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## Investments 

The Company’s investment portfolio has been de-risked over the past three years primarily by reducing the equity and limited partnership investments as a percentage of the overall portfolio and increasing fixed income investments. The Company’s investment strategy emphasizes preservation and growth of capital surplus. Subject to achieving that objective, the Company pursues favorable risk adjusted returns. 

At December 31, 2020, the market value of the Company's consolidated investment portfolio was approximately $1,043.7 million, consisting of fixed income securities, equity securities, investments in limited partnerships, commercial mortgage loans and short-term and other investments and included $47.0 million of short-term funds classified as cash equivalents. 

A comparison of the allocation of assets within the Company's consolidated investment portfolio, using market value as a basis, is as follows as of December 31: 

<img src='content_image/1046810.jpg'>

## Fixed Income and Short-Term Investments 

Fixed income and short-term securities comprised 92.7% of the market value of the Company's consolidated investment portfolio of $1,043.7 million at December 31, 2020. The fixed income portfolio is widely diversified with no concentrations in any single industry, geographic location or municipality. The largest amount invested in any single issuer was $4.0 million (0.4% of the Company's consolidated investment portfolio). The Company's fixed income portfolio has a short duration compared to the duration of its insurance liabilities and, accordingly, the Company does not actively trade fixed income securities but typically holds such investments until maturity. Exceptions exist in instances where the underlying credit for a specific issue is deemed to be diminished. In such cases, the security will be considered for disposal prior to maturity. In addition, fixed income securities may be sold when realignment of the portfolio is considered beneficial (e.g., moving from taxable to non-taxable issues) or when valuations are considered excessive compared to alternative investments. 

Approximately $63.7 million of the Company's fixed income investments (6.1% of the Company's consolidated investment portfolio, which includes money market instruments classified as cash equivalents) consisted of non-rated bonds and bonds rated as less than investment grade by the National Association of Insurance Commissioners ("NAIC") at year end. These investments had a $2.2 million aggregate net unrealized gain position at December 31, 2020. 

The market value of the consolidated fixed income portfolio included $26.3 million of net unrealized gains at December 31, 2020 compared to $12.5 million of net unrealized gains at December 31, 2019. The current net unrealized gain on fixed income securities consisted of $4.7 million of gross unrealized losses and $31.0 million of gross unrealized gains at December 31, 2020. The gross unrealized losses equal approximately 0.5% of the cost of all fixed income securities. See also " Critical Accounting Policies"  in Part II, Item 7, " Management's Discussion and Analysis of Financial Condition and Results of Operations, " of this Annual Report on Form 10-K for additional details regarding the Company's investment valuation. 

## Equity Securities 

Because of the large amount of high-quality fixed income investments owned, relative to the Company's loss and loss expense reserves (net of reinsurance recoverables) and other liabilities, amounts invested in equity securities are not needed to fund current operations and, accordingly, can be committed for longer periods of time. Equity securities comprised 5.6% of the market value of the Company's consolidated investment portfolio of $1,043.7 million at December 31, 2020. The Company's equity securities portfolio consists of various securities with diversification from large to small capitalization issuers and among several industries. The largest single-equity issue owned had a market value of $3.5 million at December 31, 2020 (0.3% of the Company's consolidated investment portfolio). 

