Investments (Tables)

6 Months Ended

Jun. 30, 2013

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 June 30, 2013 and December 31, 2012. The table below includes other-than-temporarily impaired (“OTTI”) securities recognized within other comprehensive income (“OCI”).

	June 30, 2013
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		(Losses)			Cost
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	464,167	$	3,538	$	(7,492	)	$	468,121
States, municipalities and political subdivisions		452,084		10,281		(13,114	)		454,917
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		320,150		7,782		(4,645	)		317,013
Residential mortgage obligations		37,335		1,196		(221	)		36,360
Asset-backed securities		75,311		747		(113	)		74,677
Commercial mortgage-backed securities		173,388		8,731		(514	)		165,171
Subtotal	$	606,184	$	18,456	$	(5,493	)	$	593,221
Corporate bonds		485,371		16,285		(3,162	)		472,248
Total fixed maturities	$	2,007,806	$	48,560	$	(29,261	)	$	1,988,507
Equity securities—common stocks		138,549		25,238		(1,910	)		115,221
Short-term investments		124,726		—		—			124,726
Cash		101,960		—		—			101,960
Total	$	2,373,041	$	73,798	$	(31,171	)	$	2,330,414

	December 31, 2012
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		(Losses)			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

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 June 30, 2013 are shown in the following table:

	June 30, 2013
	Fair		Amortized
In thousands	Value		Cost
Due in one year or less	$	117,677	$	116,999
Due after one year through five years		576,742		566,164
Due after five years through ten years		462,171		461,911
Due after ten years		245,032		250,212
Mortgage- and asset-backed securities		606,184		593,221
Total	$	2,007,806	$	1,988,507

Amount and Percentage of Fixed Maturities by Rating

The following table shows the amount and percentage of the Company’s fixed maturities as of June 30, 2013 by 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.

	June 30, 2013
		Fair		Percent
In thousands	Rating	Value		of Total
Rating description:
Extremely strong	AAA	$	293,952		15	%
Very strong	AA		1,088,098		53	%
Strong	A		454,692		23	%
Adequate	BBB		152,317		8	%
Speculative	BB & Below		15,073		1	%
Not rated	NR		3,674		0	%
Total	AA	$	2,007,806		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 June 30, 2013 and December 31, 2012, 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.

	June 30, 2013						December 31, 2012
	Number of		Fair		Gross Unrealized		Number of		Fair		Gross Unrealized
In thousands, except # of securities	Securities		Value		Loss		Securities		Value		Loss
Fixed maturities:
U.S. Treasury bonds, agency bonds, and foreign government bonds
0-6 months		60	$	278,158	$	7,492		8	$	23,760	$	22
7-12 months		—		—		—		3		14,118		11
> 12 months		—		—		—		1		4,652		3
Subtotal		60	$	278,158	$	7,492		12	$	42,530	$	36
States, municipalities and political subdivisions
0-6 months		110	$	223,186	$	11,556		10	$	21,299	$	325
7-12 months		7		17,168		1,546		—		—		—
> 12 months		3		1,970		12		4		2,908		55
Subtotal		120	$	242,324	$	13,114		14	$	24,207	$	380
Agency mortgage-backed securities
0-6 months		89	$	104,138	$	3,096		10	$	62,516	$	174
7-12 months		9		24,070		1,431		2		1,671		30
> 12 months		2		1,559		118		—		—		—
Subtotal		100	$	129,767	$	4,645		12	$	64,187	$	204
Residential mortgage obligations
0-6 months		12	$	2,953	$	47		6	$	1,825	$	22
7-12 months		—		—		—		—		—		—
> 12 months		17		3,140		174		35		7,252		527
Subtotal		29	$	6,093	$	221		41	$	9,077	$	549
Asset-backed securities
0-6 months		4	$	16,905	$	29		—	$	—	$	—
7-12 months		—		—		—		—		—		—
> 12 months		1		1,634		84		2		2,369		49
Subtotal		5	$	18,539	$	113		2	$	2,369	$	49
Commercial mortgage-backed securities
0-6 months		5	$	15,143	$	488		7	$	2,639	$	7
7-12 months		2		651		10		—		—		—
> 12 months		3		559		16		5		845		11
Subtotal		10	$	16,353	$	514		12	$	3,484	$	18
Corporate bonds
0-6 months		43	$	121,470	$	3,162		2	$	3,528	$	6
7-12 months		—		—		—		—		—		—
> 12 months		—		—		—		4		6,689		19
Subtotal		43	$	121,470	$	3,162		6	$	10,217	$	25
Total fixed maturities		367	$	812,704	$	29,261		99	$	156,071	$	1,261
Equity securities—common stocks
0-6 months		6	$	33,817	$	1,910		13	$	23,345	$	522
7-12 months		—		—		—		1		1,943		104
> 12 months		—		—		—		—		—		—
Total equity securities		6	$	33,817	$	1,910		14	$	25,288	$	626

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:

	Three Months Ended June 30,								Six Months Ended June 30,
	2013				2012				2013				2012
	Number of				Number of				Number of				Number of
In thousands, except # of securities	Securities		Amount		Securities		Amount		Securities		Amount		Securities		Amount
Total OTTI losses:
Corporate and other bonds		—	$	—		—	$	—		—	$	—		—	$	—
Commercial mortgage-backed securities		—		—		—		—		—		—		—		—
Residential mortgage-backed securities		—		—		—		—		—		—		1		54
Asset-backed securities		—		—		—		—		—		—		—		—
Equities		—		—		2		496		2		42		3		639
Total		—	$	—		2	$	496		2	$	42		4	$	693
Less: Portion of loss in accumulated other comprehensive income (loss):
Corporate and other bonds			$	—			$	—			$	—			$	—
Commercial mortgage-backed securities				—				—				—				—
Residential mortgage-backed securities				—				—				—				43
Asset-backed securities				—				—				—				—
Equities				—				—				—				—
Total			$	—			$	—			$	—			$	43
Impairment losses recognized in earnings:
Corporate and other bonds			$	—			$	—			$	—			$	—
Commercial mortgage-backed securities				—				—				—				—
Residential mortgage-backed securities				—				—				—				11
Asset-backed securities				—				—				—				—
Equities				—				496				42				639
Total			$	—			$	496			$	42			$	650

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 three and six months ended June 30, 2013 and 2012. 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.

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2013		2012		2013		2012
Beginning balance	$	3,332	$	3,322	$	3,332	$	3,321
Additions for credit loss impairments recognized in the current period on securities not previously impaired		—		—		—		—
Additions for credit loss impairments recognized in the current period on securities previously impaired		—		—		—		11
Reductions for credit loss impairments previously recognized on securities sold during the period		—		—		—		—
Ending balance	$	3,332	$	3,332	$	3,332	$	3,332

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 June 30, 2013 is presented in the following table:

	June 30, 2013
	Gross Unrealized Losses					Fair Value
			Percent					Percent
In thousands	Amount		of Total			Amount		of Total
Due in one year or less	$	12		0	%	$	11,813		1	%
Due after one year through five years		2,442		8	%		192,689		24	%
Due after five years through ten years		11,394		39	%		267,617		33	%
Due after ten years		9,920		34	%		169,833		21	%
Mortgage- and asset-backed securities		5,493		19	%		170,752		21	%
Total	$	29,261		100	%	$	812,704		100	%

Net Investment Income

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

	Three Months Ended June 30,						Six Months Ended June 30,
In thousands	2013			2012			2013			2012
Fixed maturities	$	13,578		$	15,006		$	26,743		$	30,416
Equity securities		1,257			994			2,288			1,941
Short-term investments		198			701			388			1,014
Total investment income	$	15,033		$	16,701		$	29,419		$	33,371
Investment expenses		(787	)		(924	)		(1,516	)		(6,336	)
Net investment income	$	14,246		$	15,777		$	27,903		$	27,035

Change in Net Unrealized Gains/(Losses)

The change in net unrealized gains and losses, inclusive of the change in the non credit portion of other-than-temporary impairment losses, consisted of:

	Six Months Ended June 30,
In thousands	2013			2012
Fixed maturities	$	(67,769	)	$	17,439
Equity securities		7,035			6,910
Gross unrealized gains (losses)	$	(60,734	)	$	24,349
Deferred income tax		(21,264	)		7,796
Change in net unrealized gains (losses), net	$	(39,470	)	$	16,553

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:

	Three Months Ended June 30,						Six Months Ended June 30,
In thousands	2013			2012			2013			2012
Fixed maturities:
Gains	$	1,730		$	4,717		$	4,936		$	7,858
Losses		(73	)		(231	)		(383	)		(1,530	)
Fixed maturities, net	$	1,657		$	4,486		$	4,553		$	6,328
Equity securities:
Gains	$	1,815		$	204		$	3,733		$	204
Losses		(127	)		(473	)		(127	)		(473	)
Equity securities, net	$	1,688		$	(269	)	$	3,606		$	(269	)
Net realized gains (losses)	$	3,345		$	4,217		$	8,159		$	6,059

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, the Company’s fixed maturities and equity securities by asset class that are measured at fair value on a recurring basis as of June 30, 2013 and December 31, 2012:

	June 30, 2013
In thousands	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	276,111	$	188,056	$	—	$	464,167
States, municipalities and political subdivisions		—		452,084		—		452,084
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		—		320,150		—		320,150
Residential mortgage obligations		—		37,335		—		37,335
Asset-backed securities		—		75,311		—		75,311
Commercial mortgage-backed securities		—		173,388		—		173,388
Subtotal	$	—	$	606,184	$	—	$	606,184
Corporate bonds		—		485,371		—		485,371
Total fixed maturities	$	276,111	$	1,731,695	$	—	$	2,007,806
Equity securities—common stocks		138,549		—		—		138,549
Total	$	414,660	$	1,731,695	$	—	$	2,146,355

	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