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Investments
9 Months Ended
Sep. 30, 2011
Investments [Abstract] 
Investments

Note 2 - Investments

Maturities/Sales of Fixed Maturity Securities

The following table presents the distribution of the Company's fixed maturity securities ("fixed maturities") portfolio by estimated expected maturity. Estimated expected maturities differ from contractual maturities, reflecting assumptions regarding borrowers' utilization of the right to call or prepay obligations with or without call or prepayment penalties. For structured securities, including mortgage-backed securities and other asset-backed securities, estimated expected maturities consider broker dealer survey prepayment assumptions and are verified for consistency with the interest rate and economic environments.

                                         
     Percent of Total Fair Value   September 30, 2011
     September 30,
2011		   December 31,
2010		   Fair
Value		    Amortized
Cost
         

Due in 1 year or less

        3.8 %       3.3 %     $ 200,883        $ 184,796  

Due after 1 year through 5 years

        19.1         20.5         1,011,904          930,869  

Due after 5 years through 10 years

        32.7         29.5         1,737,247          1,598,125  

Due after 10 years through 20 years

        22.4         22.7         1,187,932          1,092,800  

Due after 20 years

        22.0         24.0         1,169,068          1,075,446  
      

 

 

      

 

 

      

 

 

       

 

 

  

Total

        100.0 %       100.0 %     $ 5,307,034        $ 4,882,036  
      

 

 

      

 

 

      

 

 

       

 

 

  

The average option-adjusted duration for the Company's fixed maturity securities was 6.5 years at September 30, 2011 and 6.9 years at December 31, 2010.

Proceeds received from sales of fixed maturities, determined using the specific identification method, and gross gains and gross losses realized as a result of those sales for each period were:

                                 
     Three Months Ended
September 30,		     Nine Months Ended
September 30,		  
     2011     2010     2011     2010  
         

Proceeds received

    $ 246,127     $ 171,300     $ 457,411     $ 533,894  

Gross gains realized

      19,272       14,544       28,954       31,324  

Gross losses realized

      (9 )      (416 )      (92 )      (5,491 ) 

 

Unrealized Gains and Losses on Fixed Maturities and Equity Securities

The amortized cost or cost, unrealized investment gains and losses, fair values and other-than-temporary impairment ("OTTI") included in accumulated other comprehensive income (loss) ("AOCI") of all fixed maturities and equity securities in the portfolio as of September 30, 2011 and December 31, 2010 were as follows:

 

                                         
     Amortized
Cost/Cost		      Unrealized
Gains		      Unrealized
Losses		      Fair
Value		      OTTI in
AOCI (2)		  

September 30, 2011

                                             

Fixed maturity securities

                                             

U.S. government and federally sponsored agency obligations (1)

                                             

Mortgage-backed securities

    $ 445,263       $ 55,346       $ 10       $ 500,599       $ -   

Other

      558,144         44,003         15         602,132         -   

Municipal bonds

      1,155,900         106,002         1,062         1,260,840         -   

Foreign government bonds

      44,542         4,122         -         48,664         -   

Corporate bonds

      1,924,036         195,866         23,703         2,096,199         -   

Other mortgage-backed securities

      754,151         59,526         15,077         798,600         2,094  
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Totals

    $ 4,882,036       $ 464,865       $ 39,867       $ 5,307,034       $ 2,094  
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
           

Equity securities

    $ 19,906       $ 3,747       $ 592       $ 23,061       $ -   
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
           

December 31, 2010

                                             

Fixed maturity securities

                                             

U.S. government and federally sponsored agency obligations (1)

                                             

Mortgage-backed securities

    $ 442,969       $ 26,255       $ 1,180       $ 468,044       $ -   

Other

      512,692         6,227         21,465         497,454         -   

Municipal bonds

      1,080,324         27,782         19,399         1,088,707         -   

Foreign government bonds

      42,982         2,554         -         45,536         -   

Corporate bonds

      1,790,159         152,866         10,437         1,932,588         -   

Other mortgage-backed securities

      664,107         34,746         15,645         683,208         1,401  
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Totals

    $ 4,533,233       $ 250,430       $ 68,126       $ 4,715,537       $ 1,401  
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
           

Equity securities

    $ 20,765       $ 3,747       $ 456       $ 24,056       $ -   
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

(1)

Fair value includes securities issued by Federal National Mortgage Association ("FNMA") of $548,472 and $431,635; Federal Home Loan Mortgage Corporation ("FHLMC") of $357,466 and $310,751; and Government National Mortgage Association ("GNMA") of $40,108 and $45,454 as of September 30, 2011 and December 31, 2010, respectively.

(2)

Represents the amount of other-than-temporary impairment losses in AOCI which, beginning April 1, 2009, was not included in earnings under current accounting guidance. Amounts also include unrealized gains and losses on impaired securities relating to changes in the fair value of such securities subsequent to the impairment measurement date.

 

Net unrealized gains and losses are computed as the difference between fair value and amortized cost for fixed maturities or cost for equity securities. The following table reconciles the net unrealized investment gains and losses, net of tax, included in accumulated other comprehensive income (loss), before the impact of deferred policy acquisition costs:

                                       
     Three Months Ended
September 30,		   Nine Months Ended
September 30,
     2011   2010   2011   2010

Net unrealized investment gains (losses) on fixed maturity securities, net of tax

                     

Beginning of period

      $ 163,967       $ 144,514       $ 118,498       $ 24,599  

Change in unrealized investment gains and losses

        125,937         94,655         178,913         221,980  

Reclassification of net realized investment (gains) losses to net income

        (13,655 )       (7,542 )       (21,162 )       (14,952 )
      

 

 

      

 

 

      

 

 

      

 

 

  

End of period

      $ 276,249       $ 231,627       $ 276,249       $ 231,627  
      

 

 

      

 

 

      

 

 

      

 

 

  

Net unrealized investment gains (losses) on equity securities, net of tax

                                         

Beginning of period

      $ 2,885       $ 276       $ 2,139       $ (1,189 )

Change in unrealized investment gains and losses

        (761 )       2,421         (12 )       3,946  

Reclassification of net realized investment (gains) losses to net income

        (73 )       (11 )       (76 )       (71 )
      

 

 

      

 

 

      

 

 

      

 

 

  

End of period

      $ 2,051       $ 2,686       $ 2,051       $ 2,686  
      

 

 

      

 

 

      

 

 

      

 

 

  

Credit Losses

The following table summarizes the cumulative amounts related to the Company's credit loss component of the other-than-temporary impairment losses on fixed maturity securities held as of September 30, 2011 and 2010 that the Company did not intend to sell as of those dates, and it was not more likely than not that the Company would be required to sell the securities before the anticipated recovery of the amortized cost bases, for which the non-credit portions of the other-than-temporary impairment losses were recognized in other comprehensive income:

                     
     Nine Months Ended
September 30,
     2011   2010

Cumulative credit loss (1)

                     

Beginning of period

      $ 4,518       $ 2,875  

New credit losses

        -         647  

Losses related to securities sold or paid down during the period

        (561 )       -  
      

 

 

      

 

 

  

End of period

      $ 3,957       $ 3,522  
      

 

 

      

 

 

  

(1)

The cumulative credit loss amounts exclude other-than-temporary impairment losses on securities held as of the periods indicated that the Company intended to sell or it was more likely than not that the Company would be required to sell the security before the recovery of the amortized cost basis. The current definition, reporting and disclosure of "credit loss" was effective as of April 1, 2009.

Fixed Maturities and Equity Securities

At September 30, 2011, the gross unrealized loss in the fixed maturity and equity securities portfolio was $40,459 (300 positions, the fair value of which represented 11.2% of total fixed maturity and equity securities fair value). The following table presents the fair value and gross unrealized losses of fixed maturity securities and equity securities in an unrealized loss position at September 30, 2011 and December 31, 2010. The Company views the decrease in value of all of the securities with unrealized losses at September 30, 2011 -- which was driven largely by spread widening and changes in interest rates from the date of acquisition -- as temporary. For fixed maturity securities, management does not have the intent to sell the securities and it is not more likely than not the Company will be required to sell the securities before the anticipated recovery of the amortized cost bases. In addition, management expects to recover the entire cost basis of the fixed maturity securities. For equity securities, the Company has the ability and intent to hold the securities for the recovery of cost and recovery of cost is expected within a reasonable period of time. Therefore, no impairment of these securities was recorded at September 30, 2011.

                                                             
     12 Months or Less    More than 12 Months    Total
     Fair Value    Gross
Unrealized
Losses		    Fair Value    Gross
Unrealized
Losses		    Fair Value    Gross
Unrealized
Losses

September 30, 2011

                                                                  

Fixed maturity securities

                                                                  

U.S. government and federally sponsored agency obligations

                                                                  

Mortgage-backed securities

      $ 60        $ -        $ 1,618        $ 10        $ 1,678        $ 10  

Other

        2,852          15          -          -          2,852          15  

Municipal bonds

        38,119          349          35,967          713          74,086          1,062  

Foreign government bonds

        -          -          -          -          -          -  

Corporate bonds

        374,350          17,983          23,719          5,720          398,069          23,703  

Other mortgage-backed
securities

        76,118          2,261          38,545          12,816          114,663          15,077  
      

 

 

       

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  

Totals

      $ 491,499        $ 20,608        $ 99,849        $ 19,259        $ 591,348        $ 39,867  
      

 

 

       

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
             

Equity securities (1)

      $ -        $ -        $ 5,410        $ 592        $ 5,410        $ 592  
      

 

 

       

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
             

December 31, 2010

                                                                  

Fixed maturity securities

                                                                  

U.S. government and federally sponsored agency obligations

                                                                  

Mortgage-backed securities

      $ 27,111        $ 1,179        $ 1,907        $ 1        $ 29,018        $ 1,180  

Other

        312,750          21,465          -          -          312,750          21,465  

Municipal bonds

        416,216          14,520          34,825          4,879          451,041          19,399  

Foreign government bonds

        -          -          -          -          -          -  

Corporate bonds

        179,339          4,587          45,789          5,850          225,128          10,437  

Other mortgage-backed
securities

        117,602          2,932          68,921          12,713          186,523          15,645  
      

 

 

       

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  

Totals

      $ 1,053,018        $ 44,683        $ 151,442        $ 23,443        $ 1,204,460        $ 68,126  
      

 

 

       

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
             

Equity securities (1)

      $ 938        $ 49        $ 5,822        $ 407        $ 6,760        $ 456  
      

 

 

       

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  

(1)

Includes primarily nonredeemable (perpetual) preferred stocks and also common stocks.

The Company's investment portfolio includes no free-standing derivative financial instruments (futures, forwards, swaps, option contracts or other financial instruments with similar characteristics).