2.	Investments

Short-term investments held at December 31, 2016 include $ 21.9 million of U.S. Treasury securities and obligation of U.S. government agencies, $4.9 million of states and political subdivisions and $2.8 million of corporate bonds. Short-term investments held at December 31, 2015 include $7.7 million of corporate bonds.

AMERISAFE holds an investment in a limited partnership hedge fund accounted for under the equity method. The carrying value of this investment is $13.3 million at December 31, 2016.

The gross unrealized gains and losses on, and the amortized cost and fair value of, those investments classified as held-to-maturity at December 31, 2016 are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
States and political subdivisions	$	394,875	$	7,622	$	(3,014	)	$	399,483
Corporate bonds		143,858		423		(265	)		144,016
Commercial mortgage-backed securities		70		—		—			70
U.S. agency-based mortgage-backed securities		9,967		948		—			10,915
U.S. Treasury securities and obligations of U.S. government agencies		11,737		746		(67	)		12,416
Asset-backed securities		1,927		163		(59	)		2,031
Totals	$	562,434	$	9,902	$	(3,405	)	$	568,931

The gross unrealized gains and losses on, and the cost or amortized cost and fair value of, those investments classified as available-for-sale at December 31, 2016 are summarized as follows:

	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
Fixed maturity:
States and political subdivisions	$	231,168	$	4,340	$	(3,215	)	$	232,293
Corporate bonds		182,350		436		(271	)		182,515
U.S. agency-based mortgage-backed securities		10,428		17		(1,103	)		9,342
U.S. Treasury securities and obligations of U.S. government agencies		55,925		—		(978	)		54,947
Total fixed maturity		479,871		4,793		(5,567	)		479,097
Other investments		10,000		3,330		—			13,330
Equity securities		—		33		—			33
Totals	$	489,871	$	8,156	$	(5,567	)	$	492,460

The gross unrealized gains and losses on, and the amortized cost and fair value of, those investments classified as held-to-maturity at December 31, 2015 are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
States and political subdivisions	$	408,447	$	15,352	$	(45	)	$	423,754
Corporate bonds		171,224		159		(810	)		170,573
Commercial mortgage-backed securities		37,494		204		(15	)		37,683
U.S. agency-based mortgage-backed securities		13,223		1,249		(1	)		14,471
U.S. Treasury securities and obligations of U.S. government agencies		12,487		897		(4	)		13,380
Asset-backed securities		2,289		202		(76	)		2,415
Totals	$	645,164	$	18,063	$	(951	)	$	662,276

The gross unrealized gains and losses on, and the cost or amortized cost and fair value of, those investments classified as available-for-sale at December 31, 2015 are summarized as follows:

	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
Fixed maturity:
States and political subdivisions	$	164,684	$	6,942	$	(207	)	$	171,419
Corporate bonds		202,537		253		(1,486	)		201,304
U.S. agency-based mortgage-backed securities		8,888		4		(1,593	)		7,299
Total fixed maturity		376,109		7,199		(3,286	)		380,022
Other investments		10,000		2,217		—			12,217
Equity securities		—		31		—			31
Totals	$	386,109	$	9,447	$	(3,286	)	$	392,270

A summary of the amortized cost and fair value of investments in fixed maturity securities, classified as held-to-maturity at December 31, 2016, by contractual maturity, is as follows:

	Amortized Cost		Fair Value
	(in thousands)
Maturity:
Within one year	$	109,707	$	110,469
After one year through five years		259,942		263,620
After five years through ten years		105,396		106,341
After ten years		75,425		75,485
Commercial mortgage-backed securities		70		70
U.S. agency-based mortgage-backed securities		9,967		10,915
Asset-backed securities		1,927		2,031
Totals	$	562,434	$	568,931

A summary of the amortized cost and fair value of investments in fixed maturity securities, classified as available-for-sale at December 31, 2016, by contractual maturity, is as follows:

	Amortized Cost		Fair Value
	(in thousands)
Maturity:
Within one year	$	64,852	$	65,174
After one year through five years		215,486		215,624
After five years through ten years		30,846		30,488
After ten years		158,259		158,469
U.S. agency-based mortgage-backed securities		10,428		9,342
Totals	$	479,871	$	479,097

Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations with or without call or prepayment penalties.

At December 31, 2016, there were $21.2 million of held-to-maturity investments, $0.4 million of available-for-sale investments and $0.1 million of cash 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 2016, 2015 and 2014 is as follows:

	Fixed Maturity Securities Available for Sale			Equity Securities			Other		Total
	(in thousands)
Year ended December 31, 2016
Proceeds from sales	$	54,730		$	—		$	4,609	$	59,339
Gross realized investment gains	$	823		$	—		$	68	$	891
Gross realized investment losses		(1,728	)		—			—		(1,728	)
Net realized investment gains (losses)		(905	)		—			68		(837	)
Other, including gains on calls and redemptions		274			—			69		343
Net realized gains (losses) on investments	$	(631	)	$	—		$	137	$	(494	)
Year ended December 31, 2015
Proceeds from sales	$	4,432		$	—		$	—	$	4,432
Gross realized investment gains	$	177		$	—		$	—	$	177
Gross realized investment (losses)		(162	)		—			—		(162	)
Net realized investment gains		15			—			—		15
Impairments		(2,653	)		—			—		(2,653	)
Other, including gains on calls and redemptions		102			—			42		144
Net realized gains (losses) on investments	$	(2,536	)	$	—		$	42	$	(2,494	)
Year ended December 31, 2014
Proceeds from sales	$	768		$	9,780		$	—	$	10,548
Gross realized investment gains	$	1		$	749		$	—	$	750
Gross realized investment (losses)		—			(451	)		—		(451	)
Net realized investment gains		1			298			—		299
Impairments		(222	)		—			—		(222	)
Other, including gains on calls and redemptions		244			—			376		620
Net realized gains on investments	$	23		$	298		$	376	$	697

In 2016, the Company sold bonds that were classified as held-to-maturity. In February, Moody’s downgraded the bonds to B2 from B1 citing increasing liquidity concerns and also placed the bonds on negative outlook indicating the rating could be downgraded further. Given the evidence of significant deterioration, the Company elected to sell the bonds for $3.0 million, recognizing a $0.1 million realized gain.

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

	Year Ended December 31,
	2016			2015			2014
	(in thousands)
Gross investment income:
Fixed maturity securities	$	27,837		$	28,498		$	26,622
Short-term investments and cash and cash equivalents		348			149			426
Equity securities		—			—			232
Other investments		1,568			763			1,611
Total gross investment income		29,753			29,410			28,891
Investment expenses		(1,647	)		(1,508	)		(1,677	)
Net investment income	$	28,106		$	27,902		$	27,214

The following table summarizes the fair value and gross unrealized losses on securities, aggregated by major investment category and length of time that the individual securities have been in a continuous unrealized loss position:

	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)
December 31, 2016
Held-to-Maturity
Fixed maturity securities:
States and political subdivisions	$	157,507	$	3,014	$	—	$	—	$	157,507	$	3,014
Corporate bonds		44,654		202		6,292		63		50,946		265
U.S. Treasury securities and obligations of U.S. government agencies		3,968		67		—		—		3,968		67
Asset-backed securities		—		—		1,173		59		1,173		59
Total held-to-maturity securities		206,129		3,283		7,465		122		213,594		3,405
Available-for Sale
Fixed maturity securities:
States and political subdivisions	$	73,505	$	2,976	$	4,523	$	239	$	78,028	$	3,215
Corporate bonds		41,419		111		7,922		160		49,341		271
U.S. agency-based mortgage-backed securities		3,702		48		3,607		1,055		7,309		1,103
U.S. Treasury securities and obligations of U.S. government agencies		54,947		978		—		—		54,947		978
Total available-for-sale securities		173,573		4,113		16,052		1,454		189,625		5,567
Total	$	379,702	$	7,396	$	23,517	$	1,576	$	403,219	$	8,972
December 31, 2015
Held-to-Maturity
Fixed maturity securities:
States and political subdivisions	$	24,068	$	45	$	—	$	—	$	24,068	$	45
Corporate bonds		128,436		687		18,139		123		146,575		810
Commercial mortgage-backed securities		9,784		15		—		—		9,784		15
U.S. agency-based mortgage-backed securities		18		—		28		1		46		1
U.S. Treasury securities and obligations of U.S. government agencies		2,980		4		—		—		2,980		4
Asset-backed securities		—		—		1,389		76		1,389		76
Total held-to-maturity securities		165,286		751		19,556		200		184,842		951
Available-for Sale
Fixed maturity securities:
States and political subdivisions	$	6,560	$	9	$	4,439	$	198	$	10,999	$	207
Corporate bonds		141,857		1,475		4,216		11		146,073		1,486
U.S. agency-based mortgage-backed securities		434		37		6,794		1,556		7,228		1,593
Total available-for-sale securities		148,851		1,521		15,449		1,765		164,300		3,286
Total	$	314,137	$	2,272	$	35,005	$	1,965	$	349,142	$	4,237

At December 31, 2016, the Company held 260 individual fixed maturity securities that were in an unrealized loss position, of which 17 were in a continuous unrealized loss position for longer than 12 months.

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 preferred 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.

We 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. We expect to recover the carrying value of these securities as it is not more likely than not that we will be required to sell the securities before the recovery of its amortized cost basis.

In 2016, there were no impairment losses recognized for other-than-temporary declines in the fair value of our investments.