Investments (Tables)

9 Months Ended

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

	September 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	$	445,969	$	3,683	$	(5,694	)	$	447,980
States, municipalities and political subdivisions		445,281		9,752		(12,240	)		447,769
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		300,347		7,966		(3,925	)		296,306
Residential mortgage obligations		35,277		1,107		(224	)		34,394
Asset-backed securities		88,714		795		(190	)		88,109
Commercial mortgage-backed securities		173,069		8,386		(365	)		165,048
Subtotal	$	597,407	$	18,254	$	(4,704	)	$	583,857
Corporate bonds		493,074		17,104		(2,858	)		478,828
Total fixed maturities	$	1,981,731	$	48,793	$	(25,496	)	$	1,958,434
Equity securities—common stocks		158,890		29,548		(1,704	)		131,046
Short-term investments		152,987		—		—			152,987
Cash		130,513		—		—			130,513
Total	$	2,424,121	$	78,341	$	(27,200	)	$	2,372,980

	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 September 30, 2013 are shown in the following table:

	September 30, 2013
	Fair		Amortized
In thousands	Value		Cost
Due in one year or less	$	79,192	$	78,621
Due after one year through five years		616,576		603,165
Due after five years through ten years		458,136		455,826
Due after ten years		230,420		236,965
Mortgage- and asset-backed securities		597,407		583,857
Total	$	1,981,731	$	1,958,434

Amount and Percentage of Fixed Maturities by Rating

The following table shows the amount and percentage of the Company’s fixed maturities as of September 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.

	September 30, 2013
		Fair		Percent
In thousands	Rating	Value		of Total
Rating description:
Extremely strong	AAA	$	305,979		15	%
Very strong	AA		1,051,156		54	%
Strong	A		440,063		22	%
Adequate	BBB		163,614		8	%
Speculative	BB & Below		11,722		1	%
Not rated	NR		9,197		0	%
Total	AA	$	1,981,731		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 September 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.

	September 30, 2013						December 31, 2012
					Gross						Gross
	Number of		Fair		Unrealized		Number of		Fair		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		42	$	196,851	$	5,688		8	$	23,760	$	22
7-12 months		1		928		6		3		14,118		11
> 12 months		—		—		—		1		4,652		3
Subtotal		43	$	197,779	$	5,694		12	$	42,530	$	36
States, municipalities and political subdivisions
0-6 months		100	$	196,987	$	9,485		10	$	21,299	$	325
7-12 months		17		37,989		2,755		—		—		—
> 12 months		1		303		—		4		2,908		55
Subtotal		118	$	235,279	$	12,240		14	$	24,207	$	380
Agency mortgage-backed securities
0-6 months		71	$	90,215	$	2,472		10	$	62,516	$	174
7-12 months		9		18,667		1,354		2		1,671		30
> 12 months		2		5,130		99		—		—		—
Subtotal		82	$	114,012	$	3,925		12	$	64,187	$	204
Residential mortgage obligations
0-6 months		12	$	2,016	$	43		6	$	1,825	$	22
7-12 months		—		—		—		—		—		—
> 12 months		17		2,955		181		35		7,252		527
Subtotal		29	$	4,971	$	224		41	$	9,077	$	549
Asset-backed securities
0-6 months		3	$	32,019	$	189		—	$	—	$	—
7-12 months		1		339		1		—		—		—
> 12 months		—		—		—		2		2,369		49
Subtotal		4	$	32,358	$	190		2	$	2,369	$	49
Commercial mortgage-backed securities
0-6 months		6	$	19,891	$	341		7	$	2,639	$	7
7-12 months		—		—		—		—		—		—
> 12 months		5		889		24		5		845		11
Subtotal		11	$	20,780	$	365		12	$	3,484	$	18
Corporate bonds
0-6 months		37	$	123,673	$	2,856		2	$	3,528	$	6
7-12 months		2		2,315		2		—		—		—
> 12 months		—		—		—		4		6,689		19
Subtotal		39	$	125,988	$	2,858		6	$	10,217	$	25
Total fixed maturities		326	$	731,167	$	25,496		99	$	156,071	$	1,261
Equity securities—common stocks
0-6 months		13	$	33,429	$	1,340		13	$	23,345	$	522
7-12 months		1		1,904		364		1		1,943		104
> 12 months		—		—		—		—		—		—
Total equity securities		14	$	35,333	$	1,704		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 September 30,								Nine Months Ended September 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		1	$	1,821		—	$	—		1	$	1,821		—	$	—
Commercial mortgage-backed securities		—		—		—		—		—		—		—		—
Residential mortgage-backed securities		—		—		—		—		—		—		1		54
Asset-backed securities		—		—		—		—		—		—		—		—
Equities		—		—		—		—		2		42		3		639
Total		1	$	1,821		—	$	—		3	$	1,863		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			$	1,821			$	—			$	1,821			$	—
Commercial mortgage-backed securities				—				—				—				—
Residential mortgage-backed securities				—				—				—				11
Asset-backed securities				—				—				—				—
Equities				—				—				42				639
Total			$	1,821			$	—			$	1,863			$	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 nine months ended September 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 September 30,				Nine Months Ended September 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		1,821		—		1,821		—
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	$	5,153	$	3,332	$	5,153	$	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 September 30, 2013 is presented in the following table:

	September 30, 2013
	Gross Unrealized Losses					Fair Value
			Percent					Percent
In thousands	Amount		of Total			Amount		of Total
Due in one year or less	$	1		0	%	$	1,716		0	%
Due after one year through five years		1,119		4	%		144,849		20	%
Due after five years through ten years		9,803		38	%		250,290		34	%
Due after ten years		9,869		40	%		162,191		22	%
Mortgage- and asset-backed securities		4,704		18	%		172,121		24	%
Total	$	25,496		100	%	$	731,167		100	%

Net Investment Income

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

	Three Months Ended September 30,						Nine Months Ended September 30,
In thousands	2013			2012			2013			2012
Fixed maturities	$	13,399		$	14,364		$	40,142		$	44,779
Equity securities		1,315			989			3,603			2,930
Short-term investments		187			437			575			1,452
Total investment income	$	14,901		$	15,790		$	44,320		$	49,161
Investment expenses		(807	)		(2,193	)		(2,323	)		(8,529	)
Net investment income	$	14,094		$	13,597		$	41,997		$	40,632

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:

	Nine Months Ended September 30,
In thousands	2013			2012
Fixed maturities	$	(63,771	)	$	38,165
Equity securities		11,551			8,817
Gross unrealized gains (losses)	$	(52,220	)	$	46,982
Deferred income tax		(18,296	)		15,702
Change in net unrealized gains (losses), net	$	(33,924	)	$	31,280

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 September 30,						Nine Months Ended September 30,
In thousands	2013			2012			2013			2012
Fixed maturities:
Gains	$	1,099		$	4,011		$	6,035		$	11,868
Losses		(2,087	)		(216	)		(2,470	)		(1,746	)
Fixed maturities, net	$	(988	)	$	3,795		$	3,565		$	10,122
Equity securities:
Gains	$	—		$	966		$	3,733		$	1,171
Losses		—			—			(127	)		(473	)
Equity securities, net	$	—		$	966		$	3,606		$	698
Net realized gains (losses)	$	(988	)	$	4,761		$	7,171		$	10,820

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 September 30, 2013 and December 31, 2012:

	September 30, 2013
In thousands	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	256,500	$	189,469	$	—	$	445,969
States, municipalities and political subdivisions		—		445,281		—		445,281
Mortgage-backed and asset-backed securities:								—
Agency mortgage-backed securities		—		300,347		—		300,347
Residential mortgage obligations		—		35,277		—		35,277
Asset-backed securities		—		88,714		—		88,714
Commercial mortgage-backed securities		—		173,069		—		173,069
Subtotal	$	—	$	597,407	$	—	$	597,407
Corporate bonds		—		488,512		4,562		493,074
Total fixed maturities	$	256,500	$	1,720,669	$	4,562	$	1,981,731
Equity securities—common stocks		158,890		—		—		158,890
Total	$	415,390	$	1,720,669	$	4,562	$	2,140,621

	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

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 of all investments measured at fair value using Level 3 inputs during the three and nine months ended September 30, 2013.

	Three Months Ended September 30, 2013
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:
Corporate Bonds	$	—	$	—	$	(15	)	$	4,661	$	(84	)	$	—	$	—	$	—	$	4,562
Total assets	$	—	$	—	$	(15	)	$	4,661	$	(84	)	$	—	$	—	$	—	$	4,562

	Nine Months Ended September 30, 2013
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:
Corporate Bonds	$	—	$	—	$	(15	)	$	4,661	$	(84	)	$	—	$	—	$	—	$	4,562
Total assets	$	—	$	—	$	(15	)	$	4,661	$	(84	)	$	—	$	—	$	—	$	4,562