• Filing Date: 2019-03-08
  • Form Type: 10-K
  • Description: Annual report
v3.10.0.1
Investments (Tables)
12 Months Ended
Dec. 31, 2018
Summary of Amortized Cost, Gross Unrealized Gains and Losses, and Estimated Fair Value of Available-for-Sale Securities
The Company holds investments in fixed-maturity securities that are classified as 
available-for-sale.
 At December 31, 2018 and 2017, 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, 2018
                
U.S. Treasury and U.S. government agencies
 $61,979  $24  $(206 $61,797 
Corporate bonds
  103,580   134   (1,809  101,905 
State, municipalities, and political subdivisions
  10,567   98   (3  10,662 
Exchange-traded debt
  8,426   82   (261  8,247 
Redeemable preferred stock
  118   —     (6  112 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 $184,670  $338  $(2,285 $182,723 
  
 
 
  
 
 
  
 
 
  
 
 
 
As of December 31, 2017
                
U.S. Treasury and U.S. government agencies
 $42,313  $1  $(287 $42,027 
Corporate bonds
  106,897   1,110   (904  107,103 
State, municipalities, and political subdivisions
  78,954   1,816   (75  80,695 
Exchange-traded debt
  7,469   197   (7  7,659 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 $235,633  $3,124  $(1,273 $237,484 
  
 
 
  
 
 
  
 
 
  
 
 
 
Scheduled Contractual Maturities of Fixed-Maturity Securities The scheduled contractual maturities of fixed-maturity securities at December 31, 2018 and 2017 are as follows:
 
 
December 31,
 
 
 
2018
 
 
2017
 
 
 
Cost or

Amortized

Cost
 
 
Estimated

Fair

Value
 
 
Cost or

Amortized

Cost
 
 
Estimated

Fair

Value
 
Available-for-sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Due in one year or less
 
$
50,659
 
 
$
50,574
 
 
$
35,386
 
 
$
35,364
 
Due after one year through five years
 
 
117,826
 
 
 
116,498
 
 
 
116,378
 
 
 
115,766
 
Due after five years through ten years
 
 
11,602
 
 
 
11,253
 
 
 
57,415
 
 
 
58,984
 
Due after ten years
 
 
4,583
 
 
 
4,398
 
 
 
26,454
 
 
 
27,370
 
 
 
$
184,670
 
 
$
182,723
 
 
$
235,633
 
 
$
237,484
 
Summary of Proceeds Received and Gross Realized Gains and Losses from Sales of Available for Sale Securities
Proceeds received, and the gross realized gains and losses from sales of 
available-for-sale
 fixed-maturity securities, for the years ended December 31, 2018, 2017 and 2016 were as follows:
 
     
Gross
Realized
  
Gross
Realized
 
  
Proceeds
  
Gains
  
Losses
 
Year ended December 31, 2018
 $81,809  $1,293  $(570
  
 
 
  
 
 
  
 
 
 
Year ended December 31, 2017
 $31,759  $2,176  $(181
  
 
 
  
 
 
  
 
 
 
Year ended December 31, 2016
 $40,454  $604  $(79
  
 
 
  
 
 
  
 
 
 
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:
 
 
2017
 
 
2016
 
Balance at January 1
 
$
475
 
 
$
111
 
Credit impairments on impaired securities
 
 
 
 
 
475
 
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
 
 
(475
)
 
 
(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
 
Summary of Securities with Gross Unrealized Loss Positions Aggregated by Investment Category
Securities with gross unrealized loss positions at December 31, 2018 and 2017, 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
 
As of December 31, 2018
 
Loss
  
Value
  
Loss
  
Value
  
Loss
  
Value
 
U.S. Treasury and U.S. government agencies
 $(59 $ 21,031  $(147 $ 35,393  $(206 $56,424 
Corporate bonds
  (542  19,932   (1,267  36,682   (1,809  56,614 
State, municipalities, and political subdivisions
  (3  715   —     —     (3  715 
Exchange-traded debt
  (261  5,275   —     —     (261  5,275 
Redeemable preferred stock
  (6  112   —     —     (6  112 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total 
available-for-sale
 securities
 $ (871 $47,065  $ (1,414)  $72,075  $ (2,285 $119,140 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
At December 31, 2018, there were 82 securities in an unrealized loss position. Of these securities, 35 securities had been in an unrealized loss position for 12 months or longer.
 
  
Less Than Twelve
Months
  
Twelve Months or
Longer
  
Total
 
  
Gross
  
Estimated
  
Gross
  
Estimated
  
Gross
  
Estimated
 
  
Unrealized
  
Fair
  
Unrealized
  
Fair
  
Unrealized
  
Fair
 
As of December 31, 2017
 
Loss
  
Value
  
Loss
  
Value
  
Loss
  
Value
 
U.S. Treasury and U.S. government agencies
 $(246 $ 40,587  $(41 $1,938  $(287 $42,525 
Corporate bonds
  (174  40,627   (730  30,563   (904  71,190 
State, municipalities, and political subdivisions
  (30  9,775   (45  2,297   (75  12,072 
Exchange-traded debt
  (6  2,481   (1  36   (7  2,517 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total 
available-for-sale
 securities
 $(456 $93,470  $ (817)  $34,834  $ (1,273)  $128,304 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Summary of Amortized Cost, Gross Unrealized Gains and Losses, and Estimated Fair Value Of Equity Securities
The Company holds investments in equity securities measured at fair values which are readily determinable. At December 31, 2018 and 2017, the cost, gross unrealized gains and losses, and estimated fair value of the Company’s equity securities were as follows:

 
 
 
Cost
 
 
Gross

Unrealized

Gain
 
 
Gross

Unrealized

Loss
 
 
Estimated

Fair

Value
 
December 31, 2018
 
$
45,671
 
 
$
1,059
 
 
$
(5,587
)
 
$
41,143
 
December 31, 2017
 
$
54,282
 
 
$
6,383
 
 
$
(709
)
 
$
59,956
 
Summary of Unrealized Gains and Losses in Consolidated Statement of Income
The table below presents the portion of unrealized gains and losses in the Company’s consolidated statement of income for the periods related to equity securities still held.
 
  
Year
 
  
Ended
 
  
December 31,
 
  
2018
 
Net losses recognized
 $(4,811
Less: Net realized gains recognized for securities sold
  5,391 
  
 
 
 
Net unrealized losses recognized*
 $(10,202
  
 
 
 
 
*
Unrealized holding gains and losses for the comparative years in 2017 and 2016 were reported in accumulated other comprehensive income. See 
Adoption of New Accounting Standards
 in Note 2 — “Summary of Significant Accounting Policies” for additional information.
Summary of Proceeds Received, and The Gross Realized Gains and Losses From Sales of Trading Equity Securities
Proceeds received, and the gross realized gains and losses from sales of equity securities, for the years ended December 31, 2018 and 2017 were as follows:

 
 
 
Proceeds
 
 
Gross

Realized

Gains
 
 
Gross

Realized

Losses
 
Year ended December 31, 2018
 
$
66,439
 
 
$
7,324
 
 
$
(1,933
)
Year ended December 31, 2017
 
$
45,282
 
 
$
3,993
 
 
$
(1,642
)
Year ended December 31, 2016
 
$
23,127
 
 
$
2,656
 
 
$
(580
)
Schedule of Company's Investments in Limited Partnerships
The following table provides information related to the Company’s investments in limited partnerships:
  
December 31, 2018
  
December 31, 2017
 
  
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)
 $ 10,169  $2,577   15.37  $7,276  $5,505   15.37 
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)
  9,219   —     1.76   7,951   1,745   1.76 
High returns and long-term capital appreciation through investments in the power, utility and energy industries, and in the infrastructure sector. (b)(f)(g)
  9,023   2,329   0.18   7,509   2,512   0.18 
Value-oriented investments in less liquid and mispriced senior and junior debts of private equity-backed companies. (b)(h)(i)
  1,156   3,706   0.47   448   4,566   0.47 
Value-oriented investments in mature real estate private equity funds and portfolios globally. (b)(j)
  2,726   7,692   3.28   —     —     —   
  
 
 
  
 
 
      
 
 
  
 
 
     
Total
 $32,293  $16,304      $23,184  $14,328     
  
 
 
  
 
 
      
 
 
  
 
 
     
 
(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 
ten-year
 term and the capital commitment is expected to expire on September 3, 2019.
(d)
Expected to have a three-year term from June 30, 2018. Although the capital commitment period already ended, the general partner could still request an additional funding of approximately $843 under certain circumstances.
(e)
At the fund manager’s discretion, the term of the fund may be extended for up to two additional 
one-year
 periods.
(f)
Expected to have a 
ten-year
 term and the capital commitment is expected to expire on June 30, 2020.
(g)
With the consent of a supermajority of partners, the term of the fund may be extended for up to three additional 
one-year
 periods.
(h)
Expected to have a 
six-year
 term from the commencement date, which can be extended for up to two additional 
one-year
 periods with the consent of either the advisory committee or a majority of limited partners.
(i)
Unless extended or terminated for reasons specified in the agreement, the capital commitment is expected to expire on December 1, 2019.
(j)
Expected to have an eight-year term after the final fund closing date, which has yet to be determined.
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,
 
 
 
2018
 
 
2017
 
 
2016
 
Operating results:
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
$
438
 
 
$
331
 
 
$
 
Total expenses
 
 
100
 
 
 
483
 
 
 
 
Net income (loss)
 
$
338
 
 
$
(152
)
 
$
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Company’s share of net income (loss) (a)
 
$
304
 
 
$
(234
)
 
$
 
(a)
Included in net investment income in the Company’s consolidated statements of income. Gain from the sale of the outparcel during 2017 was allocated in accordance with the method specified in the operating agreement.
 
 
 
December 31,
 
 
 
2018
 
 
2017
 
Balance Sheet:
 
 
 
 
 
 
 
 
Construction in progress—real estate
 
$
 
 
$
27
 
Property and equipment, net
 
 
787
 
 
 
1,199
 
Cash
 
 
149
 
 
 
236
 
Other
 
 
5
 
 
 
5
 
Total assets
 
$
941
 
 
$
1,467
 
 
 
 
 
 
 
 
 
 
Other liabilities
 
$
3
 
 
$
18
 
Members’ capital
 
 
938
 
 
 
1,449
 
Total liabilities and members’ capital
 
$
941
 
 
$
1,467
 
 
 
 
 
 
 
 
 
 
Investment in unconsolidated joint venture, at equity*
 
$
845
 
 
$
1,304
 
Summary of Real Estate Investment
Real estate investments consist of the following as of December 31, 2018 and 2017:
 
  
December 31,
 
  
2018
  
2017
 
Land
 $ 23,884  $ 26,315 
Land improvements
  8,717   9,904 
Building
  19,201   21,284 
Tenant and leasehold improvements
  1,261   1,204 
Other
  5,266   3,050 
  
 
 
  
 
 
 
Total, at cost
  58,329   61,757 
Less: accumulated depreciation and amortization
  (3,839  (3,399
  
 
 
  
 
 
 
Real estate investments
 $54,490  $58,358 
  
 
 
  
 
 
 
Investment (Loss) Income Summarized
Net investment income (loss), by source, is summarized as follows:

 
 
 
Years Ended December 31,
 
 
 
2018
 
 
2017
 
 
2016
 
Available-for-sale securities:
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-maturity securities
 
$
5,104
 
 
$
5,689
 
 
$
4,589
 
Equity securities
 
 
2,124
 
 
 
3,318
 
 
 
3,452
 
Investment expense
 
 
(581
)
 
 
(726
)
 
 
(651
)
Limited partnership investments
 
 
4,430
 
 
 
2,334
 
 
 
1,207
 
Real estate investments
 
 
340
 
 
 
(1,018
)
 
 
(592
)
Income (loss) from unconsolidated joint venture
 
 
304
 
 
 
(234
)
 
 
 
Cash and cash equivalents
 
 
3,485
 
 
 
2,069
 
 
 
1,036
 
Short-term investments
 
 
1,375
 
 
 
 
 
 
 
Other
 
 
 
 
 
7
 
 
 
46
 
Net investment income
 
$
16,581
 
 
$
11,439
 
 
$
9,087
 
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 as of December 31, 2017.
Real estate investments
 
$
4,680
 
Other assets
 
$
152
 
Accrued expenses
 
$
21
 
Other liabilities
 
$
160
 
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,
 
 
 
2018
 
 
2017
 
 
2016
 
Operating results:
 
 
 
 
 
 
 
 
 
 
 
 
Total income
 
$
1,821,935
 
 
$
409,169
 
 
$
310,998
 
Total expenses
 
 
146,079
 
 
 
105,281
 
 
 
185,126
 
Net income (loss)
 
$
1,675,856
 
 
$
303,888
 
 
$
125,872
 
 
 
 
December 31,
 
 
 
2018
 
 
2017
 
Balance Sheet:
 
 
 
 
 
 
 
 
Total assets
 
$
6,689,792
 
 
$
4,381,321
 
Total liabilities
 
$
394,029
 
 
$
382,310