Investments | 5. Investments The amortized cost/carrying value and estimated fair value of investments in debt and equity securities by category is as follows (in thousands): Gross Gross Amortized Cost/ Unrealized Unrealized Carrying Value Gains Losses Fair Value As of September 30, 2022 U.S. Treasury securities and obligations of U.S. Government $ 41,731 $ 308 $ (907) $ 41,132 Corporate bonds 263,114 1,132 (6,837) 257,409 Corporate bank loans 77,895 5 (2,889) 75,011 Municipal bonds 42,575 59 (610) 42,024 Mortgage-backed 1,555 7 (85) 1,477 Total debt securities 426,870 1,511 (11,328) 417,053 Total equity securities 42,858 5,504 (7,360) 41,002 Total investments $ 469,728 $ 7,015 $ (18,688) $ 458,055 Gross Gross Amortized Cost/ Unrealized Unrealized As of December 31, 2021 Carrying Value Gains Losses Fair Value U.S. Treasury securities and obligations of U.S. Government $ 63,098 $ 56 $ (170) $ 62,984 Corporate bonds 103,515 2,115 (49) 105,581 Corporate bank loans 81,570 84 (465) 81,189 Municipal bonds 38,162 372 (70) 38,464 Mortgage-backed 1,830 29 (4) 1,855 Total debt securities 288,175 2,656 (758) 290,073 Total equity securities 42,120 9,355 (2,780) 48,695 Total investments $ 330,295 $ 12,011 $ (3,538) $ 338,768 Major categories of net investment gains (losses) on investments are summarized as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 U.S. Treasury securities and obligations of U.S. Government 300 - 300 - Corporate bonds 160 133 172 494 Corporate bank loans 39 14 66 105 Municipal bonds (4) (18) (12) (12) Mortgage Backed 9 — — — Equity securities — 930 1,141 4,701 Gain on investments 504 1,059 1,667 5,288 Unrealized (losses) gain on equity investments (3,325) (1,592) (8,431) 3,834 Investment gains, net $ (2,821) $ (533) $ (6,764) $ 9,122 We realized gross gains on investments of $0.5 million and $1.1 million during the three months ended September 30, 2022 and 2021, respectively, and $1.7 million and $5.8 million for the nine months ended September 30, 2022 and 2021, respectively. We realized gross losses on investments of $5 thousand and $0.1 million for the three months ended September 30, 2022 and 2021, respectively and $26 thousand and $0.5 million for the nine months ended September 30, 2022 and 2021, respectively. We recorded proceeds from the sale of investment securities of $0.2 million and $1.1 million during the three months ended September 30, 2022 and 2021, respectively, and $4.7 million and $16.9 million for the nine months ended September 30, 2022 and 2021, respectively. Realized investment gains and losses are recognized in operations on the first in-first out method. The following schedules summarize the gross unrealized losses showing the length of time that investments have been continuously in an unrealized loss position as of September 30, 2022 and December 31, 2021 (in thousands): As of September 30, 2022 12 months or less Longer than 12 months Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses U.S. Treasury securities and obligations of U.S. Government $ 40,824 $ (907) $ — $ — $ 40,824 $ (907) Corporate bonds 253,177 (6,831) 195 (6) 253,372 (6,837) Corporate bank loans 39,488 (1,577) 34,279 (1,312) 73,767 (2,889) Municipal bonds 13,216 (579) 1,767 (31) 14,983 (610) Mortgage-backed 1,452 (79) 7 (6) 1,459 (85) Total debt securities 348,157 (9,973) 36,248 (1,355) 384,405 (11,328) Total equity securities 8,579 (727) 11,565 (6,633) 20,144 (7,360) Total investments $ 356,736 $ (10,700) $ 47,813 $ (7,988) $ 404,549 $ (18,688) As of December 31, 2021 12 months or less Longer than 12 months Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses U.S. Treasury securities and obligations of U.S. Government $ 43,273 $ (170) $ — $ — $ 43,273 $ (170) Corporate bonds - - 2,245 (49) 2,245 (49) Corporate bank loans 42,256 (177) 16,763 (288) 59,019 (465) Municipal bonds 3,321 (58) 1,038 (12) 4,359 (70) Mortgage-backed - - 10 (4) 10 (4) Total debt securities 88,850 (405) 20,056 (353) 108,906 (758) Total equity securities 6,221 (710) 5,055 (2,070) 11,276 (2,780) Total investments $ 95,071 $ (1,115) $ 25,111 $ (2,423) $ 120,182 $ (3,538) We had a total of 249 debt securities with an unrealized loss, of which 211 were in an unrealized loss position for less than one year and 38 were in an unrealized loss position for a period of one year or greater, as of September 30, 2022. We held a total of 100 debt securities with an unrealized loss, of which 74 were in an unrealized loss position for less than one year and 26 were in an unrealized loss position for a period of one year or greater, as of December 31, 2021. We consider these losses as a temporary decline in value as they are on securities that we do not intend to sell and do not believe we will be required to sell prior to recovery of our amortized cost basis. The gross unrealized losses on the debt security positions at September 30, 2022 and December 31, 2021 were due predominately to market and interest rate fluctuations and we see no other indications that the decline in values of these securities is other-than-temporary. Based on evidence gathered through our normal credit evaluation process, we presently expect that all debt securities held in our investment portfolio will be paid in accordance with their contractual terms. Nonetheless, it is at least reasonably possible that the performance of certain issuers of these debt securities will be worse than currently expected resulting in future write-downs within our portfolio of debt securities. We complete a detailed analysis each quarter to assess whether any decline in the fair value of any debt security below cost is deemed other-than-temporary. All debt securities with an unrealized loss are reviewed. We recognize an impairment loss when a debt security’s value declines below cost, adjusted for accretion, amortization and previous other-than-temporary impairments and it is determined that the decline is other-than-temporary. We did not recognize any impairment loss on debt securities during the nine months ended September 30, 2022. During the nine months ended September 30, 2021, we disposed of $0.6 million of previously impaired securities. Debt Investments: We assess whether we intend to sell, or it is more likely than not that we will be required to sell, a fixed maturity investment before recovery of its amortized cost basis less any current period credit losses. For fixed maturity investments that are considered other-than-temporarily impaired and that we do not intend to sell and will not be required to sell, we separate the amount of the impairment into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the investment’s amortized cost basis and the present value of its expected future cash flows. The remaining difference between the investment’s fair value and the present value of future expected cash flows is recognized in other comprehensive income. Equity Investments: Equity investments that are not consolidated or accounted for under the equity method of accounting with readily determinable fair values are not required to be evaluated for other-than-temporary-impairment. Amortized Cost Fair Value (in thousands) Due in one year or less $ 114,153 $ 112,798 Due after one year through five years 249,384 243,358 Due after five years through ten years 55,046 53,097 Due after ten years 6,732 6,323 Mortgage-backed 1,555 1,477 $ 426,870 $ 417,053 |