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Investments | 9 Months Ended
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Sep. 30, 2019
Investments, Debt and Equity Securities [Abstract] |
Investments | Investments Securities Available for Sale The following table provides the amortized cost and fair value of debt securities available for sale as of the dates presented (in thousands):
| September 30, 2019
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
Debt Securities: |  |  |  |  |  |  |
U.S. government obligations and agencies | $ | 71,696 |  |  | $ | 1,096 |  |  | $ | (206 | ) |  | $ | 72,586 |
Corporate bonds | 450,868 |  |  | 18,628 |  |  | (198 | ) |  | 469,298 |
Mortgage-backed and asset-backed securities | 313,001 |  |  | 8,642 |  |  | (509 | ) |  | 321,134 |
Municipal bonds | 3,399 |  |  | 148 |  |  | (5 | ) |  | 3,542 |
Redeemable preferred stock | 11,694 |  |  | 395 |  |  | (82 | ) |  | 12,007 |
Total | $ | 850,658 |  |  | $ | 28,909 |  |  | $ | (1,000 | ) |  | $ | 878,567 |
| 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 |
The following table provides the credit quality of available-for-sale debt securities with contractual maturities as of the dates presented (dollars in thousands):
|  | September 30, 2019 |  | December 31, 2018
Equivalent S&P Credit Ratings |  | Fair Value |  | % of Total Fair Value |  | Fair Value |  | % of Total Fair Value
AAA |  | $ | 406,441 |  |  | 46.3 | % |  | $ | 388,672 |  |  | 47.4 | %
AA |  | 93,687 |  |  | 10.7 | % |  | 100,791 |  |  | 12.3 | %
A |  | 232,352 |  |  | 26.4 | % |  | 214,503 |  |  | 26.1 | %
BBB |  | 141,837 |  |  | 16.1 | % |  | 112,613 |  |  | 13.7 | %
BB and Below |  | — |  |  | — |  |  | 494 |  |  | 0.1 | %
No Rating Available |  | 4,250 |  |  | 0.5 | % |  | 3,365 |  |  | 0.4 | %
Total |  | $ | 878,567 |  |  | 100.0 | % |  | $ | 820,438 |  |  | 100.0 | %
The table above includes credit quality ratings by Standard and Poor’s Rating Services, Inc. (“S&P”), 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 amortized cost and fair value of mortgage-backed and asset-backed securities as of the dates presented (in thousands):
| September 30, 2019 |  | December 31, 2018
| Amortized Cost |  | Fair Value |  | Amortized Cost |  | Fair Value
Mortgage-backed Securities: |  |  |  |  |  |  |
Agency | $ | 147,245 |  |  | $ | 148,465 |  |  | $ | 139,418 |  |  | $ | 136,291 |
Non-agency | 73,119 |  |  | 78,794 |  |  | 61,689 |  |  | 61,933 |
Asset-backed Securities: |  |  |  |  |  |  |
Auto loan receivables | 43,681 |  |  | 44,103 |  |  | 53,449 |  |  | 53,341 |
Credit card receivables | 21,147 |  |  | 21,538 |  |  | 29,594 |  |  | 29,366 |
Other receivables | 27,809 |  |  | 28,234 |  |  | 28,690 |  |  | 28,666 |
Total | $ | 313,001 |  |  | $ | 321,134 |  |  | $ | 312,840 |  |  | $ | 309,597 |
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):
| September 30, 2019
| 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 | 2 |  |  | $ | 3,907 |  |  | $ | (38 | ) |  | 6 |  |  | $ | 41,419 |  |  | $ | (168 | )
Corporate bonds | 24 |  |  | 24,357 |  |  | (115 | ) |  | 22 |  |  | 19,923 |  |  | (83 | )
Mortgage-backed and asset-backed securities | 26 |  |  | 30,609 |  |  | (139 | ) |  | 38 |  |  | 53,895 |  |  | (370 | )
Municipal bonds | — |  |  | — |  |  | — |  |  | 1 |  |  | 275 |  |  | (5 | )
Redeemable preferred stock | 8 |  |  | 1,116 |  |  | (12 | ) |  | 8 |  |  | 2,094 |  |  | (70 | )
Total | 60 |  |  | $ | 59,989 |  |  | $ | (304 | ) |  | 75 |  |  | $ | 117,606 |  |  | $ | (696 | )
| 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 | )
Evaluating Investments for Other Than Temporary Impairment As of September 30, 2019, 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 a 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 September 30, 2019 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):
| September 30, 2019
| Amortized Cost |  | Fair Value
Due in one year or less | $ | 122,700 |  |  | $ | 122,907 |
Due after one year through five years | 427,470 |  |  | 436,026 |
Due after five years through ten years | 288,021 |  |  | 306,986 |
Due after ten years | 12,040 |  |  | 12,173 |
Perpetual maturity securities | 427 |  |  | 475 |
Total | $ | 850,658 |  |  | $ | 878,567 |
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, equity securities and investment real estate during the periods presented (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Proceeds from sales and maturities (fair value): |  |  |  |  |  |  |
Available-for-sale debt securities | $ | 61,615 |  |  | $ | 32,287 |  |  | $ | 173,345 |  |  | $ | 225,989 |
Equity securities | $ | — |  |  | $ | 4,158 |  |  | $ | 29,137 |  |  | $ | 8,285 |
Gross realized gains on sale of securities: |  |  |  |  |  |  |
Available-for-sale debt securities | $ | 65 |  |  | $ | 1 |  |  | $ | 364 |  |  | $ | 318 |
Equity securities | $ | — |  |  | $ | 413 |  |  | $ | 335 |  |  | $ | 714 |
Gross realized losses on sale of securities: |  |  |  |  |  |  |
Available-for-sale debt securities | $ | (87 | ) |  | $ | (11 | ) |  | $ | (277 | ) |  | $ | (3,125 | )
Equity securities | $ | — |  |  | $ | — |  |  | $ | (14,787 | ) |  | $ | — |
Realized gains on sales of investment real estate | $ | — |  |  | $ | — |  |  | $ | 1,213 |  |  | $ | — |
The following table presents the components of net investment income, comprised primarily of interest and dividends, for the periods presented (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Available-for-sale debt securities | $ | 6,316 |  |  | $ | 4,595 |  |  | $ | 18,508 |  |  | $ | 12,390 |
Equity securities | 487 |  |  | 722 |  |  | 2,091 |  |  | 2,016 |
Available-for-sale short-term investments | — |  |  | — |  |  | — |  |  | 145 |
Cash and cash equivalents (1) | 1,374 |  |  | 1,854 |  |  | 4,066 |  |  | 4,100 |
Other (2) | 243 |  |  | 252 |  |  | 754 |  |  | 665 |
Total investment income | 8,420 |  |  | 7,423 |  |  | 25,419 |  |  | 19,316 |
Less: Investment expenses (3) | (807 | ) |  | (781 | ) |  | (2,254 | ) |  | (2,103 | )
Net investment income | $ | 7,613 |  |  | $ | 6,642 |  |  | $ | 23,165 |  |  | $ | 17,213 |
(1 | ) |  | Includes interest earned on restricted cash and cash equivalents.
(2 | ) |  | Includes investment income earned on real estate investments.
(3 | ) |  | Includes custodial fees, investment accounting and advisory fees, and expenses associated with real estate investments.
Equity Securities The following table provides the unrealized gains and losses recorded during the periods presented on equity securities still held at the end of the reporting period (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Unrealized gains and (losses) recognized during the reporting period on equity securities still held at the reporting period | $ | 573 |  |  | $ | (2,473 | ) |  | $ | 3,339 |  |  | $ | (9,103 | )
Investment Real Estate Investment real estate consisted of the following as of the dates presented (in thousands):
| September 30, 2019 |  | December 31, 2018
Income Producing: |  |  |
Investment real estate | $ | 14,679 |  |  | $ | 14,619 |
Less: Accumulated depreciation | (1,181 | ) |  | (870 | )
| 13,498 |  |  | 13,749 |
Non-Income Producing: |  |  |  |  |
Investment real estate | 2,190 |  |  | 10,690 |
Investment real estate, net | $ | 15,688 |  |  | $ | 24,439 |
During the nine months ended September 30, 2019, the Company completed the sale of investment real estate. The Company received net cash proceeds of approximately $10.5 million and recognized a pre-tax gain of approximately $1.2 million that is included in net realized gains (losses) on investments on the Condensed Consolidated Statements of Income for the nine months ended September 30, 2019. Depreciation expense related to investment real estate for the periods presented (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Depreciation expense on investment real estate | $ | 104 |  |  | $ | 103 |  |  | $ | 311 |  |  | $ | 307 |

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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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