Investments

6 Months Ended

Jun. 30, 2012

Investments [Abstract]

Investments

Note 4. Investments

The gross unrealized gains and losses on, and the cost or amortized cost and fair value of, those investments classified as held-to-maturity at June 30, 2012 are summarized as follows:

	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
States and political subdivisions	$	419,483	$	30,344	$	(128	)	$	449,699
Corporate bonds		94,831		1,706		(28	)		96,509
Commercial mortgage-backed securities		51,540		5,584		—			57,124
U.S. agency-based mortgage-backed securities		39,013		3,741		(10	)		42,744
U.S. Treasury securities and obligations of U.S. Government agencies		11,042		1,649		(4	)		12,687
Asset-backed securities		4,773		28		(647	)		4,154
Total	$	620,682	$	43,052	$	(817	)	$	662,917

The gross unrealized gains and losses on, and the cost and fair value of, those investments classified as available-for-sale at June 30, 2012 are summarized as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
Fixed maturity:
States and political subdivision	$	72,914	$	3,317	$	(28	)	$	76,203
Corporate bonds		47,474		743		(76	)		48,141
U.S. agency-based mortgage-backed securities		4,216		19		(14	)		4,221
Total fixed maturity		124,604		4,079		(118	)		128,565
Equity securities		8,374		279		(360	)		8,293
Total	$	132,978	$	4,358	$	(478	)	$	136,858

The gross unrealized gains and losses on, and the cost or amortized 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
Total	$	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
Total	$	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 June 30, 2012, by contractual maturity, is as follows:

Remaining Time to Maturity	Carrying Value		Fair Value
	(In thousands)
Less than one year	$	85,230	$	85,833
One to five years		165,923		175,132
Five to ten years		133,106		147,163
More than ten years		141,097		150,767
U.S. agency-based mortgage-backed securities		39,013		42,744
Commercial mortgage-backed securities		51,540		57,124
Asset-backed securities		4,773		4,154
Total	$	620,682	$	662,917

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, 2012, by contractual maturity, is as follows:

Remaining Time to Maturity	Carrying Value		Fair Value
	(In thousands)
Less than one year	$	11,453	$	11,447
One to five years		25,727		25,915
Five to ten years		18,075		18,649
More than ten years		65,133		68,333
U.S. agency-based mortgage-backed securities		4,216		4,221
Total	$	124,604	$	128,565

The following table summarizes, as of June 30, 2012, gross unrealized losses on securities that were at a loss for either less than twelve months or twelve months or greater:

	As of June 30, 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	$	12,755	$	28	$	203	$	—	$	12,958	$	28
States and political subdivisions		13,982		87		2,978		41		16,960		128
U.S. Treasury securities and obligations of U.S. Government agencies		4,152		4		—		—		4,152		4
U.S. agency-based mortgage-backed securities		—		—		218		10		218		10
Asset-backed securities		—		—		2,930		647		2,930		647
Total held-to-maturity securities		30,889		119		6,329		698		37,218		817
Available-for Sale
Fixed maturity securities:
Corporate bonds	$	21,648	$	76	$	—	$	—	$	21,648	$	76
States and political subdivisions		6,453		28		—		—		6,453		28
U.S. agency-based mortgage-backed securities		991		14		—		—		991		14
Equity Securities		4,439		360		—		—		4,439		360
Total available-for-sale securities		33,531		478		—		—		33,531		478
Total	$	64,420	$	597	$	6,329	$	698	$	70,749	$	1,295

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 greater:

	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 June 30, 2012, we sold equity securities classified as available-for-sale. The carrying value of these securities at disposal was $0.9 million with realized gains on the sale of these securities of $0.1 million. In the three months ended June 30, 2011, we sold fixed maturity securities classified as available-for-sale. The carrying value of these securities at disposal was $11.9 million with realized gains on the sale of these securities of $0.3 million.

In the six months ended June 30, 2012 and 2011, we sold equity and fixed maturity securities classified as available-for-sale. The carrying value of these securities at disposal was $20.0 million with realized gains on the sale of these securities of $1.9 million for the six months ended June 30, 2012, compared to a carrying value of $12.8 million and realized gains of $0.4 million for the same period in 2011.

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 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.