(2) Investments:

The following is a summary of available-for-sale securities at March 31, 2013 and December 31, 2012:

										Net
			Cost or		Gross		Gross			Unrealized
	Fair		Amortized		Unrealized		Unrealized			Gains
	Value		Cost		Gains		Losses			(Losses)
March 31, 2013
Fixed maturities
U.S. government obligations	$	75,562	$	75,575	$	81	$	(94	)	$	(13	)
Residential mortgage-backed securities		23,190		21,611		1,692		(113	)		1,579
Commercial mortgage-backed securities		12,444		11,663		806		(25	)		781
States and municipal obligations		179,854		179,180		784		(110	)		674
Corporate securities		119,717		117,988		2,861		(1,132	)		1,729
Foreign government obligations		21,854		21,641		300		(87	)		213
Total fixed maturities		432,621		427,658		6,524		(1,561	)		4,963
Equity securities:
Financial institutions		13,205		5,618		7,627		(40	)		7,587
Industrial & miscellaneous		102,172		58,786		44,261		(875	)		43,386
Total equity securities		115,377		64,404		51,888		(915	)		50,973
Total	$	547,998	$	492,062	$	58,412	$	(2,476	)		55,936

							Applicable federal income taxes				(19,578	)

							Net unrealized gains - net of tax			$	36,358

December 31, 2012
Fixed maturities
U.S. government obligations	$	70,742	$	70,720	$	43	$	(21	)	$	22
Residential mortgage-backed securities		25,040		23,954		1,218		(132	)		1,086
Commercial mortgage-backed securities		11,828		11,006		849		(27	)		822
State and municipal obligations		194,865		194,258		757		(150	)		607
Corporate securities		120,596		118,574		2,923		(901	)		2,022
Foreign government obligations		22,598		22,047		602		(51	)		551
Total fixed maturities		445,669		440,559		6,392		(1,282	)		5,110
Equity securities:
Financial institutions		12,394		5,925		6,542		(73	)		6,469
Industrial & miscellaneous		95,188		52,202		44,568		(1,582	)		42,986
Total equity securities		107,582		58,127		51,110		(1,655	)		49,455
Total	$	553,251	$	498,686	$	57,502	$	(2,937	)		54,565

							Applicable federal income taxes				(19,098	)

							Net unrealized gains - net of tax			$	35,467

The Company has six other-than-temporarily impaired fixed maturity securities at March 31, 2013 compared to five such securities at December 31, 2012. Four of these investments have other-than-temporary impairment losses recognized in accumulated other comprehensive income at both March 31, 2013 and December 31, 2012.

The following table summarizes, for fixed maturity and equity security investments in an unrealized loss position at March 31, 2013 and December 31, 2012, 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, 2013							December 31, 2012
	Number of Securities		Fair Value		Gross Unrealized Loss			Number of Securities		Fair Value		Gross Unrealized Loss
Fixed maturity securities:
12 months or less		176	$	65,966	$	(792	)		170	$	90,607	$	(483	)
Greater than 12 months		52		24,190		(769	)		58		19,283		(799	)
Total fixed maturities		228		90,156		(1,561	)		228		109,890		(1,282	)

Equity securities:
12 months or less		24		14,247		(896	)		20		6,955		(842	)
Greater than 12 months		2		244		(19	)		11		6,640		(813	)
Total equity securities		26		14,491		(915	)		31		13,595		(1,655	)
Total fixed maturity and equity securities		254	$	104,647	$	(2,476	)		259	$	123,485	$	(2,937	)

The fair value and the cost or amortized cost of fixed maturity investments at March 31, 2013, 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	$	145,477	$	144,847
Excess of one year to five years		207,061		205,716
Excess of five years to ten years		28,331		27,851
Excess of ten years		2,584		2,423
Total maturities		383,453		380,837
Asset-backed securities		49,168		46,821
	$	432,621	$	427,658

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

	Three Months Ended
	March 31
	2013			2012
Fixed maturities:
Gross gains	$	1,419		$	550
Gross losses		(1,337	)		(971	)
Net realized gains (losses)		82			(421	)

Equity securities:
Gross gains		11,712			524
Gross losses		(1,160	)		(142	)
Net realized gains		10,552			382

Limited partnerships - net gain		3,713			5,420


Totals	$	14,347		$	5,381

Net realized gains activity for investments, as shown in the previous table, are further detailed as follows:

	Three Months Ended
	March 31
	2013			2012

Realized net gains (losses) on the disposal of securities	$	9,244		$	(96	)
Mark-to-market adjustment		210			57
Equity in gains of limited partnership
investments - realized and unrealized		3,713			5,420
Impairment:
Write-downs based upon objective criteria		(6	)		-
Recovery of prior write-downs
upon sale or disposal		1,186			-

Totals	$	14,347		$	5,381

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, 2013 includes an estimated $2,733 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, 2013 includes approximately $7,173 of net unrealized gains reported to the Company as part of the underlying assets of the various limited partnerships. Shareholders' equity at March 31, 2013 includes approximately $22,114, net of deferred federal income taxes, of earnings undistributed by limited partnerships.