Investments

The cost or amortized cost, gross unrealized gain or loss, and estimated fair value of the investments in securities classified as available for sale at December 31, 2017 and 2016 were as follows (dollars in thousands):



	December 31, 2017
	Cost or Amortized Cost		Gross Unrealized					Estimated Fair Value
			Gains		Losses
Debt securities:
U.S. Government	$	17,179	$	10	$	(99	)	$	17,090
State and local government	17,302		255		(54		)	17,503
Corporate debt	38,947		170		(209		)	38,908
Asset-backed securities	23,539		36		(35		)	23,540
Mortgage-backed securities	33,942		38		(522		)	33,458
Commercial mortgage-backed securities	3,532		3		(44		)	3,491
Collateralized mortgage obligations	2,563		19		(36		)	2,546
Total debt securities available for sale	137,004		531		(999		)	136,536
Equity securities:	8,629		1,240		(182		)	9,687
Total securities available for sale	$	145,633	$	1,771	$	(1,181	)	$	146,223



	December 31, 2016
	Cost or Amortized Cost		Gross Unrealized					Estimated Fair Value
			Gains		Losses
Debt securities:
U.S. Government	$	5,908	$	31	$	(36	)	$	5,903
State and local government	13,618		106		(205		)	13,519
Corporate debt	34,105		205		(254		)	34,056
Asset-backed securities	19,094		20		(13		)	19,101
Mortgage-backed securities	33,423		64		(630		)	32,857
Commercial mortgage-backed securities	4,760		14		(63		)	4,711
Collateralized mortgage obligations	3,007		34		(25		)	3,016
Total debt securities available for sale	113,915		474		(1,226		)	113,163
Equity securities:	4,283		366		(70		)	4,579
Total securities available for sale	$	118,198	$	840	$	(1,296	)	$	117,742

The following table summarizes the aggregate fair value and gross unrealized losses, by security type, of the available-for-sale securities in unrealized loss positions. The table segregates the holdings based on the length of time that individual securities have been in a continuous unrealized loss position, as follows (dollars in thousands):



	December 31, 2017
	Less than 12 months						Greater than 12 months						Total
	No. of Issues	Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses			No. of Issues	Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses			No. of Issues	Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses
Debt securities:
U.S. Government	12	$	11,555	$	(64	)	7	$	2,207	$	(35	)	19	$	13,762	$	(99	)
State and local government	10	3,511		(20		)	7	1,424		(34		)	17	4,935		(54		)
Corporate debt	38	15,236		(46		)	10	6,555		(163		)	48	21,791		(209		)
Asset-backed securities	20	13,948		(29		)	3	915		(6		)	23	14,863		(35		)
Mortgage-backed securities	6	4,935		(19		)	26	24,939		(503		)	32	29,874		(522		)
Commercial mortgage-backed securities	3	2,026		(12		)	2	722		(32		)	5	2,748		(44		)
Collateralized mortgage obligations	8	1,870		(36		)	—	—		—			8	1,870		(36		)
Total debt securities available for sale	97	53,081		(226		)	55	36,762		(773		)	152	89,843		(999		)
Equity securities:
Common stock	13	436		(75		)	4	266		(107		)	17	702		(182		)
Total equity securities available for sale	13	436		(75		)	4	266		(107		)	17	702		(182		)
Total securities	110	$	53,517	$	(301	)	59	$	37,028	$	(880	)	169	$	90,545	$	(1,181	)



	December 31, 2016
	Less than 12 months						Greater than 12 months						Total
	No. of Issues	Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses			No. of Issues	Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses			No. of Issues	Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses
Debt securities:
U.S. Government	15	$	4,539	$	(36	)	—	$	—	$	—		15	$	4,539	$	(36	)
State and local government	29	8,217		(202		)	1	104		(3		)	30	8,321		(205		)
Corporate debt	22	9,031		(239		)	7	3,369		(15		)	29	12,400		(254		)
Asset-backed securities	10	4,612		(13		)	2	118		—			12	4,730		(13		)
Mortgage-backed securities	41	30,330		(630		)	—	—		—			41	30,330		(630		)
Commercial mortgage-backed securities	5	1,432		(54		)	3	684		(9		)	8	2,116		(63		)
Collateralized mortgage obligations	3	1,674		(25		)	—	—		—			3	1,674		(25		)
Total debt securities available for sale	125	59,835		(1,199		)	13	4,275		(27		)	138	64,110		(1,226		)
Equity securities:
Common stock	76	2,472		(61		)	2	66		(9		)	78	2,538		(70		)
Total equity securities available for sale	76	2,472		(61		)	2	66		(9		)	78	2,538		(70		)
Total securities	201	$	62,307	$	(1,260	)	15	$	4,341	$	(36	)	216	$	66,648	$	(1,296	)

The Company analyzed its investment portfolio in accordance with its OTTI review procedures and determined the Company did not need to record a credit-related OTTI loss, nor recognize a non credit-related OTTI loss in other comprehensive income for the years ended December 31, 2017 and 2016.

The Company’s sources of net investment income are as follows (dollars in thousands):



	December 31,
	2017			2016			2015
Debt securities	$	2,757		$	2,370		$	2,110
Equity securities	124			98			92
Cash and short-term investments	122			21			5
Total investment income	3,003			2,489			2,207
Investment expenses	(275		)	(316		)	(305		)
Net investment income	$	2,728		$	2,173		$	1,902

The following table summarizes the gross realized gains and losses from sales or maturities of available-for-sale debt securities and equity securities, as follows (dollars in thousands):



	December 31,
	2017			2016			2015
Debt securities:
Gross realized gains	$	32		$	587		$	92
Gross realized losses	(8		)	(24		)	(6		)
Total debt securities	24			563			86
Equity securities:
Gross realized gains	76			1,198			290
Gross realized losses	(30		)	(396		)	(91		)
Total equity securities	46			802			199
Total net investment realized gains	$	70		$	1,365		$	285

Proceeds from the sales of debt and equity securities available for sale, maturities and other redemptions (primarily the return of capital) were $10.9 million, $44.3 million and $10.6 million for the years ended December 31, 2017, 2016 and 2015, respectively.

The table below summarizes the amortized cost and fair value of available-for-sale debt securities by contractual maturity at December 31, 2017. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties (dollars in thousands):



	Amortized Cost		Estimated Fair Value
Due in one year or less	$	10,015	$	10,016
Due after one year through five years	41,111		41,027
Due after five years through ten years	12,293		12,396
Due after ten years	10,009		10,062
Securities with contractual maturities	73,428		73,501
Commercial mortgage and asset backed	63,576		63,035
Total debt securities	$	137,004	$	136,536

At December 31, 2017 and 2016, the Insurance Companies Subsidiaries had an aggregate of $8.2 million and $9.6 million, respectively, on deposit in trust accounts to meet the deposit requirements of various state insurance departments. At December 31, 2017 and 2016, the Company had $18.4 million and $10.3 million held in trust accounts to meet collateral requirements with other third-party insurers, relating to various fronting arrangements. There are withdrawal and other restrictions on these deposits, including the type of investments that may be held, however, the Company may generally invest in high-grade bonds and short-term investments and earn interest on the funds.

Investment in Affiliate

The Company recognizes its 50%-ownership interest in the Affiliate under the equity method of accounting. The investment balance is included in Other assets in the consolidated balance sheets and activity is included in consolidated statement of operations as Equity earnings (losses) in affiliates, net of tax. A summary of key balances of the Affiliate are presented below (dollars in thousands):



	December 31,
	2017			2016			2015
Total assets	$	1,344		$	3,516		$	4,633
Total liabilities	1,310			3,612			4,944
Total shareholder's equity	$	34		$	(96	)	$	(311	)

For the year ended December 31,
Total Revenue	$	(275	)	$	(316	)	$	(305	)
Net Income	2,728			2,173			1,902