x | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2012 |
¨ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _______ to _______ |
Virginia | 54-1959284 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer x | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
Page Number | ||
June 30, 2012 | December 31, 2011 | ||||||
(dollars in thousands) | |||||||
ASSETS | |||||||
Investments, available-for-sale, at estimated fair value: | |||||||
Fixed maturities (amortized cost of $4,916,699 in 2012 and $5,172,952 in 2011) | $ | 5,326,511 | $ | 5,538,174 | |||
Equity securities (cost of $1,313,186 in 2012 and $1,156,294 in 2011) | 2,180,069 | 1,873,927 | |||||
Short-term investments (estimated fair value approximates cost) | 465,734 | 541,014 | |||||
Total Investments | 7,972,314 | 7,953,115 | |||||
Cash and cash equivalents | 837,208 | 775,032 | |||||
Receivables | 476,462 | 350,237 | |||||
Reinsurance recoverable on unpaid losses | 765,043 | 791,102 | |||||
Reinsurance recoverable on paid losses | 43,406 | 38,208 | |||||
Deferred policy acquisition costs | 174,274 | 194,674 | |||||
Prepaid reinsurance premiums | 112,399 | 97,074 | |||||
Goodwill and intangible assets | 991,430 | 867,558 | |||||
Other assets | 592,697 | 465,103 | |||||
Total Assets | $ | 11,965,233 | $ | 11,532,103 | |||
LIABILITIES AND EQUITY | |||||||
Unpaid losses and loss adjustment expenses | $ | 5,273,275 | $ | 5,398,869 | |||
Unearned premiums | 1,036,444 | 915,930 | |||||
Payables to insurance companies | 139,858 | 64,327 | |||||
Senior long-term debt and other debt (estimated fair value of $1,446,000 in 2012 and $1,391,000 in 2011) | 1,309,530 | 1,293,520 | |||||
Other liabilities | 463,222 | 397,111 | |||||
Total Liabilities | 8,222,329 | 8,069,757 | |||||
Redeemable noncontrolling interests | 87,613 | 74,231 | |||||
Commitments and contingencies | |||||||
Shareholders’ equity: | |||||||
Common stock | 904,047 | 891,507 | |||||
Retained earnings | 1,957,778 | 1,835,086 | |||||
Accumulated other comprehensive income | 793,341 | 660,920 | |||||
Total Shareholders’ Equity | 3,655,166 | 3,387,513 | |||||
Noncontrolling interests | 125 | 602 | |||||
Total Equity | 3,655,291 | 3,388,115 | |||||
Total Liabilities and Equity | $ | 11,965,233 | $ | 11,532,103 |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(dollars in thousands, except per share data) | |||||||||||||||
OPERATING REVENUES | |||||||||||||||
Earned premiums | $ | 513,056 | $ | 490,201 | $ | 1,042,652 | $ | 953,312 | |||||||
Net investment income | 63,602 | 64,253 | 143,396 | 134,352 | |||||||||||
Net realized investment gains: | |||||||||||||||
Other-than-temporary impairment losses | (992 | ) | (1,707 | ) | (992 | ) | (1,707 | ) | |||||||
Other-than-temporary impairment losses recognized in other comprehensive income (loss) | — | (3,168 | ) | — | (3,168 | ) | |||||||||
Other-than-temporary impairment losses recognized in net income | (992 | ) | (4,875 | ) | (992 | ) | (4,875 | ) | |||||||
Net realized investment gains, excluding other-than-temporary impairment losses | 9,208 | 6,219 | 21,117 | 17,459 | |||||||||||
Net realized investment gains | 8,216 | 1,344 | 20,125 | 12,584 | |||||||||||
Other revenues | 108,373 | 91,370 | 220,209 | 168,514 | |||||||||||
Total Operating Revenues | 693,247 | 647,168 | 1,426,382 | 1,268,762 | |||||||||||
OPERATING EXPENSES | |||||||||||||||
Losses and loss adjustment expenses | 221,094 | 306,683 | 509,615 | 621,011 | |||||||||||
Underwriting, acquisition and insurance expenses | 224,784 | 196,845 | 463,481 | 399,195 | |||||||||||
Amortization of intangible assets | 8,315 | 5,555 | 17,119 | 11,563 | |||||||||||
Other expenses | 97,719 | 79,473 | 198,123 | 147,968 | |||||||||||
Total Operating Expenses | 551,912 | 588,556 | 1,188,338 | 1,179,737 | |||||||||||
Operating Income | 141,335 | 58,612 | 238,044 | 89,025 | |||||||||||
Interest expense | 22,209 | 21,898 | 44,376 | 40,860 | |||||||||||
Income Before Income Taxes | 119,126 | 36,714 | 193,668 | 48,165 | |||||||||||
Income tax expense | 28,358 | 5,065 | 45,187 | 6,655 | |||||||||||
Net Income | $ | 90,768 | $ | 31,649 | $ | 148,481 | $ | 41,510 | |||||||
Net income attributable to noncontrolling interests | 1,081 | 1,335 | 1,541 | 2,924 | |||||||||||
Net Income to Shareholders | $ | 89,687 | $ | 30,314 | $ | 146,940 | $ | 38,586 | |||||||
OTHER COMPREHENSIVE INCOME (LOSS) | |||||||||||||||
Change in net unrealized gains on investments, net of taxes: | |||||||||||||||
Net holding gains (losses) arising during the period | $ | (8,029 | ) | $ | 64,403 | $ | 145,426 | $ | 84,724 | ||||||
Unrealized other-than-temporary impairment losses on fixed maturities arising during the period | 130 | 1,644 | (8 | ) | 1,468 | ||||||||||
Reclassification adjustments for net gains included in net income | (5,739 | ) | (827 | ) | (13,670 | ) | (7,291 | ) | |||||||
Change in net unrealized gains on investments, net of taxes | (13,638 | ) | 65,220 | 131,748 | 78,901 | ||||||||||
Change in foreign currency translation adjustments, net of taxes | (3,162 | ) | 156 | (339 | ) | 2,595 | |||||||||
Change in net actuarial pension loss, net of taxes | 482 | 355 | 965 | 701 | |||||||||||
Total Other Comprehensive Income (Loss) | (16,318 | ) | 65,731 | 132,374 | 82,197 | ||||||||||
Comprehensive Income | $ | 74,450 | $ | 97,380 | $ | 280,855 | $ | 123,707 | |||||||
Comprehensive income attributable to noncontrolling interests | 1,034 | 1,335 | 1,494 | 2,924 | |||||||||||
Comprehensive Income to Shareholders | $ | 73,416 | $ | 96,045 | $ | 279,361 | $ | 120,783 | |||||||
NET INCOME PER SHARE | |||||||||||||||
Basic | $ | 8.44 | $ | 3.12 | $ | 14.38 | $ | 3.97 | |||||||
Diluted | $ | 8.42 | $ | 3.11 | $ | 14.35 | $ | 3.95 |
Common Stock | Retained Earnings | Accumulated Other Comprehensive Income | Total Shareholders’ Equity | Noncontrolling Interests | Total Equity | Redeemable Noncontrolling Interests | |||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||
December 31, 2010 | $ | 884,457 | $ | 1,735,973 | $ | 551,093 | $ | 3,171,523 | $ | 871 | $ | 3,172,394 | $ | 15,298 | |||||||||||||
Net income | 38,586 | — | 38,586 | (136 | ) | 38,450 | 3,060 | ||||||||||||||||||||
Change in net unrealized gains on investments, net of taxes | — | 78,901 | 78,901 | — | 78,901 | — | |||||||||||||||||||||
Change in foreign currency translation adjustments, net of taxes | — | 2,595 | 2,595 | — | 2,595 | — | |||||||||||||||||||||
Change in net actuarial pension loss, net of taxes | — | 701 | 701 | — | 701 | — | |||||||||||||||||||||
Comprehensive Income | 120,783 | (136 | ) | 120,647 | 3,060 | ||||||||||||||||||||||
Issuance of common stock | 848 | — | — | 848 | — | 848 | — | ||||||||||||||||||||
Repurchase of common stock | — | (13,492 | ) | — | (13,492 | ) | — | (13,492 | ) | — | |||||||||||||||||
Restricted stock units expensed | 3,129 | — | — | 3,129 | — | 3,129 | — | ||||||||||||||||||||
Acquisitions | — | — | — | — | — | — | 47,292 | ||||||||||||||||||||
Other | 182 | — | — | 182 | — | 182 | (1,279 | ) | |||||||||||||||||||
June 30, 2011 | $ | 888,616 | $ | 1,761,067 | $ | 633,290 | $ | 3,282,973 | $ | 735 | $ | 3,283,708 | $ | 64,371 | |||||||||||||
December 31, 2011 | $ | 891,507 | $ | 1,835,086 | $ | 660,920 | $ | 3,387,513 | $ | 602 | $ | 3,388,115 | $ | 74,231 | |||||||||||||
Net income | 146,940 | — | 146,940 | (477 | ) | 146,463 | 2,018 | ||||||||||||||||||||
Change in net unrealized gains on investments, net of taxes | — | 131,748 | 131,748 | — | 131,748 | — | |||||||||||||||||||||
Change in foreign currency translation adjustments, net of taxes | — | (292 | ) | (292 | ) | — | (292 | ) | (47 | ) | |||||||||||||||||
Change in net actuarial pension loss, net of taxes | — | 965 | 965 | — | 965 | — | |||||||||||||||||||||
Comprehensive Income | 279,361 | (477 | ) | 278,884 | 1,971 | ||||||||||||||||||||||
Issuance of common stock | 8,413 | — | — | 8,413 | — | 8,413 | — | ||||||||||||||||||||
Repurchase of common stock | — | (16,062 | ) | — | (16,062 | ) | — | (16,062 | ) | — | |||||||||||||||||
Restricted stock units expensed | 3,806 | — | — | 3,806 | — | 3,806 | — | ||||||||||||||||||||
Acquisitions | — | — | — | — | — | — | 7,896 | ||||||||||||||||||||
Adjustment of redeemable noncontrolling interests | — | (8,186 | ) | — | (8,186 | ) | — | (8,186 | ) | 8,186 | |||||||||||||||||
Other | 321 | — | — | 321 | — | 321 | (4,671 | ) | |||||||||||||||||||
June 30, 2012 | $ | 904,047 | $ | 1,957,778 | $ | 793,341 | $ | 3,655,166 | $ | 125 | $ | 3,655,291 | $ | 87,613 |
Six Months Ended June 30, | |||||||
2012 | 2011 | ||||||
(dollars in thousands) | |||||||
OPERATING ACTIVITIES | |||||||
Net income | $ | 148,481 | $ | 41,510 | |||
Adjustments to reconcile net income to net cash provided by operating activities | (43,734 | ) | 58,833 | ||||
Net Cash Provided By Operating Activities | 104,747 | 100,343 | |||||
INVESTING ACTIVITIES | |||||||
Proceeds from sales of fixed maturities and equity securities | 143,429 | 107,131 | |||||
Proceeds from maturities, calls and prepayments of fixed maturities | 256,503 | 202,269 | |||||
Cost of fixed maturities and equity securities purchased | (285,988 | ) | (312,173 | ) | |||
Net change in short-term investments | 75,539 | (275,238 | ) | ||||
Acquisitions, net of cash acquired | (143,620 | ) | (5,841 | ) | |||
Additions to property and equipment | (22,885 | ) | (27,158 | ) | |||
Cost of equity method investments | (38,250 | ) | (10,600 | ) | |||
Other | (1,509 | ) | 10,970 | ||||
Net Cash Used By Investing Activities | (16,781 | ) | (310,640 | ) | |||
FINANCING ACTIVITIES | |||||||
Additions to senior long-term debt and other debt | 73,705 | 295,352 | |||||
Repayments of senior long-term debt and other debt | (71,529 | ) | (53,038 | ) | |||
Repurchases of common stock | (16,062 | ) | (13,492 | ) | |||
Other | (11,245 | ) | (1,017 | ) | |||
Net Cash Provided (Used) By Financing Activities | (25,131 | ) | 227,805 | ||||
Effect of foreign currency rate changes on cash and cash equivalents | (659 | ) | 5,187 | ||||
Increase in cash and cash equivalents | 62,176 | 22,695 | |||||
Cash and cash equivalents at beginning of period | 775,032 | 745,259 | |||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 837,208 | $ | 767,954 |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in thousands, except per share amounts) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Net income to shareholders | $ | 89,687 | $ | 30,314 | $ | 146,940 | $ | 38,586 | |||||||
Adjustment of redeemable noncontrolling interests | 8,186 | — | 8,186 | — | |||||||||||
Adjusted net income to shareholders | $ | 81,501 | $ | 30,314 | $ | 138,754 | $ | 38,586 | |||||||
Basic common shares outstanding | 9,651 | 9,717 | 9,646 | 9,720 | |||||||||||
Dilutive potential common shares | 25 | 40 | 26 | 40 | |||||||||||
Diluted shares outstanding | 9,676 | 9,757 | 9,672 | 9,760 | |||||||||||
Basic net income per share | $ | 8.44 | $ | 3.12 | $ | 14.38 | $ | 3.97 | |||||||
Diluted net income per share | $ | 8.42 | $ | 3.11 | $ | 14.35 | $ | 3.95 |
Quarter Ended June 30, | |||||||||||||||
(dollars in thousands) | 2012 | 2011 | |||||||||||||
Written | Earned | Written | Earned | ||||||||||||
Direct | $ | 530,144 | $ | 490,607 | $ | 508,006 | $ | 461,962 | |||||||
Assumed | 116,778 | 91,107 | 89,187 | 87,323 | |||||||||||
Ceded | (80,308 | ) | (68,658 | ) | (66,505 | ) | (59,084 | ) | |||||||
Net premiums | $ | 566,614 | $ | 513,056 | $ | 530,688 | $ | 490,201 |
Six Months Ended June 30, | |||||||||||||||
(dollars in thousands) | 2012 | 2011 | |||||||||||||
Written | Earned | Written | Earned | ||||||||||||
Direct | $ | 1,048,684 | $ | 1,000,196 | $ | 981,216 | $ | 908,100 | |||||||
Assumed | 246,856 | 174,949 | 206,760 | 168,773 | |||||||||||
Ceded | (147,760 | ) | (132,493 | ) | (138,276 | ) | (123,561 | ) | |||||||
Net premiums | $ | 1,147,780 | $ | 1,042,652 | $ | 1,049,700 | $ | 953,312 |
a) | The following tables summarize the Company’s available-for-sale investments. |
June 30, 2012 | |||||||||||||||||||
(dollars in thousands) | Amortized Cost | Gross Unrealized Holding Gains | Gross Unrealized Holding Losses | Unrealized Other-Than- Temporary Impairment Losses | Estimated Fair Value | ||||||||||||||
Fixed maturities: | |||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies | $ | 312,540 | $ | 21,330 | $ | (38 | ) | $ | — | $ | 333,832 | ||||||||
Obligations of states, municipalities and political subdivisions | 2,663,600 | 231,887 | (409 | ) | — | 2,895,078 | |||||||||||||
Foreign governments | 552,873 | 52,629 | (32 | ) | — | 605,470 | |||||||||||||
Residential mortgage-backed securities | 297,664 | 21,638 | (3 | ) | (2,258 | ) | 317,041 | ||||||||||||
Asset-backed securities | 15,069 | 629 | — | — | 15,698 | ||||||||||||||
Public utilities | 64,132 | 5,093 | — | — | 69,225 | ||||||||||||||
All other corporate bonds | 1,010,821 | 86,101 | (130 | ) | (6,625 | ) | 1,090,167 | ||||||||||||
Total fixed maturities | 4,916,699 | 419,307 | (612 | ) | (8,883 | ) | 5,326,511 | ||||||||||||
Equity securities: | |||||||||||||||||||
Insurance companies, banks and trusts | 443,857 | 358,808 | (488 | ) | — | 802,177 | |||||||||||||
Industrial, consumer and all other | 869,329 | 515,267 | (6,704 | ) | — | 1,377,892 | |||||||||||||
Total equity securities | 1,313,186 | 874,075 | (7,192 | ) | — | 2,180,069 | |||||||||||||
Short-term investments | 465,739 | 1 | (6 | ) | — | 465,734 | |||||||||||||
Investments, available-for-sale | $ | 6,695,624 | $ | 1,293,383 | $ | (7,810 | ) | $ | (8,883 | ) | $ | 7,972,314 |
December 31, 2011 | |||||||||||||||||||
(dollars in thousands) | Amortized Cost | Gross Unrealized Holding Gains | Gross Unrealized Holding Losses | Unrealized Other-Than- Temporary Impairment Losses | Estimated Fair Value | ||||||||||||||
Fixed maturities: | |||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies | $ | 299,413 | $ | 22,789 | $ | (9 | ) | $ | — | $ | 322,193 | ||||||||
Obligations of states, municipalities and political subdivisions | 2,729,838 | 201,477 | (794 | ) | — | 2,930,521 | |||||||||||||
Foreign governments | 572,253 | 45,629 | (1,068 | ) | — | 616,814 | |||||||||||||
Residential mortgage-backed securities | 366,859 | 24,601 | (18 | ) | (2,258 | ) | 389,184 | ||||||||||||
Asset-backed securities | 16,096 | 731 | (9 | ) | — | 16,818 | |||||||||||||
Public utilities | 63,965 | 5,462 | — | — | 69,427 | ||||||||||||||
All other corporate bonds | 1,124,528 | 78,053 | (2,750 | ) | (6,614 | ) | 1,193,217 | ||||||||||||
Total fixed maturities | 5,172,952 | 378,742 | (4,648 | ) | (8,872 | ) | 5,538,174 | ||||||||||||
Equity securities: | |||||||||||||||||||
Insurance companies, banks and trusts | 389,421 | 296,648 | (1,366 | ) | — | 684,703 | |||||||||||||
Industrial, consumer and all other | 766,873 | 425,131 | (2,780 | ) | — | 1,189,224 | |||||||||||||
Total equity securities | 1,156,294 | 721,779 | (4,146 | ) | — | 1,873,927 | |||||||||||||
Short-term investments | 541,014 | 4 | (4 | ) | — | 541,014 | |||||||||||||
Investments, available-for-sale | $ | 6,870,260 | $ | 1,100,525 | $ | (8,798 | ) | $ | (8,872 | ) | $ | 7,953,115 |
b) | The following tables summarize gross unrealized investment losses by the length of time that securities have continuously been in an unrealized loss position. |
June 30, 2012 | |||||||||||||||||||||||
Less than 12 months | 12 months or longer | Total | |||||||||||||||||||||
(dollars in thousands) | Estimated Fair Value | Gross Unrealized Holding and Other-Than- Temporary Impairment Losses | Estimated Fair Value | Gross Unrealized Holding and Other-Than- Temporary Impairment Losses | Estimated Fair Value | Gross Unrealized Holding and Other-Than- Temporary Impairment Losses | |||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies | $ | 55,792 | $ | (35 | ) | $ | 3,483 | $ | (3 | ) | $ | 59,275 | $ | (38 | ) | ||||||||
Obligations of states, municipalities and political subdivisions | 9,387 | (95 | ) | 6,284 | (314 | ) | 15,671 | (409 | ) | ||||||||||||||
Foreign governments | 14,270 | (32 | ) | — | — | 14,270 | (32 | ) | |||||||||||||||
Residential mortgage-backed securities | 856 | (2,261 | ) | — | — | 856 | (2,261 | ) | |||||||||||||||
All other corporate bonds | 12,049 | (6,698 | ) | 3,920 | (57 | ) | 15,969 | (6,755 | ) | ||||||||||||||
Total fixed maturities | 92,354 | (9,121 | ) | 13,687 | (374 | ) | 106,041 | (9,495 | ) | ||||||||||||||
Equity securities: | |||||||||||||||||||||||
Insurance companies, banks and trusts | 21,265 | (488 | ) | — | — | 21,265 | (488 | ) | |||||||||||||||
Industrial, consumer and all other | 95,989 | (6,574 | ) | 17,499 | (130 | ) | 113,488 | (6,704 | ) | ||||||||||||||
Total equity securities | 117,254 | (7,062 | ) | 17,499 | (130 | ) | 134,753 | (7,192 | ) | ||||||||||||||
Short-term investments | 154,995 | (6 | ) | — | — | 154,995 | (6 | ) | |||||||||||||||
Total | $ | 364,603 | $ | (16,189 | ) | $ | 31,186 | $ | (504 | ) | $ | 395,789 | $ | (16,693 | ) |
December 31, 2011 | |||||||||||||||||||||||
Less than 12 months | 12 months or longer | Total | |||||||||||||||||||||
(dollars in thousands) | Estimated Fair Value | Gross Unrealized Holding and Other-Than- Temporary Impairment Losses | Estimated Fair Value | Gross Unrealized Holding and Other-Than- Temporary Impairment Losses | Estimated Fair Value | Gross Unrealized Holding and Other-Than- Temporary Impairment Losses | |||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies | $ | 32,384 | $ | (9 | ) | $ | — | $ | — | $ | 32,384 | $ | (9 | ) | |||||||||
Obligations of states, municipalities and political subdivisions | 1,016 | (2 | ) | 17,261 | (792 | ) | 18,277 | (794 | ) | ||||||||||||||
Foreign governments | 40,340 | (1,068 | ) | — | — | 40,340 | (1,068 | ) | |||||||||||||||
Residential mortgage-backed securities | 489 | (2,263 | ) | 2,045 | (13 | ) | 2,534 | (2,276 | ) | ||||||||||||||
Asset-backed securities | — | — | 32 | (9 | ) | 32 | (9 | ) | |||||||||||||||
All other corporate bonds | 74,812 | (7,829 | ) | 7,923 | (1,535 | ) | 82,735 | (9,364 | ) | ||||||||||||||
Total fixed maturities | 149,041 | (11,171 | ) | 27,261 | (2,349 | ) | 176,302 | (13,520 | ) | ||||||||||||||
Equity securities: | |||||||||||||||||||||||
Insurance companies, banks and trusts | 26,514 | (1,366 | ) | — | — | 26,514 | (1,366 | ) | |||||||||||||||
Industrial, consumer and all other | 70,555 | (2,774 | ) | 18,525 | (6 | ) | 89,080 | (2,780 | ) | ||||||||||||||
Total equity securities | 97,069 | (4,140 | ) | 18,525 | (6 | ) | 115,594 | (4,146 | ) | ||||||||||||||
Short-term investments | 295,991 | (4 | ) | — | — | 295,991 | (4 | ) | |||||||||||||||
Total | $ | 542,101 | $ | (15,315 | ) | $ | 45,786 | $ | (2,355 | ) | $ | 587,887 | $ | (17,670 | ) |
• | fundamentals of the issuer, including current and projected earnings, current liquidity position and ability to raise capital; |
• | fundamentals of the industry in which the issuer operates; |
• | expectations of defaults and recovery rates; |
• | changes in ratings by rating agencies; |
• | other relevant market considerations; and |
• | receipt of interest payments |
c) | The amortized cost and estimated fair value of fixed maturities at June 30, 2012 are shown below by contractual maturity. |
(dollars in thousands) | Amortized Cost | Estimated Fair Value | |||||
Due in one year or less | $ | 308,649 | $ | 314,640 | |||
Due after one year through five years | 1,283,202 | 1,389,784 | |||||
Due after five years through ten years | 1,599,929 | 1,742,051 | |||||
Due after ten years | 1,412,186 | 1,547,297 | |||||
4,603,966 | 4,993,772 | ||||||
Residential mortgage-backed securities | 297,664 | 317,041 | |||||
Asset-backed securities | 15,069 | 15,698 | |||||
Total fixed maturities | $ | 4,916,699 | $ | 5,326,511 |
d) | The following table summarizes the activity for credit losses recognized in net income on fixed maturities where other-than-temporary impairment was identified and a portion of the other-than-temporary impairment was included in other comprehensive income (loss). |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in thousands) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Cumulative credit loss, beginning balance | $ | 21,370 | $ | 10,307 | $ | 21,370 | $ | 10,307 | |||||||
Additions: | |||||||||||||||
Increases related to other-than-temporary impairment losses previously recognized | — | 4,875 | — | 4,875 | |||||||||||
Total additions | — | 4,875 | — | 4,875 | |||||||||||
Reductions: | |||||||||||||||
Sales of fixed maturities on which credit losses were recognized | — | (15 | ) | — | (15 | ) | |||||||||
Cumulative credit loss, ending balance | $ | 21,370 | $ | 15,167 | $ | 21,370 | $ | 15,167 |
e) | The following table presents net realized investment gains and the change in net unrealized gains on investments. |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in thousands) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Realized gains: | |||||||||||||||
Sales of fixed maturities | $ | 3,570 | $ | 2,877 | $ | 5,422 | $ | 10,858 | |||||||
Sales of equity securities | 5,820 | 3,747 | 15,514 | 5,818 | |||||||||||
Other | 134 | 94 | 655 | 1,519 | |||||||||||
Total realized gains | 9,524 | 6,718 | 21,591 | 18,195 | |||||||||||
Realized losses: | |||||||||||||||
Sales of fixed maturities | (316 | ) | (499 | ) | (474 | ) | (736 | ) | |||||||
Other-than-temporary impairments | (992 | ) | (4,875 | ) | (992 | ) | (4,875 | ) | |||||||
Total realized losses | (1,308 | ) | (5,374 | ) | (1,466 | ) | (5,611 | ) | |||||||
Net realized investment gains | $ | 8,216 | $ | 1,344 | $ | 20,125 | $ | 12,584 | |||||||
Change in net unrealized gains on investments: | |||||||||||||||
Fixed maturities | $ | 27,921 | $ | 80,819 | $ | 44,590 | $ | 64,423 | |||||||
Equity securities | (47,744 | ) | 16,061 | 149,250 | 52,918 | ||||||||||
Short-term investments | (2 | ) | 18 | (5 | ) | 21 | |||||||||
Net increase (decrease) | $ | (19,825 | ) | $ | 96,898 | $ | 193,835 | $ | 117,362 |
f) | The following table presents other-than-temporary impairment losses recognized in net income and included in net realized investment gains by investment type. |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in thousands) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Fixed maturities: | |||||||||||||||
Residential mortgage-backed securities | $ | — | $ | (4,875 | ) | $ | — | $ | (4,875 | ) | |||||
Total fixed maturities | — | (4,875 | ) | — | (4,875 | ) | |||||||||
Equity securities: | |||||||||||||||
Insurance companies, banks and trusts | (992 | ) | — | (992 | ) | — | |||||||||
Total equity securities | (992 | ) | — | (992 | ) | — | |||||||||
Total | $ | (992 | ) | $ | (4,875 | ) | $ | (992 | ) | $ | (4,875 | ) |
a) | The following tables summarize the Company’s segment disclosures. |
Quarter Ended June 30, 2012 | |||||||||||||||||||||||
(dollars in thousands) | Excess and Surplus Lines | Specialty Admitted | London Insurance Market | Other Insurance (Discontinued Lines) | Investing | Consolidated | |||||||||||||||||
Gross premium volume | $ | 229,906 | $ | 180,150 | $ | 236,874 | $ | (8 | ) | $ | — | $ | 646,922 | ||||||||||
Net written premiums | 193,291 | 169,276 | 204,054 | (7 | ) | — | 566,614 | ||||||||||||||||
Earned premiums | 189,668 | 144,695 | 178,699 | (6 | ) | — | 513,056 | ||||||||||||||||
Losses and loss adjustment expenses: | |||||||||||||||||||||||
Current accident year | (127,683 | ) | (101,378 | ) | (118,931 | ) | — | — | (347,992 | ) | |||||||||||||
Prior accident years | 50,686 | 11,917 | 64,785 | (490 | ) | — | 126,898 | ||||||||||||||||
Underwriting, acquisition and insurance expenses: | |||||||||||||||||||||||
Prospective adoption of ASU 2010-26 (1) | (6,040 | ) | (4,499 | ) | (3,732 | ) | — | — | (14,271 | ) | |||||||||||||
All other expenses | (81,345 | ) | (53,837 | ) | (74,947 | ) | (384 | ) | — | (210,513 | ) | ||||||||||||
Underwriting profit (loss) | 25,286 | (3,102 | ) | 45,874 | (880 | ) | — | 67,178 | |||||||||||||||
Net investment income | — | — | — | — | 63,602 | 63,602 | |||||||||||||||||
Net realized investment gains | — | — | — | — | 8,216 | 8,216 | |||||||||||||||||
Other revenues (insurance) | — | 14,081 | 147 | — | — | 14,228 | |||||||||||||||||
Other expenses (insurance) | — | (11,802 | ) | (778 | ) | — | — | (12,580 | ) | ||||||||||||||
Segment profit (loss) | $ | 25,286 | $ | (823 | ) | $ | 45,243 | $ | (880 | ) | $ | 71,818 | $ | 140,644 | |||||||||
Other revenues (non-insurance) | 94,145 | ||||||||||||||||||||||
Other expenses (non-insurance) | (85,139 | ) | |||||||||||||||||||||
Amortization of intangible assets | (8,315 | ) | |||||||||||||||||||||
Interest expense | (22,209 | ) | |||||||||||||||||||||
Income before income taxes | $ | 119,126 | |||||||||||||||||||||
U.S. GAAP combined ratio (2) | 87 | % | 102 | % | 74 | % | NM | (3) | 87 | % |
Quarter Ended June 30, 2011 | |||||||||||||||||||||||
(dollars in thousands) | Excess and Surplus Lines | Specialty Admitted | London Insurance Market | Other Insurance (Discontinued Lines) | Investing | Consolidated | |||||||||||||||||
Gross premium volume | $ | 225,979 | $ | 143,530 | $ | 227,682 | $ | 2 | $ | — | $ | 597,193 | |||||||||||
Net written premiums | 194,048 | 136,292 | 200,472 | (124 | ) | — | 530,688 | ||||||||||||||||
Earned premiums | 187,206 | 131,364 | 171,754 | (123 | ) | — | 490,201 | ||||||||||||||||
Losses and loss adjustment expenses: | |||||||||||||||||||||||
Current accident year | (142,550 | ) | (94,324 | ) | (146,546 | ) | — | — | (383,420 | ) | |||||||||||||
Prior accident years | 52,649 | 1,771 | 22,605 | (288 | ) | — | 76,737 | ||||||||||||||||
Underwriting, acquisition and insurance expenses | (82,932 | ) | (47,789 | ) | (65,835 | ) | (289 | ) | — | (196,845 | ) | ||||||||||||
Underwriting profit (loss) | 14,373 | (8,978 | ) | (18,022 | ) | (700 | ) | — | (13,327 | ) | |||||||||||||
Net investment income | — | — | — | — | 64,253 | 64,253 | |||||||||||||||||
Net realized investment gains | — | — | — | — | 1,344 | 1,344 | |||||||||||||||||
Other revenues (insurance) | — | 12,375 | — | — | — | 12,375 | |||||||||||||||||
Other expenses (insurance) | — | (12,588 | ) | (39 | ) | — | — | (12,627 | ) | ||||||||||||||
Segment profit (loss) | $ | 14,373 | $ | (9,191 | ) | $ | (18,061 | ) | $ | (700 | ) | $ | 65,597 | $ | 52,018 | ||||||||
Other revenues (non-insurance) | 78,995 | ||||||||||||||||||||||
Other expenses (non-insurance) | (66,846 | ) | |||||||||||||||||||||
Amortization of intangible assets | (5,555 | ) | |||||||||||||||||||||
Interest expense | (21,898 | ) | |||||||||||||||||||||
Income before income taxes | $ | 36,714 | |||||||||||||||||||||
U.S. GAAP combined ratio (2) | 92 | % | 107 | % | 110 | % | NM | (3) | 103 | % |
(1) | Effective January 1, 2012, the Company prospectively adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts. At December 31, 2011, deferred policy acquisition costs included approximately $43 million of costs that no longer met the criteria for deferral as of January 1, 2012 and will be recognized into income primarily over the first nine months of 2012, consistent with policy terms. The quarter ended June 30, 2012 included $14.3 million of underwriting, acquisition and insurance expenses that were deferred as of December 31, 2011 and no longer met the criteria for deferral as of January 1, 2012. |
(2) | The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of incurred losses, loss adjustment expenses and underwriting, acquisition and insurance expenses to earned premiums. |
(3) | NM – Ratio is not meaningful. |
Six Months Ended June 30, 2012 | |||||||||||||||||||||||
(dollars in thousands) | Excess and Surplus Lines | Specialty Admitted | London Insurance Market | Other Insurance (Discontinued Lines) | Investing | Consolidated | |||||||||||||||||
Gross premium volume | $ | 452,835 | $ | 328,272 | $ | 514,440 | $ | (7 | ) | $ | — | $ | 1,295,540 | ||||||||||
Net written premiums | 386,204 | 309,828 | 451,754 | (6 | ) | — | 1,147,780 | ||||||||||||||||
Earned premiums | 389,046 | 278,170 | 375,441 | (5 | ) | — | 1,042,652 | ||||||||||||||||
Losses and loss adjustment expenses: | |||||||||||||||||||||||
Current accident year | (255,750 | ) | (194,071 | ) | (250,677 | ) | — | — | (700,498 | ) | |||||||||||||
Prior accident years | 81,273 | 16,243 | 86,250 | 7,117 | — | 190,883 | |||||||||||||||||
Underwriting, acquisition and insurance expenses: | |||||||||||||||||||||||
Prospective adoption of ASU 2010-26 (1) | (14,527 | ) | (10,263 | ) | (9,769 | ) | — | — | (34,559 | ) | |||||||||||||
All other expenses | (167,202 | ) | (111,103 | ) | (149,950 | ) | (667 | ) | — | (428,922 | ) | ||||||||||||
Underwriting profit (loss) | 32,840 | (21,024 | ) | 51,295 | 6,445 | — | 69,556 | ||||||||||||||||
Net investment income | — | — | — | — | 143,396 | 143,396 | |||||||||||||||||
Net realized investment gains | — | — | — | — | 20,125 | 20,125 | |||||||||||||||||
Other revenues (insurance) | — | 24,529 | 4,530 | — | — | 29,059 | |||||||||||||||||
Other expenses (insurance) | — | (23,003 | ) | (1,752 | ) | — | — | (24,755 | ) | ||||||||||||||
Segment profit (loss) | $ | 32,840 | $ | (19,498 | ) | $ | 54,073 | $ | 6,445 | $ | 163,521 | $ | 237,381 | ||||||||||
Other revenues (non-insurance) | 191,150 | ||||||||||||||||||||||
Other expenses (non-insurance) | (173,368 | ) | |||||||||||||||||||||
Amortization of intangible assets | (17,119 | ) | |||||||||||||||||||||
Interest expense | (44,376 | ) | |||||||||||||||||||||
Income before income taxes | $ | 193,668 | |||||||||||||||||||||
U.S. GAAP combined ratio (2) | 92 | % | 108 | % | 86 | % | NM | (3) | 93 | % |
Six Months Ended June 30, 2011 | |||||||||||||||||||||||
(dollars in thousands) | Excess and Surplus Lines | Specialty Admitted | London Insurance Market | Other Insurance (Discontinued Lines) | Investing | Consolidated | |||||||||||||||||
Gross premium volume | $ | 427,350 | $ | 277,851 | $ | 482,683 | $ | 92 | $ | — | $ | 1,187,976 | |||||||||||
Net written premiums | 369,585 | 263,531 | 416,611 | (27 | ) | — | 1,049,700 | ||||||||||||||||
Earned premiums | 368,263 | 253,840 | 331,237 | (28 | ) | — | 953,312 | ||||||||||||||||
Losses and loss adjustment expenses: | |||||||||||||||||||||||
Current accident year | (265,057 | ) | (172,794 | ) | (334,422 | ) | — | — | (772,273 | ) | |||||||||||||
Prior accident years | 109,441 | 1,969 | 35,239 | 4,613 | — | 151,262 | |||||||||||||||||
Underwriting, acquisition and insurance expenses | (168,852 | ) | (97,262 | ) | (132,560 | ) | (521 | ) | — | (399,195 | ) | ||||||||||||
Underwriting profit (loss) | 43,795 | (14,247 | ) | (100,506 | ) | 4,064 | — | (66,894 | ) | ||||||||||||||
Net investment income | — | — | — | — | 134,352 | 134,352 | |||||||||||||||||
Net realized investment gains | — | — | — | — | 12,584 | 12,584 | |||||||||||||||||
Other revenues (insurance) | — | 21,561 | — | — | — | 21,561 | |||||||||||||||||
Other expenses (insurance) | — | (24,328 | ) | (47 | ) | — | — | (24,375 | ) | ||||||||||||||
Segment profit (loss) | $ | 43,795 | $ | (17,014 | ) | $ | (100,553 | ) | $ | 4,064 | $ | 146,936 | $ | 77,228 | |||||||||
Other revenues (non-insurance) | 146,953 | ||||||||||||||||||||||
Other expenses (non-insurance) | (123,593 | ) | |||||||||||||||||||||
Amortization of intangible assets | (11,563 | ) | |||||||||||||||||||||
Interest expense | (40,860 | ) | |||||||||||||||||||||
Income before income taxes | $ | 48,165 | |||||||||||||||||||||
U.S. GAAP combined ratio (2) | 88 | % | 106 | % | 130 | % | NM | (3) | 107 | % |
(1) | Effective January 1, 2012, the Company prospectively adopted FASB ASU No. 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts. At December 31, 2011, deferred policy acquisition costs included approximately $43 million of costs that no longer met the criteria for deferral as of January 1, 2012 and will be recognized into income primarily over the first nine months of 2012, consistent with policy terms. The six months ended June 30, 2012 included $34.6 million of underwriting, acquisition and insurance expenses that were deferred as of December 31, 2011 and no longer met the criteria for deferral as of January 1, 2012. |
(2) | The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of incurred losses, loss adjustment expenses and underwriting, acquisition and insurance expenses to earned premiums. |
(3) | NM – Ratio is not meaningful. |
b) | The following table reconciles segment assets to the Company’s consolidated balance sheets. |
(dollars in thousands) | June 30, 2012 | December 31, 2011 | |||||
Segment assets: | |||||||
Investing | $ | 8,766,935 | $ | 8,692,391 | |||
Underwriting | 2,451,938 | 2,209,431 | |||||
Total segment assets | $ | 11,218,873 | $ | 10,901,822 | |||
Non-insurance operations | 746,360 | 630,281 | |||||
Total assets | $ | 11,965,233 | $ | 11,532,103 |
a) | Expenses relating to the Company’s defined contribution plans were $4.7 million and $9.3 million, respectively, for the quarter and six months ended June 30, 2012 and $4.1 million and $8.5 million, respectively, for the same periods in 2011. |
b) | The following table presents the components of net periodic benefit cost (income) for the Terra Nova Pension Plan, a defined benefit plan. |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in thousands) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Service cost | $ | 89 | $ | 346 | $ | 179 | $ | 683 | |||||||
Interest cost | 1,693 | 1,811 | 3,386 | 3,579 | |||||||||||
Expected return on plan assets | (2,431 | ) | (2,504 | ) | (4,863 | ) | (4,947 | ) | |||||||
Amortization of net actuarial pension loss | 644 | 486 | 1,287 | 960 | |||||||||||
Net periodic benefit cost (income) | $ | (5 | ) | $ | 139 | $ | (11 | ) | $ | 275 |
June 30, 2012 | |||||||||||||||
(dollars in thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Assets: | |||||||||||||||
Investments available-for-sale: | |||||||||||||||
Fixed maturities: | |||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies | $ | — | $ | 333,832 | $ | — | $ | 333,832 | |||||||
Obligations of states, municipalities and political subdivisions | — | 2,895,078 | — | 2,895,078 | |||||||||||
Foreign governments | — | 605,470 | — | 605,470 | |||||||||||
Residential mortgage-backed securities | — | 317,041 | — | 317,041 | |||||||||||
Asset-backed securities | — | 15,698 | — | 15,698 | |||||||||||
Public utilities | — | 69,225 | — | 69,225 | |||||||||||
All other corporate bonds | — | 1,090,167 | — | 1,090,167 | |||||||||||
Total fixed maturities | — | 5,326,511 | — | 5,326,511 | |||||||||||
Equity securities: | |||||||||||||||
Insurance companies, banks and trusts | 802,177 | — | — | 802,177 | |||||||||||
Industrial, consumer and all other | 1,377,892 | — | — | 1,377,892 | |||||||||||
Total equity securities | 2,180,069 | — | — | 2,180,069 | |||||||||||
Short-term investments | 391,822 | 73,912 | — | 465,734 | |||||||||||
Total investments available-for-sale | 2,571,891 | 5,400,423 | — | 7,972,314 | |||||||||||
Liabilities: | |||||||||||||||
Derivative contracts | $ | — | $ | — | $ | 17,130 | $ | 17,130 |
December 31, 2011 | |||||||||||||||
(dollars in thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Assets: | |||||||||||||||
Investments available-for-sale: | |||||||||||||||
Fixed maturities: | |||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies | $ | — | $ | 322,193 | $ | — | $ | 322,193 | |||||||
Obligations of states, municipalities and political subdivisions | — | 2,930,521 | — | 2,930,521 | |||||||||||
Foreign governments | — | 616,814 | — | 616,814 | |||||||||||
Residential mortgage-backed securities | — | 389,184 | — | 389,184 | |||||||||||
Asset-backed securities | — | 16,818 | — | 16,818 | |||||||||||
Public utilities | — | 69,427 | — | 69,427 | |||||||||||
All other corporate bonds | — | 1,193,217 | — | 1,193,217 | |||||||||||
Total fixed maturities | — | 5,538,174 | — | 5,538,174 | |||||||||||
Equity securities: | |||||||||||||||
Insurance companies, banks and trusts | 684,703 | — | — | 684,703 | |||||||||||
Industrial, consumer and all other | 1,189,224 | — | — | 1,189,224 | |||||||||||
Total equity securities | 1,873,927 | — | — | 1,873,927 | |||||||||||
Short-term investments | 477,348 | 63,666 | — | 541,014 | |||||||||||
Total investments available-for-sale | 2,351,275 | 5,601,840 | — | 7,953,115 | |||||||||||
Liabilities: | |||||||||||||||
Derivative contracts | $ | — | $ | — | $ | 29,331 | $ | 29,331 |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in thousands) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Derivatives, beginning of period | $ | 18,270 | $ | 23,567 | $ | 29,331 | $ | 25,228 | |||||||
Total losses (gains) included in: | |||||||||||||||
Net income | (1,140 | ) | 1,029 | (12,201 | ) | (632 | ) | ||||||||
Other comprehensive income (loss) | — | — | — | — | |||||||||||
Transfers into Level 3 | — | — | — | — | |||||||||||
Transfers out of Level 3 | — | — | — | — | |||||||||||
Derivatives, end of period | $ | 17,130 | $ | 24,596 | $ | 17,130 | $ | 24,596 | |||||||
Net unrealized losses (gains) included in net income relating to liabilities held at June 30, 2012 and 2011 (1) | $ | (1,140 | ) | $ | 1,029 | $ | (12,201 | ) | $ | (632 | ) |
(1) | Included in net investment income in the consolidated statements of income and comprehensive income. |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in thousands) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Underwriting profit (loss) | $ | 67,178 | $ | (13,327 | ) | $ | 69,556 | $ | (66,894 | ) | |||||
Net investment income | 63,602 | 64,253 | 143,396 | 134,352 | |||||||||||
Net realized investment gains | 8,216 | 1,344 | 20,125 | 12,584 | |||||||||||
Other revenues | 108,373 | 91,370 | 220,209 | 168,514 | |||||||||||
Amortization of intangible assets | (8,315 | ) | (5,555 | ) | (17,119 | ) | (11,563 | ) | |||||||
Other expenses | (97,719 | ) | (79,473 | ) | (198,123 | ) | (147,968 | ) | |||||||
Interest expense | (22,209 | ) | (21,898 | ) | (44,376 | ) | (40,860 | ) | |||||||
Income tax expense | (28,358 | ) | (5,065 | ) | (45,187 | ) | (6,655 | ) | |||||||
Net income attributable to noncontrolling interests | (1,081 | ) | (1,335 | ) | (1,541 | ) | (2,924 | ) | |||||||
Net income to shareholders | $ | 89,687 | $ | 30,314 | $ | 146,940 | $ | 38,586 |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in thousands) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Gross premium volume | $ | 646,922 | $ | 597,193 | $ | 1,295,540 | $ | 1,187,976 | |||||||
Net written premiums | $ | 566,614 | $ | 530,688 | $ | 1,147,780 | $ | 1,049,700 | |||||||
Net retention | 88 | % | 89 | % | 89 | % | 88 | % | |||||||
Earned premiums | $ | 513,056 | $ | 490,201 | $ | 1,042,652 | $ | 953,312 | |||||||
Losses and loss adjustment expenses | $ | 221,094 | $ | 306,683 | $ | 509,615 | $ | 621,011 | |||||||
Underwriting, acquisition and insurance expenses (1) | $ | 224,784 | $ | 196,845 | $ | 463,481 | $ | 399,195 | |||||||
Underwriting profit (loss) | $ | 67,178 | $ | (13,327 | ) | $ | 69,556 | $ | (66,894 | ) | |||||
U.S. GAAP Combined Ratios (2) | |||||||||||||||
Excess and Surplus Lines | 87 | % | 92 | % | 92 | % | 88 | % | |||||||
Specialty Admitted | 102 | % | 107 | % | 108 | % | 106 | % | |||||||
London Insurance Market | 74 | % | 110 | % | 86 | % | 130 | % | |||||||
Other Insurance (Discontinued Lines) | NM (3) | NM (3) | NM (3) | NM (3) | |||||||||||
Markel Corporation (Consolidated) | 87 | % | 103 | % | 93 | % | 107 | % |
(1) | Effective January 1, 2012, we prospectively adopted Financial Accounting Standards Board Accounting Standards Update (ASU) No. 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts. At December 31, 2011, deferred acquisition costs included approximately $43 million of costs that no longer met the criteria for deferral as of January 1, 2012. Pursuant to the new guidance, these costs will be amortized primarily over the first nine months of 2012, consistent with policy terms. As a result of the prospective adoption of ASU No. 2010-26, underwriting, acquisition and insurance expenses for the quarter and six months ended June 30, 2012 included $14.3 million and $34.6 million of costs that were deferred as of December 31, 2011 and no longer met the criteria for deferral. |
(2) | The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of incurred losses, loss adjustment expenses and underwriting, acquisition and insurance expenses to earned premiums. A combined ratio less than 100% indicates an underwriting profit, while a combined ratio greater than 100% reflects an underwriting loss. |
(3) | NM – Ratio is not meaningful. |
Gross Premium Volume | ||||||||||||||||
Quarter Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2012 | 2011 | (dollars in thousands) | 2012 | 2011 | ||||||||||||
$ | 229,906 | $ | 225,979 | Excess and Surplus Lines | $ | 452,835 | $ | 427,350 | ||||||||
180,150 | 143,530 | Specialty Admitted | 328,272 | 277,851 | ||||||||||||
236,874 | 227,682 | London Insurance Market | 514,440 | 482,683 | ||||||||||||
(8 | ) | 2 | Other Insurance (Discontinued Lines) | (7 | ) | 92 | ||||||||||
$ | 646,922 | $ | 597,193 | Total | $ | 1,295,540 | $ | 1,187,976 |
Net Written Premiums | ||||||||||||||||
Quarter Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2012 | 2011 | (dollars in thousands) | 2012 | 2011 | ||||||||||||
$ | 193,291 | $ | 194,048 | Excess and Surplus Lines | $ | 386,204 | $ | 369,585 | ||||||||
169,276 | 136,292 | Specialty Admitted | 309,828 | 263,531 | ||||||||||||
204,054 | 200,472 | London Insurance Market | 451,754 | 416,611 | ||||||||||||
(7 | ) | (124 | ) | Other Insurance (Discontinued Lines) | (6 | ) | (27 | ) | ||||||||
$ | 566,614 | $ | 530,688 | Total | $ | 1,147,780 | $ | 1,049,700 |
Earned Premiums | ||||||||||||||||
Quarter Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2012 | 2011 | (dollars in thousands) | 2012 | 2011 | ||||||||||||
$ | 189,668 | $ | 187,206 | Excess and Surplus Lines | $ | 389,046 | $ | 368,263 | ||||||||
144,695 | 131,364 | Specialty Admitted | 278,170 | 253,840 | ||||||||||||
178,699 | 171,754 | London Insurance Market | 375,441 | 331,237 | ||||||||||||
(6 | ) | (123 | ) | Other Insurance (Discontinued Lines) | (5 | ) | (28 | ) | ||||||||
$ | 513,056 | $ | 490,201 | Total | $ | 1,042,652 | $ | 953,312 |
• | our anticipated premium volume is based on current knowledge and assumes no significant man-made or natural catastrophes, no significant changes in products or personnel and no adverse changes in market conditions; |
• | we offer insurance coverage against terrorist acts in connection with some of our programs, and in other instances we are legally required to offer terrorism insurance; in both circumstances, we actively manage our exposure, but if there is a covered terrorist attack, we could sustain material losses; |
• | the impact of the events of September 11, 2001 will depend on the resolution of on-going insurance coverage litigation and arbitrations; |
• | the frequency and severity of catastrophic events (including earthquakes and weather-related catastrophes) is unpredictable and, in the case of weather-related catastrophes, may be exacerbated if, as many forecast, conditions in the oceans and atmosphere result in increased hurricane or other adverse weather-related activity; |
• | changing legal and social trends and inherent uncertainties (including but not limited to those uncertainties associated with our asbestos and environmental reserves) in the loss estimation process can adversely impact the adequacy of loss reserves and the allowance for reinsurance recoverables; |
• | adverse developments in insurance coverage litigation or other legal or administrative proceedings could result in material increases in our estimates of loss reserves; |
• | the loss estimation process may become more uncertain if we experience a period of rising inflation; |
• | the costs and availability of reinsurance may impact our ability to write certain lines of business; |
• | industry and economic conditions can affect the ability and/or willingness of reinsurers to pay balances due; |
• | after the commutation of ceded reinsurance contracts, any subsequent adverse development in the re-assumed loss reserves will result in a charge to earnings; |
• | regulatory actions can impede our ability to charge adequate rates and efficiently allocate capital; |
• | economic conditions, actual or potential defaults in sovereign debt obligations, volatility in interest and foreign currency exchange rates and changes in market value of concentrated investments can have a significant impact on the fair value of fixed maturities and equity securities, as well as the carrying value of other assets and liabilities, and this impact may be heightened by market volatility; |
• | economic conditions, changes in government support for education, healthcare and infrastructure projects and foreign currency exchange rates, among other factors, may adversely affect the markets served by our non-insurance operations and negatively impact their revenues and profitability; |
• | we have substantial investments in municipal bonds (approximately $2.9 billion at June 30, 2012) and, although no more than 10% of our municipal bond portfolio is tied to any one state, widespread defaults could adversely affect our results of operations and financial condition; |
• | we cannot predict the extent and duration of the current economic slowdown; the effects of government actions to address the U.S. federal deficit and debt ceiling issues; the continuing effects of government intervention into the markets to address the financial crisis of 2008 and 2009 (including, among other things, the effects of the Dodd-Frank Wall Street Reform and Consumer Protection Act and regulations adopted thereunder); the outcome of economic and currency concerns in the Eurozone; and their combined impact on our industry, business and investment portfolio; |
• | we cannot predict the impact of U.S. health care reform legislation and regulations under that legislation on our business; |
• | our business is dependent upon the successful functioning and security of our computer systems; if our information technology systems fail or suffer a security breach, our business or reputation could be adversely impacted; |
• | we have recently completed a number of acquisitions and may engage in additional acquisition activity in the future, which may increase operational and control risks for a period of time; |
• | loss of services of any executive officers could impact our operations; and |
• | adverse changes in our assigned financial strength or debt ratings could impact our ability to attract and retain business or obtain capital. |
(a) | (b) | (c) | (d) | ||||||||||
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) | |||||||||
April 1, 2012 through April 30, 2012 | — | — | — | $ | 153,275 | ||||||||
May 1, 2012 through May 31, 2012 | 20,200 | $ | 437.02 | 20,200 | $ | 144,447 | |||||||
June 1, 2012 through June 30, 2012 | 11,300 | $ | 434.92 | 11,300 | $ | 139,533 | |||||||
Total | 31,500 | $ | 436.27 | 31,500 | $ | 139,533 |
(1) | The Board of Directors approved the repurchase of up to $200 million of our common stock pursuant to a share repurchase program publicly announced on December 1, 2010 (the Program). Under the Program, we may repurchase outstanding shares of our common stock from time to time, primarily through open-market transactions. The Program has no expiration date but may be terminated by the Board of Directors at any time. |
Markel Corporation | ||
By: | /s/ Alan I. Kirshner | |
Alan I. Kirshner | ||
Chief Executive Officer and | ||
Chairman of the Board of Directors | ||
By: | /s/ Anne G. Waleski | |
Anne G. Waleski | ||
Vice President and Chief Financial Officer | ||
(Principal Financial Officer) |
Number | Description | |
3(i) | Amended and Restated Articles of Incorporation (3.1)a | |
3(ii) | Bylaws, as amended (3.1)b | |
4.1 | Form of Amended and Restated Credit Agreement dated as of September 23, 2011 among Markel Corporation, the lenders party thereto and SunTrust Bank, as Administrative Agent (4.1)c | |
4.2 | Form of Consent dated as of June 25, 2012 regarding Amended and Restated Credit Agreement dated as of September 23, 2011 among Markel Corporation, the lenders party thereto and SunTrust Bank, as Administrative Agent* | |
4.3 | Indenture dated as of June 5, 2001, between Markel Corporation and The Chase Manhattan Bank, as Trustee (4.1)d | |
4.4 | Form of Second Supplemental Indenture dated as of February 25, 2003 between Markel Corporation and JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as Trustee, including form of the securities as Exhibit A (4.1)e | |
4.5 | Form of Third Supplemental Indenture dated as of August 13, 2004 between Markel Corporation and JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as Trustee, including form of the securities as Exhibit A (4.2)f | |
4.6 | Form of Fourth Supplemental Indenture dated as of August 22, 2006 between Markel Corporation and J.P. Morgan Trust Company, National Association (as successor to The Chase Manhattan Bank), as Trustee, including form of the securities as Exhibit A (4.2)g | |
4.7 | Form of Fifth Supplemental Indenture dated as of September 22, 2009 between Markel Corporation and The Bank of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the securities as Exhibit A (4.2)h | |
4.8 | Form of Sixth Supplemental Indenture dated as of June 1, 2011 between Markel Corporation and The Bank of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the securities as Exhibit A (4.2)i | |
4.9 | Form of Seventh Supplemental Indenture dated as of July 2, 2012 between Markel Corporation and The Bank of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the securities as Exhibit A (4.2)j | |
The registrant hereby agrees to furnish to the Securities and Exchange Commission a copy of all instruments defining the rights of holders of long-term debt of the registrant’s subsidiaries shown on the Consolidated Balance Sheet of the registrant at June 30, 2012 and the respective Notes thereto, included in this Quarterly Report on Form 10-Q. | ||
10.1 | Markel Corporation 2012 Equity Incentive Compensation Plan (Appendix A)k | |
10.2 | Form of Restricted Stock Award Agreement for Outside Directors* | |
31.1 | Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)* | |
31.2 | Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)* | |
32.1 | Certification of Principal Executive Officer furnished Pursuant to 18 U.S.C. Section 1350* | |
32.2 | Certification of Principal Financial Officer furnished Pursuant to 18 U.S.C. Section 1350* | |
101 | The following consolidated financial statements from Markel Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, filed on August 8, 2012, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income and Comprehensive Income, (iii) Consolidated Statements of Changes in Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements.* |
a. | Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant’s report on Form 8-K filed on May 13, 2011. |
b. | Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant’s report on Form 8-K filed on November 18, 2011. |
c. | Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 10-Q for the quarter ended September 30, 2011. |
d. | Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant’s report on Form 8-K filed on June 5, 2001. |
e. | Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant’s report on Form 8-K filed on February 25, 2003. |
f. | Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant’s report on Form 8-K filed on August 11, 2004. |
g. | Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant’s report on Form 8-K filed on August 17, 2006. |
h. | Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant’s report on Form 8-K filed on September 21, 2009. |
i. | Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant’s report on Form 8-K filed on May 31, 2011. |
j. | Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on June 29, 2012. |
k. | Incorporated by reference from the Appendix shown in parentheses filed with the Commission in the Registrant's Proxy Statement and Definitive 14A filed March 16, 2012. |
* | Filed with this report. |
Re: | Amended and Restated Credit Agreement dated as of September 23, 2011 among Markel Corporation, the banks and financial institutions party thereto and SunTrust Bank, as administrative agent and swingline lender (the “Credit Agreement”) |
Sincerely, | |||
Markel Corporation | |||
By: | |||
Anne G. Waleski | |||
Vice President and | |||
Chief Financial Officer |
Agreed to: | ||
SunTrust Bank, as Administrative Agent, | ||
Swingline Lender and as a Lender | ||
By: | ||
Authorized Officer | ||
Wells Fargo Bank, National Association | ||
By: | ||
Authorized Officer | ||
Barclays Bank PLC | ||
By: | ||
Authorized Officer | ||
Branch Banking & Trust Company | ||
By: | ||
Authorized Officer | ||
Citibank, N.A. | ||
By: | ||
Authorized Officer | ||
The Northern Trust Company | ||
By: | ||
Authorized Officer | ||
1. | Vesting of Shares. Except as otherwise provided in this Award Agreement, the Shares will become vested and nonforfeitable one year from the date hereof (the “Vesting Date”), provided that the Director remains a member of the Board of Directors until the earlier of the Vesting Date or the Company's next annual meeting of shareholders after the date hereof. |
2. | Forfeiture of Shares. If the Director ceases to be a member of the Board of Directors other than by reason of death or Disability (as defined below) before the Vesting Date, the Shares will be forfeited; provided, that the Outside Directors may determine in their sole discretion that forfeiture should not occur, in whole or in part, because the Director had an approved termination of his or her service as a member of the Board of Directors and may in such circumstances allow the Shares to vest, in whole or in part, on such terms as the Outside Directors deem appropriate. If the Director dies or incurs a Disability, the Shares will become fully vested and non-forfeitable on the date of the Director's death or Disability. |
3. | Change of Control. Any unvested Shares will become fully vested and non-forfeitable if, after a Change in Control (as defined in the Plan) and before the Vesting Date, the Director ceases to be a member of the Board of Directors for any reason other than voluntary resignation. |
4. | Transfer Restrictions. The Shares are not subject to sale, assignment, transfer, pledge, hypothecation or encumbrance. |
5. | Binding Effect. Subject to the limitations stated above, this Award Agreement will be binding upon and inure to the benefit of the Director's legatees, distributees, and personal representatives and the successors of the Company. |
6. | Interpretation. This Award Agreement will be construed under and be governed by the laws of the Commonwealth of Virginia. THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA OR THE CIRCUIT COURT FOR THE COUNTY OF HENRICO, VIRGINIA SHALL HAVE EXCLUSIVE JURISDICTION OVER ANY DISPUTES ARISING OUT OF OR RELATED TO THE PLAN OR THIS AWARD AGREEMENT. |
MARKEL CORPORATION | ||||
____________, 201_ | ||||
By: | ||||
Authorized Officer | ||||
1. | I have reviewed this quarterly report on Form 10-Q of Markel Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
August 8, 2012 | /s/ Alan I. Kirshner | |
Alan I. Kirshner | ||
Chairman and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Markel Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
August 8, 2012 | /s/ Anne G. Waleski | |
Anne G. Waleski | ||
Vice President and Chief Financial Officer | ||
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Alan I. Kirshner | |
Alan I. Kirshner | |
Chairman and Chief Executive Officer | |
August 8, 2012 |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Anne G. Waleski | |
Anne G. Waleski | |
Vice President and Chief Financial Officer | |
August 8, 2012 |
Employee Benefit Plans (Components Of Net Periodic Benefit Cost Pension Plan) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2012
|
Jun. 30, 2011
|
Jun. 30, 2012
|
Jun. 30, 2011
|
|
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | ||||
Service cost | $ 89 | $ 346 | $ 179 | $ 683 |
Interest cost | 1,693 | 1,811 | 3,386 | 3,579 |
Expected return on plan assets | (2,431) | (2,504) | (4,863) | (4,947) |
Amortization of net actuarial pension loss | 644 | 486 | 1,287 | 960 |
Net periodic benefit cost (income) | $ (5) | $ 139 | $ (11) | $ 275 |
Subsequent Events Subsequent Events (Details) (USD $)
In Millions, unless otherwise specified |
1 Months Ended | |||
---|---|---|---|---|
Aug. 08, 2012
4.90% Unsecured Senior Notes [Member]
July 2, 2012 Issuance Of 4.90% Unsecured Senior Notes [Member]
|
Jul. 02, 2012
4.90% Unsecured Senior Notes [Member]
July 2, 2012 Issuance Of 4.90% Unsecured Senior Notes [Member]
|
Jun. 30, 2012
7.50% Unsecured Senior Debentures [Member]
August 1, 2012 Redemption Of 7.50% Unsecured Senior Debentures [Member]
|
Jun. 30, 2012
6.80% Unsecured Senior Notes [Member]
|
|
Subsequent Event [Line Items] | ||||
Debt instrument, face amount | $ 350 | $ 150 | ||
Debt instrument, interest rate, stated percentage | 4.90% | 7.50% | 6.80% | |
Proceeds from issuance of unsecured debt | 347.2 | |||
Debt instrument, redemption price, percentage of face amount | 100.00% | |||
Debt instrument, principal amount outstanding | $ 246.7 |
Investments (Summary Of Net Realized Investment Gains And The Change In Net Unrealized Gains On Investments) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2012
|
Jun. 30, 2011
|
Jun. 30, 2012
|
Jun. 30, 2011
|
|
Schedule of Available-for-sale Securities [Line Items] | ||||
Realized gains | $ 9,524 | $ 6,718 | $ 21,591 | $ 18,195 |
Realized losses | (1,308) | (5,374) | (1,466) | (5,611) |
Other-than-temporary impairment losses recognized in net income | (992) | (4,875) | (992) | (4,875) |
Net realized investment gains | 8,216 | 1,344 | 20,125 | 12,584 |
Change in net unrealized gains on investments | (19,825) | 96,898 | 193,835 | 117,362 |
Sales Of Fixed Maturities [Member]
|
||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Realized gains | 3,570 | 2,877 | 5,422 | 10,858 |
Realized losses | (316) | (499) | (474) | (736) |
Sales Of Equity Securities [Member]
|
||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Realized gains | 5,820 | 3,747 | 15,514 | 5,818 |
Other [Member]
|
||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Realized gains | 134 | 94 | 655 | 1,519 |
Fixed Maturities [Member]
|
||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Change in net unrealized gains on investments | 27,921 | 80,819 | 44,590 | 64,423 |
Equity Securities [Member]
|
||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Change in net unrealized gains on investments | (47,744) | 16,061 | 149,250 | 52,918 |
Short-Term Investments [Member]
|
||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Change in net unrealized gains on investments | $ (2) | $ 18 | $ (5) | $ 21 |
Net Income Per Share (Schedule Of Net Income Per Share To Shareholders) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2012
|
Jun. 30, 2011
|
Jun. 30, 2012
|
Jun. 30, 2011
|
|
Earnings Per Share [Abstract] | ||||
Net income to shareholders | $ 89,687 | $ 30,314 | $ 146,940 | $ 38,586 |
Adjustment of redeemable noncontrolling interests | 8,186 | 0 | 8,186 | 0 |
Adjusted net income to shareholders | $ 81,501 | $ 30,314 | $ 138,754 | $ 38,586 |
Basic common shares outstanding | 9,651 | 9,717 | 9,646 | 9,720 |
Dilutive potential common shares | 25 | 40 | 26 | 40 |
Diluted shares outstanding | 9,676 | 9,757 | 9,672 | 9,760 |
Basic net income per share | $ 8.44 | $ 3.12 | $ 14.38 | $ 3.97 |
Diluted net income per share | $ 8.42 | $ 3.11 | $ 14.35 | $ 3.95 |
Derivatives (Narrative) (Details) (USD $)
|
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2012
|
Jun. 30, 2011
|
Jun. 30, 2012
|
Jun. 30, 2011
|
Dec. 31, 2011
|
|
Derivatives, Fair Value [Line Items] | |||||
Credit default swap, notional value | $ 33,100,000 | $ 33,100,000 | $ 33,100,000 | ||
Credit default swap, exposure to loss, maximum per reference entity | 20,000,000 | 20,000,000 | |||
Credit default swap, fair value | 17,100,000 | 17,100,000 | 29,300,000 | ||
Gain on derivative instrument recognized in earnings | $ 1,100,000 | $ (1,000,000) | $ 12,200,000 | $ 600,000 | |
Weighted average expected default rate | 5.00% | 5.00% | 9.00% | ||
Weighted average expected recovery rate | 39.00% | 39.00% | 39.00% | ||
Minimum [Member]
|
|||||
Derivatives, Fair Value [Line Items] | |||||
Expected default rate | 2.00% | 2.00% | 2.00% | ||
Credit derivative expected recovery rate | 20.00% | 20.00% | 19.00% | ||
Maximum [Member]
|
|||||
Derivatives, Fair Value [Line Items] | |||||
Expected default rate | 30.00% | 30.00% | 37.00% | ||
Credit derivative expected recovery rate | 40.00% | 40.00% | 52.00% |
Reinsurance
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Jun. 30, 2012
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Reinsurance Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance | Reinsurance The following tables summarize the effect of reinsurance on premiums written and earned.
Incurred losses and loss adjustment expenses were net of reinsurance recoverables (ceded incurred losses and loss adjustment expenses) of $24.2 million and $45.3 million, respectively, for the quarters ended June 30, 2012 and 2011 and $64.3 million and $93.8 million, respectively, for the six months ended June 30, 2012 and 2011. |