Note 5: Investment Securities

The amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of fixed-maturity securities held in trust at June 30, 2013, are as follows:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Obligations of U.S. government sponsored enterprises	$	72,849	$	562	$	(1,661	)	$	71,750
Corporate debt securities		102,209		1,955		(557	)		103,607
Commercial paper		62,989		1		—			62,990
Foreign corporate debt securities		28,970		174		(288	)		28,856
Commercial mortgage-backed securities		3,469		5		(73	)		3,401

Total fixed-maturity securities		270,486		2,697		(2,579	)		270,604
Less total unrestricted fixed-maturity securities – trading		20,405		254		(172	)		20,487
Less total unrestricted fixed-maturity securities – held to maturity		72,710		—		—			72,710

Total fixed-maturity securities held in trust	$	177,371	$	2,443	$	(2,407	)	$	177,407

The amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of fixed-maturity securities held in trust at December 31, 2012, are as follows:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Obligations of U.S. government sponsored enterprises	$	97,104	$	1,415	$	(156	)	$	98,363
Corporate debt securities		91,997		3,011		(34	)		94,974
Commercial paper		54,948		—		—			54,948
Foreign corporate debt securities		18,305		379		(18	)		18,666
Commercial mortgage-backed securities		10,541		64		(87	)		10,518

Total fixed-maturity securities		272,895		4,869		(295	)		277,469
Less total unrestricted fixed-maturity securities – trading		14,246		168		(18	)		14,396
Less total unrestricted fixed-maturity securities – held to maturity		61,413		—		—			61,413

Total fixed-maturity securities held in trust	$	197,236	$	4,701	$	(277	)	$	201,660

Amortized cost and estimated fair value of fixed-maturity securities at June 30, 2013 by contractual maturity are as follows:


	Amortized Cost		Estimated Fair Value
Maturity in:
2013	$	73,148	$	73,167
2014-2017		124,916		126,578
2018-2022		42,272		40,983
Thereafter		26,681		26,475
Mortgage-backed securities		3,469		3,401

Total fixed-maturity securities	$	270,486	$	270,604

Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

Net investment income for the periods ending June 30, 2013 and 2012 is summarized as follows:


	Successor			Successor			Successor			Successor			Predecessor
	Three Months Ended June 30, 2013			Three Months Ended June 30, 2012			Six Months Ended June 30, 2013			Period from March 20, 2012 through June 30, 2012			Period from January 1, 2012 through March 19, 2012
Investment income:
Amortization of premium or discount on fixed-maturity securities	$	(596	)	$	(669	)	$	(1,084	)	$	(756	)	$	(523	)
Investment income on fixed-maturity securities		1,779			2,878			3,637			3,279			2,467
Interest income on cash and equivalents		5			15			9			15			3
Realized net gain (loss) from sale of investment		(121	)		278			13			271			176
Unrealized (losses) gains on trading securities held at period end		(3,775	)		(323	)		(4,587	)		273			1,049

Net investment income	$	(2,708	)	$	2,179		$	(2,012	)	$	3,082		$	3,172

The following tables show how the Company’s investments are categorized in accordance with fair value measurement as of June 30, 2013 and December 31, 2012:


	June 30, 2013
	Level 1		Level 2		Level 3		Total
Class of Security:
Obligations of U.S. government sponsored enterprises	$	11,211	$	60,539	$	—	$	71,750
Corporate debt securities		21,302		82,305		—		103,607
Commercial paper		62,990		—		—		62,990
Foreign corporate debt securities		1,537		27,319		—		28,856
Commercial mortgage-backed securities		—		3,401		—		3,401

Total fixed maturity securities		97,040		173,564		—		270,604
Money market funds		19,784		—		—		19,784

Total	$	116,824	$	173,564	$	—	$	290,388


	December 31, 2012
	Level 1		Level 2		Level 3		Total
Class of Security:
Obligations of U.S. government sponsored enterprises	$	11,362	$	87,001	$	—	$	98,363
Corporate debt securities		22,833		72,141		—		94,974
Commercial paper		54,948		—		—		54,948
Foreign corporate debt securities		1,001		17,665		—		18,666
Commercial mortgage-backed securities		—		10,518		—		10,518

Total fixed maturity securities		90,144		187,325		—		277,469
Money market funds		33,628		—		—		33,628

Total	$	123,772	$	187,325	$	—	$	311,097

A review of the fair value hierarchy classifications of the Company’s investments is conducted quarterly. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Reclassifications are reported as transfers in or transfers out of the applicable Level at end of the calendar quarter in which the reclassifications occur. During the six months ended June 30, 2013 and the year ended December 31, 2012, $6.3 million and $17.7 million, respectively, of investments were transferred from Level 2 to Level 1 as a result of improving market conditions for short-term and investment grade corporate securities.


	Six months ended June 30, 2013				Year ended December 31, 2012
	Transfers from Level 1 to Level 2		Transfers from Level 2 to Level 1		Transfers from Level 1 to Level 2		Transfers from Level 2 to Level 1
Class of securities:
Corporate securities	$	—	$	6,261	$	—	$	16,745
Foreign corporate debt securities		—		—		—		1,001

Total Transfers	$	—	$	6,261	$	—	$	17,746