INVESTMENTS

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



	Cost or Adjusted/Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 30, 2011
U.S. government and agency securities	$	59,804	$	325	$	16	$	60,113
States, municipalities and political subdivisions	17,169		1,119		—		18,288
Corporate securities	51,213		1,917		205		52,925
Redeemable preferred stocks	809		—		65		744
Total fixed maturities	128,995		3,361		286		132,070
Common stocks	2,974		147		164		2,957
Nonredeemable preferred stocks	605		—		52		553
Total equity securities	3,579		147		216		3,510
Other long-term investments	300		—		—		300
Total investments	$	132,874	$	3,508	$	502	$	135,880

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 nine-month periods ended September 30, 2011 and 2010:



	2011					2010
	Gains (Losses)			Fair Value at Sale		Gains (Losses)			Fair Value at Sale
Three Months Ended September 30,
Fixed maturities	$	—		$	—	$	124		$	26,180
Equity securities	—			—		86			1,249
Total realized gains	—			—		210			27,429
Fixed maturities	—			—		—			—
Equity securities	—			—		(4		)	194
Total realized losses	—			—		(4		)	194
Net realized investment gains	$	—		$	—	$	206		$	27,623

Nine Months Ended September 30,
Fixed maturities	$	110		$	12,046	$	128		$	41,152
Equity securities	10			65		131			2,027
Total realized gains	120			12,111		259			43,179
Fixed maturities	(8		)	2,990		(21		)	15,468
Equity securities	—			96		(4		)	194
Total realized losses	(8		)	3,086		(25		)	15,662
Net realized investment gains	$	112		$	15,197	$	234		$	58,841

Various states in which we operate or will be operating require us, by statute, to maintain deposits to secure the payment of claims. The table below summarizes our statutorily-required deposits as of September 30, 2011.



	Type of Security Deposited	Book Value		Fair Value
Florida	Certificate of Deposit	$	300	$	300
Amount reflected in other long-term investments		300		300
South Carolina	U.S. Treasury Note	1,003		1,005
Massachusetts	Municipal Bond	104		111
Amount reflected in fixed maturities		1,107		1,116
Securities deposited with insurance regulatory authorities		$	1,407	$	1,416

The CD we deposited with the Florida insurance regulatory authority is a twelve-month, automatically renewing CD. The par value of the portion of the municipal bond we deposited with the Massachusetts insurance regulatory authority is $100.

The table below summarizes our fixed maturities at September 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.



	September 30, 2011
	Cost or Amortized Cost		Fair Value
Due in one year or less	$	45,862	$	45,898
Due after one year through five years	34,311		34,563
Due after five years through ten years	31,826		33,531
Due after ten years	16,996		18,078
Total	$	128,995	$	132,070

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



	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Fixed maturities	$	678		$	943		$	1,780		$	2,811
Equity securities	34			40			110			132
Cash, cash equivalents and short-term investments	95			54			151			110
Net investment income	$	807		$	1,037		$	2,041		$	3,053
Investment expenses	(24		)	(20		)	(116		)	(120		)
Net investment income, less investment expenses	$	783		$	1,017		$	1,925		$	2,933

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
September 30, 2011
U.S. government and agency securities	1	$	16	$	1,635	—	$	—	$	—
Corporate securities	5	205		5,890		—	—		—
Redeemable preferred stocks	—	—		—		6	65		745
Total fixed maturities	6	221		7,525		6	65		745
Common stocks	20	97		588		5	67		578
Nonredeemable preferred stocks	—	—		—		4	52		552
Total equity securities	20	97		588		9	119		1,130
Total	26	$	318	$	8,113	15	$	184	$	1,875

December 31, 2010
U.S. government and agency securities	7	$	65	$	9,611	—	$	—	$	—
States, municipalities and political subdivisions	13	336		11,951		—	—		—
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 nine-month periods ended September 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 third 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 we also have the ability and the intent to hold these securities until their value equals or exceeds their cost.

The following tables presents the fair value measurements of our financial instruments by level at September 30, 2011 and December 31, 2010:



September 30, 2011	Total		Level 1		Level 2			Level 3
U.S. government and agency securities	$	60,113	$	34,083	$	26,030		$	—
States, municipalities and political subdivisions	18,288		—		18,288			—
Corporate securities	52,925		—		52,925			—
Redeemable preferred stocks	744		744		—			—
Total fixed maturities	132,070		34,827		97,243			—
Common stocks	2,957		2,957		—			—
Nonredeemable preferred stocks	553		553		—			—
Total equity securities	3,510		3,510		—			—
Other long-term investments	300		300		—			—
Total investments	$	135,880	$	38,637	$	97,243		$	—

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. 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.