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Investments

3 Months Ended

Mar. 31, 2022

Investments

Note 3 - Investments

Fixed-Maturity Securities

The amortized cost, estimated fair value, and unrealized gains and losses on investments in fixed-maturity securities classified as available-for-sale as of March 31, 2022 and December 31, 2021 are summarized as follows:

		March 31, 2022

		Cost or				Gross				Gross Unrealized Losses								Estimated				Net
		Amortized				Unrealized				Less than 12				More than 12				Fair				Unrealized
Category		Cost				Gains				Months				Months				Value				Losses

Fixed-Maturity Securities:
Political subdivisions of States,
Territories and Possessions		$	17,227,562			$	5,692			$	(1,614,463	)		$	-			$	15,618,791			$	(1,608,771	)

Corporate and other bonds
Industrial and miscellaneous			85,566,044				336,272				(3,143,378	)			-				82,758,938				(2,807,106	)

Residential mortgage and other asset backed securities			56,656,711				289,836				(3,119,931	)			(306,849	)			53,519,767				(3,136,944	)
Total fixed-maturity securities		$	159,450,317			$	631,800			$	(7,877,772	)		$	(306,849	)		$	151,897,496			$	(7,552,821	)

		December 31, 2021
																						Net
		Cost or				Gross				Gross Unrealized Losses								Estimated				Unrealized
		Amortized				Unrealized				Less than 12				More than 12				Fair				Gains/
Category		Cost				Gains				Months				Months				Value				(Losses)

Fixed-Maturity Securities:
Political subdivisions of States,
Territories and Possessions		$	17,236,750			$	246,748			$	(197,984	)		$	-			$	17,285,514			$	48,764

Corporate and other bonds
Industrial and miscellaneous			80,534,769				2,603,411				(126,926	)			-				83,011,254				2,476,485

Residential mortgage and other asset backed securities			58,036,959				355,985				(489,258	)			(120,344	)			57,783,342				(253,617	)
Total fixed-maturity securities		$	155,808,478			$	3,206,144			$	(814,168	)		$	(120,344	)		$	158,080,110			$	2,271,632

A summary of the amortized cost and estimated fair value of the Company’s investments in available-for-sale fixed-maturity securities by contractual maturity as of March 31, 2022 and December 31, 2021 is shown below:

		March 31, 2022								December 31, 2021
		Amortized				Estimated				Amortized				Estimated
Remaining Time to Maturity		Cost				Fair Value				Cost				Fair Value

Less than one year		$	496,511			$	503,090			$	1,153,099			$	1,156,636
One to five years			46,504,448				46,284,000				43,007,110				44,914,759
Five to ten years			29,499,983				27,743,070				26,808,853				27,332,581
More than 10 years			26,292,664				23,847,569				26,802,457				26,892,792
Residential mortgage and other asset backed securities			56,656,711				53,519,767				58,036,959				57,783,342
Total		$	159,450,317			$	151,897,496			$	155,808,478			$	158,080,110

The actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalties.

Equity Securities

The cost and estimated fair value of, and gross unrealized gains and losses on, investments in equity securities as of March 31, 2022 and December 31, 2021 are as follows:

		March 31, 2022
						Gross				Gross				Estimated
Category		Cost				Gains				Losses				Fair Value

Equity Securities:
Preferred stocks		$	19,944,128			$	333,811			$	(1,793,476	)		$	18,484,463
Common stocks, mutual funds, and exchange traded funds			13,145,504				837,696				(702,254	)			13,280,946
Total		$	33,089,632			$	1,171,507			$	(2,495,730	)		$	31,765,409




		December 31, 2021
						Gross				Gross				Estimated
Category		Cost				Gains				Losses				Fair Value

Equity Securities:
Preferred stocks		$	22,019,509			$	1,007,009			$	(184,617	)		$	22,841,901
Common stocks, mutual funds, and exchange traded funds			15,451,160				1,573,653				(179,712	)			16,845,101
Total		$	37,470,669			$	2,580,662			$	(364,329	)		$	39,687,002

Other Investments

The cost and estimated fair value of, and gross gains on, the Company’s other investments as of March 31, 2022 and December 31, 2021 are as follows:

		March 31, 2022												December 31, 2021
						Gross				Estimated								Gross				Estimated
Category		Cost				Gains				Fair Value				Cost				Gains				Fair Value

Other Investments:
Hedge fund		$	3,999,381			$	2,626,502			$	6,625,883			$	3,999,381			$	3,562,034			$	7,561,415

Held-to-Maturity Securities

The cost or amortized cost and estimated fair value of, and unrealized gross gains and losses on, investments in held-to-maturity fixed-maturity securities as of March 31, 2022 and December 31, 2021 are summarized as follows:

		March 31, 2022
																						Net
		Cost or				Gross				Gross Unrealized Losses								Estimated				Unrealized
		Amortized				Unrealized				Less than 12				More than 12				Fair				Gains/
Category		Cost				Gains				Months				Months				Value				(Losses)

Held-to-Maturity Securities:
U.S. Treasury securities		$	729,654			$	202,788			$	(1,177	)		$	-			$	931,265			$	201,611

Political subdivisions of States,
Territories and Possessions			498,249				8,421				-				-				506,670				8,421

Exchange traded debt			304,111				-				(21,611	)							282,500				(21,611	)

Corporate and other bonds
Industrial and miscellaneous			6,233,124				56,601				(380,860	)			-				5,908,865				(324,259	)
Total		$	7,765,138			$	267,810			$	(403,648	)		$	-			$	7,629,300			$	(135,838	)

		December 31, 2021
																						Net
		Cost or				Gross				Gross Unrealized Losses								Estimated				Unrealized
		Amortized				Unrealized				Less than 12				More than 12				Fair				Gains/
Category		Cost				Gains				Months				Months				Value				(Losses)

Held-to-Maturity Securities:
U.S. Treasury securities		$	729,642			$	209,633			$	-			$	-			$	939,275			$	209,633

Political subdivisions of States,
Territories and Possessions			998,239				22,856				-				-				1,021,095				22,856

Exchange traded debt			304,111				85				(13,921	)							290,275				(13,836	)

Corporate and other bonds
Industrial and miscellaneous			6,234,342				280,951				(12,779	)			-				6,502,514				268,172
Total		$	8,266,334			$	513,525			$	(26,700	)		$	-			$	8,753,159			$	486,825

Held-to-maturity U.S. Treasury securities are held in trust pursuant to various states’ minimum funds requirements.

A summary of the amortized cost and estimated fair value of the Company’s investments in held-to-maturity securities by contractual maturity as of March 31, 2022 and December 31, 2021 is shown below:

		March 31, 2022								December 31, 2021
		Amortized				Estimated				Amortized				Estimated
Remaining Time to Maturity		Cost				Fair Value				Cost				Fair Value

Less than one year		$	494,595			$	501,795			$	994,712			$	1,008,180
One to five years			1,206,159				1,262,780				1,205,829				1,290,465
Five to ten years			1,516,810				1,494,773				1,513,942				1,648,808
More than 10 years			4,547,574				4,369,952				4,551,851				4,805,706
Total		$	7,765,138			$	7,629,300			$	8,266,334			$	8,753,159

The actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalties.

Investment Income

Major categories of the Company’s net investment income are summarized as follows:

		Three months ended
		March 31,
		2022				2021

Income:
Fixed-maturity securities		$	1,140,189			$	1,491,127
Equity securities			345,168				357,311
Cash and cash equivalents			183				924
Total			1,485,540				1,849,362
Expenses:
Investment expenses			126,440				66,166
Net investment income		$	1,359,100			$	1,783,196

Proceeds from the redemption of fixed-maturity securities held-to-maturity were $500,000 and $-0- for the three months ended March 31, 2022 and 2021, respectively.

Proceeds from the sale or maturity of fixed-maturity securities available-for-sale were $10,181,658 and $11,548,405 for the three months ended March 31, 2022 and 2021, respectively.

Proceeds from the sale of equity securities were $4,994,884 and $6,433,262 for the three months ended March 31, 2022 and 2021, respectively.

The Company’s net (losses) gains on investments are summarized as follows:

		Three months ended
		March 31,
		2022				2021
Realized Gains (Losses)

Fixed-maturity securities:
Gross realized gains		$	85,100			$	410,311
Gross realized losses			(126,424	)			(15,986	)
			(41,324	)			394,325

Equity securities:
Gross realized gains			448,306				933,122
Gross realized losses			(329,221	)			(200,213	)
			119,085				732,909

Net realized gains			77,761				1,127,234

Unrealized (Losses) Gains

Equity Securities:
Gross gains			-				1,003,209
Gross losses			(3,560,634	)			-
			(3,560,634	)			1,003,209

Other Investments:
Gross gains			-				829,964
Gross losses			(915,532	)			-
			(915,532	)			829,964

Net unrealized (losses) gains			(4,476,166	)			1,833,173

Net (losses) gains on investments		$	(4,398,405	)		$	2,960,407

Impairment Review

Impairment of investment securities results in a charge to operations when a market decline below cost is deemed to be other-than-temporary. The Company regularly reviews its fixed-maturity securities to evaluate the necessity of recording impairment losses for other-than-temporary declines in the estimated fair value of investments. In evaluating potential impairment, GAAP specifies (i) if the Company does not have the intent to sell a debt security prior to recovery and (ii) it is more likely than not that it will not have to sell the debt security prior to recovery, the security would not be considered other-than-temporarily impaired unless there is a credit loss. When the Company does not intend to sell the security and it is more likely than not that the Company will not have to sell the security before recovery of its cost basis, it will recognize the credit component of an other-than-temporary impairment (“OTTI”) of a debt security in earnings and the remaining portion in comprehensive loss. The credit loss component recognized in earnings is identified as the amount of principal cash flows not expected to be received over the remaining term of the security based on cash flow projections. For held-to-maturity fixed-maturity securities, the amount of OTTI recorded in comprehensive loss for the noncredit portion of a previous OTTI is amortized prospectively over the remaining life of the security based on timing of future estimated cash flows of the security.

OTTI losses are recorded in the consolidated statements of operations and comprehensive loss as net realized losses on investments and result in a permanent reduction of the cost basis of the underlying investment. The determination of OTTI is a subjective process and different judgments and assumptions could affect the timing of loss realization. At March 31, 2022 and December 31, 2021, there were 100 and 48 fixed-maturity securities, respectively, that accounted for the gross unrealized losses. The Company determined that none of the unrealized losses were deemed to be OTTI for its portfolio of investments for the three months ended March 31, 2022 and 2021. Significant factors influencing the Company’s determination that unrealized losses were temporary included the magnitude of the unrealized losses in relation to each security’s cost, the nature of the investment and management’s intent and ability to hold the investment for a period of time sufficient to allow for an anticipated recovery of estimated fair value to the Company’s cost basis.

The Company held available-for-sale securities with unrealized losses representing declines that were considered temporary at March 31, 2022 as follows:

		March 31, 2022
		Less than 12 months												12 months or more												Total
		Estimated								No. of				Estimated								No. of				Estimated
		Fair				Unrealized				Positions				Fair				Unrealized				Positions				Fair				Unrealized
Category		Value				Losses				Held				Value				Losses				Held				Value				Losses

Fixed-Maturity Securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies		$	-			$	-				-			$	-				-				-			$	-			$	-

Political subdivisions of States, Territories and Possessions			14,959,121				(1,614,463	)			12				-				-				-				14,959,121				(1,614,463	)

Corporate and other bonds industrial and miscellaneous			51,973,548				(3,143,378	)			55				-				-				-				51,973,548				(3,143,378	)

Residential mortgage and other asset backed securities			40,310,519				(3,119,931	)			31				2,733,402				(306,849	)			2				43,043,921				(3,426,780	)

Total fixed-maturity securities		$	107,243,188			$	(7,877,772	)			98			$	2,733,402			$	(306,849	)			2			$	109,976,590			$	(8,184,621	)

The Company held available-for-sale securities with unrealized losses representing declines that were considered temporary at December 31, 2021 as follows:

		December 31, 2021
		Less than 12 months												12 months or more												Total
		Estimated								No. of				Estimated								No. of				Estimated
		Fair				Unrealized				Positions				Fair				Unrealized				Positions				Fair				Unrealized
Category		Value				Losses				Held				Value				Losses				Held				Value				Losses

Fixed-Maturity Securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies		$	-			$	-				-			$	-				-				-			$	-			$	-

Political subdivisions of States, Territories and Possessions			6,768,123				(197,984	)			5				-				-				-				6,768,123				(197,984	)

Corporate and other bonds industrial and miscellaneous			17,593,707				(126,926	)			15				-				-				-				17,593,707				(126,926	)

Residential mortgage and other asset backed securities			45,399,451				(489,258	)			26				2,923,182				(120,344	)			2				48,322,633				(609,602	)

Total fixed-maturity securities		$	69,761,281			$	(814,168	)			46			$	2,923,182			$	(120,344	)			2			$	72,684,463			$	(934,512	)