INVESTMENTS

The following table details the difference between cost or adjusted/amortized cost and estimated fair value, by major investment category, at June 30, 2011, and December 31, 2010:



	Cost or Adjusted/Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
June 30, 2011
U.S. government and agency securities	$	62,848	$	129	$	79	$	62,898
States, municipalities and political subdivisions	14,302		198		88		14,412
Corporate securities	49,120		352		119		49,353
Redeemable preferred stocks	809		—		22		787
Total fixed maturities	127,079		679		308		127,450
Common stocks	2,974		280		57		3,197
Nonredeemable preferred stocks	605		—		29		576
Total equity securities	3,579		280		86		3,773
Other long-term investments	300		—		—		300
Total investments	$	130,958	$	959	$	394	$	131,523

December 31, 2010
U.S. government and agency securities	$	32,841	$	119	$	65	$	32,895
States, municipalities and political subdivisions	13,305		10		336		12,979
Corporate securities	4,029		18		—		4,047
Redeemable preferred stocks	809		—		47		762
Total fixed maturities	50,984		147		448		50,683
Common stocks	3,061		47		60		3,048
Nonredeemable preferred stocks	605		—		38		567
Total equity securities	3,666		47		98		3,615
Other long-term investments	300		—		—		300
Total investments	$	54,950	$	194	$	546	$	54,598

When we sell investments, we calculate the gain or loss realized on the sale by comparing the sales price (fair value) to the cost or adjusted/amortized cost of the security sold. We determine the cost or adjusted/amortized cost of the security sold using the specific-identification method. The following tables detail our realized gains (losses) by major investment category for the three- and six-month periods ended June 30, 2011 and 2010:



	2011					2010
	Gains (Losses)			Fair Value at Sale		Gains (Losses)			Fair Value at Sale
Three Months Ended June 30,
Fixed maturities	$	110		$	12,046	$	4		$	14,972
Equity securities	10			65		45			778
Total realized gains	120			12,111		49			15,750
Fixed maturities	(8		)	2,990		(7		)	8,472
Equity securities	—			—		—			—
Total realized losses	(8		)	2,990		(7		)	8,472
Net realized investment gains	$	112		$	15,101	$	42		$	24,222

Six Months Ended June 30,
Fixed maturities	$	110		$	12,046	$	4		$	14,972
Equity securities	10			65		45			778
Total realized gains	120			12,111		49			15,750
Fixed maturities	(8		)	2,990		(21		)	15,468
Equity securities	—			96		—			—
Total realized losses	(8		)	3,086		(21		)	15,468
Net realized investment gains	$	112		$	15,197	$	28		$	31,218

The states in which we operate require us, by statute, to maintain deposits to secure the payment of claims. In Florida, we have assigned a twelve-month, automatically renewing certificate of deposit in the amount of $300 to the state regulatory authority to satisfy the Florida requirement. In South Carolina, we have assigned a U.S. Treasury Note with a book value of $1,004 and a fair value of $1,007 to the state regulatory authority to satisfy the requirement. We report the certificate of deposit in other long-term investments, while we report the U.S. Treasury Note in fixed maturities. To obtain the approval of our application to write policies in Massachusetts, we purchased a Massachusetts municipal bond with a par value of $1,000 and assigned a tranche with a $100 par value to the state regulatory authority during 2010. At June 30, 2011, the book value of the assigned tranche was $104 and the fair value was $102.

The table below summarizes our fixed maturities at June 30, 2011, by contractual maturity periods. Actual results may differ as issuers may have the right to call or prepay obligations, with or without penalties, prior to the contractual maturity of those obligations.



	June 30, 2011
	Cost or Amortized Cost		Fair Value
Due in one year or less	$	44,873	$	44,830
Due after one year through five years	38,368		38,621
Due after five years through ten years	30,785		30,917
Due after ten years	13,053		13,082
Total	$	127,079	$	127,450

The following table summarizes our net investment income by major investment category:



	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Fixed maturities	$	608		$	905		$	1,102		$	1,868
Equity securities	40			44			76			92
Cash, cash equivalents and short-term investments	52			19			56			56
Net investment income	$	700		$	968		$	1,234		$	2,016
Investment expenses	(32		)	(27		)	(92		)	(100		)
Net investment income, less investment expenses	$	668		$	941		$	1,142		$	1,916

The following table presents an aging of our unrealized investment losses by investment class:



	Less Than Twelve Months					Twelve Months or More
	Number of Securities*	Gross Unrealized Losses		Fair Value		Number of Securities*	Gross Unrealized Losses		Fair Value
June 30, 2011
U.S. government and agency securities	5	$	79	$	21,584	—	$	—	$	—
States, municipalities and political subdivisions	2	48		1,978		3	40		2,880
Corporate securities	13	119		14,602		—	—		—
Redeemable preferred stocks	—	—		—		6	22		787
Total fixed maturities	20	246		38,164		9	62		3,667
Common stocks	6	9		118		2	48		191
Nonredeemable preferred stocks	—	—		—		4	29		576
Total equity securities	6	9		118		6	77		767
Total	26	$	255	$	38,282	15	$	139	$	4,434

December 31, 2010
U.S. government and agency securities	7	$	65	$	9,611	—	$	—	$	—
States, municipalities and political subdivisions	13	336		11,951		—	—		—
Corporate securities	—	—		—		—	—		—
Redeemable preferred stocks	—	—		—		6	47		763
Total fixed maturities	20	401		21,562		6	47		763
Common stocks	19	17		810		4	43		423
Nonredeemable preferred stocks	—	—		—		4	38		567
Total equity securities	19	17		810		8	81		990
Total	39	$	418	$	22,372	14	$	128	$	1,753

* This amount represents the actual number of discrete securities, not the number of shares of those securities. The number is not presented in thousands.

During the three- and six-month periods ended June 30, 2011 and 2010, respectively, we did not incur any other-than-temporary impairment (OTTI) charges. We have never recorded an OTTI charge on our debt-security investments.

During our second quarter 2011 evaluations of our securities for impairment, we determined that none of our investments in debt and equity securities that reflected an unrealized loss position were other-than-temporarily impaired. The issuers of our debt securities continue to make interest payments on a timely basis and have not suffered any credit rating reductions. We do not intend to sell nor is it likely that we would be required to sell the debt securities before we recover our amortized cost basis. All the issuers of the equity securities we own had near-term prospects that indicated we could recover our cost basis, and that we also have the ability and the intent to hold these securities until their value equals or exceeds their cost.

The following table presents the fair value measurements of our financial instruments by level at June 30, 2011:



June 30, 2011	Total		Level 1		Level 2			Level 3
U.S. government and agency securities	$	62,898	$	33,958	$	28,940		$	—
States, municipalities and political subdivisions	14,412		—		14,412			—
Corporate securities	49,353		—		49,353			—
Redeemable preferred stocks	787		787		—			—
Total fixed maturities	127,450		34,745		92,705			—
Common stocks	3,197		3,197		—			—
Nonredeemable preferred stocks	576		576		—			—
Total equity securities	3,773		3,773		—			—
Other long-term investments	300		300		—			—
Total investments	$	131,523	$	38,818	$	92,705		$	—

December 31, 2010
U.S. government and agency securities	$	32,895	$	—	$	32,895		$	—
States, municipalities and political subdivisions	12,979		—		12,979			—
Corporate securities	4,047		—		4,047			—
Redeemable preferred stocks	762		762		—		—	—
Total fixed maturities	50,683		762		49,921			—
Common stocks	3,048		3,048		—			—
Nonredeemable preferred stocks	567		567		—			—
Total equity securities	3,615		3,615		—			—
Other long-term investments	300		300		—			—
Total investments	$	54,598	$	4,677	$	49,921		$	—

For our investments in U.S. government securities that do not have prices in active markets, agency securities, state and municipal governments, and corporate bonds, we obtain the fair values from Synovus Trust Company, NA, which uses a third-party valuation service. In our case, the valuation service calculates prices for our investments in the aforementioned security types on a month-end basis by using several matrix-pricing methodologies that incorporate inputs from various sources. The model the valuation service uses to price U.S. government securities and securities of states and municipalities incorporates inputs from active market makers and inter-dealer brokers. To price corporate bonds and agency securities, the valuation service calculates non-call yield spreads on all issuers, uses option-adjusted yield spreads to account for any early redemption features, then adds final spreads to the U.S. Treasury curve at 3 p.m. (ET) as of quarter end. A special cash-discounting yield/price routine then calculates the prices. Since the inputs the valuation service uses in their calculations are not quoted prices in active markets, but are observable inputs, they represent Level 2 inputs