5. Investments

The amortized cost and estimated fair value of investments in debt and equity securities by category is as follows (in thousands):



			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
As of September 30, 2015	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. Government	$	91,311	$	370	$	-	$	91,681
Corporate bonds		50,638		586		(614)		50,610
Collateralized corporate bank loans		124,158		344		(2,368)		122,134
Municipal bonds		196,174		2,108		(6,334)		191,948
Mortgage-backed		62,627		283		(120)		62,790

Total debt securities		524,908		3,691		(9,436)		519,163

Total equity securities		24,957		23,998		(726)		48,229

Total debt and equity securities	$	549,865	$	27,689	$	(10,162)	$	567,392

As of December 31, 2014
U.S. Treasury securities and obligations of U.S. Government	$	93,280	$	29	$	(4)	$	93,305
Corporate bonds		28,643		884		(85)		29,442
Collateralized corporate bank loans		115,358		206		(1,915)		113,649
Municipal bonds		161,546		2,384		(1,601)		162,329
Mortgage-backed		51,943		487		(370)		52,060

Total debt securities		450,770		3,990		(3,975)		450,785

Total equity securities		25,360		31,086		(2)		56,444

Total debt and equity securities	$	476,130	$	35,076	$	(3,977)	$	507,229

Major categories of net realized gains (losses) on investments are summarized as follows (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014

U.S. Treasury securities and obligations of U.S. Government	$	-	$	-	$	-	$	-
Corporate bonds		-		(22)		-		111
Collateralized corporate bank loans		8		10		158		99
Municipal bonds		(12)		(69)		(54)		(123)
Mortgage-backed		-		29		240		31
Equity securities		32		29		5,537		34
Gain (loss) on investments		28		(23)		5,881		152
Other-than-temporary impairments		(363)		-		(2,193)		(274)
Net realized gains (losses)	$	(335)	$	(23)	$	3,688	$	(122)

We realized gross gains on investments of $76 thousand and $0.1 million during the three months ended September 30, 2015 and 2014, respectively, and $6.0 million and $0.4 million for the nine months ended September 30, 2015 and 2014, respectively. We realized gross losses on investments of $48 thousand and $0.1 million for the three months ended September 30, 2015 and 2014, respectively, and $0.1 million and $0.2 million for the nine months ended September 30, 2015 and 2014, respectively. We recorded proceeds from the sale of investment securities of $0.8 million and $0.6 million during the three months ended September 30, 2015 and 2014, respectively, and $17.7 million and $14.9 million for the nine months ended September 30, 2015 and 2014, respectively. Realized investment gains and losses are recognized in operations on the specific identification method.

The following schedules summarize the gross unrealized losses showing the length of time that investments have been continuously in an unrealized loss position as of September 30, 2015 and December 31, 2014 (in thousands):



	As of September 30, 2015
	12 months or less				Longer than 12 months				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses

U.S. Treasury securities and obligations of U.S. Government	$	-	$	-	$	-	$	-	$	-	$	-
Corporate bonds		30,917		(614)		-		-		30,917		(614)
Collateralized corporate bank loans		59,675		(1,387)		4,643		(981)		64,318		(2,368)
Municipal bonds		38,894		(517)		21,985		(5,817)		60,879		(6,334)
Mortgage-backed		25,850		(118)		72		(2)		25,922		(120)
Total debt securities		155,336		(2,636)		26,700		(6,800)		182,036		(9,436)

Total equity securities		4,611		(726)		-		-		4,611		(726)
Total debt and equity securities	$	159,947	$	(3,362)	$	26,700	$	(6,800)	$	186,647	$	(10,162)

	As of December 31, 2014
	12 months or less				Longer than 12 months				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
U.S. Treasury securities and obligations of U.S. Government	$	15,005	$	(4)	$	-	$	-	$	15,005	$	(4)
Corporate bonds		7,552		(85)		-		-		7,552		(85)
Collateralized corporate bank loans		64,712		(824)		8,898		(1,091)		73,610		(1,915)
Municipal bonds		50,546		(945)		15,684		(656)		66,230		(1,601)
Mortgage-backed		20,469		(365)		2,966		(5)		23,435		(370)
Total debt securities		158,284		(2,223)		27,548		(1,752)		185,832		(3,975)

Total equity securities		129		(2)		-		-		129		(2)
Total debt and equity securities	$	158,413	$	(2,225)	$	27,548	$	(1,752)	$	185,961	$	(3,977)

At September 30, 2015, the gross unrealized losses more than twelve months old were attributable to 25 debt security positions. At December 31, 2014, the gross unrealized losses more than twelve months old were attributable to 24 debt security positions. We consider these losses as a temporary decline in value as they are predominately on bonds that we do not intend to sell and do not believe we will be required to sell prior to recovery of our amortized cost basis. We see no other indications that the decline in values of these securities is other-than-temporary.

We complete a detailed analysis each quarter to assess whether any decline in the fair value of any investment below cost is deemed other-than-temporary. All securities with an unrealized loss are reviewed. We recognize an impairment loss when an investment's value declines below cost, adjusted for accretion, amortization and previous other-than-temporary impairments, and it is determined that the decline is other-than-temporary.

Debt Investments: We assess whether we intend to sell, or it is more likely than not that we will be required to sell, a fixed maturity investment before recovery of its amortized cost basis less any current period credit losses. For fixed maturity investments that are considered other-than-temporarily impaired and that we do not intend to sell and will not be required to sell, we separate the amount of the impairment into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the investment’s amortized cost basis and the present value of its expected future cash flows. The remaining difference between the investment’s fair value and the present value of future expected cash flows is recognized in other comprehensive income.

Equity Investments: Some of the factors considered in evaluating whether a decline in fair value for an equity investment is other-than-temporary include: (1) our ability and intent to retain the investment for a period of time sufficient to allow for an anticipated recovery in value; (2) the recoverability of cost; (3) the length of time and extent to which the fair value has been less than cost; and (4) the financial condition and near-term and long-term prospects for the issuer, including the relevant industry conditions and trends, and implications of rating agency actions and offering prices. When it is determined that an equity investment is other-than-temporarily impaired, the security is written down to fair value, and the amount of the impairment is included in earnings as a realized investment loss. The fair value then becomes the new cost basis of the investment, and any subsequent recoveries in fair value are recognized at disposition. We recognize a realized loss when impairment is deemed to be other-than-temporary even if a decision to sell an equity investment has not been made. When we decide to sell a temporarily impaired available-for-sale equity investment and we do not expect the fair value of the equity investment to fully recover prior to the expected time of sale, the investment is deemed to be other-than-temporarily impaired in the period in which the decision to sell is made.

The amortized cost and estimated fair value of debt securities at September 30, 2015 by contractual maturity are as follows. Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without penalties.



	Amortized		Fair
	Cost		Value
	(in thousands)
Due in one year or less	$	58,057	$	57,912
Due after one year through five years		232,118		230,320
Due after five years through ten years		116,755		113,043
Due after ten years		55,351		55,098
Mortgage-backed		62,627		62,790
	$	524,908	$	519,163