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Investments | 3 Months Ended
--- | ---
Mar. 31, 2024
Investments |
Investments | Note 3 - Investments Fixed-Maturity Securities The amortized cost, estimated fair value, and gross unrealized gains and losses on investments in fixed-maturity securities classified as available-for-sale for which an allowance for credit loss has not been recorded, as of March 31, 2024 and December 31, 2023 are summarized as follows:
|  | March 31, 2024 |
|  | 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: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. government corporations and agencies (1) |  | $ | 35,735,950 |  |  | $ | - |  |  | $ | (28,592 | ) |  | $ | - |  |  | $ | 35,707,358 |  |  | $ | (28,592 | )
Political subdivisions of States, Territories and Possessions |  |  | 16,600,086 |  |  |  | - |  |  |  | - |  |  |  | (3,289,577 | ) |  |  | 13,310,509 |  |  |  | (3,289,577 | )
Corporate and other bonds |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Industrial and miscellaneous |  |  | 74,663,044 |  |  |  | - |  |  |  | - |  |  |  | (6,019,568 | ) |  |  | 68,643,476 |  |  |  | (6,019,568 | )
Residential mortgage and other asset backed securities (2) |  |  | 50,345,615 |  |  |  | 133,220 |  |  |  | (3,266 | ) |  |  | (6,889,842 | ) |  |  | 43,585,727 |  |  |  | (6,759,888 | )
Total fixed-maturity securities |  | $ | 177,344,695 |  |  | $ | 133,220 |  |  | $ | (31,858 | ) |  | $ | (16,198,987 | ) |  | $ | 161,247,070 |  |  | $ | (16,097,625 | )
|  | December 31, 2023 |
|  | 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: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. government corporations and agencies (1) |  | $ | 20,954,764 |  |  | $ | 1,799 |  |  | $ | (17,373 | ) |  | $ | - |  |  | $ | 20,939,190 |  |  | $ | (15,574 | )
Political subdivisions of States, Territories and Possessions |  |  | 16,607,713 |  |  |  | - |  |  |  | - |  |  |  | (3,209,161 | ) |  |  | 13,398,552 |  |  |  | (3,209,161 | )
Corporate and other bonds |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Industrial and miscellaneous |  |  | 75,993,042 |  |  |  | - |  |  |  | - |  |  |  | (5,885,296 | ) |  |  | 70,107,746 |  |  |  | (5,885,296 | )
Residential mortgage and other asset backed securities (2) |  |  | 50,905,423 |  |  |  | 113,761 |  |  |  | (2,144 | ) |  |  | (6,541,731 | ) |  |  | 44,475,309 |  |  |  | (6,430,114 | )
Total fixed-maturity securities |  | $ | 164,460,942 |  |  | $ | 115,560 |  |  | $ | (19,517 | ) |  | $ | (15,636,188 | ) |  | $ | 148,920,797 |  |  | $ | (15,540,145 | )
(1) | In October 2022, KICO placed certain U.S. Treasury securities to fulfill the required collateral for a sale-leaseback transaction in a designated custodian account (see Note 9 – Debt - “Equipment Financing”). As of March 31, 2024 and December 31, 2023, the amount of required collateral was approximately $6,576,000 and $6,999,000, respectively. As of March 31, 2024 and December 31, 2023, the estimated fair value of the U.S. Treasury securities used as eligible collateral was approximately $ 5,969,000 and $11,960,000, respectively. As of March 31, 2024, cash was used to cover the remaining eligible collateral.
(2) | KICO has placed certain residential mortgage backed securities as eligible collateral in a designated custodian account related to its membership in the Federal Home Loan Bank of New York (“FHLBNY”) (see Note 9 – Debt – “Federal Home Loan Bank”). The eligible collateral would be pledged to FHLBNY if KICO draws an advance from the FHLBNY credit line. As of March 31, 2024, the estimated fair value of the eligible investments was approximately $10,929,000. KICO will retain all rights regarding all securities if pledged as collateral. As of March 31, 2024 and December 31, 2023 there was no outstanding balance on the FHLBNY credit line.
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, 2024 and December 31, 2023 is shown below:
|  | March 31, 2024 |  |  | December 31, 2023 |
|  | Amortized |  |  | Estimated |  |  | Amortized |  |  | Estimated |
Remaining Time to Maturity |  | Cost |  |  | Fair Value |  |  | Cost |  |  | Fair Value |
Less than one year |  | $ | 52,751,113 |  |  | $ | 52,469,326 |  |  | $ | 34,729,120 |  |  | $ | 34,461,172 |
One to five years |  |  | 28,855,096 |  |  |  | 27,378,577 |  |  |  | 31,803,338 |  |  |  | 30,416,618 |
Five to ten years |  |  | 31,468,786 |  |  |  | 26,916,621 |  |  |  | 31,596,410 |  |  |  | 27,330,377 |
More than 10 years |  |  | 13,924,085 |  |  |  | 10,896,819 |  |  |  | 15,426,651 |  |  |  | 12,237,321 |
Residential mortgage and other asset backed securities |  |  | 50,345,615 |  |  |  | 43,585,727 |  |  |  | 50,905,423 |  |  |  | 44,475,309 |
Total |  | $ | 177,344,695 |  |  | $ | 161,247,070 |  |  | $ | 164,460,942 |  |  | $ | 148,920,797 |
The actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalties. There was no allowance for credit losses on fixed-maturity securities as of March 31, 2024 and December 31, 2023, respectively. Equity Securities The cost and estimated fair value of, and gross unrealized gains and losses on, investments in equity securities as of March 31, 2024 and December 31, 2023 are as follows:
|  | March 31, 2024 |
|  |  |  |  | Gross |  |  | Gross |  |  |  |
|  |  |  |  | Unrealized |  |  | Unrealized |  |  | Estimated |
Category |  | Cost |  |  | Gains |  |  | Losses |  |  | Fair Value |
Equity Securities: |  |  |  |  |  |  |  |  |  |  |  |
Preferred stocks |  | $ | 11,815,602 |  |  | $ | - |  |  | $ | (2,246,277 | ) |  | $ | 9,569,325 |
Fixed income exchange traded funds |  |  | 3,711,232 |  |  |  | - |  |  |  | (723,832 | ) |  |  | 2,987,400 |
Mutual funds |  |  | 523,320 |  |  |  | 387,388 |  |  |  | - |  |  |  | 910,708 |
FHLBNY common stock |  |  | 69,400 |  |  |  | - |  |  |  | - |  |  |  | 69,400 |
Total |  | $ | 16,119,554 |  |  | $ | 387,388 |  |  | $ | (2,970,109 | ) |  | $ | 13,536,833 |
|  | December 31, 2023 |
|  |  |  |  | Gross |  |  | Gross |  |  |  |
|  |  |  |  | Unrealized |  |  | Unrealized |  |  | Estimated |
Category |  | Cost |  |  | Gains |  |  | Losses |  |  | Fair Value |
Equity Securities: |  |  |  |  |  |  |  |  |  |  |  |
Preferred stocks |  | $ | 13,583,942 |  |  | $ | - |  |  | $ | (2,870,027 | ) |  | $ | 10,713,915 |
Fixed income exchange traded funds |  |  | 3,711,232 |  |  |  |  |  |  |  | (669,232 | ) |  |  | 3,042,000 |
Mutual funds |  |  | 622,209 |  |  |  | 314,816 |  |  |  | - |  |  |  | 937,025 |
FHLBNY common stock |  |  | 69,400 |  |  |  | - |  |  |  | - |  |  |  | 69,400 |
Total |  | $ | 17,986,783 |  |  | $ | 314,816 |  |  | $ | (3,539,259 | ) |  | $ | 14,762,340 |
Other Investments The cost and estimated fair value of, and gross gains on, the Company’s other investments as of March 31, 2024 and December 31, 2023 are as follows:
|  | March 31, 2024 |  |  | December 31, 2023 |
|  |  |  |  | Gross |  |  | Estimated |  |  |  |  |  | Gross |  |  | Estimated |
Category |  | Cost |  |  | Gains |  |  | Fair Value |  |  | Cost |  |  | Gains |  |  | Fair Value |
Other Investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Hedge fund |  | $ | 1,987,040 |  |  | $ | 2,087,136 |  |  | $ | 4,074,176 |  |  | $ | 1,987,040 |  |  | $ | 1,910,110 |  |  | $ | 3,897,150 |
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, 2024 and December 31, 2023 are summarized as follows:
|  | March 31, 2024 |
|  | 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 |
Held-to-Maturity Securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities |  | $ | 1,228,936 |  |  | $ | 1,818 |  |  | $ | (14,906 | ) |  | $ | (23,047 | ) |  | $ | 1,192,801 |  |  | $ | (36,135 | )
Political subdivisions of States, Territories and Possessions |  |  | 499,306 |  |  |  | - |  |  |  | (3,326 | ) |  |  | - |  |  |  | 495,980 |  |  |  | (3,326 | )
Exchange traded debt |  |  | 304,111 |  |  |  | - |  |  |  | - |  |  |  | (64,111 | ) |  |  | 240,000 |  |  |  | (64,111 | )
Corporate and other bonds Industrial and miscellaneous |  |  | 5,018,899 |  |  |  | - |  |  |  | - |  |  |  | (903,769 | ) |  |  | 4,115,130 |  |  |  | (903,769 | )
Total |  | $ | 7,051,252 |  |  | $ | 1,818 |  |  | $ | (18,232 | ) |  | $ | (990,927 | ) |  | $ | 6,043,911 |  |  | $ | (1,007,341 | )
|  | December 31, 2023 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 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 |  | $ | 1,228,860 |  |  | $ | 15,045 |  |  | $ | (6,914 | ) |  | $ | (18,163 | ) |  | $ | 1,218,828 |  |  | $ | (10,032 | )
Political subdivisions of States, Territories and Possessions |  |  | 499,170 |  |  |  | 890 |  |  |  | - |  |  |  | - |  |  |  | 500,060 |  |  |  | 890 |
Exchange traded debt |  |  | 304,111 |  |  |  | - |  |  |  | - |  |  |  | (70,111 | ) |  |  | 234,000 |  |  |  | (70,111 | )
Corporate and other bonds Industrial and miscellaneous |  |  | 5,020,400 |  |  |  | - |  |  |  | - |  |  |  | (867,140 | ) |  |  | 4,153,260 |  |  |  | (867,140 | )
Total |  | $ | 7,052,541 |  |  | $ | 15,935 |  |  | $ | (6,914 | ) |  | $ | (955,414 | ) |  | $ | 6,106,148 |  |  | $ | (946,393 | )
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, 2024 and December 31, 2023 is shown below:
|  | March 31, 2024 |  |  | December 31, 2023 |
|  | Amortized |  |  | Estimated |  |  | Amortized |  |  | Estimated |
Remaining Time to Maturity |  | Cost |  |  | Fair Value |  |  | Cost |  |  | Fair Value |
Less than one year |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
One to five years |  |  | 1,121,488 |  |  |  | 1,087,009 |  |  |  | 1,121,288 |  |  |  | 1,097,101 |
Five to ten years |  |  | 1,418,024 |  |  |  | 1,289,190 |  |  |  | 1,414,911 |  |  |  | 1,270,770 |
More than 10 years |  |  | 4,511,740 |  |  |  | 3,667,712 |  |  |  | 4,516,342 |  |  |  | 3,738,277 |
Total |  | $ | 7,051,252 |  |  | $ | 6,043,911 |  |  | $ | 7,052,541 |  |  | $ | 6,106,148 |
The actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalties. There was no allowance for credit losses on held-to-maturity fixed-maturity securities as of March 31, 2024 and December 31, 2023, respectively. Investment Income Major categories of the Company’s net investment income are summarized as follows:
|  | Three months ended |
|  | March 31, |
|  | 2024 |  |  | 2023 |
Income: |  |  |  |  |  |
Fixed-maturity securities |  | $ | 1,182,629 |  |  | $ | 1,417,709 |
Equity securities |  |  | 177,169 |  |  |  | 176,877 |
Cash and cash equivalents |  |  | 196,137 |  |  |  | 32,858 |
Total |  |  | 1,555,935 |  |  |  | 1,627,444 |
Expenses: |  |  |  |  |  |  |  |
Investment expenses |  |  | 53,075 |  |  |  | 85,952 |
Net investment income |  | $ | 1,502,860 |  |  | $ | 1,541,492 |
There were no redemptions of fixed-maturity securities held-to-maturity for the three months ended March 31, 2024 and 2023. Proceeds from the sale or maturity of fixed-maturity securities available-for-sale were $32,801,612 and $13,554,928 for the three months ended March 31, 2024 and 2023, respectively. Proceeds from the sale of equity securities were $1,777,738 and $75,554 for the three months ended March 31, 2024 and 2023, respectively. The Company’s net gains on investments are summarized as follows:
|  | Three months ended |
|  | March 31, |
|  | 2024 |  |  | 2023 |
Realized Losses |  |  |  |  |  |
Fixed-maturity securities: |  |  |  |  |  |
Gross realized gains |  | $ | 84 |  |  | $ | 418 |
Gross realized losses |  |  | (2,951 | ) |  |  | (3,057 | )
|  |  | (2,867 | ) |  |  | (2,639 | )
Equity securities: |  |  |  |  |  |  |  |
Gross realized gains |  |  | 5,120 |  |  |  | - |
Gross realized losses |  |  | (94,610 | ) |  |  | - |
|  |  | (89,490 | ) |  |  | - |
Net realized losses |  |  | (92,357 | ) |  |  | (2,639 | )
Unrealized Gains |  |  |  |  |  |  |  |
Equity Securities: |  |  |  |  |  |  |  |
Gross gains |  |  | 641,722 |  |  |  | 863,713 |
Gross losses |  |  | - |  |  |  | - |
|  |  | 641,722 |  |  |  | 863,713 |
Other Investments: |  |  |  |  |  |  |  |
Gross gains |  |  | 177,026 |  |  |  | 363,797 |
Gross losses |  |  | - |  |  |  | - |
|  |  | 177,026 |  |  |  | 363,797 |
Net unrealized gains |  |  | 818,748 |  |  |  | 1,227,510 |
Net gains on investments |  | $ | 726,391 |  |  | $ | 1,224,871 |
Allowance for Credit Loss For available-for-sale fixed maturity securities, a credit loss exists if the present value of cash flows expected to be collected is less than the amortized cost basis. The allowance for credit losses related to available-for-sale fixed maturity securities is the difference between the present value of cash flows expected to be collected and the amortized cost basis, limited by the amount that the fair value is less than the amortized cost basis. The Company considers all available evidence when determining whether an investment requires a credit loss write-down or allowance to be recorded, which is recognized in net loss through an allowance for credit losses. Any remaining decline in fair value represents the noncredit portion of the impairment, which is recognized in other comprehensive income (loss). The Company did not identify any available-for-sale securities as of March 31, 2024 which presented a risk of loss due to credit deterioration of the security. At both March 31, 2024 and December 31, 2023, there were 140 fixed-maturity securities that accounted for the gross unrealized losses. The Company determined that none of the unrealized losses were deemed to be credit losses for its portfolio of investments for the three months ended March 31, 2024 and 2023. Significant factors influencing the Company’s determination that unrealized losses were temporary included credit quality considerations, the magnitude of the unrealized losses in relation to each security’s cost, the nature of the investment and interest rate environment factors, 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, 2024 as follows:
|  | March 31, 2024 |
|  | 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 |
Available-for-Sale Securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. government corporations and agencies |  | $ | 35,707,358 |  |  | $ | (28,592 | ) |  |  | 2 |  |  | $ | - |  |  |  | - |  |  |  | - |  |  | $ | 35,707,358 |  |  | $ | (28,592 | )
Political subdivisions of States, Territories and Possessions |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 13,310,509 |  |  |  | (3,289,577 | ) |  |  | 13 |  |  |  | 13,310,509 |  |  |  | (3,289,577 | )
Corporate and other bonds industrial and miscellaneous |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 67,648,476 |  |  |  | (6,019,568 | ) |  |  | 82 |  |  |  | 67,648,476 |  |  |  | (6,019,568 | )
Residential mortgage and other asset backed securities |  |  | 111,165 |  |  |  | (3,266 | ) |  |  | 6 |  |  |  | 37,784,418 |  |  |  | (6,889,842 | ) |  |  | 37 |  |  |  | 37,895,583 |  |  |  | (6,893,108 | )
Total fixed-maturity securities |  | $ | 35,818,523 |  |  | $ | (31,858 | ) |  |  | 8 |  |  | $ | 118,743,403 |  |  | $ | (16,198,987 | ) |  |  | 132 |  |  | $ | 154,561,926 |  |  | $ | (16,230,845 | )
The Company held available-for-sale securities with unrealized losses representing declines that were considered temporary at December 31, 2023 as follows:
|  | December 31, 2023 |
|  | 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 |
Available-for-Sale Securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. government corporations and agencies |  | $ | 5,974,440 |  |  | $ | (17,373 | ) |  |  | 1 |  |  | $ | - |  |  |  | - |  |  |  | - |  |  | $ | 5,974,440 |  |  | $ | (17,373 | )
Political subdivisions of States, Territories and Possessions |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 13,398,552 |  |  |  | (3,209,161 | ) |  |  | 13 |  |  |  | 13,398,552 |  |  |  | (3,209,161 | )
Corporate and other bonds industrial and miscellaneous |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 70,107,746 |  |  |  | (5,885,296 | ) |  |  | 85 |  |  |  | 70,107,746 |  |  |  | (5,885,296 | )
Residential mortgage and other asset backed securities |  |  | 88,988 |  |  |  | (2,144 | ) |  |  | 4 |  |  |  | 38,675,604 |  |  |  | (6,541,731 | ) |  |  | 37 |  |  |  | 38,764,592 |  |  |  | (6,543,875 | )
Total fixed-maturity securities |  | $ | 6,063,428 |  |  | $ | (19,517 | ) |  |  | 5 |  |  | $ | 122,181,902 |  |  | $ | (15,636,188 | ) |  |  | 135 |  |  | $ | 128,245,330 |  |  | $ | (15,655,705 | )

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