Investments

9 Months Ended

Sep. 30, 2011

Investments [Abstract]

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 September 30, 2011 are summarized as follows:

	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
States and political subdivisions	$	441,686	$	25,263	$	(426	)	$	466,523
U.S. agency-based mortgage-backed securities		49,969		4,275		(56	)		54,188
Commercial mortgage-backed securities		51,556		3,097		—			54,653
U.S. Treasury securities and obligations of U.S. Government agencies		13,194		1,481		—			14,675
Corporate bonds		79,981		1,549		(58	)		81,472
Asset-backed securities		5,647		25		(896	)		4,776
Totals	$	642,033	$	35,690	$	(1,436	)	$	676,287

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

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
States and political subdivisions	$	31,052	$	1,856	$	—		$	32,908
Corporate bonds		31,959		81		(194	)		31,846
Equity securities		14,306		436		(143	)		14,599
Totals	$	77,317	$	2,373	$	(337	)	$	79,353

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 September 30, 2011, by contractual maturity, is as follows:

Remaining Time to Maturity	Carrying Value		Fair Value
	(In thousands)
Less than one year	$	101,770	$	102,462
One to five years		179,874		187,513
Five to ten years		138,499		150,958
More than ten years		114,718		121,737
U.S. agency-based mortgage-backed securities		49,969		54,188
Commercial mortgage-backed securities		51,556		54,653
Asset-backed securities		5,647		4,776
Total	$	642,033	$	676,287

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

Remaining Time to Maturity	Carrying Value		Fair Value
	(In thousands)
Less than one year	$	5,244	$	5,261
One to five years		18,953		18,894
Five to ten years		8,366		8,374
More than ten years		30,448		32,225
Total	$	63,011	$	64,754

The following table summarizes, as of September 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 September 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	$	1,133	$	45	$	6,046	$	381	$	7,179	$	426
U.S. agency-based mortgage-backed securities		542		13		899		43		1,441		56
Corporate bonds		13,995		58		—		—		13,995		58
Asset-backed securities		1,200		72		3,514		824		4,714		896
Total held-to-maturity securities		16,870		188		10,459		1,248		27,329		1,436
Available-for Sale
Fixed maturity securities:
States and political subdivisions	$	—	$	—	$	—	$	—	$	—	$	—
U.S. Treasury securities and obligations of U.S. Government agencies		—		—		—		—		—		—
Corporate bonds		17,599		194		—		—		17,599		194
Equity Securities		2,701		143		—		—		2,701		143
Total available-for-sale securities		20,300		337		—		—		20,300		337
Total	$	37,170	$	525	$	10,459	$	1,248	$	47,629	$	1,773

In the three months ended September 30, 2011, we sold equity and fixed maturity securities classified as available-for-sale. The carrying value of these securities at disposal was $9.6 million. Realized gains on the sale of these securities totaled $0.5 million.

In the nine months ended September 30, 2011, we sold equity and fixed maturity securities classified as available-for-sale. An other-than-temporary impairment had previously been recognized on one of the equity securities. The carrying value of these securities at disposal was $22.4 million. Realized gains on the sale of these securities totaled $0.9 million. In the nine months ended September 30, 2011, we recognized an other-than-temporary impairment of $0.2 million on an asset-based security in our held-to-maturity portfolio.

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 current conditions in the capital markets, the impact of those conditions on market liquidity and prices generally and changes to market interest rates since the date of purchase. 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.