2.	Investments

Short-term investments held at December 31, 2015 include $7.7 million of corporate bonds. Short-term investments held at December 31, 2014 include $32.7 million of corporate bonds and certificates of deposit of $1.0 million. All certificates of deposit are fully insured by the Federal Deposit Insurance Corporation.

Amerisafe holds an investment in a limited partnership hedge fund accounted for under the equity method. The carrying value of this investment is $12.2 million at December 31, 2015.

The gross unrealized gains and losses on, and the amortized cost and fair value of, those investments classified as held-to-maturity at December 31, 2015 are summarized as follows:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
States and political subdivisions	$	408,447	$	15,352	$	(45)	$	423,754
Corporate bonds		171,224		159		(810)		170,573
Commercial mortgage-backed securities		37,494		204		(15)		37,683
U.S. agency-based mortgage-backed securities		13,223		1,249		(1)		14,471
U.S. Treasury securities and obligations of U.S. government agencies		12,487		897		(4)		13,380
Asset-backed securities		2,289		202		(76)		2,415

Totals	$	645,164	$	18,063	$	(951)	$	662,276

The gross unrealized gains and losses on, and the cost or amortized cost and fair value of, those investments classified as available-for-sale at December 31, 2015 are summarized as follows:


	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
Fixed maturity:
States and political subdivisions	$	164,684	$	6,942	$	(207)	$	171,419
Corporate bonds		202,537		253		(1,486)		201,304
U.S. agency-based mortgage-backed securities		8,888		4		(1,593)		7,299

Total fixed maturity		376,109		7,199		(3,286)		380,022
Other investments		10,000		2,217		—		12,217
Equity securities		—		31		—		31

Totals	$	386,109	$	9,447	$	(3,286)	$	392,270

The gross unrealized gains and losses on, and the amortized cost and fair value of, those investments classified as held-to-maturity at December 31, 2014 are summarized as follows:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
States and political subdivisions	$	385,623	$	20,100	$	(58)	$	405,665
Corporate bonds		176,880		374		(520)		176,734
Commercial mortgage-backed securities		46,662		1,867		—		48,529
U.S. agency-based mortgage-backed securities		16,972		1,702		(2)		18,672
U.S. Treasury securities and obligations of U.S. government agencies		10,697		1,097		(2)		11,792
Asset-backed securities		2,797		264		(82)		2,979

Totals	$	639,631	$	25,404	$	(664)	$	664,371

The gross unrealized gains and losses on, and the cost or amortized cost and fair value of, those investments classified as available-for-sale at December 31, 2014 are summarized as follows:


	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
Fixed maturity:
States and political subdivisions	$	151,744	$	7,302	$	(1,672)	$	157,374
Corporate bonds		165,412		428		(470)		165,370
U.S. agency-based mortgage-backed securities		9,848		2		(1,352)		8,498

Total fixed maturity		327,004		7,732		(3,494)		331,242
Other investments		10,000		1,748		—		11,748
Equity securities		—		28		—		28

Totals	$	337,004	$	9,508	$	(3,494)	$	343,018

A summary of the amortized cost and fair value of investments in fixed maturity securities, classified as held-to-maturity at December 31, 2015, by contractual maturity, is as follows:


	Amortized Cost		Fair Value
	(in thousands)
Maturity:
Within one year	$	112,187	$	112,830
After one year through five years		299,100		306,633
After five years through ten years		109,901		114,362
After ten years		70,970		73,882
U.S. agency-based mortgage-backed securities		13,223		14,471
Commercial mortgage-backed securities		37,494		37,683
Asset-backed securities		2,289		2,415

Totals	$	645,164	$	662,276

A summary of the amortized cost and fair value of investments in fixed maturity securities, classified as available-for-sale at December 31, 2015, by contractual maturity, is as follows:


	Amortized Cost		Fair Value
	(in thousands)
Maturity:
Within one year	$	32,687	$	32,724
After one year through five years		206,409		206,375
After five years through ten years		19,394		19,585
After ten years		108,731		114,039
U.S. agency-based mortgage-backed securities		8,888		7,299

Totals	$	376,109	$	380,022

Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations with or without call or prepayment penalties.

At December 31, 2015, there were $20.3 million of held-to-maturity investments and $1.5 million of cash on deposit with regulatory agencies of states in which the Company does business.

A summary of the Company’s realized gains and losses on sales, calls or redemptions of investments for 2015, 2014 and 2013 is as follows:


	Fixed Maturity Securities Available for Sale			Equity Securities			Other		Total
	(in thousands)
Year ended December 31, 2015
Proceeds from sales	$	4,432		$	—		$	—	$	4,432

Gross realized investment gains	$	177		$	—		$	—	$	177
Gross realized investment (losses)		(162	)		—			—		(162	)

Net realized investment gains		15			—			—		15
Impairments		(2,653	)		—			—		(2,653	)
Other, including gains on calls and redemptions		102			—			42		144

Net realized gains (losses) on investments	$	(2,536	)	$	—		$	42	$	(2,494	)

Year ended December 31, 2014
Proceeds from sales	$	768		$	9,780		$	—	$	10,548

Gross realized investment gains	$	1		$	749		$	—	$	750
Gross realized investment (losses)		—			(451	)		—		(451	)

Net realized investment gains		1			298			—		299
Impairments		(222	)		—			—		(222	)
Other, including gains on calls and redemptions		244			—			376		620

Net realized gains on investments	$	23		$	298		$	376	$	697

Year ended December 31, 2013
Proceeds from sales	$	2,090		$	8,900		$	—	$	10,990

Gross realized investment gains	$	90		$	1,264		$	—	$	1,354
Gross realized investment (losses)		—			(471	)		—		(471	)

Net realized investment gains		90			793			—		883
Impairments		—			(2,229	)		—		(2,229	)
Other, including gains on calls and redemptions		38			—			97		135

Net realized gains (losses) on investments	$	128		$	(1,436	)	$	97	$	(1,211	)

Major categories of the Company’s net investment income are summarized as follows:


	Year Ended December 31,
	2015			2014			2013
	(in thousands)
Gross investment income:
Fixed maturity securities	$	28,498		$	26,622		$	26,422
Short-term investments and cash and cash equivalents		149			426			634
Equity securities		—			232			543
Other investments		763			1,611			803

Total gross investment income		29,410			28,891			28,402
Investment expenses		(1,508	)		(1,677	)		(1,373	)

Net investment income	$	27,902		$	27,214		$	27,029

The following table summarizes the fair value and gross unrealized losses on securities, aggregated by major investment category and length of time that the individual securities have been in a continuous unrealized loss position:


	Less Than 12 Months				12 Months or Greater				Total
	Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses
	(in thousands)
December 31, 2015
Held-to-Maturity
Fixed maturity securities:
Corporate bonds	$	128,436	$	687	$	18,139	$	123	$	146,575	$	810
States and political subdivisions		24,068		45		—		—		24,068		45
U.S. Treasury securities and obligations of U.S. Government agencies		2,980		4		—		—		2,980		4
U.S. agency-based mortgage-backed securities		18		—		28		1		46		1
Asset-backed securities		—		—		1,389		76		1,389		76
Commercial mortgage-backed securities		9,784		15		—		—		9,784		15

Total held-to-maturity securities		165,286		751		19,556		200		184,842		951

Available-for Sale
Fixed maturity securities:
Corporate bonds	$	141,857	$	1,475	$	4,216	$	11	$	146,073	$	1,486
States and political subdivisions		6,560		9		4,439		198		10,999		207
U.S. agency-based mortgage-backed securities		434		37		6,794		1,556		7,228		1,593

Total available-for-sale securities		148,851		1,521		15,449		1,765		164,300		3,286

Total	$	314,137	$	2,272	$	35,005	$	1,965	$	349,142	$	4,237


December 31, 2014
Held-to-Maturity
Fixed maturity securities:
Corporate bonds	$	129,788	$	520	$	—	$	—	$	129,788	$	520
States and political subdivisions		16,896		58		—		—		16,896		58
U.S. Treasury securities and obligations of U.S. Government agencies		3,385		2		—		—		3,385		2
U.S. agency-based mortgage-backed securities		78		2		—		—		78		2
Asset-backed securities		—		—		1,662		82		1,662		82

Total held-to-maturity securities		150,147		582		1,662		82		151,809		664

Available-for Sale
Fixed maturity securities:
Corporate bonds	$	106,185	$	470	$	—	$	—	$	106,185	$	470
States and political subdivisions		3,810		6		10,347		1,666		14,157		1,672
U.S. agency-based mortgage-backed securities		627		11		7,757		1,341		8,384		1,352

Total available-for-sale securities		110,622		487		18,104		3,007		128,726		3,494

Total	$	260,769	$	1,069	$	19,766	$	3,089	$	280,535	$	4,158

At December 31, 2015, the Company held 198 individual fixed maturity securities that were in an unrealized loss position, of which 29 were in a continuous unrealized loss position for longer than 12 months.

The Company regularly reviews its investment portfolio to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of our investments. The Company considers various factors in determining if a decline in the fair value of an individual security is other-than-temporary. The key factors considered are:

•

any reduction or elimination of preferred dividends, or nonpayment of scheduled principal or interest payments;

•

the financial condition and near-term prospects of the issuer of the applicable security, including any specific events that may affect its operations or earnings;

•

how long and by how much the fair value of the security has been below its cost or amortized cost;

•

any downgrades of the security by a rating agency;

•

our intent not to sell the security for a sufficient time period for it to recover its value;

•

the likelihood of being forced to sell the security before the recovery of its value; and

•

an evaluation as to whether there are any credit losses on debt securities.

The Company reviewed all securities with unrealized losses in accordance with the impairment policy described above. With the exception of four securities deemed to be other-than-temporarily impaired, the Company determined that the unrealized losses in the fixed maturity securities portfolio related primarily to changes in market interest rates since the date of purchase, current conditions in the capital markets and the impact of those conditions on market liquidity and prices generally, and the transfer of the investments from the available-for-sale classification to the held-to-maturity classification in January 2004. We expect to recover the carrying value of these securities as it is not more likely than not that we will be required to sell the security before the recovery of its amortized cost basis.

In 2015, the Company impaired four fixed maturity securities in the amount of $2.7 million. The impairment charge is included in “Net realized gains (losses) on investments” for 2015. We impaired the securities due to a downgrade of the securities and the amount of the accumulated unrealized loss.