Fixed Maturity

The amortized cost and fair value of available for sale investments as of June 30, 2026 and December 31, 2025 is as follows:

The amortized cost and fair value of debt securities as of June 30, 2026 and December 31, 2025, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Proceeds from the sale of securities, maturities, and asset paydowns in the six months ended June 30, 2026 and 2025 were $8,423,108 and $7,633,681 respectively. With the revision of ASC 326, changes in the allowance for credit losses is included in net gains (losses).  Realized gains and losses related to the sale of securities and net credit losses recognized in income are summarized as follows:

Proceeds from the sale of securities, maturities, and asset paydowns in the three months ended June 30, 2026 and 2025 were $5,610,103 and $3,921,056 respectively. Realized gains and losses related to the sale of securities and net credit losses recognized in income are summarized as follows:

Gross unrealized losses by duration are summarized as follows:

Unrealized losses occur from market price declines due to changes in interest rates. The total number of available for sale fixed maturity securities in the investment portfolio in an unrealized loss position as of June 30, 2026 was 204, which represented an unrealized loss of $4,441,766 of the aggregate carrying value of those securities. The 204 securities breakdown as follows: 119 bonds, 72 mortgage and asset-backed securities, 5 term loans, and 8 redeemable preferred stock.  Management does not intend to sell and it is likely that management will not be required to sell before their anticipated recovery. 

Mortgage Loans on Real Estate

The Company has invested in various mortgage loans through participation agreements with the original issuing entity.  The Company’s mortgage loans by property type as of June 30, 2026 and December 31, 2025 are summarized as follows:

The Company’s mortgage loans by loan-to-value ratio as of June 30, 2026 and December 31, 2025 are summarized as follows:

The Company’s mortgage loans by maturity date as of June 30, 2026 and December 31, 2025 are summarized as follows:

The Company evaluates commercial mortgage loans on a collective basis when similar risk characteristics exist and on an individual basis when such characteristics are not present.  For individually evaluated loans where it is determined that it is not probable that all amounts due under the contractual terms will be collected, the Company measures expected credit losses based on the present value of expected future cash flows, discounted at the loan’s original effective interest rate. If repayment is expected to be provided solely through the sale or operation of the collateral, expected credit losses are measured based on the fair value of the collateral, adjusted for estimated costs to sell when appropriate.  The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the loans to present the net carrying value expected to be collected. Changes in the allowance are recognized through earnings as credit loss expense. Loans are written off against the allowance when deemed uncollectible.

The Company recorded a realized loss on one mortgage loan that paid off in full during the six-month period ending June 30, 2026. The mortgage loan paid off in full on June 24, 2026, in the amount of $218,803, and previously had an original principal amount of $755,663 that was secured by real estate. The loan originated on March 28, 2022 and had an original maturity date of April 10, 2024.  We previously stopped accruing interest on this asset.  It previously carried an interest rate of 6.95%.  During the second quarter, we recorded an additional allowance and a subsequent write-off totaling $46,492. As of the reporting date, the loan has paid off, reflecting a total loss of 71%.

A second mortgage loan has an original principal amount of $655,791 that is secured by real estate. This asset represents a pool of individual loans. The loan was originated on October 22, 2020 and has various maturity dates and interest rates.  We no longer accrue interest on this asset.  As of the reporting date, there are 11 loans. Two out of the 11 loans are current. Five out of the 11 loans are delinquent with total outstanding loan amount of $169,125, and four real estate owned properties, which remain underlying collateral, with outstanding loan amount of $329,393. Specifically, the borrower has missed payments totaling $498,518. No interest is being accrued on these loans.

The Company has evaluated the loan for expected credit losses in accordance with FASB ASC 326. This evaluation considered the borrower’s historical payment performance, current financial condition, and the value of the collateral securing the loan. As part of this assessment, the Company determined that the loan is collateral-dependent, as repayment is expected to be provided primarily through the operation or sale of the underlying collateral. The fair value of the collateral, net of estimated costs to sell when applicable, is $193,473 less than the amortized cost basis of the loan. As a result, an allowance for credit losses of $193,473 was established in December of 2025 and was subsequently recorded as a charge-off.

Additionally, the Company had one mortgage loan participation with a specific allowance for credit losses of $250,000 as of March 31, 2025. This allowance was reversed based upon an updated third-party appraisal of the property, which showed the collateral value exceeded the amortized cost basis of the loan. The mortgage loan has a principal amount of $1,000,000 that is secured by real estate. The loan was originated on November 4, 2022 and had an original maturity date of December 1, 2025.  The loan was extended for three months in 2025 and further extended an additional six months in the first quarter of 2026. It previously carried an interest rate of 8%.  Payments due beginning in the second quarter of 2025 have been modified to a reduced interest rate of 5% with the lost interest capitalized into the principal of the loan. There is a pending sale of this property, which if completed should return the full principal amount of this loan.

The Company has evaluated the loan for expected credit losses in accordance with FASB ASC 326. As part of this assessment, the Company considered relevant information about the borrower’s current financial condition, historical payment performance, and the value of the collateral securing the loan. Based on this evaluation, the loan is determined to be collateral-dependent, and repayment is expected to be derived primarily from the operation or sale of the collateral. The fair value of the collateral, net of estimated costs to sell when applicable, exceeds the amortized cost basis of the loan by 40%. As such, no allowance for credit losses has been recorded as of the reporting date.

Finally, the Company has one loan for which a receiver has been appointed and is in the process of foreclosure. The loan was originated in February of 2026 and has an outstanding loan principal of $2,000,000. The loan is currently 30 days delinquent, but rent payments have started to be received from the receiver.

The Company has evaluated the loan for expected credit losses in accordance with FASB ASC 326. As part of this assessment, the Company considered relevant information about the borrower’s current financial condition, historical payment performance, and the value of the collateral securing the loan. Based on this evaluation, the loan is determined to be collateral-dependent, and repayment is expected to be derived primarily from the operation or sale of the collateral. The fair value of the collateral, net of estimated costs to sell when applicable, exceeds the amortized cost basis of the loan by 35%. As such, no specific allowance for credit losses has been recorded as of the reporting date.

For mortgage loans on which the collection of interest income is uncertain, we discontinue the accrual of interest and recognize it in the period when an interest payment is received. We typically do not resume the accrual of interest on mortgage loans on nonaccrual status until there are significant improvements in the underlying financial condition of the borrower. We consider a loan to be delinquent if full payment is not received in accordance with the contractual terms of the loan.

The amount of the general loan allowance is based upon management's evaluation of the collectability of the loan portfolio, historical loss experience, delinquencies, credit concentrations, underwriting standards, and national and local economic conditions. The Company does not measure a credit loss allowance on accrued interest receivable, as we write off any uncollectible accrued interest receivable balance to net investment income in a timely manner. The Company did not charge off any uncollectible accrued interest receivable on our commercial mortgage loan portfolio during the three and six months ended June 30, 2026 and 2025.  

The Company's commercial mortgage loans are pooled by risk rating and property collateral type and an estimated loss ratio is applied against each risk pool. The loss ratios are generally based upon historical loss experience for each risk pool and are adjusted for current and forecasted economic factors management believes to be relevant and supportable. Economic factors are forecasted for two years with immediate reversion to historical experience.

The following tables presents a roll-forward of our general and specific valuation allowances for our commercial mortgage loan portfolio:

The following table presents a breakdown of our mortgage loans by aging category:

The Company will record an "intent-to-sell impairment" as a reduction to the amortized cost of available for sale fixed maturities and other invested assets in an unrealized loss position if the Company intends to sell or it is more likely than not that the Company will be required to sell the fixed maturity before a recovery in value. A corresponding charge is recorded in net realized losses equal to the difference between the fair value on the impairment date and the amortized cost basis of the fixed maturity before recognizing the impairment.

For fixed maturity securities and other invested assets where a credit loss has been identified and no intent-to-sell impairment has been recorded, the Company will record an allowance for credit loss ("ACL") for the portion of the unrealized loss related to a credit loss.  Any remaining unrealized loss on a fixed maturity after recording an ACL is the non-credit amount is recorded in other comprehensive income.  The ACL is the excess of the amortized cost over the greater of the Company's best estimate present value of the expected future cash flows or the security's fair value.  Cash flows are discounted at the effective yield that is used to record interest income.  The ACL cannot exceed the unrealized loss and, therefore, it may fluctuate with the changes in the fair value of the fixed maturity if the fair value is greater than the Company's best estimate of the present value of expected future cash flows.  The initial ACL and any subsequent changes are recorded in net realized gains and losses.  The ACL is written off against amortized cost in the period in which all or a portion of the related fixed maturity is determined to be uncollectible.

Developing the Company's best estimate of expected future cash flows is a quantitative and qualitative process that incorporates information received from third party sources along with certain internal assumptions regarding the future performance.  The Company's considerations include a) changes in the financial condition of the issuer and/or the underlying collateral, (b) whether the issuer is current on contractually obligated interest and principal payments, (c) credit ratings, (d) payment structure of the security, and (e) the extent to which the fair value has been less than the amortized cost of the security.  For non-structured securities, assumptions included, but are not limited to, economic and industry specific trends and fundamentals, instrument specific developments including changes in credit ratings, industry earnings multiples, and the issuer's ability to restructure, access capital markets, and execute asset sales.

In the second quarter of 2026, the Company recorded an additional impairment for Thames River Moorings Limited ("TRM" or "Project Cherwell") in the amount of $112,681.  TRM is classified as an other invested asset and has an outstanding balance of $989,514 as of June 30, 2026.   This reflects the latest best estimate on recovery value of approximately 67% of current gross outstanding loan balance. TRM commenced an administrative restructuring process in November 2025. This asset is no longer accruing interest.

Investment Income, Net of Expenses

The components of net investment income for the six months ended June 30, 2026 and 2025 are as follows:

The components of net investment income for the three months ended June 30, 2026 and 2025 are as follows:

Net Investment Gains (losses)

Net investment losses for the six months ended June 30, 2026 and 2025 are summarized as follows:

Net investment losses for the three months ended June 30, 2026 and 2025 are summarized as follows: