XML 24 R14.htm IDEA: XBRL DOCUMENT
v3.23.2

Note 6 - Investments | 6 Months Ended
--- | ---
Jun. 30, 2023
Notes to Financial Statements |
Investment [Text Block] | NOTE 6 INVESTMENTS The amortized cost, gross unrealized gains and losses included in accumulated other comprehensive (loss) income, and estimated fair value of the Company's available-for-sale investments at June 30, 2023 and December 31, 2022 are summarized in the tables shown below:
(in thousands) |  | June 30, 2023 |
|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Estimated Fair Value |
Fixed maturities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government, government agencies and authorities |  | $ | 14,780 |  |  | $ | — |  |  | $ | 635 |  |  | $ | 14,145 |
States, municipalities and political subdivisions |  |  | 3,224 |  |  |  | — |  |  |  | 155 |  |  |  | 3,069 |
Mortgage-backed |  |  | 8,682 |  |  |  | — |  |  |  | 640 |  |  |  | 8,042 |
Asset-backed |  |  | 1,435 |  |  |  | — |  |  |  | 68 |  |  |  | 1,367 |
Corporate |  |  | 10,460 |  |  |  | 2 |  |  |  | 892 |  |  |  | 9,570 |
Total fixed maturities |  | $ | 38,581 |  |  | $ | 2 |  |  | $ | 2,390 |  |  | $ | 36,193 |
(in thousands) |  | December 31, 2022 |
|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Estimated Fair Value |
Fixed maturities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government, government agencies and authorities |  | $ | 15,797 |  |  | $ | — |  |  | $ | 717 |  |  | $ | 15,080 |
States, municipalities and political subdivisions |  |  | 2,390 |  |  |  | — |  |  |  | 158 |  |  |  | 2,232 |
Mortgage-backed |  |  | 9,058 |  |  |  | 1 |  |  |  | 647 |  |  |  | 8,412 |
Asset-backed |  |  | 1,682 |  |  |  | — |  |  |  | 72 |  |  |  | 1,610 |
Corporate |  |  | 11,200 |  |  |  | 1 |  |  |  | 944 |  |  |  | 10,257 |
Total fixed maturities |  | $ | 40,127 |  |  | $ | 2 |  |  | $ | 2,538 |  |  | $ | 37,591 |
The table below summarizes the Company's fixed maturities at June 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 maturity of these obligations.
(in thousands) |  | June 30, 2023 |
|  | Amortized Cost |  |  | Estimated Fair Value |
Due in one year or less |  | $ | 6,899 |  |  | $ | 6,797 |
Due after one year through five years |  |  | 25,865 |  |  |  | 24,212 |
Due after five years through ten years |  |  | 1,368 |  |  |  | 1,214 |
Due after ten years |  |  | 4,449 |  |  |  | 3,970 |
Total |  | $ | 38,581 |  |  | $ | 36,193 |
The following tables highlight the aggregate unrealized loss position, by security type, of available-for-sale investments in unrealized loss positions where no credit loss allowance had been established as of June 30, 2023 and December 31, 2022. The tables segregate the holdings based on the period of time the investments have been continuously held in unrealized loss positions.
(in thousands) |  | June 30, 2023 |
|  | Less than 12 Months |  |  | Greater than 12 Months |  |  | Total |
|  | Estimated Fair Value |  |  | Unrealized Loss |  |  | Estimated Fair Value |  |  | Unrealized Loss |  |  | Estimated Fair Value |  |  | Unrealized Loss |
Fixed maturities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government, government agencies and authorities |  | $ | 4,081 |  |  | $ | 62 |  |  | $ | 10,064 |  |  | $ | 573 |  |  | $ | 14,145 |  |  | $ | 635 |
States, municipalities and political subdivisions |  |  | 838 |  |  |  | 19 |  |  |  | 2,031 |  |  |  | 136 |  |  |  | 2,869 |  |  |  | 155 |
Mortgage-backed |  |  | 1,328 |  |  |  | 24 |  |  |  | 6,714 |  |  |  | 616 |  |  |  | 8,042 |  |  |  | 640 |
Asset-backed |  |  | 302 |  |  |  | 5 |  |  |  | 1,065 |  |  |  | 63 |  |  |  | 1,367 |  |  |  | 68 |
Corporate |  |  | 1,732 |  |  |  | 47 |  |  |  | 7,604 |  |  |  | 845 |  |  |  | 9,336 |  |  |  | 892 |
Total fixed maturities |  | $ | 8,281 |  |  | $ | 157 |  |  | $ | 27,478 |  |  | $ | 2,233 |  |  | $ | 35,759 |  |  | $ | 2,390 |
(in thousands) |  | December 31, 2022 |
|  | Less than 12 Months |  |  | Greater than 12 Months |  |  | Total |
|  | Estimated Fair Value |  |  | Unrealized Loss |  |  | Estimated Fair Value |  |  | Unrealized Loss |  |  | Estimated Fair Value |  |  | Unrealized Loss |
Fixed maturities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government, government agencies and authorities |  | $ | 4,543 |  |  | $ | 126 |  |  | $ | 10,537 |  |  | $ | 591 |  |  | $ | 15,080 |  |  | $ | 717 |
States, municipalities and political subdivisions |  |  | 1,040 |  |  |  | 73 |  |  |  | 937 |  |  |  | 85 |  |  |  | 1,977 |  |  |  | 158 |
Mortgage-backed |  |  | 2,248 |  |  |  | 93 |  |  |  | 5,756 |  |  |  | 554 |  |  |  | 8,004 |  |  |  | 647 |
Asset-backed |  |  | 1,251 |  |  |  | 39 |  |  |  | 299 |  |  |  | 33 |  |  |  | 1,550 |  |  |  | 72 |
Corporate |  |  | 3,244 |  |  |  | 155 |  |  |  | 6,760 |  |  |  | 789 |  |  |  | 10,004 |  |  |  | 944 |
Total fixed maturities |  | $ | 12,326 |  |  | $ | 486 |  |  | $ | 24,289 |  |  | $ | 2,052 |  |  | $ | 36,615 |  |  | $ | 2,538 |
At June 30, 2023, there are approximately 205 individual available-for-sale investments that were in unrealized loss positions, for which an allowance for credit losses had not been recorded. The Company did not have the intent to sell these investments, and it was not more likely than not that the Company would be required to sell these investments before recovery of its amortized cost. The Company evaluated these investments for credit losses at June 30, 2023. The Company considers many factors in evaluating whether the unrealized losses were credit related including, but not limited to, the extent to which the fair value has been less than amortized cost, conditions related to the security, industry, or geographic area, payment structure of the investment and the likelihood of the issuer’s ability to make contractual cashflows, defaults or other collectability concerns related to the issuer, changes in the ratings assigned by a rating agency, and other credit enhancements that affect the investment’s expected performance. The Company determined that the unrealized losses on the fixed maturity investments were due to non-credit related factors at June 30, 2023. At December 31, 2022, there are approximately 208 individual available-for-sale investments that were in unrealized loss positions. Prior to the adoption of ASU 2016-13, the Company performed an analysis of the individual investments to determine if declines in market value were other-than-temporary. See the "Significant Accounting Policies and Critical Estimates" section of Management's Discussion and Analysis of Financial Condition included in the 2022 Annual Report for further information regarding the Company's detailed analysis and factors considered in establishing an other-than-temporary impairment on an investment. The Company reviewed currently available information regarding investments with estimated fair values less than their carrying amounts and believes these unrealized losses are not other-than-temporary and are primarily due to temporary market and sector-related factors rather than to issuer-specific factors. The Company did not have the intent to sell these investments, and it was not more likely than not that the Company would be required to sell those investments before recovery of its amortized cost. The Company did not record any write-downs for impairment related to available-for-sale fixed maturity investments for the three and six months ended June 30, 2023 and June 30, 2022. The Company does not have any exposure to subprime mortgage-backed investments. Limited liability investments include investments in limited liability companies and limited partnerships. The Company's interests in these investments are not deemed minor and, therefore, are accounted for under the equity method of accounting. The most recently available financial statements are used in applying the equity method. The difference between the end of the reporting period of the limited liability entities and that of the Company is no more than three months. As of June 30, 2023 and December 31, 2022, the carrying value of limited liability investments totaled $0.9 million and $1.0 million, respectively. Income or loss from limited liability investments is recognized based on the Company's share of the earnings of the limited liability entities and is included in net investment income in the consolidated statements of operations. At June 30, 2023, the Company had no unfunded commitments related to limited liability investments. Limited liability investments, at fair value represents the underlying investments of the Company’s consolidated entities Net Lease Investment Grade Portfolio, LLC ("Net Lease") and Argo Holdings Fund I, LLC ("Argo Holdings"). As of June 30, 2023 and December 31, 2022, the carrying value of the Company's limited liability investments, at fair value was $3.7 million and $17.1 million, respectively. The Company recorded impairments related to limited liability investments, at fair value of $0.1 million during each of the three and six months ended June 30, 2023(less than $0.1 million for the three and six months ended June 30, 2022), which are included in gain (loss) on change in fair value of limited liability investments, at fair value in the consolidated statements of operations. At June 30, 2023, the Company had no unfunded commitments to fund limited liability investments, at fair value. The Company consolidates the financial statements of Net Lease on a three-month lag. Net Lease owned investments in limited liability companies that held investment properties. During the fourth quarter of 2022, one of Net Lease's limited liability companies refinanced their existing debt. Debt proceeds of $5.2 million were distributed to Net Lease, which decreased Net Lease's investment in the limited liability company, which the Company recorded during the first quarter of 2023. During the first quarter of 2023, Net Lease sold its final investment property for $15.8 million. Net Lease received net proceeds of $8.1 million after the repayment of debt at the limited liability company and transaction expenses. Given the three-month reporting lag discussed above, the Company recorded this transaction in its second quarter 2023 financial statements. As a result of the sale and subsequent distribution of the net proceeds, the carrying value of Net Lease's investments in limited liability companies is zero at June 30, 2023. Investments in private companies consist of convertible preferred stocks and notes in privately owned companies and investments in limited liability companies in which the Company’s interests are deemed minor. The Company's investments in private companies do not have readily determinable fair values. The Company has elected to record investments in private companies at cost, adjusted for observable price changes and impairments. As of June 30, 2023 and December 31, 2022, the carrying value of the Company's investments in private companies totaled $0.8 million. For the three and six months ended June 30, 2023 and June 30, 2022, the Company did not record any adjustments to the fair value of its investments in private companies for observable price changes. The Company performs a quarterly impairment analysis of its investments in private companies. As a result of the analysis performed, the Company did not record any impairments related to investments in private companies for the three and six months ended June 30, 2023 and June 30, 2022. Net investment income for the three and six months ended June 30, 2023 and June 30, 2022 is comprised as follows:
(in thousands) |  | Three months ended June 30, |  |  | Six months ended June 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Investment income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest from fixed maturities |  | $ | 243 |  |  | $ | 117 |  |  | $ | 472 |  |  | $ | 210 |
Dividends |  |  | 14 |  |  |  | 33 |  |  |  | 74 |  |  |  | 64 |
Income (loss) from limited liability investments |  |  | 1 |  |  |  | 52 |  |  |  | (33 | ) |  |  | 287 |
Income from limited liability investments, at fair value |  |  | — |  |  |  | 4 |  |  |  | — |  |  |  | 4 |
Income from real estate investments |  |  | — |  |  |  | 200 |  |  |  | — |  |  |  | 400 |
Other |  |  | 102 |  |  |  | 87 |  |  |  | 622 |  |  |  | 170 |
Gross investment income |  |  | 360 |  |  |  | 493 |  |  |  | 1,135 |  |  |  | 1,135 |
Investment expenses |  |  | (30 | ) |  |  | (28 | ) |  |  | (67 | ) |  |  | (51 | )
Net investment income |  | $ | 330 |  |  | $ | 465 |  |  | $ | 1,068 |  |  | $ | 1,084 |
Gross realized gains and losses on available-for-sale investments for the three and six months ended June 30, 2023 and June 30, 2022 are comprised as follows:
(in thousands) |  | Three months ended June 30, |  |  | Six months ended June 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Gross realized gains |  | $ | — |  |  | $ | — |  |  | $ | 2 |  |  | $ | 1 |
Gross realized losses |  |  | — |  |  |  | (16 | ) |  |  | — |  |  |  | (21 | )
Net |  | $ | — |  |  | $ | (16 | ) |  | $ | 2 |  |  | $ | (20 | )
Gain (loss) on change in fair value of equity investments for the three and six months ended June 30, 2023 and June 30, 2022 is comprised as follows:
(in thousands) |  | Three months ended June 30, |  |  | Six months ended June 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Net gains recognized on equity investments sold during the period |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Change in unrealized gains (losses) on equity investments held at end of the period |  |  | 1,707 |  |  |  | (38 | ) |  |  | 2,782 |  |  |  | (48 | )
Gain (loss) on change in fair value of equity investments |  | $ | 1,707 |  |  | $ | (38 | ) |  | $ | 2,782 |  |  | $ | (48 | )
Prior to the second quarter of 2023, the Company held 400,000 warrants in Limbach Holdings, Inc. ("Limbach"). During the first quarter of 2023, the underlying common stock price of Limbach increased, resulting in an increase in the fair value of the warrants held at March 31, 2023. During the second quarter of 2023, the Company completed a cashless exercise of its Limbach warrants and received 110,036 shares of Limbach common stock. The change in fair value for the second quarter of 2023 is a result of the increased common stock price of Limbach as of June 30, 2023.

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

X
- Definition The entire disclosure for investment. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 320 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//320/tableOfContent Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Name Accounting Standards Codification -Topic 321 -Publisher FASB -URI https://asc.fasb.org//321/tableOfContent Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef -Name Accounting Standards Codification -Topic 325 -Publisher FASB -URI https://asc.fasb.org//325/tableOfContent + Details
Name: | us-gaap_InvestmentTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration