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 March 31, 2018 and December 31, 2017, were as follows (dollars in thousands):



	March 31, 2018
	Cost or Amortized Cost		Gross Unrealized					Estimated Fair Value
			Gains		Losses
Debt Securities:
U.S. Government	$	15,896	$	4	$	(222	)	$	15,678
State and local government	16,668		85		(201		)	16,552
Corporate debt	38,806		92		(651		)	38,247
Asset-backed securities	25,331		37		(110		)	25,258
Mortgage-backed securities	33,981		22		(1,242		)	32,761
Commercial mortgage-backed securities	3,935		—		(85		)	3,850
Collateralized mortgage obligations	2,408		12		(54		)	2,365
Total debt securities available for sale	$	137,025	$	252	$	(2,565	)	$	134,711



	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 (1)	8,629		1,240		(182		)	9,687
Total securities available for sale	$	145,633	$	1,771	$	(1,181	)	$	146,223

(1) Effective January 1, 2018, the Company adopted ASU No. 2016-01. As a result, equity securities are no longer classified as available-for-sale. Prior periods have not been recast to conform to the current presentation. Refer to Note 1 ~ Summary of Significant Accounting Policies for further details.

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):



	March 31, 2018
	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
Fixed Maturity Securities:
U.S. Government	12	$	12,889	$	(175	)	6	$	1,960	$	(47	)	18	$	14,849	$	(222	)
State and local government	39	10,338		(145		)	7	1,380		(56		)	46	11,718		(201		)
Corporate debt	62	21,989		(284		)	10	6,350		(367		)	72	28,339		(651		)
Asset-backed securities	23	14,448		(101		)	3	793		(9		)	26	15,241		(110		)
Mortgage-backed securities	11	8,175		(191		)	27	23,390		(1,051		)	38	31,565		(1,242		)
Commercial mortgage-backed securities	4	2,732		(32		)	2	667		(53		)	6	3,399		(85		)
Collateralized mortgage obligations	9	1,869		(54		)	—	—		—			9	1,869		(54		)
Total debt securities available for sale	160	$	72,440	$	(982	)	55	$	34,540	$	(1,583	)	215	$	106,980	$	(2,565	)



	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
Fixed Maturity 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 (1)	13	436		(75		)	4	266		(107		)	17	702		(182		)
Total securities	110	$	53,517	$	(301	)	59	$	37,028	$	(880	)	169	$	90,545	$	(1,181	)

The Company analyzed its investment portfolio in accordance with its other-than-temporary impairment ("OTTI") review procedures and determined the Company did not need to record a credit-related OTTI loss in net income, nor recognize a non-credit related OTTI loss in other comprehensive income for the three months ended March 31, 2018 and 2017.

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



	Three Months Ended March 31,
	2018			2017
Debt securities	$	826		$	601
Equity securities	27			25
Cash and short-term investments	23			11
Total investment income	876			637
Investment expenses	(74		)	(60		)
Net investment income	$	802		$	577

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



	Three Months Ended March 31,
	2018			2017
Debt securities:
Gross realized gains	$	2		$	—
Gross realized losses	(5		)	(7		)
Total debt securities	(3		)	(7		)
Equity securities:
Gross realized gains	170			29
Gross realized losses	(6		)	(30		)
Total equity securities	164			(1		)
Total net realized gains (losses)	$	161		$	(8	)

Proceeds from the sales of debt and equity securities available for sale, maturities and other redemptions (primarily the return of capital) were $8.1 million and $6.6 million for the three months ended March 31, 2018 and 2017, respectively.

Effective January 1, 2018, the Company adopted ASU No. 2016-01. As a result, equity securities are no longer classified as available-for-sale with unrealized gains and losses recognized in other comprehensive income; rather, all changes in fair value of equity securities are now recognized in net income. The change in fair value of equity securities included in net income for the quarter ended March 31, 2018, was a $297 thousand loss, prior periods have not been recast for the adoption of this guidance.

The table below summarizes the amortized cost and fair value of available-for-sale debt securities by contractual maturity at March 31, 2018. 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	$	13,283	$	13,258
Due after one year through five years	36,167		35,701
Due after five years through ten years	12,271		12,011
Due after ten years	9,649		9,507
Securities with contractual maturities	71,370		70,477
Asset-backed securities	25,331		25,258
Mortgage-backed securities	33,981		32,761
Commercial mortgage-backed securities	3,935		3,850
Collateralized mortgage obligations	2,408		2,365
Total debt securities	$	137,025	$	134,711

At March 31, 2018 and December 31, 2017, the Insurance Company Subsidiaries had an aggregate of $7.8 million and $8.2 million, respectively, on deposit in trust accounts to meet the deposit requirements of various state insurance departments. At March 31, 2018 and December 31, 2017, the Company had $29.4 million and $18.4 million, respectively, 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.