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



September 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	$	9,600	$	137	$	—	$	9,737
U.S. government-sponsored agencies	221,466		2,743		744		223,465
Obligations of states and political subdivisions	319,666		24,270		—		343,936
Commercial mortgage-backed	41,304		2,437		2		43,739
Residential mortgage-backed	94,411		1,660		6,387		89,684
Other asset-backed	17,738		1,066		66		18,738
Corporate	435,188		15,339		1,865		448,662
Total fixed maturity securities	1,139,373		47,652		9,064		1,177,961

Equity securities:
Common stocks:
Financial services	27,143		8,215		839		34,519
Information technology	18,956		7,845		237		26,564
Healthcare	14,969		9,388		239		24,118
Consumer staples	10,093		5,762		86		15,769
Consumer discretionary	10,471		8,705		26		19,150
Energy	16,927		4,999		756		21,170
Industrials	11,153		6,924		332		17,745
Other	15,243		2,269		509		17,003
Non-redeemable preferred stocks	17,986		546		265		18,267
Total equity securities	142,941		54,653		3,289		194,305
Total securities available-for-sale	$	1,282,314	$	102,305	$	12,353	$	1,372,266



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



September 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. government-sponsored agencies	$	44,495	$	471	$	35,212	$	273	$	79,707	$	744
Commercial mortgage-backed	579		2		—		—		579		2
Residential mortgage-backed	15,102		1,873		22,393		4,514		37,495		6,387
Other asset-backed	6,136		66		—		—		6,136		66
Corporate	69,883		1,570		11,438		295		81,321		1,865
Total, fixed maturity securities	136,195		3,982		69,043		5,082		205,238		9,064
Equity securities:
Common stocks:
Financial services	9,754		831		57		8		9,811		839
Information technology	3,552		237		—		—		3,552		237
Healthcare	3,388		239		—		—		3,388		239
Consumer staples	1,762		86		—		—		1,762		86
Consumer discretionary	371		26		—		—		371		26
Energy	9,478		756		—		—		9,478		756
Industrials	3,501		332		—		—		3,501		332
Other	7,510		509		—		—		7,510		509
Non-redeemable preferred stocks	2,463		41		1,776		224		4,239		265
Total equity securities	41,779		3,057		1,833		232		43,612		3,289
Total temporarily impaired securities	$	177,974	$	7,039	$	70,876	$	5,314	$	248,850	$	12,353



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 September 30, 2015.

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

The amortized cost and estimated fair value of fixed maturity securities at September 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	$	66,429	$	67,150
Due after one year through five years	144,462		152,924
Due after five years through ten years	280,923		286,725
Due after ten years	507,529		533,372
Securities not due at a single maturity date	140,030		137,790
Totals	$	1,139,373	$	1,177,961

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



	Three months ended September 30,						Nine months ended September 30,
($ in thousands)	2015			2014			2015			2014
Fixed maturity securities available-for-sale:
Gross realized investment gains	$	61		$	129		$	642		$	495
Gross realized investment losses	—			—			—			(92		)

Equity securities available-for-sale:
Gross realized investment gains	3,345			1,140			11,681			6,456
Gross realized investment losses	(2,525		)	(181		)	(3,278		)	(662		)
"Other-than-temporary" impairments	(628		)	(561		)	(1,293		)	(877		)

Other long-term investments, net	7,245			(917		)	3,803			(2,105		)
Totals	$	7,498		$	(390	)	$	11,555		$	3,215

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 net realized investment gains (losses) recognized on other long-term investments for the three and nine months ended September 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.