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):

	March 31, 2017
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Fixed Maturities:
U.S. government obligations and agencies	$	78,055	$	1	$	(587	)	$	77,469
Corporate bonds		194,289		727		(975	)		194,041
Mortgage-backed and asset-backed securities		215,670		128		(1,797	)		214,001
Municipal bonds		100,762		307		(3,177	)		97,892
Redeemable preferred stock		13,777		524		(29	)		14,272
Equity Securities:
Common stock		214		—		(119	)		95
Mutual funds		51,616		953		(2,378	)		50,191
Short-term investments		5,000		1		—			5,001
Total	$	659,383	$	2,641	$	(9,062	)	$	652,962

	December 31, 2016
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Fixed Maturities:
U.S. government obligations and agencies	$	74,937	$	—	$	(670	)	$	74,267
Corporate bonds		192,328		402		(1,300	)		191,430
Mortgage-backed and asset-backed securities		216,679		135		(2,038	)		214,776
Municipal bonds		94,794		130		(3,727	)		91,197
Redeemable preferred stock		12,723		125		(157	)		12,691
Equity Securities:
Common stock		214		—		(121	)		93
Mutual funds		53,900		407		(3,597	)		50,710
Short-term investments		5,000		2		—			5,002
Total	$	650,575	$	1,201	$	(11,610	)	$	640,166

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):

	March 31, 2017					December 31, 2016
			% of Total					% of Total
Comparable Ratings	Fair Value		Fair Value			Fair Value		Fair Value
AAA	$	129,495		21.5	%	$	131,260		22.3	%
AA		282,340		46.9	%		275,480		46.7	%
A		111,734		18.5	%		107,418		18.2	%
BBB		70,754		11.7	%		67,263		11.4	%
BB+ and Below		3,706		0.6	%		3,444		0.6	%
No Rating Available		4,647		0.8	%		4,498		0.8	%
Total	$	602,676		100.0	%	$	589,363		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):

	March 31, 2017				December 31, 2016
	Cost or				Cost or
	Amortized				Amortized
	Cost		Fair Value		Cost		Fair Value
Mortgage-backed Securities:
Agency	$	111,148	$	109,720	$	110,724	$	109,022
Non-agency		18,247		18,128		19,408		19,265
Asset-backed Securities:
Auto loan receivables		36,900		36,857		37,390		37,429
Credit card receivables		38,617		38,553		38,640		38,568
Other receivables		10,758		10,743		10,517		10,492
Total	$	215,670	$	214,001	$	216,679	$	214,776

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 (dollars in thousands):

	March 31, 2017
	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		12	$	72,345	$	(540	)		2	$	3,511	$	(47	)
Corporate bonds		92		76,775		(934	)		2		289		(41	)
Mortgage-backed and asset-backed securities		86		148,308		(1,651	)		8		14,521		(146	)
Municipal bonds		65		76,343		(3,177	)		—		—		—
Redeemable preferred stock		14		1,606		(29	)		—		—		—
Equity Securities:
Common stock		1		20		(5	)		2		75		(114	)
Mutual funds		1		16,685		(116	)		1		9,090		(2,262	)
Total		271	$	392,082	$	(6,452	)		15	$	27,486	$	(2,610	)

	December 31, 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		11	$	70,453	$	(608	)		2	$	3,504	$	(62	)
Corporate bonds		116		96,379		(1,219	)		4		3,250		(80	)
Mortgage-backed and asset-backed securities		73		149,928		(1,923	)		5		9,660		(115	)
Municipal bonds		69		79,402		(3,726	)		—		—		—
Redeemable preferred stock		50		6,340		(158	)		—		—		—
Equity Securities:
Common stock		1		18		(7	)		2		75		(115	)
Mutual funds		3		28,020		(774	)		2		11,529		(2,823	)
Total		323	$	430,540	$	(8,415	)		15	$	28,018	$	(3,195	)

Evaluating Investments for Other Than Temporary Impairment (“OTTI”)

At March 31, 2017, 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, we believe that our fixed income portfolio is of high quality and that 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 March 31, 2017 are other than temporary.

As of March 31, 2017, the Company held approximately $9.2 million equity securities that were in an unrealized loss position twelve months or longer. The unrealized loss on these securities was $2.4 million. Based on our analysis, the Company believes each security will recover in a reasonable period of time and the Company has 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):

	March 31, 2017
	Cost or
	Amortized Cost		Fair Value
Due in one year or less	$	53,558	$	53,570
Due after one year through five years		229,273		228,831
Due after five years through ten years		38,207		37,658
Due after ten years		57,068		54,344
Mortgage-backed and asset-backed securities		215,670		214,001
Perpetual maturity securities		13,777		14,272
Total	$	607,553	$	602,676

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
	March 31,
	2017			2016
Proceeds from sales and maturities (fair value)	$	22,329		$	52,366
Gross realized gains	$	—		$	685
Gross realized losses	$	(63	)	$	(18	)

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,
	2017			2016
Fixed maturities	$	2,710		$	1,831
Equity securities		382			203
Short-term investments		15			115
Other (1)		144			73
Total investment income		3,251			2,222
Less: Investment expenses (2)		(547	)		(617	)
Net investment (expense) income	$	2,704		$	1,605

(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):

	March 31, 2017			December 31, 2016
Income Producing:
Investment real estate	$	6,918		$	6,918
Less: Accumulated depreciation		(326	)		(281	)
		6,592			6,637
Non-Income Producing:
Properties under development		6,512			4,798
Investment real estate, net	$	13,104		$	11,435