6.	Investments

The amortized cost, gross unrealized gains and losses and fair value of the investment portfolio at December 31, 2013 and 2012 are shown below.

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2013	Cost		Gains		Losses (1)			Value
	(In thousands)
U.S. Treasury securities and obligations of U.S.government corporations and agencies	$	663,642	$	1,469	$	(25,521	)	$	639,590
Obligations of U.S. states and political subdivisions		932,922		5,865		(17,420	)		921,367
Corporate debt securities		2,190,095		6,313		(24,993	)		2,171,415
Asset-backed securities		399,839		1,100		(453	)		400,486
Residential mortgage-backed securities		383,368		146		(24,977	)		358,537
Commercial mortgage-backed securities		277,920		131		(6,668	)		271,383
Collateralized loan obligations		61,337		-		(1,042	)		60,295
Debt securities issued by foreign sovereign governments		39,420		1,722		(290	)		40,852
Total debt securities		4,948,543		16,746		(101,364	)		4,863,925
Equity securities		2,908		9		(23	)		2,894

Total investment portfolio	$	4,951,451	$	16,755	$	(101,387	)	$	4,866,819

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2012	Cost		Gains		Losses (1)			Value
	(In thousands)
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	863,282	$	3,040	$	(71	)	$	866,251
Obligations of U.S. states and political subdivisions		795,935		16,965		(506	)		812,394
Corporate debt securities		1,469,844		13,813		(2,716	)		1,480,941
Asset-backed securities		322,802		1,657		(23	)		324,436
Residential mortgage-backed securities		451,352		871		(1,314	)		450,909
Commercial mortgage-backed securities		150,232		524		(414	)		150,342
Debt securities issued by foreign sovereign governments		132,490		9,784		(208	)		142,066
Total debt securities		4,185,937		46,654		(5,252	)		4,227,339
Equity securities		2,797		139		-			2,936

Total investment portfolio	$	4,188,734	$	46,793	$	(5,252	)	$	4,230,275

(1)

There were no other-than-temporary impairment losses recorded in other comprehensive income at December 31, 2013 and 2012.

Our foreign investments primarily consist of the investment portfolio supporting our Australian domiciled subsidiary. In December 2013, our Australian subsidiary liquidated a portion of its investment portfolio and repatriated, with regulatory approval, $89.5 million to its parent MGIC. The remaining portfolio is comprised of Australian government and semi government securities, representing 84% of the market value of our foreign investments with the remaining 11% invested in corporate securities and 5% in cash equivalents. Seventy-eight percent of the Australian portfolio is rated AAA, by one or more of Moody’s, Standard & Poor’s and Fitch Ratings, and the remaining 22% is rated AA. At December 31, 2013 the equity value in our Australian operations was approximately $46 million.

The amortized cost and fair values of debt securities at December 31, 2013, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Because most asset-backed and mortgage-backed securities and collateralized loan obligations provide for periodic payments throughout their lives, they are listed below in separate categories.

	Amortized		Fair
December 31, 2013	Cost		Value
	(In thousands)

Due in one year or less	$	739,401	$	740,155
Due after one year through five years		1,800,785		1,800,866
Due after five years through ten years		809,680		781,170
Due after ten years		476,213		451,033
		3,826,079		3,773,224

Asset-backed securities		399,839		400,486
Residential mortgage-backed securities		383,368		358,537
Commercial mortgage-backed securities		277,920		271,383
Collateralized loan obligations		61,337		60,295

Total at December 31, 2013	$	4,948,543	$	4,863,925

At December 31, 2013 and 2012, the investment portfolio had gross unrealized losses of $101.4 million and $5.3 million, respectively. For those securities in an unrealized loss position, the length of time the securities were in such a position, as measured by their month-end fair values, is as follows:

	Less Than 12 Months				12 Months or Greater				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
December 31, 2013	Value		Losses		Value		Losses		Value		Losses
	(In thousands)
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	465,975	$	24,980	$	4,103	$	541	$	470,078	$	25,521
Obligations of U.S. states and political subdivisions		503,967		17,370		4,226		50		508,193		17,420
Corporate debt securities		1,238,211		20,371		81,593		4,622		1,319,804		24,993
Asset-backed securities		126,991		387		7,114		66		134,105		453
Residential mortgage-backed securities		91,534		3,886		265,827		21,091		357,361		24,977
Commercial mortgage-backed securities		192,440		6,239		43,095		429		235,535		6,668
Collateralized loan obligations		60,295		1,042		-		-		60,295		1,042
Debt securities issued by foreign sovereign governments		7,203		290		-		-		7,203		290
Equity securities		1,012		18		75		5		1,087		23
Total investment portfolio	$	2,687,628	$	74,583	$	406,033	$	26,804	$	3,093,661	$	101,387

	Less Than 12 Months				12 Months or Greater				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
December 31, 2012	Value		Losses		Value		Losses		Value		Losses
	(In thousands)
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	24,094	$	71	$	-	$	-	$	24,094	$	71
Obligations of U.S. states and political subdivisions		156,111		505		1,006		1		157,117		506
Corporate debt securities		280,765		2,714		3,353		2		284,118		2,716
Asset-backed securities		29,675		23		-		-		29,675		23
Residential mortgage-backed securities		315,000		982		19,939		332		334,939		1,314
Commercial mortgage-backed securities		72,689		414		-		-		72,689		414
Debt securities issued by foreign sovereign governments		14,695		208		-		-		14,695		208
Total investment portfolio	$	893,029	$	4,917	$	24,298	$	335	$	917,327	$	5,252

The unrealized losses in all categories of our investments at December 31, 2013 were primarily caused by the difference in interest rates at December 31, 2013 compared to interest rates at the time of purchase. At December 31, 2013, the weighted average fair value as a percent of amortized cost of the securities in an unrealized loss position was 97% and 50% of the securities in an unrealized loss position were backed by the U.S. Government. At December 31, 2012, the securities in an unrealized loss position were primarily corporate debt securities.

During 2013 we recognized other-than-temporary impairment (“OTTI”) losses in earnings of $0.3 million. During 2012 we recognized OTTI losses in earnings of $2.3 million, related to impairments on certain auction rate securities, some of which were previously impaired in 2011. During 2011 we recognized OTTI losses in earnings of $0.7 million.

For the years ended December 31, 2013 and 2012, there were no credit losses recognized in earnings for which a portion of an OTTI loss was recognized in accumulated other comprehensive income (loss).

Net investment income is comprised of the following:

	2013			2012			2011
	(In thousands)

Fixed maturities	$	82,168		$	122,886		$	202,301
Equity securities		229			200			330
Cash equivalents		353			333			496
Other		675			782			926

Investment income		83,425			124,201			204,053
Investment expenses		(2,686	)		(2,561	)		(2,783	)

Net investment income	$	80,739		$	121,640		$	201,270

The net realized investment gains (losses), including impairment losses, and change in net unrealized appreciation (depreciation) of investments are as follows:

	2013			2012			2011
	(In thousands)
Net realized investment gains (losses) on investments:
Fixed maturities	$	3,274		$	195,652		$	142,284
Equity securities		1,068			487			330
Other		1,389			(730	)		101

Total net realized investment gains	$	5,731		$	195,409		$	142,715

Change in net unrealized appreciation (depreciation):
Fixed maturities	$	(126,020	)	$	(78,604	)	$	31,576
Equity securities		(153	)		58			86
Other		-			-			-
Total change in net unrealized appreciation (depreciation)	$	(126,173	)	$	(78,546	)	$	31,662

The gross realized gains, gross realized losses and impairment losses are as follows:

	2013			2012			2011
	(In thousands)


Gross realized gains	$	11,043		$	213,827		$	158,659
Gross realized losses		(4,984	)		(16,108	)		(15,229	)
Impairment losses		(328	)		(2,310	)		(715	)

Net realized gains on securities	$	5,731		$	195,409		$	142,715

We had $20.3 million and $21.4 million of investments on deposit with various states at December 31, 2013 and 2012, respectively, due to regulatory requirements of those state insurance departments.