Investments

3 Months Ended

Mar. 31, 2012

Investments [Abstract]

Investments

Note 2 – Investments

The amortized cost and estimated fair values of the Company’s investments at March 31, 2012, and December 31, 2011, are as follows (dollars in thousands):

March 31, 2012	Amortized Cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value
Fixed maturity securities:
U.S. Treasury securities and other government corporations and agencies	$	50,350	$	3,876	$	—		$	54,226
States of the U.S. and political subdivisions of the states		27,668		4,808		(57	)		32,419
Corporate securities		295,353		30,752		(427	)		325,678
Mortgage-backed securities		245,818		12,553		(49	)		258,322
Commercial mortgage-backed securities		58,369		4,733		(29	)		63,073
Asset-backed securities		52,407		1,688		(45	)		54,050
Total fixed maturities	$	729,965	$	58,410	$	(607	)	$	787,768
Common stock	$	6,926	$	—	$	(175	)	$	6,751
Preferred stock	$	2,789	$	277	$	(25	)	$	3,041

December 31, 2011	Amortized Cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value
Fixed maturity securities:
U.S. Treasury securities and other government corporations and agencies	$	58,814	$	4,315	$	(39	)	$	63,090
States of the U.S. and political subdivisions of the states		27,676		4,581		—			32,257
Corporate securities		298,452		29,601		(1,127	)		326,926
Mortgage-backed securities		257,864		12,973		(26	)		270,811
Commercial mortgage-backed securities		60,198		3,941		(178	)		63,961
Asset-backed securities		58,437		666		(149	)		58,954
Total fixed maturities	$	761,441	$	56,077	$	(1,519	)	$	815,999
Common stock	$	6,926	$	—	$	(175	)	$	6,751
Preferred stock	$	2,789	$	212	$	(69	)	$	2,932

During the three months ended March 31, 2012 and 2011, available-for-sale fixed maturity securities were sold for total proceeds of $5.2 million and $81.6 million, respectively, resulting in gross realized gains to the Company. The gross realized gains on these sales totaled $0.1 million and $11.1 million in 2012 and 2011 respectively. For the purpose of determining gross realized gains, the cost of securities sold is based on specific identification.

The amortized cost and estimated fair value of fixed maturity securities at March 31, 2012, is shown below by contractual maturity.

	Amortized cost		Estimated fair value
	(dollars in thousands)
Due in one year or less	$	28,698	$	29,188
Due after one year through five years		106,401		113,742
Due after five years through ten years		164,239		180,237
Due after ten years		74,033		89,156
Mortgage and asset-backed securities		356,594		375,445
Total	$	729,965	$	787,768

The following tables summarize the gross unrealized losses of the Company’s investment portfolio as of March 31, 2012 and December 31, 2011, 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
March 31, 2012	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(dollars in thousands)
Fixed maturity securities:
U.S. Treasury securities and other government corporations and agencies	$	—	$	—		$	—	$	—	$	—	$	—
States of the U.S. and political subdivisions of the states		1,053		(57	)		—		—		1,053		(57	)
Corporate securities		9,647		(427	)		—		—		9,647		(427	)
Mortgage-backed securities		12,691		(49	)		—		—		12,691		(49	)
Commercial mortgage-backed securities		4,906		(29	)		—		—		4,906		(29	)
Asset-backed securities		1,683		(45	)		—		—		1,683		(45	)
Subtotal fixed maturity securities		29,980		(607	)		—		—		29,980		(607	)
Common stock		6,751		(175	)		—		—		6,751		(175	)
Preferred stock		994		(25	)		—		—		994		(25	)
Total temporarily impaired securities	$	37,725	$	(807	)	$	—	$	—	$	37,725	$	(807	)

	Less than 12 months					12 months or longer					Total
December 31, 2011	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(dollars in thousands)
Fixed maturity securities:
U.S. Treasury securities and other government corporations and agencies	$	3,749	$	(39	)	$	—	$	—		$	3,749	$	(39	)
States of the U.S. and political subdivisions of the states		—		—			—		—			—		—
Corporate securities		31,808		(1,127	)		—		—			31,808		(1,127	)
Mortgage-backed securities		6,574		(26	)		—		—			6,574		(26	)
Commercial mortgage-backed securities		13,401		(135	)		5,432		(43	)		18,833		(178	)
Asset-backed-securities		15,537		(149	)		—		—			15,537		(149	)
Subtotal, fixed maturity securities		71,069		(1,476	)		5,432		(43	)		76,501		(1,519	)
Common stock		6,751		(175	)		—		—			6,751		(175	)
Preferred stock		1,436		(50	)		509		(19	)		1,945		(69	)
Total temporarily impaired securities	$	79,256	$	(1,701	)	$	5,941	$	(62	)	$	85,197	$	(1,763	)

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;

• a pattern of 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 three months ended March 31, 2012 and 2011, the Company did not incur any OTTI losses.