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Note 6 - Investments | 9 Months Ended
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Sep. 30, 2024
Notes to Financial Statements |
Investment [Text Block] | NOTE 6 INVESTMENTS The amortized cost, gross unrealized gains and losses included in accumulated other comprehensive loss, and estimated fair value of the Company's available-for-sale investments at September 30, 2024 and December 31, 2023 are summarized in the tables shown below:
(in thousands) |  | September 30, 2024 |
|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Estimated Fair Value |
Fixed maturities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government, government agencies and authorities |  | $ | 12,872 |  |  | $ | 77 |  |  | $ | 182 |  |  | $ | 12,767 |
States, municipalities and political subdivisions |  |  | 2,843 |  |  |  | 9 |  |  |  | 62 |  |  |  | 2,790 |
Mortgage-backed |  |  | 10,010 |  |  |  | 59 |  |  |  | 322 |  |  |  | 9,747 |
Asset-backed |  |  | 1,328 |  |  |  | 8 |  |  |  | 22 |  |  |  | 1,314 |
Corporate |  |  | 10,582 |  |  |  | 46 |  |  |  | 390 |  |  |  | 10,238 |
Total fixed maturities |  | $ | 37,635 |  |  | $ | 199 |  |  | $ | 978 |  |  | $ | 36,856 |
(in thousands) |  | December 31, 2023 |
|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Estimated Fair Value |
Fixed maturities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government, government agencies and authorities |  | $ | 13,384 |  |  | $ | 8 |  |  | $ | 395 |  |  | $ | 12,997 |
States, municipalities and political subdivisions |  |  | 2,885 |  |  |  | 3 |  |  |  | 105 |  |  |  | 2,783 |
Mortgage-backed |  |  | 9,724 |  |  |  | 23 |  |  |  | 494 |  |  |  | 9,253 |
Asset-backed |  |  | 1,254 |  |  |  | 1 |  |  |  | 45 |  |  |  | 1,210 |
Corporate |  |  | 10,860 |  |  |  | 18 |  |  |  | 648 |  |  |  | 10,230 |
Total fixed maturities |  | $ | 38,107 |  |  | $ | 53 |  |  | $ | 1,687 |  |  | $ | 36,473 |
The table below summarizes the Company's fixed maturities at September 30, 2024 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) |  | September 30, 2024 |
|  | Amortized Cost |  |  | Estimated Fair Value |
Due in one year or less |  | $ | 7,166 |  |  | $ | 7,110 |
Due after one year through five years |  |  | 24,885 |  |  |  | 24,442 |
Due after five years through ten years |  |  | 1,458 |  |  |  | 1,440 |
Due after ten years |  |  | 4,126 |  |  |  | 3,864 |
Total |  | $ | 37,635 |  |  | $ | 36,856 |
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 September 30, 2024 and December 31, 2023. The tables segregate the holdings based on the period of time the investments have been continuously held in unrealized loss positions.
(in thousands) |  | September 30, 2024 |
|  | 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 |  | $ | 2,373 |  |  | $ | 24 |  |  | $ | 5,467 |  |  | $ | 158 |  |  | $ | 7,840 |  |  | $ | 182 |
States, municipalities and political subdivisions |  |  | 149 |  |  |  | 2 |  |  |  | 1,596 |  |  |  | 60 |  |  |  | 1,745 |  |  |  | 62 |
Mortgage-backed |  |  | 857 |  |  |  | 4 |  |  |  | 4,891 |  |  |  | 318 |  |  |  | 5,748 |  |  |  | 322 |
Asset-backed |  |  | — |  |  |  | — |  |  |  | 840 |  |  |  | 22 |  |  |  | 840 |  |  |  | 22 |
Corporate |  |  | 350 |  |  |  | 1 |  |  |  | 7,649 |  |  |  | 389 |  |  |  | 7,999 |  |  |  | 390 |
Total fixed maturities |  | $ | 3,729 |  |  | $ | 31 |  |  | $ | 20,443 |  |  | $ | 947 |  |  | $ | 24,172 |  |  | $ | 978 |
(in thousands) |  | December 31, 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 |  | $ | 3,237 |  |  | $ | 46 |  |  | $ | 7,940 |  |  | $ | 349 |  |  | $ | 11,177 |  |  | $ | 395 |
States, municipalities and political subdivisions |  |  | — |  |  |  | — |  |  |  | 1,705 |  |  |  | 105 |  |  |  | 1,705 |  |  |  | 105 |
Mortgage-backed |  |  | 737 |  |  |  | 11 |  |  |  | 6,067 |  |  |  | 483 |  |  |  | 6,804 |  |  |  | 494 |
Asset-backed |  |  | — |  |  |  | — |  |  |  | 1,050 |  |  |  | 45 |  |  |  | 1,050 |  |  |  | 45 |
Corporate |  |  | 937 |  |  |  | 11 |  |  |  | 8,013 |  |  |  | 637 |  |  |  | 8,950 |  |  |  | 648 |
Total fixed maturities |  | $ | 4,911 |  |  | $ | 68 |  |  | $ | 24,775 |  |  | $ | 1,619 |  |  | $ | 29,686 |  |  | $ | 1,687 |
At September 30, 2024 and December 31, 2023, there are approximately 155 and 181 individual available-for-sale investments that were in unrealized loss positions, for which an allowance for credit losses has 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 September 30, 2024 and December 31, 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 September 30, 2024 and December 31, 2023. The Company did not record any write-downs for impairment related to available-for-sale fixed maturity investments for the three and nine months ended September 30, 2024 and September 30, 2023. 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 September 30, 2024 and December 31, 2023, the carrying value of limited liability investments totaled $0.7 million and $0.8 million, respectively. The Company recorded no impairments related to limited liability investments during the three and nine months ended September 30, 2024 ($0.1 million during the three and nine months ended September 30, 2023), which are included in impairment losses on investments in the consolidated statements of operations. 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 September 30, 2024, the Company had no unfunded commitments related to limited liability investments. Limited liability investment, at fair value represents the underlying investments of the Company’s consolidated entity Argo Holdings Fund I, LLC ("Argo Holdings"). As of September 30, 2024 and December 31, 2023, the carrying value of the Company's limited liability investment, at fair value was $2.7 million and $3.5 million, respectively. At September 30, 2024, the Company had no unfunded commitments to fund limited liability investments, at fair value. Prior to the second quarter of 2023, the Company's limited liability investments, at fair value included the underlying investments of the Company's consolidated entity, Net Lease Investment Grade Portfolio LLC ("Net Lease"). The Company consolidated 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 was 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 September 30, 2024 and December 31, 2023, the carrying value of the Company's investments in private companies totaled $0.7 million and $0.9 million, respectively. For the three and nine months ended September 30, 2024, the Company did not record any adjustments to the carrying value of its investments in private companies for observable price changes (adjustment of $0.1 million for the three and nine months ended September 30, 2023 to increase the fair value of certain investments in private companies for observable price changes, which is included in net change in unrealized gain on private company investments in the consolidated statements of operations). 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 nine months ended September 30, 2024 and September 30, 2023. Net investment income for the three and nine months ended September 30, 2024 and September 30, 2023 is comprised as follows:
(in thousands) |  | Three months ended September 30, |  |  | Nine months ended September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Investment income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest from fixed maturities |  | $ | 331 |  |  | $ | 264 |  |  | $ | 968 |  |  | $ | 736 |
Dividends |  |  | 11 |  |  |  | 11 |  |  |  | 39 |  |  |  | 85 |
Income (loss) from limited liability investments |  |  | 1 |  |  |  | (8 | ) |  |  | (161 | ) |  |  | (41 | )
Other |  |  | 98 |  |  |  | 106 |  |  |  | 300 |  |  |  | 728 |
Gross investment income |  |  | 441 |  |  |  | 373 |  |  |  | 1,146 |  |  |  | 1,508 |
Investment expenses |  |  | (38 | ) |  |  | (22 | ) |  |  | (109 | ) |  |  | (89 | )
Net investment income |  | $ | 403 |  |  | $ | 351 |  |  | $ | 1,037 |  |  | $ | 1,419 |
Net realized gains on investments for the three and nine months ended September 30, 2024 and September 30, 2023 are comprised as follows:
(in thousands) |  | Three months ended September 30, |  |  | Nine months ended September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Available-for-sale fixed maturities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gross realized gains |  | $ | — |  |  | $ | 7 |  |  | $ | — |  |  | $ | 9 |
Gross realized losses |  |  | — |  |  |  | (7 | ) |  |  | — |  |  |  | (7 | )
Net realized gains on available-for-sale fixed maturities |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2 |
Limited liability investments |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 103 |
Limited liability investments, at fair value |  |  | 874 |  |  |  | 191 |  |  |  | 1,260 |  |  |  | 407 |
Investments in private companies |  |  | 84 |  |  |  | 15 |  |  |  | 99 |  |  |  | 27 |
Net realized gains |  | $ | 958 |  |  | $ | 206 |  |  | $ | 1,359 |  |  | $ | 539 |
Net gain (loss) on equity investments for the three and nine months ended September 30, 2024 and September 30, 2023 is comprised as follows:
(in thousands) |  | Three months ended September 30, |  |  | Nine months ended September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Net gains (losses) recognized on equity investments sold during the period |  | $ | — |  |  | $ | 3,322 |  |  | $ | (3 | ) |  | $ | 3,322 |
Change in net unrealized (losses) gains recognized on equity investments held at end of the period |  |  | — |  |  |  | (2,730 | ) |  |  | — |  |  |  | 52 |
Net gain (loss) on equity investments |  | $ | — |  |  | $ | 592 |  |  | $ | (3 | ) |  | $ | 3,374 |
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. During the third quarter of 2023, the Company sold all of its Limbach common shares. The Company recorded total gains related to Limbach of $3.3 million during the nine months ended September 30, 2023.

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