Investments

The Company invests primarily in fixed maturity securities, which totaled 83.9% of total investments and cash and cash equivalents at December 31, 2013. Holdings in high quality fixed maturity securities rated A or higher by Standard & Poor's, Inc. totaled 81.2% of investment holdings in this category, reflecting the conservative investment philosophy of the Company.



	December 31, 2013			December 31, 2012
	Carrying Value		% of Total Carrying Value	Carrying Value		% of Total Carrying Value
	(In thousands)			(In thousands)
Fixed maturity securities	$	832,952	83.9	$	791,528	82.7
Equity securities	47,259		4.8	53,741		5.6
Mortgage loans	671		0.1	1,509		0.2
Policy loans	48,868		4.8	42,993		4.5
Real estate and other long-term investments	8,485		0.9	8,553		0.9
Short-term investments	—		—	2,340		0.2
Cash and cash equivalents	54,593		5.5	56,299		5.9
Total cash, cash equivalents and investments	$	992,828	100.0	$	956,963	100.0

The cost, gross unrealized gains and losses and fair value of investments in fixed maturities and equity securities, as of December 31, 2013 and 2012, are as follows.



	December 31, 2013
	Cost or Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
	(In thousands)
Fixed maturities:
Available-for-sale securities:
U.S. Treasury securities	$	10,115	2,348	—	12,463
U.S. Government-sponsored enterprises	53,587		1,209	228	54,568
States and political subdivisions	341,673		6,242	11,449	336,466
Foreign governments	104		23	—	127
Corporate	186,671		12,289	1,399	197,561
Commercial mortgage-backed	300		9	—	309
Residential mortgage-backed	3,494		270	2	3,762
Total available-for-sale securities	595,944		22,390	13,078	605,256
Held-to-maturity securities:
U.S. Government-sponsored enterprises	8,877		197	3	9,071
States and political subdivisions	181,246		1,633	6,412	176,467
Corporate	37,573		771	349	37,995
Total held-to-maturity securities	227,696		2,601	6,764	223,533
Total fixed maturity securities	$	823,640	24,991	19,842	828,789
Equity securities:
Stock mutual funds	$	10,463	1,506	—	11,969
Bond mutual funds	35,080		—	417	34,663
Common stock	17		—	5	12
Preferred stock	323		292	—	615
Total equity securities	$	45,883	1,798	422	47,259



	December 31, 2012
	Cost or Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
	(In thousands)
Fixed maturities:
Available-for-sale securities:
U.S. Treasury securities	$	10,170	3,773	—	13,943
U.S. Government-sponsored enterprises	81,788		3,815	22	85,581
States and political subdivisions	265,812		17,227	777	282,262
Foreign governments	105		36	—	141
Corporate	195,755		20,536	286	216,005
Commercial mortgage-backed	481		17	2	496
Residential mortgage-backed	5,625		469	2	6,092
Total available-for-sale securities	559,736		45,873	1,089	604,520
Held-to-maturity securities:
U.S. Government-sponsored enterprises	28,632		514	—	29,146
States and political subdivisions	125,634		5,435	378	130,691
Corporate	32,742		1,160	—	33,902
Total held-to-maturity securities	187,008		7,109	378	193,739
Total fixed maturity securities	$	746,744	52,982	1,467	798,259
Equity securities:
Stock mutual funds	$	10,463	250	28	10,685
Bond mutual funds	41,504		541	129	41,916
Common stock	17		—	2	15
Preferred stock	760		365	—	1,125
Total equity securities	$	52,744	1,156	159	53,741

For investments of available-for-sale fixed maturities that have unrealized losses as of December 31, 2013, 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, 2013
	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	$	14,032	228	12	—	—	—	14,032	228	12
States and political subdivisions	183,280		9,872	203	15,673	1,577	16	198,953	11,449	219
Corporate	35,789		1,048	25	2,426	351	2	38,215	1,399	27
Residential mortgage-backed	57		1	3	42	1	1	99	2	4
Total available-for-sale securities	233,158		11,149	243	18,141	1,929	19	251,299	13,078	262
Held-to-maturity securities:
U.S. Government-sponsored enterprises	2,997		3	1	—	—	—	2,997	3	1
States and political subdivisions	100,153		5,236	118	14,797	1,176	17	114,950	6,412	135
Corporate	5,225		349	4	—	—	—	5,225	349	4
Total held-to-maturity securities	108,375		5,588	123	14,797	1,176	17	123,172	6,764	140
Total fixed maturities	$	341,533	16,737	366	32,938	3,105	36	374,471	19,842	402
Equity securities:
Bond mutual funds	$	34,663	417	7	—	—	—	34,663	417	7
Common stocks	12		5	1	—	—	—	12	5	1
Total equities	$	34,675	422	8	—	—	—	34,675	422	8

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, 2013 based upon the items above for impairment.

For investments of available-for-sale fixed maturities and equity securities that have unrealized losses as of December 31, 2012, 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, 2012
	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	$	10,603	22	9	—	—	—	10,603	22	9
States and political subdivisions	54,115		443	61	5,099	334	2	59,214	777	63
Corporate	22,316		286	16	—	—	—	22,316	286	16
Commercial mortgage-backed	94		2	1	—	—	—	94	2	1
Residential mortgage-backed	—		—	—	52	2	1	52	2	1
Total available-for-sale securities	87,128		753	87	5,151	336	3	92,279	1,089	90
Held-to-maturity securities:
States and political subdivisions	40,611		378	32	—	—	—	40,611	378	32
Total held-to-maturity securities	40,611		378	32	—	—	—	40,611	378	32
Total fixed maturities	$	127,739	1,131	119	5,151	336	3	132,890	1,467	122
Equity securities:
Stock mutual funds	$	—	—	—	972	28	1	972	28	1
Bond mutual funds	3,335		88	1	2,959	41	2	6,294	129	3
Common stocks	15		2	1	—	—	—	15	2	1
Total equities	$	3,350	90	2	3,931	69	3	7,281	159	5

The amortized cost and fair value of fixed maturities at December 31, 2013 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	$	17,183	17,414
Due after one year through five years	117,140		123,970
Due after five years through ten years	94,156		96,647
Due after ten years	367,465		367,225
Total available-for-sale securities	595,944		605,256
Held-to-maturity securities:
Due in one year or less	8,912		8,992
Due after one year through five years	37,750		38,170
Due after five years through ten years	43,384		43,888
Due after ten years	137,650		132,483
Total held-to-maturity securities	227,696		223,533
Total fixed maturities	$	823,640	828,789

The Company had no investments in any one entity, excluding U.S. Government agencies, which exceeded 10% of stockholders' equity at December 31, 2013. In addition, there were no investments that were non-income producing for the year ended December 31, 2013.

Major categories of net investment income are summarized as follows:



	For the Years Ended December 31,
	2013			2012		2011
	(In thousands)
Investment income on:
Fixed maturities	$	32,604		27,470		26,606
Equity securities	1,839			2,158		1,534
Mortgage loans on real estate	68			104		99
Policy loans	3,637			3,332		3,024
Long-term investments	229			234		225
Other	64			99		122
Total investment income	38,441			33,397		31,610
Investment expenses	(1,844		)	(1,672	)	(1,511	)
Net investment income	$	36,597		31,725		30,099

Proceeds and gross realized gains and losses from sales of fixed maturities available-for-sale for 2013, 2012 and 2011 are summarized as follows:



	For the Years Ended December 31,
	2013		2012	2011
	(In thousands)
Proceeds	$	316	576	—
Gross realized gains	$	7	54	—
Gross realized losses	$	1	3	—

In 2013, two bonds were sold for a gain related to the non-insurance subsidiaries holdings. Certain securities were sold during 2012 from a tax planning perspective and due to statutory reporting considerations related to non-rated securities.

There were no securities sold from the held-to-maturity portfolio in 2013, 2012 or 2011.

Proceeds and gross realized gains and losses from sales of equity securities for 2013, 2012 and 2011 are summarized as follows:



	For the Years Ended December 31,
	2013		2012	2011
	(In thousands)
Proceeds	$	5,996	2,855	7,504
Gross realized gains	$	—	632	1,259
Gross realized losses	$	428	—	—

In December of 2013, the Company sold two equity mutual funds that resulted in a loss of $0.4 million due to circumstances that arose relative to tax planning considerations. During 2012 and 2011, the Company sold holdings of equity mutual funds that were previously impaired, generating realized capital gains for financial reporting purposes of $0.6 million and $1.3 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,
	2013			2012		2011
	(In thousands)
Realized investment gains (losses):
Sales, calls and maturities:
Fixed maturities	$	199		824		119
Equity securities	(436		)	636		1,259
Property and equipment	—			—		2
Other long-term investments	(10		)	55		16
Net realized gains (losses)	(247		)	1,515		1,396
Other-than-temporary impairments ("OTTI")
Fixed maturities	—			(1,319	)	(70	)
Other long-term investments	—			—		(561	)
Realized loss on OTTI	—			(1,319	)	(631	)
Net realized investment gains (losses)	$	(247	)	196		765

We recorded an OTTI write-down in 2012 of $1,319,000 related to a coal powered energy issuer debt security holding which has a maturity date in 2017. We also recorded impairments in 2011 of $70,000 related to a bond issuer that declared bankruptcy in 2011.

The Company had realized gains of $199,000 from calls of held-to-maturity fixed maturities in 2013.