Investments (Tables)

6 Months Ended

Jun. 30, 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 June 30, 2014 and December 31, 2013. The table below includes other-than-temporarily impaired (“OTTI”) securities recognized within accumulated other comprehensive income (“AOCI”).

	June 30, 2014
In thousands	Fair Value		Gross Unrealized Gains		Gross Unrealized (Losses)			Cost or Amortized Cost
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	421,891	$	4,313	$	(4,339	)	$	421,917
States, municipalities and political subdivisions		564,782		15,833		(2,883	)		551,832
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		256,407		8,289		(1,753	)		249,871
Residential mortgage obligations		60,867		1,832		(101	)		59,136
Asset-backed securities		162,529		598		(381	)		162,312
Commercial mortgage-backed securities		184,946		8,071		(131	)		177,006
Subtotal	$	664,749	$	18,790	$	(2,366	)	$	648,325
Corporate bonds		569,433		15,572		(1,159	)		555,020
Total fixed maturities	$	2,220,855	$	54,508	$	(10,747	)	$	2,177,094
Equity securities - common stocks		144,977		31,262		(964	)		114,679
Equity securities - Preferred stocks		35,509		1,799		(23	)		33,733
Short-term investments		226,237		—		—			226,237
Cash		72,604		—		—			72,604
Total	$	2,700,182	$	87,569	$	(11,734	)	$	2,624,347

	December 31, 2013
In thousands	Fair Value		Gross Unrealized Gains		Gross Unrealized (Losses)			Cost or Amortized 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 June 30, 2014 are shown in the following table:

	June 30, 2014
In thousands	Fair Value		Amortized Cost
Due in one year or less	$	61,556	$	61,457
Due after one year through five years		751,955		737,324
Due after five years through ten years		379,451		373,226
Due after ten years		363,144		356,762
Mortgage- and asset-backed securities		664,749		648,325
Total	$	2,220,855	$	2,177,094

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, 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.

	June 30, 2014
In thousands	Rating	Fair Value		Percent of Total
Rating description:
Extremely strong	AAA	$	396,295		18	%
Very strong	AA		1,041,052		47	%
Strong	A		584,921		26	%
Adequate	BBB		178,196		8	%
Speculative	BB & Below		16,907		1	%
Not rated	NR		3,484		0	%
Total	AA	$	2,220,855		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, 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.

	June 30, 2014						December 31, 2013
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		4	$	15,576	$	13		27	$	136,360	$	1,096
7-12 months		9		22,215		171		26		149,370		7,759
> 12 months		38		154,222		4,155		—		—		—
Subtotal		51	$	192,013	$	4,339		53	$	285,730	$	8,855
States, municipalities and political subdivisions
0-6 months		17	$	25,239	$	158		28	$	40,132	$	297
7-12 months		3		3,897		59		104		205,152		12,100
> 12 months		71		155,079		2,666		6		12,357		1,254
Subtotal		91	$	184,215	$	2,883		138	$	257,641	$	13,651
Agency mortgage-backed securities
0-6 months		2	$	1,778	$	7		39	$	39,458	$	434
7-12 months		—		—		—		64		77,860		3,768
> 12 months		61		77,105		1,746		9		22,784		1,814
Subtotal		63	$	78,883	$	1,753		112	$	140,102	$	6,016
Residential mortgage obligations
0-6 months		5	$	1,192	$	6		3	$	431	$	2
7-12 months		—		—		—		7		950		29
> 12 months		16		2,504		95		15		2,467		130
Subtotal		21	$	3,696	$	101		25	$	3,848	$	161
Asset-backed securities
0-6 months		4	$	20,791	$	24		14	$	75,887	$	479
7-12 months		4		34,907		357		1		203		1
> 12 months		—		—		—		—		—		—
Subtotal		8	$	55,698	$	381		15	$	76,090	$	480
Commercial mortgage-backed securities
0-6 months		2	$	1,504	$	1		4	$	6,712	$	31
7-12 months		—		—		—		2		15,098		322
> 12 months		4		15,631		130		4		774		21
Subtotal		6	$	17,135	$	131		10	$	22,584	$	374
Corporate bonds
0-6 months		14	$	67,019	$	197		34	$	93,591	$	717
7-12 months		5		6,192		33		18		55,021		2,726
> 12 months		12		40,248		929		—		—		—
Subtotal		31	$	113,459	$	1,159		52	$	148,612	$	3,443
Total fixed maturities		271	$	645,099	$	10,747		405	$	934,607	$	32,980
Equity securities - common stocks
0-6 months		5	$	13,762	$	929		5	$	7,387	$	422
7-12 months		2		376		35		2		3,538		128
> 12 months		—		—		—		—		—		—
Total common Stocks		7	$	14,138	$	964		7	$	10,925	$	550
Equity securities - preferred stocks
0-6 months		4	$	3,294	$	23		—	$	—	$	—
7-12 months		—		—		—		—		—		—
> 12 months		—		—		—		—		—		—
Total Preferred Stocks		4	$	3,294	$	23		—	$	—	$	—

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,
	2014				2013				2014				2013
In thousands, except # of securities	Number of Securities		Amount		Number of Securities		Amount		Number of Securities		Amount		Number of 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 fixed maturities for the three and six months ended June 30, 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 June 30,				Six Months Ended June 30,
In thousands	2014		2013		2014		2013
Beginning balance	$	4,183	$	2,362	$	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	$	4,183	$	2,362

Gross Unrealized Losses

The following table summarizes the gross unrealized losses as of June 30, 2014 by length of time where the fair value is less than 80% of amortized cost:

	June 30, 2014
In thousands	Fixed Maturities		Equity Securities		Total
Less than three months	$	—	$	—	$	—
Longer than three months and less than six months		—		465		465
Longer than six months and less than twelve months		—		—		—
Longer than twelve months		—		—		—
Total	$	—	$	465	$	465

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 June 30, 2014 is presented in the following table:

	June 30, 2014
	Gross Unrealized Losses					Fair Value
In thousands	Amount		Percent of Total			Amount		Percent of Total
Due in one year or less	$	417		4	%	$	8,486		1	%
Due after one year through five years		2,009		19	%		157,888		25	%
Due after five years through ten years		3,877		36	%		182,500		28	%
Due after ten years		2,078		19	%		140,813		22	%
Mortgage- and asset-backed securities		2,366		22	%		155,412		24	%
Total	$	10,747		100	%	$	645,099		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	2014			2013			2014			2013
Fixed maturities	$	14,188		$	13,578		$	28,142		$	26,743
Equity securities		1,971			1,257			5,204			2,288
Short-term investments		242			198			459			388
Total investment income	$	16,401		$	15,033		$	33,805		$	29,419
Investment expenses		(753	)		(787	)		(1,547	)		(1,516	)
Net investment income	$	15,648		$	14,246		$	32,258		$	27,903

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	2014		2013
Fixed maturities	$	32,887	$	(67,769	)
Equity securities		6,924		7,035
Gross unrealized gains (losses)	$	39,811	$	(60,734	)
Deferred income tax		13,758		(21,264	)
Change in net unrealized gains (losses), net	$	26,053	$	(39,470	)

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	2014			2013			2014			2013
Fixed maturities:
Gains	$	3,113		$	1,730		$	4,979		$	4,936
Losses		(56	)		(73	)		(2,106	)		(383	)
Fixed maturities, net	$	3,057		$	1,657		$	2,873		$	4,553
Equity securities:
Gains	$	1,416		$	1,815		$	3,336		$	3,733
Losses		—			(127	)		(903	)		(127	)
Equity securities, net	$	1,416		$	1,688		$	2,433		$	3,606
Net realized gains (losses)	$	4,473		$	3,345		$	5,306		$	8,159

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 June 30, 2014 and December 31, 2013:

	June 30, 2014
In thousands	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	214,454	$	207,437	$	—	$	421,891
States, municipalities and political subdivisions		—		564,782		—		564,782
Mortgage-backed and asset-backed securities: Agency mortgage-backed securities		—		256,407		—		—   256,407
Residential mortgage obligations		—		60,867		—		60,867
Asset-backed securities		—		162,529		—		162,529
Commercial mortgage-backed securities		—		184,946		—		184,946
Subtotal	$	—	$	664,749	$	—	$	664,749
Corporate bonds		—		569,433		—		569,433
Total fixed maturities	$	214,454	$	2,006,401	$	—	$	2,220,855
Equity securities - common stocks		144,977		—		—		144,977
Equity securities - preferred stocks				35,509				35,509
Total	$	359,431	$	2,041,910	$	—	$	2,401,341

	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 six months ended June 30, 2014.

	Six Months Ended June 30, 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	)	$	—