |  |  | $ | 463 |  |  | $ | (9,826 | ) |  | $ | 156,656 |  |  | $ | — |
Corporate bonds |  |  | 150,915 |  |  |  | 530 |  |  |  | (6,657 | ) |  |  | 144,788 |  |  |  | — |
U.S. agency-based mortgage-backed securities |  |  | 5,984 |  |  |  | — |  |  |  | (538 | ) |  |  | 5,446 |  |  |  | — |
U.S. Treasury securities and obligations of U.S. government agencies |  |  | 15,675 |  |  |  | 9 |  |  |  | (1,453 | ) |  |  | 14,231 |  |  |  | — |
Totals |  | $ | 338,593 |  |  | $ | 1,002 |  |  | $ | (18,474 | ) |  | $ | 321,121 |  |  | $ | — |
The cost, gross unrealized gains and losses, and the fair value of equity securities at December 31, 2022 are summarized as follows:
|  | Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
|  | (in thousands) |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |
Domestic common stock |  | $ | 50,185 |  |  | $ | 11,873 |  |  | $ | — |  |  | $ | 62,058 |
Total equity securities |  | $ | 50,185 |  |  | $ | 11,873 |  |  | $ | — |  |  | $ | 62,058 |
The amortized cost, allowance for credit losses, carrying amount, gross unrealized gains and losses, and the fair value of those investments classified as held-to-maturity at December 31, 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 |  | $ | 471,688 |  |  | $ | (48 | ) |  | $ | 471,640 |  |  | $ | 25,175 |  |  | $ | (263 | ) |  | $ | 496,552 |
Corporate bonds |  |  | 56,756 |  |  |  | (143 | ) |  |  | 56,613 |  |  |  | 1,344 |  |  |  | (114 | ) |  |  | 57,843 |
U.S. agency-based mortgage-backed securities |  |  | 4,623 |  |  |  | — |  |  |  | 4,623 |  |  |  | 377 |  |  |  | — |  |  |  | 5,000 |
U.S. Treasury securities and obligations of U.S. government agencies |  |  | 16,251 |  |  |  | — |  |  |  | 16,251 |  |  |  | 132 |  |  |  | (36 | ) |  |  | 16,347 |
Asset-backed securities |  |  | 108 |  |  |  | (4 | ) |  |  | 104 |  |  |  | 4 |  |  |  | — |  |  |  | 108 |
Totals |  | $ | 549,426 |  |  | $ | (195 | ) |  | $ | 549,231 |  |  | $ | 27,032 |  |  | $ | (413 | ) |  | $ | 575,850 |
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, 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 |  | $ | 202,008 |  |  | $ | 14,538 |  |  | $ | (240 | ) |  | $ | 216,306 |  |  | $ | — |
Corporate bonds |  |  | 93,947 |  |  |  | 2,751 |  |  |  | (272 | ) |  |  | 96,426 |  |  |  | — |
U.S. agency-based mortgage-backed securities |  |  | 7,944 |  |  |  | 158 |  |  |  | (13 | ) |  |  | 8,089 |  |  |  | — |
U.S. Treasury securities and obligations of U.S. government agencies |  |  | 20,698 |  |  |  | 382 |  |  |  | (132 | ) |  |  | 20,948 |  |  |  | — |
Totals |  | $ | 324,597 |  |  | $ | 17,829 |  |  | $ | (657 | ) |  | $ | 341,769 |  |  | $ | — |
The cost, gross unrealized gains and losses on, and fair value of equity securities at December 31, 2021 are summarized as follows:
|  | Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
|  | (in thousands) |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |
Domestic common stock |  | $ | 44,175 |  |  | $ | 19,965 |  |  | $ | — |  |  | $ | 64,140 |
Total equity securities |  | $ | 44,175 |  |  | $ | 19,965 |  |  | $ | — |  |  | $ | 64,140 |
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:
|  | December 31, 2022 |  |  | December 31, 2021 |
|  | Carrying Amount |  |  | Fair Value |  |  | Carrying Amount |  |  | Fair Value |
|  | (in thousands) |
Maturity: |  |  |  |  |  |  |  |  |  |  |  |
Within one year |  | $ | 41,878 |  |  | $ | 41,652 |  |  | $ | 70,859 |  |  | $ | 71,455 |
After one year through five years |  |  | 165,216 |  |  |  | 159,006 |  |  |  | 174,157 |  |  |  | 180,376 |
After five years through ten years |  |  | 121,739 |  |  |  | 112,665 |  |  |  | 100,543 |  |  |  | 104,851 |
After ten years |  |  | 159,093 |  |  |  | 151,178 |  |  |  | 198,945 |  |  |  | 214,060 |
U.S. agency-based mortgage-backed securities |  |  | 3,696 |  |  |  | 3,576 |  |  |  | 4,623 |  |  |  | 5,000 |
Asset-backed securities |  |  | 66 |  |  |  | 67 |  |  |  | 104 |  |  |  | 108 |
Totals |  | $ | 491,688 |  |  | $ | 468,144 |  |  | $ | 549,231 |  |  | $ | 575,850 |
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:
|  | December 31, 2022 |  |  | December 31, 2021 |
|  | Amortized Cost |  |  | Fair Value |  |  | Amortized Cost |  |  | Fair Value |
|  | (in thousands) |
Maturity: |  |  |  |  |  |  |  |  |  |  |  |
Within one year |  | $ | 28,290 |  |  | $ | 27,814 |  |  | $ | 30,925 |  |  | $ | 31,258 |
After one year through five years |  |  | 68,876 |  |  |  | 65,406 |  |  |  | 97,830 |  |  |  | 100,716 |
After five years through ten years |  |  | 102,296 |  |  |  | 95,366 |  |  |  | 58,050 |  |  |  | 60,137 |
After ten years |  |  | 133,147 |  |  |  | 127,089 |  |  |  | 129,848 |  |  |  | 141,569 |
U.S. agency-based mortgage-backed securities |  |  | 5,984 |  |  |  | 5,446 |  |  |  | 7,944 |  |  |  | 8,089 |
Totals |  | $ | 338,593 |  |  | $ | 321,121 |  |  | $ | 324,597 |  |  | $ | 341,769 |
Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations with or without call or prepayment penalties. At December 31, 2022, there were $24.0 million of held-to-maturity investments on deposit with regulatory agencies of states in which the Company does business. A summary of the Company’s realized gains and losses on sales, calls or redemptions of investments for 2022, 2021 and 2020 is as follows:
|  | Fixed Maturity Securities Available-for-Sale |  |  | Equity Securities |  |  | Other |  |  | Total |
|  | (in thousands) |
Year ended December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |
Proceeds from sales |  | $ | 42,505 |  |  | $ | 8,487 |  |  | $ | — |  |  | $ | 50,992 |
Gross realized investment gains |  | $ | 365 |  |  | $ | 3,350 |  |  | $ | — |  |  | $ | 3,715 |
Gross realized investment losses |  |  | (51 | ) |  |  | — |  |  |  | — |  |  |  | (51 | )
Net realized investment gains |  |  | 314 |  |  |  | 3,350 |  |  |  | — |  |  |  | 3,664 |
Other, including losses on calls and redemptions |  |  | (200 | ) |  |  | — |  |  |  | (24 | ) |  |  | (224 | )
Net realized gains (losses) on investments |  | $ | 114 |  |  | $ | 3,350 |  |  | $ | (24 | ) |  | $ | 3,440 |
Year ended December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |
Proceeds from sales |  | $ | 28,191 |  |  | $ | — |  |  | $ | 12,388 |  |  | $ | 40,579 |
Gross realized investment gains |  | $ | 1,751 |  |  | $ | — |  |  | $ | 3 |  |  | $ | 1,754 |
Gross realized investment losses |  |  | (21 | ) |  |  | — |  |  |  | — |  |  |  | (21 | )
Net realized investment gains |  |  | 1,730 |  |  |  | — |  |  |  | 3 |  |  |  | 1,733 |
Other, including losses on calls and redemptions |  |  | (6 | ) |  |  | — |  |  |  | (32 | ) |  |  | (38 | )
Net realized gains (losses) on investments |  | $ | 1,724 |  |  | $ | — |  |  | $ | (29 | ) |  | $ | 1,695 |
Year ended December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |
Proceeds from sales |  | $ | 25,436 |  |  | $ | — |  |  | $ | 46,959 |  |  | $ | 72,395 |
Gross realized investment gains |  | $ | 711 |  |  | $ | — |  |  | $ | 306 |  |  | $ | 1,017 |
Gross realized investment losses |  |  | (14 | ) |  |  | — |  |  |  | (4 | ) |  |  | (18 | )
Net realized investment gains |  |  | 697 |  |  |  | — |  |  |  | 302 |  |  |  | 999 |
Other, including gains (losses) on calls and redemptions |  |  | (43 | ) |  |  | — |  |  |  | 176 |  |  |  | 133 |
Net realized gains on investments |  | $ | 654 |  |  | $ | — |  |  | $ | 478 |  |  | $ | 1,132 |
Major categories of the Company’s net investment income are summarized as follows:
|  | Year Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | (in thousands) |
Gross investment income: |  |  |  |  |  |  |  |  |
Fixed maturity securities |  | $ | 24,399 |  |  | $ | 24,882 |  |  | $ | 28,414 |
Equity securities |  |  | 1,566 |  |  |  | 1,236 |  |  |  | 1,006 |
Short-term investments and cash and cash equivalents |  |  | 2,260 |  |  |  | 304 |  |  |  | 897 |
Total gross investment income |  |  | 28,225 |  |  |  | 26,422 |  |  |  | 30,317 |
Investment expenses |  |  | (1,002 | ) |  |  | (987 | ) |  |  | (953 | )
Net investment income |  | $ | 27,223 |  |  | $ | 25,435 |  |  | $ | 29,364 |
The following table summarizes the fair value and gross unrealized losses on fixed maturity 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:
|  | 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, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available-for-Sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions |  | $ | 87,522 |  |  | $ | 5,319 |  |  | $ | 24,980 |  |  | $ | 4,507 |  |  | $ | 112,502 |  |  | $ | 9,826 |
Corporate bonds |  |  | 98,590 |  |  |  | 4,549 |  |  |  | 30,011 |  |  |  | 2,108 |  |  |  | 128,601 |  |  |  | 6,657 |
U.S. agency-based mortgage-backed securities |  |  | 4,732 |  |  |  | 444 |  |  |  | 714 |  |  |  | 94 |  |  |  | 5,446 |  |  |  | 538 |
U.S. Treasury securities and obligations of U.S. government agencies |  |  | 5,589 |  |  |  | 313 |  |  |  | 7,719 |  |  |  | 1,140 |  |  |  | 13,308 |  |  |  | 1,453 |
Total available-for-sale securities |  | $ | 196,433 |  |  | $ | 10,625 |  |  | $ | 63,424 |  |  | $ | 7,849 |  |  | $ | 259,857 |  |  | $ | 18,474 |
December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available-for-Sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions |  | $ | 23,465 |  |  | $ | 240 |  |  | $ | — |  |  | $ | — |  |  | $ | 23,465 |  |  | $ | 240 |
Corporate bonds |  |  | 36,443 |  |  |  | 272 |  |  |  | — |  |  |  | — |  |  |  | 36,443 |  |  |  | 272 |
U.S. agency-based mortgage-backed securities |  |  | 1,146 |  |  |  | 13 |  |  |  | — |  |  |  | — |  |  |  | 1,146 |  |  |  | 13 |
U.S. Treasury securities and obligations of U.S. government agencies |  |  | 6,771 |  |  |  | 132 |  |  |  | — |  |  |  | — |  |  |  | 6,771 |  |  |  | 132 |
Total available-for-sale securities |  | $ | 67,825 |  |  | $ | 657 |  |  | $ | — |  |  | $ | — |  |  | $ | 67,825 |  |  | $ | 657 |
At December 31, 2022, the Company held 185 individual fixed maturity securities classified as available-for-sale that were in an unrealized loss position, of which 48 were in a continuous unrealized loss position for longer than 12 months. 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 year ended December 31, 2022.
|  | 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, 2021 |  | $ | 48 |  |  | $ | 143 |  |  | $ | — |  |  | $ | — |  |  | $ | 4 |  |  | $ | 195 |
Provision for credit loss expense (benefit) |  |  | (8 | ) |  |  | 53 |  |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | 44 |
Balance at December 31, 2022 |  | $ | 40 |  |  | $ | 196 |  |  | $ | — |  |  | $ | — |  |  | $ | 3 |  |  | $ | 239 |
The Company has established an allowance for credit losses on 464 held-to-maturity securities totaling $0.2 million as of December 31, 2022. The majority of those securities were issued by states and political subdivisions and corporate bonds at 439 and 22, respectively. The Company has no allowance for credit losses on investments classified as available-for-sale as of December 31, 2022. 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 plus any accrued interest, 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 December 31, 2022.
|  | 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 |  | $ | 412,166 |  |  | $ | 26,566 |  |  | $ | 3,696 |  |  | $ | 13,123 |  |  | $ | 49 |  |  | $ | 455,600 |
Baa/BBB ratings |  |  | 2,970 |  |  |  | 33,337 |  |  |  | — |  |  |  | — |  |  |  | 10 |  |  |  | 36,317 |
B ratings |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 10 |  |  |  | 10 |
Total |  | $ | 415,136 |  |  | $ | 59,903 |  |  | $ | 3,696 |  |  | $ | 13,123 |  |  | $ | 69 |  |  | $ | 491,927 |

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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 https://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 https://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 https://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 https://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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