4. INVESTMENTS

Unrealized Gains and Losses

The difference between amortized cost or cost and estimated fair value and gross unrealized gains and losses, by major investment category, consisted of the following:

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	Amortized		Gross		Gross
	Cost		Unrealized		Unrealized
	or Cost		Gains		Losses		Fair Value
	(In thousands)
December 31, 2017
Debt securities - available-for-sale:
United States government obligations and authorities	$	98,739	$	244	$	846	$	98,137
Obligations of states and political subdivisions	66,319		325		378		66,266
Corporate securities	239,435		2,233		749		240,919
International securities	17,807		136		27		17,916
	422,300		2,938		2,000		423,238

Debt securities - held-to-maturity:
United States government obligations and authorities	4,160		9		106		4,063
Corporate securities	1,123		21		—		1,144
International securities	66		1		—		67
	5,349		31		106		5,274
Equity securities	14,085		1,628		279		15,434
Total investments	$	441,734	$	4,597	$	2,385	$	443,946



	Amortized		Gross		Gross
	Cost		Unrealized		Unrealized
	or Cost		Gains		Losses		Fair Value
	(In thousands)
December 31, 2016
Debt securities - available-for-sale:
United States government obligations and authorities	$	62,881	$	177	$	853	$	62,205
Obligations of states and political subdivisions	152,823		427		2,067		151,183
Corporate	149,053		1,347		895		149,505
International	11,887		95		119		11,863
	376,644		2,046		3,934		374,756

Debt securities - held-to-maturity:
United States government obligations and authorities	$	4,163	$	22	$	118	$	4,067
Corporate	1,317		20		2		1,335
International	71		—		—		71
	5,551		42		120		5,473
Equity securities	24,163		5,500		288		29,375
Total investments	$	406,358	$	7,588	$	4,342	$	409,604

Net Realized Gains and Losses

The Company calculates the gain or loss realized on the sale of investments by comparing the sales price (fair value) to the cost or amortized cost of the security sold. Net realized gains and losses on investments are determined in accordance with the specific identification method.

Net realized gains, by major investment category, consisted of the following:

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	Year Ended December 31,
	2017			2016			2015
	(In thousands)
Gross realized gains:
Debt securities	$	1,814		$	3,208		$	1,272
Equity securities	9,944			4,264			4,959
Total gross realized gains	11,758			7,472			6,231

Gross realized losses:
Debt securities	(1,671		)	(1,614		)	(805		)
Equity securities	(1,539		)	(2,813		)	(1,810		)
Total gross realized losses	(3,210		)	(4,427		)	(2,615		)
Net realized gains on investments	$	8,548		$	3,045		$	3,616

Proceeds from sale of investment securities were $306.7 million, $229.3 million and $157.2 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Contractual Maturity

Expected maturities and contractual maturities may differ because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Amortized cost and estimated fair value of debt securities, by contractual maturity, consisted of the following:



	December 31, 2017
	Amortized
	Cost		Fair Value
Securities with maturity dates:	(In thousands)
Debt securities, available-for-sale:
One year or less	$	45,949	$	45,879
Over one through five years	194,427		194,463
Over five through ten years	177,657		178,664
Over ten years	4,267		4,232
	422,300		423,238
Debt securities, held-to-maturity:
One year or less	180		180
Over one through five years	4,097		4,028
Over five through ten years	1,072		1,066
	5,349		5,274
Total	$	427,649	$	428,512

Net Investment Income

Net investment income consisted of the following: ໿



	Year Ended December 31,
	2017		2016		2015
	(In thousands)
Interest income	$	9,776	$	7,920	$	6,638
Dividends income	478		1,143		588
Net investment income	$	10,254	$	9,063	$	7,226

Aging of Gross Unrealized Losses

Gross unrealized losses and related fair values for debt and equity securities, grouped by duration of time in a continuous unrealized loss position, consisted of the following:



	Less than 12 months				12 months or longer				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
December 31, 2017					(In thousands)
Debt securities - available-for-sale:
United States government obligations
and authorities	$	52,368	$	517	$	19,287	$	329	$	71,655	$	846
Obligations of states and political subdivisions	32,030		221		5,676		157		37,706		378
Corporate	109,780		625		6,452		124		116,232		749
International	8,935		27		25		—		8,960		27
	203,113		1,390		31,440		610		234,553		2,000

Equity securities	4,312		279		—		—		4,312		279

Total investments	$	207,425	$	1,669	$	31,440	$	610	$	238,865	$	2,279



	Less than 12 months				12 months or longer				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
December 31, 2016					(In thousands)
Debt securities - available-for-sale:
United States government obligations
and authorities	$	45,255	$	850	$	111	$	3	$	45,366	$	853
Obligations of states and political subdivisions	103,724		2,066		1,007		1		104,731		2,067
Corporate	59,970		864		2,427		31		62,397		895
International	5,925		119		5		—		5,930		119
	214,874		3,899		3,550		35		218,424		3,934

Equity securities	4,701		253		434		35		5,135		288

Total investments	$	219,575	$	4,152	$	3,984	$	70	$	223,559	$	4,222

As of December 31, 2017, the Company held a total of 866 debt and equity securities that were in an unrealized loss position, of which 73 securities were in an unrealized loss position continuously for 12 months or more. As of December 31, 2016, the Company held a total of 1,132 debt and equity securities that were in an unrealized loss position, of which 36 securities were in an unrealized loss position continuously for 12 months or more. The unrealized losses associated with these securities consisted primarily of losses related to corporate securities.

The Company holds its equity securities and some of its debt securities as available-for-sale and as such, these securities are recorded at fair value. The Company continually monitors the difference between cost and the estimated fair value of its investments, which involves uncertainty as to whether declines in value are temporary in nature. If the decline of a particular investment is deemed temporary, the Company records the decline as an unrealized loss in shareholders’ equity. If the decline is deemed to be other than temporary, the Company will write the security’s cost-basis or amortized cost-basis down to the fair value of the investment and recognizes an OTTI loss in the Company’s consolidated statement of operations. Additionally, any portion of such decline related to debt securities that is believed to arise from factors other than credit will be recorded as a component of other comprehensive income rather than charged against income.

The Company’s assessment of equity securities initially involves an evaluation of all securities that are in an unrealized loss position, regardless of the duration or severity of the loss, as of the applicable balance sheet date. Such initial review consists primarily of assessing whether: (i) there has been a negative credit or news event with respect to the issuer that could indicate the existence of an OTTI; and (ii) the Company has the ability and intent to hold an equity security for a period of time sufficient to allow for an anticipated recovery (generally considered to be one year from the balance sheet date).

To the extent that an equity security in an unrealized loss position is not impaired based on the initial review described previously, the Company then evaluates such equity security by considering qualitative and quantitative factors. These factors include but are not limited to facts and circumstances specific to individual securities, asset classes, the financial condition of the issuer, changes in dividend payment, the length of time fair value had been less than cost, the severity of the decline in fair value below cost, industry outlook and the Company’s ability and intent to hold each position until its forecasted recovery.

The determination that unrealized losses on such securities were other-than-temporary was primarily based on the duration of the decline in the fair value of such securities relative to their cost as of the balance sheet date. OTTI losses were $0, $0.3 million and $0.4 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Collateral Deposits

Investments, the majority of which were debt securities, with fair values of approximately $12.9 million and $7.9 million were deposited with governmental authorities and into custodial bank accounts as required by law or contractual obligations as of December 31, 2017 and 2016, respectively.