NOTE 10 – INSURANCE SUBSIDIARY INVESTMENTS

The Company maintains investments, consisting principally of cash and cash equivalents, debt securities, equities and certificates of deposit for the payment of claims and expenses related to professional liability and workers compensation risks. These investments have been categorized as available-for-sale and are reported at fair value.

NOTE 10 – INSURANCE SUBSIDIARY INVESTMENTS (Continued)

The cost for equities, amortized cost for debt securities and estimated fair value of the Company’s insurance subsidiary investments at December 31 follows (in thousands):

	2015									2014
	Cost		Unrealized gains		Unrealized losses			Fair value		Cost		Unrealized gains		Unrealized losses			Fair value
Cash and cash equivalents (a)	$	186,029	$	−	$	−		$	186,029	$	150,556	$	−	$	−		$	150,556
Debt securities:
Corporate bonds		46,940		5		(122	)		46,823		49,077		19		(60	)		49,036
Debt securities issued by U.S. government agencies		22,497		−		(43	)		22,454		25,313		19		(19	)		25,313
U.S. Treasury notes		33,386		−		(55	)		33,331		25,813		3		(7	)		25,809
		102,823		5		(220	)		102,608		100,203		41		(86	)		100,158
Equities by industry:
Consumer		2,271		182		(36	)		2,417		1,539		107		(13	)		1,633
Healthcare		1,896		116		(37	)		1,975		962		60		(8	)		1,014
Industrials		1,994		86		(157	)		1,923		649		14		(22	)		641
Financial services		1,854		55		(81	)		1,828		975		56		(6	)		1,025
Technology		1,533		66		(98	)		1,501		989		41		(34	)		996
Energy		1,015		−		(15	)		1,000		1,103		−		(159	)		944
Other		3,849		26		(268	)		3,607		2,042		40		(106	)		1,976
		14,412		531		(692	)		14,251		8,259		318		(348	)		8,229
Certificates of deposit		8,250		−		(2	)		8,248		7,051		2		−			7,053
	$	311,514	$	536	$	(914	)	$	311,136	$	266,069	$	361	$	(434	)	$	265,996

(a)	Includes $29.6 million and $15.6 million of money market funds at December 31, 2015 and 2014, respectively.

The fair value by maturity periods at December 31, 2015 of available-for-sale investments of the Company’s insurance subsidiary follows. Equities generally do not have maturity dates.

(In thousands)	Contractual maturities
Within one year	$	238,296
One year to five years		58,589
After five years		−
Equities		14,251
	$	311,136

Since the Company’s insurance subsidiary investments are restricted for a limited purpose, they are classified in the accompanying consolidated balance sheet based upon the expected current and long-term cash requirements of the limited purpose insurance subsidiary.

Net investment income earned by the Company’s insurance subsidiary investments follows (in thousands):

	Year ended December 31,
	2015			2014			2013
Interest income	$	1,461		$	1,013		$	1,011
Net amortization of premium and accretion of discount		(348	)		(325	)		(330	)
Gains on sale of investments		646			2,895			3,404
Losses on sale of investments		(33	)		(92	)		(24	)
Other-than-temporary impairments		(440	)		−			(143	)
Investment expenses		(215	)		(145	)		(118	)
	$	1,071		$	3,346		$	3,800

NOTE 10 – INSURANCE SUBSIDIARY INVESTMENTS (Continued)

The available-for-sale investments of the Company’s insurance subsidiary which have unrealized losses at December 31, 2015 and 2014 are shown below. The investments are categorized by the length of time that individual securities have been in a continuous unrealized loss position at December 31, 2015 and 2014.

	December 31, 2015	Less than one year				One year or greater				Total
(In thousands)		Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Debt securities:
Corporate bonds		$	42,299	$	104	$	878	$	18	$	43,177	$	122
Debt securities issued by U.S. government agencies			20,503		43		−		−		20,503		43
U.S. Treasury notes			33,331		55		−		−		33,331		55
			96,133		202		878		18		97,011		220
Equities by industry:
Consumer			381		36		−		−		381		36
Healthcare			700		37		−		−		700		37
Industrials			1,026		157		−		−		1,026		157
Financial services			860		81		−		−		860		81
Technology			892		98		−		−		892		98
Energy			182		15		−		−		182		15
Other			2,990		268		−		−		2,990		268
			7,031		692		−		−		7,031		692
Certificates of deposit			4,848		2		−		−		4,848		2
		$	108,012	$	896	$	878	$	18	$	108,890	$	914

	December 31, 2014	Less than one year				One year or greater				Total
(In thousands)		Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Debt securities:
Corporate bonds		$	34,859	$	60	$	−	$	−	$	34,859	$	60
Debt securities issued by U.S. government agencies			13,294		19		−		−		13,294		19
U.S. Treasury notes			15,626		7		−		−		15,626		7
			63,779		86		−		−		63,779		86
Equities by industry:
Consumer			372		13		−		−		372		13
Healthcare			321		8		−		−		321		8
Industrials			339		22		−		−		339		22
Financial services			110		3		159		3		269		6
Technology			470		34		−		−		470		34
Energy			944		159		−		−		944		159
Other			1,343		106		−		−		1,343		106
			3,899		345		159		3		4,058		348
		$	67,678	$	431	$	159	$	3	$	67,837	$	434

The unrealized losses on equities totaling $0.7 million at December 31, 2015 and $0.3 million at December 31, 2014 were due generally to market fluctuations. Accordingly, the Company believes these unrealized losses are temporary in nature.

The Company’s investment policy governing insurance subsidiary investments precludes the investment portfolio managers from selling any security at a loss without prior authorization from the Company. The investment managers also limit the exposure to any one issue, issuer or type of investment. The Company intends, and has the ability, to hold insurance subsidiary investments for a long duration without the necessity of selling securities to fund the underwriting needs of its insurance subsidiary. This ability to hold securities allows sufficient time for recovery of temporary declines in the market value of equity securities and the par value of debt securities as of their stated maturity date.

NOTE 10 – INSURANCE SUBSIDIARY INVESTMENTS (Continued)

The Company considered the severity and duration of its unrealized losses at December 31, 2015 and December 31, 2013 and recognized pretax other-than-temporary impairments during 2015 and 2013 of $0.4 million and $0.1 million, respectively, for various investments held in its insurance subsidiary investment portfolio. These investments were determined to be impaired after considering the duration of the declines in value and the likelihood of near term price recovery of each investment. The Company considered the severity and duration of its unrealized losses at December 31, 2014 for various investments held in its insurance subsidiary investment portfolio and determined that these unrealized losses were temporary and did not record any impairment losses related to these investments. Because the Company considered the remaining unrealized losses at December 31, 2015 and December 31, 2013 to be temporary, the Company did not record any additional impairment losses related to these investments.

As a result of deterioration in professional liability and workers compensation underwriting results of the Company’s limited purpose insurance subsidiary in 2012, the Company made a capital contribution of $14.2 million in 2013 to its limited purpose insurance subsidiary. This transaction was completed in accordance with applicable regulations and had no impact on earnings. No contribution was required to be paid in 2015 or 2014.