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						March 31, 2012
	March 31, 2012			December 31, 2011			Fair Value			Amortized Cost

Due in 1 year or less		5.0	%		4.8	%		$	276,006		$	252,992
Due after 1 year through 5 years		18.6			19.4				1,021,565			936,384
Due after 5 years through 10 years		34.5			33.2				1,897,192			1,739,001
Due after 10 years through 20 years		21.9			22.1				1,204,432			1,104,004
Due after 20 years		20.0			20.5				1,100,889			1,009,094

Total		100.0	%		100.0	%		$	5,500,084		$	5,041,475

The average option-adjusted duration for the Company's fixed maturity securities was 6.3 years at March 31, 2012 and 6.4 years at December 31, 2011.

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 March 31,
	2012				2011

Proceeds received		$	158,301			$	131,266
Gross gains realized			8,901				4,543
Gross losses realized			(9,145	)			(83	)

Unrealized Gains and Losses on Fixed Maturities and Equity Securities

Compared to December 31, 2011, the 2012 improvement in unrealized investment gains and losses was due to narrowing credit spreads across virtually all asset classes somewhat offset by higher yields on U.S. Treasury securities. The narrowing credit spreads resulted in an increase in unrealized gains for the Company's holdings of corporate securities and municipal securities, while the higher U.S. Treasury yields reduced the Company's unrealized gains in government securities and mortgage-backed 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 March 31, 2012 and December 31, 2011 were as follows:


	Amortized Cost/Cost			Unrealized Gains			Unrealized Losses			Fair Value			OTTI in AOCI (2)
March 31, 2012
Fixed maturity securities
U.S. government and federally sponsored agency obligations (1)
Mortgage-backed securities		$	521,347		$	64,328		$	12		$	585,663		$	-
Other			505,356			27,391			802			531,945			-
Municipal bonds			1,319,731			135,629			3,668			1,451,692			-
Foreign government bonds			44,516			5,822			-			50,338			-
Corporate bonds			2,085,642			216,459			9,144			2,292,957			-
Other mortgage-backed securities			564,883			27,158			4,552			587,489			2,338

Totals		$	5,041,475		$	476,787		$	18,178		$	5,500,084		$	2,338


Equity securities		$	24,346		$	3,942		$	499		$	27,789		$	-


December 31, 2011
Fixed maturity securities
U.S. government and federally sponsored agency obligations (1)
Mortgage-backed securities		$	532,554		$	71,402		$	144		$	603,812		$	-
Other			560,036			43,705			-			603,741			-
Municipal bonds			1,291,281			122,857			1,020			1,413,118			-
Foreign government bonds			44,529			5,095			-			49,624			-
Corporate bonds			1,967,229			205,413			16,098			2,156,544			-
Other mortgage-backed securities			588,760			22,024			15,791			594,993			2,136

Totals		$	4,984,389		$	470,496		$	33,053		$	5,421,832		$	2,136


Equity securities		$	23,070		$	4,030		$	326		$	26,774		$	-

(1)

Fair value includes securities issued by Federal National Mortgage Association ("FNMA") of $488,752 and $547,521; Federal Home Loan Mortgage Corporation ("FHLMC") of $369,474 and $374,361; and Government National Mortgage Association ("GNMA") of $120,494 and $124,515 as of March 31, 2012 and December 31, 2011, 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 on deferred policy acquisition costs:


	Three Months Ended March 31,
	2012				2011
Net unrealized investment gains (losses) on fixed maturity securities, net of tax
Beginning of period		$	284,338			$	118,498
Change in unrealized investment gains and losses			13,998				(241	)
Reclassification of net realized investment (gains) losses to net income			(240	)			(3,742	)

End of period		$	298,096			$	114,515


Net unrealized investment gains (losses) on equity securities, net of tax
Beginning of period		$	2,408			$	2,139
Change in unrealized investment gains and losses			(155	)			358
Reclassification of net realized investment (gains) losses to net income			(15	)			-

End of period		$	2,238			$	2,497

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 March 31, 2012 and 2011 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:


	Three Months Ended March 31,
	2012			2011
Cumulative credit loss (1)
Beginning of period		$	3,957		$	4,518
New credit losses			-			-
Losses related to securities sold or paid down during the period			-			(561	)

End of period		$	3,957		$	3,957

(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 definition, reporting and disclosure of "credit loss" was effective as of April 1, 2009.

Fixed Maturities and Equity Securities

At March 31, 2012, the combined gross unrealized loss in the fixed maturities and equity securities portfolios was $18,677 (168 positions, the fair value of which represented 8.2% of total fixed maturities and equity securities fair value). Of the total gross unrealized loss at March 31, 2012, $9,144 related to corporate securities. The following table presents the fair value and gross unrealized losses of fixed maturity securities and equity securities in an unrealized loss position at March 31, 2012 and December 31, 2011, respectively. The Company views the decrease in value of all of the securities with unrealized losses at March 31, 2012 -- which was driven largely by spread widening, financial market illiquidity 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 March 31, 2012.


	12 Months or Less						More than 12 Months						Total
	Fair Value			Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Gross Unrealized Losses
March 31, 2012
Fixed maturity securities
U.S. government and federally sponsored agency obligations
Mortgage-backed securities		$	135		$	1		$	1,430		$	11		$	1,565		$	12
Other			66,842			802			-			-			66,842			802
Municipal bonds			79,803			3,015			3,384			653			83,187			3,668
Foreign government bonds			-			-			-			-			-			-
Corporate bonds			164,181			3,795			29,454			5,349			193,635			9,144
Other mortgage-backed securities			72,477			1,919			27,534			2,633			100,011			4,552

Totals		$	383,438		$	9,532		$	61,802		$	8,646		$	445,240		$	18,178


Equity securities (1)		$	1,097		$	349		$	5,042		$	150		$	6,139		$	499


December 31, 2011
Fixed maturity securities
U.S. government and federally sponsored agency obligations
Mortgage-backed securities		$	3,519		$	133		$	1,511		$	11		$	5,030		$	144
Other			-			-			-			-			-			-
Municipal bonds			24,047			270			19,309			750			43,356			1,020
Foreign government bonds			-			-			-			-			-			-
Corporate bonds			273,209			9,752			26,977			6,346			300,186			16,098
Other mortgage-backed securities			115,986			3,222			36,944			12,569			152,930			15,791

Totals		$	416,761		$	13,377		$	84,741		$	19,676		$	501,502		$	33,053


Equity securities (1)		$	-		$	-		$	4,865		$	326		$	4,865		$	326

(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).