Note 7.

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 June 30, 2014 and December 31, 2013.

Investments were comprised of the following:

	June 30, 2014
	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	$	24,599	$	751	$	31	$	23,879
Obligations of states and political subdivisions		8,062		845		-		7,217
Corporate securities:
Utilities and telecom		14,881		2,254		-		12,627
Financial services		58,119		3,810		91		54,400
Other business – diversified		73,884		3,201		536		71,219
Other consumer – diversified		33,947		1,046		673		33,574
Total corporate securities		180,831		10,311		1,300		171,820
Redeemable preferred stocks:
Financial services		610		10		-		600
Other consumer – diversified		192		-		-		192
Total redeemable preferred stocks		802		10		-		792
Total fixed maturities		214,294		11,917		1,331		203,708
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,468		504		-		964
Financial services		6,025		617		131		5,539
Other business – diversified		190		143		-		47
Other consumer – diversified		12,576		6,962		-		5,614
Total equity securities		20,259		8,226		131		12,164
Other invested assets		3,032		-		-		3,032
Policy loans		2,268		-		-		2,268
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	241,129	$	20,143	$	1,462	$	222,448

	December 31, 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

The carrying value and amortized cost of the Company’s investments in fixed maturities at June 30, 2014 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.

	June 30, 2014
	Carrying Value		Amortized Cost
Due in one year or less	$	1,000	$	999
Due after one year through five years		17,060		16,074
Due after five years through ten years		118,208		112,762
Due after ten years		64,584		60,897
Varying maturities		13,442		12,976
Totals	$	214,294	$	203,708

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 June 30, 2014 and December 31, 2013.

	June 30, 2014						December 31, 2013
	Carrying Value		Amortized Cost		Unrealized Gains		Carrying Value		Amortized Cost		Unrealized Gains (Losses)
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	24,599	$	23,879	$	720	$	17,240	$	16,874	$	366
Obligations of states and political subdivisions		8,062		7,217		845		7,611		7,226		385
Utilities and telecom		16,349		13,591		2,758		18,006		16,150		1,856
Financial services		64,754		60,539		4,215		58,451		57,118		1,333
Other business – diversified		74,074		71,266		2,808		70,504		72,409		(1,905	)
Other consumer – diversified		46,715		39,380		7,335		51,381		43,872		7,509
Other investments		6,576		6,576		-		5,768		5,768		-
Investments	$	241,129	$	222,448	$	18,681	$	228,961	$	219,417	$	9,544

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 June 30, 2014 and December 31, 2013.

	June 30, 2014
	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	$	1,277	$	1	$	2,695	$	30	$	3,972	$	31
Corporate securities		8,699		111		20,635		1,189		29,334		1,300
Common and non-redeemable preferred stocks		-		-		2,869		131		2,869		131
Total temporarily impaired securities	$	9,976	$	112	$	26,199	$	1,350	$	36,175	$	1,462

	December 31, 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

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 June 30, 2014, 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 June 30, 2014.

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 June 30, 2014 and December 31, 2013, the value of the Company’s fixed maturities valued using Level 3 criteria was $2,117 and $1,991, respectively. The use of different criteria or assumptions regarding data may have yielded materially different valuations.

As of June 30, 2014, 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	$	-	$	212,177	$	2,117	$	214,294
Equity securities		14,527		5,732		-		20,259
Cash equivalents		25,202		-		-		25,202
Total	$	39,729	$	217,909	$	2,117	$	259,755

As of December 31, 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	$	-	$	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

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) for the three month and six month periods ended June 30, 2014.

	Fixed Maturities
Balance, December 31, 2013	$	1,991
Total unrealized gains included in other comprehensive income		65
Balance, March 31, 2014		2,056
Total unrealized gains included in other comprehensive income		61
Balance, June 30, 2014	$	2,117

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.