Note 4. Investments

3 Months Ended

Mar. 31, 2013

Notes

Note 4. Investments

4.             Investments

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):

		MARCH 31, 2013
				GROSS		GROSS
		AMORTIZED		UNREALIZED		UNREALIZED		FAIR
		COST		GAINS		LOSSES		VALUE
FIXED MATURITIES
AVAILABLE-FOR-SALE:
Corporate securities	$	34,820	$	806	$	(127)	$	35,499
Foreign securities		3,320		41		(43)		3,318
Collateralized mortgage obligations (CMO) – residential		568		11		-		579
CMO – commercial		390		-		(160)		230
States, municipalities and political subdivisions		12,937		476		(20)		13,393
U.S. Government		6,712		196		-		6,908
Government sponsored enterprise (GSE)		617		8		-		625
Agency mortgage backed pass through securities (MBS)		129		9		-		138
Redeemable preferred stocks		274		91		-		365
Total fixed maturities	$	59,767	$	1,638	$	(350)	$	61,055

EQUITY SECURITIES
AVAILABLE-FOR-SALE:
Nonredeemable preferred stocks		970		72		-		1,042
Total available-for-sale equity securities	$	970	$	72	$	-	$	1,042

		DECEMBER 31, 2012
				GROSS		GROSS
		AMORTIZED		UNREALIZED		UNREALIZED		FAIR
		COST		GAINS		LOSSES		VALUE
FIXED MATURITIES
AVAILABLE-FOR-SALE:
Corporate securities	$	33,015	$	883	$	(112)	$	33,786
CMO - residential		842		222		-		1,064
CMO – commercial		390		-		(162)		228
States, municipalities and political subdivisions		9,630		398		(21)		10,007
U.S. Government		6,217		216		-		6,433
GSE		6,042		250		-		6,292
MBS		151		12		-		163
Redeemable preferred stocks		273		83		-		356
Total fixed maturities	$	56,560	$	2,064	$	(295)	$	58,329

EQUITY SECURITIES
AVAILABLE-FOR-SALE
Nonredeemable preferred stocks		2,447		60		-		2,507
Total available-for-sale equity securities	$	2,447	$	60	$	-	$	2,507

Government-sponsored enterprises (“GSEs”) are private enterprises established and chartered by the Federal Government, or its various insurance and lease programs which carry the full faith and credit obligation of the US Government.

The amortized cost and fair value of fixed maturities at March 31, 2013, 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.  CMOs and MBSs are shown separately, as they are not due at a single maturity.

		AMORTIZED		FAIR
		COST		VALUE
		(In thousands)
Due in one year or less	$	302	$	307
Due after one year through five years		18,504		19,038
Due after five years through ten years		26,034		26,526
Due after ten years		13,223		13,612
CMOs and MBSs		1,704		1,572
	$	59,767	$	61,055

The following tables summarize, for all securities in an unrealized loss position at March 31, 2013 and December 31, 2012, 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):

		March 31, 2013
		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	$	10,737	$	127	$	-	$	-	$	10,737	$	127
Foreign securities		1,423		43		-		-		1,423		43
CMO – commercial		-		-		230		160		230		160
States, municipalities and political subdivisions		3,702		20		-		-		3,702		20
Total fixed maturities	$	15,862	$	190	$	230	$	160	$	16,092	$	350
Number of securities in an unrealized loss position		15				1				16

		December 31, 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	$	12,378	$	112	$	-	$	-	$	12,378	$	112
CMO – commercial		-		-		228		162		228		162
States, municipalities and political subdivisions		3,760		21		-		-		3,760		21
Total fixed maturities	$	16,138	$	133	$	228	$	162	$	16,366	$	295
Number of securities in an unrealized loss position		14				1				15

Substantially all of the unrealized losses on fixed maturities at March 31, 2013 and December 31, 2012 were attributable to changes in market interest rates 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 March 31, 2013.

Other-Than-Temporary Impairment Evaluations

For other-than-temporary impairment losses, we recognize an other-than-temporary impairment loss in earnings in the period that we determine: 1) we intend to sell the security; 2) it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis; or 3) the security has a credit loss. Any non-credit portion of the other-than-temporary impairment loss is recognized in other comprehensive income.  For the three months ended March 31, 2013 and 2012, there were no other-than-temporary impairments recognized in earnings.

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 $288,000 as of March, 31, 2013 and December 31, 2012.