(6)	Investments

We account for our investment securities consistent with FASB issued guidance that requires our securities to be classified into one of three categories: (i) held-to-maturity, (ii) trading securities or (iii) available-for-sale.

Investments classified as held-to-maturity include debt securities wherein the Company’s intent and ability are to hold the investment until maturity and are carried at amortized cost without consideration to unrealized gains or losses. Investments classified as trading securities include debt and equity securities bought and held primarily for sale in the near term and are carried at fair value with unrealized holding gains and losses included in current period operations. Investments classified as available-for-sale include debt and equity securities that are not classified as held-to-maturity or as trading security investments and are carried at fair value with unrealized holding gains and losses excluded from earnings and reported as a separate component of shareholders’ equity, namely “Other Comprehensive Income”.

The following table summarizes, by type, our investments as of September 30, 2015 and December 31, 2014.

	September 30, 2015					December 31, 2014
	Carrying Amount		Percent of Total			Carrying Amount		Percent of Total
	(Dollars in Thousands)
Debt securities, at fair value:
United States government obligations and authorities	$	65,994		17.08	%	$	62,323		18.84	%
Obligations of states and political subdivisions		108,597		28.11	%		91,614		27.70	%
Corporate		155,324		40.20	%		119,024		35.99	%
International		12,000		3.11	%		11,138		3.37	%
		341,915		88.50	%		284,099		85.90	%
Debt securities, at amortized cost:
United States government obligations and authorities		4,221		1.09	%		4,490		1.36	%
Corporate		2,101		0.54	%		2,681		0.81	%
International		65		0.02	%		246		0.07	%
		6,387		1.65	%		7,417		2.24	%
Total debt securities		348,302		90.15	%		291,516		88.14	%

Equity securities, at fair value:		38,086		9.85	%		39,247		11.86	%
Total investments	$	386,388		100.00	%	$	330,763		100.00	%

The following table shows the realized gains (losses) for debt and equity securities for the three months ended September 30, 2015 and 2014.

	Three Months Ended September 30,
	2015					2014
	Gains (Losses)			Fair Value at Sale		Gains (Losses)			Fair Value at Sale
	(Dollars in Thousands)

Debt securities	$	226		$	21,843	$	241		$	16,413
Equity securities		1,847			4,226		453			1,642
Total realized gains		2,073			26,069		694			18,055

Debt securities		(178	)		9,744		(20	)		1,627
Equity securities		(769	)		3,306		(15	)		118
Total realized losses		(947	)		13,050		(35	)		1,745

Net realized gains on investments	$	1,126		$	39,119	$	659		$	19,800

Net realized investment gains totaled $1.1 million for the three months ended September 30, 2015, compared with $0.7 million during the three months ended September 30, 2014. From time to time, our asset managers, at their discretion, make periodic sales from the portfolio and during the three months ended September 30, 2015, the majority of the realized gains were from equity sales.

Total investments increased $55.6 million, or 16.8%, to $386.4 million as of September 30, 2015, compared with $330.8 million as of December 31, 2014.

The debt and equity securities that are available-for-sale and carried at fair value represent 98% of total investments as of September 30, 2015 and December 31, 2014.

We did not hold any trading investment securities during the nine months ended September 30, 2015.

The Company’s policy for the valuation of temporarily impaired securities is to determine impairment based on the analysis of the following factors.

rating downgrade or other credit event (eg., failure to pay interest when due);

length of time and the extent to which the fair value has been less than amortized cost;

financial condition and near term prospects of the issuer, including any specific events which may influence the operations of the issuer such as changes in technology or discontinuance of a business segment;

prospects for the issuer’s industry segment;

intent and ability of the Company to retain the investment for a period of time sufficient to allow for anticipated recovery in market value;

historical volatility of the fair value of the security;

intent to sale the security.

Whether it is more likely than not that there would be a requirement to sell the security before its anticipated recovery.

During the nine months ended September 30, 2015, we have charged to operations, realized investment losses of less than $0.1 million. The charges relate to common stock held in diverse industries. During the nine months ended September 30, 2014, in connection with the process, we have not charged operations with investment losses.

As of September 30, 2015 and December 31, 2014, respectively, all of our securities are in good standing and not impaired as defined by FASB issued guidance except as noted above.

As of September 30, 2015 and December 31, 2014, our investments consisted primarily of corporate bonds held in various industries, municipal bonds and United States government bonds. As of September 30, 2015, 80% of our debt portfolio was in diverse industries and 20% was in United States government bonds. As of September 30, 2015, approximately 86% of our equity holdings were in equities related to diverse industries and 14% were in mutual funds. As of December 31, 2014, 77% of our debt portfolio was in diverse industries and 23% is in United States government bonds. As of December 31, 2014, approximately 88% of our equity holdings were in equities related to diverse industries and 12% were in mutual funds.

As of September 30, 2015 and December 31, 2014, we have classified $6.4 million and $7.4 million, respectively, of our bond portfolio as held-to-maturity. We classify bonds as held-to-maturity to support securitization of credit requirements.

The following table shows the realized gains (losses) for debt and equity securities for the nine months ended September 30, 2015 and 2014.

	Nine Months Ended September 30,
	2015					2014
	Gains (Losses)			Fair Value at Sale		Gains (Losses)			Fair Value at Sale
	(Dollars in Thousands)

Debt securities	$	973		$	71,869	$	533		$	38,657
Equity securities		4,189			9,985		4,013			12,595
Total realized gains		5,162			81,854		4,546			51,252

Debt securities		(504	)		39,926		(118	)		8,333
Equity securities		(915	)		3,959		(381	)		1,639
Total realized losses		(1,419	)		43,885		(499	)		9,972

Net realized gains on investments	$	3,743		$	125,739	$	4,047		$	61,224

Net realized investment gains totaled $3.7 million for the nine months ended September 30, 2015, compared with $4.0 million during the nine months ended September 30, 2014. During the nine months ended September 30, 2015, the investment committee decided to increase the fixed income asset allocation by directing new invested dollars and reducing our exposure to equities.

A summary of the amortized cost, estimated fair value and gross unrealized gains and losses of debt and equity securities at September 30, 2015 and December 31, 2014 is as follows.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(Dollars in Thousands)
September 30, 2015
Debt Securities - Available-For-Sale:
United States government obligations and authorities	$	64,876	$	1,233	$	115	$	65,994
Obligations of states and political subdivisions		107,211		1,428		42		108,597
Corporate		154,469		1,625		770		155,324
International		12,104		55		159		12,000
	$	338,660	$	4,341	$	1,086	$	341,915

Debt Securities - Held-To-Maturity:
United States government obligations and authorities	$	4,221	$	51	$	184	$	4,088
Corporate		2,101		25		6		2,120
International		65		-		-		65
	$	6,387	$	76	$	190	$	6,273

Equity securities - common stocks	$	33,605	$	6,391	$	1,910	$	38,086

December 31, 2014
Debt Securities - Available-For-Sale:
United States government obligations and authorities	$	61,376	$	1,022	$	75	$	62,323
Obligations of states and political subdivisions		90,728		956		70		91,614
Corporate		117,778		1,578		332		119,024
International		11,139		53		54		11,138
	$	281,021	$	3,609	$	531	$	284,099

Debt Securities - Held-To-Maturity:
United States government obligations and authorities	$	4,490	$	41	$	225	$	4,306
Corporate		2,681		31		5		2,707
International		246		1		1		246
	$	7,417	$	73	$	231	$	7,259

Equity securities - common stocks	$	29,908	$	9,836	$	497	$	39,247

The table below reflects our unrealized investment losses by investment class, aged for length of time in a continuous unrealized loss position as of September 30, 2015.

	Unrealized Losses		Less than 12 months		12 months or longer
	(Dollars in Thousands)
Debt securities:
United States government obligations and authorities	$	115	$	95	$	20
Obligations of states and political subdivisions		42		42		-
Corporate		770		740		30
International		159		159		-
		1,086		1,036		50
Equity securities:
Common stocks		1,910		1,881		29

Total debt and equity securities	$	2,996	$	2,917	$	79

The table below reflects our unrealized investment losses by investment class, aged for length of time in a continuous unrealized loss position as of December 31, 2014.

	Unrealized Losses		Less than 12 months		12 months or longer
	(Dollars in Thousands)
Debt securities:
United States government obligations and authorities	$	75	$	22	$	53
Obligations of states and political subdivisions		70		66		4
Corporate		332		260		72
International		54		54		-
		531		402		129
Equity securities:
Common stocks		497		461		36

Total debt and equity securities	$	1,028	$	863	$	165

Below is a summary of debt securities at September 30, 2015 and December 31, 2014, by contractual or expected maturity periods. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2015				December 31, 2014
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(Dollars in Thousands)

Due in one year or less	$	19,635	$	19,659	$	16,777	$	16,797
Due after one through five years		188,397		190,047		173,236		174,273
Due after five through ten years		136,989		138,449		98,404		100,259
Due after ten years		26		33		26		33

Total	$	345,047	$	348,188	$	288,443	$	291,362

United States Treasury notes with a book value of$60,674 and $2,204,798, maturing in 2016 and 2022, and a statutory deposit held in trust with a book value of $0.3 million, were on deposit with the Florida OIR as of September 30, 2015, as required by law for FNIC and MNIC, respectively, and are included with other investments held until maturity.

United States Treasury notes with a book value of $61,465 and $2,208,588, maturing in 2016 and 2022, respectively, were on deposit with the Florida OIR as of December 31, 2014, as required by law for FNIC, and are included with other investments held until maturity.

The table below sets forth investment results for the three months ended September 30, 2015 and 2014.

	Three Months Ended September 30,
	2015		2014
	(Dollars in Thousands)

Interest on debt securities	$	1,755	$	1,328
Dividends on equity securities		147		121
Interest on cash and cash equivalents		5		1

Total investment income	$	1,907	$	1,450

Proceeds from sales, pay downs and maturities of debt securities and proceeds from sales of equity securities during the three months ended September 30, 2015 and 2014, were approximately $42.5 million and $21.8 million, respectively.

The table below sets forth investment results for the nine months ended September 30, 2015 and 2014.

	Nine Months Ended September 30,
	2015		2014
	(Dollars in Thousands)

Interest on debt securities	$	4,713	$	3,432
Dividends on equity securities		381		324
Interest on cash and cash equivalents		60		2

Total investment income	$	5,154	$	3,758

Proceeds from sales, pay downs and maturities of debt securities and proceeds from sales of equity securities during the nine months ended September 30, 2015 and 2014, were approximately $134.9 million and $65.9 million, respectively.

The table below sets forth a summary of net realized investment gains during the three months ended September 30, 2015 and 2014.

	Three Months Ended September 30,
	2015		2014
	(Dollars in Thousands)
Net realized gains
Debt securities	$	48	$	221
Equity securities		1,078		438

Total	$	1,126	$	659

The table below sets forth a summary of net realized investment gains during the nine months ended September 30, 2015 and 2014.

	Nine Months Ended September 30,
	2015		2014
	(Dollars in Thousands)
Net realized gains
Debt securities	$	469	$	415
Equity securities		3,274		3,632

Total	$	3,743	$	4,047

The table below sets forth a summary of net unrealized investment gains as of September 30, 2015 and December 31, 2014.

	Unrealized Gains
	September 30, 2015		December 31, 2014
	(Dollars in Thousands)
Net unrealized gains
Debt securities	$	3,255	$	3,078
Equity securities		4,481		9,339

Total	$	7,736	$	12,417