Investments (Tables)

12 Months Ended

Dec. 31, 2012

Cash and Investments Including Other-Than-Temporarily Impaired Securities Recognized within Other Comprehensive Income

The following tables set forth the Company’s cash and investments as of December 31, 2012 and 2011. The tables below include OTTI securities recognized within OCI.

	December 31, 2012
In thousands	Fair Value		Gross Unrealized Gains		Gross Unrealized Losses			Amortized Cost
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	649,692	$	8,654	$	(36	)	$	641,074
States, municipalities and political subdivisions		322,947		18,712		(380	)		304,615
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		384,445		13,652		(204	)		370,997
Residential mortgage obligations		38,692		1,053		(549	)		38,188
Asset-backed securities		50,382		1,133		(49	)		49,298
Commercial mortgage-backed securities		204,821		17,996		(18	)		186,843
Subtotal	$	678,340	$	33,834	$	(820	)	$	645,326
Corporate bonds		470,854		27,129		(25	)		443,750
Total fixed maturities	$	2,121,833	$	88,329	$	(1,261	)	$	2,034,765
Equity securities—common stocks		101,297		16,919		(626	)		85,004
Short-term investments		153,788		—		—			153,788
Cash		45,336		—		—			45,336
Total	$	2,422,254	$	105,248	$	(1,887	)	$	2,318,893

	December 31, 2011
In thousands	Fair Value		Gross Unrealized Gains		Gross Unrealized Losses			Amortized Cost
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	336,070	$	8,979	$	(383	)	$	327,474
States, municipalities and political subdivisions		410,836		28,887		(108	)		382,057
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		395,860		17,321		(3	)		378,542
Residential mortgage obligations		23,148		8		(2,848	)		25,988
Asset-backed securities		48,934		695		(75	)		48,314
Commercial mortgage-backed securities		216,034		10,508		(593	)		206,119
Subtotal	$	683,976	$	28,532	$	(3,519	)	$	658,963
Corporate bonds		457,187		15,743		(6,772	)		448,216
Total fixed maturities	$	1,888,069	$	82,141	$	(10,782	)	$	1,816,710
Equity securities—common stocks		95,849		23,240		(958	)		73,567
Short-term investments		122,220		—		—			122,220
Cash		127,360		—		—			127,360
Total	$	2,233,498	$	105,381	$	(11,740	)	$	2,139,857

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

The contractual maturity dates for fixed maturity securities categorized by the number of years until maturity as of December 31, 2012 are shown in the following table:

	December 31, 2012
In thousands	Fair Value		Amortized Cost
Due in one year or less	$	107,224	$	106,500
Due after one year through five years		801,129		780,715
Due after five years through ten years		356,251		333,257
Due after ten years		178,889		168,967
Mortgage- and asset-backed securities		678,340		645,326
Total	$	2,121,833	$	2,034,765

Amount and Percentage of Fixed Maturities by Rating

The following table shows the amount and percentage of the Company’s fixed maturities as of December 31, 2012 by Standard & Poor’s (“S&P”) credit rating or, if an S&P rating is not available, the equivalent Moody’s Investor Services (“Moody’s”) rating. The table includes fixed maturities at fair value, and the total rating is the weighted average quality rating.

	December 31, 2012
In thousands	Rating	Fair Value		Percent of Total
Rating description:
Extremely strong	AAA	$	316,511		15	%
Very strong	AA		1,257,209		59	%
Strong	A		369,620		17	%
Adequate	BBB		159,943		8	%
Speculative	BB & Below		14,780		1	%
Not rated	NR		3,770		0	%
Total	AA	$	2,121,833		100	%

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

The following table summarizes all securities in a gross unrealized loss position as of December 31, 2012 and 2011, 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.

	December 31, 2012						December 31, 2011
In thousands, except # of securities	Number of Securities		Fair Value		Gross Unrealized Loss		Number of Securities		Fair Value		Gross Unrealized Loss
Fixed maturities:
U.S. Treasury bonds, agency bonds, and foreign government bonds
0-6 months		8	$	23,760	$	22		7	$	58,587	$	98
7-12 months		3		14,118		11		—		—		—
> 12 months		1		4,652		3		2		6,883		285
Subtotal		12	$	42,530	$	36		9	$	65,470	$	383
States, municipalities and political subdivisions
0-6 months		10	$	21,299	$	325		7	$	5,894	$	72
7-12 months		—		—		—		1		216		1
> 12 months		4		2,908		55		5		2,420		35
Subtotal		14	$	24,207	$	380		13	$	8,530	$	108
Agency mortgage-backed securities
0-6 months		10	$	62,516	$	174		3	$	5,087	$	3
7-12 months		2		1,671		30		—		—		—
> 12 months		—		—		—		—		—		—
Subtotal		12	$	64,187	$	204		3	$	5,087	$	3
Residential mortgage obligations
0-6 months		6	$	1,825	$	22		6	$	6,672	$	184
7-12 months		—		—		—		7		5,250		313
> 12 months		35		7,252		527		47		10,749		2,351
Subtotal		41	$	9,077	$	549		60	$	22,671	$	2,848
Asset-backed securities
0-6 months		—	$	—	$	—		2	$	4,933	$	12
7-12 months		—		—		—		5		6,645		63
> 12 months		2		2,369		49		1		2		—
Subtotal		2	$	2,369	$	49		8	$	11,580	$	75
Commercial mortgage-backed securities
0-6 months		7	$	2,639	$	7		6	$	5,465	$	29
7-12 months		—		—		—		3		6,840		550
> 12 months		5		845		11		3		1,503		14
Subtotal		12	$	3,484	$	18		12	$	13,808	$	593
Corporate bonds
0-6 months		2	$	3,528	$	6		52	$	135,516	$	4,539
7-12 months		—		—		—		18		27,561		1,457
> 12 months		4		6,689		19		8		14,898		776
Subtotal		6	$	10,217	$	25		78	$	177,975	$	6,772
Total fixed maturities		99	$	156,071	$	1,261		183	$	305,121	$	10,782
Equity securities—common stocks
0-6 months		13	$	23,345	$	522		4	$	3,320	$	587
7-12 months		1		1,943		104		1		1,629		371
> 12 months		—		—		—		—		—		—
Total equity securities		14	$	25,288	$	626		5	$	4,949	$	958

Gross Unrealized Investment Losses

The following table summarizes the gross unrealized investment losses by length of time that the fair value continues to be less than 80% of amortized cost as of December 31, 2012:

	December 31, 2012
In thousands	Fixed Maturities		Equity Securities		Total
Less than three months	$	—	$	—	$	—
Longer than three months and less than six months		—		—		—
Longer than six months and less than twelve months		—		—		—
Longer than twelve months		32		—		32
Total	$	32	$	—	$	32

Summary of Activity Related to Other-Than-Temporary Impairment Losses

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

	Year Ended December 31,
	2012				2011				2010
In thousands, except # of securities	Number of Securities		Amount		Number of Securities		Amount		Number of Securities		Amount
Total OTTI losses:
Corporate and other bonds		—	$	—		1	$	109		—	$	—
Commercial mortgage-backed securities		—		—		—		—		—		—
Residential mortgage-backed securities		1		55		19		2,616		18		1,835
Asset-backed securities		—		—		—		—		—		—
Equities		3		847		2		892		2		387
Total		4	$	902		22	$	3,617		20	$	2,222
Less: Portion of loss in accumulated other comprehensive income (loss):
Corporate and other bonds			$	—			$	—			$	—
Commercial mortgage-backed securities				—				—				—
Residential mortgage-backed securities				44				1,632				1,142
Asset-backed securities				—				—				—
Equities				—				—				—
Total			$	44			$	1,632			$	1,142
Impairment losses recognized in earnings:
Corporate and other bonds			$	—			$	109			$	—
Commercial mortgage-backed securities				—				—				—
Residential mortgage-backed securities				11				984				693
Asset-backed securities				—				—				—
Equities				847				892				387
Total			$	858			$	1,985			$	1,080

Summary of Cumulative Amounts Related to Credit Loss Portion of Other-Than-Temporary Impairment Losses on Debt Securities

The following table summarizes the cumulative amounts related to the Company’s credit loss portion of the OTTI losses on debt securities for the years ended December 31, 2012, 2011 and 2010. The Company does not intend to sell and it is more likely than not that it will not be required to sell, the securities prior to recovery of the amortized cost basis and for which the non-credit loss portion is included in OCI.

	Year Ended December 31,
In thousands	2012		2011		2010
Beginning balance	$	3,321	$	2,228	$	2,523
Additions for credit loss impairments recognized in the current period on securities not previously impaired				109		271
Additions for credit loss impairments recognized in the current period on securities previously impaired		11		984		422
Reductions for credit loss impairments previously recognized on securities sold during the period		—		—		(988	)
Ending balance	$	3,332	$	3,321	$	2,228

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

The contractual maturity dates for fixed maturity securities categorized by the number of years until maturity, with a gross unrealized loss as of December 31, 2012 is presented in the following table:

	December 31, 2012
	Gross Unrealized Losses					Fair Value
In thousands	Amount		Percent of Total			Amount		Percent of Total
Due in one year or less	$	7		1	%	$	8,560		5	%
Due after one year through five years		62		5	%		33,336		21	%
Due after five years through ten years		89		7	%		6,157		4	%
Due after ten years		283		22	%		28,901		19	%
Mortgage- and asset-backed securities		820		65	%		79,117		51	%
Total	$	1,261		100	%	$	156,071		100	%

Net Investment Income

The Company’s net investment income was derived from the following sources:

	Year Ended December 31,
In thousands	2012			2011			2010
Fixed maturities	$	58,995		$	65,060		$	69,996
Equity securities		3,945			5,071			3,028
Short-term investments		1,694			964			965
Total investment income		64,634			71,095			73,989
Investment expenses		(10,386	)		(7,595	)		(2,327	)
Net investment income	$	54,248		$	63,500		$	71,662

Change in Net Unrealized Gains/(Losses)

The change in net unrealized gains and losses, inclusive of the change in the non-credit portion of OTTI losses, consisted of:

	Year Ended December 31,
In thousands	2012			2011			2010
Fixed maturities	$	15,709		$	44,712		$	(12,039	)
Equity securities		(5,989	)		(183	)		7,231
Gross unrealized gains (losses)		9,720			44,529			(4,808	)
Deferred income tax		3,418			15,143			(1,324	)
Change in net unrealized gains (losses), net	$	6,302		$	29,386		$	(3,484	)

Realized Gains and Losses Excluding Net Other-Than-Temporary Impairment Losses Recognized in Earnings

Realized gains and losses, excluding net OTTI losses recognized in earnings, for the periods indicated were as follows:

	Year Ended December 31,
In thousands	2012			2011			2010
Fixed maturities:
Gains	$	28,789		$	11,678		$	42,932
Losses		(1,915	)		(7,044	)		(3,239	)
Fixed maturities, net	$	26,874		$	4,634		$	39,693
Equity securities:
Gains	$	14,673		$	9,319		$	1,867
Losses		(473	)		(1,957	)		(241	)
Equity securities, net	$	14,200		$	7,362		$	1,626
Net realized gains (losses)	$	41,074		$	11,996		$	41,319

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

The following tables present, for each of the fair value hierarchy levels as defined by the accounting guidance for fair value measurements and described below, the Company’s fixed maturities and equity securities by asset class that are measured at fair value on a recurring basis as of December 31, 2012 and 2011:

	December 31, 2012
In thousands	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	414,502	$	235,190	$	—	$	649,692
States, municipalities and political subdivisions		—		322,947		—		322,947
Mortgage-backed and asset-backed securities:								—
Agency mortgage-backed securities		—		384,445		—		384,445
Residential mortgage obligations		—		38,692		—		38,692
Asset-backed securities		—		50,382		—		50,382
Commercial mortgage-backed securities		—		204,821		—		204,821
Subtotal	$	—	$	678,340	$	—	$	678,340
Corporate bonds		—		470,854		—		470,854
Total fixed maturities	$	414,502	$	1,707,331	$	—	$	2,121,833
Equity securities—common stocks		101,297		—		—		101,297
Total	$	515,799	$	1,707,331	$	—	$	2,223,130

	December 31, 2011
In thousands	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	136,625	$	199,445	$	—	$	336,070
States, municipalities and political subdivisions		—		410,836		—		410,836
Mortgage-backed and asset-backed securities:								—
Agency mortgage-backed securities		—		395,860		—		395,860
Residential mortgage obligations		—		23,148		—		23,148
Asset-backed securities		—		48,934		—		48,934
Commercial mortgage-backed securities		—		216,034		—		216,034
Subtotal	$	—	$	683,976	$	—	$	683,976
Corporate bonds		—		457,187		—		457,187
Total fixed maturities	$	136,625	$	1,751,444	$	—	$	1,888,069
Equity securities—common stocks		95,849		—		—		95,849
Total	$	232,474	$	1,751,444	$	—	$	1,983,918

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

The following tables present a reconciliation of the beginning and ending balances for all investments measured at fair value using Level 3 inputs for the years ended December 31, 2011 and 2010.

	Year Ended December 31, 2011
In thousands	Beginning Balance		Realized Gains (Losses)		Unrealized Gains (Losses)		Purchases		Sales		Settlements		Transfers into Level 3		Transfers out of Level 3			Ending Balance
Assets:
Commercial Mortgage Obligations	$	1,837	$	—	$	94	$	—	$	—	$	—	$	—	$	(1,931	)	$	—
Total assets	$	1,837	$	—	$	94	$	—	$	—	$	—	$	—	$	(1,931	)	$	—

	Year Ended December 31, 2010
In thousands	Beginning Balance		Realized Gains (Losses)		Unrealized Gains (Losses)			Purchases		Sales		Settlements		Transfers into Level 3		Transfers out of Level 3		Ending Balance
Assets:
Commercial Mortgage Obligations	$	—	$	—	$	(19	)	$	1,856	$	—	$	—	$	—	$	—	$	1,837
Total assets	$	—	$	—	$	(19	)	$	1,856	$	—	$	—	$	—	$	—	$	1,837