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 six months ended June 30, 2013 and 2012 are summarized below (dollars in thousands):



Three months ended June 30, 2013	Total		P&C Insurance Operations		Life Insurance Operations			Non-Insurance Operations
REVENUE
Net premiums earned	$	13,038	$	11,376	$	1,662		$	—
Net investment income	728		219		490			19
Net realized investment gains	1,030		1,028		2			—
Other income	145		145		—			—
	14,941		12,768		2,154			19
BENEFITS AND EXPENSES
Policyholder benefits paid	8,260		7,076		1,184			—
Amortization of deferred policy acquisition costs	923		638		285			—
Commissions	1,486		1,396		90			—
General and administrative expenses	2,201		1,363		549			289
Taxes, licenses and fees	474		423		51			—
Interest expense	435		—		17			418
	13,779		10,896		2,176			707
Income (Loss) Before Income Taxes	$	1,162	$	1,872	$	(22	)	$	(688	)



Three months ended June 30, 2012	Total			P&C Insurance Operations		Life Insurance Operations		Non-Insurance Operations
REVENUE
Net premiums earned	$	12,533		$	10,814	$	1,719	$	—
Net investment income	1,066			529		520		17
Net realized investment gains	865			75		790		—
Other income	193			192		1		—
	14,657			11,610		3,030		17
BENEFITS AND EXPENSES
Policyholder benefits paid	7,976			6,763		1,213		—
Amortization of deferred policy acquisition costs	915			686		229		—
Commissions	2,018			1,908		110		—
General and administrative expenses	1,835			1,111		644		80
Litigation settlement and defense costs	12,670			—		—		12,670
Taxes, licenses and fees	438			385		53		—
Interest expense	288			—		35		253
	26,140			10,853		2,284		13,003
Income (Loss) Before Income Taxes	$	(11,483	)	$	757	$	746	$	(12,986	)



Six months ended June 30, 2013	Total		P&C Insurance Operations		Life Insurance Operations		Non-Insurance Operations
REVENUE
Net premiums earned	$	25,972	$	22,564	$	3,408	$	—
Net investment income	1,812		696		1,078		38
Net realized investment gains	1,057		1,030		27		—
Other income	317		315		2		—
	29,158		24,605		4,515		38
BENEFITS AND EXPENSES
Policyholder benefits paid	17,811		15,629		2,182		—
Amortization of deferred policy acquisition costs	1,865		1,299		566		—
Commissions	3,468		3,282		186		—
General and administrative expenses	4,043		2,608		990		445
Taxes, licenses and fees	960		835		125		—
Interest expense	877		—		38		839
	29,024		23,653		4,087		1,284
Income (Loss) Before Income Taxes	$	134	$	952	$	428	$	(1,246	)



Six months ended June 30, 2012	Total			P&C Insurance Operations		Life Insurance Operations		Non-Insurance Operations
REVENUE
Net premiums earned	$	26,029		$	22,558	$	3,471	$	—
Net investment income	2,201			1,140		1,028		33
Net realized investment gains	1,071			207		862		2
Other income	390			388		2		—
	29,691			24,293		5,363		35
BENEFITS AND EXPENSES
Policyholder benefits paid	15,821			13,176		2,645		—
Amortization of deferred policy acquisition costs	1,731			1,403		328		—
Commissions	3,974			3,735		239		—
General and administrative expenses	4,323			2,940		1,092		291
Litigation settlement and defense costs	13,259			—		—		13,259
Taxes, licenses and fees	930			815		115		—
Interest expense	580			—		37		543
	40,618			22,069		4,456		14,093
Income (Loss) Before Income Taxes	$	(10,927	)	$	2,224	$	907	$	(14,058	)

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 six months ended June 30, 2013 and 2012, respectively:



	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
Life, accident and health operations premiums written:
Traditional life insurance	$	1,184		$	1,263		$	2,402		$	2,493
Accident and health insurance	437			455			881			919
Total life, accident and health	1,621			1,718			3,283			3,412
Property and Casualty operations premiums written:
Dwelling fire & extended coverage	8,406			7,825			15,965			14,752
Homeowners (Including mobile homeowners)	6,756			6,745			12,177			12,232
Ocean marine	(17		)	363			75			447
Other liability	474			409			882			766
Private passenger auto liability	—			(12		)	—			57
Commercial auto liability	—			—			—			6
Auto physical damage	—			(5		)	—			31
Total property and casualty	15,619			15,325			29,099			28,291
Gross premiums written	17,240			17,043			32,382			31,703
Reinsurance premium ceded	(2,199		)	(2,431		)	(4,350		)	(4,106		)
Net premiums written	$	15,041		$	14,612		$	28,032		$	27,597

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 six months ended June 30, 2013 and 2012, respectively:



	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
Life, accident and health operations premiums earned:
Traditional life insurance	$	1,240		$	1,285		$	2,556		$	2,593
Accident and health insurance	433			449			882			913
Total life, accident and health	1,673			1,734			3,438			3,506
Property and Casualty operations premiums earned:
Dwelling fire & extended coverage	7,256			6,665			14,274			13,212
Homeowners (Including mobile homeowners)	5,652			5,790			11,333			11,694
Ocean marine	269			275			524			543
Other liability	391			343			764			683
Private passenger auto liability	—			93			—			328
Commercial auto liability	—			—			—			6
Auto physical damage	—			44			—			151
Total property and casualty	13,568			13,210			26,895			26,617
Gross premiums earned	15,241			14,944			30,333			30,123
Reinsurance premium ceded	(2,203		)	(2,411		)	(4,361		)	(4,094		)
Net premiums earned	$	13,038		$	12,533		$	25,972		$	26,029