SUMMARY OF INVESTMENTS

Fair Value of Investments

The table that follows is a reconciliation of the amortized cost (cost for equity securities) to fair value of investments in held-to-maturity and available-for-sale fixed maturity and equity securities as of December 31, 2014 and 2013.



December 31, 2014
Type of Investment	Cost or Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Fair Value
HELD-TO-MATURITY
Fixed maturities
Bonds
States, municipalities and political subdivisions	$	55	$	—	$	—	$	55
Corporate bonds - financial services	200		—		—		200
Mortgage-backed securities	142		7		—		149
Total Held-to-Maturity Fixed Maturities	$	397	$	7	$	—	$	404
AVAILABLE-FOR-SALE
Fixed maturities
Bonds
U.S. Treasury	$	25,856	$	168	$	52	$	25,972
U.S. government agency	349,747		4,347		2,422		351,672
States, municipalities and political subdivisions	748,632		30,395		742		778,285
Foreign bonds	136,487		4,132		446		140,173
Public utilities	206,366		6,479		488		212,357
Corporate bonds
Energy	135,068		2,858		793		137,133
Industrials	211,256		6,373		2,154		215,475
Consumer goods and services	172,623		4,702		324		177,001
Health care	86,017		3,228		210		89,035
Technology, media and telecommunications	131,465		3,863		799		134,529
Financial services	215,095		8,574		87		223,582
Mortgage-backed securities	17,121		483		46		17,558
Collateralized mortgage obligations	335,092		7,003		4,806		337,289
Asset-backed securities	2,741		277		—		3,018
Total Available-For-Sale Fixed Maturities	$	2,773,566	$	82,882	$	13,369	$	2,843,079
Equity securities
Common stocks
Public utilities	$	7,231	$	13,103	$	44	$	20,290
Energy	5,094		8,623		—		13,717
Industrials	13,284		32,299		124		45,459
Consumer goods and services	10,294		13,295		275		23,314
Health care	7,920		22,436		—		30,356
Technology, media and telecommunications	6,207		7,846		58		13,995
Financial services	16,637		77,077		51		93,663
Nonredeemable preferred stocks	4,984		72		7		5,049
Total Available-for-Sale Equity Securities	$	71,651	$	174,751	$	559	$	245,843
Total Available-for-Sale Securities	$	2,845,217	$	257,633	$	13,928	$	3,088,922



December 31, 2013
Type of Investment	Cost or Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Fair Value
HELD-TO-MATURITY
Fixed maturities
Bonds
States, municipalities and political subdivisions	$	250	$	4	$	—	$	254
Corporate bonds - financial services	200		—		—		200
Mortgage-backed securities	206		9		—		215
Total Held-to-Maturity Fixed Maturities	$	656	$	13	$	—	$	669
AVAILABLE-FOR-SALE
Fixed maturities
Bonds
U.S. Treasury	$	33,612	$	423	$	140	$	33,895
U.S. government agency	287,988		258		18,663		269,583
States, municipalities and political subdivisions	690,461		34,151		10,705		713,907
Foreign bonds	167,390		5,863		397		172,856
Public utilities	213,479		6,873		1,776		218,576
Corporate bonds
Energy	157,620		4,398		1,008		161,010
Industrials	234,221		5,626		2,819		237,028
Consumer goods and services	165,565		3,770		1,421		167,914
Health care	91,008		3,138		1,200		92,946
Technology, media and telecommunications	121,746		2,541		3,321		120,966
Financial services	234,739		7,735		723		241,751
Mortgage-backed securities	22,034		323		291		22,066
Collateralized mortgage obligations	309,975		1,707		16,919		294,763
Asset-backed securities	3,719		276		—		3,995
Total Available-For-Sale Fixed Maturities	$	2,733,557	$	77,082	$	59,383	$	2,751,256
Equity securities
Common stocks
Public utilities	$	7,231	$	9,068	$	27	$	16,272
Energy	5,094		9,269		—		14,363
Industrials	13,308		32,823		32		46,099
Consumer goods and services	10,363		10,895		—		21,258
Health care	7,920		17,078		—		24,998
Technology, media and telecommunications	6,204		7,183		83		13,304
Financial services	15,853		72,537		128		88,262
Nonredeemable preferred stocks	4,984		5		177		4,812
Total Available-for-Sale Equity Securities	$	70,957	$	158,858	$	447	$	229,368
Total Available-for-Sale Securities	$	2,804,514	$	235,940	$	59,830	$	2,980,624

Maturities

The amortized cost and fair value of held-to-maturity, available-for-sale and trading fixed maturity securities at December 31, 2014, by contractual maturity, are shown in the following table. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Asset-backed securities, mortgage-backed securities and collateralized mortgage obligations may be subject to prepayment risk and are therefore not categorized by contractual maturity.



	Held-To-Maturity				Available-For-Sale				Trading
December 31, 2014	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	55	$	55	$	271,298	$	274,748	$	2,783	$	3,437
Due after one year through five years	200		200		838,504		875,291		6,157		6,685
Due after five years through 10 years	—		—		813,205		831,253		1,894		2,322
Due after 10 years	—		—		495,605		503,922		3,529		4,418
Asset-backed securities	—		—		2,741		3,018		—		—
Mortgage-backed securities	142		149		17,121		17,558		—		—
Collateralized mortgage obligations	—		—		335,092		337,289		—		—
	$	397	$	404	$	2,773,566	$	2,843,079	$	14,363	$	16,862

Net Realized Investment Gains and Losses

Net realized gains (losses) on disposition of investments are computed using the specific identification method and are included in the computation of net income. A summary of net realized investment gains (losses) for 2014, 2013 and 2012, is as follows:



	2014			2013			2012
Net realized investment gains (losses)
Fixed maturities:
Held-to-maturity	$	—		$	1		$	12
Available-for-sale	3,353			3,211			3,408
Trading securities
Change in fair value	609			1,183			683
Sales	1,339			788			406
Equity securities:
Available-for-sale	1,732			3,739			698
Trading securities
Change in fair value	238			(126		)	250
Sales	(1		)	38			—
Other-than-temporary-impairment charges:
Fixed maturities	—			(139		)	—
Equity securities	—			—			(4		)
Total net realized investment gains	$	7,270		$	8,695		$	5,453

The proceeds and gross realized gains (losses) on the sale of available-for-sale securities for 2014, 2013 and 2012, were as follows:



	2014			2013		2012
Proceeds from sales	$	3,091		$	23,007	$	20,324
Gross realized gains	900			451		513
Gross realized losses	(56		)	—		(37		)

There were no sales of held-to-maturity securities in 2014, 2013 and 2012.

Our investment portfolio includes trading securities with embedded derivatives. These securities are primarily convertible securities which are recorded at fair value. Income or loss, including the change in the fair value of these trading securities, is recognized currently in earnings as a component of net realized investment gains and losses. Our portfolio of trading securities had a fair value of $20,928 and $12,427 at December 31, 2014 and 2013, respectively.

Net Investment Income

Net investment income for the years ended December 31, 2014, 2013 and 2012, is comprised of the following:



Years Ended December 31,	2014		2013		2012
Investment income
Interest on fixed maturities	$	97,969	$	101,950	$	108,517
Dividends on equity securities	6,602		5,806		5,354
Income on other long-term investments
Investment income	1,927		1,194		232
Change in value ⁽¹⁾	1,917		7,030		2,562
Interest on mortgage loans	252		266		279
Interest on short-term investments	5		6		10
Interest on cash and cash equivalents	255		239		290
Other	1,998		1,632		825
Total investment income	$	110,925	$	118,123	$	118,069
Less investment expenses	6,316		5,324		6,164
Net investment income	$	104,609	$	112,799	$	111,905


(1)	Represents the change in value of our interests in limited liability partnerships that are recorded on the equity method of accounting.

Funding Commitment

Pursuant to an agreement with one of our limited liability partnership investments, we are contractually committed through December 31, 2023 to make capital contributions upon request of the partnership. Our remaining potential contractual obligation was $11,830 at December 31, 2014.

Unrealized Appreciation and Depreciation

A summary of changes in net unrealized investment appreciation for 2014, 2013 and 2012, is as follows:



	2014			2013			2012
Change in net unrealized investment appreciation
Available-for-sale fixed maturities	$	51,814		$	(132,579	)	$	15,816
Equity securities	15,781			48,176			19,339
Deferred policy acquisition costs	(16,789		)	42,102			(4,821		)
Income tax effect	(17,784		)	14,806			(10,614		)
Total change in net unrealized investment appreciation, net of tax	$	33,022		$	(27,495	)	$	19,720

We continually monitor the difference between our cost basis and the estimated fair value of our investments. Our accounting policy for impairment recognition requires OTTI charges to be recorded when we determine that it is more likely than not that we will be unable to collect all amounts due according to the contractual terms of the fixed maturity security or that the anticipated recovery in fair value of the equity security will not occur in a reasonable amount of time. Any shortfalls in these expected future cash flows are considered a credit loss impairment and are charged to earnings as a component of realized losses, while non-cash flow related factors are considered a non-credit loss impairment and are recorded to accumulated other comprehensive income as a component of unrealized losses.

Impairment charges on investments are recorded based on the fair value of the investments at the measurement date. Factors considered in evaluating whether a decline in value is other-than-temporary include: the length of time and the extent to which fair value has been less than cost; the financial condition and near-term prospects of the issuer; our intention to hold the investment; and the likelihood that we will be required to sell the investment.

The tables on the following pages summarize our fixed maturity and equity securities that were in an unrealized loss position at December 31, 2014 and 2013. The securities are presented by the length of time they have been continuously in an unrealized loss position. It is possible that we could recognize OTTI charges in future periods on securities held at December 31, 2014 if future events or information cause us to determine that a decline in fair value is other-than-temporary.

We have evaluated the near-term prospects of the issuers of our fixed maturity securities in relation to the severity and duration of the unrealized loss which resulted in the recognition of a $139 credit loss OTTI in our Consolidated Statements of Income and Comprehensive Income for the year ended December 31, 2013. There were no OTTI losses on fixed maturity securities recognized in 2014 or 2012. We believe the unrealized depreciation in value of other securities in our fixed maturity portfolio is primarily attributable to changes in market interest rates and not the credit quality of the issuer. We have no intention to sell and it is more likely than not that we will not be required to sell these securities until the fair value recovers to at least equal our cost basis or the securities mature.

We have evaluated the near-term prospects of the issuers of our equity securities in relation to the severity and duration of the unrealized loss which resulted in the recognition of a $4 OTTI loss in our Consolidated Statements of Income and Comprehensive Income for the year ended December 31, 2012. There were no OTTI losses on equity securities recognized in 2014 or 2013. Our largest unrealized loss greater than 12 months on an individual equity security at December 31, 2014 was $54. We have no intention to sell any of these securities prior to a recovery in value, but will continue to monitor the fair value reported for these securities as part of our overall process to evaluate investments for OTTI recognition.




December 31, 2014	Less than 12 months					12 months or longer					Total
Type of Investment	Number of Issues	Fair Value		Gross Unrealized Depreciation		Number of Issues	Fair Value		Gross Unrealized Depreciation		Fair Value		Gross Unrealized Depreciation
AVAILABLE-FOR-SALE
Fixed maturities
Bonds
U.S. Treasury	4	$	2,343	$	6	4	$	5,069	$	46	$	7,412	$	52
U.S. government agency	11	41,064		70		35	95,198		2,352		136,262		2,422
States, municipalities and political subdivisions	18	30,859		185		62	50,847		557		81,706		742
Foreign bonds	6	17,158		446		—	—		—		17,158		446
Public utilities	10	21,839		194		4	3,611		294		25,450		488
Corporate bonds
Energy	8	17,416		420		3	7,061		373		24,477		793
Industrials	8	17,103		362		3	9,592		1,792		26,695		2,154
Consumer goods and services	11	28,344		258		7	10,064		66		38,408		324
Health care	3	8,244		36		3	7,104		174		15,348		210
Technology, media and telecommunications	4	8,860		68		4	15,742		731		24,602		799
Financial services	3	5,908		31		2	6,131		56		12,039		87
Mortgage-backed securities	9	425		21		2	1,991		25		2,416		46
Collateralized mortgage obligations	10	20,746		112		56	122,550		4,694		143,296		4,806
Total Available-for-Sale Fixed Maturities	105	$	220,309	$	2,209	185	$	334,960	$	11,160	$	555,269	$	13,369
Equity securities
Common stocks
Public utilities	3	$	263	$	44	—	$	—	$	—	$	263	$	44
Industrials	3	280		70		2	58		54		338		124
Consumer goods and services	1	129		272		2	15		3		144		275
Technology, media and telecommunications	4	503		14		5	218		44		721		58
Financial services	1	186		51		—	—		—		186		51
Nonredeemable preferred stocks	—	—		—		1	700		7		700		7
Total Available-for-Sale Equity Securities	12	$	1,361	$	451	10	$	991	$	108	$	2,352	$	559
Total Available-for-Sale Securities	117	$	221,670	$	2,660	195	$	335,951	$	11,268	$	557,621	$	13,928




December 31, 2013	Less than 12 months					12 months or longer					Total
Type of Investment	Number of Issues	Fair Value		Gross Unrealized Depreciation		Number of Issues	Fair Value		Gross Unrealized Depreciation		Fair Value		Gross Unrealized Depreciation
AVAILABLE-FOR-SALE
Fixed maturities
Bonds
U.S. Treasury	10	$	9,196	$	140	—	$	—	$	—	$	9,196	$	140
U.S. government agency	101	256,203		18,019		2	4,356		644		260,559		18,663
States, municipalities and political subdivisions	136	97,950		7,423		29	29,670		3,282		127,620		10,705
Foreign bonds	10	20,832		397		—	—		—		20,832		397
Public utilities	31	61,582		1,776		—	—		—		61,582		1,776
Corporate bonds
Energy	9	23,735		1,008		—	—		—		23,735		1,008
Industrials	34	77,788		2,819		—	—		—		77,788		2,819
Consumer goods and services	31	58,833		1,276		6	3,218		145		62,051		1,421
Health care	10	25,888		942		2	4,427		258		30,315		1,200
Technology, media and telecommunications	18	58,105		2,147		2	7,468		1,174		65,573		3,321
Financial services	7	15,191		720		1	1,525		3		16,716		723
Mortgage-backed securities	16	4,476		177		6	3,113		114		7,589		291
Collateralized mortgage obligations	111	208,855		11,062		23	55,184		5,857		264,039		16,919
Total Available-for-Sale Fixed Maturities	524	$	918,634	$	47,906	71	$	108,961	$	11,477	$	1,027,595	$	59,383
Equity securities
Common stocks
Public utilities	—	$	—	$	—	3	$	281	$	27	$	281	$	27
Industrials	1	1		1		2	81		31		82		32
Technology, media and telecommunications	—	—		—		6	206		83		206		83
Financial services	—	—		—		4	215		128		215		128
Nonredeemable preferred stocks	3	3,493		116		2	1,170		61		4,663		177
Total Available-for-Sale Equity Securities	4	$	3,494	$	117	17	$	1,953	$	330	$	5,447	$	447
Total Available-for-Sale Securities	528	$	922,128	$	48,023	88	$	110,914	$	11,807	$	1,033,042	$	59,830