Note B - Investments

The following is a summary of available for sale securities at December 31:

										Net
			Cost or		Gross		Gross			Unrealized
	Fair		Amortized		Unrealized		Unrealized			Gains
	Value		Cost		Gains		Losses			(Losses)
December 31, 2017
Fixed maturities
Agency collateralized mortgage obligations	$	16,586	$	15,839	$	818	$	(71	)	$	747
Agency mortgage-backed securities		27,075		27,180		47		(152	)		(105	)
Asset-backed securities		43,469		42,861		749		(141	)		608
Bank loans		19,488		19,271		266		(49	)		217
Certificates of deposit		3,135		3,124		11		-			11
Collateralized mortgage obligations		6,492		6,079		451		(38	)		413
Corporate securities		198,349		198,419		1,602		(1,672	)		(70	)
Mortgage-backed securities		24,204		23,656		933		(385	)		548
Municipal obligations		96,650		97,059		322		(731	)		(409	)
Non-U.S. government obligations		37,394		37,971		475		(1,052	)		(577	)
U.S. government obligations		49,011		49,558		-		(547	)		(547	)
Total fixed maturities		521,853		521,017		5,674		(4,838	)		836
Equity securities:
Consumer		46,578		23,565		24,031		(1,018	)		23,013
Energy		10,278		6,763		3,602		(87	)		3,515
Financial		45,470		31,859		13,937		(326	)		13,611
Industrial		25,402		8,949		16,793		(340	)		16,453
Technology		13,061		5,768		7,401		(108	)		7,293
Funds (e.g. mutual funds, closed end funds, ETFs)		50,291		46,177		4,153		(39	)		4,114
Other		10,683		7,670		3,313		(300	)		3,013
Total equity securities		201,763		130,751		73,230		(2,218	)		71,012

Total	$	723,616	$	651,768	$	78,904	$	(7,056	)		71,848

							Applicable federal income taxes				(25,148	)

							Net unrealized gains - net of tax			$	46,700

										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
Funds (e.g. mutual funds, closed end funds, ETFs)		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 December 31, the aggregate fair value and gross unrealized loss categorized by the duration those securities have been continuously in an unrealized loss position:

	2017							2016
	Number of Securities		Fair Value		Gross Unrealized Loss			Number of Securities		Fair Value		Gross Unrealized Loss
Fixed maturity securities:
12 months or less		459	$	313,421	$	(2,683	)		397	$	291,048	$	(4,380	)
Greater than 12 months		112		75,638		(2,155	)		54		32,054		(2,872	)
Total fixed maturities		571		389,059		(4,838	)		451		323,102		(7,252	)
Equity securities:
12 months or less		65		46,654		(2,218	)		35		20,698		(983	)
Greater than 12 months		-		-		-			-		-		-
Total equity securities		65		46,654		(2,218	)		35		20,698		(983	)
Total		636	$	435,713	$	(7,056	)		486	$	343,800	$	(8,235	)

Unrealized losses in the Company's fixed maturity portfolio are generally the result of interest rate or foreign currency fluctuations. The Company does not intend to sell any fixed maturity securities which are in an unrealized loss position at December 31, 2017 and it is not more likely than not that the Company will have to sell any fixed maturity security before recovery of its amortized cost basis. For equity securities, the Company has evaluated the near-term prospects of the investments in relation to the severity and duration of the impairment and, based on that evaluation, the Company has the ability and intent to hold these investments for a period sufficient to allow for recovery of their fair value. Accordingly, the Company does not believe any unrealized losses represent an other-than-temporary impairment as of December 31, 2017.

The fair value and the cost or amortized cost of fixed maturity investments at December 31, 2017, organized by contractual maturity, is shown below. Actual maturities may 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	$	54,567	10.5	%	$	54,777	10.5	%
Excess of one year to five years		292,755	56.1			294,698	56.6
Excess of five years to ten years		61,087	11.7			60,366	11.6
Excess of ten years		2,909	0.5			2,914	0.5
Total maturities		411,318	78.8			412,755	79.2
Asset-backed securities		110,535	21.2			108,262	20.8
	$	521,853	100.0	%	$	521,017	100.0	%

Major categories of investment income for the years ended December 31 are summarized as follows:

	2017			2016			2015
Interest on fixed maturities	$	15,340		$	13,254		$	11,663
Dividends on equity securities		4,611			3,598			3,445
Money market funds, Short-term and other		471			128			32
		20,422			16,980			15,140
Investment expenses		(2,327	)		(2,497	)		(2,642	)
Net investment income	$	18,095		$	14,483		$	12,498

Gains and losses on investments, including equity method earnings from limited partnerships, for the years ended December 31 are summarized below:

	2017			2016			2015
Fixed maturities:
Gross gains	$	9,135		$	11,628		$	6,633
Gross losses		(10,031	)		(14,020	)		(13,634	)
Net losses		(896	)		(2,392	)		(7,001	)

Equity securities:
Gross gains		10,481			28,742			21,070
Gross losses		(2,368	)		(5,595	)		(13,643	)
Net gains		8,113			23,147			7,427

Limited partnerships - net gain (loss)		12,469			2,473			(1,687	)


Total net gains (losses)	$	19,686		$	23,228		$	(1,261	)

Gain and loss activity for fixed maturity and equity security investments, as shown in the previous table, includes adjustments for other-than-temporary impairment for the years ended December 31 summarized as follows:

	2017			2016			2015

Cumulative charges to income at beginning of year	$	5,060		$	10,513		$	7,168

Writedowns based on objective and subjective criteria		149			5,743			7,700
Recovery of prior writedowns upon sale or disposal		(1,590	)		(10,606	)		(4,355	)
Net pre-tax realized gain (loss)		1,441			4,863			(3,345	)

Cumulative charges to income at end of year	$	4,209		$	5,060		$	10,513

There is no primary market and only a limited secondary market for the Company's investments in limited partnerships and, in most cases, the Company is prohibited from disposing of its limited partnership interests for some period of time and generally must seek approval from the applicable general partner for any such disposal. Distributions of earnings from these partnerships are largely at the sole discretion of the general partners and distributions are generally not received by the Company for many years after the earnings have been reported. The Company has a commitment to contribute up to an additional $1,404 to a limited partnership as of December 31, 2017.

The Company has invested in three limited partnerships with an aggregate estimated value of $43,586 at December 31, 2017, that are managed by organizations in which two directors of the Company are executive officers, directors or owners. The Company's ownership interest in these limited partnerships was 5% for New Vernon India Fund, 37% for New Vernon Global Opportunity Fund and 23% for New Vernon Global Opportunity Fund II. During 2017, the Company withdrew $5,000 from the New Vernon India Fund and $5,000 from the New Vernon Global Opportunity Fund II which reduced our investments. These limited partnerships contributed to or (reduced) $9,549, ($971) and ($1,978), net of fees, investment gains in 2017, 2016 and 2015, respectively. During 2017, 2016 and 2015, the Company recorded management fees of $803, $777 and $749, respectively, for management of these limited partnerships.

The Company utilizes the services of investment firms of which two directors of the Company are employees or partial owners. These investment firms manage equity securities and fixed maturity portfolios with an aggregate market value of approximately $24,779 at December 31, 2017. Total commissions and net fees earned by the investment firms and affiliates on these portfolios and for advice and consulting were approximately $97, $207 and $235 during 2017, 2016 and 2015, respectively.

The Company's limited partnerships include one investment which primarily invests in public and private equity markets in India. This limited partnership investment's value as of December 31, 2017 and 2016 was $29,817 and $27,153, respectively. At December 31, 2017, the Company's estimated ownership interest in this limited partnership investment was approximately 5%. The Company's share of income (losses), from both realized and unrealized appreciation (losses) from this limited partnership investment was $7,665, ($1,117) and ($1,599) in 2017, 2016 and 2015, respectively. The summarized financial information of this limited partnership investment as of and for the years ended December 31 is as follows:

	2017			2016			2015

Investment income (loss)	$	623		$	(5	)	$	(188	)
Partnership expenses		2,206			2,426			3,024
Net investment loss		(1,583	)		(2,431	)		(3,212	)

Realized gain (loss) on investments		8,723			7,754			21,091

Unrealized appreciation (depreciation) on investments		133,807			(21,002	)		(37,482	)

Net increase (decrease) in partners' capital resulting from operations	$	140,947		$	(15,679	)	$	(19,603	)

Total assets		566,629			448,263			511,118
Total liabilities		30,976			39,988			40,335
Total partners' capital		535,653			408,275			470,783

The fair value of regulatory deposits with various insurance departments in the United States and Canada totaled $86,335 and $86,169 at December 31, 2017 and 2016, respectively.

Short-term investments at December 31, 2017 included $1,000 in certificates of deposit issued by a Bermuda bank.

The Company's fixed maturities are over 86% invested in investment grade fixed maturity investments. The Company has a total of $693, representing one investment, of fixed maturity investments which were originally issued with guarantees by a third party insurance company. The S&P credit rating of such investment, with consideration of the guarantee, is AA. The S&P underlying credit rating of such investment, without consideration of the guarantee, would remain AA. The Company does not have any direct exposure to any guarantor.

Approximately $71,907 of fixed maturity investments (8.4% of the Company's consolidated investment portfolio) consists of non-rated bonds and bonds rated as less than investment grade at year end. These investments include a diversified portfolio of over 40 investments and have a $1,605 aggregate net unrealized gain position at December 31, 2017.