INVESTMENTS

The amortized cost and aggregate fair values of investments in available-for-sale securities as of September 30, 2013 are as follows:



Available-for-sale securities:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate debt securities	$	34,841	$	1,778	$	507	$	36,112
Trust preferred securities	538		10		—		548
Mortgage backed securities	8,007		90		466		7,631
Private label mortgage backed securities	5,690		158		2		5,846
Obligations of states and political subdivisions	17,034		685		226		17,493
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	10,155		165		348		9,972
Total fixed maturities	76,265		2,886		1,549		77,602
Equity securities	2,465		2,334		424		4,375
Total	$	78,730	$	5,220	$	1,973	$	81,977

The amortized cost and aggregate fair values of investments in held-to-maturity securities as of September 30, 2013 are as follows:



Held-to-maturity securities:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Mortgage backed securities	$	764	$	47	$	—	$	811
Obligations of states and political subdivisions	—		—		—		—
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	114		6		—		120
Total	$	878	$	53	$	—	$	931

The amortized cost and aggregate fair values of investments in available-for-sale securities as of December 31, 2012 are as follows:



Available-for-sale securities:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate debt securities	$	31,387	$	2,430	$	80	$	33,737
Trust preferred securities	537		50		—		587
Mortgage backed securities	8,595		175		85		8,685
Private label mortgage backed securities	7,679		294		9		7,964
Obligations of states and political subdivisions	16,160		1,359		3		17,516
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	7,320		487		2		7,805
Total fixed maturities	71,678		4,795		179		76,294
Equity securities	3,191		2,398		457		5,132
Total	$	74,869	$	7,193	$	636	$	81,426

The amortized cost and aggregate fair values of investments in held-to-maturity securities as of December 31, 2012 are as follows:



Held-to-maturity securities:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Mortgage backed securities	$	1,194	$	91	$	—	$	1,285
Obligations of states and political subdivisions	145		2		—		147
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	163		14		—		177
Total	$	1,502	$	107	$	—	$	1,609

The amortized cost and aggregate fair value of debt securities at September 30, 2013, by contractual maturity, are presented in the following table. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.



	(Dollars in Thousands)
	Amortized Cost		Fair Value
Available-for-sale securities:
Due in one year or less	$	1,155	$	1,185
Due after one year through five years	15,140		16,257
Due after five years through ten years	26,309		26,726
Due after ten years	33,661		33,434
Total	$	76,265	$	77,602

Held-to-maturity securities:
Due in one year or less	$	—	$	—
Due after one year through five years	271		285
Due after five years through ten years	195		207
Due after ten years	412		439
Total	$	878	$	931

A summary of securities available-for-sale with unrealized losses as of September 30, 2013, along with the related fair value, aggregated by the length of time that investments have been in a continuous unrealized loss position, is as

follows:



	Less than 12 months				12 months or longer				Total
September 30, 2013	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Total Securities in a Loss Position
Fixed maturities
Corporate debt securities	$	10,133	$	404	$	1,561	$	103	$	11,694	$	507	25
Mortgage backed securities	3,250		337		1,879		129		5,129		466		17
Private label mortgage backed securities	178		2		—		—		178		2		1
Obligations of state and political subdivisions	2,855		192		322		34		3,177		226		8
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	5,150		259		409		89		5,559		348		11
Equity securities	—		—		862		424		862		424		1
	$	21,566	$	1,194	$	5,033	$	779	$	26,599	$	1,973	63

A summary of securities available-for-sale with unrealized losses as of December 31, 2012, along with the related fair value, aggregated by the length of time that investments have been in a continuous unrealized loss position, is as follows:



	Less than 12 months				12 months or longer				Total
December 31, 2012	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Total Securities in a Loss Position
Fixed maturities
Corporate debt securities	$	2,226	$	31	$	963	$	49	$	3,189	$	80	7
Mortgage backed securities	2,904		77		165		8		3,069		85		8
Private label mortgage backed securities	206		8		65		1		271		9		2
Obligations of state and political subdivisions	356		3		—		—		356		3		1
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	495		2		—		—		495		2		1
Equity securities	—		—		829		457		829		457		1
	$	6,187	$	121	$	2,022	$	515	$	8,209	$	636	20

There were no securities held-to-maturity with unrealized losses as of September 30, 2013 and December 31, 2012.

The Company conducts periodic reviews to identify and evaluate securities in an unrealized loss position in order to identify other-than-temporary impairments. For securities in an unrealized loss position, the Company assesses whether the Company has the intent to sell the security or more-likely-than-not will be required to sell the security before the anticipated recovery. If either of these conditions is met, the Company is required to recognize an other-than-temporary impairment with the entire unrealized loss reported in earnings. For securities in an unrealized loss position that do not meet these conditions, the Company assesses whether the impairment of a security is other-than-temporary. If the impairment is determined to be other-than-temporary, the Company is required to separate the other-than-temporary impairments into two components: the amount representing the credit loss and the amount related to all other factors. The credit loss is the portion of the amortized book value in excess of the net present value of the projected future cash flows discounted at the effective interest rate implicit in the debt security prior to impairment. The credit loss component of other-than-temporary impairments is reported in earnings, whereas the amount relating to factors other than credit losses are recorded in other comprehensive income, net of taxes.

Management has evaluated each security in a significant unrealized loss position. The Company has no material exposure to sub-prime mortgage loans and less than 3.7% of the fixed income investment portfolio is rated below investment grade. In evaluating whether or not the equity loss positions were other-than-temporary impairments, Management evaluated financial information on each company and where available, reviewed analyst reports from at least two independent sources. Based on a review of the available financial information, the prospect for future earnings of each company and consideration of the Company’s intent and ability to hold the securities until market values recovered, it was determined that the securities in an accumulated loss position in the portfolio were temporary impairments.

For the nine months ended September 30, 2013, the Company realized no additional other-than-temporary impairments. The single largest accumulated loss not realized as an impairment was in the equity portfolio and totaled $424,000. The second largest loss position was in the bond portfolio and totaled $110,000. The third largest loss position was in the bond portfolio and totaled $92,000.

For the year ended December 31, 2012, the Company realized $87,000 in other-than-temporary impairments. The single largest accumulated loss not realized as an impairment was in the equity portfolio and totaled $457,000. The second largest loss position was in the bond portfolio and totaled $39,000. The third largest loss position was in the bond portfolio and totaled $27,000.

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



	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013			2012
Fixed maturities	$	846	$	860	$	2,486		$	2,621
Equity securities	34		44		107			156
Mortgage loans on real estate	5		6		17			20
Investment real estate	42		31		123			52
Policy loans	27		24		77			70
Company owned life insurance change in surrender value	48		113		(100		)	284
Other, principally short-term investments	98		115		306			293
	1,100		1,193		3,016			3,496
Less: Investment expenses	54		53		158			155
Net investment income	$	1,046	$	1,140	$	2,858		$	3,341

Major categories of investment gains and losses are summarized as follows (dollars in thousands):



	Three months ended September 30,						Nine months ended September 30,
	2013			2012			2013		2012
Fixed maturities	$	(16	)	$	376		$	110	$	503
Equity securities	(1		)	1,528			928		2,263
Trading securities	—			(1		)	—		1
Other, principally real estate	3,314			(200		)	3,316		7
Other-than-temporary impairments	—			—			—		—
Net realized investment gains	$	3,297		$	1,703		$	4,354	$	2,774

Other, principally real estate gain above reflects the third quarter sale of investment real estate with a carrying value of $1,300,000.

An analysis of the net change in unrealized appreciation on available-for-sale securities follows (dollars in thousands):



	September 30, 2013			December 31, 2012
	(UNAUDITED)
Net change in unrealized appreciation on available-for-sale securities before deferred tax	$	3,310		$	(153	)
Deferred income tax	(1,125		)	52
Net change in unrealized appreciation on available-for-sale securities	$	2,185		$	(101	)