Investments in Marketable Debt Securities

3 Months Ended

Mar. 31, 2012

Investments in Marketable Debt Securities

NOTE B – Investments in Marketable Debt Securities

The Company’s investments in marketable debt securities are classified as available-for-sale. These investments are stated at fair value with any unrealized gains or losses, net of tax, included as a component of accumulated other comprehensive income.

The Company utilizes third-party pricing services for all of its marketable debt security valuations. The Company reviews the pricing methodology used by the third-party pricing services including the manner employed to collect market information. On a periodic basis, the Company also performs review and validation procedures on the pricing information received from the third-party providers. These procedures help ensure that the fair value information used by the Company is determined in accordance with applicable accounting guidance.

The Company evaluates its investment in marketable securities at the end of each reporting period to determine if a decline in fair value is other than temporary. Realized losses are recognized upon management’s determination that a decline in fair value is other than temporary. The determination of other-than-temporary impairment is a subjective process, requiring the use of judgments and assumptions regarding the amount and timing of recovery. The Company reviews and evaluates its investments at least quarterly to identify investments that have indications of other-than-temporary impairments. It is reasonably possible that a change in estimate could occur in the near term relating to other-than-temporary impairment. Accordingly, the Company considers several factors when evaluating debt securities for other-than-temporary impairment, including whether the decline in fair value of the security is due to increased default risk for the specific issuer or market interest rate risk.

In assessing default risk, the Company considers the collectability of principal and interest payments by monitoring changes to issuers’ credit ratings, specific credit events associated with individual issuers as well as the credit ratings of any financial guarantor, and the extent and duration to which amortized cost exceeds fair value.

In assessing market interest rate risk, including benchmark interest rates and credit spreads, the Company considers its intent for selling the securities and whether it is more likely than not the Company will be able to hold these securities until the recovery of any unrealized losses.

Marketable debt securities at March 31, 2012 and December 31, 2011 consisted of the following:

At March 31, 2012	AMORTIZED COST		UNREALIZED GAINS		UNREALIZED LOSSES		FAIR VALUE
U.S. tax-exempt securities	$	294.2	$	2.6	$	.1	$	296.7
U.S. corporate securities		28.9		.3				29.2
U.S. government and agency securities		1.5						1.5
Non-U.S. government securities		384.5		5.9		.2		390.2
Non-U.S. corporate securities		149.2		.9				150.1
Other debt securities		79.6		.5				80.1
	$	937.9	$	10.2	$	.3	$	947.8

At December 31, 2011	AMORTIZED COST		UNREALIZED GAINS		UNREALIZED LOSSES		FAIR VALUE
U.S. tax-exempt securities	$	291.9	$	2.6	$	.1	$	294.4
U.S. corporate securities		27.4		.3		.2		27.5
U.S. government and agency securities		1.9						1.9
Non-U.S. government securities		361.2		6.0		.1		367.1
Non-U.S. corporate securities		148.0		.5		.2		148.3
Other debt securities		70.3		.6				70.9
	$	900.7	$	10.0	$	.6	$	910.1

The cost of marketable debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Amortization, accretion, interest and dividend income and realized gains and losses are included in investment income. The cost of securities sold is based on the specific identification method. The proceeds from sales and maturities of marketable securities for the three months ended March 31, 2012 were $129.7. Gross realized gains were $.7 and $.4 and gross realized losses were $.1 and $.2 for the three months ended March 31, 2012 and 2011, respectively.

The fair value of marketable debt securities that have been in an unrealized loss position for 12 months or greater at March 31, 2012 was $5.3 and the associated unrealized loss was $.03. The Company had no marketable debt securities in an unrealized loss position for 12 months or greater at March 31, 2011.

For the investment securities in gross unrealized loss positions identified above, the Company does not intend to sell the investment securities, it is more likely than not that the Company will not be required to sell the investment securities before recovery of the unrealized losses, and the Company expects that the contractual principal and interest will be received on the investment securities. As a result, the Company recognized no other-than-temporary impairments during the periods presented.

Contractual maturities on marketable debt securities at March 31, 2012 were as follows:

Maturities:	AMORTIZED COST		FAIR VALUE
Within one year	$	310.9	$	311.8
One to five years		624.6		633.6
Six to ten years		.2		.2
More than ten years		2.2		2.2
	$	937.9	$	947.8

Marketable debt securities included $2.2 and $7.1 of variable rate demand obligations (VRDOs) at March 31, 2012 and December 31, 2011, respectively. VRDOs are debt instruments with long-term scheduled maturities which have interest rates that reset periodically.