(2) Investments:

The following is a summary of available-for-sale securities at June 30, 2014 and December 31, 2013:

										Net
			Cost or		Gross		Gross			Unrealized
	Fair		Amortized		Unrealized		Unrealized			Gains
	Value		Cost		Gains		Losses			(Losses)
June 30, 2014
Fixed maturities
U.S. government obligations	$	119,517	$	119,356	$	176	$	(15	)	$	161
Residential mortgage-backed securities		7,935		7,574		424		(63	)		361
Commercial mortgage-backed securities		26,618		25,878		815		(75	)		740
States and municipal obligations		114,212		113,481		861		(130	)		731
Corporate securities		135,435		134,469		3,426		(2,460	)		966
Foreign government obligations		25,743		25,420		471		(148	)		323
Total fixed maturities		429,460		426,178		6,173		(2,891	)		3,282
Equity securities:
Financial institutions		20,456		8,565		11,907		(16	)		11,891
Industrial & miscellaneous		140,470		64,275		76,416		(221	)		76,195
Total equity securities		160,926		72,840		88,323		(237	)		88,086
Total	$	590,386	$	499,018	$	94,496	$	(3,128	)		91,368

							Applicable federal income taxes				(31,979	)

							Net unrealized gains - net of tax			$	59,389

December 31, 2013
Fixed maturities
U.S. government obligations	$	113,389	$	113,348	$	81	$	(40	)	$	41
Residential mortgage-backed securities		13,252		12,058		1,334		(140	)		1,194
Commercial mortgage-backed securities		28,565		28,406		308		(149	)		159
State and municipal obligations		115,250		115,278		407		(435	)		(28	)
Corporate securities		137,215		136,991		3,207		(2,983	)		224
Foreign government obligations		23,879		23,689		588		(398	)		190
Total fixed maturities		431,550		429,770		5,925		(4,145	)		1,780
Equity securities:
Financial institutions		18,850		7,780		11,171		(101	)		11,070
Industrial & miscellaneous		126,978		64,307		63,009		(338	)		62,671
Total equity securities		145,828		72,087		74,180		(439	)		73,741
Total	$	577,378	$	501,857	$	80,105	$	(4,584	)		75,521

							Applicable federal income taxes				(26,432	)

							Net unrealized gains - net of tax			$	49,089

The following table summarizes, for fixed maturity and equity security investments in an unrealized loss position at June 30, 2014 and December 31, 2013, 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, 2014							December 31, 2013
	Number of Securities		Fair Value		Gross Unrealized Loss			Number of Securities		Fair Value		Gross Unrealized Loss
Fixed maturity securities:
12 months or less		256	$	61,528	$	(1,827	)		451	$	123,145	$	(3,105	)
Greater than 12 months		86		30,389		(1,064	)		53		18,249		(1,040	)
Total fixed maturities		342		91,917		(2,891	)		504		141,394		(4,145	)

Equity securities:
12 months or less		10		3,510		(185	)		10		1,682		(204	)
Greater than 12 months		4		626		(52	)		2		1,980		(235	)
Total equity securities		14		4,136		(237	)		12		3,662		(439	)
Total fixed maturity and equity securities		356	$	96,053	$	(3,128	)		516	$	145,056	$	(4,584	)

The fair value and the cost or amortized costs of fixed maturity investments at June 30, 2014, 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	$	124,351	$	124,042
Excess of one year to five years		165,938		165,905
Excess of five years to ten years		62,049		60,694
Excess of ten years		8,076		7,347
Contractual maturities		360,414		357,988
Asset-backed securities		69,046		68,190
Total	$	429,460	$	426,178

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						Six Months Ended
	June 30						June 30
	2014			2013			2014			2013
Fixed maturities:
Gross gains	$	2,762		$	2,233		$	4,601		$	3,652
Gross losses		(926	)		(883	)		(2,152	)		(2,220	)
Net realized gains		1,836			1,350			2,449			1,432

Equity securities:
Gross gains		1,412			893			2,153			12,605
Gross losses		(359	)		(249	)		(711	)		(1,409	)
Net realized gains		1,053			644			1,442			11,196

Limited partnerships - net gain (loss)		5,200			(1,275	)		8,268			2,438


Totals	$	8,089		$	719		$	12,159		$	15,066

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

	Three Months Ended					Six Months Ended
	June 30					June 30
	2014		2013			2014			2013

Realized net gains on the disposal of securities	$	2,419	$	1,554		$	3,614		$	10,798
Mark-to-market adjustment		469		195			269			405
Equity in gains of limited partnership
investments - realized and unrealized		5,200		(1,275	)		8,268			2,438
Impairment:
Write-downs based upon objective criteria		-		(68	)		(105	)		(74	)
Recovery of prior write-downs
upon sale or disposal		1		313			113			1,499

Totals	$	8,089	$	719		$	12,159		$	15,066

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 and year-to-date periods ending June 30, 2014 includes an estimated $1,649 and $5,507 of net unrealized gains respectively, reported to the Company as part of the underlying assets of the various limited partnerships. The value of limited partnerships at June 30, 2014 includes approximately $12,971 of accumulated net unrealized gains reported to the Company as part of the underlying assets of the various limited partnerships. Shareholders’ equity at June 30, 2014 includes approximately $29,768, net of federal income taxes, of reported earnings which remain undistributed by limited partnerships.

As of June 30, 2014, the Company had committed funds totaling $64,750 to seven separate borrowers related to seven bridge loan agreements. The Company retains possession of these funds which will only be loaned in the unlikely event that long-term financing is unavailable to the counter party in the market.