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 September 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	$	39,241	$	422	$	1,063	$	38,600
Mortgage backed securities	14,486		55		694		13,847
Private label asset backed securities	13,762		130		40		13,852
Obligations of states and political subdivisions	11,685		140		182		11,643
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	21,022		18		763		20,277
Total	$	100,196	$	765	$	2,742	$	98,219

The amortized cost and aggregate fair values of investments in held-to-maturity securities as of September 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	$	1,482	$	6	$	34	$	1,454
Total	$	1,482	$	6	$	34	$	1,454

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 September 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	$	1,089	$	1,093
Due after one year through five years	19,620		19,538
Due after five years through ten years	27,204		26,801
Due after ten years	52,283		50,787
Total	$	100,196	$	98,219

Held-to-maturity securities:
Due in one year or less	$	—	$	—
Due after one year through five years	47		49
Due after five years through ten years	—		—
Due after ten years	1,435		1,405
Total	$	1,482	$	1,454

A summary of securities available-for-sale with unrealized losses as of September 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
September 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	$	20,029	$	631	$	6,906	$	432	$	26,935	$	1,063	49
Mortgage backed securities	7,491		233		4,734		461		12,225		694		29
Private asset backed securities	4,854		40		—		—		4,854		40		6
Obligations of state and political subdivisions	3,660		54		3,458		128		7,118		182		15
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	11,243		232		8,442		531		19,685		763		28
	$	47,277	$	1,190	$	23,540	$	1,552	$	70,817	$	2,742	127

A summary of securities held-to-maturity with unrealized losses as of September 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
September 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	$	1,044	$	34	$	—	$	—	$	1,044	$	34	1
	$	1,044	$	34	$	—	$	—	$	1,044	$	34	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 5.75% 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, 2018 and year ended December 31, 2017, the Company realized no other-than-temporary impairments. At September 30, 2018, the three largest losses not realized as an impairment were in the bond portfolio and each totaled $108,000. Each of these losses was driven by changes in market interest rates. 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 September 30,				Nine months ended September 30,
	2018		2017		2018			2017
Fixed maturities	$	989	$	860	$	2,843		$	2,518
Equity securities	21		24		61			72
Mortgage loans on real estate	2		2		6			7
Investment real estate	1		2		2			4
Policy loans	35		30		105			96
Company owned life insurance change in surrender value	3		38		(133		)	95
Other	6		14		21			101
	1,057		970		2,905			2,893
Less: Investment expenses	37		31		106			98
Net investment income	$	1,020	$	939	$	2,799		$	2,795

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



	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018			2017
Fixed maturities	$	27	$	75	$	156		$	310
Change in fair value of equity securities	426		—		57			—
Other, principally real estate	—		—		(88		)	2
Net realized investment gains (losses)	$	453	$	75	$	125		$	312

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



	September 30, 2018			December 31, 2017
Net change in unrealized gains (losses) on available-for-sale securities before deferred tax	$	(3,268	)	$	1,402
Deferred income tax	686			(476		)
Net change in unrealized gains (losses) on available-for-sale securities	$	(2,582	)	$	926