The cost (amortized cost with respect to certain fixed maturities), gross unrealized gains, gross unrealized losses and fair value of long-term investment securities are as follows (in thousands):

		JUNE 30, 2012
				GROSS		GROSS
		AMORTIZED		UNREALIZED		UNREALIZED		FAIR
		COST		GAINS		LOSSES		VALUE

*FIXED MATURITIES*
*AVAILABLE-FOR-SALE:*

Corporate securities	$	29,916	$	685	$	(104)	$	30,497
Collateralized mortgage obligations (CMO) – residential		2,899		173		(15)		3,057
CMO – commercial		390		-		(170)		220
States, municipalities and political subdivisions		9,846		520		(4)		10,362
U.S. Government		6,476		249		-		6,725
Government sponsored enterprise (GSE)		6,261		215		-		6,476
Agency mortgage backed pass through securities (MBS)		170		14		-		184
Total fixed maturities	$	55,958	$	1,856	$	(293)	$	57,521

*EQUITY SECURITIES*
*AVAILABLE-FOR-SALE:*

Preferred stock with maturities	$	273	$	63	$	-	$	336
Preferred stock without maturities		2,981		87		(1)		3,067
Total available-for-sale equity securities	$	3,254	$	150	$	(1)	$	3,403

		DECEMBER 31, 2011
				GROSS		GROSS
		AMORTIZED		UNREALIZED		UNREALIZED		FAIR
		COST		GAINS		LOSSES		VALUE

*FIXED MATURITIES*
AVAILABLE-FOR-SALE:

Corporate securities	$	30,031	$	510	$	(66)	$	30,475
CMO - residential		1,760		168		(40)		1,888
CMO – commercial		579		-		(364)		215
States, municipalities and political subdivisions		8,851		528		(12)		9,367
U.S. Government		5,982		309		-		6,291
GSE		8,900		129		(46)		8,983
MBS		196		16		-		212
Total fixed maturities	$	56,299	$	1,660	$	(528)	$	57,431

*EQUITY SECURITIES*
AVAILABLE-FOR-SALE
Common stock	$	831	$	42	$	(22)	$	851
Preferred stock with maturities		273		35		-		308
Preferred stock without maturities		2,981		91		-		3,072
Total available-for-sale equity securities	$	4,085	$	168	$	(22)	$	4,231

Government-sponsored enterprise mortgage-backed securities consist of Federal Home Loan Mortgage Corporation and Federal National Mortgage Association securities.

The unrealized gains (losses) on certain available-for-sale securities (residential CMO’s and certain preferred stocks with maturities) at June 30, 2012 and December 31, 2011 include $269,000 and $140,000, respectively, of the non-credit related component of other-than-temporary impairment losses recognized in accumulated other comprehensive income.

The amortized cost and fair value of fixed maturities at June 30, 2012, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The average life of mortgage-backed securities is affected by prepayments on the underlying loans and, therefore, is materially shorter than the original stated maturity.

						% OF
			AMORTIZED		FAIR	TOTAL FAIR
			COST		VALUE	VALUE
			(In thousands)

Due in one year or less		$	2,818	$	2,840	5%
Due after one year through five years			18,115		18,628	32%
Due after five years through ten years			17,596		18,071	31%
Due after ten years			7,709		8,045	14%
			46,238		47,584	82%

CMO and MBS
	15 years		3,866		3,869	7%
	30 years		5,854		6,068	11%

		$	55,958	$	57,521	100%

The following tables summarize, for all securities in an unrealized loss position at June 30, 2012 and December 31, 2011, the aggregate fair value and gross unrealized loss by length of time, those securities that have continuously been in an unrealized loss position (in thousands):

		June 30, 2012
		Less than 12 Months				12 Months or Longer				Total
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
		Value		Loss		Value		Losses		Value		Losses
FIXED MATURITIES:

Corporate securities	$	7,229	$	93	$	359	$	11	$	7,588	$	104
CMO – residential		1,846		15		-		-		1,846		15
CMO – commercial		-		-		220		170		220		170
States, municipalities and political subdivisions		847		4		-		-		847		4
Total fixed maturities	$	9,922	$	112	$	579	$	181	$	10,501	$	293

EQUITY SECURITIES:

Preferred stock without maturities	$	533	$	1	$	-	$	-	$	533	$	1
Total equity securities	$	533	$	1	$	-	$	-	$	533	$	1

		December 31, 2011
		Less than 12 Months				12 Months or Longer				Total
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
		Value		Loss		Value		Losses		Value		Losses
FIXED MATURITIES:

Corporate securities	$	8,538	$	57	$	1,154	$	9	$	9,692	$	66
CMO – residential		-		-		348		40		348		40
CMO – commercial		-		-		215		364		215		364
States, municipalities and political subdivisions		576		12		-		-		576		12
GSE		2,847		43		410		3		3,257		46
Total fixed maturities	$	11,961	$	112	$	2,127	$	416	$	14,088	$	528

EQUITY SECURITIES:

Common stock	$	446	$	22	$	-	$	-	$	446	$	22
Total equity securities	$	446	$	22	$	-	$	-	$	446	$	22

At June 30, 2012, a total of 10 fixed maturities and one equity security were in a continuous unrealized loss position for less than 12 months. Also, at June 30, 2012, a total of 2 fixed maturities were in a continuous unrealized loss position for 12 months or longer. At December 31, 2011, a total of 9 fixed maturities and 6 equity securities were in a continuous unrealized loss position for less than 12 months. Also, at December 31, 2011, a total of 5 fixed maturities were in a continuous unrealized loss position for 12 months or longer. Except for certain fixed maturities which are determined to be other-than-temporarily impaired, there are no securities past due or securities for which the Company currently believes it is not probable that it will collect the current amortized cost basis of the security.

Substantially all of the unrealized losses on fixed maturities at June 30, 2012 and December 31, 2011 were attributable to changes in market interest rates and general disruptions in the credit market subsequent to purchase. Because the Company does not intend to sell, nor is it more likely than not that the Company will have to sell, such investments before recovery of their amortized cost bases, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2012.

At June 30, 2012, the Company had $611,000 invested in whole loan CMOs backed by Alt-A mortgages. Of this amount, 63.4% were in CMOs that originated in 2005 or earlier and 36.6% were in CMOs that originated in 2006 or later. The unrealized losses on all other CMO’s relate to prime rate CMO’s and are primarily attributable to general disruptions in the credit market subsequent to purchase.

The Company reviews its investment securities regularly and determines whether other-than-temporary impairments have occurred. The factors considered by management in its regular review include, but are not limited to: the length of time and extent to which the fair value has been less than cost; the Company's intent to sell, or be required to sell, the debt security before the anticipated recovery of its remaining amortized cost basis; the financial condition and near-term prospects of the issuer; adverse changes in ratings announced by one or more rating agencies; subordinated credit support; whether the issuer of a debt security has remained current on principal and interest payments; current expected cash flows; whether the decline in fair value appears to be issuer specific or, alternatively, a reflection of general market or industry conditions including the effect of changes in market interest rates. If the Company intends to sell a debt security, or it is more likely than not that it would be required to sell a debt security before the recovery of its amortized cost basis, the entire difference between the security's amortized cost basis and its fair value at the balance sheet date would be recognized by a charge to total other-than-temporary impairment losses in the Condensed Consolidated Statement of Operations. If a decline in fair value of a debt security is judged by management to be other-than-temporary and; (i) the Company does not intend to sell the security; and (ii) it is not more likely than not that it will be required to sell the security prior to recovery of the security’s amortized cost, the Company assesses whether the present value of the cash flows to be collected from the security is less than its amortized cost basis. To the extent that the present value of the cash flows generated by a debt security is less than the amortized cost basis, a credit loss exists. For any such security, the impairment is bifurcated into (a) the amount of the total impairment related to the credit loss, and (b) the amount of the total impairment related to all other factors. The amount of the other-than-temporary impairment related to the credit loss is recognized by a charge to total other-than-temporary impairment losses in the Condensed Consolidated Statements of Operations, establishing a new cost basis for the security. The amount of the other-than-temporary impairment related to all other factors is recognized in other comprehensive income in the Condensed Consolidated Balance Sheets. It is reasonably possible that further declines in estimated fair values of such investments, or changes in assumptions or estimates of anticipated recoveries and/or cash flows, may cause further other-than-temporary impairments in the near term, which could be significant.

In assessing corporate debt securities for other-than-temporary impairment, the Company evaluates the ability of the issuer to meet its debt obligations and the value of the company or specific collateral securing the debt position. For mortgage-backed securities where loan level data is not available, the Company uses a cash flow model based on the collateral characteristics. Assumptions about loss severity and defaults used in the model are primarily based on actual losses experienced and defaults in the collateral pool. Prepayment speeds, both actual and estimated, are also considered. The cash flows generated by the collateral securing these securities are then determined with these default, loss severity and prepayment assumptions. These collateral cash flows are then utilized, along with consideration for the issue’s position in the overall structure, to determine the cash flows associated with the mortgage-backed security held by the Company. In addition, the Company evaluates other asset-backed securities for other-than-temporary impairment by examining similar characteristics referenced above for mortgage-backed securities. The Company evaluates U.S. Treasury securities and obligations of U.S. Government corporations, U.S. Government agencies, and obligations of states and political subdivisions for other-than-temporary impairment by examining the terms and collateral of the security.

Equity securities may experience other-than-temporary impairment in the future based on the prospects for full recovery in value in a reasonable period of time and the Company’s ability and intent to hold the security to recovery. If a decline in fair value is judged by management to be other-than-temporary or management does not have the intent or ability to hold a security, a loss is recognized by a charge to total other-than-temporary impairment losses in the Condensed Consolidated Statements of Operations for the difference between the carrying value and the fair value of the securities. For the purpose of other-than-temporary impairment evaluations, preferred stocks with maturities are treated in a manner similar to debt securities. Declines in the creditworthiness of the issuer of debt securities with both debt and equity-like features requires the use of the equity model in analyzing the security for other-than-temporary impairment.

Subsequent increases and decreases, if not an other-than-temporary impairment, in the fair value of available-for-sale securities that were previously impaired, are included in other comprehensive income in the Condensed Consolidated Balance Sheet.

Cumulative credit losses for other-than-temporary impairments recorded on securities for which a portion of an other-than-temporary impairment was recognized in other comprehensive income were as follows (in thousands):

Further deterioration in credit quality of the companies backing the securities, further deterioration in the condition of the financial services industry, a continuation of the current imbalance in liquidity that exist in the marketplace, a continuation or worsening of the current economic recession, or additional declines in real estate values may further affect the fair value of these securities and increase the potential that certain unrealized losses be designated as other-than-temporary in future periods and the Company may incur additional write-downs.