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, 2017 and December 31, 2016 are as follows. All securities are classified as available-for-sale and are carried at fair value.



September 30, 2017	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair values
($ in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair values
Securities available-for-sale:
Fixed maturity securities:
U.S. treasury	$	8,109	$	57	$	2	$	8,164
U.S. government-sponsored agencies	262,050		237		6,668		255,619
Obligations of states and political subdivisions	318,016		18,954		332		336,638
Commercial mortgage-backed	66,138		583		911		65,810
Residential mortgage-backed	104,620		2,593		3,547		103,666
Other asset-backed	24,501		756		290		24,967
Corporate	450,338		14,001		863		463,476
Total fixed maturity securities	1,233,772		37,181		12,613		1,258,340

Equity securities:
Common stocks:
Financial services	28,130		12,679		71		40,738
Information technology	19,772		16,912		—		36,684
Healthcare	18,417		12,457		144		30,730
Consumer staples	10,258		4,794		8		15,044
Consumer discretionary	12,224		9,464		83		21,605
Energy	13,273		4,692		769		17,196
Industrials	13,209		15,138		32		28,315
Other	12,114		4,704		31		16,787
Non-redeemable preferred stocks	23,031		1,591		2		24,620
Total equity securities	150,428		82,431		1,140		231,719
Total securities available-for-sale	$	1,384,200	$	119,612	$	13,753	$	1,490,059



December 31, 2016	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair values
($ in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair values
Securities available-for-sale:
Fixed maturity securities:
U.S. treasury	$	7,841	$	—	$	11	$	7,830
U.S. government-sponsored agencies	249,495		311		10,609		239,197
Obligations of states and political subdivisions	319,663		17,034		940		335,757
Commercial mortgage-backed	37,964		741		1,133		37,572
Residential mortgage-backed	102,307		1,435		7,308		96,434
Other asset-backed	26,592		732		931		26,393
Corporate	445,663		12,232		1,379		456,516
Total fixed maturity securities	1,189,525		32,485		22,311		1,199,699

Equity securities:
Common stocks:
Financial services	22,922		12,410		210		35,122
Information technology	19,832		10,739		29		30,542
Healthcare	16,092		8,700		85		24,707
Consumer staples	13,438		5,787		125		19,100
Consumer discretionary	14,812		7,672		163		22,321
Energy	14,276		4,873		78		19,071
Industrials	13,005		11,258		18		24,245
Other	13,071		5,345		32		18,384
Non-redeemable preferred stocks	20,031		483		167		20,347
Total equity securities	147,479		67,267		907		213,839
Total securities available-for-sale	$	1,337,004	$	99,752	$	23,218	$	1,413,538

The following tables set forth the estimated fair values and gross unrealized losses associated with investment securities that were in an unrealized loss position as of September 30, 2017 and December 31, 2016, listed by length of time the securities were consistently in an unrealized loss position.



September 30, 2017	Less than twelve months				Twelve months or longer				Total
($ in thousands)	Fair values		Unrealized losses		Fair values		Unrealized losses		Fair values		Unrealized losses
Fixed maturity securities:
U.S. treasury	$	248	$	2	$	—	$	—	$	248	$	2
U.S. government-sponsored agencies	104,235		1,695		125,982		4,973		230,217		6,668
Obligations of states and political subdivisions	—		—		14,372		332		14,372		332
Commercial mortgage-backed	26,070		133		15,653		778		41,723		911
Residential mortgage-backed	19,872		431		21,155		3,116		41,027		3,547
Other asset-backed	5,211		39		8,809		251		14,020		290
Corporate	9,056		67		15,956		796		25,012		863
Total fixed maturity securities	164,692		2,367		201,927		10,246		366,619		12,613
Equity securities:
Common stocks:
Financial services	2,964		71		—		—		2,964		71
Healthcare	1,594		144		—		—		1,594		144
Consumer staples	159		8		—		—		159		8
Consumer discretionary	1,023		79		99		4		1,122		83
Energy	4,323		769		—		—		4,323		769
Industrials	309		32		—		—		309		32
Other	894		31		—		—		894		31
Non-redeemable preferred stocks	—		—		1,998		2		1,998		2
Total equity securities	11,266		1,134		2,097		6		13,363		1,140
Total temporarily impaired securities	$	175,958	$	3,501	$	204,024	$	10,252	$	379,982	$	13,753



December 31, 2016	Less than twelve months				Twelve months or longer				Total
($ in thousands)	Fair values		Unrealized losses		Fair values		Unrealized losses		Fair values		Unrealized losses
Fixed maturity securities:
U.S. treasury	$	7,830	$	11	$	—	$	—	$	7,830	$	11
U.S. government-sponsored agencies	202,900		10,609		—		—		202,900		10,609
Obligations of states and political subdivisions	43,777		940		—		—		43,777		940
Commercial mortgage-backed	21,695		1,133		—		—		21,695		1,133
Residential mortgage-backed	26,217		1,232		23,625		6,076		49,842		7,308
Other asset-backed	19,091		931		—		—		19,091		931
Corporate	82,657		1,273		8,625		106		91,282		1,379
Total fixed maturity securities	404,167		16,129		32,250		6,182		436,417		22,311
Equity securities:
Common stocks:
Financial services	1,462		12		908		198		2,370		210
Information technology	1,947		29		—		—		1,947		29
Healthcare	3,585		85		—		—		3,585		85
Consumer staples	2,427		125		—		—		2,427		125
Consumer discretionary	1,637		163		—		—		1,637		163
Energy	1,621		33		1,188		45		2,809		78
Industrials	779		18		—		—		779		18
Other	1,472		32		—		—		1,472		32
Non-redeemable preferred stocks	3,356		44		1,877		123		5,233		167
Total equity securities	18,286		541		3,973		366		22,259		907
Total temporarily impaired securities	$	422,453	$	16,670	$	36,223	$	6,548	$	458,676	$	23,218

Most of the fixed maturity securities that are in an unrealized loss position 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, 2017.

No individual equity security accounted for a material amount of unrealized losses. 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, 2017.

All of the Company’s preferred stock holdings that are in an unrealized loss position are perpetual preferred stocks. The Company evaluates these 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, 2017.

The amortized cost and estimated fair values of fixed maturity securities at September 30, 2017, 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 values
Securities available-for-sale:
Due in one year or less	$	51,964	$	52,464
Due after one year through five years	167,769		173,934
Due after five years through ten years	378,169		387,220
Due after ten years	462,916		473,065
Securities not due at a single maturity date	172,954		171,657
Totals	$	1,233,772	$	1,258,340

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



	Three months ended September 30,						Nine months ended September 30,
($ in thousands)	2017			2016			2017			2016
Fixed maturity securities available-for-sale:
Gross realized investment gains	$	29		$	261		$	408		$	1,935
Gross realized investment losses	(230		)	(218		)	(2,316		)	(517		)

Equity securities available-for-sale:
Gross realized investment gains	1,396			1,001			10,669			5,849
Gross realized investment losses	(435		)	(50		)	(906		)	(1,683		)
"Other-than-temporary" impairments	(355		)	(275		)	(1,088		)	(976		)

Other long-term investments, net	(999		)	(1,911		)	(4,601		)	(5,251		)
Totals	$	(594	)	$	(1,192	)	$	2,166		$	(643	)

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 losses recognized on other long-term investments primarily represent changes in the carrying value of a limited partnership that is used solely to support an equity tail-risk hedging strategy.