SEGMENTS

The Company’s property and casualty insurance operations comprise one business segment. The property and casualty insurance segment consists of seven lines of business: dwelling fire and extended coverage, homeowners (including mobile homeowners), ocean marine, other liability, private passenger auto liability, commercial auto liability and auto physical damage. Management organizes the business utilizing a niche strategy focusing on lower valued dwellings. Our chief decision makers (President, Chief Financial Officer and Chief Executive Officer) review results and operating plans making decisions on resource allocations on a company-wide basis. The Company’s products are primarily produced through agents within the states in which we operate. The Company’s life and accident and health operations comprise the second business segment. The life and accident and health insurance segment consists of two lines of business: traditional life insurance and accident and health insurance. Premium revenues and operating income by industry segment for the three and nine-month periods ended September 30, 2012, and 2011 (unaudited) are summarized below (dollars in thousands):



Three-Month Period Ended September 30, 2012	Total			P&C Insurance Operations			Life Insurance Operations		Non-Insurance Operations
REVENUE
Net premiums earned	$	12,904		$	11,243		$	1,661	$	—
Net investment income	1,140			560			541		39
Net realized investment gains	1,703			875			829		(1		)
Other income	258			172			—		86
	16,005			12,850			3,031		124
BENEFITS AND EXPENSES
Policyholder benefits paid	11,564			10,302			1,262		—
Policy acquisition costs	3,005			2,549			456		—
General and administrative expenses	1,954			1,415			436		103
Litigation settlement and defense costs	76			—			—		76
Taxes, licenses and fees	452			393			59		—
Interest expense	311			—			62		249
	17,362			14,659			2,275		428
Income (Loss) Before Income Taxes	$	(1,357	)	$	(1,809	)	$	756	$	(304	)



Three-Month Period Ended September 30, 2011	Total			P&C Insurance Operations			Life Insurance Operations			Non-Insurance Operations
REVENUE
Net premiums earned	$	14,340		$	12,606		$	1,734		$	—
Net investment income	936			407			512			17
Net realized investment gains	(203		)	13			(110		)	(106		)
Other income	217			216			1			—
	15,290			13,242			2,137			(89		)
BENEFITS AND EXPENSES
Policyholder benefits paid	10,045			8,924			1,121			—
Policy acquisition costs	2,899			2,558			341			—
General and administrative expenses	2,205			1,685			523			(3		)
Litigation settlement and defense costs	388			—			—			388
Taxes, licenses and fees	394			339			55			—
Interest expense	293			—			20			273
	16,224			13,506			2,060			658
Income (Loss) Before Income Taxes	$	(934	)	$	(264	)	$	77		$	(747	)



Nine-Month Period Ended September 30, 2012	Total			P&C Insurance Operations		Life Insurance Operations		Non-Insurance Operations
REVENUE
Net premiums earned	$	38,933		$	33,801	$	5,132	$	—
Net investment income	3,341			1,700		1,569		72
Net realized investment gains	2,774			1,082		1,691		1
Other income	648			560		2		86
	45,696			37,143		8,394		159
BENEFITS AND EXPENSES
Policyholder benefits paid	27,385			23,478		3,907		—
Policy acquisition costs	8,710			7,687		1,023		—
General and administrative expenses	6,277			4,355		1,528		394
Litigation settlement and defense costs	13,335			—		—		13,335
Taxes, licenses and fees	1,382			1,208		174		—
Interest expense	891			—		64		827
	57,980			36,728		6,696		14,556
Income (Loss) Before Income Taxes	$	(12,284	)	$	415	$	1,698	$	(14,397	)



Nine-Month Period Ended September 30, 2011	Total			P&C Insurance Operations			Life Insurance Operations		Non-Insurance Operations
REVENUE
Net premiums earned	$	42,531		$	37,151		$	5,380	$	—
Net investment income	3,164			1,640			1,470		54
Net realized investment gains	828			656			248		(76		)
Other income	728			725			3		—
	47,251			40,172			7,101		(22		)
BENEFITS AND EXPENSES
Policyholder benefits paid	35,049			31,121			3,928		—
Policy acquisition costs	8,894			8,049			845		—
General and administrative expenses	6,794			4,737			1,697		360
Litigation settlement and defense costs	1,177			—			—		1,177
Taxes, licenses and fees	1,496			1,215			281		—
Interest expense	863			—			51		812
	54,273			45,122			6,802		2,349
Income (Loss) Before Income Taxes	$	(7,022	)	$	(4,950	)	$	299	$	(2,371	)

The following table presents the Company’s gross and net premiums written for the property and casualty segment and the life and accident and health segment for the three and nine-month periods ended September 30, 2012 and 2011, respectively:



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012		2011
Life, accident and health operations premiums written:
Traditional life insurance	$	1,195		$	1,302		3,653		$	2,688
Accident and health insurance	501			475			1,420		958
Total life, accident and health	1,696			1,777			5,073		3,646

Property and Casualty operations premiums written:
Dwelling fire & extended coverage	7,164			6,551			21,916		20,518
Homeowners (Including mobile homeowners)	6,053			6,223			18,285		19,669
Ocean marine	334			431			781		947
Other liability	369			338			1,135		1,049
Private passenger auto liability	(20		)	410			37		1,657
Commercial auto liability	—			80			6		291
Auto physical damage	(10		)	185			21		696
Total property and casualty	13,890			14,218			42,181		44,827

Gross premiums written	15,586			15,995			47,254		48,473
Reinsurance premium ceded	(2,064		)	(1,612		)	(6,135	)	(6,116		)

Net premiums written	$	13,522		$	14,383		41,119		$	42,357

The following table presents the Company’s gross and net premiums earned for the property and casualty segment and the life and accident and health segment for the three and nine-month periods ended September 30, 2012 and 2011, respectively:



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Life, accident and health operations premiums earned:
Traditional life insurance	$	1,159		$	1,225		$	3,717		$	3,914
Accident and health insurance	501			509			1,414			1,466
Total life, accident and health	1,660			1,734			5,131			5,380

Property and Casualty operations premiums earned:
Dwelling fire & extended coverage	6,905			6,606			20,117			19,771
Homeowners (Including mobile homeowners)	5,785			6,230			17,479			18,701
Ocean marine	275			294			818			913
Other liability	357			332			1,040			963
Private passenger auto liability	(9		)	502			319			1,942
Commercial auto liability	—			80			6			291
Auto physical damage	(2		)	206			149			776
Total property and casualty	13,311			14,250			39,928			43,357

Gross premiums earned	14,971			15,984			45,059			48,737
Reinsurance premium ceded	(2,067		)	(1,644		)	(6,126		)	(6,206		)

Net premiums earned	$	12,904		$	14,340		$	38,933		$	42,531