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)
June 30, 2018
Debt securities - available-for-sale:
United States government obligations and authorities	$	109,020	$	135	$	1,928	$	107,227
Obligations of states and political subdivisions	24,274		45		278		24,041
Corporate	279,836		287		5,242		274,881
International	19,525		9		194		19,340
	432,655		476		7,642		425,489

Debt securities - held-to-maturity:
United States government obligations and authorities	4,172		2		154		4,020
Corporate	1,051		3		7		1,047
International	65		—		—		65
	5,288		5		161		5,132
Total investments (1)	$	437,943	$	481	$	7,803	$	430,621

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(1) As a result of the adoption of ASU 2016-01 on January 1, 2018 (see additional details in Note 2 above) our equity securities no longer have unrealized gains or losses, therefore they are not included as of June 30, 2018.



	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	239,435		2,233		749		240,919
International	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	1,123		21		—		1,144
International	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

Net Realized and Unrealized 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 and unrealized gains (losses), by major investment category, consisted of the following:

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	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
	(In thousands)
Gross realized and unrealized gains:
Debt securities	$	41		$	304		$	264		$	873
Equity securities	1,088			2,735			2,241			3,290
Total gross realized and unrealized gains	1,129			3,039			2,505			4,163

Gross realized and unrealized losses:
Debt securities	(877		)	(118		)	(2,318		)	(1,209		)
Equity securities	(44		)	(273		)	(1,031		)	(411		)
Total gross realized and unrealized losses	(921		)	(391		)	(3,349		)	(1,620		)
Net realized and unrealized gains (losses) on investments	$	208		$	2,648		$	(844	)	$	2,543

Proceeds from sale of investment securities were $134.8 million and $142.0 million for the six months ended June 30, 2018 and 2017, respectively.

The above line item, net realized and unrealized gains (losses) on investments, includes $1.0 million of recognized net unrealized gains on equity securities for the three and six months ended June 30, 2018.

Contractual Maturity

Actual maturities may differ from contractual maturities because issuers may have the right to call or pre-pay obligations.

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

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	June 30, 2018
	Amortized
	Cost		Fair Value
Securities with Maturity Dates	(In thousands)
Debt securities, available-for-sale:
One year or less	$	44,627	$	44,515
Over one through five years	210,431		207,761
Over five through ten years	176,276		171,943
Over ten years	1,321		1,270
	432,655		425,489
Debt securities, held-to-maturity:
One year or less	785		786
Over one through five years	4,000		3,854
Over five through ten years	503		492
	5,288		5,132
Total	$	437,943	$	430,621

Net Investment Income

Net investment income consisted of the following:

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	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
	(In thousands)
Interest income	$	2,927	$	2,411	$	5,815	$	4,581
Dividends income	51		149		106		297
Net investment income	$	2,978	$	2,560	$	5,921	$	4,878

Aging of Gross Unrealized Losses

Gross unrealized losses and related fair values for debt securities (and equity securities as of December 31, 2017), grouped by duration of time in a continuous unrealized loss position, consisted of the following:

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	Less than 12 months				12 months or longer				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
					(In thousands)
June 30, 2018
Debt securities - available-for-sale:
United States government obligations and authorities	$	61,943	$	1,300	$	20,748	$	628	$	82,691	$	1,928
Obligations of states and political subdivisions	14,750		190		1,809		88		16,559		278
Corporate	229,770		4,955		5,993		287		235,763		5,242
International	15,810		194		—		—		15,810		194
	$	322,273	$	6,639	$	28,550	$	1,003	$	350,823	$	7,642



	Less than 12 months				12 months or longer				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
					(In thousands)
December 31, 2017
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

As of June 30, 2018, the Company held a total of 1,340 debt securities that were in an unrealized loss position, of which 55 securities were in an unrealized loss position continuously for 12 months or more. 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. The unrealized losses associated with these securities consisted primarily of losses related to corporate securities.

The Company holds 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 did not have any OTTI losses on its available-for-sale debt securities for the first six months of 2018 and 2017.

As discussed in Note 2 above, beginning January 1, 2018, the Company’s equity investments are measured at fair value through net income. See Note 4 of our 2017 Form 10-K for information on how the Company assessed and determined whether unrealized losses on our equity securities were other-than-temporary, which 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. The company did not have any OTTI losses on its equity securities for the first six months of 2017.

Collateral Deposits

Cash and cash equivalents and investments, the majority of which were debt securities, with fair values of $10.2 million and $12.9 million, were deposited with governmental authorities and into custodial bank accounts as required by law or contractual obligations as of June 30, 2018 and December 31, 2017, respectively.