Investments

12 Months Ended

Dec. 31, 2018

Investments, Debt and Equity Securities [Abstract]

INVESTMENTS

Securities Available for Sale

The following table provides the cost or amortized cost and fair value of debt and short-term securities available for sale as of the dates presented (in thousands):



	December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Debt Securities:
U.S. government obligations and agencies	$	67,435	$	241	$	(1,039	)	$	66,637
Corporate bonds	434,887		714		(6,736		)	428,865
Mortgage-backed and asset-backed securities	312,840		912		(4,155		)	309,597
Municipal bonds	3,405		—		(43		)	3,362
Redeemable preferred stock	12,560		55		(638		)	11,977
Total	$	831,127	$	1,922	$	(12,611	)	$	820,438



	December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Debt Securities:
U.S. government obligations and agencies	$	60,481	$	—	$	(877	)	$	59,604
Corporate bonds	228,336		476		(1,308		)	227,504
Mortgage-backed and asset-backed securities	221,956		19		(2,523		)	219,452
Municipal bonds	120,883		599		(1,187		)	120,295
Redeemable preferred stock	12,059		485		(65		)	12,479
Short-term investments	10,000		—		—			10,000
Total	$	653,715	$	1,579	$	(5,960	)	$	649,334

The following table provides the credit quality of available-for-sale debt securities with contractual maturities as of the dates presented (in thousands):



	December 31, 2018				December 31, 2017(1)
			% of Total				% of Total
Average Credit Ratings	Fair Value		Fair Value		Fair Value		Fair Value
AAA	$	388,672	47.4	%	$	317,313	48.9	%
AA	100,791		12.3	%	129,573		20.0	%
A	214,503		26.1	%	146,749		22.6	%
BBB	112,613		13.7	%	51,020		7.8	%
BB and Below	494		0.1	%	1,569		0.2	%
No Rating Available	3,365		0.4	%	3,110		0.5	%
Total	$	820,438	100.0	%	$	649,334	100.0	%


(1)	The credit ratings in the table above have been reclassified from the prior periods’ consolidated financial statements to conform to the current periods’ presentation.

The table above includes credit quality ratings by Standard and Poor’s Rating Services, Inc., Moody’s Investors Service,

Inc. and Fitch Ratings, Inc. The Company has presented the highest rating of the three rating agencies for each investment position.

The following table summarizes the cost or amortized cost and fair value of mortgage-backed and asset-backed securities as of the dates presented (in thousands):



	December 31, 2018				December 31, 2017
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Mortgage-backed securities:
Agency	$	139,418	$	136,291	$	118,014	$	116,014
Non-agency	61,689		61,933		17,676		17,488
Asset-backed securities:
Auto loan receivables	53,449		53,341		35,105		34,962
Credit card receivables	29,594		29,366		38,844		38,719
Other receivables	28,690		28,666		12,317		12,269
Total	$	312,840	$	309,597	$	221,956	$	219,452

The following table summarizes the fair value and gross unrealized losses on available-for-sale debt securities, aggregated by major investment category and length of time that individual securities have been in a continuous unrealized loss position as of the dates presented (in thousands):



	December 31, 2018
	Less Than 12 Months						12 Months or Longer
	Number of Issues	Fair Value		Unrealized Losses			Number of Issues	Fair Value		Unrealized Losses
Debt Securities:
U.S. government obligations and agencies	—	$	—	$	—		13	$	56,531	$	(1,039	)
Corporate bonds	228	210,152		(3,318		)	160	131,225		(3,418		)
Mortgage-backed and asset-backed securities	36	57,487		(196		)	103	148,436		(3,959		)
Municipal bonds	6	3,362		(43		)	—	—		—
Redeemable preferred stock	61	8,092		(506		)	5	1,034		(132		)
Total	331	$	279,093	$	(4,063	)	281	$	337,226	$	(8,548	)



	December 31, 2017
	Less Than 12 Months						12 Months or Longer
	Number of Issues	Fair Value		Unrealized Losses			Number of Issues	Fair Value		Unrealized Losses
Debt Securities:
U.S. government obligations and agencies	7	$	35,464	$	(301	)	9	$	24,140	$	(576	)
Corporate bonds	159	142,208		(792		)	39	29,796		(516		)
Mortgage-backed and asset-backed securities	83	137,481		(955		)	37	70,218		(1,568		)
Municipal bonds	36	28,265		(246		)	30	48,370		(941		)
Redeemable preferred stock	21	2,464		(65		)	—	—		—
Total	306	$	345,882	$	(2,359	)	115	$	172,524	$	(3,601	)

Evaluating Investments in Other Than Temporary Impairment (“OTTI”)

As of December 31, 2018, the Company held available-for-sale debt securities that were in an unrealized loss position as presented in the table above. For available-for-sale debt securities with significant declines in value, the Company performs quarterly fundamental credit analysis on a security-by-security basis, which includes consideration of credit quality and credit ratings, review of relevant industry analyst reports and other available market data. For available-for-sale debt securities, the Company considers whether it has the intent and ability to hold the available-for-sale debt securities for a period of time sufficient to recover its cost basis. Where the Company lacks the intent and ability to hold to recovery, or believes the recovery period is extended, the security’s decline in fair value is considered other than temporary and is recorded in earnings. Based on our analysis, our fixed income portfolio is of high quality and we believe that we will recover the amortized cost basis of our available-for-sale debt securities. We continually monitor the credit quality of our investments in available-for-sale debt securities to assess if it is probable that we will receive our contractual or estimated cash flows in the form of principal and interest. Additionally, the Company considers management’s intent and ability to hold the available-for-sale debt securities until recovery and its credit analysis of the individual issuers of the securities. Based on this process and analysis, management has no reason to believe the unrealized losses of the available-for-sale debt securities as of December 31, 2018 are other than temporary.

The following table presents the amortized cost and fair value of investments with maturities as of the date presented (in thousands):



	December 31, 2018
	Amortized Cost		Fair Value
Due in one year or less	$	123,110	$	122,333
Due after one year through five years	401,175		395,735
Due after five years through ten years	286,921		283,350
Due after ten years	14,533		13,864
Perpetual maturity securities	5,388		5,156
Total	$	831,127	$	820,438

All securities, except those with perpetual maturities, were categorized in the table above utilizing years to effective maturity. Effective maturity takes into consideration all forms of potential prepayment, such as call features or prepayment schedules, that shorten the lifespan of contractual maturity dates.

The following table provides certain information related to available-for-sale debt securities and equity securities during the periods presented (in thousands):



	Years Ended December 31,
	2018			2017			2016
Proceeds from sales and maturities (fair value)
Available-for-sale debt securities	$	255,938		$	128,370		$	165,633
Equity securities	$	8,285		$	77,640		$	60,558
Gross realized gains on sale of securities:
Available-for-sale debt securities	$	326		$	458		$	557
Equity securities	$	714		$	2,415		$	1,772
Gross realized losses on sale of securities:
Available-for-sale debt securities	$	(3,129	)	$	(150	)	$	(35	)
Equity securities	$	—		$	(153	)	$	—

The following table presents the components of net investment income, comprised primarily of interest and dividends, for the periods presented (in thousands):



	Years Ended December 31,
	2018			2017			2016
Available-for-sale debt securities	$	18,198		$	12,375		$	9,523
Equity securities	2,978			1,799			1,414
Available-for-sale short-term investments	145			22			75
Cash and cash equivalents	4,331			981			325
Other (1)	2,124			478			409
Total investment income	27,776			15,655			11,746
Less: Investment expenses (2)	(2,960		)	(2,195		)	(2,206		)
Net investment income	$	24,816		$	13,460		$	9,540


(1)	Includes interest earned on restricted cash and cash equivalents. Also includes investment income earned on real estate investments.


(2)	Includes custodial fees, investment accounting and advisory fees, and expenses associated with real estate investments.

Equity Securities

The following table provides details on the realized and unrealized gains and losses related to equity securities for the periods presented (in thousands):



	Years Ended December 31,
	2018			2017			2016
Net gains and (losses) recognized during the period on equity securities	$	(16,455	)	$	2,262		$	1,772
Less: Net (gains) and losses recognized during the period on equity securities sold during the period	(714		)	(2,262		)	(1,772		)
Unrealized gains and (losses) recognized during the reported period on equity securities still held at the reporting period	$	(17,169	)	$	—		$	—

Investment Real Estate

Investment real estate consisted of the following as of the dates presented (in thousands):



	December 31, 2018			December 31, 2017
Income Producing:
Investment real estate (1)	$	14,619		$	6,918
Less: Accumulated depreciation	(870		)	(460		)
	13,749			6,458
Non-Income Producing:
Investment real estate (1)	10,690			12,016
Investment real estate, net	$	24,439		$	18,474


(1)	During the year ended December 31, 2018, the Company transferred $7.4 million from non-income producing investment real estate to income producing investment real estate.

Depreciation expense related to investment real estate for the periods presented (in thousands):



	Years Ended December 31,
	2018		2017		2016
Depreciation expense on investment real estate	$	410	$	179	$	178