Our  investment portfolio totaled approximately $344 million at December 31, 2009, with 7% invested in equities and  93% in bonds. The equity investments are all in six mutual funds, and the company owns no individual stocks. Nearly 70% of these equity investments are in index funds that track the S&P 500. The remaining 30% are in mid cap, small cap, and international funds. Not surprisingly, the total results of these investments track fairly closely with changes in the overall stock market.

Our well-diversified bond portfolio is composed primarily of three components: tax-exempt municipal bonds (33% of the total), mortgage pass-throughs (23%), and corporate bonds (20%). The remaining 24% is composed primarily of U.S. Treasury bonds, bonds of U.S. government agencies, and commercial mortgage-backed securities. The mortgage pass-throughs are pools of mortgages through Fannie Mae and similar organizations; all are high-quality mortgages and in effect guaranteed by Fannie Mae and Freddie Mac, and none are sub-prime. As of March 1, 2010, all of Physicians Insurance's bond holdings are rated investment grade by the rating agencies.

 At the end of December, the market value of the company's  $319 million bond portfolio in total was approximately $9 million higher than amortized cost (carrying value).