Investments

12 Months Ended

Dec. 31, 2023

Disclosure Text Block Supplement [Abstract]

2. Investments

Fixed Maturity Securities Available-For-Sale

Investments in fixed maturity securities available-for-sale as of December 31, 2023 and 2022 are summarized as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
December 31, 2023	Cost		Gains		Losses		Value
Fixed maturity securities
Corporate bonds	$	5,878,911	$	14,577	$	301,848	$	5,591,640
Total fixed maturity securities	$	5,878,911	$	14,577	$	301,848	$	5,591,640

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
December 31, 2022	Cost		Gains		Losses		Value
Fixed maturity securities
Corporate bonds	$	7,144,489	$	1,153	$	478,242	$	6,667,400
U.S. Treasury securities		1,476,294		-		6,504		1,469,790
Total fixed maturity securities	$	8,620,783	$	1,153	$	484,746	$	8,137,190

For securities in an unrealized loss position as of the financial statement dates, the estimated fair value, pre-tax gross unrealized loss and number of securities by length of time that those securities have been continuously in an unrealized loss position as of December 31, 2023 and 2022 are summarized as follows:

			Unrealized		Number of
December 31, 2023	Fair Value		Loss		Securities
Fixed maturity securities
Less than 12 months
Corporate bonds	$	500,000	$	7,082		3

Greater than 12 months
Corporate bonds		4,578,111		294,766		38
Total fixed maturity securities	$	5,078,111	$	301,848		41

			Unrealized		Number of
December 31, 2022	Fair Value		Loss		Securities
Fixed maturity securities
Less than 12 months
Corporate bonds	$	6,565,489	$	478,242		48
U.S. Treasury securities		1,469,790		6,504		1

Greater than 12 months
Corporate bonds		-		-		-
Total fixed maturity securities	$	8,035,279	$	484,746		49

As of December 31, 2023, the fixed maturity securities in a loss position had an average fair value to amortized cost ratio of 94.4%. As of December 31, 2022, the fixed maturity securities in a loss position had an average fair value to amortized cost ratio of 94.3%.

As of December 31, 2023 and 2022, there were no fixed maturity securities that were below investment grade as rated by taking the median of Fitch’s, Moody’s, and Standard and Poor’s ratings, respectively.

The Company monitors all fixed maturity securities on an on-going basis relative to changes in credit ratings, market prices, earnings trends and financial performance, in addition to specific region or industry reviews. The Company evaluates whether a credit impairment exists for fixed maturity securities by considering primarily the following factors: (a) changes in the financial condition of the security's underlying collateral; (b) whether the issuer is current on contractually obligated interest and principal payments; (c) changes in the financial condition, credit rating and near-term prospects of the issuer; and (d) the payment structure of the security. The Company's best estimate of expected future cash flows used to determine the credit loss amount is a quantitative and qualitative process. Quantitative review includes information received from third-party sources such as financial statements, pricing and rating changes, liquidity and other statistical information. Qualitative factors include judgments related to business strategies, economic impacts on the issuer, overall judgment related to estimates and industry factors as well as the Company's intent to sell the security, or if it is more likely than not that the Company would be required to sell a security before recovery of its amortized cost.

The Company's best estimate of future cash flows involves assumptions including, but not limited to, various performance indicators, such as historical and projected default and recovery rates, credit ratings, and current delinquency rates. These assumptions require the use of significant management judgment and include the probability of issuer default and estimates regarding timing and amount of expected recoveries, which may include estimating the underlying collateral value. In addition, projections of expected future fixed maturity security cash flows may change based upon new information regarding the performance of the issuer. Any credit losses are presented as an allowance rather than as a write-down of available-for-sale fixed maturity securities.

As of December 31, 2023, the Company determined that no allowances for credit losses were necessary for the fixed maturity securities based on the current holdings, the respective economic factors, and the Company's historical experience.

The unrealized depreciation shown herein are primarily the result of the current interest rate environment rather than credit factors.

Net unrealized losses included in accumulated other comprehensive loss for investments classified as available-for-sale are summarized as follows:

December 31,

2023

December 31,

2022

Unrealized appreciation (depreciation) on available-for-sale securities

(287,271

)

(483,593

)

Net unrealized appreciation (depreciation) on available-for-sale securities

(287,271

)

(483,593

)

The amortized cost and fair value of fixed maturity available-for-sale securities as of December 31, 2023, by contractual maturity, are summarized as follows:

	Amortized Cost		Fair Value
Due in one year or less	$	369,647	$	365,911
Due after one year through five years		3,107,957		3,030,304
Due after five years through ten years		462,160		441,894
Due after ten years		1,939,147		1,753,531
Total fixed maturity securities	$	5,878,911	$	5,591,640

For the year ended December 31, 2023, the Company received $2,760,920 of proceeds from sales and maturities of investments in available-for-sale securities and had $3,027 of gross gains and $0 of gross losses realized, respectively. For the year ended December 31, 2022, the Company received $1,111,464 of proceeds from sales and maturities of investments in available-for-sale securities and had $20,643 of gross gains and $3,008 of gross losses realized, respectively.

Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

The amortized cost and fair value of other long-term investments (which consists of lottery prize cash flows) as of December 31, 2023, by contractual maturity, are summarized as follows:

	Amortized Cost		Fair Value
Due in one year or less	$	1,061,339	$	1,133,968
Due after one year through five years		1,654,342		1,720,964
Due after five years through ten years		157,341		174,517
Total other long-term investments	$	2,873,022	$	3,029,449

Other long-term investments by geographic distribution:

	December 31, 2023		%			December 31, 2022		%
California	$	352,011		12.3	%	$	482,073		12.8	%
Florida		242,017		8.4			305,478		8.1
Georgia		567,542		19.8			690,211		18.3
Indiana		63,873		2.2			149,263		4.0
Massachusetts		959,906		33.4			1,187,513		31.6
New York		344,214		12.0			514,540		13.7
Ohio		96,330		3.3			120,468		3.2
Oregon		69,619		2.4			89,932		2.4
Pennsylvania		177,510		6.2			223,533		5.9
Total	$	2,873,022		100.0	%	$	3,763,011		100.0	%

Mortgage Loans on Real Estate

The Company utilizes the ratio of the carrying value of individual mortgage loans compared to the individual appraisal value to evaluate the credit quality of its mortgage loans on real estate (commonly referred to as the loan-to-value ratio). Currently, all of the Company’s mortgage loans are loans on residential properties. The Company’s mortgage loans on real estate by credit quality using this ratio as of December 31, 2023 and 2022 are summarized as follows:

Loan-to-value ratio	December 31, 2023		December 31, 2022
80% to 90%	$	599,672	$	415,486
70% to 80%		4,536,084		4,917,690
60% to 70%		5,397,473		8,745,288
50% to 60%		2,091,073		2,241,720
Less than 50%		2,418,288		2,253,525
Total	$	15,042,590	$	18,573,709

Mortgage loans by geographic distribution:

State	December 31, 2023		%			December 31, 2022		%
Alabama	$	1,319,136		8.8	%	$	1,717,499		9.3	%
Arkansas		-		-			210,194		1.1
Arizona		129,506		0.9			132,475		0.7
California		389,274		2.6			563,448		3.0
Colorado		149,907		1.0			152,158		0.8
Florida		1,543,852		10.2			1,505,508		8.1
Georgia		352,107		2.3			1,167,321		6.3
Illinois		508,180		3.4			732,223		3.9
Indiana		594,006		4.0			338,596		1.8
Kansas		-		-			189,100		1.0
Kentucky		714,820		4.7			220,057		1.2
Louisiana		381,584		2.5			874,216		4.7
Maryland		255,577		1.7			-		-
Michigan		-		-			182,941		1.0
Missouri		1,937,755		12.9			2,518,454		13.6
North Carolina		277,232		1.8			878,212		4.7
New Jersey		434,206		2.9			444,162		2.4
Ohio		164,491		1.1			-		-
Pennsylvania		297,612		2.0			607,020		3.3
South Carolina		509,537		3.4			628,601		3.4
Tennessee		1,924,277		12.8			3,572,294		19.2
Texas		3,101,034		20.6			1,439,182		7.8
Virginia		-		-			257,705		1.4
Wisconsin		58,497		0.4			242,343		1.3
Total	$	15,042,590		100.0	%	$	18,573,709		100.0	%

There were 2 mortgage loans with principal balances of $284,185 that were 90 days or more past due and still accruing interest as of December 31, 2023. One of those 2 mortgage loans had a principal balance of $75,899 and was in the process of foreclosure as of December 31, 2023. The Company expects to fully recover the principal balance outstanding plus any accrued interest along with all fees and expenses. There were 2 mortgage loans with principal balances of $118,218 that were 90 days or more past due and still accruing interest as of December 31, 2022. The Company had a mortgage loan allowance of $74,663 and $92,777 as of December 31, 2023 and 2022, respectively.

	December 31, 2023			December 31, 2022
Beginning of year: mortgage loan allowance balance	$	92,777		$	65,575
Current year change in provision of estimated mortgage loan losses		(18,114	)		27,202
End of year: mortgage loan allowance balance	$	74,663		$	92,777

Major categories of net investment income for the years ended December 31, 2023 and 2022 are summarized as follows:

	For the Years Ended December 31,
	2023			2022

Fixed maturity securities	$	298,393		$	328,818
Other long-term assets		288,017			271,048
Mortgage loans		1,222,925			1,183,591
Short-term and other investments		327,376			132,438
Gross investment income		2,136,711			1,915,895
Investment expenses		(44,900	)		(204,880	)
Net investment income	$	2,091,811		$	1,711,015

Texas Republic Capital Corp 10-K