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Quarterly Financial Information
 12 Months Ended
Dec. 31, 2013
Quarterly Financial Data [Abstract]  
Quarterly Financial Information
Quarterly Financial Information (Unaudited)
Summarized quarterly financial data for 2013 and 2012 are as follows:
 
 
Quarter Ended
 
 
March 31
 
June 30
 
September 30
 
December 31
 
 
(Amounts in thousands, except per share data)
 
2013
 
 
 
 
 
 
 
 
Net premiums earned
$
662,595

 
$
675,787

 
$
678,913

  
$
680,892

 
Change in fair value of investments pursuant to the fair value option
$
43,467

 
$
(78,726
)
 
$
21,815

 
$
(30,593
)
 
Income (loss) before income taxes
$
90,994

 
$
(24,959
)
 
$
54,793

 
$
11,268

 
Net income (loss)
$
66,461

 
$
(9,264
)
 
$
39,570

 
$
15,376

 
Basic earnings per share
$
1.21

 
$
(0.17
)
 
$
0.72

 
$
0.28

 
Diluted earnings per share
$
1.21

 
$
(0.17
)
(1) 
$
0.72

 
$
0.28

 
Dividends paid per share
$
0.6125

 
$
0.6125

 
$
0.6125

  
$
0.6150

 
2012
 
 
 
 
 
 
 
 
Net premiums earned
$
635,812

 
$
637,247

 
$
646,084

  
$
655,777

 
Change in fair value of investments pursuant to the fair value option
$
49,343

 
$
(24,788
)
 
$
44,783

 
$
(28,944
)
 
Income (loss) before income taxes
$
101,994

 
$
(18,853
)
 
$
91,330

 
$
(39,161
)
 
Net income (loss)
$
73,356

 
$
(5,264
)
 
$
66,201

 
$
(17,382
)
 
Basic earnings per share
$
1.34

 
$
(0.10
)
 
$
1.21

 
$
(0.32
)
 
Diluted earnings per share
$
1.34

 
$
(0.10
)
(1) 
$
1.21

 
$
(0.32
)
(1) 
Dividends paid per share
$
0.61

 
$
0.61

 
$
0.61

  
$
0.6125

 
 __________
(1)
The dilutive impact of incremental shares is excluded from net loss position in accordance with GAAP.

Net income during 2013 was primarily affected by higher net premiums earned offset by catastrophe related losses, and declines in the fair value of the Company's investment portfolio due to the overall decline in the municipal markets. Net income during 2013 was also affected by the consolidation of claims and underwriting operations located outside of California into hub locations, which resulted in approximately $10 million of pre-tax office closure costs and severance related expense during the first quarter of 2013. The primary causes of the net loss during the second quarter of 2013 were driven by increased losses resulting from catastrophe losses due to tornadoes in Oklahoma and severe storms in the Midwest and the Southeast regions, and declines in the fair value of the Company’s municipal and equity securities due to the overall decline in the municipal and equity markets.

Net income during 2012 was primarily affected by slightly higher net premiums earned and lower operating expenses, offset by unfavorable development on loss reserves, catastrophe related losses, and higher loss frequency and severity on the California private passenger automobile line of business. The decrease in operating expenses in 2012 was primarily due to ongoing cost reduction efforts and lower profitability related expenses. The unfavorable development of loss reserves is largely the result of re-estimates of California BI losses . The primary causes of the net loss during the second quarter of 2012 were driven by unfavorable development on loss reserves, catastrophe losses in the Midwest region, and declines in the fair value of the Company’s equity securities due to the overall decline in the equity markets. The net loss during the fourth quarter of 2012 was primarily due to increased losses resulting from catastrophe losses from Hurricane Sandy, high seasonal frequency in California, and declines in the fair value of the Company’s municipal and equity securities due to the overall decline in the municipal and equity markets.