Investments (Tables)

3 Months Ended

Mar. 31, 2014

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

The following tables set forth the Company’s cash and investments as of March 31, 2014 and December 31, 2013. The table below includes other-than-temporarily impaired (“OTTI”) securities recognized within accumulated other comprehensive income (“AOCI”).

	March 31, 2014
			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	$	417,942	$	3,066	$	(4,956	)	$	419,832
States, municipalities and political subdivisions		491,598		12,216		(6,948	)		486,330
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		265,818		7,182		(3,525	)		262,161
Residential mortgage obligations		57,852		1,573		(136	)		56,415
Asset-backed securities		162,226		639		(563	)		162,150
Commercial mortgage-backed securities		173,333		7,792		(272	)		165,813
Subtotal	$	659,229	$	17,186	$	(4,496	)	$	646,539
Corporate bonds		593,944		15,472		(2,319	)		580,791
Total fixed maturities	$	2,162,713	$	47,940	$	(18,719	)	$	2,133,492
Equity securities - common stocks		141,476		26,589		(1,271	)		116,158
Equity securities - Preferred stocks		22,051		852		(1	)		21,200
Short-term investments		207,843		—		—			207,843
Cash		55,041		—		—			55,041
Total	$	2,589,124	$	75,381	$	(19,991	)	$	2,533,734

	December 31, 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	$	441,685	$	2,854	$	(8,855	)	$	447,686
States, municipalities and political subdivisions		460,422		9,298		(13,651	)		464,775
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		301,274		6,779		(6,016	)		300,511
Residential mortgage obligations		41,755		1,212		(161	)		40,704
Asset-backed securities		125,133		653		(480	)		124,960
Commercial mortgage-backed securities		172,750		7,656		(374	)		165,468
Subtotal	$	640,912	$	16,300	$	(7,031	)	$	631,643
Corporate bonds		504,854		15,402		(3,443	)		492,895
Total fixed maturities	$	2,047,873	$	43,854	$	(32,980	)	$	2,036,999
Equity securities - common stocks		143,954		25,700		(550	)		118,804
Short-term investments		296,250		—		—			296,250
Cash		86,509		—		—			86,509
Total	$	2,574,586	$	69,554	$	(33,530	)	$	2,538,562

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

The contractual maturity dates for fixed maturities categorized by the number of years until maturity as of March 31, 2014 are shown in the following table:

	March 31, 2014
	Fair		Amortized
In thousands	Value		Cost
Due in one year or less	$	78,570	$	77,743
Due after one year through five years		739,594		725,355
Due after five years through ten years		407,558		406,355
Due after ten years		277,762		277,500
Mortgage- and asset-backed securities		659,229		646,539
Total	$	2,162,713	$	2,133,492

Amount and Percentage of Fixed Maturities by Rating

The following table shows the amount and percentage of the Company’s fixed maturities as of March 31, 2014 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.

	March 31, 2014
		Fair		Percent
In thousands	Rating	Value		of Total
Rating description:
Extremely strong	AAA	$	389,209		18	%
Very strong	AA		1,014,656		47	%
Strong	A		561,731		26	%
Adequate	BBB		175,311		8	%
Speculative	BB & Below		18,287		1	%
Not rated	NR		3,519		0	%
Total	AA	$	2,162,713		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 March 31, 2014 and December 31, 2013, 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.

	March 31, 2014						December 31, 2013
					Gross						Gross
	Number of				Unrealized		Number of				Unrealized
In thousands, except # of securities	Securities		Fair Value		Loss		Securities		Fair Value		Loss
Fixed maturities:
U.S. Treasury bonds, agency bonds, and foreign government bonds
0-6 months		20	$	120,036	$	518		27	$	136,360	$	1,096
7-12 months		21		128,509		4,426		26		149,370		7,759
> 12 months		1		897		12		—		—		—
Subtotal		42	$	249,442	$	4,956		53	$	285,730	$	8,855
States, municipalities and political subdivisions
0-6 months		14	$	24,744	$	163		28	$	40,132	$	297
7-12 months		77		160,382		5,050		104		205,152		12,100
> 12 months		16		36,052		1,735		6		12,357		1,254
Subtotal		107	$	221,178	$	6,948		138	$	257,641	$	13,651
Agency mortgage-backed securities
0-6 months		6	$	22,200	$	65		39	$	39,458	$	434
7-12 months		53		61,847		2,060		64		77,860		3,768
> 12 months		11		22,492		1,400		9		22,784		1,814
Subtotal		70	$	106,539	$	3,525		112	$	140,102	$	6,016
Residential mortgage obligations
0-6 months		2	$	897	$	3		3	$	431	$	2
7-12 months		4		536		18		7		950		29
> 12 months		13		2,222		115		15		2,467		130
Subtotal		19	$	3,655	$	136		25	$	3,848	$	161
Asset-backed securities
0-6 months		7	$	42,213	$	67		14	$	75,887	$	479
7-12 months		3		31,495		496		1		203		1
> 12 months		—		—		—		—		—		—
Subtotal		10	$	73,708	$	563		15	$	76,090	$	480
Commercial mortgage-backed securities
0-6 months		3	$	6,103	$	13		4	$	6,712	$	31
7-12 months		2		15,004		250		2		15,098		322
> 12 months		2		519		9		4		774		21
Subtotal		7	$	21,626	$	272		10	$	22,584	$	374
Corporate bonds
0-6 months		45	$	176,120	$	744		34	$	93,591	$	717
7-12 months		12		45,043		1,575		18		55,021		2,726
> 12 months		1		1,701		—		—		—		—
Subtotal		58	$	222,864	$	2,319		52	$	148,612	$	3,443
Total fixed maturities		313	$	899,012	$	18,719		405	$	934,607	$	32,980
Equity securities - common stocks
0-6 months		10	$	21,578	$	1,120		5	$	7,387	$	422
7-12 months		3		3,794		151		2		3,538		128
> 12 months		—		—		—		—		—		—
Total common Stocks		13	$	25,372	$	1,271		7	$	10,925	$	550
Equity securities - preferred stocks
0-6 months		1	$	553	$	1		—	$	—	$	—
7-12 months		—		—		—		—		—		—
> 12 months		—		—		—		—		—		—
Total Preferred Stocks		1	$	553	$	1		—	$	—	$	—

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 March 31,
	2014				2013
	Number of				Number of
In thousands, except # of securities	Securities		Amount		Securities		Amount
Total OTTI losses:
Corporate and other bonds		—	$	—		—	$	—
Commercial mortgage-backed securities		—		—		—		—
Residential mortgage-backed securities		—		—		—		—
Asset-backed securities		—		—		—		—
Equities		—		—		2		42
Total		—	$	—		2	$	42
Less: Portion of loss in accumulated other comprehensive income (loss): Corporate and other bonds			$	—			$	—
Commercial mortgage-backed securities				—				—
Residential mortgage-backed securities				—				—
Asset-backed securities				—				—
Equities				—				—
Total			$	—			$	—
Impairment losses recognized in earnings:
Corporate and other bonds			$	—			$	—
Commercial mortgage-backed securities				—				—
Residential mortgage-backed securities				—				—
Asset-backed securities				—				—
Equities				—				42
Total			$	—			$	42

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 months ended March 31, 2014 and 2013. 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 AOCI.

	Three Months Ended March 31,
In thousands	2014		2013
Beginning balance	$	4,183	$	2,362
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		—		—
Reductions for credit loss impairments previously recognized on securities sold during the period		—		—
Ending balance	$	4,183	$	2,362

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

The contractual maturity dates for fixed maturities categorized by the number of years until maturity, with a gross unrealized loss as of March 31, 2014 is presented in the following table:

	March 31, 2014
	Gross Unrealized Losses					Fair Value
In thousands	Amount		Percent of Total			Amount		Percent of Total
Due in one year or less	$	—		0	%	$	1,701		0	%
Due after one year through five years		1,697		9	%		316,024		35	%
Due after five years through ten years		7,773		41	%		235,549		26	%
Due after ten years		4,753		26	%		140,210		16	%
Mortgage- and asset-backed securities		4,496		24	%		205,528		23	%
Total	$	18,719		100	%	$	899,012		100	%

Net Investment Income

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

	Three Months Ended March 31,
In thousands	2014			2013
Fixed maturities	$	13,953		$	13,167
Equity securities		3,233			1,030
Short-term investments		218			189
Total investment income	$	17,404		$	14,386
Investment expenses		(794	)		(729	)
Net investment income	$	16,610		$	13,657

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:

	Three Months Ended March 31,
In thousands	2014		2013
Fixed maturities	$	18,347	$	(10,930	)
Equity securities		1,019		8,172
Gross unrealized gains (losses)	$	19,366	$	(2,758	)
Deferred income tax		6,675		(1,003	)
Change in net unrealized gains (losses), net	$	12,691	$	(1,755	)

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 March 31,
In thousands	2014			2013
Fixed maturities:
Gains	$	1,867		$	3,206
Losses		(2,051	)		(310	)
Fixed maturities, net	$	(184	)	$	2,896
Equity securities:
Gains	$	1,920		$	1,918
Losses		(903	)		—
Equity securities, net	$	1,017		$	1,918
Net realized gains (losses)	$	833		$	4,814

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 March 31, 2014 and December 31, 2013

	March 31, 2014
In thousands	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	217,631	$	200,311	$	—	$	417,942
States, municipalities and political subdivisions		—		491,598		—		491,598
Mortgage-backed and asset-backed securities:								—
Agency mortgage-backed securities		—		265,818		—		265,818
Residential mortgage obligations		—		57,852		—		57,852
Asset-backed securities		—		162,226		—		162,226
Commercial mortgage-backed securities		—		173,333		—		173,333
Subtotal	$	—	$	659,229	$	—	$	659,229
Corporate bonds		—		593,944		—		593,944
Total fixed maturities	$	217,631	$	1,945,082	$	—	$	2,162,713
Equity securities - common stocks		141,476		—		—		141,476
Equity securities - preferred stocks				22,051				22,051
Total	$	359,107	$	1,967,133	$	—	$	2,326,240
	December 31, 2013
In thousands	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	242,379	$	199,306	$	—	$	441,685
States, municipalities and political subdivisions		—		460,422		—		460,422
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		—		301,274		—		301,274
Residential mortgage obligations		—		41,755		—		41,755
Asset-backed securities		—		125,133		—		125,133
Commercial mortgage-backed securities		—		172,750		—		172,750
Subtotal	$	—	$	640,912	$	—	$	640,912
Corporate bonds		—		500,447		4,407		504,854
Total fixed maturities	$	242,379	$	1,801,087	$	4,407	$	2,047,873
Equity securities - common stocks		143,954		—		—		143,954
Total	$	386,333	$	1,801,087	$	4,407	$	2,191,827

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 months ended March 31, 2014.

	Three Months Ended March 31, 2014
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	$	4,407	$	—	$	—	$	—	$	—	$	—	$	—	$	(4,407	)	$	—
Total assets	$	4,407	$	—	$	—	$	—	$	—	$	—	$	—	$	(4,407	)	$	—