XML 65 R11.htm IDEA: XBRL DOCUMENT v3.19.3
Investments
 9 Months Ended
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