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Investments | 3 Months Ended
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Mar. 31, 2013
Investments [Abstract] |
Investments | Note 2 - Investments Fixed Maturities and Equity Securities The following table presents the fair value and gross unrealized losses of fixed maturity securities (“fixed maturities”) and equity securities in an unrealized loss position at March 31, 2013 and December 31, 2012, respectively. The Company views the decrease in value of all of the securities with unrealized losses at March 31, 2013 — which was driven largely by spread widening, financial market illiquidity, market volatility and/or 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, and the present value of future cash flows exceeds the amortized cost bases. In addition, management expects to recover the entire cost bases 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, 2013.
|  | 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, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed maturity securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government and federally sponsored agency obligations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage-backed securities |  | $ | 11,913 |  |  | $ | 438 |  |  | $ | 48 |  |  | $ | 1 |  |  | $ | 11,961 |  |  | $ | 439 |
Other |  |  | 33,825 |  |  |  | 658 |  |  |  | - |  |  |  | - |  |  |  | 33,825 |  |  |  | 658 |
Municipal bonds |  |  | 134,086 |  |  |  | 3,555 |  |  |  | 14,908 |  |  |  | 507 |  |  |  | 148,994 |  |  |  | 4,062 |
Foreign government bonds |  |  | 1,966 |  |  |  | 17 |  |  |  | - |  |  |  | - |  |  |  | 1,966 |  |  |  | 17 |
Corporate bonds |  |  | 100,923 |  |  |  | 678 |  |  |  | 22,637 |  |  |  | 3,526 |  |  |  | 123,560 |  |  |  | 4,204 |
Other mortgage-backed securities |  |  | 118,824 |  |  |  | 1,113 |  |  |  | 29,298 |  |  |  | 1,402 |  |  |  | 148,122 |  |  |  | 2,515 |
Total fixed maturity securities |  |  | 401,537 |  |  |  | 6,459 |  |  |  | 66,891 |  |  |  | 5,436 |  |  |  | 468,428 |  |  |  | 11,895 |
Equity securities (1) |  |  | 4,564 |  |  |  | 283 |  |  |  | 1,033 |  |  |  | 424 |  |  |  | 5,597 |  |  |  | 707 |
Combined totals |  | $ | 406,101 |  |  | $ | 6,742 |  |  | $ | 67,924 |  |  | $ | 5,860 |  |  | $ | 474,025 |  |  | $ | 12,602 |
Number of positions with a gross unrealized loss |  |  | 138 |  |  |  |  |  |  |  | 41 |  |  |  |  |  |  |  | 179 |  |  |  |  |
Fair value as a percentage of total fixed maturities and equity securities fair value |  |  | 6.5 | % |  |  |  |  |  |  | 1.1 | % |  |  |  |  |  |  | 7.6 | % |  |  |  |
December 31, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed maturity securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government and federally sponsored agency obligations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage-backed securities |  | $ | 11,006 |  |  | $ | 124 |  |  | $ | 50 |  |  | $ | 1 |  |  | $ | 11,056 |  |  | $ | 125 |
Other |  |  | 9,944 |  |  |  | 135 |  |  |  | - |  |  |  | - |  |  |  | 9,944 |  |  |  | 135 |
Municipal bonds |  |  | 108,578 |  |  |  | 2,605 |  |  |  | 3,990 |  |  |  | 43 |  |  |  | 112,568 |  |  |  | 2,648 |
Foreign government bonds |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Corporate bonds |  |  | 56,481 |  |  |  | 875 |  |  |  | 26,725 |  |  |  | 4,075 |  |  |  | 83,206 |  |  |  | 4,950 |
Other mortgage-backed securities |  |  | 58,218 |  |  |  | 621 |  |  |  | 25,014 |  |  |  | 1,411 |  |  |  | 83,232 |  |  |  | 2,032 |
Total fixed maturity securities |  |  | 244,227 |  |  |  | 4,360 |  |  |  | 55,779 |  |  |  | 5,530 |  |  |  | 300,006 |  |  |  | 9,890 |
Equity securities (1) |  |  | 19,344 |  |  |  | 1,288 |  |  |  | 9 |  |  |  | 2 |  |  |  | 19,353 |  |  |  | 1,290 |
Combined totals |  | $ | 263,571 |  |  | $ | 5,648 |  |  | $ | 55,788 |  |  | $ | 5,532 |  |  | $ | 319,359 |  |  | $ | 11,180 |
Number of positions with a gross unrealized loss |  |  | 156 |  |  |  |  |  |  |  | 43 |  |  |  |  |  |  |  | 199 |  |  |  |  |
Fair value as a percentage of total fixed maturities and equity securities fair value |  |  | 4.4 | % |  |  |  |  |  |  | 0.9 | % |  |  |  |  |  |  | 5.3 | % |  |  |  |
(1) | Includes nonredeemable (perpetual) preferred stocks and common stocks.
Compared to December 31, 2012, the slight reduction in net unrealized gains at March 31, 2013 was due to slightly higher yields on U.S. Treasury securities and virtually unchanged credit spreads across most asset classes except for lower rated corporate, municipal and mortgage-backed securities where the spreads tightened in 2013, the combination of which resulted in a decrease in net unrealized gains for the Company’s holdings of corporate, government, municipal, residential and commercial mortgage-backed securities, partially offset by an increase in net unrealized gains for the Company’s holdings in common equities due to equity market performance. 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, 2013 and December 31, 2012 were as follows:
|  | Amortized Cost/Cost |  |  | Unrealized Gains |  |  | Unrealized Losses |  |  | Fair Value |  |  | OTTI in AOCI (2) |
March 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed maturity securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government and federally sponsored agency obligations (1): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage-backed securities |  | $ | 562,657 |  |  | $ | 69,206 |  |  | $ | 439 |  |  | $ | 631,424 |  |  | $ | - |
Other, including U.S. Treasury securities |  |  | 415,050 |  |  |  | 34,127 |  |  |  | 658 |  |  |  | 448,519 |  |  |  | - |
Municipal bonds |  |  | 1,422,405 |  |  |  | 185,899 |  |  |  | 4,062 |  |  |  | 1,604,242 |  |  |  | - |
Foreign government bonds |  |  | 50,445 |  |  |  | 8,915 |  |  |  | 17 |  |  |  | 59,343 |  |  |  | - |
Corporate bonds |  |  | 2,347,748 |  |  |  | 305,976 |  |  |  | 4,204 |  |  |  | 2,649,520 |  |  |  | - |
Other mortgage-backed securities |  |  | 711,554 |  |  |  | 41,586 |  |  |  | 2,515 |  |  |  | 750,625 |  |  |  | 2,880 |
Totals |  | $ | 5,509,859 |  |  | $ | 645,709 |  |  | $ | 11,895 |  |  | $ | 6,143,673 |  |  | $ | 2,880 |
Equity securities |  | $ | 53,117 |  |  | $ | 6,251 |  |  | $ | 707 |  |  | $ | 58,661 |  |  | $ | - |
December 31, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed maturity securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government and federally sponsored agency obligations (1): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage-backed securities |  | $ | 547,040 |  |  | $ | 72,644 |  |  | $ | 125 |  |  | $ | 619,559 |  |  | $ | - |
Other, including U.S. Treasury securities |  |  | 371,706 |  |  |  | 37,857 |  |  |  | 135 |  |  |  | 409,428 |  |  |  | - |
Municipal bonds |  |  | 1,402,424 |  |  |  | 186,261 |  |  |  | 2,648 |  |  |  | 1,586,037 |  |  |  | - |
Foreign government bonds |  |  | 48,476 |  |  |  | 9,393 |  |  |  | - |  |  |  | 57,869 |  |  |  | - |
Corporate bonds |  |  | 2,258,554 |  |  |  | 313,430 |  |  |  | 4,950 |  |  |  | 2,567,034 |  |  |  | - |
Other mortgage-backed securities |  |  | 683,257 |  |  |  | 41,080 |  |  |  | 2,032 |  |  |  | 722,305 |  |  |  | 3,214 |
Totals |  | $ | 5,311,457 |  |  | $ | 660,665 |  |  | $ | 9,890 |  |  | $ | 5,962,232 |  |  | $ | 3,214 |
Equity securities |  | $ | 52,396 |  |  | $ | 2,397 |  |  | $ | 1,290 |  |  | $ | 53,503 |  |  | $ | - |
(1) | Fair value includes securities issued by Federal National Mortgage Association (“FNMA”) of $402,512 and $375,111; Federal Home Loan Mortgage Corporation (“FHLMC”) of $432,559 and $418,174; and Government National Mortgage Association (“GNMA”) of $133,930 and $136,998 as of March 31, 2013 and December 31, 2012, 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/losses on impaired securities relating to changes in the fair value of such securities subsequent to the impairment measurement date.
The Company’s investment portfolio includes no free-standing derivative financial instruments (futures, forwards, swaps, option contracts or other financial instruments with similar characteristics), and there are no embedded derivative features related to the Company’s insurance products. 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, 2013 and 2012 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, |
|  | 2013 |  |  | 2012 |
Cumulative credit loss (1) |  |  |  |  |  |  |  |
Beginning of period |  | $ | 2,877 |  |  | $ | 3,957 |
New credit losses |  |  | - |  |  |  | - |
Losses related to securities sold or paid down during the period |  |  | - |  |  |  | - |
End of period |  | $ | 2,877 |  |  | $ | 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.
Maturities/Sales of Fixed Maturities and Equity Securities The following table presents the distribution of the Company’s fixed maturity securities 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, 2013 |
|  | March 31, 2013 |  |  | December 31, 2012 |  |  | Fair Value |  |  | Amortized Cost |
Estimated expected maturity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Due in 1 year or less |  |  | 4.2 | % |  |  | 4.3 | % |  | $ | 259,774 |  |  | $ | 232,974 |
Due after 1 year through 5 years |  |  | 20.3 |  |  |  | 20.8 |  |  |  | 1,246,044 |  |  |  | 1,117,496 |
Due after 5 years through 10 years |  |  | 38.4 |  |  |  | 38.4 |  |  |  | 2,362,252 |  |  |  | 2,118,549 |
Due after 10 years through 20 years |  |  | 19.4 |  |  |  | 18.7 |  |  |  | 1,189,199 |  |  |  | 1,066,515 |
Due after 20 years |  |  | 17.7 |  |  |  | 17.8 |  |  |  | 1,086,404 |  |  |  | 974,325 |
Total |  |  | 100.0 | % |  |  | 100.0 | % |  | $ | 6,143,673 |  |  | $ | 5,509,859 |
Average option-adjusted duration, in years |  |  | 6.2 |  |  |  | 6.3 |  |  |  |  |  |  |  |  |
Proceeds received from sales of fixed maturities and equity securities, each 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, |
|  | 2013 |  |  | 2012 |
Fixed maturity securities |  |  |  |  |  |  |  |
Proceeds received |  | $ | 99,182 |  |  | $ | 158,292 |
Gross gains realized |  |  | 4,512 |  |  |  | 8,892 |
Gross losses realized |  |  | (10 | ) |  |  | (9,145 | )
Equity securities |  |  |  |  |  |  |  |
Proceeds received |  | $ | 4,834 |  |  | $ | 9 |
Gross gains realized |  |  | 568 |  |  |  | 9 |
Gross losses realized |  |  | (215 | ) |  |  | - |
Unrealized Gains and Losses on Fixed Maturities and Equity Securities 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, |
|  | 2013 |  |  | 2012 |
Net unrealized investment gains (losses) on fixed maturity securities, net of tax |  |  |  |
Beginning of period |  | $ | 423,004 |  |  | $ | 284,338 |
Change in unrealized investment gains and losses |  |  | (6,909 | ) |  |  | 13,998 |
Reclassification of net realized investment (gains) losses to net income |  |  | (4,116 | ) |  |  | (240 | )
End of period |  | $ | 411,979 |  |  | $ | 298,096 |
Net unrealized investment gains (losses) on equity securities, net of tax |  |  |  |
Beginning of period |  | $ | 720 |  |  | $ | 2,408 |
Change in unrealized investment gains and losses |  |  | 3,228 |  |  |  | (155 | )
Reclassification of net realized investment (gains) losses to net income |  |  | (344 | ) |  |  | (15 | )
End of period |  | $ | 3,604 |  |  | $ | 2,238 |
Repurchase Agreements Beginning in 2013, the Company enters into repurchase agreements to earn incremental spread income. A repurchase agreement is a transaction in which one party (transferor) agrees to sell securities to another party (transferee) in return for cash (or securities), with a simultaneous agreement to repurchase the same securities at a specified price at a later date. These transactions are generally short-term in nature, and therefore, the carrying amounts of these instruments approximate fair value. As part of repurchase agreements, the Company transfers U.S. government and government agency securities and receives cash. For the repurchase agreements, the Company receives cash in an amount equal to at least 95% of the fair value of the securities transferred, and the agreements with third parties contain contractual provisions to allow for additional collateral to be obtained when necessary. The cash received from the repurchase program is typically invested in high quality floating rate fixed maturity securities. The Company accounts for the repurchase agreements as collateralized borrowings. The securities transferred under repurchase agreements are included in fixed maturity, available-for-sale securities with the obligation to repurchase those securities recorded in Other Liabilities on the Company’s Consolidated Balance Sheets. The fair value of the securities transferred was $88,823 as of March 31, 2013. The obligation for securities sold under agreement to repurchase was $87,846, including accrued interest, as of March 31, 2013.

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- Definition The entire disclosure for investments in certain debt and equity securities. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27405-111563 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6379141&loc=d3e15032-111544 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 115 -Paragraph 3, 19, 20, 21, 22, 137 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6957658&loc=d3e62557-112803 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -Glossary Equity Security -URI http://asc.fasb.org/extlink&oid=6511694 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -Glossary Debt Security -URI http://asc.fasb.org/extlink&oid=6509901 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27232-111563 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27357-111563 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27161-111563 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27290-111563 + Details
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