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



June 30, 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	$	9,591	$	62	$	15	$	9,638
U.S. government-sponsored agencies	227,144		2,058		3,890		225,312
Obligations of states and political subdivisions	306,533		21,335		475		327,393
Commercial mortgage-backed	42,365		2,798		7		45,156
Residential mortgage-backed	95,959		1,110		4,820		92,249
Other asset-backed	13,583		1,053		37		14,599
Corporate	427,284		15,245		1,914		440,615
Total fixed maturity securities	1,122,459		43,661		11,158		1,154,962

Equity securities:
Common stocks:
Financial services	26,103		10,390		204		36,289
Information technology	17,467		9,425		56		26,836
Healthcare	14,204		12,117		50		26,271
Consumer staples	8,860		5,509		34		14,335
Consumer discretionary	12,716		12,048		32		24,732
Energy	16,897		6,634		638		22,893
Industrials	13,462		7,051		220		20,293
Other	10,749		2,148		104		12,793
Non-redeemable preferred stocks	14,586		492		234		14,844
Total equity securities	135,044		65,814		1,572		199,286
Total securities available-for-sale	$	1,257,503	$	109,475	$	12,730	$	1,354,248



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 June 30, 2015 and December 31, 2014, listed by length of time the securities were in an unrealized loss position.



June 30, 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. treasury	$	4,837	$	15	$	—	$	—	$	4,837	$	15
U.S. government-sponsored agencies	111,562		2,076		33,669		1,814		145,231		3,890
Obligations of states and political subdivisions	45,475		475		—		—		45,475		475
Commercial mortgage-backed	3,176		7		—		—		3,176		7
Residential mortgage-backed	24,612		988		21,853		3,832		46,465		4,820
Other asset-backed	6,175		37		—		—		6,175		37
Corporate	112,259		1,806		9,638		108		121,897		1,914
Total, fixed maturity securities	308,096		5,404		65,160		5,754		373,256		11,158
Equity securities:
Common stocks:
Financial services	4,095		202		62		2		4,157		204
Information technology	959		56		—		—		959		56
Healthcare	1,940		50		—		—		1,940		50
Consumer staples	405		34		—		—		405		34
Consumer discretionary	877		32		—		—		877		32
Energy	6,709		629		42		9		6,751		638
Industrials	5,938		220		—		—		5,938		220
Other	3,947		104		—		—		3,947		104
Non-redeemable preferred stocks	2,481		22		1,788		212		4,269		234
Total equity securities	27,351		1,349		1,892		223		29,243		1,572
Total temporarily impaired securities	$	335,447	$	6,753	$	67,052	$	5,977	$	402,499	$	12,730



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 increased during 2015 due to an increase in interest rates. 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, 2015.

No particular sector or individual security accounted for a material amount of unrealized losses on common stocks at June 30, 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 June 30, 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 June 30, 2015.

The amortized cost and estimated fair value of fixed maturity securities at June 30, 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	$	42,908	$	43,353
Due after one year through five years	173,108		182,650
Due after five years through ten years	255,605		259,396
Due after ten years	512,514		532,158
Mortgage-backed securities	138,324		137,405
Totals	$	1,122,459	$	1,154,962

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



	Three months ended June 30,						Six months ended June 30,
($ in thousands)	2015			2014			2015			2014
Fixed maturity securities available-for-sale:
Gross realized investment gains	$	46		$	285		$	581		$	366
Gross realized investment losses	—			—			—			(92		)

Equity securities available-for-sale:
Gross realized investment gains	5,742			3,283			8,336			5,316
Gross realized investment losses	(424		)	(405		)	(753		)	(481		)
"Other-than-temporary" impairments	(47		)	—			(665		)	(316		)

Other long-term investments:
Gross realized investment losses	(2,043		)	(820		)	(3,442		)	(1,188		)
Totals	$	3,274		$	2,343		$	4,057		$	3,605

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 and six months ended June 30, 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.