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, 2014 and December 31, 2013 are as follows. All securities are classified as available-for-sale and are carried at fair value.



September 30, 2014	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Securities available-for-sale:
Fixed maturity securities:
U.S. treasury	$	9,565	$	132	$	99	$	9,598
U.S. government-sponsored agencies	206,743		1,781		4,161		204,363
Obligations of states and political subdivisions	307,807		24,373		87		332,093
Commercial mortgage-backed	47,513		4,180		—		51,693
Residential mortgage-backed	100,371		992		2,957		98,406
Other asset-backed	14,811		1,176		50		15,937
Corporate	372,788		17,352		990		389,150
Total fixed maturity securities	1,059,598		49,986		8,344		1,101,240

Equity securities:
Common stocks:
Financial services	20,136		9,888		66		29,958
Information technology	16,898		9,514		—		26,412
Healthcare	14,008		11,003		8		25,003
Consumer staples	9,985		4,739		—		14,724
Consumer discretionary	9,886		9,353		—		19,239
Energy	16,638		8,094		111		24,621
Industrials	8,386		7,462		20		15,828
Other	14,967		4,377		68		19,276
Non-redeemable preferred stocks	12,082		509		269		12,322
Total equity securities	122,986		64,939		542		187,383
Total securities available-for-sale	$	1,182,584	$	114,925	$	8,886	$	1,288,623



December 31, 2013	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Securities available-for-sale:
Fixed maturity securities:
U.S. treasury	$	9,540	$	191	$	319	$	9,412
U.S. government-sponsored agencies	156,981		1,356		11,391		146,946
Obligations of states and political subdivisions	346,554		15,040		4,542		357,052
Commercial mortgage-backed	63,185		5,842		88		68,939
Residential mortgage-backed	96,058		1,073		2,952		94,179
Other asset-backed	11,456		1,192		—		12,648
Corporate	325,798		16,542		3,532		338,808
Total fixed maturity securities	1,009,572		41,236		22,824		1,027,984

Equity securities:
Common stocks:
Financial services	19,273		9,374		149		28,498
Information technology	12,645		6,301		29		18,917
Healthcare	12,801		9,144		—		21,945
Consumer staples	9,162		3,849		—		13,011
Consumer discretionary	10,722		10,309		—		21,031
Energy	14,102		7,341		326		21,117
Industrials	11,190		6,075		1		17,264
Other	13,358		4,489		36		17,811
Non-redeemable preferred stocks	10,582		316		644		10,254
Total equity securities	113,835		57,198		1,185		169,848
Total securities available-for-sale	$	1,123,407	$	98,434	$	24,009	$	1,197,832

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, 2014 and December 31, 2013, listed by length of time the securities were in an unrealized loss position.



September 30, 2014	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	$	—	$	—	$	4,739	$	99	$	4,739	$	99
U.S. government-sponsored agencies	32,507		112		95,617		4,049		128,124		4,161
Obligations of states and political subdivisions	—		—		3,715		87		3,715		87
Residential mortgage-backed	42,877		1,027		23,215		1,930		66,092		2,957
Other asset-backed	4,987		50		—		—		4,987		50
Corporate	44,368		372		24,511		618		68,879		990
Total, fixed maturity securities	124,739		1,561		151,797		6,783		276,536		8,344
Equity securities:
Common stocks:
Financial services	2,184		66		—		—		2,184		66
Healthcare	840		8		—		—		840		8
Energy	3,078		111		—		—		3,078		111
Industrials	351		20		—		—		351		20
Other	1,756		68		—		—		1,756		68
Non-redeemable preferred stocks	—		—		1,731		269		1,731		269
Total, equity securities	8,209		273		1,731		269		9,940		542
Total temporarily impaired securities	$	132,948	$	1,834	$	153,528	$	7,052	$	286,476	$	8,886



December 31, 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	$	4,507	$	319	$	—	$	—	$	4,507	$	319
U.S. government-sponsored agencies	93,856		8,120		24,053		3,271		117,909		11,391
Obligations of states and political subdivisions	74,523		4,335		3,008		207		77,531		4,542
Commercial mortgage-backed	10,551		88		—		—		10,551		88
Residential mortgage-backed	44,243		2,482		4,600		470		48,843		2,952
Corporate	81,292		2,704		10,547		828		91,839		3,532
Total, fixed maturity securities	308,972		18,048		42,208		4,776		351,180		22,824
Equity securities:
Common stocks:
Financial services	2,801		149		—		—		2,801		149
Information technology	610		29		—		—		610		29
Consumer staples	30		—		—		—		30		—
Energy	1,450		326		—		—		1,450		326
Industrials	625		1		—		—		625		1
Other	1,499		36		—		—		1,499		36
Non-redeemable preferred stocks	2,121		128		1,484		516		3,605		644
Total, equity securities	9,136		669		1,484		516		10,620		1,185
Total temporarily impaired securities	$	318,108	$	18,717	$	43,692	$	5,292	$	361,800	$	24,009

Unrealized losses on fixed maturity securities decreased in nearly every asset class at September 30, 2014 due to the decline in interest rates during the first nine months of 2014. 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 September 30, 2014.

No particular sector or individual security accounted for a material amount of unrealized losses on common stocks at September 30, 2014. 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, 2014.

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, 2014.

The amortized cost and estimated fair value of fixed maturity securities at September 30, 2014, 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	$	23,233	$	23,647
Due after one year through five years	200,474		212,084
Due after five years through ten years	187,845		193,274
Due after ten years	500,162		522,136
Mortgage-backed securities	147,884		150,099
Totals	$	1,059,598	$	1,101,240

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



	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Fixed maturity securities available-for-sale:
Gross realized investment gains	$	129		$	44		$	495		$	862
Gross realized investment losses	—			—			(92		)	(725		)

Equity securities available-for-sale:
Gross realized investment gains	1,140			968			6,456			4,292
Gross realized investment losses	(181		)	(2		)	(662		)	(555		)
"Other-than-temporary" impairments	(561		)	(3		)	(877		)	(24		)

Other long-term investments:
Gross realized investment losses	(917		)	—			(2,105		)	—
Totals	$	(390	)	$	1,007		$	3,215		$	3,850

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 realized investment losses recognized on other long-term investments for the three and nine months ended September 30, 2014 represent changes in the carrying value of a limited partnership that was purchased to implement an equity tail-risk hedging strategy. The amount reported as “other-than-temporary” impairments on equity securities 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.