3.	Investments

Investments, Available-for-Sale

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

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2017	Cost		Gains		Losses			Value
U.S. government and agencies	$	19,642	$	70	$	(365	)	$	19,347
Political subdivisions		4,111		—		(28	)		4,083
Revenue and assessment		5,145		178		(5	)		5,318
Corporate bonds		44,070		50		(1,145	)		42,975
Collateralized mortgage obligations:
Agency backed		39,823		61		(780	)		39,104
Non-agency backed – residential		2,059		617		(6	)		2,670
Non-agency backed – commercial		54		351		—			405
Total fixed maturities, available-for-sale		114,904		1,327		(2,329	)		113,902
Preferred stock, available-for-sale		3,025		193		(114	)		3,104
Mutual funds, available-for-sale		11,813		1,126		—			12,939
	$	129,742	$	2,646	$	(2,443	)	$	129,945

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2016	Cost		Gains		Losses			Value
U.S. government and agencies	$	19,142	$	112	$	(303	)	$	18,951
Political subdivisions		4,233		—		(68	)		4,165
Revenue and assessment		5,539		185		(41	)		5,683
Corporate bonds		47,238		107		(1,805	)		45,540
Collateralized mortgage obligations:
Agency backed		23,093		73		(744	)		22,422
Non-agency backed – residential		2,411		529		(7	)		2,933
Non-agency backed – commercial		1,408		487		—			1,895
Total fixed maturities, available-for-sale		103,064		1,493		(2,968	)		101,589
Preferred stock, available-for-sale		3,025		198		(111	)		3,112
Mutual funds, available-for-sale		11,813		698		—			12,511
	$	117,902	$	2,389	$	(3,079	)	$	117,212

The following table sets 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
December 31, 2017	Gains		Losses		Losses		Securities
One year or less	$	2,219	$	—	$	—	$	2,219
After one through five years		4,798		26,818		—		31,616
After five through ten years		1,750		28,372		—		30,122
After ten years		4,715		3,052		—		7,767
No single maturity date		12,991		29,187		—		42,178
	$	26,473	$	87,429	$	—	$	113,902

The fair value and gross unrealized losses of investments, available-for-sale, by the length of time that individual securities have been in a continuous unrealized loss position follows (in thousands).

	Less than 12 months					12 months or longer
December 31, 2017	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Total Gross Losses
U.S. government and agencies	$	7,746	$	(72	)	$	10,020	$	(293	)	$	(365	)
Political subdivisions		4,083		(28	)		—		—			(28	)
Revenue and assessment		1,067		(5	)		—		—			(5	)
Corporate bonds		10,730		(123	)		25,235		(1,022	)		(1,145	)
Collateralized mortgage obligations:
Agency backed		9,085		(95	)		19,730		(685	)		(780	)
Non-agency backed – residential		265		(1	)		106		(5	)		(6	)
Non-agency backed – commercial		—		—			—		—			—
Total fixed maturities, available-for-sale		32,976		(324	)		55,091		(2,005	)		(2,329	)
Preferred stock, available-for-sale		—		—			1,411		(114	)		(114	)
Mutual funds, available-for-sale		—		—			—		—			—
	$	32,976	$	(324	)	$	56,502	$	(2,119	)	$	(2,443	)

	Less than 12 months					12 months or longer
December 31, 2016	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses		Total Gross Losses
U.S. government and agencies	$	14,837	$	(303	)	$	—	$	—	$	(303	)
Political subdivisions		4,166		(68	)		—		—		(68	)
Revenue and assessment		2,783		(41	)		—		—		(41	)
Corporate bonds		41,057		(1,805	)		—		—		(1,805	)
Collateralized mortgage obligations:
Agency backed		21,637		(744	)		—		—		(744	)
Non-agency backed – residential		105		(7	)		—		—		(7	)
Non-agency backed – commercial		—		—			—		—		—
Total fixed maturities, available-for-sale		84,585		(2,968	)		—		—		(2,968	)
Preferred stock, available-for-sale		1,415		(111	)		—		—		(111	)
Mutual funds, available-for-sale		—		—			—		—		-
	$	86,000	$	(3,079	)	$	—	$	—	$	(3,079	)

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

December 31, 2017

December 31, 2016

—

The following table reflects the fair value and gross unrealized losses of those fixed maturity securities in a continuous unrealized loss position for greater than 12 months as of December 31, 2017. Gross unrealized losses are further segregated by the percentage of amortized cost (in thousands, except number of securities). There were no fixed maturity securities in a continuous unrealized loss position for greater than 12 months as of December 31, 2016.

	Number				Gross
Gross Unrealized Losses	of		Fair		Unrealized
at December 31, 2017:	Securities		Value		Losses
Less than or equal to 10%		26	$	56,502		(2,119	)
Greater than 10%		—		—		—
		26	$	56,502	$	(2,119	)

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 December 31, 2017:	Losses		Losses			than 5%				10%		than 10%
Less than or equal to:
Three months	$	10,682	$	(55	)	$	(55	)	$	—		$	—
Six months		22,294		(269	)		(269	)		—			—
Nine months		—		—			—			—			—
Twelve months		—		—			—			—			—
Greater than twelve months		56,502		(2,119	)		(1,648	)		(471	)		—
Total	$	89,478	$	(2,443	)	$	(1,972	)	$	(471	)	$	—

	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, 2016:	Losses		Losses			than 5%				10%		than 10%
Less than or equal to:
Three months	$	58,550	$	(1,886	)	$	(1,461	)	$	(425	)	$	—
Six months		27,193		(1,186	)		(232	)		(954	)		—
Nine months		152		—			—			—			—
Twelve months		105		(7	)		—			(7	)		—
Greater than twelve months		—		-			—			—			—
Total	$	86,000	$	(3,079	)	$	(1,693	)	$	(1,386	)	$	—

Other Investments

Other investments consist of the common stock of a REIT 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) undervalued international publicly-traded equities and (iii) a pre-identified pool of select buyout private equity funds. These investments have redemption and transfer restrictions. The Company withdrew from another limited partnership investment and received the final withdrawal installment in July 2016. The Company does not intend to sell any of the remaining 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 December 31, 2017, the Company had unfunded commitments of $2.5 million with two of these investments.

Restrictions

At December 31, 2017, fixed maturities and cash equivalents with a fair value and amortized cost of $6.2 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 $18.3 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).

	Year Ended December 31,
	2017			2016			2015
Fixed maturities, available-for-sale	$	2,996		$	3,558		$	4,220
Mutual funds, available-for-sale		680			704			666
Other investments		440			427			396
Cash and cash equivalents		1,083			448			236
Investment expenses		(480	)		(488	)		(494	)
	$	4,719		$	4,649		$	5,024

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

	Year Ended December 31,
	2017			2016			2015
Gains	$	—		$	4,982		$	15
Losses		(3	)		(22	)		(26	)
Other than temporary impairment		—			(147	)		—
	$	(3	)	$	4,813		$	(11	)

Realized gains and losses on sales and redemptions are computed based on specific identification. The non-credit related portion of OTTI is included in other comprehensive loss. The amounts of non-credit OTTI for securities still owned was $1.0 million at both December 31, 2017 and 2016.

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 operations and comprehensive loss and (ii) the amount related to all other factors, which is recorded in other comprehensive loss. 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 United States Securities and Exchange Commission (“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.

The Company did not recognize any OTTI charges in net loss for the years ended December 31, 2017 and 2015. The Company recognized an OTTI charge for one mutual fund resulting in a loss of $147 thousand for the year ending December 31, 2016.

The following is a progression of the credit-related portion of OTTI on investments owned at December 31, 2017, 2016, and 2015 (in thousands).

	Year Ended December 31,
	2017			2016			2015
Beginning balance	$	(2,184	)	$	(2,632	)	$	(2,632	)
Additional credit impairments on:
Previously impaired securities		—			—			—
Securities without previous impairments		—			(147	)		—
		—			(147	)		—
Reductions for securities deemed worthless and realized		314			595			—
	$	(1,870	)	$	(2,184	)	$	(2,632	)

The Company believes that the remaining securities having unrealized losses at December 31, 2017 were impacted by changes in interest rates and are 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.