Investments

The Company invests primarily in fixed maturity securities, which totaled 84.7% of total cash, cash equivalents and investments at September 30, 2015.



	September 30, 2015				December 31, 2014
	Carrying Value		% of Total Carrying Value		Carrying Value		% of Total Carrying Value
	($ In thousands)
Fixed maturity securities	$	983,676	84.7	%	$	932,159	83.6	%
Equity securities	66,668		5.7	%	69,879		6.3	%
Mortgage loans	599		0.1	%	628		0.1	%
Policy loans	58,968		5.1	%	54,032		4.8	%
Real estate and other long-term investments	8,076		0.7	%	8,266		0.7	%
Short-term investments	254		—	%	—		—	%
Cash and cash equivalents	42,831		3.7	%	50,708		4.5	%
Total cash, cash equivalents and investments	$	1,161,072	100.0	%	$	1,115,672	100.0	%

The following tables represent the cost, gross unrealized gains and losses and fair value for fixed maturities and equity securities as of the periods indicated.



	September 30, 2015
	Cost or Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
	(In thousands)
Fixed maturities:
Available-for-sale:
U.S. Treasury securities	$	10,010	2,892	—	12,902
U.S. Government-sponsored enterprises	36,364		1,359	—	37,723
States and political subdivisions	455,494		18,018	2,937	470,575
Foreign governments	104		30	—	134
Corporate	201,760		12,994	3,408	211,346
Commercial mortgage-backed	162		7	—	169
Residential mortgage-backed	2,773		227	2	2,998
Total available-for-sale securities	706,667		35,527	6,347	735,847
Held-to-maturity securities:
U.S. Government-sponsored enterprises	2,012		137	—	2,149
States and political subdivisions	223,084		7,741	708	230,117
Corporate	22,733		672	1,623	21,782
Total held-to-maturity securities	247,829		8,550	2,331	254,048
Total fixed maturities	954,496		44,077	8,678	989,895

Short-term investments	$	254	—	—	254

Equity securities:
Stock mutual funds	$	16,007	189	67	16,129
Bond mutual funds	49,189		6	534	48,661
Common stock	65		—	23	42
Preferred stock	1,594		243	1	1,836
Total equity securities	$	66,855	438	625	66,668



	December 31, 2014
	Cost or Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
	(In thousands)
Fixed maturities:
Available-for-sale securities:
U.S. Treasury securities	$	10,056	2,924	—	12,980
U.S. Government-sponsored enterprises	38,312		1,937	—	40,249
States and political subdivisions	404,657		19,146	1,448	422,355
Foreign governments	104		31	—	135
Corporate	211,410		17,441	1,024	227,827
Commercial mortgage-backed	223		8	—	231
Residential mortgage-backed	3,204		249	3	3,450
Total available-for-sale securities	667,966		41,736	2,475	707,227
Held-to-maturity securities:
U.S. Government-sponsored enterprises	2,017		178	—	2,195
States and political subdivisions	192,875		7,782	388	200,269
Corporate	30,040		947	560	30,427
Total held-to-maturity securities	224,932		8,907	948	232,891
Total fixed maturity securities	$	892,898	50,643	3,423	940,118
Equity securities:
Stock mutual funds	$	16,005	1,657	66	17,596
Bond mutual funds	50,976		60	796	50,240
Common stock	65		—	14	51
Preferred stock	1,741		253	2	1,992
Total equity securities	$	68,787	1,970	878	69,879

The majority of the Company's equity securities are diversified stock and bond mutual funds.

Valuation of Investments in Fixed Maturity and Equity Securities

Held-to-maturity securities are reported in the financial statements at amortized cost and available-for-sale securities are reported at fair value.

The Company monitors all debt and equity securities on an on-going basis relative to changes in credit ratings, market prices, earnings trends and financial performance, in addition to specific region or industry reviews. The assessment of whether impairments have occurred is based on a case-by-case evaluation of underlying reasons for the decline in fair value. The Company determines other-than-temporary impairment by reviewing relevant evidence related to the specific security issuer as well as the Company's intent to sell the security, or if it is more likely than not that the Company would be required to sell a security before recovery of its amortized cost.

When an other-than-temporary impairment has occurred, the amount of the other-than-temporary impairment recognized in earnings depends on whether the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis. If the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis, the other-than-temporary impairment is recognized in earnings equal to the entire difference between the investment's cost and its fair value at the balance sheet date. If the Company does not intend to sell the security and it is more likely than not that the Company will not be required to sell the security before recovery of its amortized cost basis, the other-than-temporary impairment is separated into the following: (a) the amount representing the credit loss; and (b) the amount related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings. The amount of the total other-than-temporary impairment related to other factors is recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the other-than-temporary impairment recognized in earnings becomes the new amortized cost basis of the investment. The new amortized cost basis is not adjusted for subsequent recoveries in fair value.

The Company evaluates whether a credit impairment exists for debt securities by considering primarily the following factors: (a) changes in the financial condition of the security's underlying collateral; (b) whether the issuer is current on contractually obligated interest and principal payments; (c) changes in the financial condition, credit rating and near-term prospects of the issuer; (d) the length of time to which the fair value has been less than the amortized cost of the security; and (e) the payment structure of the security. The Company's best estimate of expected future cash flows used to determine the credit loss amount is a quantitative and qualitative process. Quantitative review includes information received from third party sources such as financial statements, pricing and rating changes, liquidity and other statistical information. Qualitative factors include judgments related to business strategies, economic impacts on the issuer and overall judgment related to estimates and industry factors. The Company's best estimate of future cash flows involves assumptions including, but not limited to, various performance indicators, such as historical and projected default and recovery rates, credit ratings, and current delinquency rates. These assumptions require the use of significant management judgment and include the probability of issuer default and estimates regarding timing and amount of expected recoveries, which may include estimating the underlying collateral value. In addition, projections of expected future debt security cash flows may change based upon new information regarding the performance of the issuer.

The primary factors considered in evaluating whether an impairment exists for an equity security include, but are not limited to: (a) the length of time and the extent to which the fair value has been less than the cost of the security; (b) changes in the financial condition, credit rating and near-term prospects of the issuer; (c) whether the issuer is current on contractually obligated payments; and (d) the intent and ability of the Company to retain the investment for a period of time sufficient to allow for recovery.

Other-than-temporary impairments ("OTTI") were recognized during the three and nine months ended September 30, 2015 totaling $2.4 million. No other-than-temporary impairments were recognized during the three and nine months ended in 2014.

The following tables present the fair values and gross unrealized losses of fixed maturities and equity securities that have remained in a continuous unrealized loss position for the periods indicated.



	September 30, 2015
	Less than 12 months				Greater than 12 months			Total
	Fair Value		Unrealized Losses	# of Securities	Fair Value	Unrealized Losses	# of Securities	Fair Value	Unrealized Losses	# of Securities
	(In thousands, except for # of securities)
Fixed maturities:
Available-for-sale securities:
States and political subdivisions	$	86,825	980	85	17,392	1,957	13	104,217	2,937	98
Corporate	45,786		2,678	53	5,085	730	5	50,871	3,408	58
Residential mortgage-backed	67		1	2	136	1	3	203	2	5
Total available-for-sale securities	132,678		3,659	140	22,613	2,688	21	155,291	6,347	161
Held-to-maturity securities:
States and political subdivisions	37,472		615	31	2,430	93	5	39,902	708	36
Corporate	2,744		728	3	4,664	895	4	7,408	1,623	7
Total held-to-maturity securities	40,216		1,343	34	7,094	988	9	47,310	2,331	43
Total fixed maturities	$	172,894	5,002	174	29,707	3,676	30	202,601	8,678	204
Equity securities:
Stock mutual funds	$	8,736	67	3	—	—	—	8,736	67	3
Bond mutual funds	31,668		505	2	110	29	1	31,778	534	3
Common stocks	41		6	3	—	17	1	41	23	4
Preferred stocks	—		1	1	—	—	—	—	1	1
Total equities	$	40,445	579	9	110	46	2	40,555	625	11

As of September 30, 2015, the Company had 21 available-for-sale fixed maturity securities and 9 held-to-maturity fixed maturity securities that were in an unrealized loss position for greater than 12 months. We reported 2 common stock holding in an unrealized loss position for greater than 12 months as of September 30, 2015.



	December 31, 2014
	Less than 12 months				Greater than 12 months			Total
	Fair Value		Unrealized Losses	# of Securities	Fair Value	Unrealized Losses	# of Securities	Fair Value	Unrealized Losses	# of Securities
	(In thousands, except for # of securities)
Fixed maturities:
Available-for-sale securities:
States and political subdivisions	$	43,776	318	47	33,716	1,130	24	77,492	1,448	71
Corporate	26,671		780	24	2,530	244	2	29,201	1,024	26
Residential mortgage-backed	159		2	5	33	1	1	192	3	6
Total available-for-sale securities	70,606		1,100	76	36,279	1,375	27	106,885	2,475	103
Held-to-maturity securities:
States and political subdivisions	21,233		74	16	15,429	314	21	36,662	388	37
Corporate	3,866		285	4	2,746	275	2	6,612	560	6
Total held-to-maturity securities	25,099		359	20	18,175	589	23	43,274	948	43
Total fixed maturities	$	95,705	1,459	96	54,454	1,964	50	150,159	3,423	146
Equity securities:
Stock mutual funds	$	5,224	66	4	—	—	—	5,224	66	4
Bond mutual funds	26,228		796	4	—	—	—	26,228	796	4
Preferred stocks	234		2	4	—	—	—	234	2	4
Common stock	46		1	2	4	13	9	50	14	11
Total equities	$	31,732	865	14	4	13	9	31,736	878	23

We have reviewed these securities for the periods ended September 30, 2015 and December 31, 2014 and determined that no other-than-temporary impairment exists that have not been recognized based on our evaluation of the credit worthiness of the issuers and the fact that we do not intend to sell the investments nor is it likely that we will be required to sell the securities before recovery of their amortized cost bases which may be maturity. We continue to monitor all securities on an on-going basis, and future information may become available which could result in impairments being recorded.

The amortized cost and fair value of fixed maturity securities at September 30, 2015 by contractual maturity are shown in the table below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date have been reflected based upon final stated maturity.



	September 30, 2015
	Amortized Cost		Fair Value
	(In thousands)
Available-for-sale securities:
Due in one year or less	$	23,804	24,152
Due after one year through five years	126,342		131,632
Due after five years through ten years	98,083		102,448
Due after ten years	458,438		477,615
Total available-for-sale securities	706,667		735,847
Held-to-maturity securities:
Due in one year or less	9,357		9,397
Due after one year through five years	35,383		37,298
Due after five years through ten years	48,634		50,258
Due after ten years	154,455		157,095
Total held-to-maturity securities	247,829		254,048
Total fixed maturities	$	954,496	989,895

The Company uses the specific identification method of the individual security to determine the cost basis used in the calculation of realized gains and losses related to security sales. Proceeds and gross realized gains from sales of securities for the three and nine months ended September 30, 2015 and 2014 are summarized as follows.



	Fixed Maturities Available-for-Sale					Equity Securities
	Three Months Ended			Nine Months Ended		Three Months Ended		Nine Months Ended
	September 30,			September 30,		September 30,		September 30,
	2015		2014	2015	2014	2015	2014	2015	2014
	(In thousands)
Proceeds	$	—	100	—	680	—	3,924	—	15,029
Gross realized gains	$	—	5	—	26	—	55	—	118
Gross realized losses	$	—	—	—	—	—	—	—	169

There were no sales of available-for-sale securities for the three and nine month periods ended September 30, 2015. There was one equity bond mutual fund sold at a gain during the three month period ended September 30, 2014 as higher yielding bond mutual fund alternatives became more attractive than these U.S. Government backed funds as circumstances changed in the current environment. There were three bond mutual funds sold during the nine month period ended September 30, 2014 for a net loss. There were no securities sold from the held-to-maturity portfolio for the three and nine months ended September 30, 2015 or 2014.