3. Investments

12 Months Ended

Dec. 31, 2012

Text Block [Abstract]

3. Investments

Available for Sale Securities

The amortized cost and fair value of investments in available for sale fixed-maturity securities and equities as of December 31, 2012 and 2011 are summarized as follows:

	December 31, 2012
													Net
	Cost or		Gross		Gross Unrealized Losses								Unrealized
	Amortized		Unrealized		Less than 12			More than 12			Fair		Gains/
Category	Cost		Gains		Months			Months			Value		(Losses)
Fixed-Maturity Securities:
Political subdivisions of States,
Territories and Possessions	$	5,219,092	$	257,298	$	(1,574	)	$	-		$	5,474,816	$	255,724
Corporate and other bonds
Industrial and miscellaneous		19,628,005		1,123,392		(43,553	)		(722	)		20,707,122		1,079,117
Total fixed-maturity securities		24,847,097		1,380,690		(45,127	)		(722	)		26,181,938		1,334,841
Equity Securities:
Preferred stocks		1,475,965		19,512		(11,130	)		-			1,484,347		8,382
Common stocks		3,598,012		353,782		(145,899	)		-			3,805,895		207,883
Total equity securities		5,073,977		373,294		(157,029	)		-			5,290,242		216,265
Total	$	29,921,074	$	1,753,984	$	(202,156	)	$	(722	)	$	31,472,180	$	1,551,106

	December 31, 2011
													Net
	Cost or		Gross		Gross Unrealized Losses								Unrealized
	Amortized		Unrealized		Less than 12			More than 12			Fair		Gains/
Category	Cost		Gains		Months			Months			Value		(Losses)
Fixed-Maturity Securities:
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies	$	499,832	$	50,356	$	-		$	-		$	550,188	$	50,356
Political subdivisions of States,
Territories and Possessions		5,868,743		301,559		-			-			6,170,302		301,559
Corporate and other bonds
Industrial and miscellaneous		15,846,616		338,284		(228,792	)		(107,666	)		15,848,442		1,826
Total fixed-maturity securities		22,215,191		690,199		(228,792	)		(107,666	)		22,568,932		353,741
Equity Securities:
Preferred stocks		1,428,435		36,762		(76,969	)		(4,893	)		1,383,335		(45,100	)
Common stocks		2,429,306		274,538		(21,969	)		-			2,681,875		252,569
Total equity securities		3,857,741		311,300		(98,938	)		(4,893	)		4,065,210		207,469
Total	$	26,072,932	$	1,001,499	$	(327,730	)	$	(112,559	)	$	26,634,142	$	561,210

A summary of the amortized cost and fair value of the Company’s investments in available for sale fixed-maturity securities by contractual maturity as of December 31, 2012 and 2011 is shown below:

	December 31, 2012				December 31, 2011
	Amortized				Amortized
Remaining Time to Maturity	Cost		Fair Value		Cost		Fair Value
Less than one year	$	546,952	$	560,162	$	1,063,493	$	1,079,924
One to five years		9,031,248		9,569,943		6,899,892		7,045,774
Five to ten years		12,605,798		13,306,033		12,547,046		12,680,441
More than 10 years		2,663,099		2,745,800		1,704,760		1,762,793
Total	$	24,847,097	$	26,181,938	$	22,215,191	$	22,568,932

The actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalties.

Held to Maturity Securities

The amortized cost and fair value of investments in held to maturity fixed-maturity securities as of December 31, 2012 and 2011 are summarized as follows:

December 31, 2012

Cost or

Gross

Gross Unrealized Losses

Net Unrealized

Amortized

Unrealized

Less than 12

More than 12

Fair

Gains/

Category

Cost

Gains

Months

Months

Value

(Losses)

U.S. Treasury securities

$

606,281

$

172,745

$

-

$

-

$

779,026

$

172,745

	December 31, 2011
					Gross Unrealized Losses
Category	Cost or Amortized Cost		Gross Unrealized Gains		Less than 12 Months		More than 12 Months		Fair Value		Net Unrealized Gains/ (Losses)
U.S. Treasury securities	$	606,234	$	171,719	$	-	$	-	$	777,953	$	171,719

All held to maturity securities are held in trust pursuant to the New York State Department of Financial Services’ minimum funds requirement.

Contractual maturities of all held to maturity securities are greater than ten years.

Investment Income

Major categories of the Company’s net investment income are summarized as follows:

	Years ended
	December 31,
	2012		2011
Income:
Fixed-maturity securities	$	951,895	$	748,046
Equity securities		268,034		168,813
Cash and cash equivalents		134		5,248
Other		23,857		11,974
Total		1,243,920		934,081
Expenses:
Investment expenses		228,764		179,451
Net investment income	$	1,015,156	$	754,630

Proceeds from the sale and maturity of fixed-maturity securities were $4,322,120 and $3,532,245 for the years ended December 31, 2012 and 2011, respectively.

Proceeds from the sale of equity securities were $1,726,345 and $2,771,631 for the years ended December 31, 2012 and 2011, respectively.

The Company’s net realized gains and losses on investments are summarized as follows:

	Year ended
	December 31,
	2012			2011
Fixed-maturity securities
Gross realized gains	$	233,299		$	190,855
Gross realized losses		(52,933	)		(1,983	)
		180,366			188,872
Equity securities
Gross realized gains		137,271			292,687
Gross realized losses		(29,569	)		(90,876	)
		107,702			201,811
Cash and short term investments (1)		-			133,211
Net realized gains	$	288,068		$	523,894

(1) Realized gain on cash and short term investments is a partial recovery from the FDIC of an amount previously written off in 2009 due to the failure of Waterfield Bank.

Impairment Review

The Company regularly reviews its fixed-maturity securities and equity securities portfolios to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of investments. In evaluating potential impairment, management considers, among other criteria: (i) the current fair value compared to amortized cost or cost, as appropriate; (ii) the length of time the security’s fair value has been below amortized cost or cost; (iii) specific credit issues related to the issuer such as changes in credit rating, reduction or elimination of dividends or non-payment of scheduled interest payments; (iv) management’s intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in value to cost; and (v) current economic conditions.

OTTI losses are recorded in the condensed consolidated statement of operations and comprehensive income as net realized losses on investments and result in a permanent reduction of the cost basis of the underlying investment. The determination of OTTI is a subjective process and different judgments and assumptions could affect the timing of loss realization. There are 33 securities at December 31, 2012 that account for the gross unrealized loss. The Company determined that none of the unrealized losses were deemed to be OTTI for its portfolio of fixed maturity investments and equity securities for the years ended December 31, 2012 and 2011. Significant factors influencing the Company’s determination that unrealized losses were temporary included the magnitude of the unrealized losses in relation to each security’s cost, the nature of the investment and management’s intent and ability to retain the investment for a period of time sufficient to allow for anticipated recovery of fair value to the Company’s cost basis.

The Company held securities with unrealized losses representing declines that were considered temporary at December 31, 2012 and 2011 as follows:

	December 31, 2012
	Less than 12 months							12 months or more							Total
						No. of							No. of		Aggregate
	Fair		Unrealized			Positions		Fair		Unrealized			Positions		Fair		Unrealized
Category	Value		Losses			Held		Value		Losses			Held		Value		Losses
Fixed-Maturity Securities:
Political subdivisions of
States, Territories and
Possessions	$	202,798	$	(1,574	)		1	$	-	$	-			-	$	202,798	$	(1,574	)
Corporate and other
bonds industrial and
miscellaneous		4,025,551		(43,553	)		19		128,125		(722	)		1		4,153,676		(44,275	)
Total fixed-maturity
securities	$	4,228,349	$	(45,127	)		20	$	128,125	$	(722	)		1	$	4,356,474	$	(45,849	)
Equity Securities:
Preferred stocks	$	387,925	$	(11,130	)		3	$	-	$	-			-	$	387,925	$	(11,130	)
Common stocks		1,536,860		(145,899	)		9		-		-			-		1,536,860		(145,899	)
Total equity securities	$	1,924,785	$	(157,029	)		12	$	-	$	-			-	$	1,924,785	$	(157,029	)
Total	$	6,153,134	$	(202,156	)		32	$	128,125	$	(722	)		1	$	6,281,259	$	(202,878	)

	December 31, 2011
	Less than 12 months							12 months or more							Total
						No. of							No. of		Aggregate
	Fair		Unrealized			Positions		Fair		Unrealized			Positions		Fair		Unrealized
Category	Value		Losses			Held		Value		Losses			Held		Value		Losses
Fixed-Maturity Securities:
Corporate and other
bonds industrial and
miscellaneous	$	4,849,378	$	(228,792	)	$	26	$	1,483,425	$	(107,666	)	$	7	$	6,332,803	$	(336,458	)
Total fixed-maturity
securities	$	4,849,378	$	(228,792	)		26	$	1,483,425	$	(107,666	)		7	$	6,332,803	$	(336,458	)
Equity Securities:
Preferred stocks	$	368,350	$	(76,969	)		12	$	189,364	$	(4,893	)		5	$	557,714	$	(81,862	)
Common stocks		397,268		(21,969	)		14		-		-			-		397,268		(21,969	)
Total equity securities	$	765,618	$	(98,938	)		26	$	189,364	$	(4,893	)		5	$	954,982	$	(103,831	)
Total	$	5,614,996	$	(327,730	)		52	$	1,672,789	$	(112,559	)		12	$	7,287,785	$	(440,289	)