• Filing Date: 2017-02-22
  • Form Type: 10-K
  • Description: Annual report
v3.6.0.2
Investments (Tables)
12 Months Ended
Dec. 31, 2016
Summary of Amortized Cost, Gross Unrealized Gains and Losses, and Estimated Fair Value of Available-for-Sale Securities

At December 31, 2016 and 2015, the cost or amortized cost, gross unrealized gains and losses, and estimated fair value of the Company’s available-for-sale securities by security type were as follows:

 

     Cost or
Amortized
     Gross
Unrealized
     Gross
Unrealized
     Estimated
Fair
 
     Cost      Gain      Loss      Value  

As of December 31, 2016

           

Fixed-maturity securities

           

U.S. Treasury and U.S. government agencies

   $ 1,975       $ —         $ (36    $ 1,939   

Corporate bonds

     75,538         607         (1,641      74,504   

State, municipalities, and political subdivisions

     78,018         776         (488      78,306   

Exchange-traded debt

     11,463         36         (237      11,262   

Redeemable preferred stock

     237         3         (3      237   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     167,231         1,422         (2,405      166,248   

Equity securities

     47,750         5,769         (484      53,035   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale securities

   $ 214,981       $ 7,191       $ (2,889    $ 219,283   
  

 

 

    

 

 

    

 

 

    

 

 

 

As of December 31, 2015

           

Fixed-maturity securities

           

U.S. Treasury and U.S. government agencies

   $ 108       $ 5       $ —         $ 113   

Corporate bonds

     42,560         74         (4,815      37,819   

State, municipalities, and political subdivisions

     75,812         1,632         (120      77,324   

Exchange-traded debt

     9,817         177         (565      9,429   

Redeemable preferred stock

     317         8         (1      324   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     128,614         1,896         (5,501      125,009   

Equity securities

     47,548         2,139         (1,450      48,237   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale securities

   $ 176,162       $ 4,035       $ (6,951    $ 173,246   
  

 

 

    

 

 

    

 

 

    

 

 

 
Scheduled Contractual Maturities of Fixed-Maturity Securities

The scheduled contractual maturities of fixed-maturity securities at December 31, 2016 and 2015 are as follows:

 

     December 31,  
     2016      2015  
            Estimated             Estimated  
     Amortized      Fair      Amortized      Fair  
     Cost      Value      Cost      Value  

Available-for-sale

           

Due in one year or less

   $ 2,656       $ 2,662       $ 3,282       $ 3,292   

Due after one year through five years

     49,915         50,023         32,833         32,651   

Due after five years through ten years

     90,360         89,332         71,120         67,113   

Due after ten years

     24,300         24,231         21,379         21,953   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 167,231       $ 166,248       $ 128,614       $ 125,009   
  

 

 

    

 

 

    

 

 

    

 

 

 
Summary of Proceeds Received and Gross Realized Gains and Losses from Sales of Available for Sale Securities

Sales of Available-for-Sale Securities

Proceeds received, and the gross realized gains and losses from sales of available-for-sale securities, for the years ended December 31, 2016, 2015 and 2014 were as follows:

 

            Gross
Realized
     Gross
Realized
 
     Proceeds      Gains      Losses  

Year ended December 31, 2016

        

Fixed-maturity securities

   $ 40,454       $ 604       $ (79
  

 

 

    

 

 

    

 

 

 

Equity securities

   $ 23,127       $ 2,656       $ (580
  

 

 

    

 

 

    

 

 

 

Year ended December 31, 2015

        

Fixed-maturity securities

   $ 53,711       $ 253       $ (470
  

 

 

    

 

 

    

 

 

 

Equity securities

   $ 25,695       $ 1,327       $ (1,718
  

 

 

    

 

 

    

 

 

 

Year ended December 31, 2014

        

Fixed-maturity securities

   $ 98,365       $ 4,096       $ (98
  

 

 

    

 

 

    

 

 

 

Equity securities

   $ 16,810       $ 1,372       $ (635
  

 

 

    

 

 

    

 

 

 
Rollforward of Cumulative Credit Losses in Other-Than-Temporary Impairments Recognized in Income for Available for Sale Fixed-Maturity Securities

The following table presents a rollforward of the cumulative credit losses in other-than-temporary impairments recognized in income for available for sale fixed-maturity securities:

 

     2016      2015  

Balance at January 1

   $ 111       $ —     

Credit impairments on impaired securities

     475         111   

Additional credit impairments on previously impaired securities

     293         —     

Credit impaired security fully disposed of for which there was no prior intent or requirement to sell

     (385      —     

Reduction due to increase in expected cash flows recognized over the remaining life of the previously impaired security

     (19      —     
  

 

 

    

 

 

 

Balance at December 31

   $ 475       $ 111   
  

 

 

    

 

 

 
Summary of Securities with Gross Unrealized Loss Positions Aggregated by Investment Category

Securities with gross unrealized loss positions at December 31, 2016 and 2015, aggregated by investment category and length of time the individual securities have been in a continuous loss position, are as follows:

 

     Less Than Twelve Months      Twelve Months or Longer      Total  
     Gross     Estimated      Gross     Estimated      Gross     Estimated  
     Unrealized     Fair      Unrealized     Fair      Unrealized     Fair  
     Loss     Value      Loss     Value      Loss     Value  

As of December 31, 2016

              

Fixed-maturity securities

              

U.S. Treasury and U.S. government agencies

   $ (36   $ 1,939       $ —        $ —         $ (36   $ 1,939   

Corporate bonds

     (1,546     43,859         (95     2,814         (1,641     46,673   

State, municipalities, and political subdivisions

     (441     26,029         (47     3,036         (488     29,065   

Exchange-traded debt

     (191     4,980         (46     1,954         (237     6,934   

Redeemable preferred stock

     (3     47         —          —           (3     47   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total fixed-maturity securities

     (2,217     76,854         (188     7,804         (2,405     84,658   

Equity securities

     (293     10,042         (191     3,209         (484     13,251   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total available-for-sale securities

   $ (2,510   $ 86,896       $ (379   $ 11,013       $ (2,889   $ 97,909   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

At December 31, 2016, there were 134 securities in an unrealized loss position. Of these securities, 20 securities had been in an unrealized loss position for 12 months or longer. The gross unrealized loss of corporate bonds in an unrealized loss position for twelve months or more included $76 of other-than-temporary impairment losses related to non-credit factors.

 

     Less Than Twelve Months      Twelve Months or Longer      Total  
     Gross     Estimated      Gross     Estimated      Gross     Estimated  
     Unrealized     Fair      Unrealized     Fair      Unrealized     Fair  
     Loss     Value      Loss     Value      Loss     Value  

As of December 31, 2015

              

Fixed-maturity securities

              

Corporate bonds

   $ (3,667   $ 24,196       $ (1,148   $ 3,278       $ (4,815   $ 27,474   

State, municipalities, and political subdivisions

     (107     6,587         (13     184         (120     6,771   

Exchange-traded debt

     (565     5,559         —          —           (565     5,559   

Redeemable preferred stock

     (1     129         —          —           (1     129   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total fixed-maturity securities

     (4,340     36,471         (1,161     3,462         (5,501     39,933   

Equity securities

     (1,350     15,748         (100     1,460         (1,450     17,208   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total available-for-sale securities

   $ (5,690   $ 52,219       $ (1,261   $ 4,922       $ (6,951   $ 57,141   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 
Schedule of Company's Investments in Limited Partnerships

The following table provides information related to the Company’s investments in limited partnerships:

 

     December 31, 2016      December 31, 2015  
     Carrying      Unfunded             Carrying      Unfunded         
Investment Strategy    Value      Balance      (%)(a)      Value      Balance      (%)(a)  

Primarily in senior secured loans and, to a limited extent, in other debt and equity securities of private U.S. lower-middle-market companies. (b)(c)(e)

   $ 6,246       $ 6,428         16.50       $ 4,774       $ 7,888         16.50   

Value creation through active distressed debt investing primarily in bank loans, public and private corporate bonds, asset-backed securities, and equity securities received in connection with debt restructuring. (b)(d)(e)

     7,358         1,360         1.76         4,713         3,320         1.76   

Maximum long-term capital appreciation through long and short positions in equity and/or debt securities of publicly traded U.S. and non-U.S. issuers, derivative instruments and certain other financial instruments. (f)

     11,333         —           66.58         11,689         —           65.79   

High returns and long-term capital appreciation through investments in the power, utility and energy industries, and in the infrastructure sector. (b)(g)(h)

     4,326         5,766         0.18         2,754         7,016         0.18   
  

 

 

    

 

 

       

 

 

    

 

 

    

Total

   $ 29,263       $ 13,554          $ 23,930       $ 18,224      
  

 

 

    

 

 

       

 

 

    

 

 

    

 

(a) Represents the Company’s percentage investment in the fund at each balance sheet date.
(b) Except under certain circumstances, withdrawals from the funds or any assignments are not permitted. Distributions, except income from late admission of a new limited partner, will be received when underlying investments of the funds are liquidated.
(c) Expected to have a 10-year term and the capital commitment is expected to expire on September 3, 2019.
(d) Expected to have a three-year term from the end of the capital commitment period, which is March 31, 2018.
(e) At the fund manager’s discretion, the term of the fund may be extended for up to two additional one-year periods.
(f) Withdrawal is permitted upon at least 45 days’ written notice to the general partner. In December 2016, the Company provided notice of its intent to withdraw from this fund. Such withdrawal will be effective February 15, 2017.
(g) Expected to have a 10-year term and the capital commitment is expected to expire on June 30, 2020.
(h) With the consent of a super majority, the term of the fund may be extended for up to three additional one-year periods.
Summary of Unaudited Financial Information and Unaudited Financial Position

The following tables provide FMJV’s summarized unaudited financial results and the unaudited financial positions:

 

     Years Ended December 31,  
     2016      2015      2014  

Operating results:

        

Total revenues

   $ —         $ 118       $ —     

Total expenses

     —           257         25   
     

 

 

    

 

 

 

Net income (loss)

   $ —         $ (139    $ (25
     

 

 

    

 

 

 

The Company’s share of net loss(a)

   $ —         $ (125    $ (23

 

(a) Included in net investment income in the Company’s consolidated statements of income.
     December 31,  
     2016      2015  

Balance Sheet:

     

Construction in progress - real estate

   $ 334       $ 277   

Property and equipment, net

     1,654         11,806   

Cash

     179         570   

Accounts receivable

     —           3   

Other

     180         1,008   
  

 

 

    

 

 

 

Total assets

   $ 2,347       $ 13,664   
  

 

 

    

 

 

 

Accounts payable

   $ 11       $ 125   

Construction loan

     —           8,063   

Other liabilities

     —           157   

Members’ capital

     2,336         5,319   
  

 

 

    

 

 

 

Total liabilities and members’ capital

   $ 2,347       $ 13,664   
  

 

 

    

 

 

 

Investment in unconsolidated joint venture, at equity*

   $ 2,102       $ 4,787   

 

* Included the 90% share of FMKT Mel JV’s operating results.
Summary of Real Estate Investment

Real estate investments consist of the following as of December 31, 2016 and 2015:

 

     December 31,  
     2016      2015  

Land

   $ 17,592       $ 13,134   

Land improvements

     9,336         1,505   

Building

     16,154         3,116   

Tenant and leasehold improvements

     872         —     

Construction in progress*

     3,404         2,906   

Other

     2,683         1,523   
  

 

 

    

 

 

 

Total, at cost

     50,041         22,184   

Less: accumulated depreciation and amortization

     (1,955      (1,430
  

 

 

    

 

 

 

Real estate, net

     48,086         20,754   

ADC Arrangement classified as real estate investment

     —           10,200   
  

 

 

    

 

 

 

Real estate investments

   $ 48,086       $ 30,954   
  

 

 

    

 

 

 

 

* The project is being developed by the Company’s consolidated variable interest entity.
Investment (Loss) Income Summarized

Net investment income (loss), by source, is summarized as follows:

 

     Years Ended December 31,  
     2016      2015      2014  

Available-for-sale securities:

        

Fixed-maturity securities

   $ 4,641       $ 3,946       $ 3,343   

Equity securities

     3,452         3,710         2,364   

Investment expense

     (651      (673      (436

Limited partnership investments

     1,207         (3,244      (90

Real estate investments

     (592      (343      (932

Loss from unconsolidated joint venture

     —           (125      (23

Cash and cash equivalents

     984         650         662   

Other

     46         57         —     
  

 

 

    

 

 

    

 

 

 

Net investment income

   $ 9,087       $ 3,978       $ 4,888   
  

 

 

    

 

 

    

 

 

 
Variable Interest Entity [Member]  
Summary of Unaudited Financial Information and Unaudited Financial Position

The following table summarizes the assets and liabilities related to this variable interest entity which are included in the accompanying consolidated balance sheets.

 

     December 31,  
     2016      2015  

Cash and cash equivalents

   $ 65       $ 57   

Construction in progress included in real estate investments

   $ 3,404       $ 2,906   

Accrued expenses

   $ 68       $ 21   
Limited Partnership [Member]  
Summary of Unaudited Financial Information and Unaudited Financial Position

The following is the aggregated summarized unaudited financial information of limited partnerships included in the investment strategy table above, which in certain cases is presented on a three-month lag due to the unavailability of information at the Company’s respective balance sheet dates. In applying the equity method of accounting, the Company uses the most recently available financial information provided by the general partner of each of these partnerships. The financial statements of these limited partnerships are audited annually.

 

     Years Ended December 31,  
     2016      2015  

Operating results:

     

Total income

   $ 310,998       $ 4,350   

Total expenses

     185,126         77,508   
  

 

 

    

 

 

 

Net income (loss)

   $ 125,872       $ (73,158
  

 

 

    

 

 

 
     December 31,  
     2016      2015  

Balance Sheet:

     

Total assets

   $ 2,956,327       $ 288,351   

Total liabilities

   $ 63,813       $ 28,105