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Investments (Tables)

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Schedule of Amortized Cost and Estimated Fair Value of Company's Fixed Maturities Securities

The amortized cost and estimated fair value of the Company’s fixed maturities securities were as follows as of June 30, 2023 and December 31, 2022:


(Dollars in thousands)	Amortized Cost		Allowance for Expected Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
As of June 30, 2023
Fixed maturities:
U.S. treasuries	$	396,451	$	—	$	12	$	(7,701	)	$	388,762
Obligations of states and political subdivisions		32,272		—		—		(1,666	)		30,606
Mortgage-backed securities		65,086		—		396		(4,816	)		60,666
Asset-backed securities		212,095		—		186		(7,966	)		204,315
Commercial mortgage-backed securities		86,313		—		21		(5,880	)		80,454
Corporate bonds		343,600		—		102		(12,038	)		331,664
Foreign corporate bonds		175,750		—		30		(6,641	)		169,139
Total fixed maturities	$	1,311,567	$	—	$	747	$	(46,708	)	$	1,265,606


(Dollars in thousands)	Amortized Cost		Allowance for Expected Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
As of December 31, 2022
Fixed maturities:
U.S. treasuries	$	352,533	$	—	$	—	$	(8,430	)	$	344,103
Obligations of states and political subdivisions		33,471		—		—		(1,876	)		31,595
Mortgage-backed securities		67,560		—		165		(5,609	)		62,116
Asset-backed securities		198,161		—		390		(9,151	)		189,400
Commercial mortgage-backed securities		104,777		—		20		(6,133	)		98,664
Corporate bonds		353,622		—		16		(14,858	)		338,780
Foreign corporate bonds		191,599		—		—		(8,059	)		183,540
Total fixed maturities	$	1,301,723	$	—	$	591	$	(54,116	)	$	1,248,198

Schedule Of Investments In Equity Securities

As of June 30, 2023 and December 31, 2022, the Company’s investments in equity securities consist of the following:


(Dollars in thousands)	June 30, 2023		December 31, 2022
Common stock	$	1,113	$	1,271
Preferred stock		16,040		16,249
Total	$	17,153	$	17,520

Summary of Amortized Cost and Estimated Fair Value Through Fixed Maturities

The amortized cost and estimated fair value of the Company’s fixed maturities portfolio classified as available for sale at June 30, 2023, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


(Dollars in thousands)	Amortized Cost		Estimated Fair Value
Due in one year or less	$	489,914	$	483,894
Due in one year through five years		428,150		410,281
Due in five years through ten years		17,529		15,287
Due after fifteen years		12,480		10,709
Mortgage-backed securities		65,086		60,666
Asset-backed securities		212,095		204,315
Commercial mortgage-backed securities		86,313		80,454
Total	$	1,311,567	$	1,265,606

Summary of Securities With Gross Unrealized Losses

The following table contains an analysis of the Company’s fixed income securities with gross unrealized losses that are not deemed to have credit losses, categorized by the period that the securities were in a continuous loss position as of June 30, 2023. The fair value amounts reported in the table are estimates that are prepared using the process described in Note 5.


	Less than 12 months					12 months or longer					Total
(Dollars in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fixed maturities:
U.S. treasuries	$	198,477	$	(3,953	)	$	120,678	$	(3,748	)	$	319,155	$	(7,701	)
Obligations of states and political subdivisions		7,810		(222	)		19,795		(1,444	)		27,605		(1,666	)
Mortgage-backed securities		16,354		(707	)		33,913		(4,109	)		50,267		(4,816	)
Asset-backed securities		91,904		(1,888	)		95,269		(6,078	)		187,173		(7,966	)
Commercial mortgage-backed securities		1,678		(69	)		76,056		(5,811	)		77,734		(5,880	)
Corporate bonds		74,010		(1,175	)		230,601		(10,863	)		304,611		(12,038	)
Foreign corporate bonds		23,100		(154	)		119,948		(6,487	)		143,048		(6,641	)
Total fixed maturities	$	413,333	$	(8,168	)	$	696,260	$	(38,540	)	$	1,109,593	$	(46,708	)

The following table contains an analysis of the Company’s fixed income securities with gross unrealized losses that are not deemed to have credit losses, categorized by the period that the securities were in a continuous loss position as of December 31, 2022. The fair value amounts reported in the table are estimates that are prepared using the process described in Note 5.


	Less than 12 months					12 months or longer					Total
(Dollars in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fixed maturities:
U.S. treasuries	$	335,781	$	(7,518	)	$	8,322	$	(912	)	$	344,103	$	(8,430	)
Obligations of states and political subdivisions		27,772		(1,378	)		3,778		(498	)		31,550		(1,876	)
Mortgage-backed securities		51,517		(4,228	)		7,860		(1,381	)		59,377		(5,609	)
Asset-backed securities		97,857		(3,610	)		62,689		(5,541	)		160,546		(9,151	)
Commercial mortgage-backed securities		67,926		(4,072	)		27,907		(2,061	)		95,833		(6,133	)
Corporate bonds		261,123		(8,480	)		71,192		(6,378	)		332,315		(14,858	)
Foreign corporate bonds		150,308		(5,469	)		31,232		(2,590	)		181,540		(8,059	)
Total fixed maturities	$	992,284	$	(34,755	)	$	212,980	$	(19,361	)	$	1,205,264	$	(54,116	)

Schedule of Impairments on Investments

The Company recorded the following impairments on its investment portfolio for the quarters and six months ended June 30, 2023 and 2022 and are related to securities in an unrealized loss position where the Company had an intent to sell the securities:


	Quarters Ended June 30,					Six Months Ended June 30,
(Dollars in thousands)	2023		2022 (1)			2023		2022
Fixed maturities:
Impairment related to intent to sell		—		(680	)		—		(26,205	)
Total	$	—	$	(680	)	$	—	$	(26,205	)

(1)

In response to a rising interest rate environment, the Company took action early in April 2022 to shorten the duration of its fixed maturities portfolio. In connection with these actions, the Company identified fixed maturities securities with a weighted average life of five years or greater as having an intent to sell resulting in other-than-temporary impairment losses. The majority of which were sold in the 2nd quarter of 2022. Most of the proceeds from the sale of these securities were reinvested into fixed income investments with maturities of two years. As a result of these actions, the Company's book yield rose over time. Book yield was approximately 2.2% at December 31, 2021 and 3.8% at June 30, 2023.

Schedule of Accumulated Other Comprehensive Income, Net of Tax

Accumulated other comprehensive income, net of tax, as of June 30, 2023 and December 31, 2022 was as follows:


(Dollars in thousands)	June 30, 2023			December 31, 2022
Net unrealized gains (losses) from:
Fixed maturities	$	(45,961	)	$	(53,525	)
Foreign currency fluctuations		(328	)		(127	)
Deferred taxes		9,118			10,594
Accumulated other comprehensive income (loss), net of tax	$	(37,171	)	$	(43,058	)

Changes in Accumulated Other Comprehensive Income

The following tables present the changes in accumulated other comprehensive income, net of tax, by components, for the quarters and six months ended June 30, 2023 and 2022:


Quarter Ended June 30, 2023 (Dollars in thousands)	Unrealized Gains and Losses on Available for Sale Securities			Foreign Currency Items			Accumulated Other Comprehensive Income (Loss)
Beginning balance, net of tax	$	(34,314	)	$	(301	)	$	(34,615	)
Other comprehensive income (loss) before reclassification, before tax		(3,757	)		53			(3,704	)
Amounts reclassified from accumulated other comprehensive income, before tax		587			—			587
Other comprehensive income (loss), before tax		(3,170	)		53			(3,117	)
Income tax (expense) benefit		572			(11	)		561
Ending balance, net of tax	$	(36,912	)	$	(259	)	$	(37,171	)


Quarter Ended June 30, 2022 (Dollars in thousands)	Unrealized Gains and Losses on Available for Sale Securities			Foreign Currency Items			Accumulated Other Comprehensive Income (Loss)
Beginning balance, net of tax	$	(12,769	)	$	(3	)	$	(12,772	)
Other comprehensive loss before reclassification, before tax		(26,518	)		(287	)		(26,805	)
Amounts reclassified from accumulated other comprehensive income, before tax		9,317			—			9,317
Other comprehensive loss, before tax		(17,201	)		(287	)		(17,488	)
Income tax benefit		3,575			60			3,635
Ending balance, net of tax	$	(26,395	)	$	(230	)	$	(26,625	)


Six Months Ended June 30, 2023 (Dollars in thousands)	Unrealized Gains and Losses on Available for Sale Securities			Foreign Currency Items			Accumulated Other Comprehensive Income (Loss)
Beginning balance, net of tax	$	(42,958	)	$	(100	)	$	(43,058	)
Other comprehensive (loss) before reclassification, before tax		6,371			(201	)		6,170
Amounts reclassified from accumulated other comprehensive income, before tax		1,193			—			1,193
Other comprehensive income (loss), before tax		7,564			(201	)		7,363
Income tax (expense) benefit		(1,518	)		42			(1,476	)
Ending balance, net of tax	$	(36,912	)	$	(259	)	$	(37,171	)


Six Months Ended June 30, 2022 (Dollars in thousands)	Unrealized Gains and Losses on Available for Sale Securities			Foreign Currency Items			Accumulated Other Comprehensive Income (Loss)
Beginning balance, net of tax	$	6,519		$	(115	)	$	6,404
Other comprehensive loss before reclassification, before tax		(79,267	)		(146	)		(79,413	)
Amounts reclassified from accumulated other comprehensive income, before tax		38,081			—			38,081
Other comprehensive loss, before tax		(41,186	)		(146	)		(41,332	)
Income tax benefit		8,272			31			8,303
Ending balance, net of tax	$	(26,395	)	$	(230	)	$	(26,625	)

Reclassifications Out of Accumulated Other Comprehensive Income

The reclassifications out of accumulated other comprehensive income for the quarters and six months ended June 30, 2023 and 2022 were as follows:


		Amounts Reclassified from Accumulated Other Comprehensive Income
(Dollars in thousands)		Quarters Ended June 30,
Details about Accumulated Other Comprehensive Income Components	Affected Line Item in the Consolidated Statements of Operations	2023			2022
Unrealized gains and losses on available for sale securities	Other net realized investment (gains) losses	$	587		$	8,637
	Other than temporary impairment losses on investments		—			680
	Total before tax		587		$	9,317
	Income tax expense (benefit)		(108	)		(1,440	)
	Total reclassifications, net of tax	$	479		$	7,877


		Amounts Reclassified from Accumulated Other Comprehensive Income
(Dollars in thousands)		Six Months Ended June 30,
Details about Accumulated Other Comprehensive Income Components	Affected Line Item in the Consolidated Statements of Operations	2023			2022
Unrealized gains and losses on available for sale securities	Other net realized investment (gains) losses	$	1,193		$	11,876
	Other than temporary impairment losses on investments		—			26,205
	Total before tax		1,193		$	38,081
	Income tax expense (benefit)		(227	)		(7,119	)
	Total reclassifications, net of tax	$	966		$	30,962

Components of Net Realized Investment Gains (Losses)

The components of net realized investment gains (losses) for the quarters and six months ended June 30, 2023 and 2022 were as follows:


	Quarters Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2023			2022			2023			2022
Fixed maturities:
Gross realized gains	$	9		$	456		$	14		$	662
Gross realized losses		(596	)		(9,773	)		(1,207	)		(38,743	)
Net realized gains (losses)		(587	)		(9,317	)		(1,193	)		(38,081	)
Equity securities:
Gross realized gains		209			2			784			1,806
Gross realized losses		(383	)		(2,417	)		(1,872	)		(5,566	)
Net realized gains (losses)		(174	)		(2,415	)		(1,088	)		(3,760	)
Derivatives:
Gross realized gains		—			2,872			—			8,960
Gross realized losses		—			(1,056	)		—			(2,420	)
Net realized gains (losses) (1)		—			1,816			—			6,540
Total net realized investment gains (losses)	$	(761	)	$	(9,916	)	$	(2,281	)	$	(35,301	)

(1)

Includes periodic net interest settlements related to the derivatives of $1.1 million for the quarters ended June 30, 2022 and $2.5 million for the six months ended June 30, 2022.

Summary of Calculation of Realized Gains and Losses

The following table shows the calculation of the portion of realized gains and losses related to equity securities held as of June 30, 2023 and 2022:


	Quarters Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2023			2022			2023			2022
Net gains (losses) recognized during the period on equity securities	$	(174	)	$	(2,415	)	$	(1,088	)	$	(3,760	)
Less: net gains (losses) recognized during the period on equity securities sold during the period		—			(498	)		18			10,616
Unrealized gains (losses) recognized during the reporting period on equity securities	$	(174	)	$	(1,917	)	$	(1,106	)	$	(14,376	)

Proceeds from Sales and Redemptions of Available-for-Sale Securities

The proceeds from sales and redemptions of available for sale and equity securities resulting in net realized investment gains (losses) for the six months ended June 30, 2023 and 2022 were as follows:


	Six Months Ended June 30,
(Dollars in thousands)	2023		2022
Fixed maturities	$	96,890	$	829,205
Equity securities		24		88,726

Schedule of Investment Income

The sources of net investment income for the quarters and six months ended June 30, 2023 and 2022 were as follows:


	Quarters Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2023			2022			2023			2022
Fixed maturities	$	12,313		$	7,467		$	23,773		$	13,871
Equity securities		257			275			447			609
Cash and cash equivalents		300			99			563			131
Other invested assets		697			(5,300	)		1,164			(4,874	)
Total investment income		13,567			2,541			25,947			9,737
Investment expense		(351	)		(611	)		(723	)		(1,215	)
Net investment income	$	13,216		$	1,930		$	25,224		$	8,522

Schedule of Total Investment Return

The Company’s total investment return on a pre-tax basis for the quarters and six months ended June 30, 2023 and 2022 were as follows:


	Quarters Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2023			2022			2023			2022
Net investment income	$	13,216		$	1,930		$	25,224		$	8,522
Net realized investment losses		(761	)		(9,916	)		(2,281	)		(35,301	)
Change in unrealized holding gains (losses)		(3,117	)		(17,488	)		7,363			(41,332	)
Net realized and unrealized investment returns		(3,878	)		(27,404	)		5,082			(76,633	)
Total investment return	$	9,338		$	(25,474	)	$	30,306		$	(68,111	)
Total investment return % (1)		0.7	%		(1.8	%)		2.3	%		(4.8	%)
Average investment portfolio (2)	$	1,345,235		$	1,395,519		$	1,343,024		$	1,429,227

(1)

Not annualized.

(2)

Average of total cash and invested assets, net of receivable/payable for securities purchased and sold, as of the beginning and end of the period.

Summary of Estimated Fair Values of Bonds Held on Deposit

The fair values were as follows as of June 30, 2023 and December 31, 2022:


	Estimated Fair Value
(Dollars in thousands)	June 30, 2023		December 31, 2022
On deposit with governmental authorities	$	20,983	$	19,290
Held in trust pursuant to third party requirements		164,845		161,901
Total (1)	$	185,828	$	181,191

(1)

Includes cash and cash equivalents of $9.3 million and $3.7 million at June 30, 2023 and December 31, 2022, respectively, with the remainder related to bonds available for sale.