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 March 31, 2012 are summarized as follows:


	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
States and political subdivisions	$	437,279	$	27,932	$	(488	)	$	464,723
Corporate bonds		101,420		1,799		(29	)		103,190
Commercial mortgage-backed securities		51,545		5,504		—			57,049
U.S. agency-based mortgage-backed securities		42,801		3,947		(29	)		46,719
U.S. Treasury securities and obligations of U.S. Government agencies		10,962		1,517		(4	)		12,475
Asset-backed securities		5,035		16		(774	)		4,277

Totals	$	649,042	$	40,715	$	(1,324	)	$	688,433

The gross unrealized gains and losses on, and the cost and fair value of, those investments classified as available-for-sale at March 31, 2012 are summarized as follows:


	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
Fixed Maturity:
States and political subdivision	$	56,708	$	2,566	$	(126	)	$	59,148
Corporate bonds		42,122		769		(17	)		42,874

Total Fixed Maturity		98,830		3,335		(143	)		102,022
Equity securities		4,492		131		(258	)		4,365

Totals	$	103,322	$	3,466	$	(401	)	$	106,387

The gross unrealized gains and losses on, and the cost and fair value of, those investments classified as held-to-maturity at December 31, 2011 are summarized as follows:


	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
States and political subdivisions	$	441,273	$	29,026	$	(360	)	$	469,939
Corporate bonds		92,682		1,539		(130	)		94,091
Commercial mortgage-backed securities		51,550		4,195		—			55,745
U.S. agency-based mortgage-backed securities		46,096		4,162		(44	)		50,214
U.S. Treasury securities and obligations of U.S. Government agencies		9,141		1,634		—			10,775
Asset-backed securities		5,306		17		(845	)		4,478

Totals	$	646,048	$	40,573	$	(1,379	)	$	685,242

The gross unrealized gains and losses on, and the cost and fair value of, those investments classified as available-for-sale at December 31, 2011 are summarized as follows:


	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
Fixed Maturity:
States and political subdivision	$	55,275	$	2,488	$	(1	)	$	57,762
Corporate bonds		42,802		411		(233	)		42,980

Total Fixed Maturity		98,077		2,899		(234	)		100,742
Equity securities		11,776		661		(197	)		12,240

Totals	$	109,853	$	3,560	$	(431	)	$	112,982

A summary of the cost or amortized cost and fair value of investments in fixed maturity securities, classified as held-to-maturity at March 31, 2012, by contractual maturity, is as follows:


Remaining Time to Maturity	Carrying Value		Fair Value
	(In thousands)
Less than one year	$	104,289	$	104,905
One to five years		166,204		174,286
Five to ten years		135,135		148,120
More than ten years		144,033		153,077
U.S. agency-based mortgage-backed securities		42,801		46,719
Commercial mortgage-backed securities		51,545		57,049
Asset-backed securities		5,035		4,277

Total	$	649,042	$	688,433

A summary of the cost or amortized cost and fair value of investments in fixed maturity securities, classified as available-for-sale at March 31, 2012, by contractual maturity, is as follows:


Remaining Time to Maturity	Carrying Value		Fair Value
	(In thousands)
Less than one year	$	9,785	$	9,801
One to five years		24,090		24,356
Five to ten years		12,283		12,740
More than ten years		52,672		55,125

Total	$	98,830	$	102,022

The following table summarizes, as of March 31, 2012, gross unrealized losses on securities that were at a loss for either less than twelve months or twelve months or longer:


	As of March 31, 2012
	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:
Corporate bonds	$	9,705	$	29	$	205	$	—	$	9,910	$	29
States and political subdivisions		22,942		259		5,840		229		28,782		488
U.S. Treasury securities and obligations of U.S. Government agencies		2,595		4		—		—		2,595		4
U.S. agency-based mortgage-backed securities		—		—		530		28		530		28
Asset-backed securities		545		3		3,679		772		4,224		775

Total held-to-maturity securities		35,787		295		10,254		1,029		46,041		1,324

Available-for Sale
Fixed maturity securities:
Corporate bonds	$	3,717	$	17	$	—	$	—	$	3,717	$	17
States and political subdivisions		7,997		126		—		—		7,997		126
Equity Securities		1,973		258		—		—		1,973		258

Total available-for-sale securities		13,687		401		—		—		13,687		401

Total	$	49,474	$	696	$	10,254	$	1,029	$	59,728	$	1,725

The following table summarizes, as of December 31, 2011, gross unrealized losses on securities that were at a loss for either less than twelve months or twelve months or longer:


	As of December 31, 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:
Corporate bonds	$	23,063	$	130	$	—	$	—	$	23,063	$	130
State and political subdivisions		2,291		3		5,718		357		8,009		360
U.S. agency-based mortgage-backed securities		—		—		1,012		44		1,012		44
Asset-backed securities		545		15		3,880		830		4,425		845

Total held-to-maturity securities		25,899		148		10,610		1,231		36,509		1,379

Available-for Sale
Fixed maturity securities:
Corporate bonds	$	14,301	$	233	$	—	$	—	$	14,301	$	233
States and political subdivisions		222		1		—		—		222		1
Equity Securities		2,789		197		—		—		2,789		197

Total available-for-sale securities		17,312		431		—		—		17,312		431

Total	$	43,211	$	579	$	10,610	$	1,231	$	53,821	$	1,810

In the three months ended March 31, 2012, we sold equity and fixed maturity securities classified as available-for-sale. The carrying value of these securities at disposal was $19.1 million. Realized gains on the sale of these securities totaled $1.8 million.

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 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 not to sell the security for a sufficient time period for it to recover its value;

•

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 and the transfer of the investments from the available-for-sale classification to the held-to-maturity classification in January 2004. 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 addition, none of the unrealized losses on debt securities are considered credit losses.