Investments

The Company invests primarily in fixed maturity securities, which totaled 89.3% of total investments and cash and cash equivalents at December 31, 2017. Holdings in high quality fixed maturity securities rated A or higher by Standard & Poor's, Inc. totaled 75.2% of investment holdings in this category, reflecting the conservative investment philosophy of the Company.



	December 31, 2017			December 31, 2016
	Carrying Value		% of Total Carrying Value	Carrying Value		% of Total Carrying Value
	(In thousands, except for %)
Fixed maturity securities	$	1,208,570	89.3	$	1,128,672	89.7
Equity securities	16,164		1.2	18,159		1.6
Mortgage loans	195		—	232		—
Policy loans	73,735		5.5	66,672		5.3
Real estate and other long-term investments	7,452		0.6	7,896		0.6
Short-term investments	—		—	508		—
Cash and cash equivalents	46,064		3.4	35,510		2.8
Total cash, cash equivalents and investments	$	1,352,180	100.0	$	1,257,649	100.0

The cost, gross unrealized gains and losses and fair value of investments in fixed maturities and equity securities, as of December 31, 2017 and 2016, are as follows.



	December 31, 2017
	Cost or Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
	(In thousands)
Fixed maturities:
Available-for-sale securities:
U.S. Treasury securities	$	9,860	1,948	—	11,808
U.S. Government-sponsored enterprises	3,570		926	—	4,496
States and political subdivisions	550,536		18,507	1,540	567,503
Foreign governments	103		18	—	121
Corporate	370,043		20,212	1,552	388,703
Residential mortgage-backed	1,865		118	5	1,978
Total available-for-sale securities	935,977		41,729	3,097	974,609
Held-to-maturity securities:
States and political subdivisions	213,054		7,585	629	220,010
Corporate	20,907		1,118	658	21,367
Total held-to-maturity securities	233,961		8,703	1,287	241,377
Total fixed maturity securities	$	1,169,938	50,432	4,384	1,215,986
Equity securities:
Stock mutual funds	$	2,867	350	—	3,217
Bond mutual funds	11,880		487	—	12,367
Common stock	22		2	—	24
Redeemable preferred stock	520		42	6	556
Total equity securities	$	15,289	881	6	16,164



	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
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

For fixed maturity and equity security investments that have unrealized losses as of December 31, 2017, the cost, gross unrealized losses that have been in a continuous unrealized loss position for less than 12 months, gross unrealized losses that have been in a continuous unrealized loss position for 12 months or longer and fair value are as follows.



	December 31, 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	$	49,408	312	46	47,233	1,228	46	96,641	1,540	92
Corporate	61,071		732	39	7,651	820	10	68,722	1,552	49
Residential mortgage-backed	132		3	4	157	2	4	289	5	8
Total available-for-sale securities	110,611		1,047	89	55,041	2,050	60	165,652	3,097	149
Held-to-maturity securities:
States and political subdivisions	14,178		45	15	7,460	584	14	21,638	629	29
Corporate	—		—	—	2,169	658	2	2,169	658	2
Total held-to-maturity securities	14,178		45	15	9,629	1,242	16	23,807	1,287	31
Total fixed maturities	$	124,789	1,092	104	64,670	3,292	76	189,459	4,384	180
Equity securities:
Redeemable preferred stock	$	95	6	1	—	—	—	95	6	1
Total equities	$	95	6	1	—	—	—	95	6	1

The available-for-sale fixed maturities in a gross unrealized loss position for more than 12 months is primarily related to rises in interest rates which results in lower market prices on fixed maturity securities that have lower coupons than the current market rate. This is interest rate risk and is not a signal of impairment. Management has completed its assessment of other-than-temporary impairment of these securities. Based on our evaluation of the credit worthiness of the issuers and because we do not intend to sell the investments, nor is it likely that we would be required to sell these investments before recovery of their amortized cost bases, which may be maturity, none of the unrealized losses are considered to be other-than-temporary.

We monitor 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. Our impairment review, in accordance with current guidance, is performed by the Company at each reporting date and management uses its best judgment to decide if impairment is other-than-temporary. We determine other-than-temporary impairment by reviewing relevant evidence related to the specific security issuer, as well as our intent to sell the security or whether we more likely than not will be required to sell the security before its anticipated recovery. All securities with a market price below par were segregated and reviewed as of December 31, 2017 based upon the items above for impairment.

For fixed maturity and equity security investments that have unrealized losses as of December 31, 2016, the cost, gross unrealized losses that have been in a continuous unrealized loss position for less than 12 months, gross unrealized losses that have been in a continuous unrealized loss position for 12 months or longer and fair value are as follows.



	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
Redeemable preferred stock	201		2	2	—	—	—	201	2	2
Common stocks	—		—	—	—	17	1	—	17	1
Total equities	$	10,361	110	4	—	17	1	10,361	127	5

The amortized cost and fair value of fixed maturities at December 31, 2017 by contractual maturity are shown 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 the final stated maturity.



	Cost or Amortized Cost		Fair Value
	(In thousands)
Available-for-sale securities:
Due in one year or less	$	44,805	45,049
Due after one year through five years	101,337		104,873
Due after five years through ten years	123,319		131,125
Due after ten years	666,516		693,562
Total available-for-sale securities	935,977		974,609
Held-to-maturity securities:
Due in one year or less	19,025		19,123
Due after one year through five years	46,497		48,014
Due after five years through ten years	46,502		48,436
Due after ten years	121,937		125,804
Total held-to-maturity securities	233,961		241,377
Total fixed maturities	$	1,169,938	1,215,986

The Company had no investments in any one entity which exceeded 10% of stockholders' equity at December 31, 2017. In addition, there were no investments that were non-income producing for the year ended December 31, 2017.

Major categories of net investment income are summarized as follows:



	Years ended December 31,
	2017			2016		2015
	(In thousands)
Investment income:
Fixed maturities	$	48,164		43,637		39,570
Equity securities	708			851		2,909
Mortgage loans on real estate	11			24		36
Policy loans	5,735			5,277		4,614
Long-term investments	76			305		247
Other	68			89		53
Total investment income	54,762			50,183		47,429
Investment expenses	(1,616		)	(1,623	)	(1,647	)
Net investment income	$	53,146		48,560		45,782

Proceeds and gross realized gains and losses from sales of fixed maturities available-for-sale for 2017, 2016 and 2015 are summarized as follows:



	Years ended December 31,
	2017		2016	2015
	(In thousands)
Proceeds	$	1,077	20,638	—
Gross realized gains	$	19	1,487	—
Gross realized losses	$	16	—	—

In 2017, SPLIC sold one bond from the available for sale portfolio for cash flow purposes and SPFIC sold three bonds. In 2016, SPLIC sold eleven bonds from their available-for-sale portfolio to generate funds to pay the extraordinary dividend to CICA. These sales produced proceeds of $20.6 million and realized gains of $1.5 million. In 2015, there were no sales of fixed maturities available-for-sale. There were no securities sold from the held-to-maturity portfolio in 2017, 2016 or 2015. The Company uses specific identification for securities sold.

Proceeds and gross realized gains and losses from sales of equity securities for 2017, 2016 and 2015 are summarized as follows:



	Years ended December 31,
	2017		2016	2015
	(In thousands)
Proceeds	$	1,940	5,100	43,163
Gross realized gains	$	—	291	634
Gross realized losses	$	30	35	599

In 2017, the Company sold one bond mutual fund, which had been previously impaired, that resulted in a net loss of $30,000. All mutual funds are considered common stocks for regulatory accounting purposes and the RBC charge for stocks is extremely high. In 2016, five equity and bond mutual funds were sold that resulted in a net gain of $256,000 due to regulatory accounting considerations. During 2015, six equity and bond mutual funds were sold resulting in a net gain of $35,000 due to circumstances that arose based on the current environment and due to the fact that they were shorter duration funds.

Realized investment gains (losses) are as follows:



	Years ended December 31,
	2017			2016		2015
	(In thousands)
Realized investment gains (losses):
Sales, calls and maturities:
Fixed maturities	$	(506	)	2,024		(111	)
Equity securities	121			303		37
Real estate	1,110			—		—
Net realized gains (losses)	725			2,327		(74	)
Other-than-temporary impairments ("OTTI")
Fixed maturities	—			(3,970	)	(2,998	)
Equity securities	(207		)	(342	)	(2,387	)
Realized loss on OTTI	(207		)	(4,312	)	(5,385	)
Net realized investment gains (losses)	$	518		(1,985	)	(5,459	)

During 2017, the Company sold its Markham building in Little Rock, Arkansas for a gross sales price of $3.25 million, resulting in a gain on sale of $1.1 million.