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Investments | 12 Months Ended
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Dec. 31, 2016
Investments, Debt and Equity Securities [Abstract] |
Investments | 4. Investments Fixed Maturity and Equity Securities Available-for-Sale The following tables provide information relating to investments in fixed maturity and equity securities (in thousands):
December 31, 2016 |  | Amortized |  | Unrealized |  | Unrealized |  | Fair
| Cost |  | Gains |  | Losses |  | Value
Fixed maturity securities |  |  |  |  |  |  |  |
U.S. Government and government agencies |  | $ | 15,910 |  |  | $ | 135 |  |  | $ | (95 | ) |  | $ | 15,950 |
States, municipalities and political subdivisions |  | 374,527 |  |  | 4,408 |  |  | (3,858 | ) |  | 375,077 |
Foreign government |  | 6,380 |  |  | — |  |  | (402 | ) |  | 5,978 |
Residential mortgage-backed securities |  | 136,126 |  |  | 2,634 |  |  | (564 | ) |  | 138,196 |
Commercial mortgage-backed securities |  | 48,715 |  |  | 427 |  |  | (89 | ) |  | 49,053 |
Asset-backed securities |  | 76,303 |  |  | 1,934 |  |  | (572 | ) |  | 77,665 |
Corporate and other |  | 600,458 |  |  | 23,635 |  |  | (7,054 | ) |  | 617,039 |
Total fixed maturity securities |  | $ | 1,258,419 |  |  | $ | 33,173 |  |  | $ | (12,634 | ) |  | $ | 1,278,958 |
Equity securities |  |  |  |  |  |  |  |
Common stocks |  | $ | 16,236 |  |  | $ | — |  |  | $ | (1,371 | ) |  | $ | 14,865 |
Perpetual preferred stocks |  | 37,041 |  |  | 191 |  |  | (578 | ) |  | 36,654 |
Total equity securities |  | $ | 53,277 |  |  | $ | 191 |  |  | $ | (1,949 | ) |  | $ | 51,519 |
December 31, 2015 |  | Amortized |  | Unrealized |  | Unrealized |  | Fair
| Cost |  | Gains |  | Losses |  | Value
Fixed maturity securities |  |  |  |  |  |  |  |
U.S. Government and government agencies |  | $ | 17,131 |  |  | $ | 1 |  |  | $ | (49 | ) |  | $ | 17,083 |
States, municipalities and political subdivisions |  | 387,427 |  |  | 60 |  |  | (1,227 | ) |  | 386,260 |
Foreign government |  | 6,426 |  |  | 3 |  |  | — |  |  | 6,429 |
Residential mortgage-backed securities |  | 166,324 |  |  | 579 |  |  | (588 | ) |  | 166,315 |
Commercial mortgage-backed securities |  | 74,898 |  |  | 233 |  |  | (96 | ) |  | 75,035 |
Asset-backed securities |  | 34,396 |  |  | 106 |  |  | (51 | ) |  | 34,451 |
Corporate and other |  | 553,487 |  |  | 318 |  |  | (7,537 | ) |  | 546,268 |
Total fixed maturity securities |  | $ | 1,240,089 |  |  | $ | 1,300 |  |  | $ | (9,548 | ) |  | $ | 1,231,841 |
Equity securities |  |  |  |  |  |  |  |
Common stocks |  | $ | 19,935 |  |  | $ | 1 |  |  | $ | (1,311 | ) |  | $ | 18,625 |
Perpetual preferred stocks |  | 30,901 |  |  | 162 |  |  | (6 | ) |  | 31,057 |
Total equity securities |  | $ | 50,836 |  |  | $ | 163 |  |  | $ | (1,317 | ) |  | $ | 49,682 |
The Company has investments in mortgage-backed securities ("MBS") that contain embedded derivatives (primarily interest-only MBS) that do not qualify for hedge accounting. The Company recorded the change in the fair value of these securities within Net realized losses on investments. These investments had a fair value of $15.2 million and $21.0 million as of December 31, 2016 and December 31, 2015, respectively. The change in fair value related to these securities resulted in a net loss of approximately $1.2 million for the year ended December 31, 2016 and $0.3 million for the year ended December 31, 2015. Maturities of Fixed Maturity Securities Available-for-Sale The amortized cost and fair value of fixed maturity securities available-for-sale as of December 31, 2016 are shown by contractual maturity in the table below (in thousands). Actual maturities can differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Asset and mortgage-backed securities are shown separately in the table below, as they are not due at a single maturity date:
|  | Amortized |  | Fair
|  | Cost |  | Value
Corporate, Municipal, U.S. Government and Other securities |  |  |  |
Due in one year or less |  | $ | 48,194 |  |  | $ | 44,237 |
Due after one year through five years |  | 113,158 |  |  | 113,987 |
Due after five years through ten years |  | 137,763 |  |  | 139,539 |
Due after ten years |  | 698,160 |  |  | 716,281 |
Subtotal |  | 997,275 |  |  | 1,014,044 |
Mortgage-backed securities |  | 184,841 |  |  | 187,249 |
Asset-backed securities |  | 76,303 |  |  | 77,665 |
Total |  | $ | 1,258,419 |  |  | $ | 1,278,958 |
Corporate Fixed Maturity Securities The tables below show the major industry types of the Company’s corporate and other fixed maturity securities (in thousands):
|  | December 31, 2016 |  | December 31, 2015
|  | Amortized |  | Fair |  | % of |  | Amortized |  | Fair |  | % of
|  | Cost |  | Value |  | Total |  | Cost |  | Value |  | Total
Finance, insurance, and real estate |  | $ | 214,911 |  |  | $ | 211,834 |  |  | 34.3 | % |  | $ | 223,144 |  |  | $ | 217,377 |  |  | 39.8 | %
Transportation, communication and other services |  | 180,647 |  |  | 189,163 |  |  | 30.7 | % |  | 156,022 |  |  | 155,175 |  |  | 28.4 | %
Manufacturing |  | 112,644 |  |  | 118,440 |  |  | 19.2 | % |  | 95,138 |  |  | 94,792 |  |  | 17.4 | %
Other |  | 92,256 |  |  | 97,602 |  |  | 15.8 | % |  | 79,183 |  |  | 78,924 |  |  | 14.4 | %
Total |  | $ | 600,458 |  |  | $ | 617,039 |  |  | 100.0 | % |  | $ | 553,487 |  |  | $ | 546,268 |  |  | 100.0 | %
Other-Than-Temporary Impairments - Fixed Maturity and Equity Securities A portion of certain other-than-temporary impairment (“OTTI”) losses on fixed maturity securities is recognized in AOCI. For these securities the net amount recognized in the consolidated statements of operations (“credit loss impairments”) represents the difference between the amortized cost of the security and the net present value of its projected future cash flows discounted at the effective interest rate implicit in the debt security prior to impairment. Any remaining difference between the fair value and amortized cost is recognized in AOCI. The Company recorded impairments related to two fixed maturity securities for the year ended December 31, 2016. These were a $2.5 million impairment within Other income (expense), net and a $0.2 million impairment within Net realized gains on investments. The Company did not record any impairments on fixed maturity or equity securities during the years ended December 31, 2015 and 2014. Unrealized Losses for Fixed Maturity and Equity Securities Available-for-Sale The following table presents the total unrealized losses for the 269 and 528 fixed maturity and equity securities held by the Company as of December 31, 2016 and December 31, 2015, respectively, where the estimated fair value had declined and remained below amortized cost by the indicated amount (in thousands):
|  | December 31, 2016 |  | December 31, 2015
|  | Unrealized |  | % of |  | Unrealized |  | % of
|  | Losses |  | Total |  | Losses |  | Total
Fixed maturity and equity securities |  |  |  |  |  |  |  |
Less than 20% |  | $ | (10,069 | ) |  | 69.0 | % |  | $ | (5,667 | ) |  | 52.2 | %
20% or more for less than six months |  | (482 | ) |  | 3.3 | % |  | — |  |  | — | %
20% or more for six months or greater |  | (4,032 | ) |  | 27.6 | % |  | (5,198 | ) |  | 47.8 | %
Total |  | $ | (14,583 | ) |  | 100.0 | % |  | $ | (10,865 | ) |  | 100.0 | %
The determination of whether unrealized losses are “other-than-temporary” requires judgment based on subjective as well as objective factors. Factors considered and resources used by management include (i) whether the unrealized loss is credit-driven or a result of changes in market interest rates (ii) the extent to which fair value is less than cost basis (iii) cash flow projections received from independent sources (iv) historical operating, balance sheet and cash flow data contained in issuer SEC filings and news releases (v) near-term prospects for improvement in the issuer and/or its industry (vi) third party research and communications with industry specialists (vii) financial models and forecasts (viii) the continuity of dividend payments, maintenance of investment grade ratings and hybrid nature of certain investments (ix) discussions with issuer management, and (x) ability and intent to hold the investment for a period of time sufficient to allow for anticipated recovery in fair value. The Company analyzes its MBS for other-than-temporary impairment each quarter based upon expected future cash flows. Management estimates expected future cash flows based upon its knowledge of the MBS market, cash flow projections (which reflect loan-to-collateral values, subordination, vintage and geographic concentration) received from independent sources, implied cash flows inherent in security ratings and analysis of historical payment data. The Company believes it will recover its cost basis in the non-impaired securities with unrealized losses and that the Company has the ability to hold the securities until they recover in value. The Company neither intends to sell nor does it expect to be required to sell the securities with unrealized losses as of December 31, 2016 and December 31, 2015, respectively. However, unforeseen facts and circumstances may cause the Company to sell fixed maturity and equity securities in the ordinary course of managing its portfolio to meet certain diversification, credit quality and liquidity guidelines. The following tables present the estimated fair values and gross unrealized losses for the 269 and 528 fixed maturity and equity securities held by the Company that have estimated fair values below amortized cost as of December 31, 2016 and December 31, 2015, respectively. The Company does not have any OTTI losses reported in AOCI. These investments are presented by investment category and the length of time the related fair value has remained below amortized cost (in thousands):
December 31, 2016 |  | Less than 12 months |  | 12 months of greater |  | Total
| Fair |  | Unrealized |  | Fair |  | Unrealized |  | Fair |  | Unrealized
| Value |  | Losses |  | Value |  | Losses |  | Value |  | Losses
Fixed maturity securities |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government and government agencies |  | $ | 4,392 |  |  | $ | (95 | ) |  | $ | — |  |  | $ | — |  |  | $ | 4,392 |  |  | $ | (95 | )
States, municipalities and political subdivisions |  | 207,740 |  |  | (3,858 | ) |  | — |  |  | — |  |  | 207,740 |  |  | (3,858 | )
Foreign government |  | 5,978 |  |  | (402 | ) |  | — |  |  | — |  |  | 5,978 |  |  | (402 | )
Residential mortgage-backed securities |  | 54,385 |  |  | (564 | ) |  | — |  |  | — |  |  | 54,385 |  |  | (564 | )
Commercial mortgage-backed securities |  | 13,159 |  |  | (89 | ) |  | — |  |  | — |  |  | 13,159 |  |  | (89 | )
Asset-backed securities |  | 12,443 |  |  | (572 | ) |  | — |  |  | — |  |  | 12,443 |  |  | (572 | )
Corporate and other |  | 147,653 |  |  | (3,022 | ) |  | 3,579 |  |  | (4,032 | ) |  | 151,232 |  |  | (7,054 | )
Total fixed maturity securities |  | $ | 445,750 |  |  | $ | (8,602 | ) |  | $ | 3,579 |  |  | $ | (4,032 | ) |  | $ | 449,329 |  |  | $ | (12,634 | )
Equity securities |  |  |  |  |  |  |  |  |  |  |  |
Common stocks |  | $ | 14,585 |  |  | $ | (1,371 | ) |  | $ | — |  |  | $ | — |  |  | $ | 14,585 |  |  | $ | (1,371 | )
Perpetual preferred stocks |  | 20,464 |  |  | (578 | ) |  | — |  |  | — |  |  | 20,464 |  |  | (578 | )
Total equity securities |  | $ | 35,049 |  |  | $ | (1,949 | ) |  | $ | — |  |  | $ | — |  |  | $ | 35,049 |  |  | $ | (1,949 | )
December 31, 2015 |  | Less than 12 months |  | 12 months of greater |  | Total
| Fair |  | Unrealized |  | Fair |  | Unrealized |  | Fair |  | Unrealized
| Value |  | Losses |  | Value |  | Losses |  | Value |  | Losses
Fixed maturity securities |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government and government agencies |  | $ | 15,409 |  |  | $ | (49 | ) |  | $ | — |  |  | $ | — |  |  | $ | 15,409 |  |  | $ | (49 | )
States, municipalities and political subdivisions |  | 294,105 |  |  | (1,227 | ) |  | — |  |  | — |  |  | 294,105 |  |  | (1,227 | )
Residential mortgage-backed securities |  | 77,695 |  |  | (588 | ) |  | — |  |  | — |  |  | 77,695 |  |  | (588 | )
Commercial mortgage-backed securities |  | 44,618 |  |  | (96 | ) |  | — |  |  | — |  |  | 44,618 |  |  | (96 | )
Asset-backed securities |  | 22,550 |  |  | (51 | ) |  | — |  |  | — |  |  | 22,550 |  |  | (51 | )
Corporate and other |  | 466,293 |  |  | (7,537 | ) |  | — |  |  | — |  |  | 466,293 |  |  | (7,537 | )
Total fixed maturity securities |  | $ | 920,670 |  |  | $ | (9,548 | ) |  | $ | — |  |  | $ | — |  |  | $ | 920,670 |  |  | $ | (9,548 | )
Equity securities |  |  |  |  |  |  |  |  |  |  |  |
Common stocks |  | $ | 13,657 |  |  | $ | (1,311 | ) |  | $ | — |  |  | $ | — |  |  | $ | 13,657 |  |  | $ | (1,311 | )
Perpetual preferred stocks |  | 7,378 |  |  | (6 | ) |  | — |  |  | — |  |  | 7,378 |  |  | (6 | )
Total equity securities |  | $ | 21,035 |  |  | $ | (1,317 | ) |  | $ | — |  |  | $ | — |  |  | $ | 21,035 |  |  | $ | (1,317 | )
At December 31, 2016, investment grade fixed maturity securities (as determined by nationally recognized rating agencies) represented approximately 54.5% of the gross unrealized loss and 83.0% of the fair value. At December 31, 2015, investment grade fixed maturity securities represented approximately 33.2% of the gross unrealized loss and 88.3% of the fair value. Certain risks are inherent in connection with fixed maturity securities, including loss upon default, price volatility in reaction to changes in interest rates, and general market factors and risks associated with reinvestment of proceeds due to prepayments or redemptions in a period of declining interest rates. Other Invested Assets Carrying values of other invested assets accounted for under cost and equity method are as follows (in thousands):
|  | December 31, 2016 |  | December 31, 2015
|  | Cost Method |  | Equity Method |  | Cost Method |  | Equity Method
Common Equity |  | $ | 138 |  |  | $ | 1,047 |  |  | $ | 249 |  |  | $ | 6,475 |
Preferred Equity |  | 2,484 |  |  | 9,971 |  |  | 1,655 |  |  | 7,522 |
Warrants |  | 3,097 |  |  | — |  |  | 3,880 |  |  | — |
Limited Partnerships |  | — |  |  | 1,116 |  |  | — |  |  | 1,171 |
Joint Ventures |  | — |  |  | 40,697 |  |  | — |  |  | 27,324 |
Total |  | $ | 5,719 |  |  | $ | 52,831 |  |  | $ | 5,784 |  |  | $ | 42,492 |
Additionally, other invested assets include common stock purchase warrants and call options accounted for under ASC 815, "Derivatives and Hedging" ("ASC 815") (in thousands):
December 31, 2016 |  | Cost |  | Gains |  | Losses |  | Fair Value
Warrants |  | $ | 6,332 |  |  | $ | 180 |  |  | $ | (2,919 | ) |  | $ | 3,593 |
Call Options |  | 230 |  |  | — |  |  | (10 | ) |  | 220 |
Total |  | $ | 6,562 |  |  | $ | 180 |  |  | $ | (2,929 | ) |  | $ | 3,813 |
December 31, 2015 |  | Cost |  | Gains |  | Losses |  | Fair Value
Warrants |  | $ | 6,383 |  |  | $ | 428 |  |  | $ | (2,600 | ) |  | $ | 4,211 |
Call Options |  | 1,680 |  |  | — |  |  | (1,048 | ) |  | 632 |
Total |  | $ | 8,063 |  |  | $ | 428 |  |  | $ | (3,648 | ) |  | $ | 4,843 |
Summarized information for the Company's equity method investments as of and for the years ended December 31, 2016, 2015 and 2014 (in thousands) is as follows (information for two of the investees is reported on a one month lag):
| Years Ended December 31,
|  | 2016 |  | 2015 |  | 2014
Net revenue |  | $ | 558,180 |  |  | $ | 502,122 |  |  | $ | 151,594 |
Gross profit |  | $ | 164,853 |  |  | $ | 103,236 |  |  | $ | 35,783 |
Income (loss) from continuing operations |  | $ | 51,690 |  |  | $ | (18,743 | ) |  | $ | 5,142 |
Net income (loss) |  | $ | (11,123 | ) |  | $ | (36,873 | ) |  | $ | 5,142 |
Current assets |  | $ | 285,466 |  |  | $ | 256,372 |  |  | $ | 269,864 |
Noncurrent assets |  | $ | 278,766 |  |  | $ | 219,434 |  |  | $ | 149,995 |
Current liabilities |  | $ | 184,068 |  |  | $ | 169,002 |  |  | $ | 179,552 |
Noncurrent liabilities |  | $ | 131,587 |  |  | $ | 132,934 |  |  | $ | 18,063 |
Net Investment Income The major sources of net investment income were as follows (in thousands):
|  | Year ended December 31,
|  | 2016 |  | 2015
Fixed maturity securities, available-for-sale at fair value |  | $ | 54,685 |  |  | $ | 964 |
Equity securities, available-for-sale at fair value |  | 2,263 |  |  | 93 |
Mortgage loans |  | 491 |  |  | — |
Policy loans |  | 1,173 |  |  | 18 |
Other invested assets |  | 321 |  |  | — |
Gross investment income |  | 58,933 |  |  | 1,075 |
External investment expense |  | (901 | ) |  | (44 | )
Net investment income |  | $ | 58,032 |  |  | $ | 1,031 |
Net Realized Gains (Losses) on Investments The major sources of net realized gains (losses) on investments were as follows (in thousands):
|  | Year ended December 31,
|  | 2016 |  | 2015
Realized gains on fixed maturity securities |  | $ | 4,868 |  |  | $ | 256 |
Realized losses on fixed maturity securities |  | (2,367 | ) |  | — |
Realized gains on equity securities |  | 4,525 |  |  | — |
Realized losses on equity securities |  | (352 | ) |  | — |
Net realized gains (losses) on derivative instruments |  | (1,492 | ) |  | — |
Impairment loss |  | (163 | ) |  | — |
Net realized gains (losses) |  | $ | 5,019 |  |  | $ | 256 |

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- Definition The entire disclosure for investments in certain debt and equity securities. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -Glossary Debt Security -URI http://asc.fasb.org/extlink&oid=6509901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=27724398&loc=d3e27290-111563 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6379141&loc=d3e15032-111544 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=27724398&loc=d3e27232-111563 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -Glossary Equity Security -URI http://asc.fasb.org/extlink&oid=6511694 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6957658&loc=d3e62557-112803 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=27724398&loc=d3e27161-111563 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=27724398&loc=d3e27357-111563 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=27724398&loc=d3e27405-111563 + Details
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