Investments (Tables)

12 Months Ended

Dec. 31, 2012

Original or amortized cost, estimated fair value and gross unrealized gains and losses of available-for-sale and other investments

The original or amortized cost, estimated fair value and gross unrealized gains and losses of available-for-sale fixed maturities and other investments as of December 31, 2012 and 2011, are as follows:



December 31, 2012	Original or amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
Available-for-sale securities:
U.S. treasury bonds	$	42,671	$	1,260	$	—		$	43,931
U.S. agency bonds – mortgage-backed	962,649		30,998		(1,473		)	992,174
U.S. agency bonds – other	11,682		1,407		—			13,089
Non-U.S. government bonds	55,169		2,264		—			57,433
Other mortgage-backed bonds	23,167		901		—			24,068
Corporate bonds	1,247,260		113,386		(6,492		)	1,354,154
Municipal bonds	132,604		1,244		—			133,848
Total available-for-sale fixed maturities	2,475,202		151,460		(7,965		)	2,618,697
Other investments	2,599		353		(51		)	2,901
Total investments	$	2,477,801	$	151,813	$	(8,016	)	$	2,621,598



December 31, 2011	Original or amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
Available-for-sale securities:
U.S. treasury bonds	$	44,175	$	1,774	$	—		$	45,949
U.S. agency bonds – mortgage-backed	928,944		43,230		(75		)	972,099
U.S. agency bonds – other	10,374		622		—			10,996
Non-U.S. government bonds	52,489		78		(293		)	52,274
Other mortgage-backed bonds	9,919		1		—			9,920
Corporate bonds	742,867		47,726		(30,236		)	760,357
Municipal bonds	168,338		728		—			169,066
Total available-for-sale fixed maturities	1,957,106		94,159		(30,604		)	2,020,661
Other investments	1,955		318		(81		)	2,192
Total investments	$	1,959,061	$	94,477	$	(30,685	)	$	2,022,853

Contractual maturities of fixed maturities, available-for-sale

The contractual maturities of our fixed maturities are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

5. Investments (continued)



December 31, 2012	Amortized cost		Fair value		% of Total fair value
Maturity
Due in one year or less	$	57,675	$	58,672	2.2	%
Due after one year through five years	373,208		387,882		14.8	%
Due after five years through ten years	888,694		981,504		37.5	%
Due after ten years	169,809		174,397		6.7	%
	1,489,386		1,602,455		61.2	%
U.S. agency bonds - mortgage-backed	962,649		992,174		37.9	%
Other mortgage-backed bonds	23,167		24,068		0.9	%
Total	$	2,475,202	$	2,618,697	100.0	%

Summary of available-for-sale securities and other investments in an unrealized loss position and the aggregate fair value and gross unrealized loss by length of time the securities have continuously been in an unrealized loss position

The following tables summarize fixed maturities in an unrealized loss position and the aggregate fair value and gross unrealized loss by length of time the security has continuously been in an unrealized loss position:



	Less than 12 Months					12 Months or More					Total
December 31, 2012	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
Available-for-sale securities:
U.S. agency bonds – mortgage-backed	$	158,591	$	(1,473	)	$	—	$	—		$	158,591	$	(1,473	)
Corporate bonds	94,742		(1,098		)	141,842		(5,394		)	236,584		(6,492		)
	253,333		(2,571		)	141,842		(5,394		)	395,175		(7,965		)
Other investments	—		—			2,011		(51		)	2,011		(51		)
Total temporarily impaired available-for-sale securities and other investments	$	253,333	$	(2,571	)	$	143,853	$	(5,445	)	$	397,186	$	(8,016	)

As of December 31, 2012, there were approximately 32 securities in an unrealized loss position with a fair value of $397,186 and unrealized losses of $8,016. Of these securities, there are 9 securities that have been in an unrealized loss position for 12 months or greater with a fair value of $143,853 and unrealized losses of $5,445.



	Less than 12 Months					12 Months or More					Total
December 31, 2011	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
Available-for-sale securities:
U.S. agency bonds – mortgage-backed	$	30,447	$	(75	)	$	—	$	—		$	30,447	$	(75	)
Non-U.S. government bonds	43,629		(293		)	—		—			43,629		(293		)
Corporate bonds	227,367		(7,406		)	125,089		(22,830		)	352,456		(30,236		)
	301,443		(7,774		)	125,089		(22,830		)	426,532		(30,604		)
Other investments	1,214		(81		)	—		—			1,214		(81		)
Total temporarily impaired available-for-sale securities and other investments	$	302,657	$	(7,855	)	$	125,089	$	(22,830	)	$	427,746	$	(30,685	)

As of December 31, 2011, there were approximately 62 securities in an unrealized loss position with a fair value of $427,746 and unrealized losses of $30,685. Of these securities, there are 8 securities that have been in an unrealized loss position for 12 months or greater with a fair value of $125,089 and unrealized losses of $22,830.

Summary of the credit ratings of fixed maturities

The following summarizes the credit ratings of our fixed maturities:



Rating* as of December 31, 2012	Amortized cost		Fair value		% of Total fair value
U.S. treasury bonds	$	42,671	$	43,931	1.7	%
U.S. agency bonds	974,331		1,005,263		38.4	%
AAA	171,136		183,950		7.0	%
AA+, AA, AA-	186,495		196,797		7.5	%
A+, A, A-	477,236		515,383		19.7	%
BBB+, BBB, BBB-	587,858		637,089		24.3	%
BB+ or lower	35,475		36,284		1.4	%
Total	$	2,475,202	$	2,618,697	100.0	%



Rating* as of December 31, 2011	Amortized cost		Fair value		% of Total fair value
U.S. treasury bonds	$	44,175	$	45,949	2.3	%
U.S. agency bonds	939,318		983,095		48.6	%
AAA	160,319		161,945		8.0	%
AA+, AA, AA-	150,961		153,303		7.6	%
A+, A, A-	327,794		328,448		16.3	%
BBB+, BBB, BBB-	316,150		330,156		16.3	%
BB+ or lower	18,389		17,765		0.9	%
Total	$	1,957,106	$	2,020,661	100.0	%

*Ratings as assigned by S&P

Portfolio of other investments

The table below shows our portfolio of other investments:



December 31,	2012				2011
Investment in limited partnerships	$	2,901	100.0	%	$	2,192	100.0	%
Total other investments	$	2,901	100.0	%	$	2,192	100.0	%

Net investment income

Net investment income was derived from the following sources:



For the Year Ended December 31,	2012			2011			2010
Fixed maturities	$	79,891		$	72,050		$	71,607
Cash and cash equivalents	1,439			925			1,680
Funds withheld	1,648			4,235			407
Loan to related party	1,945			1,925			1,996
	84,923			79,135			75,690
Less:
Investment expenses	(3,735		)	(3,488		)	(2,992		)
Interest expense on securities sold under agreements to repurchase	—			(756		)	(1,047		)
Total	$	81,188		$	74,891		$	71,651

Analysis of realized and unrealized gains on investment

The following provides an analysis of net realized and unrealized gains on investment:



For the Year Ended December 31, 2012	Gross gains		Gross losses			Net
Available-for-sale securities	$	3,468	$	(13	)	$	3,455
Trading securities and short sales	—		(1,592		)	(1,592		)
Other investments	55		(11		)	44
Net realized gains on investments	$	3,523	$	(1,616	)	$	1,907



For the Year Ended December 31, 2011	Gross gains		Gross losses			Net
Available-for-sale securities	$	5,091	$	(1,812	)	$	3,279
Trading securities and short sales	2,709		(1,902		)	807
Other investments	43		(116		)	(73		)
Net realized gains	7,843		(3,830		)	4,013
Unrealized losses on short sales	—		(3,532		)	(3,532		)
Net realized and unrealized gains on investments	$	7,843	$	(7,362	)	$	481

5. Investments (continued)



For the Year Ended December 31, 2010	Gross gains		Gross losses			Net
Available-for-sale securities	$	10,372	$	(1,976	)	$	8,396
Trading securities and short sales	6,372		(7,915		)	(1,543		)
Other investments	—		(249		)	(249		)
Net realized gains on investments	$	16,744	$	(10,140	)	$	6,604

Net unrealized gains on available-for-sale securities and other investments

Net unrealized gains (losses) were as follows:



December 31,	2012			2011			2010
Available-for-sale securities	$	143,495		$	63,555		$	54,658
Other investments	302			237			96
Total net unrealized gains	143,797			63,792			54,754
Deferred income tax	(132		)	(55		)	—
Net unrealized gains, net of deferred income tax	$	143,665		$	63,737		$	54,754
Change in net unrealized gains, net of deferred income tax	$	79,928		$	8,983		$	22,007

Fair value of restricted assets

The fair value of our restricted assets was as follows:



December 31,	2012		2011
Restricted cash and cash equivalents – third party agreements	$	97,695	$	67,627
Restricted cash and cash equivalents – related party agreements	33,882		46,729
Restricted cash and cash equivalents – U.S. state regulatory authorities	750		539
Total restricted cash and cash equivalents	132,327		114,895
Restricted investments – in trust for third party agreements at fair value (Amortized cost: 2012 – $1,048,827; 2011 – $950,103)	1,101,971		972,130
Restricted investments – in trust for related party agreements at fair value (Amortized cost: 2012 – $851,873; 2011 – $458,105)	919,557		485,468
Restricted investments – in trust for U.S. state regulatory authorities (Amortized cost: 2012 – $12,744; 2011 – $12,862)	13,463		13,750
Total restricted investments	2,034,991		1,471,348
Total restricted cash and cash equivalents and investments	$	2,167,318	$	1,586,243