Note 2:

Investments

The Company invests primarily in fixed maturity securities, which totaled 85.0% of total investments and cash and cash equivalents at December 31, 2011. Holdings in high quality fixed maturity securities rated A or higher by Standard & Poor's, Inc. totaled 84.8% of investment holdings in this category, reflecting the conservative investment philosophy of the Company.

	December 31, 2011				December 31, 2010
	Carrying Value		% of Total Carrying Value		Carrying Value		% of Total Carrying Value
	(In thousands)				(In thousands)

Fixed maturity securities	$	741,753		85.0	$	655,969		84.6
Equity securities		46,137		5.3		23,304		3.0
Mortgage loans		1,557		0.2		1,489		0.2
Policy loans		39,090		4.5		35,585		4.6
Real estate and other long-term investments		8,644		1.0		9,348		1.2
Short-term investments		2,048		0.2		-		-
Cash and cash equivalents		33,255		3.8		49,723		6.4
Total cash, cash equivlents and investments	$	872,484		100.0	$	775,418		100.0

During 2011, we reinvested $31.5 million of fixed maturity bond proceeds from calls and prepayments into bond mutual funds. This change in investment strategy to diversify a small percentage of holdings into highly-rated bond funds to gain a shorter duration with an attractive yield is reflected in the increase of equity holdings to 5.3%.

The cost, gross unrealized gains and losses and fair value of investments in fixed maturities and equity securities, as of December 31, 2011 and 2010, are as follows.

	December 31, 2011
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Fixed maturities:
Available-for-sale securities:
U.S. Treasury securities	$	10,228		3,730		-		13,958
U.S. Government-sponsored enterprises		143,684		3,198		65		146,817
States of the United States and political subdivisions of the states		151,058		10,275		1,391		159,942
Foreign governments		105		37		-		142
Corporate		171,462		14,576		1,493		184,545
Securities not due at a single maturity date		8,272		585		8		8,849
Total available-for-sale securities		484,809		32,401		2,957		514,253

Held-to-maturity securities:
U.S. Government-sponsored enterprises		160,411		742		12		161,141
States of the United States and political subdivisions of the states		56,260		1,941		84		58,117
Corporate		10,829		49		43		10,835
Total held-to-maturity securities		227,500		2,732		139		230,093
Total fixed maturity securities	$	712,309		35,133		3,096		744,346

Equity securities:
Stock mutual funds	$	12,686		415		376		12,725
Bond mutual funds		31,504		27		117		31,414
Common stock		17		7		-		24
Preferred stock		1,392		582		-		1,974
Total equity securities	$	45,599		1,031		493		46,137

	December 31, 2010
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Fixed maturities:
Available-for-sale securities:
U.S. Treasury securities	$	10,908		1,917		-		12,825
U.S. Government-sponsored enterprises		290,904		441		6,390		284,955
States of the United States and political subdivisions of the states		107,214		539		6,034		101,719
Foreign governments		106		26		-		132
Corporate		155,277		7,237		1,216		161,298
Securities not due at a single maturity date		14,003		833		28		14,808
Total available-for-sale securities		578,412		10,993		13,668		575,737

Held-to-maturity securities:
U.S. Government-sponsored enterprises		80,232		272		1,401		79,103
Total fixed maturity securities	$	658,644		11,265		15,069		654,840

Equity securities:
Stock mutual funds	$	17,931		2,566		19		20,478
Common stock		17		29		-		46
Preferred stock		1,896		884		-		2,780
Total equity securities	$	19,844		3,479		19		23,304

For investments of available-for-sale fixed maturities that have unrealized losses as of December 31, 2011, 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, 2011
	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:
U.S. Government-sponsored enterprises	$	-		-		-		3,718		65		2		3,718		65		2
States of the United States and political subdivisions of the states		1,965		29		4		11,777		1,362		9		13,742		1,391		13
Corporate		27,239		976		30		8,886		517		6		36,125		1,493		36
Securities not due at a single maturity date		536		4		1		67		4		2		603		8		3
Total available-for-sale securities		29,740		1,009		35		24,448		1,948		19		54,188		2,957		54
Held-to-maturity securities:
U.S. Government-sponsored enterprises		6,997		2		4		1,121		10		1		8,118		12		5
States of the United States and political subdivisions of the states		8,345		84		7		-		-		-		8,345		84		7
Corporate		6,706		43		4		-		-		-		6,706		43		4
Total held-to-maturity securities		22,048		129		15		1,121		10		1		23,169		139		16
Total fixed maturities	$	51,788		1,138		50		25,569		1,958		20		77,357		3,096		70

Equity securities:
Stock mutual funds	$	7,158		376		2		-		-		-		7,158		376		2
Bond mutual funds		25,387		117		10		-		-		-		25,387		117		10
Total equities	$	32,545		493		12		-		-		-		32,545		493		12

As of December 31, 2011, there are no unrealized losses greater than 12 months on the Company's equity securities.

The largest group of available-for-sale fixed maturities in a gross unrealized loss position for more than 12 months is primarily the municipal bonds acquired in the acquisition of SPLIC in 2004, and under purchase GAAP accounting, have a higher cost basis than historical cost. These premiums are being amortized to net investment income. 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 90% of par were segregated and reviewed as of December 31, 2011 based upon the items above for other-than-temporary impairment.

For investments of available-for-sale fixed maturities and equity securities that have unrealized losses as of December 31, 2010, 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, 2010
	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:
U.S. Government-sponsored enterprises	$	234,994		6,390		170		-		-		-		234,994		6,390		170
States of the United States and political subdivisons of the states		66,836		3,270		60		9,626		2,764		8		76,462		6,034		68
Corporate		28,072		1,040		21		2,443		176		7		30,515		1,216		28
Securities not due at a single maturity date		569		8		2		201		20		5		770		28		7
Total available-for-sale securities		330,471		10,708		253		12,270		2,960		20		342,741		13,668		273
Held-to-maturity securities:
U.S. Government-sponsored enterprises		45,699		1,401		18		-		-		-		45,699		1,401		18
Total fixed maturities	$	376,170		12,109		271		12,270		2,960		20		388,440		15,069		291

Equity securities:
Stock mutual funds	$	2,910		19		1		-		-		-		2,910		19		1

The amortized cost and fair value of fixed maturities at December 31, 2011 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.

	Cost or Amortized Cost		Fair Value
	(In thousands)

Available-for-sale securities:
Due in one year or less	$	4,281		4,328
Due after one year through five years		35,128		36,833
Due after five years through ten years		104,214		110,047
Due after ten years		332,914		354,196
Total available-for-sale securities		476,537		505,404
Held-to-maturity securities:
Due after one year through five years		11,071		11,067
Due after five years through ten years		27,704		28,655
Due after ten years		188,725		190,371
Total held-to-maturity securities		227,500		230,093
Securities not due at a single maturity date		8,272		8,849
Total fixed maturities	$	712,309		744,346

The securities not due at a single maturity date include mortgage-backed obligations of U.S. Government-sponsored enterprises and corporate securities.

The Company had no investments in any one entity, excluding U.S. Government agencies, which exceeded 10% of stockholders' equity at December 31, 2011. In addition, there were no investments that were non-income producing for the year ended December 31, 2011.

Major categories of net investment income are summarized as follows:

	For the Years Ended December 31,
	2011			2010			2009
	(In thousands)

Investment income on:
Fixed maturities	$	26,606			26,829			25,921
Equity securities		1,534			713			1,056
Mortgage loans on real estate		99			101			50
Policy loans		3,024			2,704			2,444
Long-term investments		225			246			465
Other		122			207			507
Total investment income		31,610			30,800			30,443
Investment expenses		(654	)		(723	)		(841	)
Net investment income	$	30,956			30,077			29,602

Proceeds and gross realized gains and losses from sales of fixed maturities available-for-sale for 2011, 2010 and 2009 are summarized as follows:

	For the Years Ended December 31,
	2011		2010		2009
	(In thousands)

Proceeds	$	-		8,029		74,181
Gross realized gains	$	-		912		2,752
Gross realized losses	$	-		25		-

Certain securities were sold during 2010 from a tax planning perspective and due to statutory reporting considerations related to non-rated securities.

In 2009, the Company sold available-for-sale bonds to capture realized gains and reinvest in higher yielding securities of the same quality based upon market changes. No securities were sold from the held-to-maturity portfolio in 2011, 2010 or 2009.

Proceeds and gross realized gains and losses from sales of equity securities for 2011, 2010 and 2009 are summarized as follows:

	For the Years Ended December 31,
	2011		2010		2009
	(In thousands)

Proceeds	$	7,504		22,822		22,745
Gross realized gains	$	1,259		7,254		5,292
Gross realized losses	$	-		11		-

In 2011, 2010 and 2009, the Company sold holdings of equity mutual funds that were previously impaired in 2008, generating realized capital gains for financial reporting purposes of $1.3 million, $6.4 million and $4.9 million, respectively, but realized losses for tax purposes. The tax losses offset current year tax gains and were carried back to recover taxes paid on gains in prior years.

Realized investment gains (losses) are as follows:

	For the Years Ended December 31,
	2011			2010			2009
	(In thousands)

Realized investment gains (losses):
Sales, calls and maturities:
Fixed maturities	$	119			753			2,705
Equity securities		1,259			7,343			5,292
Property and equipment		2			(8	)		323
Other long-term investments		16			(49	)		16
Net realized gains		1,396			8,039			8,336
Other-than-temporary impairments ("OTTI")
Fixed maturities		(70	)		(27	)		(103	)
Equity securities		-			-			(193	)
Other long-term investments		(561	)		-			-
Realized loss on OTTI		(631	)		(27	)		(296	)
Net realized investment gains	$	765			8,012			8,040

We recorded an OTTI write-down in 2011 of $70,000 related to one American Airlines ("AMR") debt security holding which had a maturity date in 2012. AMR declared bankruptcy in November of 2011. We also recorded an impairment in 2011 of $0.6 million related to an investment property that was acquired as part of the Ozark acquisition in 2008. A current appraisal reflected a declining value of this Arkansas office building from the fair value at acquisition.

The Company had realized gains of $31,000 from calls of held-to-maturity fixed maturities in 2011.