3. Investments

The Company liquidated its trading portfolio of equity securities and transferred the fixed maturities that were outstanding at December 31, 2012 into its portfolio of securities available for sale effective March 1, 2013. The unrealized gain (loss) associated with the fixed maturities trading portfolio was recognized in earnings up to the date of transfer.

The following table presents the Company’s investment holdings by type of instrument as of the dates presented (in thousands):


	As of March 31, 2014						As of December 31, 2013
	Cost or						Cost or
	Amortized				Carrying		Amortized				Carrying
	Cost		Fair Value		Value		Cost		Fair Value		Value
Cash and cash equivalents (1)	$	122,771	$	122,771	$	122,771	$	117,275	$	117,275	$	117,275
Restricted cash and cash equivalents		2,635		2,635		2,635		2,600		2,600		2,600
Fixed maturities:
U.S. government obligations and agencies		116,808		115,961		115,961		105,229		104,215		104,215
Corporate bonds		94,086		93,831		93,831		94,708		94,203		94,203
Mortgage-backed and asset-backed securities		90,953		90,554		90,554		91,502		91,000		91,000
Equity securities:
Common stock		7,024		7,250		7,250		8,500		9,295		9,295
Mutual funds		52,057		52,902		52,902		55,113		55,727		55,727

Total		360,928		360,498		360,498		355,052		354,440		354,440

Total investments	$	486,334	$	485,904	$	485,904	$	474,927	$	474,315	$	474,315

(1)	Cash and cash equivalents include short-term debt securities consisting of direct obligations of the U.S. Treasury or money-market accounts that invest in or are collateralized by direct obligations of the U.S. Treasury and other U.S. government guaranteed securities.

The Company has made an assessment of its invested assets for fair value measurement as further described in “— Note 13 (Fair Value Measurements)”.

The following table presents the components of net investment income, comprised primarily of interest and dividends, for the periods presented (in thousands):


	Three Months Ended March 31,
	2014			2013
Cash and cash equivalents (1)	$	12		$	120
Fixed maturities		728			—
Equity securities		302			88

Total investment income		1,042			208
Less investment expenses		(524	)		(196	)

Net investment (expense) income	$	518		$	12

(1)	Includes interest earned on restricted cash and cash equivalents.

Trading Portfolio

The following table provides the effect of trading activities on the Company’s results of operations for the period presented by type of instrument and by line item in the Condensed Consolidated Statements of Income (in thousands):


	Three Months Ended March 31, 2013
Realized gains (losses) on investments:
Equity securities	$	(15,969	)
Derivatives (non-hedging instruments) (1)		(68	)

Total realized gains (losses) on trading portfolio		(16,037	)
Change in unrealized gains (losses) on investments:
Fixed maturities		13
Equity securities		7,758
Derivatives (non-hedging instruments) (1)		89
Other		14

Total change in unrealized gains (losses) on trading portfolio		7,874

Net gains (losses) recognized on trading portfolio	$	(8,163	)

(1)	This table provides the alternative quantitative disclosures permitted for derivatives that are not used as hedging instruments and are included in the trading portfolio.

There was no effect of trading activities for the three months ended March 31, 2014 as the Company liquidated its trading portfolio in March 2013.

Securities Available for Sale

The following table provides the cost or amortized cost and fair value of securities available for sale as of the dates presented (in thousands):


	March 31, 2014
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed Maturities:
U.S. government obligations and agencies	$	116,808	$	39	$	(886	)	$	115,961
Corporate bonds		94,086		190		(445	)		93,831
Mortgage-backed and asset-backed securities		90,953		126		(525	)		90,554
Equity Securities:
Common stock		7,024		439		(213	)		7,250
Mutual funds		52,057		2,206		(1,361	)		52,902

Total	$	360,928	$	3,000	$	(3,430	)	$	360,498


	December 31, 2013
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed Maturities:
U.S. government obligations and agencies	$	105,229	$	19	$	(1,033	)	$	104,215
Corporate bonds		94,708		265		(770	)		94,203
Mortgage-backed and asset-backed securities		91,502		75		(577	)		91,000
Equity Securities:
Common stock		8,500		916		(121	)		9,295
Mutual funds		55,113		2,266		(1,652	)		55,727

Total	$	355,052	$	3,541	$	(4,153	)	$	354,440

The following table summarizes the fair value and gross unrealized losses on securities available for sale, aggregated by major investment category and length of time that individual securities have been in a continuous unrealized loss position as of the dates presented (in thousands):


	March 31, 2014
	Less than 12 months							12 months or longer
	Number of issues		Fair value		Unrealized losses			Number of issues		Fair value		Unrealized losses
Fixed maturities:
U.S. government obligations and agencies		7	$	82,798	$	(886	)		—	$	—	$	—
Corporate bonds		42		47,773		(445	)		—		—		—
Mortgage-backed and asset-backed securities		17		60,261		(525	)		—		—		—
Equity securities:
Common stock		14		2,314		(213	)		—		—		—
Mutual funds		4		17,997		(1,361	)		—		—		—

Total		84	$	211,143	$	(3,430	)		—	$	—	$	—


	December 31, 2013
	Less than 12 months							12 months or longer
	Number of issues		Fair value		Unrealized losses			Number of issues		Fair value		Unrealized losses
Fixed maturities:
U.S. government obligations and agencies		6	$	71,042	$	(1,033	)		—	$	—	$	—
Corporate bonds		55		65,926		(770	)		—		—		—
Mortgage-backed and asset-backed securities		16		67,110		(577	)		—		—		—
Equity securities:
Common stock		13		3,517		(121	)		—		—		—
Mutual funds		5		19,646		(1,652	)		—		—		—

Total		95	$	227,241	$	(4,153	)		—	$	—	$	—

At March 31, 2014, we held fixed maturity and equity securities that were in an unrealized loss position as presented in the table above. For fixed maturity securities with significant declines in value, we perform quarterly fundamental credit analysis on a security-by-security basis, which includes consideration of credit quality and credit ratings, review of relevant industry analyst reports and other available market data. For fixed maturity and equity securities, the Company considers whether it has the intent and ability to hold the securities for a period of time sufficient to recover its cost basis. Where the Company lacks the intent and ability to hold to recovery, or believes the recovery period is extended, the security’s decline in fair value is considered other than temporary and is recorded in earnings. Based upon the limited severity and duration of the unrealized losses combined with management’s intent and ability to hold the securities until recovery and its credit analysis of the individual issuers of the securities, management has no reason to believe the unrealized losses for securities available for sale at March 31, 2014 are other than temporary.

The following table presents the amortized cost and fair value of fixed maturities available for sale by contractual maturity as of the date presented (in thousands):


	March 31, 2014
	Amortized Cost		Fair Value
Due in one year or less	$	17,030	$	17,017
Due after one year through five years		190,101		189,234
Due after five years through ten years		3,763		3,541
Due after ten years		—		—
Mortgage-backed and asset-backed securities		90,953		90,554

Total	$	301,847	$	300,346

Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay with or without penalty.

The following table provides certain information related to securities available for sale during the period presented (in thousands):


	Three Months Ended March 31, 2014
Sales proceeds (fair value)	$	14,441
Gross realized gains	$	999
Gross realized losses	$	(97	)
Other than temporary losses	$	—

There was no sale activity of securities available for sale during the three months ended March 31, 2013.