2.	Investments

Short-term investments held at December 31, 2011 include $37.0 million of corporate bonds, certificates of deposit of $9.7 million and $0.3 million of municipal securities. All certificates of deposits are fully insured by the Federal Deposit Insurance Corporation.

The gross unrealized gains and losses on, and the cost and fair value of, those investments classified as held-to-maturity at December 31, 2011 are summarized as follows:


	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
States and political subdivisions	$	441,273	$	29,026	$	(360	)	$	469,939
Corporate bonds		92,682		1,539		(130	)		94,091
Commercial mortgage-backed securities		51,550		4,195		—			55,745
U.S. agency-based mortgage-backed securities		46,096		4,162		(44	)		50,214
U.S. Treasury securities and obligations of U.S. Government agencies		9,141		1,634		—			10,775
Asset-backed securities		5,306		17		(845	)		4,478

Totals	$	646,048	$	40,573	$	(1,379	)	$	685,242

The gross unrealized gains and losses on, and the cost and fair value of, those investments classified as available-for-sale at December 31, 2011 are summarized as follows:


	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Fixed Maturity:
States and political subdivisions	$	55,275	$	2,488	$	(1	)	$	57,762
Corporate bonds		42,802		411		(233	)		42,980

Total Fixed Maturity		98,077		2,899		(234	)		100,742
Equity securities		11,776		661		(197	)		12,240

Totals	$	109,853	$	3,560	$	(431	)	$	112,982

The gross unrealized gains and losses on, and the cost and fair value of, those investments classified as held-to-maturity at December 31, 2010 are summarized as follows:


	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
States and political subdivisions	$	466,898	$	14,044	$	(1,797	)	$	479,145
U.S. agency-based mortgage-backed securities		62,090		3,951		(101	)		65,940
Corporate bonds		60,825		1,423		(27	)		62,221
Commercial mortgage-backed securities		51,571		2,513		—			54,084
U.S. Treasury securities and obligations of U.S. Government agencies		14,819		972		—			15,791
Asset-backed securities		6,392		17		(877	)		5,532
Long-term certificates of deposit		750		—		—			750

Totals	$	663,345	$	22,920	$	(2,802	)	$	683,463

The gross unrealized gains and losses on, and the cost and fair value of, those investments classified as available-for-sale at December 31, 2010 are summarized as follows:


	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Fixed Maturity:
Corporate bonds	$	15,946	$	10	$	(147	)	$	15,809
U.S. Treasury securities and obligations of U.S. Government agencies		5,919		16		(95	)		5,840

Total Fixed Maturity		21,865		26		(242	)		21,649
Equity securities		1,687		86		—			1,773

Totals	$	23,552	$	112	$	(242	)	$	23,422

A summary of the cost or amortized cost and fair value of investments in fixed maturity securities, classified as held-to-maturity at December 31, 2011, by contractual maturity, is as follows:


	Cost or Amortized Cost		Fair Value
	(In thousands)
Maturity:
Due in 2012	$	107,892	$	108,537
In 2013 through 2016		179,896		187,744
In 2017 through 2021		130,807		144,980
After 2021		124,501		133,544
U.S. agency-based mortgage-backed securities		46,096		50,214
Commercial mortgage-backed securities		51,550		55,745
Asset-backed securities		5,306		4,478

Totals	$	646,048	$	685,242

A summary of the cost or amortized cost and fair value of investments in fixed maturity securities, classified as available-for-sale at December 31, 2011, by contractual maturity, is as follows:


	Cost or Amortized Cost		Fair Value
	(In thousands)
Maturity:
Due in 2012	$	7,706	$	7,749
In 2013 through 2016		23,355		23,324
In 2017 through 2021		15,664		15,943
After 2021		51,352		53,726

Totals	$	98,077	$	100,742

At December 31, 2011, there were $18,889,134 of held-to-maturity investments on deposit with regulatory agencies of states in which the Company does business.

A summary of the Company's realized gains and losses on sales, calls or redemptions of investments for 2011, 2010 and 2009 is as follows:


	Fixed Maturity Securities Available for Sale		Equity Securities			Other			Total
	(In thousands)
Year ended December 31, 2011
Proceeds from sales	$	21,560	$	14,769		$	—		$	36,329

Gross realized investment gains	$	815	$	1,621		$	—		$	2,436
Gross realized investment (losses)		—		(98	)		(1	)		(99	)

Net realized investment gain		815		1,523			(1	)		2,337
Impairments		—		—			(169	)		(169	)
Other, including gains on calls and redemptions		—		—			60			60

Net realized investment gains	$	815	$	1,523		$	(110	)	$	2,228

Year ended December 31, 2010
Proceeds from sales	$	15,462	$	14,695		$	—		$	30,157

Gross realized investment gains	$	—	$	2,650		$	—		$	2,650
Gross realized investment (losses)		—		—			—			—

Net realized investment gain		—		2,650			—			2,650
Impairments		—		(693	)		—			(693	)
Other, including gains on calls and redemptions		411		—			81			492

Net realized investment gains	$	411	$	1,957		$	81		$	2,449

Year ended December 31, 2009
Proceeds from sales	$	—	$	12,229		$	—		$	12,229

Gross realized investment gains	$	—	$	1,650		$	—		$	1,650
Gross realized investment (losses)		—		—			—			—

Net realized investment gain		—		1,650			—			1,650
Impairments		—		—			—			—
Other, including gains on calls and redemptions		—		—			383			383

Net realized investment gains	$	—	$	1,650		$	383		$	2,033

Major categories of the Company's net investment income are summarized as follows:


	Year Ended December 31,
	2011			2010			2009
	(In thousands)
Gross investment income:
Fixed maturity securities	$	26,769		$	26,571		$	28,163
Short-term investments and cash and cash equivalents		590			819			711
Equity securities		181			71			477

Total gross investment income		27,540			27,461			29,351
Investment expenses		(1,200	)		(1,219	)		(1,337	)

Net investment income	$	26,340		$	26,242		$	28,014

The following table summarizes, as of December 31, 2011, the gross unrealized losses on securities that were at a loss for either less than twelve months or twelve months or longer:


	As of December 31, 2011
	Less Than 12 Months				12 Months or Greater				Total
	Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses
	(in thousands)
Held-to-Maturity
Fixed maturity securities:
Corporate bonds	$	23,063	$	130	$	—	$	—	$	23,063	$	130
States and political subdivisions		2,291		3		5,718		357		8,009		360
U.S. agency-based mortgage-backed securities		—		—		1,012		44		1,012		44
Asset-backed securities		545		15		3,880		830		4,425		845

Total held-to-maturity securities		25,899		148		10,610		1,231		36,509		1,379

Available-for Sale
Fixed maturity securities:
Corporate bonds	$	14,301	$	233	$	—	$	—	$	14,301	$	233
States and political subdivisions		222		1		—		—		222		1
Equity Securities		2,789		197		—		—		2,789		197

Total available-for-sale securities		17,312		431		—		—		17,312		431

Total	$	43,211	$	579	$	10,610	$	1,231	$	53,821	$	1,810

The following table summarizes, as of December 31, 2010, the gross unrealized losses on securities that were at a loss for either less than twelve months or twelve months or longer:


	As of December 31, 2010
	Less Than 12 Months				12 Months or Greater				Total
	Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses
	(in thousands)
Held-to-Maturity
Fixed maturity securities:
States and political subdivisions	$	65,976	$	1,200	$	4,135	$	597	$	70,111	$	1,797
Corporate bonds		3,480		27		—		—		3,480		27
U.S. agency-based mortgage-backed securities		1,016		5		3,289		96		4,305		101
Asset-backed securities		715		43		4,761		834		5,476		877

Total held-to-maturity securities		71,187		1,275		12,185		1,527		83,372		2,802

Available-for Sale
Fixed maturity securities:
Corporate bonds	$	13,446	$	147	$	—	$	—	$	13,446	$	147
U.S Treasury securities and obligations of U.S. government agencies		2,010		95		—		—		2,010		95

Total available-for-sale securities		15,456		242		—		—		15,456		242

Total	$	86,643	$	1,517	$	12,185	$	1,527	$	98,828	$	3,044

The Company regularly reviews its investment portfolio to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of our investments. The Company considers various factors in determining if a decline in the fair value of an individual security is other-than-temporary. The key factors considered are:

•

any reduction or elimination of dividends, or nonpayment of scheduled principal or interest payments;

•

the financial condition and near-term prospects of the issuer of the applicable security, including any specific events that may affect its operations or earnings;

•

how long and by how much the fair value of the security has been below its cost or amortized cost;

•

any downgrades of the security by a rating agency;

•

our intent not to sell the security for a sufficient time period for it to recover its value;

•

the likelihood of being forced to sell the security before the recovery of its value; and

•

an evaluation as to whether there are any credit losses on debt securities.

The Company reviewed all securities with unrealized losses in accordance with the impairment policy described above. The Company determined that the unrealized losses in the fixed maturity securities portfolio related primarily to changes in market interest rates since the date of purchase, current conditions in the capital markets and the impact of those conditions on market liquidity and prices generally, and the transfer of the investments from the available-for-sale classification to the held-to-maturity classification in January 2004. The Company expects to recover the carrying value of these securities since management does not intend to sell the securities and it is not more likely than not that the Company will be required to sell the security before the recovery of its amortized cost basis. In addition, none of the unrealized losses on debt securities are considered credit losses.

In 2011, we recorded an impairment charge of $0.2 million related to one asset-backed security in our held-to-maturity investment portfolio. We impaired this security because, among other things, a loss of principal was anticipated based upon estimated future cash flows.