3. Investments

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):

	June 30, 2016
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Fixed Maturities:
U.S. government obligations and agencies and municipal securities	$	144,716	$	1,918	$	(55	)	$	146,579
Corporate bonds		186,111		2,674		(216	)		188,569
Mortgage-backed and asset-backed securities		230,694		1,770		(233	)		232,231
Redeemable preferred stock		9,732		705		(6	)		10,431
Equity Securities:
Common stock		3,224		—		(138	)		3,086
Mutual funds		35,491		82		(3,116	)		32,457
Short-term investments		5,000		4		—			5,004
Total	$	614,968	$	7,153	$	(3,764	)	$	618,357

	December 31, 2015
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Fixed Maturities:
U.S. government obligations and agencies	$	126,209	$	—	$	(867	)	$	125,342
Corporate bonds		126,421		137		(1,041	)		125,517
Mortgage-backed and asset-backed securities		151,328		97		(1,265	)		150,160
Redeemable preferred stock		9,665		429		(29	)		10,065
Other		5,000		—		(1	)		4,999
Equity Securities:
Common stock		10,991		15		(244	)		10,762
Mutual funds		35,221		5		(3,774	)		31,452
Short-term investments		25,011		10		—			25,021
Total	$	489,846	$	693	$	(7,221	)	$	483,318

The following table provides the credit quality of investment securities with contractual maturities or the issuer of such securities as of the dates presented (in thousands):

	June 30, 2016					December 31, 2015
			% of Total					% of Total
Comparable Ratings	Fair Value		Fair Value			Fair Value		Fair Value
AAA	$	128,053		22.0	%	$	103,097		23.4	%
AA		277,327		47.5	%		189,600		43.0	%
A		108,337		18.6	%		83,850		19.0	%
BBB		65,155		11.2	%		41,408		9.4	%
BB+ and Below		2,442		0.4	%		4,261		1.0	%
No Rating Available		1,500		0.3	%		18,888		4.2	%
Total	$	582,814		100.0	%	$	441,104		100.0	%

The tables above include comparable credit quality ratings by Standard and Poor’s Rating Services, Inc., Moody’s Investors Service, Inc. and Fitch Ratings, Inc.

The following table summarizes the cost or amortized cost and fair value of mortgage-backed and asset-backed securities as of the dates presented (in thousands):

	June 30, 2016				December 31, 2015
	Cost or				Cost or
	Amortized				Amortized
	Cost		Fair Value		Cost		Fair Value
Mortgage-backed securities:
Agency	$	113,609	$	114,464	$	74,353	$	73,854
Non-agency		21,266		21,404		10,430		10,183
Asset-backed securities:
Auto loan receivables		39,937		40,192		29,883		29,712
Credit card receivables		36,686		36,857		32,225		31,985
Other receivables		19,196		19,314		4,437		4,426
Total	$	230,694	$	232,231	$	151,328	$	150,160

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):

	June 30, 2016
	Less Than 12 Months							12 Months or Longer
	Number of				Unrealized			Number of				Unrealized
	Issues		Fair Value		Losses			Issues		Fair Value		Losses
Fixed maturities:
U.S. government obligations and agencies and municipal securities		—	$	—	$	—			2	$	3,524	$	(55	)
Corporate bonds		9		7,018		(49	)		7		5,328		(166	)
Mortgage-backed and asset-backed securities		18		41,521		(107	)		4		6,473		(126	)
Redeemable preferred stock		2		171		(6	)		—		—		—
Equity securities:
Common stock		2		2,986		(48	)		2		100		(90	)
Mutual funds		3		12,936		(451	)		1		8,686		(2,666	)
Total		34	$	64,632	$	(661	)		16	$	24,111	$	(3,103	)

	December 31, 2015
	Less Than 12 Months							12 Months or Longer
	Number of				Unrealized			Number of				Unrealized
	Issues		Fair Value		Losses			Issues		Fair Value		Losses
Fixed maturities:
U.S. government obligations and agencies		10	$	121,912	$	(690	)		2	$	3,429	$	(177	)
Corporate bonds		101		90,717		(927	)		6		4,789		(114	)
Mortgage-backed and asset-backed securities		51		118,743		(974	)		6		13,902		(291	)
Redeemable preferred stock		5		764		(29	)		—		—		—
Other		1		4,999		(1	)		—		—		—
Equity securities:
Common stock		3		8,690		(148	)		2		93		(96	)
Mutual funds		3		13,192		(374	)		1		7,867		(3,400	)
Total		174	$	359,017	$	(3,143	)		17	$	30,080	$	(4,078	)

Evaluating Investments for OTTI

At June 30, 2016, the Company held fixed maturity, equity securities and short-term investments that were in an unrealized loss position as presented in the table above. For fixed maturity securities with significant declines in value, the Company performs 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, equity securities and short-term investments, 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 on our analysis, our fixed income portfolio is of high quality and we believe we will recover the amortized cost basis of our fixed income securities. We continually monitor the credit quality of our fixed income investments to assess if it is probable that we will receive our contractual or estimated cash flows in the form of principal and interest. Additionally, the Company considers management’s intent and ability to hold the securities until recovery and its credit analysis of the individual issuers of the securities. Based on this process and analysis, management has no reason to believe the unrealized losses for securities available for sale at June 30, 2016 are other than temporary.

As of June 30, 2016, we held approximately $8.0 million equity securities that were in an unrealized loss position twelve months or longer. The unrealized loss on these securities was $3.5 million. Based on our analysis, we believe each security will recover in a reasonable period of time and we have the intent and ability to hold them until recovery. There were no OTTI losses recognized in the periods presented on the equity portfolio.

The following table presents the amortized cost and fair value of investments with contractual maturities as of the date presented (in thousands):

	June 30, 2016
	Cost or
	Amortized Cost		Fair Value
Due in one year or less	$	33,796	$	33,834
Due after one year through five years		234,677		237,846
Due after five years through ten years		19,321		19,712
Due after ten years		48,033		48,760
Mortgage-backed and asset-backed securities		230,694		232,231
Perpetual maturity securities		9,732		10,431
Total	$	576,253	$	582,814

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 periods presented (in thousands):

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2016		2015			2016			2015
Sales proceeds (fair value)	$	70,006	$	15,861		$	117,673		$	44,052
Gross realized gains	$	576	$	111		$	1,261		$	296
Gross realized losses	$	—	$	(1	)	$	(18	)	$	(15	)

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						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Fixed maturities	$	2,160		$	1,338		$	3,992		$	2,522
Equity securities		239			206			442			263
Short-term investments		14			67			45			105
Other (1)		281			79			437			145
Total investment income		2,694			1,690			4,916			3,035
Less: Investment expenses (2)		(552	)		(483	)		(1,169	)		(966	)
Net investment (expense) income	$	2,142		$	1,207		$	3,747		$	2,069

(1)	Includes interest earned on cash and cash equivalents and restricted cash and cash equivalents. Also includes investment income earned on real estate investments.

(2)	Includes bank fees, investment accounting and advisory fees, and expenses associated with real estate investments.

Investment Real Estate

Investment real estate consisted of the following as of the dates presented (in thousands):

	June 30, 2016			December 31, 2015
Investment real estate	$	8,294		$	6,220
Less: Accumulated depreciation		(192	)		(103	)
Investment real estate, net	$	8,102		$	6,117