Note B - Investments

The following is a summary of available for sale securities at December 31:

										Net
			Cost or		Gross		Gross			Unrealized
	Fair		Amortized		Unrealized		Unrealized			Gains
	Value		Cost		Gains		Losses			(Losses)
2015:
Fixed maturities:
U.S. government obligations	$	103,245	$	103,448	$	56	$	(259	)	$	(203	)
Residential mortgage-backed securities		4,776		4,668		162		(54	)		108
Commercial mortgage-backed securities		30,595		30,977		247		(629	)		(382	)
State and municipal obligations		110,578		109,932		806		(160	)		646
Corporate securities		164,025		168,137		2,445		(6,557	)		(4,112	)
Foreign government obligations		23,965		25,416		404		(1,855	)		(1,451	)
Total fixed maturities		437,184		442,578		4,120		(9,514	)		(5,394	)
Equity securities:
Financial institutions		21,694		10,836		11,069		(211	)		10,858
Industrial & miscellaneous		123,804		69,385		59,338		(4,919	)		54,419
Total equity securities		145,498		80,221		70,407		(5,130	)		65,277
Total	$	582,682	$	522,799	$	74,527	$	(14,644	)		59,883

							Applicable federal income taxes				(20,959	)

							Net unrealized gains - net of tax			$	38,924

2014:
Fixed maturities:
U.S. government obligations	$	101,094	$	101,058	$	108	$	(72	)	$	36
Residential mortgage-backed securities		6,066		5,830		273		(37	)		236
Commercial mortgage-backed securities		36,440		36,210		630		(400	)		230
State and municipal obligations		113,777		113,133		784		(140	)		644
Corporate securities		166,966		170,822		2,005		(5,861	)		(3,856	)
Foreign government obligations		27,466		28,332		114		(980	)		(866	)
Total fixed maturities		451,809		455,385		3,914		(7,490	)		(3,576	)
Equity securities:
Financial institutions		25,343		10,100		15,303		(60	)		15,243
Industrial & miscellaneous		136,764		68,678		70,260		(2,174	)		68,086
Total equity securities		162,107		78,778		85,563		(2,234	)		83,329
Total	$	613,916	$	534,163	$	89,477	$	(9,724	)		79,753

							Applicable federal income taxes				(27,913	)

							Net unrealized gains - net of tax			$	51,840

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

	2015							2014
	Number of Securities		Fair Value		Gross Unrealized Loss			Number of Securities		Fair Value		Gross Unrealized Loss
Fixed maturity securities:
12 months or less		328	$	205,475	$	(5,070	)		591	$	176,756	$	(6,083	)
Greater than 12 months		168		108,043		(4,444	)		140		27,667		(1,407	)
Total fixed maturities		496		313,518		(9,514	)		731		204,423		(7,490	)
Equity securities:
12 months or less		73		26,517		(5,130	)		33		13,538		(2,170	)
Greater than 12 months		-		-		-			3		686		(64	)
Total equity securities		73		26,517		(5,130	)		36		14,224		(2,234	)
Total		569	$	340,035	$	(14,644	)		767	$	218,647	$	(9,724	)

Unrealized losses in the Company's fixed maturity portfolio are generally the result of interest rate or foreign currency fluctuations as well as the disruption of credit markets occasioned by financial market turmoil. The average unrealized loss for all fixed maturity securities in a loss position at December 31, 2015 is approximately 3% of original or adjusted cost. The Company does not intend to sell any fixed maturity securities which are in an unrealized loss position at December 31, 2015 and it is not more likely than not that the Company will have to sell any fixed maturity security before recovery of its amortized cost basis. For equity securities, the Company has evaluated the near-term prospects of the investments in relation to the severity and duration of the impairment and, based on that evaluation, the Company has the ability and intent to hold these investments for a period sufficient to allow for recovery of fair value. Accordingly, the Company does not believe the unrealized losses represent an other-than-temporary impairment as of December 31, 2015.

The fair value and the cost or amortized cost of fixed maturity investments at December 31, 2015, by contractual maturity, is shown below. Actual maturities may 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	$	74,187	17.0	%	$	75,854	17.1	%
Excess of one year to five years		242,713	55.5			244,033	55.1
Excess of five years to ten years		36,452	8.3			37,269	8.4
Excess of ten years		3,218	0.8			2,901	0.7
Total maturities		356,570	81.6			360,057	81.3
Asset-backed securities		80,614	18.4			82,521	18.7
	$	437,184	100.0	%	$	442,578	100.0	%

Major categories of investment income for the years ended December 31 are summarized as follows:

	2015			2014			2013
Interest on fixed maturities	$	11,663		$	8,806		$	9,023
Dividends on equity securities		3,445			2,693			2,166
Money market funds, Short-term and other		32			37			49
		15,140			11,536			11,238
Investment expenses		(2,642	)		(2,481	)		(2,468	)
Net investment income	$	12,498		$	9,055		$	8,770

Gains and losses on investments, including equity method earnings from limited partnerships, for the years ended December 31 are summarized below:

	2015			2014			2013
Fixed maturities:
Gross gains	$	6,633		$	6,480		$	7,235
Gross losses		(13,634	)		(4,596	)		(4,371	)
Net gains (losses)		(7,001	)		1,884			2,864

Equity securities:
Gross gains		21,070			7,467			15,374
Gross losses		(13,643	)		(1,529	)		(2,718	)
Net gains		7,427			5,938			12,656

Limited partnerships - net gain (loss)		(1,687	)		7,108			7,995


Total net gains (losses)	$	(1,261	)	$	14,930		$	23,515

Shareholders' equity includes approximately $26,521, net of deferred federal income taxes, of undistributed earnings from limited partnerships as of December 31, 2015.

Gain and loss activity for fixed maturity and equity security investments, as shown in the previous table, include adjustments for other-than-temporary impairment for the years ended December 31 summarized as follows:

	2015			2014			2013

Cumulative charges to income at beginning of year	$	7,168		$	6,770		$	7,773

Writedowns based on objective and subjective criteria		7,700			689			742
Recovery of prior writedowns upon sale or disposal		(4,355	)		(291	)		(1,745	)
Net pre-tax realized gain (loss)		(3,345	)		(398	)		1,003

Cumulative charges to income at end of year	$	10,513		$	7,168		$	6,770

Addition (reduction) to earnings per share from net
after-tax OTTI gain (loss)	$	(.14	)	$	(.02	)	$	.04

Unrealized gain on investments previously
written down at end of the year - see note below	$	14,710		$	17,127		$	13,129

Note: Recovery in market value of an investment which has previously been adjusted for other-than-temporary impairment is treated as an unrealized gain until the investment matures or is sold.

There is no primary or secondary market for the Company's investments in limited partnerships and, in most cases, the Company is prohibited from disposing of its limited partnership interests for some period of time and generally must seek approval from the applicable general partner for any such disposal. Distributions of earnings from these partnerships are largely at the sole discretion of the general partners and distributions are generally not received by the Company for many years after the earnings have been reported. The Company has commitments to contribute an additional $2,459 to various limited partnerships as of December 31, 2015.

The Company has invested a total of $23,000 in two limited partnerships, with an aggregate estimated value of $45,009 at December 31, 2015, that are managed by organizations in which four directors of the Company are executive officers, directors or owners. The Company's ownership interest in these limited partnerships ranges from 5% to 17%. These limited partnerships added ($1,978), $7,088 and $1,154, net of fees, to investment gains (losses) in 2015, 2014 and 2013, respectively. During 2015, 2014 and 2013, the Company has recorded management fees of $749, $697 and $640, respectively, and performance-based fees of $0, $0 and $18, respectively, to these organizations for management of these limited partnerships.

The Company utilizes the services of an investment firm of which two directors of the Company are employees or partial owners. This investment firm may serve as agent for purchases and sales of securities and manages equity securities and fixed maturity portfolios with an aggregate market value of approximately $62,156 at December 31, 2015. Total commissions and net fees earned by the investment firm and affiliates on these transactions and for advice and consulting were approximately $235, $212 and $239 during 2015, 2014 and 2013, respectively.

The Company's limited partnerships include one significant investment which invests in public and private equity markets in India. This limited partnership investment's value as of December 31, 2015 and 2014 was $28,270 and $29,868, respectively. At December 31, 2015, the Company's estimated ownership interest in this limited partnership investment was approximately 5%. The Company's share of earnings (losses) from this limited partnership investment was ($1,599), $7,176 and ($3,176) in 2015, 2014 and 2013, respectively. The summarized financial information of the significant limited partnership investment as of and for the years ended December 31 is as follows:

	2015			2014		2013
Total assets	$	511,118		$	565,500	$	493,028
Total partners' capital		470,783			542,700		444,337
Net increase (decrease) in partners' capital resulting from operations		(19,603	)		125,700		(64,550	)

The fair value of regulatory deposits with various insurance departments in the United States and Canada totaled $84,198 and $76,406 at December 31, 2015 and 2014, respectively.

Short-term investments at December 31, 2015 include $2,220 in time certificates of deposit issued by a Bermuda bank.

The Company's fixed maturities are over 85% invested in investment grade fixed maturity investments. The Company has a total of $2,969, representing three different investments, of fixed maturity investments which were originally issued with guarantees by three different third party insurance companies, with the largest exposure to a single investment being $1,997. The average S&P credit rating of such investments, with consideration of the guarantee, is AA. The average S&P underlying credit rating of such investments, without consideration of the guarantee, would remain AA. The Company does not have any direct exposure to any guarantor.

Approximately $61,271 of fixed maturity investments (8.4% of total invested assets) consists of bonds rated as less than investment grade at year end. These investments include a diversified portfolio of over 40 investments and have a $3,185 aggregate net unrealized loss position at December 31, 2015.

As of December 31, 2015, the Company had committed funds totaling $5,000 related to one bridge loan agreement. The Company retains possession of these committed funds which will only be loaned in the unlikely event that long-term financing is unavailable to the counter party in the market.