(2) Investments:

The following is a summary of available-for-sale securities at March 31, 2014 and December 31, 2013:

										Net
			Cost or		Gross		Gross			Unrealized
	Fair		Amortized		Unrealized		Unrealized			Gains
	Value		Cost		Gains		Losses			(Losses)
March 31, 2014
Fixed maturities
U.S. government obligations	$	121,426	$	121,413	$	117	$	(104	)	$	13
Residential mortgage-backed securities		16,741		15,302		1,520		(81	)		1,439
Commercial mortgage-backed securities		25,561		25,217		479		(135	)		344
States and municipal obligations		115,378		115,054		617		(293	)		324
Corporate securities		127,715		126,937		3,255		(2,477	)		778
Foreign government obligations		27,221		27,033		467		(279	)		188
Total fixed maturities		434,042		430,956		6,455		(3,369	)		3,086
Equity securities:
Financial institutions		19,376		7,770		11,606		-			11,606
Industrial & miscellaneous		133,453		64,649		69,026		(222	)		68,804
Total equity securities		152,829		72,419		80,632		(222	)		80,410
Total	$	586,871	$	503,375	$	87,087	$	(3,591	)		83,496

							Applicable federal income taxes				(29,224	)

							Net unrealized gains - net of tax			$	54,272

December 31, 2013
Fixed maturities
U.S. government obligations	$	113,389	$	113,348	$	81	$	(40	)	$	41
Residential mortgage-backed securities		13,252		12,058		1,334		(140	)		1,194
Commercial mortgage-backed securities		28,565		28,406		308		(149	)		159
State and municipal obligations		115,250		115,278		407		(435	)		(28	)
Corporate securities		137,215		136,991		3,207		(2,983	)		224
Foreign government obligations		23,879		23,689		588		(398	)		190
Total fixed maturities		431,550		429,770		5,925		(4,145	)		1,780
Equity securities:
Financial institutions		18,850		7,780		11,171		(101	)		11,070
Industrial & miscellaneous		126,978		64,307		63,009		(338	)		62,671
Total equity securities		145,828		72,087		74,180		(439	)		73,741
Total	$	577,378	$	501,857	$	80,105	$	(4,584	)		75,521

							Applicable federal income taxes				(26,432	)

							Net unrealized gains - net of tax			$	49,089

The following table summarizes, for fixed maturity and equity security investments in an unrealized loss position at March 31, 2014 and December 31, 2013, respectively, the aggregate fair value and gross unrealized loss categorized by the duration those securities have been continuously in an unrealized loss position.

	March 31, 2014							December 31, 2013
	Number of Securities		Fair Value		Gross Unrealized Loss			Number of Securities		Fair Value		Gross Unrealized Loss
Fixed maturity securities:
12 months or less		369	$	114,779	$	(2,339	)		451	$	123,145	$	(3,105	)
Greater than 12 months		69		16,018		(1,030	)		53		18,249		(1,040	)
Total fixed maturities		438		130,797		(3,369	)		504		141,394		(4,145	)

Equity securities:
12 months or less		12		2,401		(221	)		10		1,682		(204	)
Greater than 12 months		1		19		(1	)		2		1,980		(235	)
Total equity securities		13		2,420		(222	)		12		3,662		(439	)
Total fixed maturity and equity securities		451	$	133,217	$	(3,591	)		516	$	145,056	$	(4,584	)

The fair value and the cost or amortized costs of fixed maturity investments at March 31, 2014, by contractual maturity, are shown below. Actual maturities may ultimately differ from contractual maturities because borrowers have, in some cases, the right to call or prepay obligations with or without call or prepayment penalties. Pre-refunded municipal bonds are classified based on their pre-refunded call dates.

	Fair Value		Cost or Amortized Cost

One year or less	$	98,307	$	98,690
Excess of one year to five years		193,827		193,119
Excess of five years to ten years		56,991		56,364
Excess of ten years		7,891		7,232
Contractual maturities		357,016		355,405
Asset-backed securities		77,026		75,551
Total	$	434,042	$	430,956

Following is a summary of the components of net realized gains on investments for the periods presented in the accompanying consolidated statements of operations.

	Three Months Ended
	March 31
	2014			2013
Fixed maturities:
Gross gains	$	1,839		$	1,419
Gross losses		(1,226	)		(1,337	)
Net realized gains		613			82

Equity securities:
Gross gains		741			11,712
Gross losses		(352	)		(1,160	)
Net realized gains		389			10,552

Limited partnerships - net gain		3,068			3,713


Totals	$	4,070		$	14,347

Net realized gains activity for investments, as shown in the previous table, are further detailed as follows:

	Three Months Ended
	March 31
	2014			2013

Realized net gains on the disposal of securities	$	1,195		$	9,244
Mark-to-market adjustment		(200	)		210
Equity in gains of limited partnership
investments - realized and unrealized		3,068			3,713
Impairment:
Write-downs based upon objective criteria		(105	)		(6	)
Recovery of prior write-downs
upon sale or disposal		112			1,186

Totals	$	4,070		$	14,347

The mark-to-market adjustments in the table above represent the changes in fair value of (1) options embedded in convertible debt securities and (2) insurance-linked securities held by the Company.

The income from limited partnerships for the quarter ending March 31, 2014 includes an estimated $3,859 of net unrealized gains reported to the Company as part of the underlying assets of the various limited partnerships. The value of limited partnerships at March 31, 2014 includes approximately $11,322 of accumulated net unrealized gains reported to the Company as part of the underlying assets of the various limited partnerships. Shareholders’ equity at March 31, 2014 includes approximately $26,455, net of federal income taxes, of reported earnings which remain undistributed by limited partnerships.

As of March 31, 2014, the Company had committed funds totaling $20,000 related to three bridge loan agreements. The Company retains possession of these funds which will only be loaned in the unlikely event that long-term financing is unavailable to the counter party in the market.