SUMMARY OF INVESTMENTS

Fair Value of Investments

The table that follows is 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 December 31, 2012 and 2011.



December 31, 2012
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	$	1,185	$	11	$	—	$	1,196
Corporate bonds - financial services	200		—		—		200
Mortgage-backed securities	256		15		—		271
Collateralized mortgage obligations	14		—		—		14
Total Held-to-Maturity Fixed Maturities	$	1,655	$	26	$	—	$	1,681
AVAILABLE-FOR-SALE
Fixed maturities
Bonds
U.S. Treasury	$	37,887	$	939	$	5	$	38,821
U.S. government agency	45,566		429		67		45,928
States, municipalities and political subdivisions	739,752		55,572		819		794,505
Foreign bonds	207,359		11,863		62		219,160
Public utilities	232,550		15,208		32		247,726
Corporate bonds
Energy	169,973		9,758		—		179,731
Industrials	280,185		13,690		212		293,663
Consumer goods and services	193,313		9,813		151		202,975
Health care	115,654		7,111		80		122,685
Technology, media and telecommunications	123,660		6,909		198		130,371
Financial services	271,061		13,858		1,059		283,860
Mortgage-backed securities	27,940		888		21		28,807
Collateralized mortgage obligations	208,042		7,702		1,160		214,584
Asset-backed securities	4,480		406		—		4,886
Redeemable preferred stocks	378		—		2		376
Total Available-For-Sale Fixed Maturities	$	2,657,800	$	154,146	$	3,868	$	2,808,078
Equity securities
Common stocks
Public utilities	$	7,231	$	7,268	$	83	$	14,416
Energy	5,094		6,903		—		11,997
Industrials	13,031		19,827		174		32,684
Consumer goods and services	10,394		8,535		50		18,879
Health care	7,920		10,286		125		18,081
Technology, media and telecommunications	5,367		5,155		95		10,427
Financial services	15,701		52,936		145		68,492
Nonredeemable preferred stocks	2,154		25		28		2,151
Total Available-for-Sale Equity Securities	$	66,892	$	110,935	$	700	$	177,127
Total Available-for-Sale Securities	$	2,724,692	$	265,081	$	4,568	$	2,985,205



December 31, 2011
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	7,920		8,010		232		15,698
Technology, media and telecommunications	5,368		4,796		146		10,018
Financial services	15,592		41,041		543		56,090
Nonredeemable preferred stocks	2,154		42		384		1,812
Total Available-for-Sale Equity Securities	$	66,787	$	92,742	$	1,846	$	157,683
Total Available-for-Sale Securities	$	2,629,573	$	232,772	$	7,414	$	2,854,931

Maturities

The amortized cost and fair value of held-to-maturity, available-for-sale and trading fixed maturity securities at December 31, 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.



	Held-To-Maturity				Available-For-Sale				Trading
December 31, 2012	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	594	$	599	$	263,363	$	268,716	$	3,441	$	3,420
Due after one year through five years	791		797		1,023,990		1,084,961		6,520		6,995
Due after five years through 10 years	—		—		937,236		1,007,689		—		—
Due after 10 years	—		—		192,749		198,435		2,684		2,938
Asset-backed securities	—		—		4,480		4,886		—		—
Mortgage-backed securities	256		271		27,940		28,807		—		—
Collateralized mortgage obligations	14		14		208,042		214,584		—		—
	$	1,655	$	1,681	$	2,657,800	$	2,808,078	$	12,645	$	13,353

Net Realized Investment Gains and Losses

Net realized gains (losses) on disposition of investments are computed using the specific identification method and are included in the computation of net income. A summary of net realized investment gains (losses) for 2012, 2011 and 2010, is as follows:



	2012		2011			2010
Net realized investment gains (losses)
Fixed maturities:
Held-to-maturity	$	12	$	8		$	12
Available-for-sale	3,408		4,381			4,067
Trading securities
Change in fair value	683		(539		)	(325		)
Sales	406		(326		)	198
Equity securities:
Available-for-sale	694		2,988			5,030
Trading securities - change in fair value	250		(4		)	—
Mortgage loans	—		—			(362		)
Other long-term investments	—		(68		)	(131		)
Total net realized investment gains	$	5,453	$	6,440		$	8,489

The proceeds and gross realized gains (losses) on the sale of available-for-sale securities for 2012, 2011 and 2010, were as follows:



	2012			2011			2010
Proceeds from sales	$	20,324		$	39,496		$	3,402
Gross realized gains	513			1,144			1,915
Gross realized losses	(37		)	(1,562		)	—

There were no sales of held-to-maturity securities in 2012, 2011 and 2010.

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 $15,371 and $15,222 at December 31, 2012 and 2011, respectively.

Net Investment Income

Net investment income for the years ended December 31, 2012, 2011 and 2010, is comprised of the following:



Years Ended December 31	2012		2011			2010
Investment income
Interest on fixed maturities	$	108,517	$	109,467		$	108,754
Dividends on equity securities	5,354		4,628			3,675
Income (loss) on other long-term investments
Interest	232		224			24
Change in value ⁽¹⁾	2,562		(137		)	387
Interest on mortgage loans	279		285			479
Interest on short-term investments	10		4			6
Interest on cash and cash equivalents	290		913			1,064
Other	2,335		2,542			2,686
Total investment income	$	119,579	$	117,926		$	117,075
Less investment expenses	7,674		8,432			5,390
Net investment income	$	111,905	$	109,494		$	111,685


(1)	Represents the change in value of our interests in limited liability partnerships that are recorded on the equity method of accounting.

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 $15,000, upon request by the partnership, through December 31, 2017. Our remaining potential contractual obligation was $5,106 at December 31, 2012.

Unrealized Appreciation and Depreciation

A summary of changes in net unrealized investment appreciation for 2012, 2011 and 2010, is as follows:



	2012			2011			2010
Change in net unrealized investment appreciation
Available-for-sale fixed maturities	$	15,816		$	34,699		$	17,105
Equity securities	19,339			(4,675		)	16,155
Deferred policy acquisition costs	(4,821		)	3,402			(2,172		)
Income tax effect	(10,614		)	(11,699		)	(10,930		)
Total change in net unrealized investment appreciation, net of tax	$	19,720		$	21,727		$	20,158

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, 2012 and 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 December 31, 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 the fair value recovers to at least equal our cost basis or the securities mature.

We have evaluated the near-term prospects of the issuers of our equity securities in relation to the severity and duration of the unrealized loss, and unless otherwise noted, these losses do not warrant the recognition of an OTTI charge at December 31, 2012. Our largest unrealized loss greater than 12 months on an individual security at December 31, 2012 was $263. 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.




December 31, 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. Treasury	2	$	1,724	$	5	—	$	—	$	—	$	1,724	$	5
U.S. government agency	5	$	17,654	$	67	—	$	—	$	—	$	17,654	$	67
States, municipalities and political subdivisions	31	41,775		819		—	—		—		41,775		819
Foreign bonds	1	3,323		48		1	558		14		3,881		62
Public utilities	2	3,155		32		—	—		—		3,155		32
Corporate bonds
Industrials	4	12,194		109		1	2,897		103		15,091		212
Consumer goods and services	—	—		—		7	4,606		151		4,606		151
Health care	3	7,416		80		—	—		—		7,416		80
Technology, media and telecommunications	5	13,402		198		—	—		—		13,402		198
Financial services	2	1,005		1		24	24,693		1,058		25,698		1,059
Mortgage-backed securities	7	4,472		21		—	—		—		4,472		21
Collateralized mortgage obligations	27	74,702		1,004		1	29		156		74,731		1,160
Redeemable preferred stocks	2	376		2		—	—		—		376		2
Total Available-for-Sale Fixed Maturities	91	$	181,198	$	2,386	34	$	32,783	$	1,482	$	213,981	$	3,868
Equity securities
Common stocks
Public utilities	3	$	225	$	83	—	$	—	$	—	$	225	$	83
Industrials	4	482		52		9	621		122		1,103		174
Consumer goods and services	2	280		19		4	372		31		652		50
Health care	1	31		2		3	896		123		927		125
Technology, media and telecommunications	5	241		7		7	581		88		822		95
Financial services	1	47		19		7	1,109		126		1,156		145
Nonredeemable preferred stocks	—	—		—		2	1,203		28		1,203		28
Total Available-for-Sale Equity Securities	16	$	1,306	$	182	32	$	4,782	$	518	$	6,088	$	700
Total Available-for-Sale Securities	107	$	182,504	$	2,568	66	$	37,565	$	2,000	$	220,069	$	4,568




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