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 tables are 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 Ended September 30,
							Net realized
	Proceeds		Gains		Losses		gain / (Loss)
2018
Fixed maturity securities	$	3,512,293	$	45,130	$	(30,165)	$	14,965
Common stocks		533,388		61,330		(60,591)		739
Preferred stocks		66,000		—		(675)		(675)
2017
Fixed maturity securities	$	1,255,443	$	—	$	—	$	—
Common stocks		198,499		—		(2,752)		(2,752)
Preferred stocks		55,199		919		—		919



	For the Nine-Months Ended September 30,
							Net realized
	Proceeds		Gains		Losses		gain
2018
Fixed maturity securities	$	10,181,569	$	97,917	$	(56,280)	$	41,637
Common stocks		9,367,763		1,164,192		(122,833)		1,041,359
Preferred stocks		3,927,722		86,863		(82,630)		4,233
2017
Fixed maturity securities	$	5,670,040	$	29,328	$	(21)	$	29,307
Common stocks		2,154,214		415,472		(2,752)		412,720
Preferred stocks		55,199		919		—		919

The amortized cost and estimated fair value of fixed income securities at September 30, 2018, by contractual maturity, are shown as follows:



	Amortized Cost		Fair Value
Due in one year or less	$	813,225	$	821,742
Due after one year through five years		23,865,819		23,769,718
Due after five years through 10 years		11,956,466		12,044,355
Due after 10 years		16,553,033		16,647,419
Asset and mortgage backed securities without a specific due date		36,387,655		35,617,216
Total fixed maturity securities	$	89,576,198	$	88,900,450

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 September 30, 2018 and December 31, 2017:



	Cost or				Gross Unrealized
	Amortized Cost		Fair Value		Gains		Losses
2018
Fixed maturity securities:
U.S. treasury	$	1,348,107	$	1,319,537	$	—	$	(28,570)
MBS/ABS/CMBS		36,387,655		35,617,215		29,751		(800,191)
Corporate		32,701,336		32,652,681		347,244		(395,899)
Municipal		19,139,100		19,311,017		333,420		(161,503)
Total fixed maturity securities		89,576,198		88,900,450		710,415		(1,386,163)
Equity securities:
Common stocks		13,137,108		13,607,356		1,225,227		(754,979)
Preferred stocks		—		—		—		—
Total equity securities		13,137,108		13,607,356		1,225,227		(754,979)
Total AFS securities	$	102,713,306	$	102,507,806	$	1,935,642	$	(2,141,142)



	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 $14,060,675 and $13,517,725 and commercial mortgage backed securities of $10,103,025 and $8,469,852 at September 30, 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 September 30, 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.



	September 30, 2018						December 31, 2017
			12 Months						12 Months
	< 12 Months		& Greater		Total		< 12 Months		& Greater		Total
U.S. treasury
Fair value	$	342,250	$	977,287	$	1,319,537	$	1,038,297	$	295,428	$	1,333,725
Cost or amortized cost		348,124		999,983		1,348,107		1,046,508		300,204		1,346,712
Unrealized loss		(5,874)		(22,696)		(28,570)		(8,211)		(4,776)		(12,987)

MBS/ABS/CMBS
Fair value		21,088,559		7,245,861		28,334,420		9,754,119		7,445,071		17,199,190
Cost or amortized cost		21,443,390		7,691,221		29,134,611		9,778,528		7,645,085		17,423,613
Unrealized loss		(354,831)		(445,360)		(800,191)		(24,409)		(200,014)		(224,423)

Corporate
Fair value		17,985,164		1,498,716		19,483,880		5,583,942		2,023,856		7,607,798
Cost or amortized cost		18,320,100		1,559,679		19,879,779		5,610,093		2,048,963		7,659,056
Unrealized loss		(334,936)		(60,963)		(395,899)		(26,151)		(25,107)		(51,258)

Municipal
Fair value		8,435,081		829,523		9,264,604		478,019		1,171,520		1,649,539
Cost or amortized cost		8,553,627		872,480		9,426,107		479,904		1,186,663		1,666,567
Unrealized loss		(118,546)		(42,957)		(161,503)		(1,885)		(15,143)		(17,028)

Subtotal, fixed income
Fair value		47,851,054		10,551,387		58,402,441		16,854,377		10,935,875		27,790,252
Cost or amortized cost		48,665,241		11,123,363		59,788,604		16,915,033		11,180,915		28,095,948
Unrealized loss		(814,187)		(571,976)		(1,386,163)		(60,656)		(245,040)		(305,696)

Common stock
Fair value		5,618,996				5,618,996		637,100		—		637,100
Cost or amortized cost		6,373,975		—		6,373,975		654,800		—		654,800
Unrealized loss		(754,979)		—		(754,979)		(17,700)		—		(17,700)

Preferred stock
Fair value		—		—		—		842,530		520,710		1,363,240
Cost or amortized cost		—		—		—		870,755		540,421		1,411,176
Unrealized loss		—		—		—		(28,225)		(19,711)		(47,936)

Total
Fair value		53,470,050		10,551,387		64,021,437		18,334,007		11,456,585		29,790,592
Cost or amortized cost		55,039,216		11,123,363		66,162,579		18,440,588		11,721,336		30,161,924
Unrealized loss	$	(1,569,166)	$	(571,976)	$	(2,141,142)	$	(106,581)	$	(264,751)	$	(371,332)

As of September 30, 2018, the Company held 129 common stock securities in an unrealized loss position. Of these 129 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 143 securities in an unrealized loss position as of September 30, 2018. Of these 143 securities, 31 have been in an unrealized loss position for 12 consecutive months or longer and represent $571,976 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 net earnings during the first nine months ended September 30, 2018. For the nine months ended, September 30, 2017, the Company recognized in net earnings $57,316 of other-than-temporary impairment losses on an ETF included in common stock that was impaired during the second quarter of 2017. The securities in an unrealized loss position were not other-than-temporarily impaired at September 30, 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 September 30, 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 and nine month periods ending September 30, 2018, there were no outstanding borrowings with the FHLBC.