3. Investments

6 Months Ended

Jun. 30, 2011

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

3.  Investments

The amortized cost and estimated market value of investments in fixed maturity securities are as follows:

Portfolio Designated “Held to Maturity” June 30, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Market Value
US Treasury securities and obligations of US government      corporations and agencies	$	5,894,909	$	61,789	$	10,838	$	5,945,860
Canadian government		1,019,672		-		9,905		1,009,767
Corporate securities		2,750,307		142,668		54,529		2,838,446
Mortgage-backed securities GNMA and FNMA CMO		6,003,202		365,905		4,639		6,364,468
Totals	$	15,668,090	$	570,362	$	79,911	$	16,158,541

The amortized cost and estimated fair value of investments in fixed maturity securities at June 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 and because most mortgage-backed securities provide for periodic payments throughout their life.

	Held to Maturity
	June 30, 2011
			Estimated
	Amortized Cost		Market Value
Due in one year or less	$	1,046,003	$	1,054,209
Due after one year through five years		3,229,741		3,323,608
Due after five years through ten years		3,385,547		3,419,880
Due after ten years		2,003,598		1,996,376
		9,664,889		9,794,073
Mortgage-backed securities		6,003,201		6,364,468
	$	15,668,090	$	16,158,541

Proceeds from sales and maturities of investments in fixed maturity securities and equity securities for the six month period ended June 30, 2011 and 2010 were $3,347,702 and $4,351,025 respectively.  Gross gains were $40,170 and $14,717 and gross losses were $27,984 and $31,269 as of June 30, 2011 and 2010, respectively.

Investment in equity securities at June 30, 2011 represents common stock investments as follows:

	2011
	Cost		Market Value
Banks, trusts and insurance companies	$	30,370	$	6,200
Industrial and other		849,387		994,229
	$	879,757	$	1,000,429

Other long-term investments of $1,054,418 consist of a convertible debenture loan investment (“Debenture”) to EPSI Benefits, Inc. (“EBI”).  The original loan, dated July 25, 2001, was $1,357,407 at 14% interest.  Monthly principal payments were scheduled to begin on September 15, 2008 with a maturity date of August 15, 2015.  On July 14, 2008, the Company and EBI amended the Debenture whereby the monthly principal payments will start on September 15, 2013 with the maturity date extended to August 15, 2020.

In accordance with applicable generally accepted accounting principles the Company analyzes discounted expected future cash flows and in prior years established an allowance for credit losses in the amount of $302,989 resulting in a net book value of $1,054,418.  Interest on the debentures is and has been current.

The Company’s policy for recognizing interest income on impaired investments is to recognize interest under the stated loan terms.  Interest on the investment is and has been current.

The average book value on impaired investments during the period ended June 30, 2011 was $1,054,418.  Interest income recognized in 2011 on the impaired investments was $87,210.

Activity in the allowance for credit losses is as follows:

	2011
Beginning Balance	$	302,989
Additions charged to operations		-
Direct write downs		-
Recoveries previously charged to operations		-
Ending Balance	$	302,989

In the first quarter of 2011 the Company recognized an other than temporary impairment on the 6,100 shares of common stock of Treaty Oak Bank and wrote the stock down to $0, for a realized loss of $3,050.  The stock was purchased for $50,813 or $8.33 a share.  The bank’s stock was written down to market value of $0.50 at September 30, 2010.

The Company’s conservative investment philosophies minimize market risk and risk of default by investing in high quality debt instruments with staggered maturity dates.  The Company does not hedge investment risk through the use of derivative financial instruments.  The market value of the Company’s investments in debt instruments varies with changes in interest rates.  A significant increase in interest rates could cause decreases in the market values of investments and have a negative effect on comprehensive income and capital.

The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses that are not deemed to be other than temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2011.

	Less than 12 Months				12 Months or Greater				Total
Description of Securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Investment in fixed maturities,     held to maturity
US Treasury securities and     obligations of US government     corporations and agencies	$	1,739,163	$	10,838	$	-	$	-	$	1,739,163	$	10,838
Canadian government		771,596		6,163		238,170		3,742		1,009,766		9,905
Corporate securities		99,246		4,352		349,823		50,177		449,069		54,529
Mortgage-backed securities     GNMA and FNMA CMO		124,287		2,545		60,268		2,094		184,555		4,639
Totals	$	2,734,292	$	23,898	$	648,261	$	56,013	$	3,382,553	$	79,911
Other long-term investments	$	-	$	-	$	865,970	$	188,448	$	865,970	$	188,448
Totals	$	-	$	-	$	865,970	$	188,448	$	865,970	$	188,448
Equity Securities	$	-	$	-	$	119,574	$	113,605	$	119,574	$	113,605
Totals	$	-	$	-	$	119,574	$	113,605	$	119,574	$	113,605

U.S. Treasury and U.S. Government Agency Obligations

The unrealized losses on the Company's investments in U.S. Treasury and U. S. Government Agency obligations are all less than 12 months old.  The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost of the investment.  Because the Company has the ability and intent to hold those investments until a recovery of fair value, which may be maturity or until they are called, the Company does not consider those investments to be other than temporarily impaired at June 30, 2011.

Federal Agency Mortgage-Backed Securities

The unrealized losses on the Company's investment in federal agency mortgage-backed securities are not material at June 30, 2011.  The contractual cash flows of those investments are guaranteed by an agency of the U.S. government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company's investment. Because the decline in market value is attributable to factors other than credit quality, and because the Company has the ability and intent to hold those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2011.

Corporate Bonds

The following table discloses the unrealized losses on corporate bonds with significant unrealized losses.

Corporate Bonds June 30, 2011	S&P Rating	Amortized Book Value		Gross Unrealized Loss		Estimated Market Value
American General Finance	B	$	200,000	$	9,340	$	190,660
MBIA	B		200,000		40,837		159,163
Totals		$	400,000	$	50,177	$	349,823

The corporate bonds with unrealized losses in the table are insurance corporations that have had their fair value increase in 2010 and 2011.  The Company currently does not believe it is probable that it will be unable to collect all amounts due according to the contractual terms of the investments.  Therefore, it is expected that the debentures would not be settled at a price less than the amortized cost of the investment. Because the Company has the ability and intent to hold these investments until a recovery of fair value, which may be maturity, it does not consider the investments to be other than temporarily impaired at June 30, 2011.

Marketable Equity Securities

The table below discloses the unrealized losses on the Company’s marketable equity securities.

Equity Securities June 30, 2011	Cost		Gross Unrealized Losses			Estimated Market Value
Garmin LTD	$	175,527	$	(76,437	)	$	99,090
Regions Financial Corporation		30,370		(24,170	)		6,200
International Assets		27,282		(12,998	)		14,284
Totals	$	233,179	$	(113,605	)	$	119,574

The Company's marketable equity securities include a variety of industries.  Garmin LTD has the largest unrealized loss of $76,437, which is approximately a 44% decrease in value. Garmin manufactures communication and navigational products, and they are the leader in personal navigational devices.  Garmin continues to remain profitable in 2011.  Regions Financial Corporation has suffered from the recession and the reduced demand for loans.  The Company evaluated the near-term prospects of the issuers in relation to the severity and duration of the impairment. Based on that evaluation and the Company's ability and intent to hold those investments for a reasonable period of time sufficient for a forecasted recovery of fair value, the Company does not consider those investments to be other than temporarily impaired at June 30, 2011.