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)
September 30, 2018
Debt securities - available-for-sale:
United States government obligations and authorities	$	116,969	$	20	$	2,752	$	114,237
Obligations of states and political subdivisions	9,891		9		221		9,679
Corporate	287,901		246		4,934		283,213
International	17,290		20		291		17,019
	432,051		295		8,198		424,148

Debt securities - held-to-maturity:
United States government obligations and authorities	4,140		1		174		3,967
Corporate	1,035		3		6		1,032
International	80		—		1		79
	5,255		4		181		5,078
Total investments (1)	$	437,306	$	299	$	8,379	$	429,226

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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) for our equity securities we now recognize changes in unrealized gains or losses within our statements of operations; therefore they are not included as of September 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						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
	(In thousands)
Gross realized and unrealized gains:
Debt securities	$	91		$	618		$	355		$	1,471
Equity securities	1,922			6,527			4,163			9,776
Total gross realized and unrealized gains	2,013			7,145			4,518			11,247

Gross realized and unrealized losses:
Debt securities	(253		)	(103		)	(2,571		)	(1,293		)
Equity securities	—			(941		)	(1,031		)	(1,310		)
Total gross realized and unrealized losses	(253		)	(1,044		)	(3,602		)	(2,603		)
Net realized and unrealized gains (losses) on investments	$	1,760		$	6,101		$	916		$	8,644

Proceeds from sale of investment securities were $161.4 million and $252.1 million for the nine months ended September 30, 2018 and 2017, respectively.

The above line item, net realized and unrealized gains (losses) on investments, includes $1.6 million and $2.6 million of recognized net unrealized gains on equity securities for the three and nine months ended September 30, 2018, respectively.

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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	September 30, 2018
	Amortized
	Cost		Fair Value
Securities with Maturity Dates	(In thousands)
Debt securities, available-for-sale:
One year or less	$	36,645	$	36,575
Over one through five years	212,426		209,585
Over five through ten years	181,102		176,126
Over ten years	1,878		1,862
	432,051		424,148
Debt securities, held-to-maturity:
One year or less	750		751
Over one through five years	4,033		3,869
Over five through ten years	472		458
	5,255		5,078
Total	$	437,306	$	429,226

Net Investment Income

Net investment income consisted of the following:

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	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
	(In thousands)
Interest income	$	3,089	$	2,492	$	8,904	$	7,073
Dividends income	48		111		154		408
Net investment income	$	3,137	$	2,603	$	9,058	$	7,481

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)
September 30, 2018
Debt securities - available-for-sale:
United States government obligations and authorities	$	83,061	$	1,450	$	27,124	$	1,302	$	110,185	$	2,752
Obligations of states and political subdivisions	5,879		94		3,265		127		9,144		221
Corporate	202,142		3,701		34,306		1,233		236,448		4,934
International	13,439		285		161		6		13,600		291
	$	304,521	$	5,530	$	64,856	$	2,668	$	369,377	$	8,198



	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 September 30, 2018, the Company held a total of 1,364 debt securities that were in an unrealized loss position, of which 195 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 nine 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 nine 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 September 30, 2018 and December 31, 2017, respectively.