INVESTMENTS

Our investment in available-for-sale securities, which are reported at fair value, includes fixed maturity securities and prior to January 1, 2018, equity securities. Net unrealized gains or losses on equity securities prior to January 1, 2018, and on fixed maturities are reported after-tax as a component of other comprehensive income. As of January 1, 2018, changes in fair value of equity securities are recognized through net income.

The amortized cost and aggregate fair values of investments in available-for-sale securities as of June 30, 2018 are as follows (dollars in thousands):



Available-for-sale securities:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate debt securities	$	39,440	$	439	$	1,118	$	38,761
Mortgage backed securities	13,773		89		576		13,286
Private label asset backed securities	14,007		205		24		14,188
Obligations of states and political subdivisions	11,954		201		144		12,011
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	19,340		34		584		18,790
Total	$	98,514	$	968	$	2,446	$	97,036

The amortized cost and aggregate fair values of investments in held-to-maturity securities as of June 30, 2018 are as follows (dollars in thousands):



Held-to-maturity securities:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Mortgage backed securities	$	1,523	$	12	$	23	$	1,512
Total	$	1,523	$	12	$	23	$	1,512

The amortized cost and aggregate fair values of investments in available-for-sale securities as of December 31, 2017 are as follows (dollars in thousands):



Available-for-sale securities:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate debt securities	$	39,127	$	1,103	$	321	$	39,909
Mortgage backed securities	12,892		177		274		12,795
Private label asset backed securities	10,128		382		—		10,510
Obligations of states and political subdivisions	13,758		389		54		14,093
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	18,562		206		317		18,451
Total fixed maturities	94,467		2,257		966		95,758
Equity securities	1,842		2,667		—		4,509
Total	$	96,309	$	4,924	$	966	$	100,267

The amortized cost and aggregate fair values of investments in held-to-maturity securities as of December 31, 2017 are as follows (dollars in thousands):



Held-to-maturity securities:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Mortgage backed securities	$	1,615	$	29	$	—	$	1,644
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	1		—		—		1
Total	$	1,616	$	29	$	—	$	1,645

The amortized cost and aggregate fair value of debt securities at June 30, 2018, by contractual maturity, are presented in the following table (dollars in thousands). Expected maturities will differ from contractual maturities because issuers 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	$	1,093	$	1,100
Due after one year through five years	17,858		17,806
Due after five years through ten years	27,667		27,317
Due after ten years	51,896		50,813
Total	$	98,514	$	97,036

Held-to-maturity securities:
Due in one year or less	$	—	$	—
Due after one year through five years	4		5
Due after five years through ten years	48		50
Due after ten years	1,471		1,457
Total	$	1,523	$	1,512

A summary of securities available-for-sale with unrealized losses as of June 30, 2018, 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 (dollars in thousands):



	Less than 12 months				12 months or longer				Total
June 30, 2018	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	$	19,523	$	676	$	7,400	$	442	$	26,923	$	1,118	47
Mortgage backed securities	6,380		164		4,869		412		11,249		576		25
Private asset backed securities	4,381		24		—		—		4,381		24		5
Obligations of state and political subdivisions	4,366		62		2,516		82		6,882		144		14
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	8,691		198		7,677		386		16,368		584		24
	$	43,341	$	1,124	$	22,462	$	1,322	$	65,803	$	2,446	115

A summary of securities held-to-maturity with unrealized losses as of June 30, 2018 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
June 30, 2018	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Total Securities in a Loss Position
Fixed maturities:
Mortgage backed securities	$	1,091	$	23	$	—	$	—	$	1,091	$	23	1
	$	1,091	$	23	$	—	$	—	$	1,091	$	23	1

A summary of securities available-for-sale with unrealized losses as of December 31, 2017, 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 (dollars in thousands):



	Less than 12 months				12 months or longer				Total
December 31, 2017	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	$	6,567	$	166	$	5,607	$	155	$	12,174	$	321	20
Mortgage backed securities	5,872		124		2,281		150		8,153		274		17
Obligations of state and political subdivisions	2,176		7		2,574		47		4,750		54		9
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	4,878		111		6,667		206		11,545		317		18
	$	19,493	$	408	$	17,129	$	558	$	36,622	$	966	64

There were no equity securities or securities held-to-maturity with unrealized losses as of December 31, 2017.

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 in both the debt and equity investment portfolios. The Company has no material exposure to sub-prime mortgage loans and approximately 5.79% 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 six months ended June 30, 2018 and year ended December 31, 2017, the Company realized no other-than-temporary impairments. At June 30, 2018, the single largest loss not realized as an impairment was in the bond portfolio and totaled $103,000. The second largest loss position was in the bond portfolio and totaled $98,000. The third largest loss position was in the bond portfolio and totaled $96,000. At December 31, 2017, the single largest loss not realized as an impairment was in the bond portfolio and totaled $75,000. The second largest loss position was in the bond portfolio and totaled $60,000. The third largest loss position was in the bond portfolio and totaled $53,000.

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



	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018			2017
Fixed maturities	$	963	$	841	$	1,854		$	1,658
Equity securities	20		24		40			48
Mortgage loans on real estate	2		3		4			5
Investment real estate	—		—		1			2
Policy loans	35		33		70			66
Company owned life insurance change in surrender value	3		14		(136		)	57
Other	7		42		15			87
	1,030		957		1,848			1,923
Less: Investment expenses	32		27		69			67
Net investment income	$	998	$	930	$	1,779		$	1,856

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



	Three months ended June 30,					Six months ended June 30,
	2018			2017		2018			2017
Fixed maturities	$	48		$	75	$	129		$	235
Change in fair value of equity securities	(163		)	—		(369		)	—
Other, principally real estate	(88		)	2		(88		)	2
Net realized investment gains (losses)	$	(203	)	$	77	$	(328	)	$	237

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



	June 30, 2018			December 31, 2017
Net change in unrealized gains (losses) on available-for-sale securities before deferred tax	$	(2,768	)	$	1,402
Deferred income tax	581			(476		)
Net change in unrealized gains (losses) on available-for-sale securities	$	(2,187	)	$	926