(2) Investments:

The following is a summary of available-for-sale securities at March 31, 2012 and December 31, 2011:

										Net
			Cost or		Gross		Gross			Unrealized
	Fair		Amortized		Unrealized		Unrealized			Gains
	Value		Cost		Gains		Losses			(Losses)
March 31, 2012:
U.S. government obligations	$	72,810	$	72,688	$	156	$	(34	)	$	122
Government sponsored entities		172		170		2		-			2
Residential mortgage-backed securities		19,917		19,804		572		(459	)		113
Commercial mortgage-backed securities		13,614		13,230		503		(119	)		384
States and municipal obligations		186,148		184,923		1,284		(59	)		1,225
Corporate securities		110,484		109,279		2,361		(1,156	)		1,205
Foreign government obligations		22,515		22,294		365		(144	)		221
Total fixed maturities		425,660		422,388		5,243		(1,971	)		3,272
Equity securities:
Financial institutions		11,037		5,106		6,035		(104	)		5,931
Industrial & Miscellaneous		94,253		50,753		44,216		(716	)		43,500
Total equity securities		105,290		55,859		50,251		(820	)		49,431
Total available-for-sale securities	$	530,950	$	478,247	$	55,494	$	(2,791	)		52,703

							Applicable federal income taxes				(18,446	)

							Net unrealized gains - net of tax			$	34,257

December 31, 2011:
U.S. government obligations	$	73,137	$	73,009	$	139	$	(11	)	$	128
Government sponsored entities		349		345		4		-			4
Residential mortgage-backed securities		21,872		21,778		619		(525	)		94
Commercial mortgage-backed securities		11,300		11,388		116		(204	)		(88	)
States and municipal obligations		190,035		188,991		1,275		(231	)		1,044
Corporate securities		91,646		91,949		1,429		(1,732	)		(303	)
Foreign government obligations		21,121		21,483		168		(530	)		(362	)
Total fixed maturities		409,460		408,943		3,750		(3,233	)		517
Equity securities:
Financial institutions		9,428		4,955		4,778		(305	)		4,473
Industrial & Miscellaneous		78,657		42,736		36,921		(1,000	)		35,921
Total equity securities		88,085		47,691		41,699		(1,305	)		40,394
Total available-for-sale securities	$	497,545	$	456,634	$	45,449	$	(4,538	)		40,911

							Applicable federal income taxes				(14,319	)

							Net unrealized gains - net of tax			$	26,592

The Company has three other-than-temporarily impaired fixed maturity securities at March 31, 2012, which were previously impaired. The Company has one other-than-temporary impairment loss relating to fixed maturity securities recognized in accumulated other comprehensive income as of March 31, 2012 and December 31, 2011.

The following table summarizes, for fixed maturity and equity security investments in an unrealized loss position at March 31, 2012 and December 31, 2011, respectively, the aggregate fair value and gross unrealized loss categorized by the duration those securities have been continuously in an unrealized loss position.

	March 31, 2012							December 31, 2011
	Number of Securities		Fair Value		Gross Unrealized Loss			Number of Securities		Fair Value		Gross Unrealized Loss
Fixed maturity securities:
12 months or less		217	$	78,440	$	(1,316	)		206	$	86,470	$	(2,303	)
Greater than 12 months		35		14,183		(655	)		44		11,930		(930	)
Total fixed maturities		252		92,623		(1,971	)		250		98,400		(3,233	)
Equity securities:
12 months or less		16		7,069		(781	)		35		8,317		(1,275	)
Greater than 12 months		4		497		(39	)		4		216		(30	)
Total equity securities		20		7,566		(820	)		39		8,533		(1,305	)
Total fixed maturity and equity securities		272	$	100,189	$	(2,791	)		289	$	106,933	$	(4,538	)

The fair value and the cost or amortized cost of fixed maturity investments, at March 31, 2012, 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	$	144,610	$	144,309
Excess of one year to five years		219,069		216,846
Excess of five years to ten years		14,094		13,872
Excess of ten years		3,264		3,098
Total maturities		381,037		378,125
Asset-backed securities		44,623		44,263
	$	425,660	$	422,388

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

	Three Months Ended
	March 31
	2012			2011
Fixed maturities:
Gross gains	$	550		$	997
Gross losses		(971	)		(1,467	)
Net losses		(421	)		(470	)

Equity securities:
Gross gains		524			1,031
Gross losses		(142	)		(491	)
Net gains		382			540

Limited partnerships - net gain (loss)		5,420			(1,539	)


Total net gains (losses)	$	5,381		$	(1,469	)

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

	Three Months Ended
	March 31
	2012			2011

Realized net gains (losses) on the disposal of securities	$	(96	)	$	408
Mark-to-market adjustment		57			(802	)
Equity in gains (losses) of limited partnership
investments - realized and unrealized		5,420			(1,539	)
Impairment:
Write-downs based upon objective criteria		-			-
Recovery of prior write-downs
upon sale or disposal		-			464

Totals	$	5,381		$	(1,469	)

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 income from limited partnerships for the quarter ending March 31, 2012 includes an estimated $5,531 of net unrealized gains reported to the Company as part of the underlying assets of the various limited partnerships. The value of limited partnerships at March 31, 2012 includes approximately $1,363 of net unrealized gains reported to the Company as part of the underlying assets of the various limited partnerships. Shareholders' equity at March 31, 2012 includes approximately $19,104, net of deferred federal income taxes, of earnings undistributed by limited partnerships.