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Investments (Tables)

9 Months Ended

Sep. 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 September 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 September 30, 2023
Fixed maturities:
U.S. treasuries	$	451,829	$	—	$	13	$	(6,671	)	$	445,171
Obligations of states and political subdivisions		27,975		—		—		(1,760	)		26,215
Mortgage-backed securities		66,571		—		18		(7,487	)		59,102
Asset-backed securities		208,011		—		87		(7,124	)		200,974
Commercial mortgage-backed securities		85,375		—		13		(6,628	)		78,760
Corporate bonds		331,758		—		80		(11,351	)		320,487
Foreign corporate bonds		162,611		—		11		(6,236	)		156,386
Total fixed maturities	$	1,334,130	$	—	$	222	$	(47,257	)	$	1,287,095


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


(Dollars in thousands)	September 30, 2023		December 31, 2022
Common stock	$	1,189	$	1,271
Preferred stock		15,765		16,249
Total	$	16,954	$	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 September 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	$	652,549	$	645,791
Due in one year through five years		294,500		279,512
Due in five years through ten years		15,533		13,157
Due after ten years		11,591		9,799
Mortgage-backed securities		66,571		59,102
Asset-backed securities		208,011		200,974
Commercial mortgage-backed securities		85,375		78,760
Total	$	1,334,130	$	1,287,095

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 September 30, 2023. The fair value amounts reported in the table are estimates that are prepared using the process described in Note 6.


	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	$	97,951	$	(1,146	)	$	252,138	$	(5,525	)	$	350,089	$	(6,671	)
Obligations of states and political subdivisions		—		—			26,215		(1,760	)		26,215		(1,760	)
Mortgage-backed securities		22,425		(1,738	)		35,093		(5,749	)		57,518		(7,487	)
Asset-backed securities		66,818		(1,024	)		115,001		(6,100	)		181,819		(7,124	)
Commercial mortgage-backed securities		2,203		(105	)		76,236		(6,523	)		78,439		(6,628	)
Corporate bonds		57,729		(566	)		241,105		(10,785	)		298,834		(11,351	)
Foreign corporate bonds		27,112		(104	)		115,392		(6,132	)		142,504		(6,236	)
Total fixed maturities	$	274,238	$	(4,683	)	$	861,180	$	(42,574	)	$	1,135,418	$	(47,257	)

December 31, 2022. The fair value amounts reported in the table are estimates that are prepared using the process described in Note 6.


	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 nine months ended September 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 September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2023		2022		2023		2022 (1)
Fixed maturities:
Impairment related to intent to sell		—		—		—		(26,205	)
Total	$	—	$	—	$	—	$	(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 4.0% at September 30, 2023.

Schedule of Accumulated Other Comprehensive Income, Net of Tax

Accumulated other comprehensive income (loss), net of tax, as of September 30, 2023 and December 31, 2022 was as follows:


(Dollars in thousands)	September 30, 2023			December 31, 2022
Net unrealized gains (losses) from:
Fixed maturities	$	(47,035	)	$	(53,525	)
Foreign currency fluctuations		(509	)		(127	)
Deferred taxes		9,427			10,594
Accumulated other comprehensive income (loss), net of tax	$	(38,117	)	$	(43,058	)

Changes in Accumulated Other Comprehensive Income

The following tables present the changes in accumulated other comprehensive income (loss), net of tax, by components, for the quarters and nine months ended September 30, 2023 and 2022:


Quarter Ended September 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	$	(36,912	)	$	(259	)	$	(37,171	)
Other comprehensive loss before reclassification, before tax		(1,192	)		(181	)		(1,373	)
Amounts reclassified from accumulated other comprehensive income, before tax		118			—			118
Other comprehensive loss, before tax		(1,074	)		(181	)		(1,255	)
Income tax benefit		271			38			309
Ending balance, net of tax	$	(37,715	)	$	(402	)	$	(38,117	)


Quarter Ended September 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	$	(26,395	)	$	(230	)	$	(26,625	)
Other comprehensive loss before reclassification, before tax		(23,133	)		(163	)		(23,296	)
Amounts reclassified from accumulated other comprehensive income, before tax		259			—			259
Other comprehensive loss, before tax		(22,874	)		(163	)		(23,037	)
Income tax benefit		4,291			34			4,325
Ending balance, net of tax	$	(44,978	)	$	(359	)	$	(45,337	)


Nine Months Ended September 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		5,179			(382	)		4,797
Amounts reclassified from accumulated other comprehensive income, before tax		1,311			—			1,311
Other comprehensive income (loss), before tax		6,490			(382	)		6,108
Income tax (expense) benefit		(1,247	)		80			(1,167	)
Ending balance, net of tax	$	(37,715	)	$	(402	)	$	(38,117	)


Nine Months Ended September 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		(102,400	)		(309	)		(102,709	)
Amounts reclassified from accumulated other comprehensive income, before tax		38,340			—			38,340
Other comprehensive loss, before tax		(64,060	)		(309	)		(64,369	)
Income tax benefit		12,563			65			12,628
Ending balance, net of tax	$	(44,978	)	$	(359	)	$	(45,337	)

Reclassifications Out of Accumulated Other Comprehensive Income

The reclassifications out of accumulated other comprehensive income (loss) for the quarters and nine months ended September 30, 2023 and 2022 were as follows:


		Amounts Reclassified from Accumulated Other Comprehensive Income
(Dollars in thousands)		Quarters Ended September 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	$	118		$	259
	Other than temporary impairment losses on investments		—			—
	Total before tax	$	118		$	259
	Income tax expense (benefit)		(24	)		(65	)
	Total reclassifications, net of tax	$	94		$	194


		Amounts Reclassified from Accumulated Other Comprehensive Income
(Dollars in thousands)		Nine Months Ended September 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	$	1,311		$	12,135
	Other than temporary impairment losses on investments		—			26,205
	Total before tax	$	1,311		$	38,340
	Income tax expense (benefit)		(251	)		(7,184	)
	Total reclassifications, net of tax	$	1,060		$	31,156

Components of Net Realized Investment Gains (Losses)

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


	Quarters Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2023			2022			2023			2022
Fixed maturities:
Gross realized gains	$	15		$	226		$	29		$	512
Gross realized losses		(133	)		(485	)		(1,340	)		(38,852	)
Net realized gains (losses)		(118	)		(259	)		(1,311	)		(38,340	)
Equity securities:
Gross realized gains		163			159			726			1,803
Gross realized losses		(178	)		(219	)		(1,829	)		(5,623	)
Net realized gains (losses)		(15	)		(60	)		(1,103	)		(3,820	)
Derivatives:
Gross realized gains		—			2,906			—			11,867
Gross realized losses		—			(353	)		—			(2,774	)
Net realized gains (losses) (1)		—			2,553			—			9,093
Total net realized investment gains (losses)	$	(133	)	$	2,234		$	(2,414	)	$	(33,067	)

(1)

Includes periodic net interest settlements related to the derivatives of $0.5 million for the quarters ended September 30, 2022 and $3.0 million for the nine months ended September 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 September 30, 2023 and 2022:


	Quarters Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2023			2022			2023			2022
Net gains (losses) recognized during the period on equity securities	$	(15	)	$	(60	)	$	(1,103	)	$	(3,820	)
Less: net gains (losses) recognized during the period on equity securities sold during the period		15			—			32			10,616
Unrealized gains (losses) recognized during the reporting period on equity securities	$	(30	)	$	(60	)	$	(1,135	)	$	(14,436	)

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 nine months ended September 30, 2023 and 2022 were as follows:


	Nine Months Ended September 30,
(Dollars in thousands)	2023		2022
Fixed maturities	$	114,058	$	866,458
Equity securities		24		88,726

Schedule of Investment Income

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


	Quarters Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2023			2022			2023			2022
Fixed maturities	$	12,961		$	9,595		$	36,734		$	23,466
Equity securities		188			233			635			842
Cash and cash equivalents		501			89			1,064			220
Other invested assets		916			(1,061	)		2,080			(5,935	)
Total investment income		14,566			8,856			40,513			18,593
Investment expense		(366	)		(467	)		(1,089	)		(1,682	)
Net investment income	$	14,200		$	8,389		$	39,424		$	16,911

Schedule of Total Investment Return

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


	Quarters Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2023			2022			2023			2022
Net investment income	$	14,200		$	8,389		$	39,424		$	16,911
Net realized investment losses		(133	)		2,234			(2,414	)		(33,067	)
Change in unrealized holding gains (losses)		(1,254	)		(23,037	)		6,108			(64,369	)
Net realized and unrealized investment returns		(1,387	)		(20,803	)		3,694			(97,436	)
Total investment return	$	12,813		$	(12,414	)	$	43,118		$	(80,525	)
Total investment return % (1)		0.9	%		(0.9	%)		3.2	%		(5.6	%)
Average investment portfolio (2)	$	1,355,077		$	1,341,285		$	1,354,727		$	1,444,037

(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 September 30, 2023 and December 31, 2022:


	Estimated Fair Value
(Dollars in thousands)	September 30, 2023		December 31, 2022
On deposit with governmental authorities	$	18,721	$	19,290
Held in trust pursuant to third party requirements		166,025		161,901
Total (1)	$	184,746	$	181,191

(1)

Includes cash and cash equivalents of $10.4 million and $3.7 million at September 30, 2023 and December 31, 2022, respectively, with the remainder related to bonds available for sale.