Note 9. Investments

The following tables set forth the carrying value, gross unrealized gains, gross unrealized losses and amortized cost of the Company’s investments, aggregated by type and industry, as of September 30, 2013 and December 31, 2012.

Investments were comprised of the following:

	September 30, 2013
	Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Amortized Cost
Fixed maturities:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	12,024	$	700	$	40	$	11,364
Obligations of states and political subdivisions		11,084		806		-		10,278
Corporate securities:
Utilities and telecom		17,116		1,560		128		15,684
Financial services		45,856		1,486		696		45,066
Other business – diversified		67,635		889		2,322		69,068
Other consumer – diversified		36,955		584		1,410		37,781
Total corporate securities		167,562		4,519		4,556		167,599
Redeemable preferred stocks:
Financial services		2,168		2		30		2,196
Other consumer – diversified		192		-		-		192
Total redeemable preferred stocks		2,360		2		30		2,388
Total fixed maturities		193,030		6,027		4,626		191,629
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,400		436		-		964
Financial services		6,796		499		510		6,807
Other business – diversified		170		123		-		47
Other consumer – diversified		8,579		2,965		-		5,614
Total equity securities		16,945		4,023		510		13,432
Other invested assets		648		-		-		648
Policy loans		2,327		-		-		2,327
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	214,226	$	10,050	$	5,136	$	209,312

	December 31, 2012
	Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Amortized Cost
Fixed maturities:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	27,512	$	4,618	$	-	$	22,894
Obligations of states and political subdivisions		17,761		2,514		-		15,247
Corporate securities:
Utilities and telecom		17,921		3,128		-		14,793
Financial services		43,695		3,957		415		40,153
Other business – diversified		66,741		7,172		12		59,581
Other consumer – diversified		52,910		7,665		120		45,365
Total corporate securities		181,267		21,922		547		159,892
Redeemable preferred stocks:
Financial services		3,775		18		3		3,760
Other consumer – diversified		193		-		-		193
Total redeemable preferred stocks		3,968		18		3		3,953
Total fixed maturities		230,508		29,072		550		201,986
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,298		334		-		964
Financial services		8,607		857		39		7,789
Other business – diversified		134		87		-		47
Other consumer – diversified		2,166		489		-		1,677
Total equity securities		12,205		1,767		39		10,477
Other invested assets		565		-		-		565
Policy loans		2,338		-		-		2,338
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	246,892	$	30,839	$	589	$	216,642

The amortized cost and carrying value of the Company’s investments in fixed maturities at September 30, 2013 by contractual maturity were as follows. Actual maturities may differ from contractual maturities because issuers may call or prepay obligations with or without call or prepayment penalties.

	September 30, 2013
	Carrying Value		Amortized Cost
Due in one year or less	$	-	$	-
Due after one year through five years		8,895		8,233
Due after five years through ten years		96,603		96,100
Due after ten years		86,412		86,301
Varying maturities		1,120		995
Totals	$	193,030	$	191,629

The following table sets forth the carrying value, amortized cost, and net unrealized gains (losses) of the Company’s investments, aggregated by industry, as of September 30, 2013 and December 31, 2012.

	September 30, 2013							December 31, 2012
	Carrying Value		Amortized Cost		Unrealized Gains (Losses)			Carrying Value		Amortized Cost		Unrealized Gains
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	12,024	$	11,364	$	660		$	27,512	$	22,894	$	4,618
Obligations of states and political subdivisions		11,084		10,278		806			17,761		15,247		2,514
Utilities and telecom		18,516		16,648		1,868			19,219		15,757		3,462
Financial services		54,820		54,069		751			56,077		51,702		4,375
Other business – diversified		67,805		69,115		(1,310	)		66,875		59,628		7,247
Other consumer – diversified		45,726		43,587		2,139			55,269		47,235		8,034
Other investments		4,251		4,251		-			4,179		4,179		-
Investments	$	214,226	$	209,312	$	4,914		$	246,892	$	216,642	$	30,250

The following tables present the Company’s unrealized loss aging for securities by type and length of time the security was in a continuous unrealized loss position as of September 30, 2013 and December 31, 2012.

	September 30, 2013
	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	3,235	$	40	$	-	$	-	$	3,235	$	40
Corporate securities		90,486		4,480		1,924		76		92,410		4,556
Redeemable preferred stocks		1,416		30		-		-		1,416		30
Common and non-redeemable preferred stocks		3,813		470		960		40		4,773		510
Total temporarily impaired securities	$	98,950	$	5,020	$	2,884	$	116	$	101,834	$	5,136

	December 31, 2012
	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Corporate securities	$	8,806	$	147	$	1,600	$	400	$	10,406	$	547
Redeemable preferred stocks		1,216		3		-		-		1,216		3
Common and non-redeemable preferred stocks		3,494		39		-		-		3,494		39
Total temporarily impaired securities	$	13,516	$	189	$	1,600	$	400	$	15,116	$	589

The evaluation for an other than temporary impairment is a quantitative and qualitative process, which is subject to risks and uncertainties in the determination of whether declines in the fair value of investments are other than temporary. Potential risks and uncertainties include, among other things, changes in general economic conditions, an issuer’s financial condition or near term recovery prospects and the effects of changes in interest rates. In evaluating a potential impairment, the Company considers, among other factors, management’s intent and ability to hold these securities until price recovery, the nature of the investment and the expectation of prospects for the issuer and its industry, the status of an issuer’s continued satisfaction of its obligations in accordance with their contractual terms, and management’s expectation as to the issuer’s ability and intent to continue to do so, as well as ratings actions that may affect the issuer’s credit status.

As of September 30, 2013, securities in an unrealized loss position primarily included certain of the Company’s investments in fixed maturities within the other diversified business, other diversified consumer and financial services sectors. The Company does not currently intend to sell nor does it expect to be required to sell any of the securities in an unrealized loss position. Based upon the Company’s expected continuation of receipt of contractually required principal and interest payments and its intent and ability to retain the securities until price recovery, as well as the Company’s evaluation of other relevant factors, including those described above, the Company has deemed these securities to be temporarily impaired as of September 30, 2013.

The following describes the fair value hierarchy and provides information as to the extent to which the Company uses fair value to measure the value of its financial instruments and information about the inputs used to value those financial instruments. The fair value hierarchy prioritizes the inputs in the valuation techniques used to measure fair value into three broad levels.

Level 1

Observable inputs that reflect quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. The Company’s financial instruments valued using Level 1 criteria include cash equivalents and exchange traded common stocks.

Level 2

Observable inputs, other than quoted prices included in Level 1, for an asset or liability or prices for similar assets or liabilities. The Company’s financial instruments valued using Level 2 criteria include substantially all of its fixed maturities, which consist of U.S. Treasury securities and U.S. Government securities, obligations of states and political subdivisions, and certain corporate fixed maturities, as well as its non-redeemable preferred stocks. In determining fair value measurements using Level 2 criteria, the Company utilizes various external pricing sources.

Level 3

Valuations that are derived from techniques in which one or more of the significant inputs are unobservable (including assumptions about risk). Fair value is based on criteria that use assumptions or other data that are not readily observable from objective sources. The Company’s financial instruments valued using Level 3 criteria consist of a limited number of fixed maturities. As of September 30, 2013 and December 31, 2012, the value of the Company’s fixed maturities valued using Level 3 criteria was $2,015 and $2,124. The use of different criteria or assumptions regarding data may have yielded materially different valuations.

As of September 30, 2013, financial instruments carried at fair value were measured on a recurring basis as summarized below:

	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Fixed maturities	$	-	$	191,015	$	2,015	$	193,030
Equity securities		10,404		6,541		-		16,945
Cash equivalents		34,026		-		-		34,026
Total	$	44,430	$	197,556	$	2,015	$	244,001

As of December 31, 2012, financial instruments carried at fair value were measured on a recurring basis as summarized below:

	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Fixed maturities	$	-	$	228,384	$	2,124	$	230,508
Equity securities		3,805		8,400		-		12,205
Cash equivalents		15,326		-		-		15,326
Total	$	19,131	$	236,784	$	2,124	$	258,039
Liabilities:
Derivative financial instrument	$	-	$	-	$	141	$	141

The following is a roll-forward of the financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three month and nine month periods ended September 30, 2013.

	Fixed Maturities			Derivative (Liability)
Balance, December 31, 2012	$	2,124		$	(141	)
Total unrealized gains (losses) included in other comprehensive income		(32	)		141
Balance, March 31, 2013		2,092			-
Total unrealized losses included in other comprehensive income		(58	)		-
Balance, June 30, 2013		2,034			-
Total unrealized losses included in other comprehensive income		(19	)		-
Balance, September 30, 2013	$	2,015		$	-

The Company’s fixed maturities valued using Level 3 inputs consist solely of issuances of pooled debt obligations of multiple, smaller financial services companies. They are not actively traded and valuation techniques used to measure fair value are based on future estimated cash flows (based on current cash flows) discounted at reasonable estimated rates of interest. There are no assumed prepayments and/or default probability assumptions as a majority of these instruments contain certain U.S. government agency strips to support repayment of the principal. Other qualitative and quantitative information received from the original underwriter of the pooled offerings is also considered, as applicable. The Company’s derivative financial instrument was an interest rate collar which terminated on March 4, 2013, the stated maturity date, by its terms.