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, 2018 and December 31, 2017 are as follows. All fixed maturity securities are classified as available-for-sale and are carried at fair value.



March 31, 2018	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	$	8,121	$	—	$	165	$	7,956
U.S. government-sponsored agencies	313,212		36		10,772		302,476
Obligations of states and political subdivisions	282,149		12,391		609		293,931
Commercial mortgage-backed	79,011		311		2,662		76,660
Residential mortgage-backed	134,691		1,898		4,239		132,350
Other asset-backed	23,148		418		818		22,748
Corporate	418,058		4,742		2,448		420,352
Total fixed maturity securities	$	1,258,390	$	19,796	$	21,713	$	1,256,473



December 31, 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	$	8,115	$	—	$	37	$	8,078
U.S. government-sponsored agencies	303,932		122		6,105		297,949
Obligations of states and political subdivisions	290,038		17,729		231		307,536
Commercial mortgage-backed	84,058		591		669		83,980
Residential mortgage-backed	120,554		2,479		3,234		119,799
Other asset-backed	23,934		625		445		24,114
Corporate	422,535		11,490		465		433,560
Total fixed maturity securities	1,253,166		33,036		11,186		1,275,016

Equity securities:
Common stocks:
Financial services	30,103		13,594		175		43,522
Information technology	18,308		17,504		2		35,810
Healthcare	18,877		11,876		158		30,595
Consumer staples	9,275		4,917		65		14,127
Consumer discretionary	10,935		9,640		37		20,538
Energy	12,441		5,381		917		16,905
Industrials	12,746		15,757		14		28,489
Other	11,058		5,363		—		16,421
Non-redeemable preferred stocks	20,531		1,216		39		21,708
Total equity securities	144,274		85,248		1,407		228,115
Total securities available-for-sale	$	1,397,440	$	118,284	$	12,593	$	1,503,131

The following tables set forth the estimated fair values and gross unrealized losses associated with investment securities that were in an unrealized loss position recognized in accumulated other comprehensive income as of March 31, 2018 and December 31, 2017, listed by length of time the securities were consistently in an unrealized loss position.



March 31, 2018	Less than twelve months				Twelve months or longer				Total
($ in thousands)	Fair values		Unrealized losses		Fair values		Unrealized losses		Fair values		Unrealized losses
Securities available-for-sale:
Fixed maturity securities:
U.S. treasury	$	7,956	$	165	$	—	$	—	$	7,956	$	165
U.S. government-sponsored agencies	159,653		3,831		125,284		6,941		284,937		10,772
Obligations of states and political subdivisions	11,287		78		14,057		531		25,344		609
Commercial mortgage-backed	61,143		1,971		8,280		691		69,423		2,662
Residential mortgage-backed	67,489		1,568		21,858		2,671		89,347		4,239
Other asset-backed	5,158		79		12,963		739		18,121		818
Corporate	167,148		2,263		3,999		185		171,147		2,448
Total fixed maturity securities	$	479,834	$	9,955	$	186,441	$	11,758	$	666,275	$	21,713



December 31, 2017	Less than twelve months				Twelve months or longer				Total
($ in thousands)	Fair values		Unrealized losses		Fair values		Unrealized losses		Fair values		Unrealized losses
Securities available-for-sale:
Fixed maturity securities:
U.S. treasury	$	8,078	$	37	$	—	$	—	$	8,078	$	37
U.S. government-sponsored agencies	134,284		1,491		127,604		4,614		261,888		6,105
Obligations of states and political subdivisions	—		—		14,416		231		14,416		231
Commercial mortgage-backed	32,155		221		8,530		448		40,685		669
Residential mortgage-backed	30,003		394		22,948		2,840		52,951		3,234
Other asset-backed	—		—		13,440		445		13,440		445
Corporate	28,314		329		4,047		136		32,361		465
Total fixed maturity securities	232,834		2,472		190,985		8,714		423,819		11,186
Equity securities:
Common stocks:
Financial services	4,391		175		—		—		4,391		175
Information technology	344		2		—		—		344		2
Healthcare	2,532		158		—		—		2,532		158
Consumer staples	575		65		—		—		575		65
Consumer discretionary	992		37		—		—		992		37
Energy	3,181		917		—		—		3,181		917
Industrials	3,016		14		—		—		3,016		14
Non-redeemable preferred stocks	—		—		1,961		39		1,961		39
Total equity securities	15,031		1,368		1,961		39		16,992		1,407
Total temporarily impaired securities	$	247,865	$	3,840	$	192,946	$	8,753	$	440,811	$	12,593

Nearly all 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 March 31, 2018.

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 March 31, 2018.

The amortized cost and estimated fair values of fixed maturity securities at March 31, 2018, 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	$	35,995	$	36,421
Due after one year through five years	189,333		191,111
Due after five years through ten years	348,705		347,330
Due after ten years	468,751		470,731
Securities not due at a single maturity date	215,606		210,880
Totals	$	1,258,390	$	1,256,473

A summary of realized investment gains and (losses) and the change in unrealized investment gains on equity investments is as follows:



	Three months ended March 31,
($ in thousands)	2018			2017
Fixed maturity securities available-for-sale:
Gross realized investment gains	$	234		$	90
Gross realized investment losses	(478		)	(1,206		)

Equity securities:
Net realized investment gains, excluding "other-than-temporary" impairments	2,716			2,776
Change in unrealized investment gains	(9,854		)	XXXX

Other long-term investments, net	1,989			(2,287		)
Totals	$	(5,393	)	$	(627	)

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 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.