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 as of September 30, 2012 and December 31, 2011, is as follows:



September 30, 2012	(Dollars 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	$	1,559	$	20	$	—	$	1,579
Mortgage-backed securities	267		16		—		283
Collateralized mortgage obligations	21		—		—		21
Total Held-to-Maturity Fixed Maturities	$	1,847	$	36	$	—	$	1,883
AVAILABLE-FOR-SALE
Fixed maturities
Bonds
U.S. Treasury	$	44,776	$	1,096	$	—	$	45,872
U.S. government agency	27,864		462		29		28,297
States, municipalities and political subdivisions	714,000		60,739		63		774,676
Foreign bonds	209,772		12,301		209		221,864
Public utilities	245,161		16,045		59		261,147
Corporate bonds
Energy	173,486		9,949		—		183,435
Industrials	300,958		15,233		277		315,914
Consumer goods and services	197,861		10,868		147		208,582
Health care	117,779		7,684		39		125,424
Technology, media and telecommunications	126,996		7,895		21		134,870
Financial services	284,895		15,571		1,260		299,206
Mortgage-backed securities	30,752		1,144		1		31,895
Collateralized mortgage obligations	187,788		6,990		621		194,157
Asset-backed securities	4,574		412		—		4,986
Redeemable preferred stocks	378		4		—		382
Total Available-For-Sale Fixed Maturities	$	2,667,040	$	166,393	$	2,726	$	2,830,707
Equity securities
Common stocks
Public utilities	$	7,231	$	7,376	$	105	$	14,502
Energy	5,094		7,346		—		12,440
Industrials	13,030		17,870		217		30,683
Consumer goods and services	10,394		8,548		47		18,895
Health care	8,255		10,996		109		19,142
Technology, media and telecommunications	5,367		5,913		124		11,156
Financial services	15,701		53,588		219		69,070
Nonredeemable preferred stocks	3,887		34		85		3,836
Total Available-for-Sale Equity Securities	$	68,959	$	111,671	$	906	$	179,724
Total Available-for-Sale Securities	$	2,735,999	$	278,064	$	3,632	$	3,010,431



December 31, 2011	(Dollars 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	$	3,739	$	52	$	61	$	3,730
Mortgage-backed securities	356		25		—		381
Collateralized mortgage obligations	48		2		—		50
Total Held-to-Maturity Fixed Maturities	$	4,143	$	79	$	61	$	4,161
AVAILABLE-FOR-SALE
Fixed maturities
Bonds
U.S. Treasury	$	42,530	$	1,421	$	—	$	43,951
U.S. government agency	95,813		582		—		96,395
States, municipalities and political subdivisions	687,039		61,076		8		748,107
Foreign bonds	206,872		8,766		823		214,815
Public utilities	254,822		15,562		313		270,071
Corporate bonds
Energy	189,902		7,567		277		197,192
Industrials	285,696		10,631		650		295,677
Consumer goods and services	203,948		8,872		646		212,174
Health care	109,219		6,497		45		115,671
Technology, media and telecommunications	108,315		4,951		318		112,948
Financial services	258,526		9,075		2,300		265,301
Mortgage-backed securities	34,353		1,041		4		35,390
Collateralized mortgage obligations	79,545		3,490		184		82,851
Asset-backed securities	5,801		495		—		6,296
Redeemable preferred stocks	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	$	7,231	$	7,602	$	98	$	14,735
Energy	5,094		7,116		—		12,210
Industrials	12,678		16,153		275		28,556
Consumer goods and services	10,750		7,982		168		18,564
Health care	8,212		8,008		232		15,988
Technology, media and telecommunications	5,368		4,796		146		10,018
Financial services	15,592		41,041		543		56,090
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

Maturities

The amortized cost and fair value of held-to-maturity, available-for-sale and trading securities at September 30, 2012, 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. Asset-backed securities, 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
September 30, 2012	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	271	$	276	$	261,755	$	267,088	$	2,821	$	2,713
Due after one year through five years	1,288		1,303		1,028,748		1,091,315		6,649		7,412
Due after five years through 10 years	—		—		1,000,318		1,079,653		—		—
Due after 10 years	—		—		153,105		161,613		4,077		4,373
Asset-backed securities	—		—		4,574		4,986		—		—
Mortgage-backed securities	267		283		30,752		31,895		—		—
Collateralized mortgage obligations	21		21		187,788		194,157		—		—
	$	1,847	$	1,883	$	2,667,040	$	2,830,707	$	13,547	$	14,498

Net Realized Investment Gains and Losses

Net realized gains (losses) on disposition of investments are computed using the specific identification method and recognized as a component of earnings for the current period. A summary of net realized investment gains (losses) is as follows:



	Three Months Ended September 30,					Nine Months Ended September 30,
(In Thousands)	2012		2011			2012		2011
Net realized investment gains (losses)
Fixed maturities	$	102	$	813		$	2,425	$	3,247
Equity securities	—		792			697		2,126
Trading securities	1,198		(457		)	1,536		(179		)
Other long-term investments	—		(78		)	—		(347		)
Mark-to-market valuation gain for interest rate swaps	—		149			—		149
Total net realized investment gains	$	1,300	$	1,219		$	4,658	$	4,996

The proceeds and gross realized gains and losses on the sale of available-for-sale securities are as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
(In Thousands)	2012		2011		2012		2011
Proceeds from sales	$	—	$	830	$	12,003	$	21,871
Gross realized gains	—		793		472		1,144
Gross realized losses	—		—		25		688

There were no sales of held-to-maturity securities during the nine-month periods ended September 30, 2012 and 2011.

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 net realized investment gains and losses. Our portfolio of trading securities had a fair value of $14.5 million and $13.5 million at September 30, 2012 and December 31, 2011, respectively.

Off-Balance Sheet Arrangements

Pursuant to an agreement with one of our limited liability partnership investments, we are contractually committed to make capital contributions up to $15.0 million, upon request by the partnership, through December 31, 2017. Our remaining potential contractual obligation was $6.5 million at September 30, 2012.

Unrealized Appreciation and Depreciation

A summary of changes in net unrealized investment appreciation (depreciation) during the reporting period is as follows:



	Nine Months Ended September 30,
(In Thousands)	2012			2011
Change in net unrealized investment appreciation
Available-for-sale fixed maturities and equity securities	$	49,078		$	8,368
Deferred policy acquisition costs	(10,854		)	2,527
Income tax effect	(13,270		)	(3,687		)
Total change in net unrealized investment appreciation, net of tax	$	24,954		$	7,208

In the above table, the amount reported as changes in deferred policy acquisition costs pertains to certain investments of our life insurance segment and represents the impact of fluctuations that occur in the interest rate environment from time to time.

We continually monitor the difference between our cost basis and the estimated fair value of our investments. Our accounting policy for impairment recognition requires other-than-temporary impairment ("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 September 30, 2012 and December 31, 2011. 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 September 30, 2012, 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 securities in 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 these securities until such time as the fair value recovers to at least equal our cost basis or the securities mature.

We have evaluated the unrealized losses reported for all of our equity securities at September 30, 2012, and have concluded that the duration and severity of these losses do not warrant the recognition of an OTTI charge at September 30, 2012. Our largest unrealized loss greater than 12 months on an individual security at September 30, 2012 was $0.4 million. 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)
September 30, 2012	Less than 12 months					12 months or longer					Total
Type of Investment	Number of Issues	Fair Value		Gross Unrealized Depreciation		Number of Issues	Fair Value		Gross Unrealized Depreciation		Fair Value		Gross Unrealized Depreciation
AVAILABLE-FOR-SALE
Fixed maturities
Bonds
U.S. government agency	4	$	9,971	$	29	—	$	—	$	—	$	9,971	$	29
States, municipalities and political subdivisions	18	13,965		63		—	—		—		13,965		63
Foreign bonds	4	7,224		188		1	836		21		8,060		209
Public utilities	5	7,366		59		—	—		—		7,366		59
Corporate bonds
Industrials	3	9,076		174		1	2,897		103		11,973		277
Consumer goods and services	4	2,579		27		3	2,058		120		4,637		147
Health care	3	9,022		39		—	—		—		9,022		39
Technology, media and telecommunications	2	6,839		21		—	—		—		6,839		21
Financial services	4	3,072		162		23	22,157		1,098		25,229		1,260
Mortgage-backed securities	5	668		1		—	—		—		668		1
Collateralized mortgage obligations	17	42,084		414		4	85		207		42,169		621
Total Available-For-Sale Fixed Maturities	69	$	111,866	$	1,177	32	$	28,033	$	1,549	$	139,899	$	2,726
Equity securities
Common stocks
Public utilities	—	$	—	$	—	3	$	203	$	105	$	203	$	105
Industrials	7	716		103		7	508		114		1,224		217
Consumer goods and services	1	73		4		10	428		43		501		47
Health care	3	325		13		3	922		96		1,247		109
Technology, media and telecommunications	2	205		8		7	552		116		757		124
Financial services	4	744		44		7	1,060		175		1,804		219
Nonredeemable preferred stocks	—	—		—		2	1,146		85		1,146		85
Total Available-for-Sale Equity Securities	17	$	2,063	$	172	39	$	4,819	$	734	$	6,882	$	906
Total Available-for-Sale Securities	86	$	113,929	$	1,349	71	$	32,852	$	2,283	$	146,781	$	3,632



(In Thousands)
December 31, 2011	Less than 12 months					12 months or longer					Total
Type of Investment	Number of Issues	Fair Value		Gross Unrealized Depreciation		Number of Issues	Fair Value		Gross Unrealized Depreciation		Fair Value		Gross Unrealized Depreciation
HELD-TO-MATURITY
Fixed maturities
Bonds
States, municipalities and political subdivisions	—	$	—	$	—	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	6	$	3,555	$	6	1	$	619	$	2	$	4,174	$	8
Foreign bonds	13	18,001		488		6	14,123		335		32,124		823
Public utilities	6	9,579		160		1	1,068		153		10,647		313
Corporate bonds
Energy	2	5,436		53		1	5,223		224		10,659		277
Industrials	9	25,664		359		3	8,135		291		33,799		650
Consumer goods and services	5	5,360		514		5	3,932		132		9,292		646
Health care	2	5,027		45		—	—		—		5,027		45
Technology, media and telecommunications	13	14,148		318		—	—		—		14,148		318
Financial services	23	20,073		292		26	28,892		2,008		48,965		2,300
Mortgage-backed securities	5	684		4		—	—		—		684		4
Collateralized mortgage obligations	7	4,466		141		3	5,209		43		9,675		184
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	3	$	210	$	98	—	$	—	$	—	$	210	$	98
Industrials	7	975		155		8	577		120		1,552		275
Consumer goods and services	12	625		150		3	431		18		1,056		168
Health care	5	768		94		4	455		138		1,223		232
Technology, media and telecommunications	7	571		124		2	144		22		715		146
Financial services	16	1,876		319		6	746		224		2,622		543
Nonredeemable preferred stocks	3	1,171		31		2	878		353		2,049		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