(3) Investments

All of the Company’s debt and equity securities are classified as AFS and are carried at fair value. The Company evaluates whether AFS securities are other-than-temporarily impaired (OTTI) based on criteria that include the extent to which cost exceeds market value, the duration of the market value decline, the credit rating of the issuer or security, the failure of the issuer to make scheduled principal or interest payments and the financial health and prospects of the issuer or security.

Declines in the value of AFS securities determined to be OTTI are recognized in earnings and reported as OTTI losses. Debt securities with unrealized losses are considered OTTI if the Company intends to sell the debt security or if the Company will be required to sell the debt security prior to any anticipated recovery. If the Company determines that a debt security is OTTI under these circumstances, the impairment recognized in earnings is measured as the difference between the amortized cost and the current fair value. A debt security is also determined to be OTTI if the Company does not expect to recover the amortized cost of the debt security. However, in this circumstance, if the Company does not intend to sell the debt security and will not be required to sell the debt security, the impairment recognized in earnings equals the estimated credit loss as measured by the difference between the present value of expected cash flows and the amortized cost of the debt security. Expected cash flows are discounted using the debt security’s effective interest rate. An equity security is determined to be OTTI if the Company does not expect to recover the cost of the equity security. Declines in the value of AFS securities determined to be temporary are reported, net of tax, as other comprehensive losses and included as a component of stockholders’ equity.

Interest and dividend income, amortization of premiums, accretion of discounts and realized gains and losses on AFS securities are included in investment income. Interest income is accrued as earned. Dividend income is recognized as income on the ex-dividend date of the stock. The cost of AFS securities sold is based on the first-in, first-out method.

Following is a summary of AFS securities as of June 30, 2012 and December 31, 2011:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(Amounts are in thousands)
June 30, 2012
Tax exempt bonds	$	2,860,946		37,717		975		2,897,688
Taxable bonds		1,330,983		19,120		492		1,349,611
Restricted investments		170,000		---		776		169,224
Equity securities		362,208		44,044		16,721		389,531


	$	4,724,137		100,881		18,964		4,806,054

December 31, 2011
Tax exempt bonds	$	2,488,135		36,657		550		2,524,242
Taxable bonds		1,226,136		20,015		1,514		1,244,637
Restricted investments		170,000		---		3,019		166,981
Equity securities		296,105		35,564		14,274		317,395


	$	4,180,376		92,236		19,357		4,253,255

Realized gains on sales of AFS securities totaled $7,228,000 and $13,476,000 for the three months ended June 30, 2012 and June 25, 2011, respectively, and $9,777,000 and $22,736,000 for the six months ended June 30, 2012 and June 25, 2011, respectively. Realized losses on sales of AFS securities totaled $3,064,000 and $949,000 for the three months ended June 30, 2012 and June 25, 2011, respectively, and $5,375,000 and $2,176,000 for the six months ended June 30, 2012 and June 25, 2011, respectively. There were no OTTI losses on AFS securities for the three and six months ended June 30, 2012 and June 25, 2011.

The amortized cost and fair value of AFS securities by expected maturity as of June 30, 2012 and December 31, 2011 are as follows:


	June 30, 2012				December 31, 2011
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Amounts are in thousands)
Due in one year or less	$	647,811		650,967		445,296		447,972
Due after one year through five years		2,722,156		2,757,828		2,492,484		2,524,020
Due after five years through ten years		469,594		476,333		348,427		356,808
Due after ten years		352,368		362,171		428,064		440,079


		4,191,929		4,247,299		3,714,271		3,768,879
Restricted investments		170,000		169,224		170,000		166,981
Equity securities		362,208		389,531		296,105		317,395


	$	4,724,137		4,806,054		4,180,376		4,253,255

Following is a summary of temporarily impaired AFS securities by the time period impaired as of June 30, 2012 and December 31, 2011:


	Less Than 12 Months			12 Months or Longer			Total

	Fair Value		Unrealized Losses	Fair Value		Unrealized Losses	Fair Value		Unrealized Losses
	(Amounts are in thousands)
June 30, 2012
Tax exempt bonds		$257,992	975		---	---		257,992	975
Taxable bonds		175,903	492		---	---		175,903	492
Restricted investments		169,224	776		---	---		169,224	776
Equity securities		107,847	14,087		12,395	2,634		120,242	16,721
Total temporarily impaired AFS securities		$710,966	16,330		12,395	2,634		723,361	18,964

December 31, 2011
Tax exempt bonds		$138,892	536		6,026	14		144,918	550
Taxable bonds		201,538	1,514		---	---		201,538	1,514
Restricted investments		166,981	3,019		---	---		166,981	3,019
Equity securities		86,236	13,899		1,889	375		88,125	14,274
Total temporarily impaired AFS securities		$593,647	18,968		7,915	389		601,562	19,357

There are 353 AFS securities issues contributing to the total unrealized loss of $18,964,000 as of June 30, 2012. Unrealized losses related to debt securities are primarily driven by interest rate volatility impacting the market value of certain bonds. The Company continues to receive scheduled principal and interest payments on these debt securities. Unrealized losses related to equity securities are primarily driven by stock market volatility.