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Investments

3 Months Ended

Mar. 31, 2024

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	)