Note 4. Investments

3 Months Ended

Mar. 31, 2015

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, 2015
				GROSS		GROSS
		AMORTIZED		UNREALIZED		UNREALIZED		FAIR
		COST		GAINS		LOSSES		VALUE
FIXED MATURITIES
AVAILABLE-FOR-SALE:
Corporate securities	$	30,505	$	233	$	(303)	$	30,435
Foreign government		6,581		49		(35)		6,595
Collateralized mortgage obligations (CMO) – residential		256		4		-		260
CMO – commercial		390		16		-		406
States, municipalities and political subdivisions		27,886		297		(172)		28,011
U.S. Government		6,675		136		-		6,811
Government sponsored enterprise (GSE)		1,106		44		(1)		1,149
Agency mortgage backed pass through securities (MBS)		61		3		-		64
Redeemable preferred stocks		274		104		-		378
Total fixed maturities	$	73,734	$	886	$	(511)	$	74,109

EQUITY SECURITIES
AVAILABLE-FOR-SALE:
Nonredeemable preferred stocks		970		50		-		1,020
Total available-for-sale equity securities	$	970	$	50	$	-	$	1,020

		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
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
GSE		1,400		23		(7)		1,416
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

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

The amortized cost and fair value of fixed maturities at March 31, 2015, 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	$	1,174	$	1,190
Due after one year through five years		27,071		27,164
Due after five years through ten years		19,740		19,931
Due after ten years		24,944		24,994
CMOs and MBSs		805		830
	$	73,734	$	74,109

The following tables summarize, for all securities in an unrealized loss position at March 31, 2015 and December 31, 2014, 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, 2015
		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	$	6,781	$	73	$	10,190	$	230	$	16,971	$	303
Foreign securities		1,714		1		1,374		34		3,088		35
States, municipalities and political subdivisions		-		-		7,128		172		7,128		172
GSE		-		-		65		1		65		1
Total temporarily impaired securities	$	8,495	$	74	$	18,757	$	437	$	27,252	$	511
Number of securities in an unrealized loss position		7				18				25

		December 31, 2014
		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	$	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
States, municipalities and political subdivisions		3,691		61		6,448		151		10,139		212
GSE		-		-		351		7		351		7
Total temporarily impaired securities	$	14,342	$	184	$	23,188	$	585	$	37,530	$	769
Number of securities in an unrealized loss position		11				22				33

Substantially all of the unrealized losses on fixed maturities at March 31, 2015 and December 31, 2014 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 March 31, 2015.

The following table summarizes the Company’s net investment income for three months ended March 31, 2015 and 2014 (in thousands):

		Three Months Ended
		March 31,
		2015		2014
Fixed maturities	$	541	$	559
Equity securities		32		30
Other		39		(53)
Net investment income	$	612	$	536

Net realized investment gains for the three months ended March 31, 2015 and 2014 are as follows (in thousands):

		Three Months Ended
		March 31,
		2015		2014
Available-for-sale securities:
Fixed maturities	$	123	$	54
Total available-for-sale securities		123		54
Trading securities		1		(14)
Change in unrealized gain on trading securities		17		8
Net realized investment gains	$	141	$	48

For the three months ended March 31, 2015 and 2014, proceeds from sales of available-for-sale securities were $10,041,000 and $6,768,000, respectively, and the Company realized gross gains of $157,000 and $106,000, respectively, and gross losses of $34,000 and $52,000 respectively, on those sales.

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 (loss).  For the three months ended March 31, 2015 and 2014, 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 (loss) were $288,000 as of March 31, 2015 and December 31, 2014.