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Investments

12 Months Ended

Dec. 31, 2022

Investments, Debt and Equity Securities [Abstract]

INVESTMENTS

The following table details fixed maturity available-for-sale securities, by major investment category, at December 31, 2022 and 2021:


	Cost or Adjusted/Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2022
U.S. government and agency securities	$	34,116	$	—	$	105	$	34,011
Foreign government	1,339		—		9		1,330
States, municipalities and political subdivisions	55,842		2		4,065		51,779
Public utilities	15,930		—		1,242		14,688
Corporate securities	157,354		19		15,739		141,634
Mortgage-backed securities	109,100		—		9,136		99,964
Asset-backed securities	34,905		9		2,788		32,126
Redeemable preferred stocks	931		—		—		931
Total fixed maturities	$	409,517	$	30	$	33,084	$	376,463

December 31, 2021
U.S. government and agency securities	$	50,373	$	293	$	1,326	$	49,340
Foreign government	3,383		84		8		3,459
States, municipalities and political subdivisions	80,385		592		1,081		79,896
Public utilities	26,103		164		810		25,457
Corporate securities	246,933		2,303		4,793		244,443
Mortgage-backed securities	190,383		554		4,197		186,740
Asset-backed securities	70,569		116		523		70,162
Redeemable preferred stocks	4,010		106		11		4,105
Total fixed maturities	$	672,139	$	4,212	$	12,749	$	663,602

Equity securities are summarized as follows at:


	December 31, 2022				December 31, 2021
	Estimated Fair Value		Percent of Total		Estimated Fair Value		Percent of Total

Mutual funds	$	35,485	91.0	%	$	33,064	87.1	%
Public utilities	551		1.4		—		—

Non-redeemable preferred stocks	2,984		7.6		4,894		12.9
Total equity securities	$	39,020	100.0	%	$	37,958	100.0	%

When we sell investments, we calculate the gain or loss realized on the sale by comparing the sales price (fair value) to the cost or adjusted/amortized cost of the security sold. We determine the cost or adjusted/amortized cost of the security sold using the specific-identification method. The following table details our realized gains (losses) by major investment category for the years ended December 31, 2022, 2021 and 2020:


	2022				2021				2020
	Gains (Losses)		Fair Value at Sale		Gains (Losses)		Fair Value at Sale		Gains (Losses)		Fair Value at Sale
Fixed maturities	$	725	$	86,532	$	2,112	$	221,597	$	32,460	$	678,736
Equity securities	—		—		5,569		12,116		38,325		131,178
Short-term investments	—		90		—		33,485		—		1,346
Total realized gains	725		86,622		7,681		267,198		70,785		811,260
Fixed maturities (1)	(32,730)		163,990		(4,050)		220,809		(478)		16,552
Equity securities	(77)		750		(18)		575		(3,602)		13,805
Short-term investments	—		—		(46)		35,975		(14)		1,258
Total realized losses	(32,807)		164,740		(4,114)		257,359		(4,094)		31,615
Net realized investment gains (losses)	$	(32,082)	$	251,362	$	3,567	$	524,557	$	66,691	$	842,875

(1) Includes impairment losses realized of $22,718,000 for the year ended December 31, 2022.

The table below summarizes our fixed maturities at December 31, 2022 by contractual maturity periods. Actual results may differ as issuers may have the right to call or prepay obligations, with or without penalties, prior to the contractual maturities of those obligations.


	December 31, 2022
	Cost or Amortized Cost		Percent of Total		Fair Value		Percent of Total
Due in one year or less	$	21,362	5.2	%	$	21,301	5.7	%
Due after one year through five years	126,685		30.9	%	122,337		32.5	%
Due after five years through ten years	109,016		26.6	%	93,142		24.7	%
Due after ten years	8,449		2.1	%	7,593		2.0	%
Asset and mortgage-backed securities	144,005		35.2	%	132,090		35.1	%
Total	$	409,517	100.0	%	$	376,463	100.0	%

The following table summarizes our net investment income by major investment category:


	Year Ended December 31,
	2022			2021		2020
Fixed maturities	$	9,482		$	12,884	$	21,789
Equity securities	914			695		2,155
Cash and cash equivalents	3,326			280		1,329
Other investments	1,018		63	975		38
Other assets	26			24		178
Investment income	14,766			14,858		25,489
Investment expenses	(755)			(1,086)		(1,364)
Net investment income	$	14,011		$	13,772	$	24,125

Portfolio monitoring

We have a quarterly portfolio monitoring process to identify and evaluate each fixed-income security whose carrying value

may be impaired as the result of a credit loss. For each fixed-income security in an unrealized loss position, if we determine that

we intend to sell the security or that it is more likely than not that we will be required to sell the security before recovery of the

cost or amortized cost basis for reasons such as liquidity needs, contractual or regulatory requirements, the security's entire

decline in fair value is recorded in earnings.

If our management decides not to sell the fixed-income security and it is more likely than not that we will not be required to sell the fixed-income security before recovery of its amortized cost basis, we evaluate whether the decline in fair value has resulted from credit losses or other factors. This is typically indicated by a change in the rating of the security assigned by a rating agency, and any adverse conditions specifically related to the security or industry, among other factors. If the assessment indicates that a credit loss may exist, the present value 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 will be recorded in earnings. Credit loss is limited to the difference between a security's amortized cost basis and its fair value. Any additional impairment not recorded through an allowance for credit losses is recognized in other comprehensive loss.

During the year-ended December 31, 2022, we determined that none of our fixed-income securities shown in the table below that are in an unrealized loss position have declines in fair value that are reflected as a result of credit losses. Therefore, no credit loss allowance was recorded at December 31, 2022. The issuers of our debt security investments continue to make interest payments on a timely basis. However, during the year ended December 31, 2022, management determined that it was more likely than not that we would be required to sell a portion of our fixed-income securities attributable to our personal lines operating segment before recovery of their amortized cost basis. As a result, we realized impairment losses of $22,718,000 on these securities. Total shareholders’ equity (deficit) was not impacted by such charge; however, our net loss for the year ended December 31, 2022 worsened and other comprehensive income improved by $22,718,000 in offsetting amounts. We do not intend to sell, nor is it likely that we would be required to sell our remaining debt securities before we recover our amortized cost basis. Equity securities are reported at fair value with changes in fair value recognized in the valuation of equity investments.

The following table presents an aging of our unrealized investment losses by investment class:


	Less Than Twelve Months					Twelve Months or More
	Number of Securities(1)	Gross Unrealized Losses		Fair Value		Number of Securities(1)	Gross Unrealized Losses		Fair Value
December 31, 2022
U.S. government and agency securities	3	$	105	$	2,385	—	$	—	$	—
Foreign governments	1	9		991		—	—		—
States, municipalities and political subdivisions	21	540		7,306		31	3,525		18,853
Public utilities	8	193		2,286		4	1,049		5,408
Corporate securities	78	2,279		24,594		77	13,460		57,765
Mortgage-backed securities	48	1,282		15,259		80	7,854		40,856
Asset backed securities	16	795		6,397		46	1,993		19,028

Total fixed maturities	175	$	5,203	$	59,218	238	$	27,881	$	141,910

December 31, 2021
U.S. government and agency securities	39	$	971	$	32,167	15	$	355	$	8,126
Foreign governments	1	8		2,010		—	—		—
States, municipalities and political subdivisions	63	761		41,670		8	320		11,423
Public utilities	14	346		12,719		7	464		7,708
Corporate securities	205	4,589		158,959		12	204		7,896
Mortgage-backed securities	138	2,638		111,636		37	1,559		41,786
Asset-backed securities	111	493		60,566		2	30		1,596
Redeemable preferred stocks	1	2		90		1	9		91
Total fixed maturities	572	$	9,808	$	419,817	82	$	2,941	$	78,626

(1) This amount represents the actual number of discrete securities, not the number of shares or units of those securities. The numbers are not presented in thousands.

Fair value measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The hierarchy for inputs used in determining fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Assets and liabilities recorded on our Consolidated Balance Sheets at fair value are categorized in the fair value hierarchy based on the observability of inputs to the valuation techniques as follows:

Level 1: Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that we can access.

Level 2: Assets and liabilities whose values are based on the following:

(a) Quoted prices for similar assets or liabilities in active markets;

(b) Quoted prices for identical or similar assets or liabilities in markets that are not active; or

(c) Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Unobservable inputs reflect our estimates of the assumptions that market participants would use in valuing the assets and liabilities.

We estimate the fair value of our investments using the closing prices on the last business day of the reporting period, obtained from active markets such as the NYSE, Nasdaq and NYSE American. For securities for which quoted prices in active markets are unavailable, we use a third-party pricing service that utilizes quoted prices in active markets for similar instruments, benchmark interest rates, broker quotes and other relevant inputs to estimate the fair value of those securities for which quoted prices are unavailable. Our estimates of fair value reflect the interest rate environment that existed as of the close of business on December 31, 2022 and 2021. Changes in interest rates subsequent to December 31, 2022 may affect the fair value of our investments.

The fair value of our fixed maturities is initially calculated by a third-party pricing service. Valuation service providers typically obtain data about market transactions and other key valuation model inputs from multiple sources and, through the use of proprietary models, produce valuation information in the form of a single fair value for individual fixed income and other securities for which a fair value has been requested. The inputs used by the valuation service providers include, but are not limited to, market prices from recently completed transactions and transactions of comparable securities, interest rate yield curves, credit spreads, liquidity spreads, currency rates and other information, as applicable. Credit and liquidity spreads are typically implied from completed transactions and transactions of comparable securities. Valuation service providers also use proprietary discounted cash flow models that are widely accepted in the financial services industry and similar to those used by other market participants to value the same financial information. The valuation models take into account, among other things, market observable information as of the measurement date, as described above, as well as the specific attributes of the security being valued, including its term, interest rate, credit rating, industry sector and, where applicable, collateral quality and other issue or issuer specific information. Executing valuation models effectively requires seasoned professional judgment and experience.

Any change in the estimated fair value of our fixed-income securities would impact the amount of unrealized gain or loss we have recorded, which could change the amount we have recorded for our investments and other comprehensive income loss on our Consolidated Balance Sheet as of December 31, 2022.

The following table presents the fair value of our financial instruments measured on a recurring basis by level at December 31, 2022 and 2021:


	Total		Level 1		Level 2		Level 3
December 31, 2022
U.S. government and agency securities	$	34,011	$	—	$	34,011	$	—
Foreign government	1,330		—		1,330		—
States, municipalities and political subdivisions	51,779		—		51,779		—
Public utilities	14,688		—		14,688		—
Corporate securities	141,634		—		141,634		—
Mortgage-backed securities	99,964		—		99,964		—
Asset-backed securities	32,126		—		32,126		—
Redeemable preferred stocks	931		359		572		—
Total fixed maturities	376,463		359		376,104		—
Mutual funds	35,485		20,615		14,870		—
Public utilities	551		551		—		—

Non-redeemable preferred stocks	2,984		2,984		—		—
Total equity securities	39,020		24,150		14,870		—
Other investments (1)	444		300		144		—
Total investments	$	415,927	$	24,809	$	391,118	$	—

December 31, 2021
U.S. government and agency securities	$	49,340	$	—	$	49,340	$	—
Foreign government	3,459		—		3,459		—
States, municipalities and political subdivisions	79,896		—		79,896		—
Public utilities	25,457		—		25,457		—
Corporate securities	244,443		—		244,443		—
Mortgage-backed securities	186,740		—		186,740		—
Asset-backed securities	70,162		—		70,162		—
Redeemable preferred stocks	4,105		535		3,570		—
Total fixed maturities	663,602		535		663,067		—
Mutual Funds	33,064		24,652		8,412		—


Non-redeemable preferred stocks	4,894		4,894		—		—
Total equity securities	37,958		29,546		8,412		—
Other investments (1)	381		300		81		—
Total investments	$	701,941	$	30,381	$	671,560	$	—

(1) Other long-term investments included in the fair value hierarchy exclude these other limited partnership interests that are measured at estimated fair value using the net asset value per share (or its equivalent) practical expedient.

Certain financial assets and financial liabilities are measured at fair value on a non-recurring basis; this is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). There were no financial instruments measured on a non-recurring basis at December 31, 2022 and 2021.

The carrying amounts for the following financial instrument categories approximate their fair values at December 31, 2022 and 2021, because of their short-term nature: cash and cash equivalents, accrued investment income, premiums receivable, reinsurance recoverable, reinsurance payable, other assets, and other liabilities. The carrying amount of the notes payable to the Florida State Board of Administration, Truist Financial Corporation (Truist), and our senior notes approximate fair value as the interest rates and terms are variable.

We are responsible for the determination of fair value and the supporting assumptions and methodologies. We have implemented a system of processes and controls designed to provide assurance that our assets and liabilities are appropriately valued. For fair values received from third parties, our processes are designed to provide assurance that the valuation methodologies and inputs are appropriate and consistently applied, the assumptions are reasonable and consistent with the objective of determining fair value, and the fair values are accurately recorded.

At the end of each quarter, we determine whether we need to transfer the fair values of any securities between levels of the fair value hierarchy and, if so, we report the transfer as of the end of the quarter. During 2022, we transferred no investments between levels.

For our investments in U.S. government securities that do not have prices in active markets, agency securities, state and municipal governments, and corporate bonds, we obtain the fair values from our investment custodians, which use a third-party valuation service. The valuation service calculates prices for our investments in the aforementioned security types on a month-end basis by using several matrix-pricing methodologies that incorporate inputs from various sources. The model the valuation service uses to price U.S. government securities and securities of states and municipalities incorporates inputs from active market makers and inter-dealer brokers. To price corporate bonds and agency securities, the valuation service calculates non-call yield spreads on all issuers, uses option-adjusted yield spreads to account for any early redemption features, and adds final spreads to the U.S. Treasury curve at 3 p.m. (ET) as of quarter end. Since the inputs the valuation service uses in its calculations are not quoted prices in active markets, but are observable inputs, they represent Level 2 inputs.

Other investments

We acquired investments in limited partnerships, recorded in the other investments line of our Consolidated Balance Sheets and these investments are currently being accounted for at fair value utilizing a net asset value per share equivalent methodology.

The information presented in the table below is as of December 31, 2022 and 2021:


	Book Value		Unrealized Gain		Unrealized Loss		Fair Value
December 31, 2022
Limited partnership investments (1)	$	16,133	$	1,590	$	1,539	$	16,184
Certificates of deposit	300		—		—		300
Short-term investments	145		—		1		144
Total other investments	$	16,578	$	1,590	$	1,540	$	16,628

December 31, 2021
Limited partnership investments (1)	$	16,750	$	1,401	$	526	$	17,625
Certificates of deposit	300		—		—		300
Short-term investments	81		—		—		81
Total other investments	$	17,131	$	1,401	$	526	$	18,006

(1) Distributions will be generated from investment gains, from operating income, from underlying investments of the funds, and from liquidation of the underlying assets of the funds. We estimate that the underlying assets of the funds will be liquidated over the next few months to five years.

Restricted Cash

We are required to maintain assets on deposit with various regulatory authorities to support our insurance operations. The cash on deposit with state regulators is available to settle insurance liabilities. We also use trust funds in certain reinsurance transactions.

The following table presents the components of restricted assets:


	December 31,
	2022		2021
Trust funds	$	48,363	$	32,211
Cash on deposit (regulatory deposits)	5,354		1,043
Total restricted cash	$	53,717	$	33,254

In addition to the cash held on deposit described above, we also have securities on deposit with regulators, which are presented within our Fixed Maturities or Other Investments lines on the Consolidated Balance Sheets, dependent upon if they are short-term or long-term in nature. The table below shows the carrying value of those securities held on deposit with regulators.


	December 31,
	2022		2021
Invested assets on deposit (regulatory deposits)	$	3,997	$	2,885