(2) Investments:

The following is a summary of available-for-sale securities at June 30, 2011 and December 31, 2010:

										Net
			Cost or		Gross		Gross			Unrealized
	Fair		Amortized		Unrealized		Unrealized			Gains
	Value		Cost		Gains		Losses			(Losses)
June 30, 2011:
U.S. government obligations	$	57,738	$	57,584	$	172	$	(18	)	$	154
Government sponsored entities		1,688		1,680		8		-			8
Residential mortgage-backed securities		28,964		28,459		867		(362	)		505
Commercial mortgage-backed securities		18,866		18,759		269		(162	)		107
States and political
subdivisions obligations		191,416		190,006		1,423		(13	)		1,410
Corporate securities		93,336		91,702		1,915		(281	)		1,634
Foreign government obligations		25,168		24,353		906		(91	)		815
Total fixed maturities		417,176		412,543		5,560		(927	)		4,633
Equity securities:
Financial institutions		11,227		5,030		6,270		(73	)		6,197
Industrial & Miscellaneous		93,706		46,511		48,098		(903	)		47,195
Total equity securities		104,933		51,541		54,368		(976	)		53,392
Total available-for-sale securities	$	522,109	$	464,084	$	59,928	$	(1,903	)		58,025

							Applicable federal income taxes				(20,309	)

							Net unrealized gains - net of tax			$	37,716

December 31, 2010:
U.S. government obligations	$	62,998	$	62,882	$	150	$	(34	)	$	116
Government sponsored entities		3,324		3,325		7		(8	)		(1	)
Residential mortgage-backed securities		37,101		36,513		847		(259	)		588
Commercial mortgage-backed securities		14,714		14,417		405		(108	)		297
States and political
subdivisions obligations		192,706		192,236		1,006		(536	)		470
Corporate securities		84,417		83,121		1,931		(635	)		1,296
Foreign government obligations		20,294		20,095		354		(155	)		199
Total fixed maturities		415,554		412,589		4,700		(1,735	)		2,965
Equity securities:
Financial institutions		11,477		4,945		6,559		(27	)		6,532
Industrial & Miscellaneous		85,180		42,532		42,947		(299	)		42,648
Total equity securities		96,657		47,477		49,506		(326	)		49,180
Total available-for-sale securities	$	512,211	$	460,066	$	54,206	$	(2,061	)		52,145

							Applicable federal income taxes				(18,251	)

							Net unrealized gains - net of tax			$	33,894

The Company has no other-than-temporarily impaired fixed maturity securities at June 30, 2011. Additionally, the Company had no other-than-temporary impairment losses relating to fixed maturity securities recognized in accumulated other comprehensive income as of June 30, 2011 and December 31, 2010.

The following table summarizes, for fixed maturity and equity security investments in an unrealized loss position at June 30, 2011 and December 31, 2010, respectively, the aggregate fair value and gross unrealized loss categorized by the duration those securities have been continuously in an unrealized loss position.

	June 30, 2011							December 31, 2010
	Number of Securities		Fair Value		Gross Unrealized Loss			Number of Securities		Fair Value		Gross Unrealized Loss
Fixed maturity securities:
12 months or less		107	$	58,790	$	(676	)		214	$	152,505	$	(1,525	)
Greater than 12 months		9		2,297		(251	)		16		5,460		(210	)
Total fixed maturities		116		61,087		(927	)		230		157,965		(1,735	)
Equity securities:
12 months or less		12		4,395		(255	)		3		1,676		(66	)
Greater than 12 months		11		2,347		(721	)		7		2,394		(260	)
Total equity securities		23		6,742		(976	)		10		4,070		(326	)
Total fixed maturity and equity securities		139	$	67,829	$	(1,903	)		240	$	162,035	$	(2,061	)

The fair value and the cost or amortized cost of fixed maturity investments, at June 30, 2011, by contractual maturity, are shown below. Actual maturities may ultimately differ from contractual maturities because borrowers have, in some cases, the right to call or prepay obligations with or without call or prepayment penalties. Pre-refunded municipal bonds are classified based on their pre-refunded call dates.

	Fair Value		Cost or Amortized Cost

One year or less	$	106,229	$	105,712
Excess of one year to five years		241,396		238,246
Excess of five years to ten years		15,417		15,162
Excess of ten years		6,304		6,205
Total maturities		369,346		365,325
Mortgage-backed securities		47,830		47,218
	$	417,176	$	412,543

Following is a summary of the components of net realized gains (losses) on investments for the periods presented in the accompanying statements of income.

	Three Months Ended						Six Months Ended
	June 30						June 30
	2011			2010			2011			2010
Fixed maturities:
Gross gains	$	1,161		$	888		$	2,158		$	1,840
Gross losses		(402	)		(256	)		(1,869	)		(683	)
Net gains		759			632			289			1,157

Equity securities:
Gross gains		1,198			1,034			2,229			2,230
Gross losses		(283	)		(239	)		(773	)		(715	)
Net gains		915			795			1,456			1,515

Limited partnerships - net loss		(3,637	)		(4,285	)		(5,177	)		(2,340	)


Total net gains (losses)	$	(1,963	)	$	(2,858	)	$	(3,432	)	$	332

Gain and loss activity for investments, as shown in the previous table, are further detailed as follows:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2011			2010			2011			2010

Realized net gains (losses) on the disposal of securities	$	1,636		$	1,442		$	2,044		$	2,687
Mark-to-market adjustment		156			-			(645	)		-
Equity in (losses) of limited partnership
investments - realized and unrealized		(3,637	)		(4,285	)		(5,177	)		(2,340	)
Impairment:
Write-downs based upon objective criteria		(118	)		(15	)		(118	)		(15	)
Recovery of prior write-downs
upon sale or disposal		-			-			464			-

Totals	$	(1,963	)	$	(2,858	)	$	(3,432	)	$	332

The mark-to-market adjustments in the table above represent the changes in fair value of (1) options embedded in convertible debt securities and (2) insurance-linked securities held by the Company.

The net loss from limited partnerships for the quarter and year-to-date ending June 30, 2011 includes an estimated $2,708 and $7,199, respectively, of unrealized losses reported to the Company as part of the underlying assets of the various limited partnerships. The value of limited partnerships at June 30, 2011 includes approximately $9.2 million of unrealized gains reported to the Company as part of the underlying assets of the various limited partnerships. Shareholders' equity at June 30, 2011 includes approximately $26,271, net of deferred federal income taxes, of earnings undistributed by limited partnerships.