2. INVESTMENTS

The Company’s investments are primarily composed of fixed income debt securities and common and preferred stock equity securities. All of the Company’s fixed maturity debt and equity investments are presented as available-for-sale (AFS), which are carried at fair value. When available, quoted market prices are obtained to determine fair value for the Company’s investments. If a quoted market price is not available, fair value is estimated using a secondary pricing source or using quoted market prices of similar securities. The Company has no investment securities for which fair value is determined using Level 3 inputs as defined in Note 3 – Fair Value Disclosures. Realized gains and losses on disposition of investments are based on specific identification of the investments sold on the settlement date, which does not differ significantly from trade date accounting.

Fixed Income Securities - Available-for-Sale

The following is a summary of the proceeds from sales, maturities, and calls of available-for-sale securities and the related gross realized gains and losses for the three-months ended March 31, 2018 and 2017.



	For the Three-Months Ended March 31,
							Net realized
	Proceeds		Gains		Losses		gain
2018
Fixed maturity securities	$	4,070,941	$	48,118	$	(13,031)	$	35,087
Common stocks		8,593,328		1,086,389		(24,254)		1,062,135
Preferred stocks		3,861,722		86,862		(81,954)		4,908
2017
Fixed maturity securities	$	3,507,897	$	29,328	$	(18)	$	29,310
Common stocks		1,955,715		415,471		—		415,471
Preferred stocks		—		—		—		—

The amortized cost and estimated fair value of fixed income securities at March 31, 2018, by contractual maturity, are shown as follows:



	Amortized Cost		Fair Value
Due in one year or less	$	1,061,657	$	1,061,993
Due after one year through five years		23,542,852		23,690,082
Due after five years through 10 years		11,577,116		11,742,908
Due after 10 years		18,429,974		18,767,338
Asset and mortgage backed securities without a specific due date		35,266,105		34,779,944
Total fixed maturity securities	$	89,877,704	$	90,042,265

Expected maturities may differ from contractual maturities due to call provisions on some existing securities.

The following table is a schedule of cost or amortized cost and estimated fair values of investments in fixed income and equity securities as of March 31, 2018 and December 31, 2017:



	Cost or				Gross Unrealized
	Amortized Cost		Fair Value		Gains		Losses
2018
Fixed maturity securities:
U.S. treasury	$	1,347,174	$	1,324,026	$	—	$	(23,148)
MBS/ABS/CMBS		35,266,105		34,779,944		76,938		(563,099)
Corporate		31,493,585		31,717,913		518,918		(294,590)
Municipal		21,770,840		22,220,382		523,709		(74,167)
Total fixed maturity securities		89,877,704		90,042,265		1,119,565		(955,004)
Equity securities:
Common stocks		13,061,832		12,467,829		210,297		(804,300)
Preferred stocks		66,675		65,725		—		(950)
Total equity securities		13,128,507		12,533,554		210,297		(805,250)
Total AFS securities	$	103,006,211	$	102,575,819	$	1,329,862	$	(1,760,254)



	Cost or				Gross Unrealized
	Amortized Cost		Fair Value		Gains		Losses
2017
Fixed maturity securities:
U.S. treasury	$	1,346,712	$	1,333,725	$	—	$	(12,987)
MBS/ABS/CMBS		31,584,141		31,518,662		158,944		(224,423)
Corporate		31,038,526		31,989,174		1,001,906		(51,258)
Municipal		23,803,668		24,763,512		976,872		(17,028)
Total fixed maturity securities		87,773,047		89,605,073		2,137,722		(305,696)
Equity securities:
Common stocks		7,631,180		8,534,109		920,629		(17,700)
Preferred stocks		3,783,311		3,867,429		132,054		(47,936)
Total equity securities		11,414,491		12,401,538		1,052,683		(65,636)
Total AFS securities	$	99,187,538	$	102,006,611	$	3,190,405	$	(371,332)

All of the Company’s collaterized securities carry an average credit rating of AA+ by one or more major rating agency and continue to pay according to contractual terms. Included within MBS/ABS/CMBS, as defined in Note 3 – Fair Value Disclosures, are residential mortgage backed securities with fair values of $12,972,672 and $13,517,725 and commercial mortgage backed securities of $9,303,457 and $8,469,852 at March 31, 2018 and December 31, 2017, respectively.

ANALYSIS

The following table is also used as part of the impairment analysis and displays the total value of securities that were in an unrealized loss position as of March 31, 2018, and December 31, 2017. The table segregates the securities based on type, noting the fair value, cost (or amortized cost), and unrealized loss on each category of investment as well as in total. The table further classifies the securities based on the length of time they have been in an unrealized loss position.



	March 31, 2018						December 31, 2017
			12 Months						12 Months
	< 12 Months		& Greater		Total		< 12 Months		& Greater		Total
U.S. Treasury
Fair value	$	1,031,187	$	292,839	$	1,324,026	$	1,038,297	$	295,428	$	1,333,725
Cost or Amortized cost		1,046,989		300,185		1,347,174		1,046,508		300,204		1,346,712
Unrealized Loss		(15,802)		(7,346)		(23,148)		(8,211)		(4,776)		(12,987)

MBS/ABS/CMBS
Fair value		14,678,987		7,002,941		21,681,928		9,754,119		7,445,071		17,199,190
Cost or Amortized cost		14,899,042		7,345,985		22,245,027		9,778,528		7,645,085		17,423,613
Unrealized Loss		(220,055)		(343,044)		(563,099)		(24,409)		(200,014)		(224,423)

Corporate
Fair value		14,186,545		1,257,693		15,444,238		5,583,942		2,023,856		7,607,798
Cost or Amortized cost		14,439,695		1,299,133		15,738,828		5,610,093		2,048,963		7,659,056
Unrealized Loss		(253,150)		(41,440)		(294,590)		(26,151)		(25,107)		(51,258)

Municipal
Fair value		4,515,983		844,120		5,360,103		478,019		1,171,520		1,649,539
Cost or Amortized cost		4,554,901		879,369		5,434,270		479,904		1,186,663		1,666,567
Unrealized Loss		(38,918)		(35,249)		(74,167)		(1,885)		(15,143)		(17,028)

Subtotal, fixed income
Fair value		34,412,702		9,397,593		43,810,295		16,854,377		10,935,875		27,790,252
Cost or Amortized cost		34,940,627		9,824,672		44,765,299		16,915,033		11,180,915		28,095,948
Unrealized Loss		(527,925)		(427,079)		(955,004)		(60,656)		(245,040)		(305,696)

Common Stock
Fair value		8,992,040		—		8,992,040		637,100		—		637,100
Cost or Amortized cost		9,796,340		—		9,796,340		654,800		—		654,800
Unrealized Loss		(804,300)		—		(804,300)		(17,700)		—		(17,700)

Preferred Stock
Fair value		65,725		—		65,725		842,530		520,710		1,363,240
Cost or Amortized cost		66,675		—		66,675		870,755		540,421		1,411,176
Unrealized Loss		(950)		—		(950)		(28,225)		(19,711)		(47,936)

Total
Fair value		43,470,467		9,397,593		52,868,060		18,334,007		11,456,585		29,790,592
Cost or amortized cost		44,803,642		9,824,672		54,628,314		18,440,588		11,721,336		30,161,924
Unrealized Loss	$	(1,333,175)	$	(427,079)	$	(1,760,254)	$	(106,581)	$	(264,751)	$	(371,332)

As of March 31, 2018, the Company held 204 common stock and preferred stock securities in an unrealized loss position. Of these 204 securities, none have been in an unrealized loss position for 12 consecutive months or longer. As of December 31, 2017, the Company held 13 equity securities that were in unrealized loss positions. Of these 13 securities, five were in an unrealized loss position for 12 consecutive months or longer and represented $19,711 in unrealized losses.

The fixed income portfolio contained 110 securities in an unrealized loss position as of March 31, 2018. Of these 110 securities, 26 have been in an unrealized loss position for 12 consecutive months or longer and represent $427,079 in unrealized losses. All fixed income securities in the investment portfolio continue to pay the expected coupon payments under the contractual terms of the securities. Credit-related impairments on fixed income securities that we do not plan to sell, and for which we are not more likely than not to be required to sell, are recognized in net earnings. Any non-credit related impairment is recognized in comprehensive earnings. Based on management’s analysis, the fixed income portfolio is of a high credit quality and it is believed it will recover the amortized cost basis of the fixed income securities. Management monitors the credit quality of the fixed income investments to assess if it is probable that the Company will receive its contractual or estimated cash flows in the form of principal and interest. There were no other-than-temporary impairment losses recognized in other comprehensive earnings in the periods presented. The securities in an unrealized loss position were not other-than-temporarily impaired at March 31, 2018 and December 31, 2017.

Other Invested Assets

Other invested assets include privately held investments, including membership in the Federal Home Loan Bank of Chicago (FHLBC), which occurred in February 2018 . Our investment in FHLBC stock is carried at cost. Due to the nature of our membership in the FHLBC, its carrying amount approximates fair value. As of March 31, 2018, there were no investments pledged as collateral with the FHLBC. There may be investments pledged as collateral with the FHLBC to ensure timely access to the secured lending facility that ownership of FHLBC stock provides. As of and during the three month period ending March 31, 2018, there were no outstanding borrowings with the FHLBC.