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 March 31, 2015 and December 31, 2014 are as follows. All securities are classified as available-for-sale and are carried at fair value.



March 31, 2015	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
($ in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Securities available-for-sale:
Fixed maturity securities:
U.S. treasury	$	9,582	$	210	$	—	$	9,792
U.S. government-sponsored agencies	220,768		3,295		1,034		223,029
Obligations of states and political subdivisions	294,630		27,704		41		322,293
Commercial mortgage-backed	41,277		3,581		—		44,858
Residential mortgage-backed	97,867		1,484		5,020		94,331
Other asset-backed	13,742		1,243		—		14,985
Corporate	406,439		22,727		231		428,935
Total fixed maturity securities	1,084,305		60,244		6,326		1,138,223

Equity securities:
Common stocks:
Financial services	23,724		10,719		166		34,277
Information technology	17,470		9,964		54		27,380
Healthcare	15,536		13,665		2		29,199
Consumer staples	8,827		6,106		10		14,923
Consumer discretionary	12,706		11,868		15		24,559
Energy	16,375		7,558		351		23,582
Industrials	9,555		8,695		89		18,161
Other	11,143		3,669		68		14,744
Non-redeemable preferred stocks	12,082		820		170		12,732
Total equity securities	127,418		73,064		925		199,557
Total securities available-for-sale	$	1,211,723	$	133,308	$	7,251	$	1,337,780



December 31, 2014	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
($ in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Securities available-for-sale:
Fixed maturity securities:
U.S. treasury	$	9,574	$	129	$	—	$	9,703
U.S. government-sponsored agencies	215,425		2,313		2,122		215,616
Obligations of states and political subdivisions	299,258		26,840		40		326,058
Commercial mortgage-backed	42,996		3,766		—		46,762
Residential mortgage-backed	100,296		1,402		3,745		97,953
Other asset-backed	14,798		1,213		6		16,005
Corporate	397,659		18,485		742		415,402
Total fixed maturity securities	1,080,006		54,148		6,655		1,127,499

Equity securities:
Common stocks:
Financial services	22,586		11,835		42		34,379
Information technology	15,755		11,110		—		26,865
Healthcare	14,673		12,179		—		26,852
Consumer staples	10,584		6,112		2		16,694
Consumer discretionary	11,304		11,420		33		22,691
Energy	15,837		7,458		432		22,863
Industrials	9,658		8,596		33		18,221
Other	11,493		4,563		—		16,056
Non-redeemable preferred stocks	12,082		617		284		12,415
Total equity securities	123,972		73,890		826		197,036
Total securities available-for-sale	$	1,203,978	$	128,038	$	7,481	$	1,324,535

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 March 31, 2015 and December 31, 2014, listed by length of time the securities were in an unrealized loss position.



March 31, 2015	Less than twelve months				Twelve months or longer				Total
($ in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Fixed maturity securities:
U.S. government-sponsored agencies	$	51,725	$	226	$	37,523	$	808	$	89,248	$	1,034
Obligations of states and political subdivisions	4,894		41		—		—		4,894		41
Commercial mortgage-backed	221		—		—		—		221		—
Residential mortgage-backed	18,318		1,161		23,684		3,859		42,002		5,020
Corporate	11,730		46		12,540		185		24,270		231
Total, fixed maturity securities	86,888		1,474		73,747		4,852		160,635		6,326
Equity securities:
Common stocks:
Financial services	5,130		158		57		8		5,187		166
Information technology	1,867		54		—		—		1,867		54
Healthcare	161		2		—		—		161		2
Consumer staples	266		10		—		—		266		10
Consumer discretionary	1,324		15		—		—		1,324		15
Energy	3,460		351		—		—		3,460		351
Industrials	2,189		89		—		—		2,189		89
Other	1,467		68		—		—		1,467		68
Non-redeemable preferred stocks	—		—		1,830		170		1,830		170
Total equity securities	15,864		747		1,887		178		17,751		925
Total temporarily impaired securities	$	102,752	$	2,221	$	75,634	$	5,030	$	178,386	$	7,251



December 31, 2014	Less than twelve months				Twelve months or longer				Total
($ in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Fixed maturity securities:
U.S. government-sponsored agencies	$	24,473	$	94	$	97,446	$	2,028	$	121,919	$	2,122
Obligations of states and political subdivisions	—		—		3,757		40		3,757		40
Commercial mortgage-backed	1,102		—		—		—		1,102		—
Residential mortgage-backed	21,451		1,252		21,163		2,493		42,614		3,745
Other asset-backed	1,889		6		—		—		1,889		6
Corporate	16,740		281		28,257		461		44,997		742
Total, fixed maturity securities	65,655		1,633		150,623		5,022		216,278		6,655
Equity securities:
Common stocks:
Financial services	1,162		9		187		33		1,349		42
Consumer staples	1,051		2		—		—		1,051		2
Consumer discretionary	822		33		—		—		822		33
Energy	4,298		432		—		—		4,298		432
Industrials	1,406		33		—		—		1,406		33
Non-redeemable preferred stocks	—		—		1,716		284		1,716		284
Total equity securities	8,739		509		1,903		317		10,642		826
Total temporarily impaired securities	$	74,394	$	2,142	$	152,526	$	5,339	$	226,920	$	7,481

Unrealized losses on fixed maturity securities did not materially change at March 31, 2015. 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 March 31, 2015.

No particular sector or individual security accounted for a material amount of unrealized losses on common stocks at March 31, 2015. 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 March 31, 2015.

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 March 31, 2015.

The amortized cost and estimated fair value of fixed maturity securities at March 31, 2015, 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.



($ in thousands)	Amortized cost		Estimated fair value
Securities available-for-sale:
Due in one year or less	$	40,128	$	40,717
Due after one year through five years	176,529		187,627
Due after five years through ten years	233,367		244,118
Due after ten years	495,137		526,572
Mortgage-backed securities	139,144		139,189
Totals	$	1,084,305	$	1,138,223

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



	Three months ended March 31,
($ in thousands)	2015			2014
Fixed maturity securities available-for-sale:
Gross realized investment gains	$	535		$	81
Gross realized investment losses	—			(92		)

Equity securities available-for-sale:
Gross realized investment gains	2,594			2,033
Gross realized investment losses	(329		)	(76		)
"Other-than-temporary" impairments	(618		)	(316		)

Other long-term investments:
Gross realized investment losses	(1,399		)	(368		)
Totals	$	783		$	1,262

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 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. The amounts reported as “other-than-temporary” impairments on equity securities do not include any individually significant items. The realized investment losses recognized on other long-term investments for the three months ended March 31, 2015 and 2014 represent changes in the carrying value of a limited partnership that is used solely to support an equity tail-risk hedging strategy.