Investments (Tables)

6 Months Ended

Jun. 30, 2011

Cash and Investments Including Other-Than-Temporarily Impaired ("OTTI") Securities Recognized within Other Comprehensive Income ("OCI")

The following tables set forth the Company’s cash and investments as of June 30, 2011 and December 31, 2010. The table below includes other-than-temporarily impaired (“OTTI”) securities recognized within other comprehensive income (“OCI”).

		September 30,		September 30,		September 30,			September 30,		September 30,
June 30, 2011	Fair Value		Gross Unrealized Gains		Gross Unrealized (Losses)			Cost or Amortized Cost		OTTI Recognized in OCI
	($ in thousands)
Fixed Maturities:
U.S. Government Treasury bonds, agency bonds and foreign government bonds	$	291,492	$	5,492	$	(610	)	$	286,610	$	—
States, municipalities and political subdivisions		374,873		15,910		(962	)		359,925		—
Mortgage- and asset-backed securities:
Agency mortgage-backed securities		365,497		12,752		(864	)		353,609		—
Residential mortgage obligations		25,948		40		(2,266	)		28,174		(1,384	)
Asset-backed securities		52,559		539		(77	)		52,097		—
Commercial mortgage-backed securities		218,429		6,480		(800	)		212,749		—
Subtotal		662,433		19,811		(4,007	)		646,629		(1,384	)
Corporate bonds		518,423		14,927		(2,709	)		506,205		—
Total fixed maturities		1,847,221		56,140		(8,288	)		1,799,369		(1,384	)
Equity securities - common stocks		94,737		26,959		(257	)		68,035		—
Cash		40,340		—		—			40,340		—
Short-term investments		185,032		—		—			185,032		—
Total	$	2,167,330	$	83,099	$	(8,545	)	$	2,092,776	$	(1,384	)

		September 30,		September 30,		September 30,			September 30,		September 30,
December 31, 2010	Fair Value		Gross Unrealized Gains		Gross Unrealized (Losses)			Cost or Amortized Cost		OTTI Recognized in OCI
	($ in thousands)
Fixed Maturities:
U.S. Government Treasury bonds, agency bonds and foreign government bonds	$	324,145	$	5,229	$	(4,499	)	$	323,415	$	—
States, municipalities and political subdivisions		392,250		11,903		(3,805	)		384,152		—
Mortgage- and asset-backed securities:
Agency mortgage-backed securities		382,628		10,127		(2,434	)		374,935		—
Residential mortgage obligations		20,463		24		(2,393	)		22,832		(1,646	)
Asset-backed securities		46,093		247		(292	)		46,138		—
Commercial mortgage-backed securities		190,015		4,804		(1,794	)		187,005		—
Subtotal		639,199		15,202		(6,913	)		630,910		(1,646	)
Corporate bonds		526,651		15,075		(5,545	)		517,121		—
Total fixed maturities		1,882,245		47,409		(20,762	)		1,855,598		(1,646	)
Equity securities - common stocks		87,258		22,475		(10	)		64,793		—
Cash		31,768		—		—			31,768		—
Short-term investments		153,057		—		—			153,057		—
Total	$	2,154,328	$	69,884	$	(20,772	)	$	2,105,216	$	(1,646	)

Scheduled Maturity Dates for Fixed Maturity Securities by Number of Years Until Maturity

The scheduled maturity dates for fixed maturity securities categorized by the number of years until maturity at June 30, 2011 are shown in the following table:

		September 30,		September 30,
Period from June 30, 2011 to Maturity	Fair Value		Amortized Cost
	($ in thousands)
Due in one year or less	$	101,673	$	100,292
Due after one year through five years		544,156		528,318
Due after five years through ten years		342,481		331,505
Due after ten years		196,478		192,625
Mortgage- and asset-backed (including GNMAs)		662,433		646,629
Total	$	1,847,221	$	1,799,369

Summary of Aggregate Fair Value and Gross Unrealized Loss by the Length of Time those Securities had Continuously been in a Gross Unrealized Loss Position as Well as the Number of Securities

The following table summarizes all securities in a gross unrealized loss position at June 30, 2011 and December 31, 2010, showing the aggregate fair value and gross unrealized loss by the length of time those securities had continuously been in a gross unrealized loss position as well as the relevant number of securities.

		September 30,		September 30,		September 30,		September 30,		September 30,		September 30,
	June 30, 2011						December 31, 2010
	Number of Securities		Fair Value		Gross Unrealized  Loss		Number of Securities		Fair Value		Gross Unrealized Loss
	($ in thousands except # of securities)
Fixed Maturities:
U.S. Government Treasury bonds, agency bonds and foreign government bonds
0-6 Months		4	$	7,714	$	16		36	$	163,253	$	4,499
7-12 Months		16		42,623		594		—		—		—
> 12 Months		—		—		—		—		—		—
Subtotal		20		50,337		610		36		163,253		4,499
States, municipalities and political subdivisions
0-6 Months		4		11,970		42		57		112,291		3,749
7-12 Months		15		19,445		870		1		1,004		20
> 12 Months		8		2,239		50		4		1,317		36
Subtotal		27		33,654		962		62		114,612		3,805
Agency mortgage-backed securities
0-6 Months		5		31,727		89		36		139,226		2,434
7-12 Months		16		41,952		775		—		—		—
> 12 Months		—		—		—		—		—		—
Subtotal		21		73,679		864		36		139,226		2,434
Residential mortgage obligations
0-6 Months		9		10,986		119		3		3,215		20
7-12 Months		1		183		15		—		—		—
> 12 Months		47		12,779		2,132		52		15,939		2,373
Subtotal		57		23,948		2,266		55		19,154		2,393
Asset-backed securities
0-6 Months		8		18,225		77		7		28,175		292
7-12 Months		—		—		—		—		—		—
> 12 Months		1		2		—		1		2		—
Subtotal		9		18,227		77		8		28,177		292
Commercial mortgage-backed securities
0-6 Months		14		50,628		541		16		78,212		1,755
7-12 Months		5		11,832		240		—		—		—
> 12 Months		1		222		19		2		491		39
Subtotal		20		62,682		800		18		78,703		1,794
Corporate bonds
0-6 Months		36		60,661		667		98		214,180		5,545
7-12 Months		49		101,100		2,042		—		—		—
> 12 Months		—		—		—		—		—		—
Subtotal		85		161,761		2,709		98		214,180		5,545
Total fixed maturities		239	$	424,288	$	8,288		313	$	757,305	$	20,762
Equity securities - common stocks
0-6 Months		7	$	4,743	$	257		1	$	322	$	10
7-12 Months		—		—		—		—		—		—
> 12 Months		—		—		—		—		—		—
Total equity securities		7	$	4,743	$	257		1	$	322	$	10

Summary of Activity Related to OTTI Losses

The table below summarizes the Company’s activity related to OTTI losses for the periods indicated:

		September 30,		September 30,		September 30,		September 30,		September 30,		September 30,		September 30,		September 30,
	Three Months Ended								Six Months Ended
	June 30,								June 30,
	2011				2010				2011				2010
	Number of				Number of				Number of				Number of
	Securities		Amount		Securities		Amount		Securities		Amount		Securities		Amount
($ in thousands, except # of securities)
Total other-than-temporary impairment losses
Corporate and other bonds		—	$	—		—	$	—		—	$	—		—	$	—
Commercial mortgage-backed securities		—		—		—		—		—		—		—		—
Residential mortgage-backed securities		6		516		4		489		7		549		6		713
Asset-backed securities		—		—		—		—		—		—		—		—
Equities		1		317		—		—		1		547		1		27
Total		7	$	833		4	$	489		8	$	1,096		7	$	740
Portion of loss in accumulated other comprehensive income (loss)
Corporate and other bonds			$	—			$	—			$	—			$	—
Commercial mortgage-backed securities				—				—				—				—
Residential mortgage-backed securities				301				334				322				504
Asset-backed securities				—				—				—				—
Equities				—				—				—				—
Total			$	301			$	334			$	322			$	504
Impairment losses recognized in earnings
Corporate and other bonds			$	—			$	—			$	—			$	—
Commercial mortgage-backed securities				—				—				—				—
Residential mortgage-backed securities				215				155				227				209
Asset-backed securities				—				—				—				—
Equities				317				—				547				27
Total			$	532			$	155			$	774			$	236

Summary of Cumulative Amounts Related to Credit Loss Portion of the OTTI Losses on Debt Securities

The following tables summarize the cumulative amounts related to the Company’s credit loss portion of the OTTI losses on debt securities for the three and six months ended June 30, 2011 and 2010 that it does not intend to sell and it is more likely than not that it will not be required to sell the security prior to recovery of the amortized cost basis and for which the non-credit loss portion is included in other comprehensive income:

		September 30,		September 30,
	Three months ended June 30,
($ in thousands)	2011		2010
Beginning balance at April 1	$	1,669	$	2,577
Credit losses on securities not previously impaired as of April 1		—		182
Additional credit losses on securities previously impaired as of April 1		215		—
Reductions for securities sold during the period		—		—
Ending balance at June 30	$	1,884	$	2,759

		September 30,		September 30,
	Six months ended June 30,
($ in thousands)	2011		2010
Beginning balance at January 1	$	1,658	$	2,523
Credit losses on securities not previously impaired as of January 1		—		236
Additional credit losses on securities previously impaired as of January 1		226		—
Reductions for securities sold during the period		—		—
Ending balance at June 30	$	1,884	$	2,759

Contractual Maturity by Number of Years Until Maturity for Fixed Maturity Securities with a Gross Unrealized Loss

The contractual maturity categorized by the number of years until maturity for fixed maturity securities with a gross unrealized loss at June 30, 2011 are shown in the following table:

		September 30,		September 30,			September 30,		September 30,
	Gross Unrealized Loss					Fair Value
			Percent					Percent
	Amount		of Total			Amount		of Total
	($ in thousands)
Due in one year or less	$	—		—		$	7		—
Due after one year through five years		730		9	%		93,496		22	%
Due after five years through ten years		2,258		27	%		109,933		26	%
Due after ten years		1,293		16	%		42,316		10	%
Mortgage- and asset-backed securities		4,007		48	%		178,536		42	%
Total fixed maturity securities	$	8,288		100	%	$	424,288		100	%

Change in Net Unrealized Gains/(Losses)

The change in net unrealized gains/(losses) consisted of:

		September 30,			September 30,
	Six months ended June 30,
	2011			2010
	($ in thousands)
Fixed maturities	$	21,206		$	26,921
Equity securities		4,238			(5,347	)
		25,444			21,574
Deferred income tax (charged) credited		(8,573	)		(7,354	)
Change in unrealized gains (losses), net	$	16,871		$	14,220

Realized Gains and Losses

Realized gains/(losses) for the periods indicated were as follows:

		September 30,			September 30,			September 30,			September 30,
	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
	($ in thousands)
Fixed maturities:
Gains	$	4,443		$	11,281		$	7,312		$	17,651
(Losses)		(2,277	)		(26	)		(6,534	)		(283	)
		2,166			11,255			778			17,368
Equity securities:
Gains		840			—			840			—
(Losses)		—			(235	)		—			(235	)
		840			(235	)		840			(235	)
Net realized gains (losses)	$	3,006		$	11,020		$	1,618		$	17,133

Fixed Maturities and Equity Securities by Asset Class that are Measured at Fair Value

The following table presents, for each of the fair value hierarchy levels as defined in ASC 820, Fair Value Measurements, the Company’s fixed maturities and equity securities by asset class that are measured at fair value at June 30, 2011 and December 31, 2010:

		September 30,		September 30,		September 30,		September 30,
June 30, 2011	Level 1		Level 2		Level 3		Total
	($ in thousands)
U.S. Government Treasury bonds, agency bonds and foreign government bonds	$	108,291	$	183,201	$	—	$	291,492
States, municipalities and political subdivisions		—		374,873		—		374,873
Mortgage- and asset-backed securities:
Agency mortgage-backed securities		—		365,497		—		365,497
Residential mortgage obligations		—		25,948		—		25,948
Asset-backed securities		—		52,559		—		52,559
Commercial mortgage-backed securities		—		218,429		—		218,429
Subtotal		—		662,433		—		662,433
Corporate bonds		—		518,423		—		518,423
Total fixed maturities		108,291		1,738,930		—		1,847,221
Equity securities - common stocks		94,737		—		—		94,737
Total	$	203,028	$	1,738,930	$	—	$	1,941,958

		September 30,		September 30,		September 30,		September 30,
December 31, 2010	Level 1		Level 2		Level 3		Total
	($ in thousands)
U.S. Government Treasury bonds, agency bonds and foreign government bonds	$	212,933	$	111,212	$	—	$	324,145
States, municipalities and political subdivisions		—		392,250		—		392,250
Mortgage- and asset-backed securities:
Agency mortgage-backed securities		—		382,628		—		382,628
Residential mortgage obligations		—		20,463		—		20,463
Asset-backed securities		—		46,093		—		46,093
Commercial mortgage-backed securities		—		188,178		1,837		190,015
Subtotal		—		637,362		1,837		639,199
Corporate bonds		—		526,651		—		526,651
Total fixed maturities		212,933		1,667,475		1,837		1,882,245
Equity securities - common stocks		87,258		—		—		87,258
Total	$	300,191	$	1,667,475	$	1,837	$	1,969,503

Reconciliation of Beginning and Ending Balances for All Investments Measured at Fair Value Using Level 3 Inputs

The following table presents a reconciliation of the beginning and ending balances for all investments measured at fair value using Level 3 inputs during the six months ended June 30, 2011 and 2010.

		September 30,			September 30,
	2011			2010
	($ in thousands)
Level 3 investments as of December 31	$	1,837		$	—
Unrealized net gains included in other comprehensive income (loss)		(26	)		—
Purchases, sales, paydowns and amortization		(4	)		—
Transfer from Level 3		(1,807	)		—
Transfer to Level 3		—			—
Level 3 investments as of June 30	$	—		$	—