Note 4. Investments

The gross unrealized gains and losses on, and the amortized cost and fair value of, those investments classified as held-to-maturity at March 31, 2018 are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
States and political subdivisions	$	450,553	$	5,041	$	(3,248	)	$	452,346
Corporate bonds		99,368		29		(650	)		98,747
U.S. agency-based mortgage-backed securities		9,400		503		(72	)		9,831
U.S. Treasury securities and obligations of U.S. government agencies		58,857		456		(542	)		58,771
Asset-backed securities		1,222		26		(7	)		1,241
Totals	$	619,400	$	6,055	$	(4,519	)	$	620,936

The gross unrealized gains and losses on, and the cost or amortized cost and fair value of, those investments classified as available-for-sale at March 31, 2018 are summarized as follows:

	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
Fixed maturity:
States and political subdivisions	$	232,778	$	3,730	$	(2,410	)	$	234,098
Corporate bonds		143,712		5		(943	)		142,774
U.S. agency-based mortgage-backed securities		18,260		—		(1,275	)		16,985
U.S. Treasury securities and obligations of U.S. government agencies		67,283		—		(1,876	)		65,407
Total fixed maturity		462,033		3,735		(6,504	)		459,264
Equity securities		11,425		—		—			11,425
Totals	$	473,458	$	3,735	$	(6,504	)	$	470,689

The gross unrealized gains and losses on, and the amortized cost and fair value of, those investments classified as held-to-maturity at December 31, 2017 are summarized as follows:

	Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
States and political subdivisions	$		460,428	$	9,628	$	(955	)	$		469,101
Corporate bonds			100,024		190		(167	)			100,047
U.S. agency-based mortgage-backed securities			10,260		625		(40	)			10,845
U.S. Treasury securities and obligations of U.S. government agencies		57,657			548		(198	)		58,007
Asset-backed securities			1,299		25		(15	)			1,309
Totals	$		629,668	$	11,016	$	(1,375	)	$		639,309

The gross unrealized gains and losses on, and the cost or amortized cost and fair value of, those investments classified as available-for-sale at December 31, 2017 are summarized as follows:

	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
Fixed maturity:
States and political subdivisions	$	244,898	$	6,819	$	(577	)	$	251,140
Corporate bonds		130,210		224		(212	)		130,222
U.S. agency-based mortgage-backed securities		18,813		—		(799	)		18,014
U.S. Treasury securities and obligations of U.S. government agencies		67,315		29		(1,126	)		66,218
Total fixed maturity		461,236		7,072		(2,714	)		465,594
Equity securities		8,503		779		—			9,282
Totals	$	469,739	$	7,851	$	(2,714	)	$	474,876

A summary of the amortized cost and fair value of investments in fixed maturity securities, classified as held-to-maturity at March 31, 2018, by contractual maturity, is as follows:

	Amortized Cost		Fair Value
	(in thousands)
Maturity:
Within one year	$	97,545	$	97,835
After one year through five years		255,343		255,678
After five years through ten years		94,872		95,139
After ten years		161,018		161,212
U.S. agency-based mortgage-backed securities		9,400		9,831
Asset-backed securities		1,222		1,241
Totals	$	619,400	$	620,936

A summary of the amortized cost and fair value of investments in fixed maturity securities, classified as available-for-sale at March 31, 2018, by contractual maturity, is as follows:

	Amortized Cost		Fair Value
	(in thousands)
Maturity:
Within one year	$	71,596	$	71,476
After one year through five years		164,449		162,658
After five years through ten years		38,945		38,371
After ten years		168,783		169,774
U.S. agency-based mortgage-backed securities		18,260		16,985
Totals	$	462,033	$	459,264

The following table summarizes the fair value and gross unrealized losses on securities, aggregated by major investment category and length of time that the individual securities have been in a continuous unrealized loss position:

	Less Than 12 Months				12 Months or Greater				Total
	Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses
	(in thousands)
March 31, 2018
Held-to-Maturity
Fixed maturity securities:
States and political subdivisions	$	212,693	$	2,810	$	14,513	$	438	$	227,206	$	3,248
Corporate bonds		89,227		629		2,259		21		91,486		650
U.S. agency-based mortgage-backed securities		2,613		72		—		—		2,613		72
U.S. Treasury securities and obligations of U.S. government agencies		48,489		439		4,468		103		52,957		542
Asset-backed securities		535		5		47		2		582		7
Total held-to-maturity securities		353,557		3,955		21,287		564		374,844		4,519
Available-for Sale
Fixed maturity securities:
States and political subdivisions	$	89,896	$	1,620	$	8,892	$	790	$	98,788	$	2,410
Corporate bonds		138,600		943		—		—		138,600		943
U.S. agency-based mortgage-backed securities		14,477		451		2,508		824		16,985		1,275
U.S. Treasury securities and obligations of U.S. government agencies		25,022		713		40,385		1,163		65,407		1,876
Total available-for-sale securities		267,995		3,727		51,785		2,777		319,780		6,504
Total	$	621,552	$	7,682	$	73,072	$	3,341	$	694,624	$	11,023

	Less Than 12 Months				12 Months or Greater				Total
	Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses
	(in thousands)
December 31, 2017
Held-to-Maturity
Fixed maturity securities:
States and political subdivisions	$	110,698	$	654	$	19,895	$	301	$	130,593	$	955
Corporate bonds		56,425		156		4,121		11		60,546		167
U.S. agency-based mortgage-backed securities		2,798		40		—		—		2,798		40
U.S. Treasury securities and obligations of U.S. government agencies		48,153		122		3,948		76		52,101		198
Asset-backed securities		—		—		967		15		967		15
Total held-to-maturity securities		218,074		972		28,931		403		247,005		1,375
Available-for Sale
Fixed maturity securities:
States and political subdivisions	$	23,365	$	86	$	19,153	$	491	$	42,518	$	577
Corporate bonds		82,795		171		5,888		41		88,683		212
U.S. agency-based mortgage-backed securities		14,686		59		3,328		740		18,014		799
U.S. Treasury securities and obligations of U.S. government agencies		14,730		204		47,716		922		62,446		1,126
Total available-for-sale securities		135,576		520		76,085		2,194		211,661		2,714
Total	$	353,650	$	1,492	$	105,016	$	2,597	$	458,666	$	4,089

At March 31, 2018, the Company held 448 individual fixed maturity securities that were in an unrealized loss position, of which 44 individual fixed maturity securities were in a continuous unrealized loss position for longer than 12 months.

Investment income is recognized as it is earned. The discount or premium on fixed maturity securities is amortized using the “constant yield” method. Anticipated prepayments, where applicable, are considered when determining the amortization of premiums or discounts. Realized investment gains and losses are determined using the specific identification method.

We regularly review our investment portfolio to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of specific investments. We consider various factors in determining if a decline in the fair value of an individual security is other-than-temporary. The key factors we consider are:

•

any reduction or elimination of preferred dividends, or nonpayment of scheduled principal or interest payments;

•

the financial condition and near-term prospects of the issuer of the applicable security, including any specific events that may affect its operations or earnings;

•

how long and by how much the fair value of the security has been below its cost or amortized cost;

•

any downgrades of the security by a rating agency;

•

our intent not to sell the security for a sufficient time period for it to recover its value;

•

the likelihood of being forced to sell the security before the recovery of its value; and

•

an evaluation as to whether there are any credit losses on debt securities.

We reviewed all securities with unrealized losses in accordance with the impairment policy described above. The Company determined that the unrealized losses in the fixed maturity securities portfolio related primarily to changes in market interest rates since the date of purchase, current conditions in the capital markets and the impact of those conditions on market liquidity and prices generally. We expect to recover the carrying value of these securities as it is not more likely than not that we will be required to sell the securities before the recovery of the amortized cost basis.

During the three months ended March 31, 2018 and 2017, there were no impairment losses recognized for other-than-temporary declines in the fair value of our investments

Net realized losses in the three months ended March 31, 2018 were immaterial. Net realized losses in the three months ended March 31, 2017 were $0.2 million resulting from called fixed maturity securities.