Note 2. 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 December 31, 2013 and December 31, 2012.

Investments were comprised of the following:

	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	$	17,240	$	576	$	210	$	16,874
Obligations of states and political subdivisions		7,611		402		17		7,226
Corporate securities:
Utilities and telecom		16,532		1,353		7		15,186
Financial services		50,531		1,736		320		49,115
Other business – diversified		70,326		870		2,906		72,362
Other consumer – diversified		36,712		391		1,745		38,066
Total corporate securities		174,101		4,350		4,978		174,729
Redeemable preferred stocks:
Financial services		2,159		4		41		2,196
Other consumer – diversified		192		-		-		192
Total redeemable preferred stocks		2,351		4		41		2,388
Total fixed maturities		201,303		5,332		5,246		201,217
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,474		510		-		964
Financial services		5,761		514		560		5,807
Other business – diversified		178		131		-		47
Other consumer – diversified		14,477		8,863		-		5,614
Total equity securities		21,890		10,018		560		12,432
Other invested assets		2,123		-		-		2,123
Policy loans		2,369		-		-		2,369
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	228,961	$	15,350	$	5,806	$	219,417

	2012
			Gross		Gross
	Carrying		Unrealized		Unrealized		Amortized
	Value		Gains		Losses		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

Bonds having an amortized cost of $10,101 and $7,170 and included in the tables above were on deposit with insurance regulatory authorities at December 31, 2013 and 2012, respectively, in accordance with statutory requirements.

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 December 31, 2013 and 2012.

	2013							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	$	17,240	$	16,874	$	366		$	27,512	$	22,894	$	4,618
Obligations of states and political subdivisions		7,611		7,226		385			17,761		15,247		2,514
Utilities and telecom		18,006		16,150		1,856			19,219		15,757		3,462
Financial services		58,451		57,118		1,333			56,077		51,702		4,375
Other business – diversified		70,504		72,409		(1,905	)		66,875		59,628		7,247
Other consumer – diversified		51,381		43,872		7,509			55,269		47,235		8,034
Other investments		5,768		5,768		-			4,179		4,179		-
Investments	$	228,961	$	219,417	$	9,544		$	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 December 31, 2013 and 2012.

	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	$	8,326	$	210	$	-	$	-	$	8,326	$	210
Obligations of states and political subdivisions		1,018		17						1,018		17
Corporate securities		92,049		3,714		6,938		1,264		98,987		4,978
Redeemable preferred stocks		704		41		-		-		704		41
Common and non-redeemable preferred stocks		3,724		560		-		-		3,724		560
Total temporarily impaired securities	$	105,821	$	4,542	$	6,938	$	1,264	$	112,759	$	5,806

	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 December 31, 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 December 31, 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 significantly 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 December 31, 2013 and 2012, the value of the Company’s fixed maturities valued using Level 3 criteria was $1,991 and $2,124, respectively. The use of different criteria or assumptions regarding data may have yielded materially different valuations.

As of December 31, 2013, financial instruments carried at fair value were measured on a recurring basis as summarized below:

Assets:	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Fixed maturities	$	-	$	199,312	$	1,991	$	201,303
Equity securities		16,406		5,484		-		21,890
Cash equivalents		31,618		-		-		31,618
Total	$	48,024	$	204,796	$	1,991	$	254,811

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

Assets:	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
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 (Note 7)	$	-	$	-	$	141	$	141

The following is a roll-forward of the Company’s financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) from January 1, 2012 to December 31, 2013.

	Fixed Maturities			Derivative (Liability)
Balance, January 1, 2012	$	2,035		$	(876	)
Total unrealized gains included in comprehensive income		89			735
Balance, December 31, 2012		2,124			(141	)
Total unrealized gains (losses) included in comprehensive income		(133	)		141
Balance, December 31, 2013	$	1,991		$	-

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.

The amortized cost and carrying value of fixed maturities at December 31, 2013 and 2012 by contractual maturity were as follows. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	2013				2012
	Carrying Value		Amortized Cost		Carrying Value		Amortized Cost
Due in one year or less	$	-	$	-	$	1,510	$	1,500
Due after one year through five years		11,709		11,097		5,799		5,213
Due after five years through ten years		108,358		107,846		40,416		37,013
Due after ten years		76,882		77,884		181,608		157,266
Varying maturities		4,354		4,390		1,175		994
Totals	$	201,303	$	201,217	$	230,508	$	201,986

Investment income was earned from the following sources:

	2013			2012
Fixed maturities	$	9,890		$	10,626
Equity securities		632			571
Other		287			307
Total investment income		10,809			11,504
Less investment expenses, included in other expenses		(474	)		(194	)
Net investment income	$	10,335		$	11,310

A summary of realized investment gains (losses) follows:

	2013
	Fixed Maturities			Equity Securities			Total
Gains	$	8,521		$	293		$	8,814
Losses		(45	)		(28	)		(73	)
Realized investment gains, net	$	8,476		$	265		$	8,741

	2012
	Fixed Maturities		Equity Securities		Total
Gains	$	1,434	$	-	$	1,434
Losses		-		-		-
Realized investment gains, net	$	1,434	$	-	$	1,434

Proceeds from the sales of investments were as follows:

	2013		2012
Fixed maturities	$	107,728	$	24,433
Equity securities		972		-
Other investments		45		46
Total proceeds	$	108,745	$	24,479

The Company’s bond portfolio included 90% investment grade securities, as defined by the NAIC, at December 31, 2013.