Investments

9 Months Ended

Sep. 30, 2011

Investments [Abstract]

Investments

Note 2 — Investments

The amortized cost and estimated fair values of the Company’s investments at September 30, 2011 and December 31, 2010, are as follows (dollars in thousands):

			Gross		Gross
	Amortized		unrealized		Unrealized			Estimated
	Cost		Gains		Losses			fair value
September 30, 2011
Securities available for sale:
Fixed maturities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	61,854	$	4,346	$	—		$	66,200
States of the U.S. and political subdivisions of the states		27,685		4,379					32,064
Corporate securities		316,921		27,184		(1,372	)		342,733
Mortgage-backed securities		287,348		13,511		(91	)		300,768
Commercial mortgage-backed securities		60,688		3,762		(916	)		63,534
Asset-backed securities		26,805		551		(12	)		27,344
Total fixed maturities	$	781,301	$	53,733	$	(2,391	)	$	832,643
Common stock	$	6,926	$	—	$	—		$	6,926
Preferred stock	$	2,790	$	214	$	(91	)	$	2,913

			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			fair value
December 31, 2010
Securities available for sale:
Fixed maturities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	70,796	$	3,014	$	(36	)	$	73,774
States of the U.S. and political subdivisions of the states		23,463		816		(253	)		24,026
Corporate securities		314,995		25,023		(459	)		339,559
Mortgage-backed securities		234,137		8,990		(408	)		242,719
Commercial mortgage-backed securities		29,123		6,438		—			35,561
Asset-backed securities		33,884		796		(69	)		34,611
Total fixed maturities	$	706,398	$	45,077	$	(1,225	)	$	750,250
Common stock	$	5,082	$	—	$	—		$	5,082
Preferred stock	$	2,789	$	198	$	(76	)	$	2,911

The amortized cost and estimated fair value at September 30, 2011 are shown below by contractual maturity.

	Amortized		Estimated
	cost		fair value
Due in one year or less	$	16,392	$	16,594
Due after one year through five years		130,297		136,414
Due after five years through ten years		184,203		197,690
Due after ten years		75,569		90,299
Mortgage and asset-backed securities		374,840		391,646
Total	$	781,301	$	832,643

The following tables summarize the gross unrealized losses of the Company’s investment portfolio as of September 30, 2011 and December 31, 2010, by category and length of time that the securities have been in an unrealized loss position.

	Less than 12 Months					12 months or longer					Total
			Unrealized					Unrealized					Unrealized
September 30, 2011	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
Fixed Maturities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	—	$	—		$	—	$	—		$	—	$	—
States of the U.S. & other political subdivisions of the states
Corporate securities		61,139		(1,372	)		—					61,139		(1,372	)
Mortgage- backed securities		14,456		(91	)		—		—			14,456		(91	)
Commercial mortgage- backed securities		35,475		(916	)		—		—			35,475		(916	)
Asset- backed securities		960		(12	)		—		—			960		(12	)
Total fixed maturities		112,030		(2,391	)							112,030		(2,391	)
Common stock		—		—			—		—			—		—
Preferred stock		1,424		(63	)		499		(28	)		1,923		(91	)
Total temporarily impaired	$	113,454	$	(2,454	)	$	499	$	(28	)	$	113,953	$	(2,482	)

	Less than 12 Months					12 months or longer					Total
			Unrealized					Unrealized					Unrealized
December 31, 2010	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
Fixed Maturities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	8,615	$	(36	)	$	—	$	—		$	8,615	$	(36	)
States of the U.S. & other political subdivisions of the states		7,071		(194	)		1,060		(59	)		8,131		(253	)
Corporate securities		21,321		(459	)		—		—			21,321		(459	)
Mortgage- backed securities		29,274		(408	)		—		—			29,274		(408	)
Commercial mortgage- backed securities		—		—			—		—			—		—
Asset- backed securities		6,903		(69	)		—		—			6,903		(69	)
Total fixed maturities		73,184		(1,166	)		1,060		(59	)		74,244		(1,225	)
Common stock		—		—			—		—			—		—
Preferred stock		966		(29	)		972		(47	)		1,938		(76	)
Total temporarily impaired	$	74,150	$	(1,195	)	$	2,032	$	(106	)	$	76,182	$	(1,301	)

We routinely review our investments that have experienced declines in fair value to determine if the decline is other than temporary. These reviews are performed with consideration of the facts and circumstances of an issuer in accordance with the Securities and Exchange Commission (“SEC”), Accounting for Non-Current Marketable Equity Securities; ASC-320-10-05, Accounting for Certain Investments in Debt and Equity Securities, and related guidance. The identification of distressed investments and the assessment of whether a decline is other-than-temporary involve significant management judgment and require evaluation of factors including but not limited to:

• percentage decline in value and the length of time during which the decline has occurred;

• recoverability of principal and interest;

• market conditions;

• ability and intent to hold the investment to recovery;

• continuing operating losses of the issuer;

• rating agency actions that affect the issuer’s credit status;

• adverse changes in the issuer’s availability of production resources, revenue sources, technological conditions; and

• adverse changes in the issuer’s economic, regulatory, or political environment.

Additionally, credit analysis and/or credit rating issues related to specific investments may trigger more intensive monitoring to determine if a decline in market value is other than temporary (“OTTI”). For investments with a market value below cost, the process includes evaluating the length of time and the extent to which cost exceeds market value, the prospects and financial condition of the issuer, and evaluation for a potential recovery in market value, among other factors. This process is not exact and further requires consideration of risks such as credit risk and interest rate risk. Therefore, if an investment’s cost exceeds its market value solely due to changes in interest rates, recognizing impairment may not be appropriate. For the nine months ended September 30, 2011 and 2010, the Company did not incur any OTTI losses.

During the nine months ended September 30, 2011 and 2010, available-for-sale fixed maturity securities were sold for total proceeds of $213.4 million and $126.9 million, respectively, resulting in net realized gains to the Company totaling $11.3 million and $2.1 million in 2011 and 2010, respectively. For the purpose of determining net realized gains, the cost of securities sold is based on specific identification.