Note 4. Investments

12 Months Ended

Dec. 31, 2014

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):

		DECEMBER 31, 2014
				GROSS		GROSS
		AMORTIZED		UNREALIZED		UNREALIZED		FAIR
		COST		GAINS		LOSSES		VALUE
FIXED MATURITIES
AVAILABLE-FOR-SALE:
Corporate securities	$	29,905	$	90	$	(438)	$	29,557
Foreign government		6,616		34		(101)		6,549
Collateralized mortgage obligations (CMO) – residential		851		4		(2)		853
CMO – commercial		390		-		(9)		381
States, municipalities and political subdivisions		27,631		260		(212)		27,679
U.S. government		6,674		49		-		6,723
Government sponsored enterprise (GSE)		1,400		23		(7)		1,416
Agency mortgage backed pass through securities (MBS)		65		4		-		69
Redeemable preferred stocks		273		108		-		381
Total fixed maturities	$	73,805	$	572	$	(769)	$	73,608

EQUITY SECURITIES
AVAILABLE-FOR-SALE:
Nonredeemable preferred stocks		970		43		-		1,013
Total available-for-sale equity securities	$	970	$	43	$	-	$	1,013

		DECEMBER 31, 2013
				GROSS		GROSS
		AMORTIZED		UNREALIZED		UNREALIZED		FAIR
		COST		GAINS		LOSSES		VALUE
FIXED MATURITIES
AVAILABLE-FOR-SALE:
Corporate securities	$	35,788	$	140	$	(1,361)	$	34,567
Foreign government		2,665		20		(166)		2,519
CMO - residential		1,147		8		(3)		1,152
CMO – commercial		390		-		(153)		237
States, municipalities and political subdivisions		22,921		163		(1,001)		22,083
U.S. government		6,698		118		(5)		6,811
GSE		430		4		(12)		422
MBS		79		4		-		83
Redeemable preferred stocks		273		74		-		348
Total fixed maturities	$	70,392	$	531	$	(2,701)	$	68,222

EQUITY SECURITIES
AVAILABLE-FOR-SALE
Nonredeemable preferred stocks		970		24		(6)		988
Total available-for-sale equity securities	$	970	$	24	$	(6)	$	988

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

The amortized cost and fair value of fixed maturities at December 31, 2014, 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	$	-	$	-
Due after one year through five years		23,829		23,747
Due after five years through ten years		24,776		24,694
Due after ten years		23,500		23,476
CMOs and MBSs		1,700		1,691
	$	73,805	$	73,608

The following tables summarize, for all securities in an unrealized loss position at December 31, 2014 and December 31, 2013, 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):

		December 31, 2014
		Less than 12 Months				12 Months or Longer				Total
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
		Value		Loss		Value		Losses		Value		Losses
Corporate securities	$	6,101	$	83	$	14,087	$	355	$	20,188	$	438
Foreign government		4,550		40		1,355		61		5,905		101
CMO – residential		-		-		566		2		566		2
CMO – commercial		-		-		381		9		381		9
GSE		-		-		351		7		351		7
States, municipalities and political subdivisions		3,691		61		6,448		151		10,139		212
Total temporarily impaired securities	$	14,342	$	184	$	23,188	$	585	$	37,530	$	769
Number of securities in an unrealized loss position		11				22				33

		December 31, 2013
		Less than 12 Months				12 Months or Longer				Total
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
		Value		Loss		Value		Losses		Value		Losses
Corporate securities	$	22,800	$	879	$	5,562	$	482	$	28,362	$	1,361
Foreign government		-		-		1,279		166		1,279		166
CMO – residential		742		3		-		-		742		3
CMO – commercial		-		-		237		153		237		153
U.S. Government		493		5		-		-		493		5
GSE		366		12		-		-		366		12
States, municipalities and political subdivisions		14,962		895		2,265		106		17,227		1,001
Nonredeemable preferred stocks		393		6		-		-		393		6
Total temporarily impaired securities	$	39,756	$	1,800	$	9,343	$	907	$	49,099	$	2,707
Number of securities in an unrealized loss position		31				9				40

Substantially all of the unrealized losses on fixed maturities at December 31, 2014 and December 31, 2013 were attributable to changes in market interest rates.  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 December 31, 2014.

The following table summarizes the Company’s net investment income for the years indicated (in thousands):

		Successor				Predecessor
		Year Ended				Year Ended
		December 31,				December 31,
		2014		2013		2012
Fixed maturities	$	2,153	$	2,017	$	1,848
Equity securities		110		120		256
Short-term investments		3		4		6
Other		(64)		(37)		16
Net investment income	$	2,202	$	2,104	$	2,126

The following table summarizes the Company’s net realized investment gains (losses) for the years indicated (in thousands):

		Successor				Predecessor
		Year Ended				Year Ended
		December 31,				December 31,
		2014		2013		2012
Available-for-sale securities:
Fixed maturities	$	874	$	834	$	579
Preferred stock		-		23		(4)
Total available-for-sale securities		874		857		575
Trading securities		76		214		9
Unrealized gain (loss) on trading securities:
Available-for-sale securities transferred
to trading category		-		-		20
Change in unrealized gain on trading securities		17		11		(1)
Total unrealized gain on trading securities		17		11		19
Net realized investment gains	$	967	$	1,082	$	603

For the years ended December 31, 2014, 2013 and 2012, proceeds from sales of available-for-sale securities were $43,800,000, $38,691,000 and $29,833,000, respectively, and the Company realized gross gains of $1,245,000, $1,377,000 and $937,000, respectively, and gross losses of $295,000, $306,000 and $353,000, respectively, on those sales.

In January 2012, the Company transferred equity securities previously classified as available-for-sale into the trading category and, as a result, recognized $42,000 of gross gains and $22,000 of gross losses in net realized investment gains on the accompanying Consolidated Statements of Income.  These gains and losses were previously included in accumulated other comprehensive income.

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 years ended December 31, 2014, 2013 and 2012, other-than-temporary impairments recognized in earnings of $0, $0 and $189,000, respectively, represent credit losses on fixed maturities as a result of the expected cash flows of certain securities being less than the securities’ amortized cost.

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):

		Successor				Predecessor
		Year Ended				Year Ended
		December 31,				December 31,
		2014		2013		2012
Balance at beginning of period	$	288	$	288	$	145
Securities sold		-		-		(46)
Credit portion of other-than-temporary
impairment losses recognized during period		-		-		189
Balance at end of period	$	288	$	288	$	288