Securities in an Unrealized Loss Position

The following table summarizes all securities in an unrealized loss position at December 31, 2011 and 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
December 31, 2011
U.S. government and government agency	$	24,668	$	169	$	4,800	$	182	$	29,468	$	351
State and municipal	131,417		827		183,205		15,723		314,622		16,550
Mortgage-backed securities	172,729		2,439		94,243		14,473		266,972		16,912
Corporate	341,764		8,327		125,654		27,760		467,418		36,087
Foreign	197,560		4,078		7,159		571		204,719		4,649
Fixed maturity securities	868,138		15,840		415,061		58,709		1,283,199		74,549
Common stocks	47,098		2,888		—		—		47,098		2,888
Preferred stocks	23,782		125		45,314		14,740		69,096		14,865
Equity securities available for sale	70,880		3,013		45,314		14,740		116,194		17,753
Total	$	939,018	$	18,853	$	460,375	$	73,449	$	1,399,393	$	92,302
December 31, 2010
U.S. government and government 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	342,929		6,581		155,259		22,798		498,188		29,379
Foreign	110,189		888		—		—		110,189		888
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 available for sale	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 December 31, 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	15	$	106,923	$	6,115
Corporate	13	48,106		3,461
State and municipal	5	42,197		4,553
Foreign	1	586		12
Unrealized loss $5 million or more:
Mortgage-backed security(1)	1	15,945		7,158
Total	35	$	213,757	$	21,299

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(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 Years Ended December 31,
(Dollars in thousands)	2011		2010
Beginning balance of amounts related to credit losses	$	4,261	$	5,661
Additions for amounts related to credit losses	—		—
Deductions for amounts related to credit loss sales	—		(1,400		)
Ending balance of amounts related to credit losses	$	4,261	$	4,261

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 on 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 December 31, 2011, there were six preferred stocks in an unrealized loss position, with an aggregate fair value of $69 million and a gross unrealized loss of $15 million. Four of the six securities are investment-grade. None of these securities are delinquent or in default. Management believes the unrealized losses are due primarily to market and sector related factors and does not consider these to be OTTI. Two of those preferred stocks with an aggregate fair value of $9 million and a gross unrealized loss of $5 million are rated non-investment grade. One of these two securities representing most of the gross unrealized loss has recently reflected improved fundamentals. The Company does not consider this security to be OTTI.

Common Stocks – At December 31, 2011, there were four common stocks in an unrealized loss position with an aggregate fair value of $47 million and an aggregate unrealized loss of $3 million. The Company does not consider any of these securities to be OTTI.