Investments

9 Months Ended

Sep. 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 September 30, 2012 are summarized as follows:

	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
States and political subdivisions	$	414,904	$	32,844	$	(50	)	$	447,698
Corporate bonds		90,067		1,799		(8	)		91,858
Commercial mortgage-backed securities		51,535		6,673		—			58,208
U.S. agency-based mortgage-backed securities		35,666		3,628		(8	)		39,286
U.S. Treasury securities and obligations of U.S. Government agencies		11,035		1,756		—			12,791
Asset-backed securities		4,474		158		(298	)		4,334
Total	$	607,681	$	46,858	$	(364	)	$	654,175

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

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
Fixed maturity:
States and political subdivision	$	91,690	$	5,162	$	(51	)	$	96,801
Corporate bonds		38,672		617		(21	)		39,268
U.S. agency-based mortgage-backed securities		11,179		25		(142	)		11,062
Total fixed maturity		141,541		5,804		(214	)		147,131
Equity securities		6,592		605		(80	)		7,117
Total	$	148,133	$	6,409	$	(294	)	$	154,248

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 September 30, 2012, by contractual maturity, is as follows:

Remaining Time to Maturity	Carrying Value		Fair Value
	(In thousands)
Less than one year	$	84,868	$	85,406
One to five years		158,940		168,395
Five to ten years		135,868		151,719
More than ten years		136,330		146,827
U.S. agency-based mortgage-backed securities		35,666		39,286
Commercial mortgage-backed securities		51,535		58,208
Asset-backed securities		4,474		4,334
Total	$	607,681	$	654,175

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, 2012, by contractual maturity, is as follows:

Remaining Time to Maturity	Amortized Cost		Fair Value
	(In thousands)
Less than one year	$	11,024	$	11,045
One to five years		20,300		20,627
Five to ten years		18,793		19,439
More than ten years		80,245		84,958
U.S. agency-based mortgage-backed securities		11,179		11,062
Total	$	141,541	$	147,131

The following table summarizes, as of September 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 September 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	$	4,676	$	8	$	—	$	—	$	4,676	$	8
States and political subdivisions		9,847		34		3,000		16		12,847		50
U.S. agency-based mortgage-backed securities		—		—		137		8		137		8
Asset-backed securities		—		—		2,262		298		2,262		298
Total held-to-maturity securities		14,523		42		5,399		322		19,922		364
Available-for Sale
Fixed maturity securities:
Corporate bonds	$	5,965	$	21	$	—	$	—	$	5,965	$	21
States and political subdivisions		1,322		51		—		—		1,322		51
U.S. agency-based mortgage-backed securities		7,867		142		—		—		7,867		142
Equity Securities		2,827		80		—		—		2,827		80
Total available-for-sale securities		17,981		294		—		—		17,981		294
Total	$	32,504	$	336	$	5,399	$	322	$	37,903	$	658

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 September 30, 2012, we sold equity and fixed maturity securities classified as available-for-sale. The carrying value of these securities at disposal was $11.1 million with realized gains on the sale of these securities of $0.9 million. In the three months ended September 30, 2011, we sold fixed maturity securities classified as available-for-sale. The carrying value of these securities at disposal was $9.6 million with realized gains on the sale of these securities of $0.5 million.

In the nine months ended September 30, 2012, we sold equity and fixed maturity securities classified as available-for-sale. The carrying value of these securities at disposal was $31.2 million with realized gains on the sale of these securities of $2.7 million for the nine months ended September 30, 2012, compared to a carrying value of $22.4 million and realized gains of $0.9 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.