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, 2017
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Fixed Maturities:
U.S. government obligations and agencies	$	78,049	$	35	$	(545	)	$	77,539
Corporate bonds		203,843		1,018		(658	)		204,203
Mortgage-backed and asset-backed securities		211,044		116		(1,392	)		209,768
Municipal bonds		105,110		638		(1,836	)		103,912
Redeemable preferred stock		13,727		769		(9	)		14,487
Equity Securities:
Mutual funds		12,078		59		(2,210	)		9,927
Total	$	623,851	$	2,635	$	(6,650	)	$	619,836

	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):

	June 30, 2017					December 31, 2016
			% of Total					% of Total
Comparable Ratings	Fair Value		Fair Value			Fair Value		Fair Value
AAA	$	133,486		21.8	%	$	131,260		22.3	%
AA		275,041		45.1	%		275,480		46.7	%
A		118,716		19.5	%		107,418		18.2	%
BBB		73,979		12.1	%		67,263		11.4	%
BB+ and Below		3,982		0.7	%		3,444		0.6	%
No Rating Available		4,705		0.8	%		4,498		0.8	%
Total	$	609,909		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):

	June 30, 2017				December 31, 2016
	Cost or				Cost or
	Amortized				Amortized
	Cost		Fair Value		Cost		Fair Value
Mortgage-backed Securities:
Agency	$	106,015	$	104,863	$	110,724	$	109,022
Non-agency		16,752		16,682		19,408		19,265
Asset-backed Securities:
Auto loan receivables		37,216		37,195		37,390		37,429
Credit card receivables		39,894		39,872		38,640		38,568
Other receivables		11,167		11,156		10,517		10,492
Total	$	211,044	$	209,768	$	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):

	June 30, 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		13	$	55,479	$	(458	)		2	$	3,471	$	(87	)
Corporate bonds		107		79,838		(640	)		2		312		(18	)
Mortgage-backed and asset-backed securities		94		141,724		(1,295	)		7		10,462		(97	)
Municipal bonds		61		72,065		(1,836	)		—		—		—
Redeemable preferred stock		8		979		(9	)		—		—		—
Equity Securities:
Mutual funds		—		—		—			3		9,142		(2,210	)
Total		283	$	350,085	$	(4,238	)		14	$	23,387	$	(2,412	)

	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 June 30, 2017, the Company 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, 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 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 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 June 30, 2017 are other than temporary.

As of June 30, 2017, the Company held approximately $9.1 million equity securities that were in an unrealized loss position twelve months or longer. The unrealized loss on these equity securities was $2.2 million. Based on our analysis, the Company believes each equity 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):

	June 30, 2017
	Cost or
	Amortized Cost		Fair Value
Due in one year or less	$	55,635	$	55,622
Due after one year through five years		233,199		233,244
Due after five years through ten years		41,299		41,295
Due after ten years		56,869		55,493
Mortgage-backed and asset-backed securities		211,044		209,768
Perpetual maturity securities		13,727		14,487
Total	$	611,773	$	609,909

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,
	2017			2016		2017			2016
Proceeds from sales and maturities (fair value)	$	85,293		$	112,786	$	107,622		$	165,152
Gross realized gains	$	1,813		$	576	$	1,813		$	1,261
Gross realized losses	$	(103	)	$	—	$	(166	)	$	(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						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Fixed maturities	$	3,206		$	2,160		$	5,916		$	3,992
Equity securities		338			239			720			442
Short-term investments		7			14			22			45
Other (1)		188			281			332			437
Total investment income		3,739			2,694			6,990			4,916
Less: Investment expenses (2)		(516	)		(552	)		(1,063	)		(1,169	)
Net investment (expense) income	$	3,223		$	2,142		$	5,927		$	3,747

(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 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, 2017			December 31, 2016
Income Producing:
Investment real estate	$	6,918		$	6,918
Less: Accumulated depreciation		(371	)		(281	)
		6,547			6,637
Non-Income Producing:
Properties under development		8,557			4,798
Investment real estate, net	$	15,104		$	11,435