Note 4. Investments

The gross unrealized gains and losses on, and the amortized cost and fair value of, those investments classified as held-to-maturity at March 31, 2017 are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
States and political subdivisions	$	429,088	$	8,599	$	(1,895	)	$	435,792
Corporate bonds		140,553		440		(256	)		140,737
U.S. agency-based mortgage-backed securities		9,163		861		—			10,024
U.S. Treasury securities and obligations of U.S. government agencies		14,135		723		(62	)		14,796
Asset-backed securities		1,837		159		(50	)		1,946
Totals	$	594,776	$	10,782	$	(2,263	)	$	603,295

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 March 31, 2017 are summarized as follows:

	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
Fixed maturity:
States and political subdivisions	$	235,741	$	4,770	$	(2,794	)	$	237,717
Corporate bonds		160,612		584		(165	)		161,031
U.S. agency-based mortgage-backed securities		10,082		12		(911	)		9,183
U.S. Treasury securities and obligations of U.S. government agencies		61,554		39		(834	)		60,759
Total fixed maturity		467,989		5,405		(4,704	)		468,690
Other investments		6,000		2,956		—			8,956
Equity securities		2,009		35		—			2,044
Totals	$	475,998	$	8,396	$	(4,704	)	$	479,690

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

A summary of the amortized cost and fair value of investments in fixed maturity securities, classified as held-to-maturity at March 31, 2017, by contractual maturity, is as follows:

	Amortized Cost		Fair Value
	(in thousands)
Maturity:
Within one year	$	114,829	$	115,334
After one year through five years		252,703		257,432
After five years through ten years		99,123		100,770
After ten years		117,121		117,789
U.S. agency-based mortgage-backed securities		9,163		10,024
Asset-backed securities		1,837		1,946
Totals	$	594,776	$	603,295

A summary of the amortized cost and fair value of investments in fixed maturity securities, classified as available-for-sale at March 31, 2017, by contractual maturity, is as follows:

	Amortized Cost		Fair Value
	(in thousands)
Maturity:
Within one year	$	77,440	$	77,792
After one year through five years		181,269		181,818
After five years through ten years		36,875		36,735
After ten years		162,323		163,162
U.S. agency-based mortgage-backed securities		10,082		9,183
Totals	$	467,989	$	468,690

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)
March 31, 2017
Held-to-Maturity
Fixed maturity securities:
States and political subdivisions	$	106,993	$	1,895	$	—	$	—	$	106,993	$	1,895
Corporate bonds		46,021		199		6,258		57		52,279		256
U.S. Treasury securities and obligations of U.S. government agencies		6,370		62		—		—		6,370		62
Asset-backed securities		—		—		1,119		50		1,119		50
Total held-to-maturity securities		159,384		2,156		7,377		107		166,761		2,263
Available-for Sale
Fixed maturity securities:
States and political subdivisions	$	60,871	$	2,595	$	4,374	$	199	$	65,245	$	2,794
Corporate bonds		28,915		58		7,952		107		36,867		165
U.S. agency-based mortgage-backed securities		3,583		35		3,637		876		7,220		911
U.S. Treasury securities and obligations of U.S. government agencies		55,044		834		—		—		55,044		834
Total available-for-sale securities		148,413		3,522		15,963		1,182		164,376		4,704
Total	$	307,797	$	5,678	$	23,340	$	1,289	$	331,137	$	6,967

	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

At March 31, 2017, the Company held 201 individual fixed maturity securities that were in an unrealized loss position, of which 16 individual fixed maturity securities were in a continuous unrealized loss position for longer than 12 months.

The Company holds investments in a limited partnership hedge fund accounted for under the equity method. The carrying value of this investment is $9.0 million at March 31, 2017.

Investment income is recognized as it is earned. The discount or premium on fixed maturity securities is amortized using the “constant yield” method. Anticipated prepayments, where applicable, are considered when determining the amortization of premiums or discounts. Realized investment gains and losses are determined using the specific identification method.

We regularly review our investment portfolio to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of specific investments. We consider various factors in determining if a decline in the fair value of an individual security is other-than-temporary. The key factors we consider 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 the amortized cost basis.

During the three months ended March 31, 2017 and 2016, there were no impairment losses recognized for other-than-temporary declines in the fair value of our investments

Net realized losses in the three months ended March 31, 2017 were $0.2 million resulting from called fixed maturity securities. Net realized gains in the three months ended March 31, 2016 were $0.2 million resulting from the sale of fixed maturity securities classified as available-for-sale.