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



Three months ended September 30, 2013	Total		P&C Insurance Operations		Life Insurance Operations			Non-Insurance Operations
REVENUE
Net premiums earned	$	13,191	$	11,446	$	1,745		$	—
Net investment income	1,046		474		553			19
Net realized investment gains	3,297		8		(19		)	3,308
Other income	163		152		11			—
	17,697		12,080		2,290			3,327
BENEFITS AND EXPENSES
Policyholder benefits paid	7,112		5,845		1,267			—
Amortization of deferred policy acquisition costs	894		639		255			—
Commissions	1,800		1,704		96			—
General and administrative expenses	2,156		1,444		582			130
Taxes, licenses and fees	438		385		53			—
Interest expense	434		—		34			400
	12,834		10,017		2,287			530
Income (Loss) Before Income Taxes	$	4,863	$	2,063	$	3		$	2,797



Three months 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		—
Amortization of deferred policy acquisition costs	1,056			685			371		—
Commissions	1,949			1,865			84		—
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			—			35		276
	17,362			14,660			2,247		455
Income (Loss) Before Income Taxes	$	(1,357	)	$	(1,810	)	$	784	$	(331	)



Nine months ended September 30, 2013	Total		P&C Insurance Operations		Life Insurance Operations		Non-Insurance Operations
REVENUE
Net premiums earned	$	39,163	$	34,010	$	5,153	$	—
Net investment income	2,858		1,170		1,631		57
Net realized investment gains	4,354		1,038		8		3,308
Other income	480		467		13		—
	46,855		36,685		6,805		3,365
BENEFITS AND EXPENSES
Policyholder benefits paid	24,923		21,474		3,449		—
Amortization of deferred policy acquisition costs	2,759		1,938		821		—
Commissions	5,268		4,986		282		—
General and administrative expenses	6,199		4,052		1,572		575
Taxes, licenses and fees	1,398		1,220		178		—
Interest expense	1,311		—		72		1,239
	41,858		33,670		6,374		1,814
Income (Loss) Before Income Taxes	$	4,997	$	3,015	$	431	$	1,551



Nine months 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		—
Amortization of deferred policy acquisition costs	2,787			2,088		699		—
Commissions	5,923			5,600		323		—
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			36,729		6,695		14,556
Income (Loss) Before Income Taxes	$	(12,284	)	$	414	$	1,699	$	(14,397	)

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 months ended September 30, 2013 and 2012, respectively:



	Three months ended September 30,						Nine months ended September 30,
	2013			2012			2013			2012
Life, accident and health operations premiums written:
Traditional life insurance	$	1,184		$	1,218		$	3,586		$	3,711
Accident and health insurance	604			501			1,485			1,420
Total life, accident and health	1,788			1,719			5,071			5,131
Property and Casualty operations premiums written:
Dwelling fire & extended coverage	7,630			7,164			23,595			21,916
Homeowners (Including mobile homeowners)	6,245			6,053			18,422			18,285
Ocean marine	—			334			75			781
Other liability	429			369			1,311			1,135
Private passenger auto liability	—			(20		)	—			37
Commercial auto liability	—			—			—			6
Auto physical damage	—			(10		)	—			21
Total property and casualty	14,304			13,890			43,403			42,181
Gross premiums written	16,092			15,609			48,474			47,312
Reinsurance premium ceded	(2,103		)	(2,087		)	(6,453		)	(6,193		)
Net premiums written	$	13,989		$	13,522		$	42,021		$	41,119

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 months ended September 30, 2013 and 2012, respectively:



	Three months ended September 30,						Nine months ended September 30,
	2013			2012			2013			2012
Life, accident and health operations premiums earned:
Traditional life insurance	$	1,159		$	1,182		$	3,715		$	3,776
Accident and health insurance	608			502			1,490			1,414
Total life, accident and health	1,767			1,684			5,205			5,190
Property and Casualty operations premiums earned:
Dwelling fire & extended coverage	7,446			6,905			21,720			20,117
Homeowners (Including mobile homeowners)	5,674			5,785			17,007			17,479
Ocean marine	—			275			524			818
Other liability	408			357			1,172			1,040
Private passenger auto liability	—			(9		)	—			319
Commercial auto liability	—			—			—			6
Auto physical damage	—			(2		)	—			149
Total property and casualty	13,528			13,311			40,423			39,928
Gross premiums earned	15,295			14,995			45,628			45,118
Reinsurance premium ceded	(2,104		)	(2,091		)	(6,465		)	(6,185		)
Net premiums earned	$	13,191		$	12,904		$	39,163		$	38,933