(2) Investments:

The following is a summary of available-for-sale securities at March 31, 2017 and December 31, 2016:

										Net
			Cost or		Gross		Gross			Unrealized
	Fair		Amortized		Unrealized		Unrealized			Gains
	Value		Cost		Gains		Losses			(Losses)
March 31, 2017
Fixed maturities
Agency collateralized mortgage obligations	$	7,446	$	7,065	$	381	$	-		$	381
Agency mortgage-backed securities		10,693		10,683		54		(44	)		10
Asset-backed securities		48,241		47,306		1,015		(80	)		935
Bank loans		9,144		9,041		120		(17	)		103
Certificates of deposit		3,119		3,125		-		(6	)		(6	)
Collateralized mortgage obligations		6,119		6,034		262		(177	)		85
Corporate securities		182,308		181,917		2,056		(1,665	)		391
Mortgage-backed securities		24,019		23,735		880		(596	)		284
Municipal obligations		128,883		128,818		621		(556	)		65
Non-U.S. government obligations		21,428		22,545		254		(1,371	)		(1,117	)
U.S. government obligations		67,402		67,683		60		(341	)		(281	)
Total fixed maturities		508,802		507,952		5,703		(4,853	)		850
Equity securities:
Consumer		41,624		21,194		20,825		(395	)		20,430
Energy		11,025		5,552		5,514		(41	)		5,473
Financial		35,109		25,836		9,522		(249	)		9,273
Industrial		24,147		7,981		16,336		(170	)		16,166
Technology		9,518		3,933		5,585		-			5,585
Mutual fund		7,311		6,930		472		(91	)		381
Other		6,780		4,344		2,633		(197	)		2,436
Total equity securities		135,514		75,770		60,887		(1,143	)		59,744

Total	$	644,316	$	583,722	$	66,590	$	(5,996	)		60,594

							Applicable federal income taxes				(21,208	)

							Net unrealized gains - net of tax			$	39,386

										Net
			Cost or		Gross		Gross			Unrealized
	Fair		Amortized		Unrealized		Unrealized			Gains
	Value		Cost		Gains		Losses			(Losses)
December 31, 2016
Fixed maturities
Agency collateralized mortgage obligations	$	6,171	$	6,000	$	171	$	-		$	171
Agency mortgage-backed securities		4,770		4,751		57		(38	)		19
Asset-backed securities		45,183		45,207		458		(482	)		(24	)
Bank loans		10,349		10,222		149		(22	)		127
Certificates of deposit		3,117		3,126		-		(9	)		(9	)
Collateralized mortgage obligations		9,104		9,096		290		(282	)		8
Corporate securities		142,683		143,356		1,643		(2,316	)		(673	)
Mortgage-backed securities		24,571		23,904		1,132		(465	)		667
Municipal obligations		129,335		130,204		391		(1,260	)		(869	)
Non-U.S. government obligations		24,681		26,461		230		(2,010	)		(1,780	)
U.S. government obligations		91,940		92,234		74		(368	)		(294	)
Total fixed maturities		491,904		494,561		4,595		(7,252	)		(2,657	)
Equity securities:
Consumer		32,576		15,231		17,656		(311	)		17,345
Energy		12,842		5,641		7,203		(2	)		7,201
Financial		31,186		22,417		8,998		(229	)		8,769
Industrial		21,145		6,239		15,098		(192	)		14,906
Technology		8,858		4,117		4,769		(28	)		4,741
Mutual fund		6,995		6,930		121		(56	)		65
Other		6,343		4,327		2,181		(165	)		2,016
Total equity securities		119,945		64,902		56,026		(983	)		55,043

Total	$	611,849	$	559,463	$	60,621	$	(8,235	)		52,386

							Applicable federal income taxes				(18,335	)

							Net unrealized gains - net of tax			$	34,051

The following table summarizes, for fixed maturity and equity security investments in an unrealized loss position at March 31, 2017 and December 31, 2016, 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, 2017							December 31, 2016
	Number of Securities		Fair Value		Gross Unrealized Loss			Number of Securities		Fair Value		Gross Unrealized Loss
Fixed maturity securities:
12 months or less		375	$	258,128	$	(3,133	)		397	$	291,048	$	(4,380	)
Greater than 12 months		36		10,003		(1,720	)		54		32,054		(2,872	)
Total fixed maturities		411		268,131		(4,853	)		451		323,102		(7,252	)

Equity securities:
12 months or less		46		36,038		(1,143	)		35		20,698		(983	)
Greater than 12 months		-		-		-			-		-		-
Total equity securities		46		36,038		(1,143	)		35		20,698		(983	)
Total fixed maturity and equity securities		457	$	304,169	$	(5,996	)		486	$	343,800	$	(8,235	)

The fair value and the cost or amortized costs of fixed maturity investments at March 31, 2017, 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	$	71,509	$	71,658
Excess of one year to five years		291,246		292,665
Excess of five years to ten years		44,862		44,194
Excess of ten years		4,667		4,612
Contractual maturities		412,284		413,129
Asset-backed securities		96,518		94,823
Total	$	508,802	$	507,952

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

	Three Months Ended
	March 31
	2017			2016
Fixed maturities:
Gross gains	$	888		$	1,277
Gross losses		(1,373	)		(2,896	)
Net realized losses		(485	)		(1,619	)

Equity securities:
Gross gains		1,606			15,510
Gross losses		(113	)		(2,700	)
Net realized gains		1,493			12,810

Limited partnerships - net gain (loss)		5,286			(2,179	)


Total net gains	$	6,294		$	9,012

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

	Three Months Ended
	March 31
	2017			2016

Realized net gains on the disposal of securities	$	399		$	8,309
Mark-to-market adjustment		(284	)		(301	)
Equity in gains (losses) of limited partnership
investments - realized and unrealized		5,286			(2,179	)
Impairment:
Write-downs based upon objective criteria		-			(2,060	)
Recovery of prior write-downs
upon sale or disposal		893			5,243

Total net gains	$	6,294		$	9,012

The mark-to-market adjustments in the table above represent the changes in fair value of options embedded in convertible debt securities held by the Company.

Shareholders' equity at March 31, 2017 included approximately $28,312, net of federal income taxes, of reported earnings which remain undistributed by limited partnerships.

At March 31, 2017, limited partnership investments included approximately $37,737 invested in two partnerships which are managed by organizations in which certain of the Company's directors are officers, directors, general partners or owners. Each of these investments contains profit sharing agreements, pursuant to which a portion of the gains will be paid to the affiliated organizations.

At March 31, 2017, the Company's invested assets, excluding limited partnership investments, included approximately $23,531 in portfolios managed by organizations in which certain of the Company's directors are officers, directors, general partners or owners.