2.Investments:

The amortized cost and estimated fair value of investments in debt and equity securities by category is as follows (in thousands):


			Gross		Gross
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses		Fair Value
As of December 31, 2018
U.S. Treasury securities and obligations of U.S. Government	$	48,609	$	5	$	(508)	$	48,106
Corporate bonds		243,314		440		(1,602)		242,152
Collateralized corporate bank loans		131,779		19		(5,270)		126,528
Municipal bonds		112,574		3,791		(838)		115,527
Mortgage-backed		13,992		11		(446)		13,557
Total debt securities		550,268		4,266		(8,664)		545,870
Total equity securities		68,709		20,693		(8,506)		80,896
Total other investments		3,763		—		(2,615)		1,148
Total investments	$	622,740	$	24,959	$	(19,785)	$	627,914

As of December 31, 2017
U.S. Treasury securities and obligations of U.S. Government	$	50,088	$	7	$	(148)	$	49,947
Corporate bonds		278,611		1,204		(742)		279,073
Collateralized corporate bank loans		125,536		702		(301)		125,937
Municipal bonds		134,052		709		(505)		134,256
Mortgage-backed		16,712		37		(216)		16,533
Total debt securities		604,999		2,659		(1,912)		605,746
Total equity securities		30,253		23,014		(1,504)		51,763
Total other investments		3,763		61		—		3,824
Total investments	$	639,015	$	25,734	$	(3,416)	$	661,333

Major categories of net investment income are summarized as follows (in thousands):


	Twelve Months Ended December 31,
	2018		2017
U.S. Treasury securities and obligations of U.S. Government	$	902	$	566
Corporate bonds		6,696		7,839
Collateralized corporate bank loans		5,658		4,302
Municipal bonds		3,757		4,633
Mortgage-backed		521		1,049
Equity securities		1,151		871
Other investments		—		—
Cash and cash equivalents		518		706
		19,203		19,966
Investment expenses		(971)		(1,092)
Investment income, net of expenses	$	18,232	$	18,874

No investments in any entity or its affiliates exceeded 10% of stockholders’ equity at December 31, 2018 or 2017.

Major categories of net investment gains (losses) on investments are summarized as follows (in thousands):


	Twelve Months Ended December 31,
	2018		2017
U.S. Treasury securities and obligations of U.S. Government	$	—	$	—
Corporate bonds		(83)		(468)
Collateralized corporate bank loans		90		79
Municipal bonds		1,435		195
Mortgage-backed		2		(9)
Equity securities		359		7,002
Gain on investments		1,803		6,799
Unrealized loss on other investments		(2,676)		(1,127)
Other-than-temporary impairments		—		(5,877)
Unrealized losses on equity investments		(9,322)		—
Investment losses, net	$	(10,195)	$	(205)

We realized gross gains on investments of $2.5 million and $8.0 million during the years ended December 31, 2018 and 2017, respectively, of which $1.5 million and $7.2 million were from the sales of securities during the years ended December 31, 2018 and 2017, respectively. We realized gross losses on investments of $0.7 million and $1.2 million during the years ended December 31, 2018 and 2017, respectively, of which none were from the sales of securities during the years ended December 31, 2018 and 2017, respectively. We recorded proceeds from the sale of investment securities of $17.7 million, and $29.1 million during the years ended December 31, 2018 and 2017, respectively. Realized investment gains and losses are recognized in operations on the first in-first out method.

The following schedules summarize the gross unrealized losses showing the length of time that investments have been continuously in an unrealized loss position as of December 31, 2018 and December 31, 2017 (in thousands):


	As of December 31, 2018
	12 months or less				Longer than 12 months				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
U.S. Treasury securities and obligations of U.S. Government	$	18,902	$	(181)	$	28,201	$	(327)	$	47,103	$	(508)
Corporate bonds		117,450		(907)		100,060		(695)		217,510		(1,602)
Collateralized corporate bank loans		120,410		(4,938)		4,931		(332)		125,341		(5,270)
Municipal bonds		14,281		(96)		25,891		(742)		40,172		(838)
Mortgage-backed		6,592		(60)		5,986		(386)		12,578		(446)
Total debt securities		277,635		(6,182)		165,069		(2,482)		442,704		(8,664)
Total equity securities		30,981		(3,699)		4,475		(4,807)		35,456		(8,506)
Total other investments		1,148		(2,615)		—		—		1,148		(2,615)
Total investments	$	309,764	$	(12,496)	$	169,544	$	(7,289)	$	479,308	$	(19,785)


	As of December 31, 2017
	12 months or less				Longer than 12 months				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
U.S. Treasury securities and obligations of U.S. Government	$	28,825	$	(145)	$	1,997	$	(3)	$	30,822	$	(148)
Corporate bonds		176,061		(736)		2,378		(6)		178,439		(742)
Collateralized corporate bank loans		30,008		(280)		2,517		(21)		32,525		(301)
Municipal bonds		35,200		(370)		8,917		(135)		44,117		(505)
Mortgage-backed		6,419		(127)		1,415		(89)		7,834		(216)
Total debt securities		276,513		(1,658)		17,224		(254)		293,737		(1,912)
Total equity securities		8,375		(1,504)		—		—		8,375		(1,504)
Total other investments		—		—		—		—		—		—
Total investments	$	284,888	$	(3,162)	$	17,224	$	(254)	$	302,112	$	(3,416)

We held a total of 328 debt securities with an unrealized loss, of which 221 were in an unrealized loss position for less than one year and 107 were in an unrealized loss position for a period of one year or greater, as of December 31, 2018. We held a total of 224 debt securities with an unrealized loss, of which 199 were in an unrealized loss position for less than one year and 25 were in an unrealized loss position for a period of one year or greater, as of December 31, 2017. We held a total of 20 equity securities with an unrealized loss, of which 17 were in an unrealized loss position for less than one year and 3 were in an unrealized loss position for a period of one year or greater, as of December 31, 2018. We held a total of 4 equity securities with an unrealized loss, of which all were in an unrealized loss position for less than one year as of December 31, 2017. We consider these losses as a temporary decline in value as they are predominately on securities that we do not intend to sell and do not believe we will be required to sell prior to recovery of our amortized cost basis. The gross unrealized losses on the debt security positions at December 31, 2018 were due predominately to normal market and interest rate fluctuations and we see no other indications that the decline in values of these securities is other-than-temporary.

Based on evidence gathered through our normal credit evaluation process, we presently expect that all debt securities held in our investment portfolio will be paid in accordance with their contractual terms. Nonetheless, it is at least reasonably possible that the performance of certain issuers of these debt securities will be worse than currently expected resulting in future write-downs within our portfolio of debt securities.

Also, as a result of the challenging market conditions, we expect the volatility in the valuation of our equity securities to continue in the foreseeable future. This volatility may lead to changes regarding retention strategies for certain equity securities.

We complete a detailed analysis each quarter to assess whether any decline in the fair value of any debt security below cost is deemed other-than-temporary. All debt securities with an unrealized loss are reviewed. We recognize an impairment loss when a debt security’s value declines below cost, adjusted for accretion, amortization and previous other-than-temporary impairments and it is determined that the decline is other-than-temporary. We did not recognize an impairment loss during 2018. We recognized other-than-temporary losses on our debt securities portfolio of $5.9 million during 2017, all related to credit losses on certain senior and subordinated municipal bonds concentrated in Puerto Rico. The fair value of the impaired securities was $6.1 million and $4.4 million at December 31, 2018 and 2017, respectively. During 2018 we sold one security with a realized loss of $0.1 million and recognized a change in unrealized gain of $1.8 million on the remaining securities.

Debt Investments: We assess whether we intend to sell, or it is more likely than not that we will be required to sell, a fixed maturity investment before recovery of its amortized cost basis less any current period credit losses. For fixed maturity investments that are considered other-than-temporarily impaired and that we do not intend to sell and will not be required to sell, we separate the amount of the impairment into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the investment’s amortized cost basis and the present value of its expected future cash flows. The remaining difference between the investment’s fair value and the present value of future expected cash flows is recognized in other comprehensive income.

Equity Investments: On January 1, 2018, we adopted ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities”. ASU 2016-01 requires equity investments that are not consolidated or accounted for under the equity method of accounting to be measured at fair value with changes in fair value recognized in net income each reporting period. As a result of the new standard, equity securities with readily determinable fair values are no longer required to be evaluated for other-than-temporary-impairment.

Prior to the adoption of ASU 2016-01,some of the factors considered in evaluating whether a decline in fair value for an equity investment is other-than-temporary include: (1) our ability and intent to retain the investment for a period of time sufficient to allow for an anticipated recovery in value; (2) the recoverability of cost; (3) the length of time and extent to which the fair value has been less than cost; and (4) the financial condition and near-term and long-term prospects for the issuer, including the relevant industry conditions and trends, and implications of rating agency actions and offering prices. When it was determined that an equity investment was other-than-temporarily impaired, the security was written down to fair value, and the amount of the impairment was included in earnings as a realized investment loss. The fair value then became the new cost basis of the investment, and any subsequent recoveries in fair value were recognized at disposition. We recognized a realized loss when impairment was deemed to be other-than-temporary even if a decision to sell an equity investment had not been made. If we decided to sell a temporarily impaired available-for-sale equity investment and we did not expect the fair value of the equity investment to fully recover prior to the expected time of sale, the investment was deemed to be other-than-temporarily impaired in the period in which the decision to sell was made.

Details regarding the carrying value of the other invested assets portfolio as of December 31, 2018 and 2017 were as follows:


	2018		2017
Investment Type
Equity warrant	$	1,148	$	3,824
Total other investments	$	1,148	$	3,824

We acquired this equity warrant in an active market and it entitles us to buy the underlying common stock of a publicly traded company at a fixed exercise price until the expiration date of January 19, 2021.

The amortized cost and estimated fair value of debt securities at December 31, 2018 by contractual maturity are as follows. Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without penalties.


	Amortized Cost		Fair Value
	(in thousands)
Due in one year or less	$	119,771	$	120,127
Due after one year through five years		284,992		284,947
Due after five years through ten years		105,656		102,047
Due after ten years		25,857		25,192
Mortgage-backed		13,992		13,557
	$	550,268	$	545,870

We have certain of our securities pledged for the benefit of various state insurance departments and reinsurers. These securities are included with our available-for-sale debt securities because we have the ability to trade these securities. We retain the interest earned on these securities. These securities had a carrying value of $29.5 million at December 31, 2018 and a carrying value of $26.2 million at December 31, 2017.