• Filing Date: 2020-03-06
  • Form Type: 10-K
  • Description: Annual report
v3.19.3.a.u2
Investments (Tables)
12 Months Ended
Dec. 31, 2019
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, 2019 and 2018, 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, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

26,220

 

 

$

78

 

 

$

(3

)

 

$

26,295

 

Corporate bonds

 

 

157,155

 

 

 

2,212

 

 

 

(3

)

 

 

159,364

 

State, municipalities, and political subdivisions

 

 

7,763

 

 

 

149

 

 

 

 

 

 

7,912

 

Exchange-traded debt

 

 

8,698

 

 

 

462

 

 

 

(15

)

 

 

9,145

 

Redeemable preferred stock

 

 

118

 

 

 

5

 

 

 

 

 

 

123

 

Total

 

$

199,954

 

 

$

2,906

 

 

$

(21

)

 

$

202,839

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Scheduled Contractual Maturities of Fixed-Maturity Securities The scheduled contractual maturities of fixed-maturity securities at December 31, 2019 and 2018 are as follows:

 

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

Cost or

 

 

Estimated

 

 

Cost or

 

 

Estimated

 

 

 

Amortized

 

 

Fair

 

 

Amortized

 

 

Fair

 

 

 

Cost

 

 

Value

 

 

Cost

 

 

Value

 

Available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Due in one year or less

 

$

63,135

 

 

$

63,429

 

 

$

50,659

 

 

$

50,574

 

Due after one year through five years

 

 

125,833

 

 

 

127,660

 

 

 

117,826

 

 

 

116,498

 

Due after five years through ten years

 

 

6,896

 

 

 

7,350

 

 

 

11,602

 

 

 

11,253

 

Due after ten years

 

 

4,090

 

 

 

4,400

 

 

 

4,583

 

 

 

4,398

 

 

 

$

199,954

 

 

$

202,839

 

 

$

184,670

 

 

$

182,723

 

 

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, 2019, 2018 and 2017 were as follows:

 

 

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

 

 

Realized

 

 

Realized

 

 

 

Proceeds

 

 

Gains

 

 

Losses

 

Year ended December 31, 2019

 

$

7,947

 

 

$

221

 

 

$

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31, 2018

 

$

81,809

 

 

$

1,293

 

 

$

(570

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31, 2017

 

$

31,759

 

 

$

2,176

 

 

$

(181

)

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:

 

 

 

2019

 

 

2018

 

 

2017

 

Balance at January 1

 

$

 

 

$

 

 

$

475

 

Credit impairments on impaired securities

 

 

289

 

 

 

 

 

 

 

Credit impaired security fully disposed of for which

   there was no prior intent or requirement to sell

 

 

 

 

 

 

 

 

(475

)

Balance at December 31

 

$

289

 

 

$

 

 

$

 

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

Securities with gross unrealized loss positions at December 31, 2019 and 2018, 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

 

As of December 31, 2019

 

Gross

Unrealized

Loss

 

 

Estimated

Fair

Value

 

 

Gross

Unrealized

Loss

 

 

Estimated

Fair

Value

 

 

Gross

Unrealized

Loss

 

 

Estimated

Fair

Value

 

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

 

$

(3

)

 

$

2,292

 

 

$

 

 

$

 

 

$

(3

)

 

$

2,292

 

Corporate bonds

 

 

(3

)

 

 

4,597

 

 

 

 

 

 

 

 

 

(3

)

 

 

4,597

 

Exchange-traded debt

 

 

(15

)

 

 

345

 

 

 

 

 

 

 

 

 

(15

)

 

 

345

 

Total available-for-sale securities

 

$

(21

)

 

$

7,234

 

 

$

 

 

$

 

 

$

(21

)

 

$

7,234

 

 

At December 31, 2019, there were eight securities in an unrealized loss position. Of these securities, none had been in an unrealized loss position for 12 months or longer.

 

 

 

Less Than Twelve Months

 

 

Twelve Months or Longer

 

 

Total

 

As of December 31, 2018

 

Gross

Unrealized

Loss

 

 

Estimated

Fair

Value

 

 

Gross

Unrealized

Loss

 

 

Estimated

Fair

Value

 

 

Gross

Unrealized

Loss

 

 

Estimated

Fair

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

 

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, 2019 and 2018, the cost, gross unrealized gains and losses, and estimated fair value of the Company’s equity securities were as follows:

 

 

 

 

 

 

 

Gross

Unrealized

 

 

Gross

Unrealized

 

 

Estimated

Fair

 

 

 

Cost

 

 

Gain

 

 

Loss

 

 

Value

 

December 31, 2019

 

$

31,863

 

 

$

3,652

 

 

$

(230

)

 

$

35,285

 

December 31, 2018

 

$

45,671

 

 

$

1,059

 

 

$

(5,587

)

 

$

41,143

 

Summary of Unrealized Gains and Losses for Equity Securities

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.

 

 

 

Years Ended December 31,

 

 

 

2019

 

 

2018

 

Net gains (losses) recognized

 

$

7,424

 

 

$

(4,811

)

Exclude: Net realized (losses) gains recognized for

   securities sold

 

 

(526

)

 

 

5,391

 

Net unrealized gains (losses) recognized*

 

$

7,950

 

 

$

(10,202

)

 

*

Unrealized holding gains and losses for the comparative year in 2017 were reported in accumulated other comprehensive income.

Summary of Proceeds Received, Gross Realized Gains and Losses from Sales of Equity Securities

Proceeds received, and the gross realized gains and losses from sales of equity securities, for the years ended December 31, 2019, 2018 and 2017 were as follows:

 

 

 

 

 

 

 

Gross

Realized

 

 

Gross

Realized

 

 

 

Proceeds

 

 

Gains

 

 

Losses

 

Year ended December 31, 2019

 

$

37,669

 

 

$

2,448

 

 

$

(2,974

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31, 2018

 

$

66,439

 

 

$

7,324

 

 

$

(1,933

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31, 2017

 

$

45,282

 

 

$

3,993

 

 

$

(1,642

)

Schedule of Company's Investments in Limited Partnerships The following table provides information related to the Company’s investments in limited partnerships:

 

 

 

December 31, 2019

 

 

December 31, 2018

 

 

 

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)

 

$

9,659

 

 

$

2,085

 

 

 

15.37

 

 

$

10,169

 

 

$

2,577

 

 

 

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)

 

 

5,985

 

 

 

 

 

 

1.76

 

 

 

9,219

 

 

 

 

 

 

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)

 

 

9,188

 

 

 

1,391

 

 

 

0.18

 

 

 

9,023

 

 

 

2,329

 

 

 

0.18

 

Value-oriented investments in less

   liquid and mispriced senior and junior

   debts of private equity-backed

   companies. (b)(h)(i)

 

 

1,602

 

 

 

3,106

 

 

 

0.47

 

 

 

1,156

 

 

 

3,706

 

 

 

0.47

 

Value-oriented investments in mature

   real estate private equity funds and

   portfolios globally. (b)(j)

 

 

1,912

 

 

 

8,548

 

 

 

2.24

 

 

 

2,726

 

 

 

7,692

 

 

 

3.28

 

Total

 

$

28,346

 

 

$

15,130

 

 

 

 

 

 

$

32,293

 

 

$

16,304

 

 

 

 

 

 

(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. Although the capital commitment has expired, follow-on investments and pending commitments may require additional fundings.

(d)

Expected to have a three-year term from June 30, 2018. Although the capital commitment period has 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)

The capital commitment was extended and is now expected to expire on December 1, 2020.

(j)

Expected to have an eight-year term from November 27, 2019.

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,

 

 

 

2019

 

 

2018

 

 

2017

 

Operating results:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

2

 

 

$

438

 

 

$

331

 

Total expenses

 

 

93

 

 

 

100

 

 

 

483

 

Net income (loss)

 

$

(91

)

 

$

338

 

 

$

(152

)

 

 

 

 

 

 

 

 

 

 

 

 

 

The Company’s share of net income (loss) *

 

$

(83

)

 

$

304

 

 

$

(234

)

 

*

Included in net investment income in the Company’s consolidated statements of income.

 

 

 

December 31,

 

 

 

2019

 

 

2018

 

Balance Sheet:

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

741

 

 

 

787

 

Cash

 

 

102

 

 

 

149

 

Other

 

 

4

 

 

 

5

 

Total assets

 

$

847

 

 

$

941

 

 

 

 

 

 

 

 

 

 

Other liabilities

 

$

 

 

$

3

 

Members’ capital

 

 

847

 

 

 

938

 

Total liabilities and members’ capital

 

$

847

 

 

$

941

 

 

 

 

 

 

 

 

 

 

Investment in unconsolidated joint venture, at equity**

 

$

762

 

 

$

845

 

 

**

Includes 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, 2019 and 2018:

 

 

 

December 31,

 

 

 

2019

 

 

2018

 

Land

 

$

39,511

 

 

$

23,884

 

Land improvements

 

 

11,907

 

 

 

8,717

 

Building

 

 

24,086

 

 

 

19,201

 

Tenant and leasehold improvements

 

 

1,487

 

 

 

1,261

 

Other

 

 

3,489

 

 

 

5,266

 

Total, at cost

 

 

80,480

 

 

 

58,329

 

Less: accumulated depreciation and amortization

 

 

(6,717

)

 

 

(3,839

)

Real estate investments

 

$

73,763

 

 

$

54,490

 

 

Investment (Loss) Income Summarized

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

 

 

 

Years Ended December 31,

 

 

 

2019

 

 

2018

 

 

2017

 

Available-for-sale fixed-maturity securities

 

$

6,506

 

 

$

5,097

 

 

$

5,689

 

Equity securities

 

 

1,333

 

 

 

2,131

 

 

 

3,318

 

Investment expense

 

 

(465

)

 

 

(581

)

 

 

(726

)

Limited partnership investments

 

 

1,176

 

 

 

4,430

 

 

 

2,334

 

Real estate investments

 

 

(211

)

 

 

340

 

 

 

(1,018

)

(Loss) income from unconsolidated joint venture

 

 

(83

)

 

 

304

 

 

 

(234

)

Cash and cash equivalents

 

 

4,970

 

 

 

3,485

 

 

 

2,069

 

Short-term investments

 

 

416

 

 

 

1,375

 

 

 

 

Other

 

 

 

 

 

 

 

 

7

 

Net investment income

 

$

13,642

 

 

$

16,581

 

 

$

11,439

 

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,

 

 

 

2019

 

 

2018

 

 

2017

 

Operating results:

 

 

 

 

 

 

 

 

 

 

 

 

Total income

 

$

27,171

 

 

$

1,821,935

 

 

$

409,169

 

Total expenses

 

 

139,252

 

 

 

146,079

 

 

 

105,281

 

Net (loss) income

 

$

(112,081

)

 

$

1,675,856

 

 

$

303,888

 

 

 

 

December 31,

 

 

 

2019

 

 

2018

 

Balance Sheet:

 

 

 

 

 

 

 

 

Total assets

 

$

6,850,913

 

 

$

6,689,792

 

Total liabilities

 

$

549,562

 

 

$

394,029