3. Investments

Investments, Available-for-Sale

The following tables summarize the Company’s investment securities (in thousands).

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
March 31, 2015	Cost		Gains		Losses			Value
U.S. government and agencies	$	13,038	$	353	$	—		$	13,391
State		698		21		—			719
Political subdivisions		500		4		—			504
Revenue and assessment		14,573		1,543		—			16,116
Corporate bonds		71,907		3,156		(276	)		74,787
Collateralized mortgage obligations:
Agency backed		4,613		148		—			4,761
Non-agency backed – residential		3,380		684		(1	)		4,063
Non-agency backed – commercial		2,134		650		—			2,784
Total fixed maturities, available-for-sale		110,843		6,559		(277	)		117,125
Preferred stock, available-for-sale		1,500		283		—			1,783
Mutual funds, available-for-sale		9,901		425		—			10,326
	$	122,244	$	7,267	$	(277	)	$	129,234

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2014	Cost		Gains		Losses			Value
U.S. government and agencies	$	8,039	$	277	$	(26	)	$	8,290
State		698		27		—			725
Political subdivisions		500		6		—			506
Revenue and assessment		14,856		1,522		(18	)		16,360
Corporate bonds		73,051		2,698		(630	)		75,119
Collateralized mortgage obligations:
Agency backed		4,647		160		—			4,807
Non-agency backed – residential		3,513		624		—			4,137
Non-agency backed – commercial		2,414		664		—			3,078
Total fixed maturities, available-for-sale		107,718		5,978		(674	)		113,022
Preferred stock, available-for-sale		1,500		267		—			1,767
Mutual funds, available-for-sale		9,901		403		(8	)		10,296
	$	119,119	$	6,648	$	(682	)	$	125,085

The following tables set forth the scheduled maturities of the Company’s fixed maturity securities based on their fair values (in thousands). Actual maturities may differ from contractual maturities because certain securities may be called or prepaid by the issuers.

					Securities
	Securities		Securities		with No		All
	with		with		Unrealized		Fixed
	Unrealized		Unrealized		Gains or		Maturity
March 31, 2015	Gains		Losses		Losses		Securities
One year or less	$	9,422	$	—	$	—	$	9,422
After one through five years		30,047		5,801		—		35,848
After five through ten years		33,756		15,594		—		49,350
After ten years		10,898		-		—		10,898
No single maturity date		11,303		304		—		11,607
	$	95,426	$	21,699	$	—	$	117,125

					Securities
	Securities		Securities		with No		All
	with		with		Unrealized		Fixed
	Unrealized		Unrealized		Gains or		Maturity
December 31, 2014	Gains		Losses		Losses		Securities
One year or less	$	8,791	$	—	$	—	$	8,791
After one through five years		22,140		12,888		—		35,028
After five through ten years		24,980		21,450		—		46,430
After ten years		9,009		1,742		—		10,751
No single maturity date		12,022		—		—		12,022
	$	76,942	$	36,080	$	—	$	113,022

The following table reflects the number of fixed maturity securities with gross unrealized gains and losses. Gross unrealized losses are further segregated by the length of time that individual securities have been in a continuous unrealized loss position.

Gross Unrealized Losses

Less than

Greater

Gross

or equal to

than 12

Unrealized

At:

12 months

months

Gains

March 31, 2015

December 31, 2014

The following tables reflect the fair value and gross unrealized losses of those fixed maturity securities in a continuous unrealized loss position for greater than 12 months. Gross unrealized losses are further segregated by the percentage of amortized cost (in thousands, except number of securities).

	Number				Gross
Gross Unrealized Losses	of		Fair		Unrealized
at March 31, 2015:	Securities		Value		Losses
Less than or equal to 10%		5		9,819		(167	)
Greater than 10%		—		—		—
		5	$	9,819	$	(167	)

	Number				Gross
Gross Unrealized Losses	of		Fair		Unrealized
at December 31, 2014:	Securities		Value		Losses
Less than or equal to 10%		9	$	20,567	$	(592	)
Greater than 10%		—		—		—
		9	$	20,567	$	(592	)

The following tables set forth the amount of gross unrealized losses by current severity (as compared to amortized cost) and length of time that individual securities have been in a continuous unrealized loss position (in thousands).

	Fair Value of
	Securities with
Length of	Gross		Gross			Severity of Gross Unrealized Losses
Gross Unrealized Losses	Unrealized		Unrealized			Less			5% to		Greater
at March 31, 2015:	Losses		Losses			than 5%				10%	than 10%
Less than or equal to:
Three months	$	11,880	$	(110	)	$	(109	)	$	—	$	(1	)
Six months		—		—			—			—		—
Nine months		—		—			—			—		—
Twelve months		—		—			—			—		—
Greater than twelve months		9,819		(167	)		(167	)		—		—
Total	$	21,699	$	(277	)	$	(276	)	$	—	$	(1	)

	Fair Value of
	Securities with
Length of	Gross		Gross			Severity of Gross Unrealized Losses
Gross Unrealized Losses	Unrealized		Unrealized			Less			5% to		Greater
at December 31, 2014:	Losses		Losses			than 5%				10%	than 10%
Less than or equal to:
Three months	$	17,505	$	(90	)	$	(90	)	$	—	$	—
Six months		—		—			—			—		—
Nine months		—		—			—			—		—
Twelve months		—		—			—			—		—
Greater than twelve months		20,567		(592	)		(592	)		—		—
Total	$	38,072	$	(682	)	$	(682	)	$	—	$	—

Other Investments

Other investments consist of the common stock of a real estate investment trust and limited partnership interests in three funds that invest in (i) commercial real estate and secured commercial real estate loans acquired from financial intuitions, (ii) small balance distressed secured loans and debt securities and (iii) undervalued international publicly-traded equities. These investments have redemption and transfer restrictions; however, the Company does not intend to sell these investments, and it is more likely than not that the Company will not be required to sell them before the expiration of such restrictions. At March 31, 2015, the Company had unfunded commitments of $1.9 million with two of these investments.

Restrictions

At March 31, 2015, fixed maturities and cash equivalents with a fair value and amortized cost of $6.4 million were on deposit with various insurance departments as a requirement of doing business in those states. Cash equivalents with a fair value and amortized cost of $9.4 million were on deposit with another insurance company as collateral for an assumed reinsurance contract.

Investment Income and Net Realized Gains and Losses

The major categories of investment income follow (in thousands).

	Three Months Ended
	March 31,
	2015			2014
Fixed maturities, available-for-sale	$	1,043		$	1,239
Mutual funds, available-for-sale		147			160
Other investments		46			239
Other		31			26
Investment expenses		(122	)		(127	)
	$	1,145		$	1,537

The components of net realized gains (losses) on investments, available-for-sale at fair value follow (in thousands).

	Three Months Ended
	March 31,
	2015			2014
Gains	$	—		$	85
Losses		(3	)		(3	)
	$	(3	)	$	82

Realized gains and losses on sales and redemptions are computed based on specific identification. The non-credit related portion of other-than-temporary impairment (“OTTI”) is included in other comprehensive income. The amounts of non-credit OTTI for securities still owned was $0.9 million for non-agency backed residential collateralized mortgage obligations (“CMOs”) and $0.2 million related to non-agency backed commercial CMOs at both March 31, 2015 and 2014.

Other-Than-Temporary Impairment

The Company separates OTTI into the following two components: (i) the amount related to credit losses, which is recognized in the consolidated statement of comprehensive income and (ii) the amount related to all other factors, which is recorded in comprehensive income. The credit-related portion of an OTTI is measured by comparing a security’s amortized cost to the present value of its current expected cash flows discounted at its effective yield prior to the impairment charge.

The determination of whether unrealized losses are “other-than-temporary” requires judgment based on subjective as well as objective factors. The Company routinely monitors its investment portfolio for changes in fair value that might indicate potential impairments and performs detailed reviews on such securities. Changes in fair value are evaluated to determine the extent to which such changes are attributable to (i) fundamental factors specific to the issuer or (ii) market-related factors such as interest rates or sector declines.

Securities with declines attributable to issuer-specific fundamentals are reviewed to identify all available evidence to estimate the potential for impairment. Resources used include historical financial data included in filings with the SEC for corporate bonds and performance data regarding the underlying loans for CMOs. Securities with declines attributable solely to market or sector declines where the Company does not intend to sell the security and it is more likely than not that the Company will not be required to sell the security before the full recovery of its amortized cost basis are not deemed to be other-than-temporarily impaired.

The issuer-specific factors considered in reaching the conclusion that securities with declines are not other-than-temporary include (i) the extent and duration of the decline in fair value, including the duration of any significant decline in value, (ii) whether the security is current as to payments of principal and interest, (iii) a valuation of any underlying collateral, (iv) current and future conditions and trends for both the business and its industry, (v) changes in cash flow assumptions for CMOs and (vi) rating agency actions. Based on these factors, the Company makes a determination as to the probability of recovering principal and interest on the security.

For the three months ended March 31, 2015 and 2014, the Company did not recognize any OTTI charges.

The following is a progression of the credit-related portion of OTTI on investments owned at March 31, 2015 and 2014 (in thousands).

	Three Months Ended
	March 31,
	2015			2014
Beginning balance	$	(2,632	)	$	(2,632	)
Additional credit impairments on:
Previously impaired securities		—			—
Securities without previous impairments		—			—
		—			—
Reductions for securities sold (realized)		—			—
	$	(2,632	)	$	(2,632	)

The Company believes that the remaining securities having unrealized losses at March 31, 2015 were not other-than-temporarily impaired. The Company also does not intend to sell any of these securities and it is more likely than not that the Company will not be required to sell any of these securities before the recovery of their amortized cost basis.