2. INVESTMENTS

The Company’s investments are primarily composed of fixed income debt securities and common and preferred stock equity securities. We carry our equity securities at fair value and categorize all of our fixed maturity debt securities 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.

Available-for-Sale Fixed Maturity and Equity Securities

The following tables are a summary of the proceeds from sales, maturities, and calls of available-for-sale fixed maturity and equity securities and the related gross realized gains and losses.



	For the Three-Months Ended March 31,
							Net realized
	Proceeds		Gains		Losses		gain
2019
Fixed maturity securities	$	5,778,893	$	25,589	$	(11,619)	$	13,970
Common stocks		553,413		63,577		(124,973)		(61,396)
Preferred stocks		—		—		—		—
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

The amortized cost and estimated fair value of fixed income securities at March 31, 2019, by contractual maturity, are shown as follows:



	Amortized Cost		Fair Value
Due in one year or less	$	2,442,051	$	2,436,559
Due after one year through five years		23,845,589		24,306,392
Due after five years through 10 years		13,719,450		14,325,931
Due after 10 years		13,814,588		14,500,013
Asset and mortgage backed securities without a specific due date		34,511,438		34,358,560
Total fixed maturity securities	$	88,333,116	$	89,927,455

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 securities classified as available for sale at March 31, 2019 and December 31, 2018:



	Cost or				Gross Unrealized
	Amortized Cost		Fair Value		Gains		Losses
2019
Fixed maturity securities:
U.S. Treasury	$	1,349,045	$	1,335,742	$	—	$	(13,303)
MBS/ABS/CMBS		34,511,437		34,358,559		188,396		(341,274)
Corporate		38,317,813		39,406,608		1,165,691		(76,896)
Municipal		14,154,821		14,826,546		676,010		(4,285)
Total AFS securities	$	88,333,116	$	89,927,455	$	2,030,097	$	(435,758)



	Cost or				Gross Unrealized
	Amortized Cost		Fair Value		Gains		Losses
2018
Fixed maturity securities:
U.S. Treasury	$	1,348,575	$	1,328,925	$	—	$	(19,650)
MBS/ABS/CMBS		34,372,133		33,799,024		33,955		(607,064)
Corporate		37,383,903		37,366,690		376,029		(393,242)
Municipal		16,148,295		16,486,520		398,569		(60,344)
Total fixed maturity securities		89,252,906		88,981,159		808,553		(1,080,300)
Equity securities:
Common stocks		13,572,713		11,843,223		406,812		(2,136,302)
Total equity securities1		13,572,713		11,843,223		406,812		(2,136,302)
Total AFS securities	$	102,825,619	$	100,824,382	$	1,215,365	$	(3,216,602)

1Effective January 1, 2019, 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.

All of the Company’s collaterized securities carry an average credit rating of AA+ by one or more major rating agencies 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 $14,503,520 and $13,696,585 and commercial mortgage backed securities of $9,345,650 and $10,126,352 at March 31, 2019 and December 31, 2018, respectively.

ANALYSIS

The following tables are 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, 2019, and December 31, 2018. The tables segregate 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, 2019
			12 Months
	< 12 Months		& Greater		Total
Fixed Maturity Securities:
U.S. Treasury
Fair value	$	—	$	1,335,742	$	1,335,742
Cost or amortized cost		—		1,349,045		1,349,045
Unrealized loss		—		(13,303)		(13,303)
MBS/ABS/CMBS
Fair value		7,646,768		13,672,461		21,319,229
Cost or amortized cost		7,698,242		13,962,261		21,660,503
Unrealized loss		(51,474)		(289,800)		(341,274)
Corporate
Fair value		252,781		9,358,068		9,610,849
Cost or amortized cost		252,910		9,434,835		9,687,745
Unrealized loss		(129)		(76,767)		(76,896)
Municipal
Fair value		—		272,453		272,453
Cost or amortized cost		—		276,738		276,738
Unrealized loss		—		(4,285)		(4,285)
Total debt securities available for sale
Fair value		7,899,549		24,638,724		32,538,273
Cost or amortized cost		7,951,152		25,022,879		32,974,031
Unrealized loss		(51,603)		(384,155)		(435,758)


	December 31, 2018
			12 Months
	< 12 Months		& Greater		Total
U.S. Treasury
Fair value	$	—	$	1,328,925	$	1,328,925
Cost or amortized cost		—		1,348,575		1,348,575
Unrealized loss		—		(19,650)		(19,650)
MBS/ABS/CMBS
Fair value		16,890,857		11,956,493		28,847,350
Cost or amortized cost		17,039,357		12,415,057		29,454,414
Unrealized loss		(148,500)		(458,564)		(607,064)
Corporate
Fair value		14,304,322		5,745,289		20,049,611
Cost or amortized cost		14,550,153		5,892,700		20,442,853
Unrealized loss		(245,831)		(147,411)		(393,242)
Municipal
Fair value		3,069,720		838,980		3,908,700
Cost or amortized cost		3,100,036		869,008		3,969,044
Unrealized loss		(30,316)		(30,028)		(60,344)
Subtotal, fixed income
Fair value		34,264,899		19,869,687		54,134,586
Cost or amortized cost		34,689,546		20,525,340		55,214,886
Unrealized loss		(424,647)		(655,653)		(1,080,300)
Common stock1
Fair value		8,187,764				8,187,764
Cost or amortized cost		10,324,066		—		10,324,066
Unrealized loss		(2,136,302)		—		(2,136,302)
Total
Fair value		42,452,663		19,869,687		62,322,350
Cost or amortized cost		45,013,612		20,525,340		65,538,952
Unrealized loss	$	(2,560,949)	$	(655,653)	$	(3,216,602)

As of December 31, 2018, the Company held 200 equity securities that were in unrealized loss positions. Of these 200 securities, none were in an unrealized loss position for 12 consecutive months or longer.

The fixed income portfolio contained 76 securities in an unrealized loss position as of March 31, 2019. Of these 76 securities, 63 have been in an unrealized loss position for 12 consecutive months or longer and represent $384,155 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 three months ended March 31, 2018. For all fixed income securities at a loss at March 31, 2019, management believes it is probable that the Company will receive all contractual payments in the form of principal and interest. In addition, the Company is not required to, nor does it intend to sell these investments prior to recovering the entire amortized cost basis for each security, which may be maturity. The fixed income securities in an unrealized loss position were not other-than-temporarily impaired at March 31, 2019 and December 31, 2018.

UNREALIZED GAINS AND LOSSES ON EQUITY SECURITIES

The portion of net unrealized gains for the first quarter of 2018 that relates to equity securities held as of March 31, 2019 was $1,840,418.

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, 2019, 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 periods ending March 31, 2019 and March 31, 2018, there were no outstanding borrowings with the FHLBC.