XML 24 R11.htm IDEA: XBRL DOCUMENT
v3.23.3

Investments | 9 Months Ended
--- | ---
Sep. 30, 2023
Investments, Debt and Equity Securities [Abstract] |
Investments | INVESTMENTS The following table details fixed-maturity available-for-sale securities, by major investment category, at September 30, 2023 and December 31, 2022:
| Cost or Adjusted/Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
September 30, 2023 |  |  |  |  |  |  |
U.S. government and agency securities | $ | 2,494 |  |  | $ | — |  |  | $ | 95 |  |  | $ | 2,399 |
Foreign government | 1,000 |  |  | — |  |  | — |  |  | 1,000 |
States, municipalities and political subdivisions | 26,366 |  |  | 1 |  |  | 3,345 |  |  | 23,022 |
Public utilities | 5,658 |  |  | — |  |  | 692 |  |  | 4,966 |
Corporate securities | 71,604 |  |  | — |  |  | 11,450 |  |  | 60,154 |
Mortgage-backed securities | 55,526 |  |  | — |  |  | 9,398 |  |  | 46,128 |
Asset-backed securities | 18,155 |  |  | — |  |  | 1,967 |  |  | 16,188 |
Total fixed maturities | $ | 180,803 |  |  | $ | 1 |  |  | $ | 26,947 |  |  | $ | 153,857 |
December 31, 2022 |  |  |  |  |  |  |
U.S. government and agency securities | $ | 2,490 |  |  | $ | — |  |  | $ | 105 |  |  | $ | 2,385 |
Foreign government | 1,000 |  |  | — |  |  | 9 |  |  | 991 |
States, municipalities and political subdivisions | 30,958 |  |  | 2 |  |  | 4,065 |  |  | 26,895 |
Public utilities | 8,936 |  |  | — |  |  | 1,242 |  |  | 7,694 |
Corporate securities | 99,062 |  |  | 20 |  |  | 15,739 |  |  | 83,343 |
Mortgage-backed securities | 65,251 |  |  | — |  |  | 9,136 |  |  | 56,115 |
Asset-backed securities | 30,038 |  |  | 9 |  |  | 2,788 |  |  | 27,259 |
Total fixed maturities | $ | 237,735 |  |  | $ | 31 |  |  | $ | 33,084 |  |  | $ | 204,682 |
Equity securities are summarized as follows:
|  | September 30, 2023 |  | December 31, 2022
|  | Estimated Fair Value |  | Percent of Total |  | Estimated Fair Value |  | Percent of Total
Mutual funds |  | $ | — |  |  | — | % |  | $ | 15,657 |  |  | 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 three and nine months ended September 30, 2023 and 2022, respectively:
| 2023 |  | 2022
| Gains (Losses) |  | Fair Value at Sale(1) |  | Gains (Losses) |  | Fair Value at Sale(1)
Three Months Ended September 30, |  |  |  |  |  |  |
Fixed maturities | $ | — |  |  | $ | 3,849 |  |  | $ | — |  |  | $ | 13,696 |
Equity securities | — |  |  | — |  |  | — |  |  | — |
Short-term investments | — |  |  | — |  |  | — |  |  | — |
Other investments | 3 |  |  | 1,151 |  |  | — |  |  | — |
Total realized gains | 3 |  |  | 5,000 |  |  | — |  |  | 13,696 |
Fixed maturities | (1) |  |  | 128 |  |  | (4) |  |  | 105 |
Equity securities | — |  |  | — |  |  | — |  |  | — |
Short-term investments | — |  |  | — |  |  | — |  |  | — |
Other investments | — |  |  | — |  |  | — |  |  | — |
Total realized losses | (1) |  |  | 128 |  |  | (4) |  |  | 105 |
Net realized investment gains (losses) | $ | 2 |  |  | $ | 5,128 |  |  | $ | (4) |  |  | $ | 13,801 |
Nine Months Ended September 30, |  |  |  |  |  |  |
Fixed maturities | $ | 59 |  |  | $ | 16,839 |  |  | $ | 64 |  |  | $ | 38,429 |
Equity securities | 165 |  |  | 5,786 |  |  | — |  |  | — |
Short-term investments | — |  |  | 126 |  |  | — |  |  | — |
Other investments | 3 |  |  | 1,151 |  |  | — |  |  | — |
Total realized gains | 227 |  |  | 23,902 |  |  | 64 |  |  | 38,429 |
Fixed maturities | (6,368) |  |  | 44,603 |  |  | (108) |  |  | 1,366 |
Equity securities | (665) |  |  | 10,372 |  |  | — |  |  | — |
Short-term investments | — |  |  | — |  |  | — |  |  | — |
Other investments | — |  |  | — |  |  | — |  |  | — |
Total realized losses | (7,033) |  |  | 54,975 |  |  | (108) |  |  | 1,366 |
Net realized investment gains (losses) | $ | (6,806) |  |  | $ | 78,877 |  |  | $ | (44) |  |  | $ | 39,795 |
(1) Fair value at sale includes maturities and paydowns executed at par value. The table below summarizes our fixed maturities at September 30, 2023 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.
| September 30, 2023
| Cost or Amortized Cost |  | Percent of Total |  | Fair Value |  | Percent of Total
Due in one year or less | $ | 7,480 |  |  | 4.1 | % |  | $ | 7,367 |  |  | 4.8 | %
Due after one year through five years | 35,890 |  |  | 19.9 |  |  | 32,330 |  |  | 21.0 |
Due after five years through ten years | 58,876 |  |  | 32.5 |  |  | 48,028 |  |  | 31.2 |
Due after ten years | 4,876 |  |  | 2.7 |  |  | 3,816 |  |  | 2.5 |
Asset and mortgage-backed securities | 73,681 |  |  | 40.8 |  |  | 62,316 |  |  | 40.5 |
Total | $ | 180,803 |  |  | 100.0 | % |  | $ | 153,857 |  |  | 100.0 | %
The following table summarizes our net investment income by major investment category:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Fixed maturities | $ | 1,041 |  |  | $ | 1,596 |  |  | $ | 3,537 |  |  | $ | 4,610 |
Equity securities | — |  |  | 91 |  |  | 81 |  |  | 219 |
Cash and cash equivalents | 1,759 |  |  | 504 |  |  | 4,687 |  |  | 721 |
Other investments | (33) |  |  | 161 |  |  | (111) |  |  | 333 |
Investment income | 2,767 |  |  | 2,352 |  |  | 8,194 |  |  | 5,883 |
Investment expenses | (58) |  |  | (116) |  |  | (204) |  |  | (404) |
Net investment income | $ | 2,709 |  |  | $ | 2,236 |  |  | $ | 7,990 |  |  | $ | 5,479 |
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 three and nine months ended September 30, 2023, 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 September 30, 2023. The issuers of our debt security investments continue to make interest payments on a timely basis. We do not intend to sell, nor is it likely that we would be required to sell the 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
September 30, 2023 |  |  |  |  |  |  |  |  |  |  |
U.S. government and agency securities | — |  |  | $ | — |  |  | $ | — |  |  | 3 |  |  | $ | 95 |  |  | $ | 2,399 |
Foreign governments | — |  |  | — |  |  | — |  |  | 1 |  |  | — |  |  | 1,000 |
States, municipalities and political subdivisions | 5 |  |  | 113 |  |  | 2,433 |  |  | 44 |  |  | 3,232 |  |  | 19,837 |
Public utilities | — |  |  | — |  |  | — |  |  | 12 |  |  | 692 |  |  | 4,967 |
Corporate securities | 6 |  |  | 143 |  |  | 2,290 |  |  | 137 |  |  | 11,307 |  |  | 57,858 |
Mortgage-backed securities | 4 |  |  | 77 |  |  | 908 |  |  | 119 |  |  | 9,321 |  |  | 45,220 |
Asset-backed securities | 5 |  |  | 38 |  |  | 2,135 |  |  | 43 |  |  | 1,929 |  |  | 14,053 |
Total fixed maturities | 20 |  |  | $ | 371 |  |  | $ | 7,766 |  |  | 359 |  |  | $ | 26,576 |  |  | $ | 145,334 |
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 |
(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 Unaudited Condensed 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 September 30, 2023 and December 31, 2022. Changes in interest rates subsequent to September 30, 2023 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 loss on our Unaudited Condensed Consolidated Balance Sheet as of September 30, 2023. The following table presents the fair value of our financial instruments measured on a recurring basis by level at September 30, 2023 and December 31, 2022:
| Total |  | Level 1 |  | Level 2 |  | Level 3
September 30, 2023 |  |  |  |  |  |  |
U.S. government and agency securities | $ | 2,399 |  |  | $ | — |  |  | $ | 2,399 |  |  | $ | — |
Foreign government | 1,000 |  |  | — |  |  | 1,000 |  |  | — |
States, municipalities and political subdivisions | 23,022 |  |  | — |  |  | 23,022 |  |  | — |
Public utilities | 4,966 |  |  | — |  |  | 4,966 |  |  | — |
Corporate securities | 60,154 |  |  | — |  |  | 60,154 |  |  | — |
Mortgage-backed securities | 46,128 |  |  | — |  |  | 46,128 |  |  | — |
Asset-backed securities | 16,188 |  |  | — |  |  | 16,188 |  |  | — |
Total fixed maturities | 153,857 |  |  | — |  |  | 153,857 |  |  | — |
Mutual funds | — |  |  | — |  |  | — |  |  | — |
Total equity securities | — |  |  | — |  |  | — |  |  | — |
Other investments (1) | 116 |  |  | — |  |  | 116 |  |  | — |
Total investments | $ | 153,973 |  |  | $ | — |  |  | $ | 153,973 |  |  | $ | — |
December 31, 2022 |  |  |  |  |  |  |
U.S. government and agency securities | $ | 2,385 |  |  | $ | — |  |  | $ | 2,385 |  |  | $ | — |
Foreign government | 991 |  |  | — |  |  | 991 |  |  | — |
States, municipalities and political subdivisions | 26,895 |  |  | — |  |  | 26,895 |  |  | — |
Public utilities | 7,694 |  |  | — |  |  | 7,694 |  |  | — |
Corporate securities | 83,343 |  |  | — |  |  | 83,343 |  |  | — |
Mortgage-backed securities | 56,115 |  |  | — |  |  | 56,115 |  |  | — |
Asset-backed securities | 27,259 |  |  | — |  |  | 27,259 |  |  | — |
Total fixed maturities | 204,682 |  |  | — |  |  | 204,682 |  |  | — |
Mutual Funds | 15,657 |  |  | 15,657 |  |  | — |  |  | — |
Total equity securities | 15,657 |  |  | 15,657 |  |  | — |  |  | — |
Other investments (1) | 125 |  |  | — |  |  | 125 |  |  | — |
Total investments | $ | 220,464 |  |  | $ | 15,657 |  |  | $ | 204,807 |  |  | $ | — |
(1) Other investments included in the fair value hierarchy exclude these 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 September 30, 2023 and December 31, 2022. The carrying amounts for the following financial instrument categories approximate their fair values at September 30, 2023 and December 31, 2022, 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 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 the quarter ended September 30, 2023, 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 Unaudited Condensed Consolidated Balance Sheets, and these investments are currently being measured at estimated fair value utilizing a net asset value per share (or its equivalent) practical expedient. The information presented in the table below is as of September 30, 2023:
|  | Book Value |  | Unrealized Gain |  | Unrealized Loss |  | Fair Value
September 30, 2023 |  |  |  |  |  |  |  |
Limited partnership investments (1) |  | $ | 2,126 |  |  | $ | 357 |  |  | $ | — |  |  | $ | 2,483 |
Short-term investments |  | 117 |  |  | — |  |  | 1 |  |  | 116 |
Total other investments |  | $ | 2,243 |  |  | $ | 357 |  |  | $ | 1 |  |  | $ | 2,599 |
(1) Distributions will be generated from investment gains, from operating income, from underlying investments of 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:
| September 30, 2023 |  | December 31, 2022
Trust funds | $ | 18,798 |  |  | $ | 45,364 |
Cash on deposit (regulatory deposits) | 629 |  |  | 624 |
Total restricted cash | $ | 19,427 |  |  | $ | 45,988 |
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 Unaudited Condensed 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.
| September 30, 2023 |  | December 31, 2022
Invested assets on deposit (regulatory deposits) | $ | 2,494 |  |  | $ | 2,616 |

X
- References No definition available. + Details
Name: | us-gaap_InvestmentsDebtAndEquitySecuritiesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for investments in certain debt and equity securities. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 320 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//320/tableOfContent Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 320 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 10 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481800/320-10-50-10 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6B -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-6B Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6B -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-6B Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Name Regulation S-K (SK) -Number 229 -Section 1403 -Paragraph (b) -Publisher SEC Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 946 -SubTopic 320 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//946-320/tableOfContent Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 940 -SubTopic 320 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//940-320/tableOfContent Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 942 -SubTopic 320 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//942-320/tableOfContent + Details
Name: | us-gaap_InvestmentsInDebtAndMarketableEquitySecuritiesAndCertainTradingAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration