3. 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 4 – 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 June 30,
							Net realized
	Proceeds		Gains		Losses		gain / (Loss)
2018
Fixed maturity securities	$	2,598,335	$	4,669	$	(13,084)	$	(8,415)
Common stocks		241,047		16,473		(37,988)		(21,515)
2017
Fixed maturity securities	$	906,700	$	—	$	(3)	$	(3)



	For the Six-Months Ended June 30,
							Net realized
	Proceeds		Gains		Losses		gain
2018
Fixed maturity securities	$	6,669,276	$	52,787	$	(26,115)	$	26,672
Common stocks		8,834,375		1,102,862		(62,242)		1,040,620
Preferred stocks		3,861,722		86,862		(81,954)		4,908
2017
Fixed maturity securities	$	4,414,597	$	29,328	$	(21)	$	29,307
Common stocks		1,955,715		415,471		—		415,471

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



	Amortized Cost		Fair Value
Due in one year or less	$	311,535	$	311,420
Due after one year through five years		23,915,785		23,924,513
Due after five years through 10 years		10,685,245		10,767,086
Due after 10 years		18,034,819		18,283,025
Asset and mortgage backed securities without a specific due date		37,028,126		36,408,799
Total fixed maturity securities	$	89,975,510	$	89,694,843

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 June 30, 2018 and December 31, 2017:



	Cost or				Gross Unrealized
	Amortized Cost		Fair Value		Gains		Losses
2018
Fixed maturity securities:
U.S. treasury	$	1,347,640	$	1,321,469	$	—	$	(26,171)
MBS/ABS/CMBS		37,028,126		36,408,799		49,487		(668,814)
Corporate		31,210,729		31,157,991		356,164		(408,902)
Municipal		20,389,015		20,806,584		486,377		(68,808)
Total fixed maturity securities		89,975,510		89,694,843		892,028		(1,172,695)
Equity securities:
Common stocks		13,100,640		12,907,136		656,830		(850,334)
Preferred stocks		66,675		65,650		—		(1,025)
Total equity securities		13,167,315		12,972,786		656,830		(851,359)
Total AFS securities	$	103,142,825	$	102,667,629	$	1,548,858	$	(2,024,054)



	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 4 – Fair Value Disclosures, are residential mortgage backed securities with fair values of $14,271,429 and $13,517,725 and commercial mortgage backed securities of $9,177,628 and $8,469,852 at June 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 June 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.



	June 30, 2018						December 31, 2017
			12 Months						12 Months
	< 12 Months		& Greater		Total		< 12 Months		& Greater		Total
U.S. treasury
Fair value	$	1,029,263	$	292,206	$	1,321,469	$	1,038,297	$	295,428	$	1,333,725
Cost or amortized cost		1,047,472		300,168		1,347,640		1,046,508		300,204		1,346,712
Unrealized loss		(18,209)		(7,962)		(26,171)		(8,211)		(4,776)		(12,987)

MBS/ABS/CMBS
Fair value		20,073,237		6,708,127		26,781,364		9,754,119		7,445,071		17,199,190
Cost or amortized cost		20,368,837		7,081,341		27,450,178		9,778,528		7,645,085		17,423,613
Unrealized loss		(295,600)		(373,214)		(668,814)		(24,409)		(200,014)		(224,423)

Corporate
Fair value		17,434,719		755,371		18,190,090		5,583,942		2,023,856		7,607,798
Cost or amortized cost		17,799,788		799,204		18,598,992		5,610,093		2,048,963		7,659,056
Unrealized loss		(365,069)		(43,833)		(408,902)		(26,151)		(25,107)		(51,258)

Municipal
Fair value		3,644,260		839,947		4,484,207		478,019		1,171,520		1,649,539
Cost or amortized cost		3,677,077		875,938		4,553,015		479,904		1,186,663		1,666,567
Unrealized loss		(32,817)		(35,991)		(68,808)		(1,885)		(15,143)		(17,028)

Subtotal, fixed income
Fair value		42,181,479		8,595,651		50,777,130		16,854,377		10,935,875		27,790,252
Cost or amortized cost		42,893,174		9,056,651		51,949,825		16,915,033		11,180,915		28,095,948
Unrealized loss		(711,695)		(461,000)		(1,172,695)		(60,656)		(245,040)		(305,696)

Common stock
Fair value		7,254,241		—		7,254,241		637,100		—		637,100
Cost or amortized cost		8,104,575		—		8,104,575		654,800		—		654,800
Unrealized loss		(850,334)		—		(850,334)		(17,700)		—		(17,700)

Preferred stock
Fair value		65,650		—		65,650		842,530		520,710		1,363,240
Cost or amortized cost		66,675		—		66,675		870,755		540,421		1,411,176
Unrealized loss		(1,025)		—		(1,025)		(28,225)		(19,711)		(47,936)

Total
Fair value		49,501,370		8,595,651		58,097,021		18,334,007		11,456,585		29,790,592
Cost or amortized cost		51,064,424		9,056,651		60,121,075		18,440,588		11,721,336		30,161,924
Unrealized loss	$	(1,563,054)	$	(461,000)	$	(2,024,054)	$	(106,581)	$	(264,751)	$	(371,332)

As of June 30, 2018, the Company held 148 common stock and preferred stock securities in an unrealized loss position. Of these 148 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 124 securities in an unrealized loss position as of June 30, 2018. Of these 124 securities, 24 have been in an unrealized loss position for 12 consecutive months or longer and represent $461,000 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 six months ended June 30, 2018. For the six months ended, June 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 June 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 June 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 six month periods ending June 30, 2018, there were no outstanding borrowings with the FHLBC.