Securities in an Unrealized Loss Position

The following table summarizes all securities in an unrealized loss position at September 30, 2011 and December 31, 2010 by the length of time those securities have been continuously in an unrealized loss position:



	Less Than 12 Months				12 Months or Greater				Total
(Dollars in thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
September 30, 2011
U.S. government and agency	$	19,422	$	262	$	5,108	$	82	$	24,530	$	344
State and municipal	195,770		2,279		218,058		16,998		413,828		19,277
Mortgage-backed securities	96,672		2,343		94,319		13,204		190,991		15,547
Corporate	573,666		11,944		122,770		23,212		696,436		35,156
Foreign	61,939		2,249		—		—		61,939		2,249
Fixed maturity securities	947,469		19,077		440,255		53,496		1,387,724		72,573
Common stocks	87,614		12,301		—		—		87,614		12,301
Preferred stocks	13,339		855		45,859		14,195		59,198		15,050
Equity securities	100,953		13,156		45,859		14,195		146,812		27,351
Total	$	1,048,422	$	32,233	$	486,114	$	67,691	$	1,534,536	$	99,924

December 31, 2010
U.S. government and agency	$	60,228	$	420	$	6,973	$	32	$	67,201	$	452
State and municipal	951,119		26,577		156,617		18,840		1,107,736		45,417
Mortgage-backed securities	116,194		2,809		174,163		16,063		290,357		18,872
Corporate	409,604		7,233		155,259		22,798		564,863		30,031
Foreign	43,514		236		—		—		43,514		236
Fixed maturity securities	1,580,659		37,275		493,012		57,733		2,073,671		95,008
Common stocks	58,979		989		—		—		58,979		989
Preferred stocks	27,010		2,368		76,890		8,307		103,900		10,675
Equity securities	85,989		3,357		76,890		8,307		162,879		11,664
Total	$	1,666,648	$	40,632	$	569,902	$	66,040	$	2,236,550	$	106,672

Fixed Maturity Securities – A summary of the Company’s non-investment grade fixed maturity securities that were in an unrealized loss position at September 30, 2011 is presented in the table below.



(Dollars in thousands)	Number of Securities	Aggregate Fair Value		Gross Unrealized Loss
Unrealized loss less than $5 million:
Mortgage-backed securities	14	$	104,165	$	6,369
Corporate	15	65,293		3,537
State and municipal	4	31,736		4,830
Foreign	4	8,953		165
Unrealized loss $5 million or more:
Mortgage-backed securitiy (1)	1	17,365		5,549
Total	38	$	227,512	$	20,450

_______________

(1) This investment is a residential mortgage-backed security that was evaluated based on the performance of the underlying collateral under various economic and default scenarios. The security has met its contractual obligations and the Company expects that it will continue to meet those contractual payment obligations as they become due. Based on this evaluation, the Company does not consider the investment to be OTTI.

For OTTI of fixed maturity securities that management does not intend to sell or, more likely than not, would not be required to sell, the portion of the decline in value considered to be due to credit factors is recognized in earnings and the portion of the decline in value considered to be due to non-credit factors is recognized in other comprehensive income. The table below provides a roll-forward of the portion of impairments recognized in earnings for those securities that have been impaired due to both credit factors and non-credit factors.



	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2011		2010		2011		2010
Beginning balance of amounts related to credit losses	$	4,261	$	5,661	$	4,261	$	5,661
Additions for amounts related to credit losses	—		—		—		—
Ending balance of amounts related to credit losses	$	4,261	$	5,661	$	4,261	$	5,661

The Company has evaluated its fixed maturity securities in an unrealized loss position and believes the unrealized losses are due primarily to temporary market and sector-related factors rather than to issuer-specific factors. None of these securities are delinquent or in default under financial covenants. Based on its assessment of these issuers, the Company expects them to continue to meet their contractual payment obligations as they become due and does not consider any of these securities to be OTTI.

Preferred Stocks – At September 30, 2011, there were six preferred stocks in an unrealized loss position, with an aggregate fair value of $59 million and a gross unrealized loss of $15 million. Three of those preferred stocks with an aggregate fair value of $13 million and a gross unrealized loss of $5 million were rated non-investment grade. Based upon management’s view of the underlying value of these securities, the Company does not consider any of the preferred stocks to be OTTI.

Common Stocks – At September 30, 2011, the Company owned eleven common stocks in an unrealized loss position with an aggregate fair value of $88 million and an aggregate unrealized loss of $12 million. The Company does not consider these common stocks to be OTTI.

Loans Receivable – The Company monitors the performance of its loans receivable, including current market conditions for each loan and the ability to collect principal and interest. For loans where the Company determines it is probable that the contractual terms will not be met, an analysis is performed and a valuation reserve is established, if necessary, with a charge to earnings. (See note 9, Loans Receivable).