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Investments | 12 Months Ended
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Dec. 31, 2022
Investments, Debt and Equity Securities [Abstract] |
Investments | The Company invests primarily in fixed maturity securities, which totaled 86.5% of total cash and invested assets at December 31, 2022.
Carrying Value as of December 31, (In thousands, except for %) | 2022 |  | % |  | 2021 |  | %
Cash and invested assets |  |  |  |  |  |  |
Fixed maturity securities | $ | 1,179,619 |  |  | 86.5 | % |  | $ | 1,470,617 |  |  | 89.0 | %
Equity securities | 11,590 |  |  | 0.8 |  |  | 14,844 |  |  | 0.9 |
Policy loans | 78,773 |  |  | 5.8 |  |  | 80,307 |  |  | 4.9 |
Other long-term investments | 69,558 |  |  | 5.1 |  |  | 57,399 |  |  | 3.5 |
Short-term investments | 1,241 |  |  | 0.1 |  |  | — |  |  | — |
Cash and cash equivalents | 22,973 |  |  | 1.7 |  |  | 27,294 |  |  | 1.7 |
Total cash and invested assets | $ | 1,363,754 |  |  | 100.0 | % |  | $ | 1,650,461 |  |  | 100.0 | %
The following table represents the amortized cost, gross unrealized gains and losses and fair value of fixed maturity securities as of December 31, 2022 and 2021.
December 31, 2022 (In thousands) | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
Fixed maturity securities: |  |  |  |  |  |  |
Available-for-sale: |  |  |  |  |  |  |
U.S. Treasury securities | $ | 9,425 |  |  | 152 |  |  | 9 |  |  | 9,568 |
U.S. Government-sponsored enterprises | 3,434 |  |  | 277 |  |  | 1 |  |  | 3,710 |
States and political subdivisions | 344,208 |  |  | 1,114 |  |  | 37,964 |  |  | 307,358 |
Corporate |  |  |  |  |  |  |
Financial | 243,758 |  |  | 512 |  |  | 42,383 |  |  | 201,887 |
Consumer | 247,824 |  |  | 758 |  |  | 47,138 |  |  | 201,444 |
Utilities | 115,738 |  |  | 39 |  |  | 23,790 |  |  | 91,987 |
Energy | 76,065 |  |  | — |  |  | 11,395 |  |  | 64,670 |
All Other | 184,022 |  |  | 683 |  |  | 29,048 |  |  | 155,657 |
Commercial mortgage-backed | 171 |  |  | — |  |  | 2 |  |  | 169 |
Residential mortgage-backed | 110,582 |  |  | 9 |  |  | 10,765 |  |  | 99,826 |
Asset-backed | 45,991 |  |  | 18 |  |  | 2,767 |  |  | 43,242 |
Foreign governments | 100 |  |  | 1 |  |  | — |  |  | 101 |
Total fixed maturity securities | $ | 1,381,318 |  |  | 3,563 |  |  | 205,262 |  |  | 1,179,619 |
December 31, 2021 (In thousands) | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
Fixed maturity securities: |  |  |  |  |  |  |
Available-for-sale: |  |  |  |  |  |  |
U.S. Treasury securities | $ | 9,515 |  |  | 1,097 |  |  | 1 |  |  | 10,611 |
U.S. Government-sponsored enterprises | 3,463 |  |  | 996 |  |  | — |  |  | 4,459 |
States and political subdivisions | 356,594 |  |  | 28,056 |  |  | 692 |  |  | 383,958 |
Corporate |  |  |  |  |  |  |
Financial | 213,652 |  |  | 22,477 |  |  | 172 |  |  | 235,957 |
Consumer | 219,223 |  |  | 23,658 |  |  | 900 |  |  | 241,981 |
Utilities | 105,738 |  |  | 7,358 |  |  | 801 |  |  | 112,295 |
Energy | 76,989 |  |  | 7,334 |  |  | 68 |  |  | 84,255 |
All Other | 196,403 |  |  | 22,497 |  |  | 380 |  |  | 218,520 |
Residential mortgage-backed | 117,755 |  |  | 16,046 |  |  | 6 |  |  | 133,795 |
Asset-backed | 44,322 |  |  | 368 |  |  | 14 |  |  | 44,676 |
Foreign governments | 101 |  |  | 9 |  |  | — |  |  | 110 |
Total fixed maturity securities | $ | 1,343,755 |  |  | 129,896 |  |  | 3,034 |  |  | 1,470,617 |
Most of the Company's equity securities are diversified stock and bond mutual funds.
Fair Value as of December 31, (In thousands) | 2022 |  | 2021
Equity securities: |  |  |
Stock mutual funds | $ | 2,615 |  |  | 3,571 |
Bond mutual funds | 4,337 |  |  | 5,060 |
Common stock | 857 |  |  | 990 |
Non-redeemable preferred stock | 8 |  |  | 161 |
Non-redeemable preferred stock fund | 3,773 |  |  | 5,062 |
Total equity securities | $ | 11,590 |  |  | 14,844 |
VALUATION OF INVESTMENTS AFS fixed maturity securities are reported in the consolidated financial statements at fair value. Equity securities are measured at fair value with the change in fair value recorded through net income (loss). The Company recognized net realized losses of $2.7 million and net realized gains of $0.4 million on equity securities held for the years ended December 31, 2022 and 2021. The Company monitors all AFS fixed maturity securities on an on-going basis relative to changes in credit ratings, market prices, earnings trends and financial performance, in addition to specific region or industry reviews. The Company evaluates whether a credit impairment exists for fixed maturity securities by considering primarily the following factors: (a) changes in the financial condition of the security's underlying collateral; (b) whether the issuer is current on contractually obligated interest and principal payments; (c) changes in the financial condition, credit rating and near-term prospects of the issuer; and (d) the payment structure of the security. The Company's best estimate of expected future cash flows used to determine the credit loss amount is a quantitative and qualitative process. Quantitative review includes information received from third-party sources such as financial statements, pricing and rating changes, liquidity and other statistical information. Qualitative factors include judgments related to business strategies, economic impacts on the issuer, overall judgment related to estimates and industry factors as well as the Company's intent to sell the security, or if it is more likely than not that the Company would be required to sell a security before recovery of its amortized cost. The Company's best estimate of future cash flows involves assumptions including, but not limited to, various performance indicators, such as historical and projected default and recovery rates, credit ratings, and current delinquency rates. These assumptions require the use of significant management judgment and include the probability of issuer default and estimates regarding timing and amount of expected recoveries, which may include estimating the underlying collateral value. In addition, projections of expected future fixed maturity security cash flows may change based upon new information regarding the performance of the issuer. Any credit losses are presented as an allowance rather than as a write-down on AFS fixed maturity securities management does not intend to sell or believes that it is more likely than not we will be required to sell. The Company recorded no credit valuation losses on fixed maturity securities for the years ended December 31, 2022 and 2021. For fixed maturity security investments that have unrealized losses as of December 31, 2022 and 2021, the gross unrealized losses that have been in a continuous unrealized loss position for less than 12 months, gross unrealized losses that have been in a continuous unrealized loss position for 12 months or longer and fair value are as follows.
December 31, 2022 | Less than 12 months | Greater than 12 months | Total
(In thousands, except for # of securities) | Fair Value | Unrealized Losses | # of Securities | Fair Value | Unrealized Losses | # of Securities | Fair Value | Unrealized Losses | # of Securities
Fixed maturity securities: |  |  |  |  |  |  |  |
Available-for-sale: |  |  |  |  |  |  |  |  |
U.S. Treasury securities | $ | — |  | — |  | — |  | 64 |  | 9 |  | 2 |  | 64 |  | 9 |  | 2 |
U.S. Government-sponsored enterprises | 223 |  | 1 |  | 1 |  | — |  | — |  | — |  | 223 |  | 1 |  | 1 |
States and political subdivisions | 189,084 |  | 30,866 |  | 242 |  | 14,184 |  | 7,098 |  | 14 |  | 203,268 |  | 37,964 |  | 256 |
Corporate |  |  |  |  |  |  |  |  |
Financial | 182,447 |  | 39,122 |  | 237 |  | 6,144 |  | 3,261 |  | 16 |  | 188,591 |  | 42,383 |  | 253 |
Consumer | 164,224 |  | 34,823 |  | 220 |  | 23,417 |  | 12,315 |  | 30 |  | 187,641 |  | 47,138 |  | 250 |
Utilities | 73,483 |  | 15,959 |  | 152 |  | 16,413 |  | 7,831 |  | 18 |  | 89,896 |  | 23,790 |  | 170 |
Energy | 59,053 |  | 9,601 |  | 75 |  | 5,617 |  | 1,794 |  | 8 |  | 64,670 |  | 11,395 |  | 83 |
All Other | 140,955 |  | 25,337 |  | 171 |  | 7,910 |  | 3,711 |  | 15 |  | 148,865 |  | 29,048 |  | 186 |
Commercial mortgage-backed | 168 |  | 2 |  | 2 |  | — |  | — |  | — |  | 168 |  | 2 |  | 2 |
Residential mortgage-backed | 98,758 |  | 10,514 |  | 95 |  | 759 |  | 251 |  | 5 |  | 99,517 |  | 10,765 |  | 100 |
Asset-backed | 37,067 |  | 2,485 |  | 41 |  | 4,264 |  | 282 |  | 9 |  | 41,331 |  | 2,767 |  | 50 |
Total fixed maturity securities | $ | 945,462 |  | 168,710 |  | 1,236 |  | 78,772 |  | 36,552 |  | 117 |  | 1,024,234 |  | 205,262 |  | 1,353 |
December 31, 2021 | Less than 12 months | Greater than 12 months | Total
(In thousands, except for # of securities) | Fair Value | Unrealized Losses | # of Securities | Fair Value | Unrealized Losses | # of Securities | Fair Value | Unrealized Losses | # of Securities
Fixed maturity securities: |  |  |  |  |  |  |  |
Available-for-sale: |  |  |  |  |  |  |  |  |
U.S. Treasury securities | $ | 72 |  | 1 |  | 2 |  | — |  | — |  | — |  | 72 |  | 1 |  | 2 |
States and political subdivisions | 21,715 |  | 692 |  | 15 |  | — |  | — |  | — |  | 21,715 |  | 692 |  | 15 |
Corporate |  |  |  |  |  |  |  |  |
Financial | 8,059 |  | 86 |  | 15 |  | 1,227 |  | 86 |  | 1 |  | 9,286 |  | 172 |  | 16 |
Consumer | 29,494 |  | 777 |  | 28 |  | 2,419 |  | 123 |  | 1 |  | 31,913 |  | 900 |  | 29 |
Utilities | 19,072 |  | 401 |  | 14 |  | 4,523 |  | 400 |  | 4 |  | 23,595 |  | 801 |  | 18 |
Energy | 7,381 |  | 68 |  | 8 |  | — |  | — |  | — |  | 7,381 |  | 68 |  | 8 |
All Other | 14,312 |  | 380 |  | 16 |  | — |  | — |  | — |  | 14,312 |  | 380 |  | 16 |
Residential mortgage-backed | 1,084 |  | 6 |  | 6 |  | — |  | — |  | — |  | 1,084 |  | 6 |  | 6 |
Asset-backed | 9,078 |  | 12 |  | 11 |  | 663 |  | 2 |  | 1 |  | 9,741 |  | 14 |  | 12 |
Total fixed maturity securities | $ | 110,267 |  | 2,423 |  | 115 |  | 8,832 |  | 611 |  | 7 |  | 119,099 |  | 3,034 |  | 122 |
In each category of our fixed maturity securities described below, we do not intend to sell our investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases. At December 31, 2022 and 2021, 98.7% and 98.0%, respectively, of the fair value of our fixed maturity securities portfolio was rated investment grade. While the losses are currently unrealized, we continue to monitor all fixed maturity securities on an on-going basis as future information may become available which could result in an allowance being recorded. The unrealized losses on fixed maturity securities detailed in the previous tables are due to noncredit-related factors, including widening credit spreads and rising interest rates since purchase, which have little bearing on the recoverability of our investments, hence they are not recognized as credit losses. The fair value is expected to recover as the securities approach maturity or if market yields for such investments decline. The amortized cost and fair value of fixed maturity securities at December 31, 2022 by contractual maturity are shown in the table 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. Securities not due at a single maturity date have been reflected based upon final stated maturity.
(In thousands) | Amortized Cost |  | Fair Value
Fixed maturity securities: |  |  |
Due in one year or less | $ | 22,196 |  |  | 22,201 |
Due after one year through five years | 115,395 |  |  | 113,416 |
Due after five years through ten years | 247,611 |  |  | 235,011 |
Due after ten years | 996,116 |  |  | 808,991 |
Total fixed maturity securities | $ | 1,381,318 |  |  | 1,179,619 |
There were no investments that were non-income producing for the years ended December 31, 2022 or 2021. Major categories of net investment income are summarized as follows:
Years ended December 31, (In thousands) | 2022 |  | 2021 |  |
Gross investment income: |  |  |  |  |
Fixed maturity securities | $ | 58,400 |  |  | 55,579 |  |  |
Equity securities | 650 |  |  | 1,024 |  |  |
Policy loans | 6,189 |  |  | 6,420 |  |  |
Other long-term investments | 2,535 |  |  | 809 |  |  |
Other | 246 |  |  | 54 |  |  |
Total investment income | 68,020 |  |  | 63,886 |  |  |
Investment expenses | (2,594) |  |  | (2,391) |  |  |
Net investment income | $ | 65,426 |  |  | 61,495 |  |  |
The Company uses the specific identification method of the individual security to determine the cost basis used in the calculation of realized gains and losses related to security sales.
Years ended December 31, (In thousands) | 2022 |  | 2021 |  |
Fixed maturity securities, available-for-sale: |  |  |  |  |
Proceeds | $ | 33,914 |  |  | 8,238 |  |  |
Gross realized gains | 120 |  |  | 189 |  |  |
Gross realized losses | 112 |  |  | 1 |  |  |
Equity securities: |  |  |  |  |
Proceeds | $ | 500 |  |  | 7,383 |  |  |
Gross realized gains | 44 |  |  | — |  |  |
Gross realized losses | — |  |  | 149 |  |  |
We sold 20 and 28 fixed maturity securities from our available-for-sale portfolio in 2022 and 2021, respectively. There was two sales of equity securities in 2022 and one sale in 2021. Investment related gains (losses) are as follows:
Years ended December 31, (In thousands) | 2022 |  | 2021 |  |
Investment related gains (losses): |  |  |  |  |
Sales, calls and maturities: |  |  |  |  |
Fixed maturity securities | $ | (104) |  |  | 243 |  |  |
Equity securities | 62 |  |  | (152) |  |  |
Real estate | — |  |  | 981 |  |  |
Property and equipment | — |  |  | 13 |  |  |
Other long-term investments | 2,320 |  |  | 1,892 |  |  |
Realized investment gains (losses) | 2,278 |  |  | 2,977 |  |  |
Change in fair value of equity securities | (2,665) |  |  | 376 |  |  |
Change in fair value of limited partnerships | (9,667) |  |  | 7,452 |  |  |
Change in credit loss allowance | (237) |  |  | 186 |  |  |
Net investment related gains (losses) | $ | (10,291) |  |  | 10,991 |  |  |
The Company sold its former training facility near Austin, Texas during 2021 for a gross sale price of $3.8 million, resulting in a gain on the sale of $1.0 million. The facility was owned by Citizens and was held in Other Non-Insurance Enterprises.

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