Investments

6 Months Ended

Jun. 30, 2011

Investments

Investments

Note 4. Investments

The gross unrealized gains and losses on, and the cost and fair value of, those investments classified as held-to-maturity at June 30, 2011 are summarized as follows:

	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
States and political subdivisions	$	450,745	$	18,961	$	(808	)	$	468,898
U.S. agency-based mortgage-backed securities		53,188		4,057		(66	)		57,179
Commercial mortgage-backed securities		51,561		3,771		—			55,332
U.S. Treasury securities and obligations of U.S. Government agencies		13,799		982		—			14,781
Corporate bonds		73,190		1,615		(38	)		74,767
Asset-backed securities		5,850		23		(780	)		5,093
Totals	$	648,333	$	29,409	$	(1,692	)	$	676,050

The gross unrealized gains and losses on, and the cost and fair value of, those investments classified as available-for-sale at June 30, 2011 are summarized as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
States and political subdivisions	$	30,350	$	893	$	(44	)	$	31,199
U.S. Treasury securities and obligations of U.S. Government agencies		2,103		—		(105	)		1,998
Corporate bonds		20,714		74		(101	)		20,687
Equity securities		1,090		—		—			1,090
Totals	$	54,257	$	967	$	(250	)	$	54,974

The gross unrealized gains and losses on, and the cost and fair value of, those investments classified as held-to-maturity at December 31, 2010 are summarized as follows:

	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
States and political subdivisions	$	466,898	$	14,044	$	(1,797	)	$	479,145
U.S. agency-based mortgage-backed securities		62,090		3,951		(101	)		65,940
Commercial mortgage-backed securities		51,571		2,513		—			54,084
U.S. Treasury securities and obligations of U.S. Government agencies		14,819		972		—			15,791
Corporate bonds		60,825		1,423		(27	)		62,221
Asset-backed securities		6,392		17		(877	)		5,532
Long-term certificates of deposit		750		—		—			750
Totals	$	663,345	$	22,920	$	(2,802	)	$	683,463

The gross unrealized gains and losses on, and the cost and fair value of, those investments classified as available-for-sale at December 31, 2010 are summarized as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
U.S. Treasury securities and obligations of U.S. Government agencies	$	5,919	$	16	$	(95	)	$	5,840
Corporate bonds		15,946		10		(147	)		15,809
Equity securities		1,687		86		—			1,773
Totals	$	23,552	$	112	$	(242	)	$	23,422

A summary of the cost or amortized cost and fair value of investments in fixed maturity securities, classified as held-to-maturity at June 30, 2011, by contractual maturity, is as follows:

Remaining Time to Maturity	Carrying Value		Fair Value
	(In thousands)
Less than one year	$	102,620	$	103,726
One to five years		173,342		180,343
Five to ten years		139,035		147,996
More than ten years		122,737		126,381
U.S. agency-based mortgage-backed securities		53,188		57,179
Commercial mortgage-backed securities		51,561		55,332
Asset-backed securities		5,850		5,093
Total	$	648,333	$	676,050

A summary of the cost or amortized cost and fair value of investments in fixed maturity securities, classified as available-for-sale at June 30, 2011, by contractual maturity, is as follows:

Remaining Time to Maturity	Carrying Value		Fair Value
	(In thousands)
Less than one year	$	—	$	—
One to five years		14,857		14,880
Five to ten years		6,271		6,367
More than ten years		32,039		32,637
Total	$	53,167	$	53,884

The following table summarizes, as of June 30, 2011, the fair value of, and the amount of unrealized losses on, our investment securities, segregated by the time period each security has been in a continuous unrealized loss position:

	As of June 30, 2011
	Less Than 12 Months				12 Months or Greater				Total
	Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses
	(in thousands)
Held-to-Maturity
Fixed maturity securities:
States and political subdivisions	$	28,216	$	320	$	5,254	$	488	$	33,470	$	808
U.S. agency-based mortgage-backed securities		680		12		1,419		54		2,099		66
Corporate bonds		5,972		38		—		—		5,972		38
Asset-backed securities		691		38		4,341		742		5,032		780
Total held-to-maturity securities		35,559		408		11,014		1,284		46,573		1,692
Available-for Sale
Fixed maturity securities:
States and political subdivisions	$	8,957	$	45	$	—	$	—	$	8,957	$	45
U.S. Treasury securities and obligations of U.S. Government agencies		1,999		104		—		—		1,999		104
Corporate bonds		4,278		101		—		—		4,278		101
Total available-for-sale securities		15,234		250		—		—		15,234		250
Total	$	50,793	$	658	$	11,014	$	1,284	$	61,807	$	1,942

We regularly review our investment portfolio to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of our investments. We consider various factors in determining if a decline in the fair value of an individual security is other-than-temporary. The key factors we consider are:

• any reduction or elimination of preferred stock dividends, or nonpayment of scheduled principal or interest payments;

• the financial condition and near-term prospects of the issuer of the applicable security, including any specific events that may affect its operations or earnings;

• how long and by how much the fair value of the security has been below its cost or amortized cost;

• any downgrades of the security by a rating agency;

• our intent whether or not to sell the security;

• the likelihood of being forced to sell the security before the recovery of its value; and

• an evaluation as to whether there are any credit losses on debt securities.

We reviewed all securities with unrealized losses in accordance with the impairment policy described above. We determined that the unrealized losses in the fixed maturity securities portfolios related primarily to changes in market interest rates since the date of purchase, current conditions in the capital markets and the impact of those conditions on market liquidity and prices generally. We expect to recover the carrying value of these securities since management does not intend to sell the securities and it is not more likely than not that we will be required to sell the security before the recovery of its amortized cost basis.

In June 2011, we recorded an impairment charge for one asset-backed security in our held-to-maturity investment portfolio. We impaired this security because, among other things, a loss of principal was anticipated based upon estimated future cash flows. This charge is included in "Net realized gains on investments," and totaled $0.2 million for the quarter ended June 30, 2011.