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 September 30, 2013 and December 31, 2012 are as follows. All securities are classified as available-for-sale and are carried at fair value.



September 30, 2013	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Securities available-for-sale:
Fixed maturity securities:
U.S. treasury	$	9,531,254	$	214,292	$	187,926	$	9,557,620
U.S. government-sponsored agencies	144,955,495		1,548,635		8,037,110		138,467,020
Obligations of states and political subdivisions	341,339,428		18,103,554		4,182,059		355,260,923
Commercial mortgage-backed	57,780,949		6,407,168		2,357		64,185,760
Residential mortgage-backed	97,757,843		1,326,156		2,198,569		96,885,430
Other asset-backed	11,469,906		1,209,210		—		12,679,116
Corporate	297,969,189		17,768,115		2,292,824		313,444,480
Total fixed maturity securities	960,804,064		46,577,130		16,900,845		990,480,349

Equity securities:
Common stocks:
Financial services	20,702,786		7,402,292		85,345		28,019,733
Information technology	12,031,896		5,391,369		31,860		17,391,405
Healthcare	14,233,577		8,164,301		—		22,397,878
Consumer staples	10,625,249		3,223,874		180		13,848,943
Consumer discretionary	11,919,702		10,345,614		17,612		22,247,704
Energy	15,009,818		5,585,092		272,479		20,322,431
Industrials	9,268,955		3,764,217		7,109		13,026,063
Other	14,074,163		3,775,665		56,736		17,793,092
Non-redeemable preferred stocks	10,582,438		255,200		399,098		10,438,540
Total equity securities	118,448,584		47,907,624		870,419		165,485,789
Total securities available-for-sale	$	1,079,252,648	$	94,484,754	$	17,771,264	$	1,155,966,138



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 September 30, 2013 and December 31, 2012, listed by length of time the securities were in an unrealized loss position.



September 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	$	4,633,205	$	187,926	$	—	$	—	$	4,633,205	$	187,926
U.S. government-sponsored agencies	94,003,751		7,529,486		5,480,724		507,624		99,484,475		8,037,110
Obligations of states and political subdivisions	69,172,304		4,182,059		—		—		69,172,304		4,182,059
Commercial mortgage-backed	3,795,328		2,357		—		—		3,795,328		2,357
Residential mortgage-backed	49,921,645		2,198,569		—		—		49,921,645		2,198,569
Corporate	48,612,948		1,967,100		6,866,033		325,724		55,478,981		2,292,824
Total, fixed maturity securities	270,139,181		16,067,497		12,346,757		833,348		282,485,938		16,900,845
Equity securities:
Common stocks:
Financial services	2,760,661		85,345		—		—		2,760,661		85,345
Information technology	1,066,572		31,860		—		—		1,066,572		31,860
Consumer staples	150,835		180		—		—		150,835		180
Consumer discretionary	242,312		17,612		—		—		242,312		17,612
Energy	3,209,255		272,479		—		—		3,209,255		272,479
Industrials	610,844		7,109		—		—		610,844		7,109
Other	1,520,476		56,736		—		—		1,520,476		56,736
Non-redeemable preferred stocks	3,966,300		116,138		1,717,040		282,960		5,683,340		399,098
Total, equity securities	13,527,255		587,459		1,717,040		282,960		15,244,295		870,419
Total temporarily impaired securities	$	283,666,436	$	16,654,956	$	14,063,797	$	1,116,308	$	297,730,233	$	17,771,264



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 asset class at September 30, 2013 due to the rise in interest rates during 2013. 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 September 30, 2013.

No particular sector or individual security accounted for a material amount of unrealized losses on common stocks at September 30, 2013. 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 September 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 September 30, 2013.

The amortized cost and estimated fair value of fixed maturity securities at September 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	$	3,682,036	$	3,745,814
Due after one year through five years	181,818,898		191,773,935
Due after five years through ten years	144,969,430		153,041,671
Due after ten years	474,794,908		480,847,739
Mortgage-backed securities	155,538,792		161,071,190
Totals	$	960,804,064	$	990,480,349

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



	Three months ended September 30,						Nine months ended September 30,
	2013			2012			2013			2012
Fixed maturity securities available-for-sale:
Gross realized investment gains	$	43,955		$	134,537		$	861,528		$	643,044
Gross realized investment losses	—			—			(725,062		)	—

Equity securities available-for-sale:
Gross realized investment gains	968,255			377,701			4,292,465			9,332,119
Gross realized investment losses	(1,991		)	(665,791		)	(554,978		)	(2,222,675		)
"Other-than-temporary" impairments	(3,010		)	(22,815		)	(23,618		)	(148,863		)
Totals	$	1,007,209		$	(176,368	)	$	3,850,335		$	7,603,625

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 nine months ended September 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.