NOTE 2. SUMMARY OF INVESTMENTS

Fair Value of Investments

A reconciliation of the amortized cost (cost for equity securities) to fair value of investments in held-to-maturity and available-for-sale fixed maturity and equity securities at December 31, 2011 and 2010, is as follows:



December 31, 2011	(In Thousands)
Type of Investment	Cost or Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Fair Value
HELD-TO-MATURITY
Fixed maturities
Bonds
States, municipalities and political subdivisions
General obligations	$	496	$	5	$	—	$	501
Special revenue
North central - East	242		12		—		254
North central - West	218		12		—		230
South	633		1		61		573
West	2,150		22		—		2,172
Collateralized mortgage obligations	48		2		—		50
Mortgage-backed securities	356		25		—		381
Total Held-to-Maturity Fixed Maturities	$	4,143	$	79	$	61	$	4,161
AVAILABLE-FOR-SALE
Fixed maturities
Bonds
U.S. government and government-sponsored enterprises
U.S. Treasury	$	42,530	$	1,421	$	—	$	43,951
Agency	95,813		582		—		96,395
States, municipalities and political subdivisions
General obligations
Midwest
North central - East	118,456		11,149		—		129,605
North central - West	76,986		7,325		—		84,311
Northeast	37,436		3,428		1		40,863
South	105,034		10,439		—		115,473
West	68,329		6,049		—		74,378
Special revenue
Midwest
North central - East	66,188		4,625		—		70,813
North central - West	50,658		4,578		—		55,236
Northeast	13,780		955		2		14,733
South	95,565		7,514		5		103,074
West	54,607		5,014		—		59,621
Foreign bonds
Canadian	69,107		3,269		200		72,176
Other foreign	137,765		5,497		623		142,639
Public utilities
Electric	220,682		13,047		250		233,479
Gas distribution	24,044		1,677		63		25,658
Other	10,096		838		—		10,934
Corporate bonds
Oil and gas	189,902		7,567		277		197,192
Chemicals	59,569		2,692		—		62,261
Basic resources	24,448		129		516		24,061
Construction and materials	23,962		384		16		24,330
Industrial goods and services	177,717		7,426		118		185,025
Autos and parts	17,743		801		315		18,229
Food and beverage	66,753		2,621		133		69,241
Personal and household goods	59,256		2,721		14		61,963
Health care	109,219		6,497		45		115,671
Retail	57,345		2,718		—		60,063
Media	40,346		1,670		47		41,969
Travel and leisure	2,851		11		184		2,678
Telecommunications	38,203		1,715		3		39,915
Banks	129,326		3,755		1,205		131,876
Insurance	22,878		831		9		23,700
Real estate	20,981		2,222		181		23,022
Financial services	85,341		2,267		905		86,703



Technology	29,766		1,566		268		31,064
Collateralized mortgage obligations
Government	79,269		3,490		68		82,691
Other	276		—		116		160
Mortgage-backed securities	34,353		1,041		4		35,390
Asset-backed securities	5,801		495		—		6,296
Redeemable preferred stock	405		4		—		409
Total Available-For-Sale Fixed Maturities	$	2,562,786	$	140,030	$	5,568	$	2,697,248
Equity securities
Common stocks
Public utilities
Electric	$	6,227	$	6,290	$	98	$	12,419
Gas distribution	928		1,295		—		2,223
Other	76		17		—		93
Corporate
Oil and gas	5,094		7,116		—		12,210
Chemicals	2,734		2,305		—		5,039
Industrial goods and services	9,944		13,848		275		23,517
Autos and parts	277		310		7		580
Food and beverage	2,124		3,982		—		6,106
Personal and household goods	5,513		3,158		—		8,671
Health care	8,212		8,008		232		15,988
Retail	2,836		532		161		3,207
Media	147		—		13		134
Telecommunications	2,399		3,778		17		6,160
Banks	11,690		30,196		372		41,514
Insurance	3,209		9,902		77		13,034
Real estate	393		793		72		1,114
Financial services	300		150		22		428
Technology	2,822		1,018		116		3,724
Nonredeemable preferred stocks	3,634		40		384		3,290
Total Available-for-Sale Equity Securities	$	68,559	$	92,738	$	1,846	$	159,451
Total Available-for-Sale Securities	$	2,631,345	$	232,768	$	7,414	$	2,856,699



December 31, 2010	(In Thousands)
Type of Investment	Cost or Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Fair Value
HELD-TO-MATURITY
Fixed maturities
Bonds
U.S. government and government-sponsored enterprises
General obligations	$	731	$	10	$	—	$	741
Special revenue
North central - East	364		27		—		391
North central - West	488		23		—		511
Northeast	230		12		—		242
South	1,067		4		108		963
West	2,957		36		—		2,993
Collateralized mortgage obligations	83		4		—		87
Mortgage-backed securities	444		50		—		494
Total Held-to-Maturity Fixed Maturities	$	6,364	$	166	$	108	$	6,422
AVAILABLE-FOR-SALE
Fixed maturities
Bonds
U.S. government and government-sponsored enterprises
U.S. Treasury	$	38,133	$	943	$	—	$	39,076
Agency	104,049		96		1,014		103,131
States, municipalities and political subdivisions
General obligations
Midwest
North central - East	121,273		6,634		137		127,770
North central - West	76,699		4,491		58		81,132
Northeast	27,861		1,664		—		29,525
South	92,795		6,555		53		99,297
West	53,160		2,983		90		56,053
Special revenue
Midwest
North central - East	59,063		2,205		175		61,093
North central - West	38,827		1,744		266		40,305
Northeast	4,505		247		9		4,743
South	71,486		3,405		144		74,747
West	42,363		2,182		—		44,545
Foreign bonds
Canadian	69,209		3,908		194		72,923
Other foreign	85,434		4,588		268		89,754
Public utilities
Electric	213,636		12,207		519		225,324
Gas distribution	21,131		1,124		70		22,185
Other	21,029		551		—		21,580
Corporate bonds
Oil and gas	177,973		7,890		427		185,436
Chemicals	52,561		2,445		35		54,971
Basic resources	6,971		456		—		7,427
Construction and materials	19,385		873		—		20,258
Industrial goods and services	148,212		7,208		362		155,058
Autos and parts	17,500		1,003		119		18,384
Food and beverage	70,613		3,531		111		74,033
Personal and household goods	66,597		3,079		289		69,387
Health care	78,595		4,933		186		83,342
Retail	42,150		2,139		329		43,960
Media	31,702		1,552		—		33,254
Travel and leisure	5,882		61		77		5,866
Telecommunications	34,706		2,329		51		36,984
Banks	117,506		5,817		1,689		121,634
Insurance	25,682		799		14		26,467
Real estate	20,903		1,101		267		21,737
Financial services	80,803		3,635		983		83,455
Technology	15,952		1,070		334		16,688
Collateralized mortgage obligations	17,564		2,013		—		19,577
Mortgage-backed securities	2		—		—		2
Asset-backed securities	6,754		572		—		7,326
Total Available-For-Sale Fixed Maturities	$	2,178,666	$	108,033	$	8,270	$	2,278,429
Equity securities
Common stocks
Public utilities



Electric	$	6,229	$	4,164	$	3	$	10,390
Gas distribution	90		586		—		676
Corporate
Oil and gas	5,740		7,394		—		13,134
Chemicals	2,734		3,345		—		6,079
Industrial goods and services	8,112		15,185		—		23,297
Autos and parts	257		537		—		794
Food and beverage	682		3,792		—		4,474
Personal and household goods	5,233		3,370		—		8,603
Health care	6,367		6,367		186		12,548
Retail	380		348		—		728
Travel and leisure	1		—		—		1
Telecommunications	2,376		3,438		—		5,814
Banks	9,498		34,363		101		43,760
Insurance	3,129		11,320		41		14,408
Real estate	393		667		40		1,020
Financial services	300		274		15		559
Technology	1,157		874		—		2,031
Nonredeemable preferred stocks	1,461		3		74		1,390
Total Available-for-Sale Equity Securities	$	54,139	$	96,027	$	460	$	149,706
Total Available-for-Sale Securities	$	2,232,805	$	204,060	$	8,730	$	2,428,135

Maturities

The amortized cost and fair value of held-to-maturity, available-for-sale and trading securities at December 31, 2011, by contractual maturity, are shown in the following table. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed securities and collateralized mortgage obligations may be subject to prepayment risk and are therefore not categorized by contractual maturity.



(In Thousands)	Held-To-Maturity				Available-For-Sale				Trading
	Amortized		Fair		Amortized		Fair		Amortized		Fair
December 31, 2011	Cost		Value		Cost		Value		Cost		Value
Due in one year or less	$	395	$	397	$	271,254	$	275,360	$	2,544	$	2,860
Due after one year through five years	3,344		3,333		1,084,794		1,140,002		4,880		4,749
Due after five years through 10 years	—		—		964,452		1,030,590		497		439
Due after 10 years	—		—		122,587		126,759		5,508		5,406
Asset-backed securities	—		—		5,801		6,296		—		—
Mortgage-backed securities	356		381		34,353		35,390		—		—
Collateralized mortgage obligations	48		50		79,545		82,851		—		—
	$	4,143	$	4,161	$	2,562,786	$	2,697,248	$	13,429	$	13,454

Realized Investment Gains and Losses

A summary of realized investment gains (losses) for 2011, 2010 and 2009, is as follows:



(In Thousands)
Years Ended December 31	2011			2010			2009
Realized investment gains (losses)
Fixed maturities	$	4,389		$	4,079		$	(4,117	)
Equity securities	2,984			5,030			(11,362		)
Trading securities
Change in fair value	(539		)	(325		)	1,547
Sales	(326		)	198			418
Mortgage loans	—			(362		)	—
Other long-term investments	(68		)	(131		)	332
Short-term investments	—			—			3
Total realized investment gains (losses)	$	6,440		$	8,489		$	(13,179	)

The proceeds and gross realized gains (losses) on the sale of available-for-sale securities for 2011, 2010 and 2009, were as follows:



(In Thousands)
Years Ended December 31	2011			2010		2009
Proceeds from sales	$	39,496		$	3,402	$	13,432
Gross realized gains	1,144			1,915		2,009
Gross realized losses	(1,562		)	—		(890		)

There were no sales of held-to-maturity securities in 2011, 2010 and 2009.

Our investment portfolio includes trading securities with embedded derivatives. These securities, which are primarily convertible redeemable preferred debt securities, are recorded at fair value. Income or loss, including the change in the fair value of these trading securities, is recognized currently in earnings as a component of realized investment gains (losses). Our portfolio of trading securities had a fair value of $13,454,000 and $12,886,000 at December 31, 2011 and 2010, respectively.

Net Investment Income

Net investment income for the years ended December 31, 2011, 2010 and 2009, is comprised of the following:



(In Thousands)
Years Ended December 31	2011			2010		2009
Investment income
Interest on fixed maturities	$	109,467		$	108,754	$	106,023
Dividends on equity securities	4,628			3,675		3,950
Income (loss) on other long-term investments
Interest	224			24		(6		)
Change in value ⁽¹⁾	(137		)	387		(1,127		)
Interest on mortgage loans	285			479		587
Interest on short-term investments	4			6		558
Interest on cash and cash equivalents	913			1,064		1,094
Other	2,542			2,686		1,253
Total investment income	$	117,926		$	117,075	$	112,332
Less investment expenses	8,432			5,390		6,257
Investment income, net	$	109,494		$	111,685	$	106,075


(1)	Represents the change in value of our holdings in limited liability partnership funds, which are accounted for under the equity method of accounting.

Off-Balance Sheet Arrangements

Pursuant to an agreement with one of our limited liability partnership funds, we are contractually committed to make capital contributions up to $15,000,000, upon request by the partnership, through December 31, 2017. Our remaining potential contractual obligation was $9,156,000 at December 31, 2011.

Unrealized Appreciation and Depreciation

A summary of changes in net unrealized investment appreciation is as follows:



(In Thousands)
Years Ended December 31	2011			2010			2009
Changes in net unrealized investment appreciation
Available-for-sale fixed maturities	$	34,699		$	17,105		$	126,555
Equity securities	(4,675		)	16,155			24,673
Deferred policy acquisition costs	3,402			(2,172		)	(63,425		)
Income tax effect	(11,699		)	(10,930		)	(30,855		)
Total change in net unrealized appreciation, net of tax	$	21,727		$	20,158		$	56,948

We continually monitor the difference between our cost basis and the estimated fair value of our investments. Our accounting policy for impairment recognition requires OTTI charges to be recorded when we determine that it is more likely than not that we will be unable to collect all amounts due according to the contractual terms of the fixed maturity security or that the anticipated recovery in fair value of the equity security will not occur in a reasonable amount of time. Impairment charges on investments are recorded based on the fair value of the investments at the measurement date. Factors considered in evaluating whether a decline in value is other-than-temporary include: the length of time and the extent to which fair value has been less than cost; the financial condition and near-term prospects of the issuer; our intention to hold the investment; and the likelihood that we will be required to sell the investment.

The tables on the following pages summarize our fixed maturity and equity securities that were in an unrealized loss position at December 31, 2011 and 2010. The securities are presented by the length of time they have been continuously in an unrealized loss position. It is possible that we could recognize OTTI charges in future periods on securities held at December 31, 2011, if future events or information cause us to determine that a decline in fair value is other-than-temporary.

We believe the unrealized depreciation in value of our fixed maturity portfolio is primarily attributable to changes in market interest rates and not the credit quality of the issuer. We have no intent to sell and it is more likely than not that we will not be required to sell the securities until such time that the fair value recovers or the securities mature.

We have evaluated the unrealized losses reported for all of our equity securities at December 31, 2011, and have concluded that the duration and severity of these losses do not warrant the recognition of an OTTI charge at December 31, 2011. Our largest unrealized loss greater than 12 months on an individual equity security at December 31, 2011, was $122,000. We have no intention to sell any of these securities prior to a recovery in value, but will continue to monitor the fair value reported for these securities as part of our overall process to evaluate investments for OTTI recognition.



(In Thousands)
December 31, 2011	Less than 12 months					12 months or longer					Total
				Gross					Gross				Gross
	Number	Fair		Unrealized		Number	Fair		Unrealized		Fair		Unrealized
Type of Investment	of Issues	Value		Depreciation		of Issues	Values		Depreciation		Values		Depreciation
HELD-TO-MATURITY
Fixed maturities
Bonds
States, municipalities and political subdivisions
Special revenue	—	$	—	$	—	1	$	473	$	61	$	473	$	61
Total Held-to-Maturity Fixed Maturities	—	$	—	$	—	1	$	473	$	61	$	473	$	61
AVAILABLE-FOR-SALE
Fixed maturities
Bonds
States, municipalities and political subdivisions
General obligations	2	$	1,506	$	1	—	$	—	$	—	$	1,506	$	1
Special revenue
Northeast	—	—		—		1	619		2		619		2
South	4	2,049		5		—	—		—		2,049		5
Foreign bonds
Canadian	1	5,667		97		2	2,930		103		8,597		200
Other foreign	12	12,334		391		4	11,193		232		23,527		623
Public utilities
Electric	4	6,486		97		1	1,068		153		7,554		250
Gas distribution	2	3,093		63		—	—		—		3,093		63
Corporate bonds
Oil and gas	2	5,436		53		1	5,223		224		10,659		277
Basic resources	3	10,861		328		2	5,238		188		16,099		516
Construction and materials	3	10,560		16		—	—		—		10,560		16
Industrial goods and services	3	4,243		15		1	2,897		103		7,140		118
Autos and parts	1	2,685		315		—	—		—		2,685		315
Food and beverage	1	1,012		1		5	3,932		132		4,944		133
Personal and household goods	1	1,047		14		—	—		—		1,047		14
Health care	2	5,027		45		—	—		—		5,027		45
Media	2	7,081		47		—	—		—		7,081		47
Travel and leisure	2	616		184		—	—		—		616		184
Telecommunications	1	1,966		3		—	—		—		1,966		3
Banks	18	16,946		264		8	17,267		941		34,213		1,205
Insurance	2	504		9		—	—		—		504		9
Real estate	2	378		10		1	4,396		171		4,774		181
Financial services	1	2,245		9		17	7,229		896		9,474		905
Technology	10	5,101		268		—	—		—		5,101		268
Collateralized mortgage obligations
Government	6	4,306		25		3	5,209		43		9,515		68
Other	1	160		116		—	—		—		160		116
Mortgage-backed securities	5	684		4		—	—		—		684		4
Total Available-For-Sale Fixed Maturities	91	$	111,993	$	2,380	46	$	67,201	$	3,188	$	179,194	$	5,568
Equity securities
Common stocks
Public utilities
Electric	3	$	210	$	98	—	$	—	$	—	$	210	$	98
Corporate



Industrial goods and services	7	975		155		8	577		120		1,552		275
Autos and parts	6	14		7		—	—		—		14		7
Health care	5	768		94		4	455		138		1,223		232
Retail	6	611		143		3	431		18		1,042		161
Media	—	—		—		1	134		13		134		13
Telecommunications	4	60		8		1	10		9		70		17
Banks	11	875		250		1	434		122		1,309		372
Insurance	4	742		47		2	107		30		849		77
Real estate	—	—		—		3	205		72		205		72
Financial services	1	259		22		—	—		—		259		22
Technology	3	511		116		—	—		—		511		116
Nonredeemable preferred stocks	3	1,171		31		2	878		353		2049		384
Total Available-for-Sale Equity Securities	53	$	6,196	$	971	25	$	3,231	$	875	$	9,427	$	1,846
Total Available-for-Sale Securities	144	$	118,189	$	3,351	71	$	70,432	$	4,063	$	188,621	$	7,414
Total	144	$	118,189	$	3,351	72	$	70,905	$	4,124	$	189,094	$	7,475



(In Thousands)
December 31, 2010	Less than 12 months					12 months or longer					Total
				Gross					Gross				Gross
	Number	Fair		Unrealized		Number	Fair		Unrealized		Fair		Unrealized
Type of Investment	of Issues	Value		Depreciation		of Issues	Values		Depreciation		Values		Depreciation
HELD-TO-MATURITY
Fixed maturities
Bonds
States, municipalities and political subdivisions
Special revenue	—	$	—	$	—	2	$	590	$	108	$	590	$	108
Total Held-to-Maturity Fixed Maturities	—	$	—	$	—	2	$	590	$	108	$	590	$	108
AVAILABLE-FOR-SALE
Fixed maturities
Bonds
U.S. government and government-sponsored enterprises
Agency	12	$	41,374	$	626	7	$	30,661	$	388	$	72,035	$	1,014
States, municipalities and political subdivisions
General obligations
Midwest
North central - East	3	2,346		105		1	497		32		2,843		137
North central - West	1	860		58		—	—		—		860		58
South	2	947		53		—	—		—		947		53
West	3	2,723		90		—	—		—		2,723		90
Special revenue
Midwest
North central - East	7	8,275		96		2	2,553		79		10,828		175
North central - West	2	3,092		102		2	2,555		164		5,647		266
Northeast	—	—		—		1	771		9		771		9
South	3	3,964		144		—	—		—		3,964		144
Foreign bonds
Canadian	1	5,687		194		—	—		—		5,687		194
Other foreign	2	6,634		235		2	2,873		33		9,507		268
Public utilities
Electric	3	4,490		100		3	10,003		419		14,493		519
Gas distribution	—	—		—		1	1,420		70		1,420		70
Corporate bonds
Oil and gas	—	—		—		4	10,168		427		10,168		427
Chemicals	3	3,366		19		1	4,939		16		8,305		35
Industrial goods and services	5	13,642		171		2	5,821		191		19,463		362
Autos and parts	—	—		—		1	3,928		119		3,928		119
Food and beverage	1	2,006		12		2	4,491		99		6,497		111
Personal and household goods	3	9,233		241		2	3,039		48		12,272		289
Health care	4	14,416		186		—	—		—		14,416		186
Retail	4	9,370		321		1	2,308		8		11,678		329
Travel and leisure	1	2,013		69		2	792		8		2,805		77
Telecommunications	2	2,696		51		—	—		—		2,696		51
Banks	1	2,920		18		15	28,887		1,671		31,807		1,689
Insurance	1	2,169		14		—	—		—		2,169		14
Real Estate	1	4,539		177		1	2,256		90		6,795		267
Financial services	3	11,660		236		15	5,270		747		16,930		983
Technology	—	—		—		3	8,628		334		8,628		334



Total Available-For-Sale Fixed Maturities	68	$	158,422	$	3,318	68	$	131,860	$	4,952	$	290,282	$	8,270
Equity securities
Common stocks
Public utilities
Electric	3	$	306	$	2	4	$	—	$	1	$	306	$	3
Corporate
Health care	2	1,437		62		1	371		124		1,808		186
Banks	2	614		33		1	488		68		1,102		101
Insurance	1	260		28		1	43		13		303		41
Real estate	1	79		10		2	158		30		237		40
Financial services	1	267		15		—	—		—		267		15
Nonredeemable preferred stocks	—	—		—		2	1,158		74		1,158		74
Total Available-for-Sale Equity Securities	10	$	2,963	$	150	11	$	2,218	$	310	$	5,181	$	460
Total Available-for-Sale Securities	78	$	161,385	$	3,468	79	$	134,078	$	5,262	$	295,463	$	8,730
Total	78	$	161,385	$	3,468	81	$	134,668	$	5,370	$	296,053	$	8,838