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Investments

6 Months Ended

Jun. 30, 2022

Investments, Debt and Equity Securities [Abstract]

Investments

Investments

Available-for-Sale Securities

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

			June 30, 2022
			Amortized Cost						Allowance for Expected Credit Losses						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value
Debt Securities:
U.S. government obligations and agencies			$	21,403					$	—					$	—					$	(791)					$	20,612
Corporate bonds			763,806						(548)						52						(80,813)						682,497
Mortgage-backed and asset-backed securities			328,934						—						331						(31,872)						297,393
Municipal bonds			14,924						—						—						(1,933)						12,991
Redeemable preferred stock			9,123						(124)						—						(1,486)						7,513
Total			$	1,138,190					$	(672)					$	383					$	(116,895)					$	1,021,006

			December 31, 2021
			Amortized Cost			Allowance for Expected Credit Losses						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value
Debt Securities:
U.S. government obligations and agencies			$	27,076		$	—					$	64					$	(334)					$	26,806
Corporate bonds			687,058			(371)						843						(13,725)						673,805
Mortgage-backed and asset-backed securities			322,844			—						194						(6,920)						316,118
Municipal bonds			14,925			(1)						—						(350)						14,574
Redeemable preferred stock			9,289			(117)						28						(48)						9,152
Total			$	1,061,192		$	(489)					$	1,129					$	(21,377)					$	1,040,455

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

						June 30, 2022												December 31, 2021
Average Credit Ratings						Fair Value						% of Total  Fair Value						Fair Value						% of Total  Fair Value
AAA						$	304,540					29.8		%				$	321,975					31.0		%
AA						150,164						14.7		%				139,186						13.4		%
A						331,360						32.5		%				339,500						32.6		%
BBB						231,083						22.6		%				234,358						22.5		%
No Rating Available						3,859						0.4		%				5,436						0.5		%
Total						$	1,021,006					100.0		%				$	1,040,455					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):

			June 30, 2022												December 31, 2021
			Amortized Cost						Fair Value						Amortized Cost						Fair Value
Mortgage-backed securities:
Agency			$	151,087					$	133,353					$	147,992					$	143,819
Non-agency			60,518						52,341						59,906						58,263
Asset-backed securities:
Auto loan receivables			72,268						69,488						67,352						66,877
Credit card receivables			2,036						1,990						4,741						4,719
Other receivables			43,025						40,221						42,853						42,440
Total			$	328,934					$	297,393					$	322,844					$	316,118

The following tables summarize available-for-sale debt securities, aggregated by major security type and length of time that individual securities have been in a continuous unrealized loss position, for which no allowance for expected credit losses has been recorded as of the dates presented (in thousands):

			June 30, 2022
			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			3						$	11,554					$	(80)					5						$	9,058					$	(711)
Corporate bonds			175						230,149						(23,682)						95						113,327						(17,574)
Mortgage-backed and asset-backed securities			131						157,635						(11,032)						73						133,065						(20,840)
Municipal bonds			9						9,655						(1,265)						1						3,336						(669)
Redeemable preferred stock			5						1,461						(283)						—						—						—
Total			323						$	410,454					$	(36,342)					174						$	258,786					$	(39,794)

			December 31, 2021
			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			4						$	18,913					$	(111)					4						$	5,016					$	(223)
Corporate bonds			249						378,595						(7,468)						18						17,356						(679)
Mortgage-backed and asset-backed securities			145						274,883						(5,969)						11						23,273						(951)
Municipal bonds			5						9,811						(269)						—						—						—
Redeemable preferred stock			1						200						(1)						—						—						—
Total			404						$	682,402					$	(13,818)					33						$	45,645					$	(1,853)

Unrealized losses on available-for-sale debt securities in the above table as of June 30, 2022 have not been recognized into income as credit losses because the issuers are of high credit quality (investment grade securities), management does not intend to sell and it is likely management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. There were no material factors impacting any one category or specific security requiring an accrual for credit loss. The issuers continue to make principal and interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity.

The following table presents a reconciliation of the beginning and ending balances for expected credit losses on available-for-sale debt securities (in thousands):

						Corporate Bonds												Municipal Bonds						Redeemable  Preferred Stock						Total
Balance, December 31, 2020						$	148											$	—					$	38					$	186
Provision for (or reversal of) credit loss expense						223												1						79						303
Balance, December 31, 2021						371												1						117						489
Provision for (or reversal of) credit loss expense						177												(1)						7						183
Balance, June 30, 2022						$	548											$	—					$	124					$	672

For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For available-for-sale debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by rating agencies, market sentiment and trends and adverse conditions specifically related to the security, among other quantitative and qualitative factors utilized for establishing an estimate for credit losses. If the assessment indicates that a credit loss exists, the present values of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.

Changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense and are reported in general and administrative expenses in the Condensed Consolidated Statements of Income. Losses are charged against the allowance when management believes an available-for-sale debt security is confirmed as uncollected or when either of the criteria regarding intent or requirement to sell is met.

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

			June 30, 2022
			Amortized Cost						Fair Value
Due in one year or less			$	64,252					$	63,354
Due after one year through five years			528,033						486,015
Due after five years through ten years			512,416						444,405
Due after ten years			31,245						25,421
Perpetual maturity securities			2,244						1,811
Total			$	1,138,190					$	1,021,006

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 in real estate during the periods presented (in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
Proceeds from sales and maturities (fair value):
Available-for-sale debt securities			$	27,911					$	61,658					$	53,217					$	114,291
Equity securities			$	2,760					$	3,589					$	17,692					$	5,165
Gross realized gains on sale of securities:
Available-for-sale debt securities			$	236					$	895					$	242					$	1,017
Equity securities			$	224					$	741					$	548					$	1,084
Gross realized losses on sale of securities:
Available-for-sale debt securities			$	(1,185)					$	(1,140)					$	(1,455)					$	(1,464)
Equity securities			$	—					$	—					$	(2)					$	—
Realized gains on sales of investment real estate (1)			$	—					$	—					$	—					$	401

(1) During the first quarter of 2021, the Company completed the sale of a non-income producing investment real estate property. The Company received net cash proceeds of approximately $2.6 million and recognized a pre-tax gain of approximately $0.4 million that is included in net realized gains (losses) on investments in the Condensed Consolidated Statements of Income for the six months ended June 30, 2021.

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 June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
Available-for-sale debt securities			$	4,877					$	2,765					$	8,944					$	5,594
Equity securities			690						652						1,225						1,243
Cash and cash equivalents (1)			233						15						255						26
Other (2)			121						267						249						535
Total investment income			5,921						3,699						10,673						7,398
Less: Investment expenses (3)			(700)						(841)						(1,410)						(1,554)
Net investment income			$	5,221					$	2,858					$	9,263					$	5,844

(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 recognized for the periods presented on equity securities still held at the end of the reported period (in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
Unrealized gains (losses) recognized during the reported period on equity securities still held at the end of the reported period			$	(8,884)					$	1,546					$	(12,237)					$	1,027

Investment Real Estate

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

			June 30,						December 31,
			2022						2021
Income Producing:
Investment real estate			$	7,091					$	7,091
Less: Accumulated depreciation			(1,293)						(1,200)
Investment real estate, net			$	5,798					$	5,891

The following table provides the depreciation expense related to investment real estate for the periods presented (in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
Depreciation expense on investment real estate			$	47					$	46					$	93					$	92

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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 https://asc.fasb.org/topic&trid=75115024

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-URI https://asc.fasb.org/topic&trid=2196928

Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 325
-URI https://asc.fasb.org/topic&trid=2197064

Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 323
-URI https://asc.fasb.org/topic&trid=2196965

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X

- References

No definition available.

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