Investments

The Company invests primarily in fixed maturity securities, which totaled 90.4% of total cash, cash equivalents and investments at June 30, 2017.



	June 30, 2017			December 31, 2016
	Carrying Value		% of Total Carrying Value	Carrying Value		% of Total Carrying Value
	(In thousands)			(In thousands)
Fixed maturity securities	$	1,175,341	90.4	$	1,128,672	89.7
Equity securities	16,143		1.2	18,159		1.6
Mortgage loans	198		—	232		0.0
Policy loans	69,382		5.3	66,672		5.3
Real estate and other long-term investments	5,906		0.5	7,896		0.6
Short-term investments	—		—	508		—
Cash and cash equivalents	33,749		2.6	35,510		2.8
Total cash, cash equivalents and investments	$	1,300,719	100.0	$	1,257,649	100.0

The following tables represent the cost, gross unrealized gains and losses and fair value for fixed maturities and equity securities as of the periods indicated.



	June 30, 2017
	Cost or Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
	(In thousands)
Fixed maturities:
Available-for-sale:
U.S. Treasury securities	$	9,895	2,249	—	12,144
U.S. Government-sponsored enterprises	3,582		966	—	4,548
States and political subdivisions	564,289		17,400	3,162	578,527
Foreign governments	103		22	—	125
Corporate	323,014		15,308	2,176	336,146
Commercial mortgage-backed	8		—	—	8
Residential mortgage-backed	2,048		153	2	2,199
Total available-for-sale securities	902,939		36,098	5,340	933,697
Held-to-maturity securities:
States and political subdivisions	220,674		7,819	740	227,753
Corporate	20,970		852	859	20,963
Total held-to-maturity securities	241,644		8,671	1,599	248,716
Total fixed maturities	$	1,144,583	44,769	6,939	1,182,413

Equity securities:
Stock mutual funds	$	2,867	211	—	3,078
Bond mutual funds	12,071		377	114	12,334
Common stock	22		—	2	20
Redeemable preferred stock	660		51	—	711
Total equity securities	$	15,620	639	116	16,143



	December 31, 2016
	Cost or Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
	(In thousands)
Fixed maturities:
Available-for-sale securities:
U.S. Treasury securities	$	9,929	2,261	—	12,190
U.S. Government-sponsored enterprises	7,639		863	—	8,502
States and political subdivisions	563,279		15,017	5,022	573,274
Foreign governments	103		23	—	126
Corporate	277,226		12,095	4,222	285,099
Commercial mortgage-backed	50		1	—	51
Residential mortgage-backed	2,247		181	2	2,426
Total available-for-sale securities	860,473		30,441	9,246	881,668
Held-to-maturity securities:
U.S. Government-sponsored enterprises	2,003		28	—	2,031
States and political subdivisions	223,966		6,916	1,599	229,283
Corporate	21,035		888	692	21,231
Total held-to-maturity securities	247,004		7,832	2,291	252,545
Total fixed maturity securities	$	1,107,477	38,273	11,537	1,134,213

Short-term investments	$	508	—	—	508

Equity securities:
Stock mutual funds	$	2,867	79	—	2,946
Bond mutual funds	14,040		265	108	14,197
Common stock	39		3	17	25
Redeemable preferred stock	819		174	2	991
Total equity securities	$	17,765	521	127	18,159

The majority of the Company's equity securities are diversified stock and bond mutual funds.

Valuation of Investments in Fixed Maturity and Equity Securities

Held-to-maturity securities are reported in the financial statements at amortized cost and available-for-sale securities are reported at fair value.

The Company monitors all debt and equity securities on an on-going basis relative to changes in credit ratings, market prices, earnings trends and financial performance, in addition to specific region or industry reviews. The assessment of whether other-than-temporary impairments have occurred is based on a case-by-case evaluation of underlying reasons for the decline in fair value. The Company determines other-than-temporary impairment by reviewing relevant evidence related to the specific security issuer as well as the Company's intent to sell the security, or if it is more likely than not that the Company would be required to sell a security before recovery of its amortized cost.

When an other-than-temporary impairment has occurred, the amount of the other-than-temporary impairment recognized in earnings depends on whether the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis. If the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis, the other-than-temporary impairment is recognized in earnings equal to the entire difference between the investment's cost and its fair value at the balance sheet date. If the Company does not intend to sell the security and it is more likely than not that the Company will not be required to sell the security before recovery of its amortized cost basis, the other-than-temporary impairment is separated into the following: (a) the amount representing the credit loss; and (b) the amount related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings. The amount of the total other-than-temporary impairment related to other factors is recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the other-than-temporary impairment recognized in earnings becomes the new amortized cost basis of the investment. The new amortized cost basis is not adjusted for subsequent recoveries in fair value.

The Company evaluates whether a credit impairment exists for debt securities by considering primarily the following factors: (a) changes in the financial condition of the security's underlying collateral; (b) whether the issuer is current on contractually obligated interest and principal payments; (c) changes in the financial condition, credit rating and near-term prospects of the issuer; (d) the length of time to which the fair value has been less than the amortized cost of the security; and (e) the payment structure of the security. The Company's best estimate of expected future cash flows used to determine the credit loss amount is a quantitative and qualitative process. Quantitative review includes information received from third party sources such as financial statements, pricing and rating changes, liquidity and other statistical information. Qualitative factors include judgments related to business strategies, economic impacts on the issuer and overall judgment related to estimates and industry factors. The Company's best estimate of future cash flows involves assumptions including, but not limited to, various performance indicators, such as historical and projected default and recovery rates, credit ratings, and current delinquency rates. These assumptions require the use of significant management judgment and include the probability of issuer default and estimates regarding timing and amount of expected recoveries, which may include estimating the underlying collateral value. In addition, projections of expected future debt security cash flows may change based upon new information regarding the performance of the issuer.

The primary factors considered in evaluating whether an impairment exists for an equity security include, but are not limited to: (a) the length of time and the extent to which the fair value has been less than the cost of the security; (b) changes in the financial condition, credit rating and near-term prospects of the issuer; (c) whether the issuer is current on contractually obligated payments; and (d) the intent and ability of the Company to retain the investment for a period of time sufficient to allow for recovery.

Other-than-temporary impairments ("OTTI") on one equity security totaling $17,000 were recognized during the six months ended June 30, 2017 and OTTI of $2.3 million was recognized during the six months ended June 30, 2016 related to one available-for-sale fixed maturity security. No OTTI was recorded for either the three months ended June 30, 2017 or June 30, 2016.

The following tables present the fair values and gross unrealized losses of fixed maturities and equity securities that have remained in a continuous unrealized loss position for the periods indicated.



	June 30, 2017
	Less than 12 months				Greater than 12 months			Total
	Fair Value		Unrealized Losses	# of Securities	Fair Value	Unrealized Losses	# of Securities	Fair Value	Unrealized Losses	# of Securities
	(In thousands, except for # of securities)
Fixed maturities:
Available-for-sale securities:
States and political subdivisions	$	138,043	1,686	112	9,127	1,476	10	147,170	3,162	122
Corporate	70,235		1,561	51	1,576	615	6	71,811	2,176	57
Residential mortgage-backed	107		1	3	103	1	2	210	2	5
Total available-for-sale securities	208,385		3,248	166	10,806	2,092	18	219,191	5,340	184
Held-to-maturity securities:
States and political subdivisions	22,373		457	31	1,342	283	2	23,715	740	33
Corporate	—		—	—	1,979	859	2	1,979	859	2
Total held-to-maturity securities	22,373		457	31	3,321	1,142	4	25,694	1,599	35
Total fixed maturities	$	230,758	3,705	197	14,127	3,234	22	244,885	6,939	219
Equity securities:
Bond mutual funds	$	8,183	114	1	—	—	—	8,183	114	1
Common stocks	21		2	2	—	—	—	21	2	2
	$	8,204	116	3	—	—	—	8,204	116	3

As of June 30, 2017, the Company had 18 available-for-sale fixed maturity securities and 4 held-to-maturity fixed maturity securities that were in an unrealized loss position for greater than 12 months. There were no equity securities in an unrealized loss position for greater than 12 months as of June 30, 2017.



	December 31, 2016
	Less than 12 months				Greater than 12 months			Total
	Fair Value		Unrealized Losses	# of Securities	Fair Value	Unrealized Losses	# of Securities	Fair Value	Unrealized Losses	# of Securities
	(In thousands, except for # of securities)
Fixed maturities:
Available-for-sale securities:
States and political subdivisions	$	202,788	3,513	184	8,018	1,509	8	210,806	5,022	192
Corporate	91,527		3,578	70	6,102	644	8	97,629	4,222	78
Residential mortgage-backed	116		1	4	105	1	2	221	2	6
Total available-for-sale securities	294,431		7,092	258	14,225	2,154	18	308,656	9,246	276
Held-to-maturity securities:
States and political subdivisions	43,659		1,562	47	509	37	1	44,168	1,599	48
Corporate	3,587		12	3	2,171	680	2	5,758	692	5
Total held-to-maturity securities	47,246		1,574	50	2,680	717	3	49,926	2,291	53
Total fixed maturities	$	341,677	8,666	308	16,905	2,871	21	358,582	11,537	329
Equity securities:
Bond mutual funds	$	10,160	108	2	—	—	—	10,160	108	2
Common stock	—		—	—	—	17	1	—	17	1
Redeemable preferred stocks	201		2	2	—	—	—	201	2	2
Total equities	$	10,361	110	4	—	17	1	10,361	127	5

We have reviewed these securities in an unrealized loss position for the periods ended June 30, 2017 and December 31, 2016 and determined that no other-than-temporary impairment exists that have not been recognized based on our evaluation of the credit worthiness of the issuers and the fact that we do not intend to sell the investments nor is it likely that we will be required to sell the securities before recovery of their amortized cost bases which may be maturity. We continue to monitor all securities on an on-going basis, and future information may become available which could result in other-than-temporary impairments being recorded.

The amortized cost and fair value of fixed maturity securities at June 30, 2017 by contractual maturity are shown in the table below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date have been reflected based upon final stated maturity.



	June 30, 2017
	Amortized Cost		Fair Value
	(In thousands)
Available-for-sale securities:
Due in one year or less	$	50,852	51,396
Due after one year through five years	103,179		106,605
Due after five years through ten years	117,410		124,665
Due after ten years	631,498		651,031
Total available-for-sale securities	902,939		933,697
Held-to-maturity securities:
Due in one year or less	17,820		18,074
Due after one year through five years	48,056		49,477
Due after five years through ten years	42,472		44,461
Due after ten years	133,296		136,704
Total held-to-maturity securities	241,644		248,716
Total fixed maturities	$	1,144,583	1,182,413

The Company uses the specific identification method of the individual security to determine the cost basis used in the calculation of realized gains and losses related to security sales.



	Fixed Maturities, Available-for-Sale					Equity Securities
	Three Months Ended			Six Months Ended		Three Months Ended		Six Months Ended
	June 30,			June 30,		June 30,		June 30,
	2017		2016	2017	2016	2017	2016	2017	2016
	(In thousands)
Proceeds	$	—	—	508	—	—	403	1,940	403
Gross realized gains	$	—	—	6	—	—	40	—	40
Gross realized losses	$	—	—	—	—	—	36	30	36

There were no sales of available-for-sale securities for the three month period ended June 30, 2017. There were no securities sold from the held-to-maturity portfolio for the three and six months ended June 30, 2017 or 2016. Realized investment losses recorded for the three month period ending June 30, 2017 were due to fixed maturity call activity.