INVESTMENTS

Investments of the Company’s insurance subsidiaries are subject to the insurance laws of the state of their incorporation. These laws prescribe the kind, quality and concentration of investments that may be made by insurance companies. In general, these laws permit investments, within specified limits and subject to certain qualifications, in federal, state and municipal obligations, corporate bonds, preferred and common stocks and real estate mortgages. The Company believes that it is in compliance with these laws.

The amortized cost and estimated fair value of securities available-for-sale as of June 30, 2013 and December 31, 2012 are as follows. All securities are classified as available-for-sale and are carried at fair value.



June 30, 2013	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Securities available-for-sale:
Fixed maturity securities:
U.S. treasury	$	9,522,918	$	223,279	$	134,150	$	9,612,047
U.S. government-sponsored agencies	142,088,929		1,802,645		6,464,459		137,427,115
Obligations of states and political subdivisions	355,773,565		21,735,855		3,936,005		373,573,415
Commercial mortgage-backed	61,484,434		6,792,466		6,507		68,270,393
Residential mortgage-backed	88,193,277		1,293,620		1,480,218		88,006,679
Other asset-backed	9,109,718		1,269,548		—		10,379,266
Corporate	294,840,820		17,227,227		2,272,399		309,795,648
Total fixed maturity securities	961,013,661		50,344,640		14,293,738		997,064,563

Equity securities:
Common stocks:
Financial services	19,148,813		6,659,473		—		25,808,286
Information technology	11,109,733		5,044,696		34,595		16,119,834
Healthcare	14,625,188		6,833,228		—		21,458,416
Consumer staples	10,249,239		2,976,155		27		13,225,367
Consumer discretionary	11,919,702		8,842,824		—		20,762,526
Energy	15,584,575		6,151,610		176,175		21,560,010
Industrials	7,776,577		2,473,171		—		10,249,748
Other	16,651,229		3,205,873		163,293		19,693,809
Non-redeemable preferred stocks	8,332,438		450,862		84,080		8,699,220
Total equity securities	115,397,494		42,637,892		458,170		157,577,216
Total securities available-for-sale	$	1,076,411,155	$	92,982,532	$	14,751,908	$	1,154,641,779



December 31, 2012	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Securities available-for-sale:
Fixed maturity securities:
U.S. treasury	$	4,697,762	$	287,140	$	—	$	4,984,902
U.S. government-sponsored agencies	159,548,303		3,228,302		333,975		162,442,630
Obligations of states and political subdivisions	335,188,220		35,776,373		2,479		370,962,114
Commercial mortgage-backed	69,952,036		10,412,989		15,843		80,349,182
Residential mortgage-backed	46,286,598		1,777,113		274,107		47,789,604
Other asset-backed	9,720,662		1,566,186		—		11,286,848
Corporate	295,450,358		26,774,604		245,385		321,979,577
Total fixed maturity securities	920,843,939		79,822,707		871,789		999,794,857

Equity securities:
Common stocks:
Financial services	14,496,766		3,630,544		33,922		18,093,388
Information technology	12,331,378		4,722,076		127,690		16,925,764
Healthcare	14,823,967		4,199,882		—		19,023,849
Consumer staples	12,019,892		1,593,039		3,404		13,609,527
Consumer discretionary	10,829,547		6,261,000		—		17,090,547
Energy	14,629,926		4,800,404		—		19,430,330
Industrials	7,638,633		936,183		—		8,574,816
Other	16,749,417		2,215,172		283,149		18,681,440
Non-redeemable preferred stocks	8,332,437		647,727		116,000		8,864,164
Total equity securities	111,851,963		29,006,027		564,165		140,293,825
Total securities available-for-sale	$	1,032,695,902	$	108,828,734	$	1,435,954	$	1,140,088,682

The following table sets forth the estimated fair value and gross unrealized losses associated with investment securities that were in an unrealized loss position as of June 30, 2013 and December 31, 2012, listed by length of time the securities were in an unrealized loss position.



June 30, 2013	Less than twelve months				Twelve months or longer				Total
	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Fixed maturity securities:
U.S. treasury	$	4,682,810	$	134,150	$	—	$	—	$	4,682,810	$	134,150
U.S. government-sponsored agencies	95,885,094		6,032,242		5,555,418		432,217		101,440,512		6,464,459
Obligations of states and political subdivisions	68,612,301		3,936,005		—		—		68,612,301		3,936,005
Commercial mortgage-backed	3,775,449		5,865		101,493		642		3,876,942		6,507
Residential mortgage-backed	43,516,137		1,480,218		—		—		43,516,137		1,480,218
Corporate	58,516,418		1,888,887		5,049,022		383,512		63,565,440		2,272,399
Total, fixed maturity securities	274,988,209		13,477,367		10,705,933		816,371		285,694,142		14,293,738
Equity securities:
Common stocks:
Information technology	1,254,591		34,595		—		—		1,254,591		34,595
Consumer staples	29,711		27		—		—		29,711		27
Energy	3,164,811		176,175		—		—		3,164,811		176,175
Other	4,147,049		163,293		—		—		4,147,049		163,293
Non-redeemable preferred stocks	—		—		1,915,920		84,080		1,915,920		84,080
Total, equity securities	8,596,162		374,090		1,915,920		84,080		10,512,082		458,170
Total temporarily impaired securities	$	283,584,371	$	13,851,457	$	12,621,853	$	900,451	$	296,206,224	$	14,751,908



December 31, 2012	Less than twelve months				Twelve months or longer				Total
	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Fixed maturity securities:
U.S. government-sponsored agencies	$	33,950,271	$	333,975	$	—	$	—	$	33,950,271	$	333,975
Obligations of states and political subdivisions	3,234,180		2,479		—		—		3,234,180		2,479
Commercial mortgage-backed	3,773,043		15,843		—		—		3,773,043		15,843
Residential mortgage-backed	5,303,741		274,107		—		—		5,303,741		274,107
Corporate	17,567,579		245,385		—		—		17,567,579		245,385
Total, fixed maturity securities	63,828,814		871,789		—		—		63,828,814		871,789
Equity securities:
Common stocks:
Financial services	881,580		33,922		—		—		881,580		33,922
Information technology	1,435,122		127,690		—		—		1,435,122		127,690
Consumer staples	90,080		3,404		—		—		90,080		3,404
Other	2,403,683		283,149		—		—		2,403,683		283,149
Non-redeemable preferred stocks	—		—		1,884,000		116,000		1,884,000		116,000
Total, equity securities	4,810,465		448,165		1,884,000		116,000		6,694,465		564,165
Total temporarily impaired securities	$	68,639,279	$	1,319,954	$	1,884,000	$	116,000	$	70,523,279	$	1,435,954

Unrealized losses on fixed maturity securities increased in nearly every type of issue at June 30, 2013 due to the rise in interest rates during the second quarter of 2013. Most of these securities are considered investment grade by credit rating agencies. Because management does not intend to sell these securities, does not believe it will be required to sell these securities before recovery, and believes it will collect the amounts due on these securities, it was determined that these securities were not “other-than-temporarily” impaired at June 30, 2013.

The unrealized losses on common stocks at June 30, 2013 are not concentrated in a particular sector or an individual security. The Company believes the unrealized losses on common stocks are primarily due to general fluctuations in the equity markets. Because the Company has the ability and intent to hold these securities for a reasonable amount of time to allow for recovery, it was determined that these securities were not “other-than-temporarily” impaired at June 30, 2013.

All of the Company’s preferred stock holdings are perpetual preferred stocks. The Company evaluates perpetual preferred stocks with unrealized losses for “other-than-temporary” impairment similar to fixed maturity securities since they have debt-like characteristics such as periodic cash flows in the form of dividends and call features, are rated by rating agencies and are priced like other long-term callable fixed maturity securities. There was no evidence of any credit deterioration in the issuers of the preferred stocks and the Company does not intend to sell these securities before recovery, nor does it believe it will be required to sell these securities before recovery; therefore, it was determined that these securities were not “other-than-temporarily” impaired at June 30, 2013.

The amortized cost and estimated fair value of fixed maturity securities at June 30, 2013, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations, with or without call or prepayment penalties.



	Amortized cost		Estimated fair value
Securities available-for-sale:
Due in one year or less	$	9,155,165	$	9,258,884
Due after one year through five years	170,883,036		180,032,167
Due after five years through ten years	147,061,947		155,425,963
Due after ten years	484,235,802		496,070,477
Mortgage-backed securities	149,677,711		156,277,072
Totals	$	961,013,661	$	997,064,563

A summary of realized investment gains and (losses) is as follows:



	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
Fixed maturity securities available-for-sale:
Gross realized investment gains	$	131,000		$	108,016		$	817,573		$	508,507
Gross realized investment losses	(725,062		)	—			(725,062		)	—

Equity securities available-for-sale:
Gross realized investment gains	1,233,603			348,743			3,324,210			8,954,418
Gross realized investment losses	(464,288		)	(1,469,047		)	(552,987		)	(1,556,884		)
"Other-than-temporary" impairments	—			(126,048		)	(20,608		)	(126,048		)
Totals	$	175,253		$	(1,138,336	)	$	2,843,126		$	7,779,993

Gains and losses realized on the disposition of investments are included in net income. The cost of investments sold is determined on the specific identification method using the highest cost basis first. The amount reported as “other-than-temporary” impairments for both the three and six months ended June 30, 2013 does not include any individually significant items.

The Company did not have any outstanding cumulative credit losses on fixed maturity securities that have been recognized in earnings from “other-than-temporary” impairments during any of the reported periods.