9. 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 held-to-maturity and available-for-sale as of September 30, 2011 and December 31, 2010 are as follows. Securities classified as held-to-maturity are carried at amortized cost. All other securities have been classified as available-for-sale and are carried at fair value.

September 30, 2011	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Securities held-to-maturity:
Fixed maturity securities:
Residential mortgage-backed	$	317,279	$	47,715	$	-	$	364,994
Total securities held-to-maturity	$	317,279	$	47,715	$	-	$	364,994

Securities available-for-sale:
Fixed maturity securities:
U.S. treasury	$	4,677,629	$	316,550	$	-	$	4,994,179
U.S. government-sponsored agencies		153,574,859		3,473,854		9,748		157,038,965
Obligations of states and political subdivisions		375,793,667		26,971,221		53,600		402,711,288
Commercial mortgage-backed		90,568,013		9,362,068		35,463		99,894,618
Residential mortgage-backed		21,488,979		1,445,531		60,942		22,873,568
Other asset-backed		11,450,462		1,467,322		500		12,917,284
Corporate		237,389,184		15,929,968		992,685		252,326,467
Total fixed maturity securities		894,942,793		58,966,514		1,152,938		952,756,369

Equity securities:
Common stocks:
Financial services		9,259,195		330,265		966,673		8,622,787
Information technology		11,013,177		4,616,783		40,209		15,589,751
Healthcare		12,064,568		1,514,628		263,800		13,315,396
Consumer staples		7,111,896		487,244		261,388		7,337,752
Consumer discretionary		9,739,804		3,834,225		333,461		13,240,568
Energy		15,704,203		1,857,419		442,257		17,119,365
Industrials		6,434,445		556,911		6,587		6,984,769
Other		9,760,843		428,408		371,044		9,818,207
Non-redeemable preferred stocks		8,160,600		275,000		1,136,400		7,299,200
Total equity securities		89,248,731		13,900,883		3,821,819		99,327,795
Total securities available-for-sale	$	984,191,524	$	72,867,397	$	4,974,757	$	1,052,084,164

December 31, 2010	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Securities held-to-maturity:
Fixed maturity securities:
Residential mortgage-backed	$	340,803	$	48,876	$	-	$	389,679
Total securities held-to-maturity....	$	340,803	$	48,876	$	-	$	389,679

Securities available-for-sale:
Fixed maturity securities:
U.S. treasury	$	4,747,814	$	53,952	$	-	$	4,801,766
U.S. government-sponsored agencies		167,976,167		1,995,829		1,899,156		168,072,840
Obligations of states and political subdivisions		384,164,252		11,650,499		4,882,247		390,932,504
Commercial mortgage-backed		82,906,928		10,341,728		26,437		93,222,219
Residential mortgage-backed		32,801,281		1,664,155		179,598		34,285,838
Other asset-backed		12,100,433		1,056,995		56,579		13,100,849
Corporate		224,885,907		12,954,535		719,432		237,121,010
Total fixed maturity securities		909,582,782		39,717,693		7,763,449		941,537,026

Equity securities:
Common stocks:
Financial services		8,630,273		2,667,761		51,613		11,246,421
Information technology		11,215,431		6,163,395		28,174		17,350,652
Healthcare		10,200,062		2,705,556		119,929		12,785,689
Consumer staples		6,010,692		1,834,157		60,563		7,784,286
Consumer discretionary		7,636,589		4,535,110		9,225		12,162,474
Energy .		6,350,228		3,031,082		-		9,381,310
Industrials		5,395,949		2,096,834		26,630		7,466,153
Other		11,281,815		3,350,963		2,773		14,630,005
Non-redeemable preferred stocks		9,000,000		100,000		768,008		8,331,992
Total equity securities		75,721,039		26,484,858		1,066,915		101,138,982
Total securities available-for-sale	$	985,303,821	$	66,202,551	$	8,830,364	$	1,042,676,008

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, 2011 and December 31, 2010, listed by length of time the securities were in an unrealized loss position.

September 30, 2011	Less than twelve months				Twelve months or longer				Total
	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Fixed maturity securities:
U.S. government-sponsored agencies	$	11,949,048	$	9,748	$	-	$	-	$	11,949,048	$	9,748
Obligations of states and political subdivisions		2,346,880		53,600		-		-		2,346,880		53,600
Commercial mortgage-backed		6,301,909		35,463		-		-		6,301,909		35,463
Residential mortgage-backed		1,559,259		60,942		-		-		1,559,259		60,942
Other asset-backed		999,500		500		-		-		999,500		500
Corporate		40,442,680		838,909		846,500		153,776		41,289,180		992,685
Total, fixed maturity securities		63,599,276		999,162		846,500		153,776		64,445,776		1,152,938

Equity securities:
Common stocks:
Financial services		4,625,957		966,673		-		-		4,625,957		966,673
Information technology		1,008,045		40,209		-		-		1,008,045		40,209
Healthcare		3,483,688		263,800		-		-		3,483,688		263,800
Consumer staples .		3,083,589		261,388		-		-		3,083,589		261,388
Consumer discretionary		2,633,197		333,461		-		-		2,633,197		333,461
Energy		6,176,221		442,257		-		-		6,176,221		442,257
Industrials .		140,859		6,587		-		-		140,859		6,587
Other		1,349,153		371,044		-		-		1,349,153		371,044
Non-redeemable preferred stocks		-		-		3,863,600		1,136,400		3,863,600		1,136,400
Total, equity securities		22,500,709		2,685,419		3,863,600		1,136,400		26,364,309		3,821,819
Total temporarily impaired securities	$	86,099,985	$	3,684,581	$	4,710,100	$	1,290,176	$	90,810,085	$	4,974,757

December 31, 2010	Less than twelve months				Twelve months or longer				Total
	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Fixed maturity securities:
U.S. government-sponsored agencies	$	64,030,427	$	1,899,156	$	-	$	-	$	64,030,427	$	1,899,156
Obligations of states and political subdivisions		97,769,789		4,882,247		-		-		97,769,789		4,882,247
Commercial mortgage-backed		3,998,831		26,437		-		-		3,998,831		26,437
Residential mortgage-backed		11,346,913		157,798		1,222,717		21,800		12,569,630		179,598
Other asset-backed		3,331,324		56,579		-		-		3,331,324		56,579
Corporate		38,270,674		719,432		-		-		38,270,674		719,432
Total, fixed maturity securities		218,747,958		7,741,649		1,222,717		21,800		219,970,675		7,763,449

Equity securities:
Common stocks:
Financial services		1,608,012		51,613		-		-		1,608,012		51,613
Information technology		879,805		28,174		-		-		879,805		28,174
Healthcare		3,551,623		119,929		-		-		3,551,623		119,929
Consumer staples...		1,218,294		60,563		-		-		1,218,294		60,563
Consumer discretionary		253,023		9,225		-		-		253,023		9,225
Industrials		761,616		26,630		-		-		761,616		26,630
Other		42,752		2,773		-		-		42,752		2,773
Non-redeemable preferred stocks		-		-		4,231,992		768,008		4,231,992		768,008
Total, equity securities		8,315,125		298,907		4,231,992		768,008		12,547,117		1,066,915
Total temporarily impaired securities	$	227,063,083	$	8,040,556	$	5,454,709	$	789,808	$	232,517,792	$	8,830,364

Unrealized losses on fixed maturity securities totaled $1,152,938 at September 30, 2011 and were primarily associated with corporate securities. The primary factor contributing to these unrealized losses was a widening of risk premium spread over U.S. Treasuries in the banking sector. Of all the securities that are in an unrealized loss position, only two residential mortgage-backed securities are considered non-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, 2011.

The unrealized losses on common stocks at September 30, 2011 are not concentrated in a particular sector or on an individual security. 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, 2011.

All of the Company's preferred stock holdings are perpetual preferred stocks. The Company evaluates perpetual preferred stocks 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, 2011.

The amortized cost and estimated fair value of fixed maturity securities at September 30, 2011, 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.

	Amortized cost		Estimated fair value
Securities held-to-maturity:
Due in one year or less	$	-	$	-
Due after one year through five years		-		-
Due after five years through ten years		-		-
Due after ten years		-		-
Mortgage-backed securities		317,279		364,994
Totals	$	317,279	$	364,994


Securities available-for-sale:
Due in one year or less	$	9,031,535	$	9,225,573
Due after one year through five years		113,708,761		117,142,606
Due after five years through ten years		159,163,215		170,379,812
Due after ten years		500,982,290		533,240,192
Mortgage-backed securities		112,056,992		122,768,186
Totals	$	894,942,793	$	952,756,369

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

	Three months ended September 30,						Nine months ended September 30,
	2011			2010			2011			2010

Fixed maturity securities available-for-sale:
Gross realized investment gains	$	102,269		$	310,544		$	286,325		$	496,941
Gross realized investment losses		(225,777	)		(87,082	)		(572,071	)		(87,082	)
"Other-than-temporary" impairments		-			-			(221,956	)		(204,045	)


Equity securities available-for-sale:
Gross realized investment gains		2,165,117			2,168,050			13,619,368			4,067,950
Gross realized investment losses		(651,228	)		(275,263	)		(1,068,488	)		(753,099	)
"Other-than-temporary" impairments		(4,912,062	)		(366,319	)		(5,606,420	)		(2,091,367	)
Totals	$	(3,521,681	)	$	1,749,930		$	6,436,758		$	1,429,298

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 amounts reported as “other-than-temporary” impairments reflect the impairment of 27 equity securities during the third quarter of 2011, and four fixed maturity securities and 34 equity securities during the nine months ended September 30, 2011. The Company impaired six equity securities during the third quarter of 2010, and 22 equity securities and two fixed maturity securities during the first nine months of 2010. The impairment losses recognized on equity securities were triggered because the Company determined that those securities would likely be sold prior to recovering in value to their cost basis.

During the first quarter of 2010, the Company determined that the credit loss associated with a previously impaired residential mortgage-backed security increased, resulting in an additional $120,539 impairment loss recognized in earnings in the first quarter of 2010. The Company also recognized $83,506 of “other-than-temporary” impairment loss on a second residential mortgage-backed security during the first quarter of 2010 due to management's intent to sell the security, which was completed during the second quarter. In the second quarter of 2011, management determined that it would sell four residential mortgage-backed securities that were in an unrealized loss position (including $86,017 on a previously impaired security that had a portion of its impairment in “other comprehensive income”). This resulted in the recognition of $221,956 of impairment losses in the second quarter of 2011. The sales of these securities were completed during the third quarter.

The following table is a roll forward of the cumulative credit losses on fixed maturity securities that have been recognized in earnings from “other-than-temporary” impairments. Note that this table only includes the credit loss component of “other-than-temporary” impairments, and does not include the non-credit loss component of impairments (which is recognized through “other comprehensive income”) or impairments that are recognized through earnings in their entirety (not subject to bifurcation between credit and non-credit components).

	Three months ended September 30,
	2011		2010
Balance at June 30	$	-	$	207,854

Balance at September 30	$	-	$	207,854

	Nine months ended September 30,
		2011			2010
Balance at beginning of year	$	207,854		$	87,315


Additional credit loss for which an "other-than-temporary" impairment loss was previously recognized		-			120,539
Reduction for credit loss associated with previously recognized "other-than-temporary" impairment due to management's intent to sell the security		(207,854	)		-
Balance at September 30	$	-		$	207,854