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Investments (Tables)
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6 Months Ended |
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Jun. 30, 2013
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| Investments, Debt and Equity Securities [Abstract] |
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| Amortized cost and estimated fair value of available-for-sale fixed maturities and equity securities |
Available-for-sale securities at June 30, 2013 and December 31, 2012 included the following: | | | | | | | | | | | | | | | | | | June 30, 2013 | (In thousands) | Amortized
Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Estimated Fair Value | Fixed maturities | | | | | | | | U.S. Treasury obligations | $ | 206,778 |
| | $ | 8,427 |
| | $ | (1,383 | ) | | $ | 213,822 |
| U.S. Government-sponsored enterprise obligations | 53,486 |
| | 3,732 |
| | (293 | ) | | 56,925 |
| State and municipal bonds | 1,204,739 |
| | 55,546 |
| | (7,113 | ) | | 1,253,172 |
| Corporate debt | 1,502,700 |
| | 60,506 |
| | (16,314 | ) | | 1,546,892 |
| Residential mortgage-backed securities | 263,844 |
| | 10,382 |
| | (1,993 | ) | * | 272,233 |
| Agency commercial mortgage-backed securities | 43,696 |
| | 822 |
| | (69 | ) | | 44,449 |
| Other commercial mortgage-backed securities | 67,861 |
| | 3,264 |
| | (260 | ) | | 70,865 |
| Other asset-backed securities | 75,843 |
| | 625 |
| | (393 | ) | | 76,075 |
| | $ | 3,418,947 |
| | $ | 143,304 |
| | $ | (27,818 | ) | | $ | 3,534,433 |
| | | | | | | | | | December 31, 2012 | (In thousands) | Amortized
Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Estimated Fair Value | Fixed maturities | | | | | | | | U.S. Treasury obligations | $ | 191,642 |
| | $ | 14,266 |
| | $ | (51 | ) | | $ | 205,857 |
| U.S. Government-sponsored enterprise obligations | 52,110 |
| | 4,837 |
| | — |
| | 56,947 |
| State and municipal bonds | 1,134,744 |
| | 85,329 |
| | (94 | ) | | 1,219,979 |
| Corporate debt | 1,375,880 |
| | 96,187 |
| | (1,543 | ) | | 1,470,524 |
| Residential mortgage-backed securities | 272,990 |
| | 17,070 |
| | (210 | ) | * | 289,850 |
| Agency commercial mortgage-backed securities | 57,234 |
| | 2,255 |
| | (25 | ) | | 59,464 |
| Other commercial mortgage-backed securities | 69,062 |
| | 5,049 |
| | (5 | ) | | 74,106 |
| Other asset-backed securities | 70,670 |
| | 1,203 |
| | (601 | ) | | 71,272 |
| | $ | 3,224,332 |
| | $ | 226,196 |
| | $ | (2,529 | ) | | $ | 3,447,999 |
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| | * | Includes other-than-temporary impairments recognized in accumulated other comprehensive income of $0.5 million and $0.9 million at June 30, 2013 and December 31, 2012, respectively. |
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| Schedule of available for sale securities by contractual maturity |
The recorded cost basis and estimated fair value of available-for-sale fixed maturities at June 30, 2013, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. | | | | | | | | | | | | | | | | | | | | | | | | | (In thousands) | Amortized
Cost | | Due in one
year or less | | Due after
one year
through
five years | | Due after
five years
through
ten years | | Due after
ten years | | Total Fair
Value | Fixed maturities, available for sale | | | | | | | | | | | | U.S. Treasury obligations | $ | 206,778 |
| | $ | 24,239 |
| | $ | 135,973 |
| | $ | 49,745 |
| | $ | 3,865 |
| | $ | 213,822 |
| U.S. Government-sponsored enterprise obligations | 53,486 |
| | — |
| | 49,356 |
| | 7,340 |
| | 229 |
| | 56,925 |
| State and municipal bonds | 1,204,739 |
| | 52,665 |
| | 418,391 |
| | 493,559 |
| | 288,557 |
| | 1,253,172 |
| Corporate debt | 1,502,700 |
| | 104,583 |
| | 702,834 |
| | 685,649 |
| | 53,826 |
| | 1,546,892 |
| Residential mortgage-backed securities | 263,844 |
| |
| |
| |
| |
| | 272,233 |
| Agency commercial mortgage-backed securities | 43,696 |
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| |
| |
| |
| | 44,449 |
| Other commercial mortgage-backed securities | 67,861 |
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| |
| |
| |
| | 70,865 |
| Other asset-backed securities | 75,843 |
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| |
| |
| |
| | 76,075 |
| | $ | 3,418,947 |
| | | | | | | | | | $ | 3,534,433 |
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| Other Investments |
Other Investments at June 30, 2013 and December 31, 2012 was comprised as follows: | | | | | | | | | (In thousands) | June 30,
2013 | | December 31,
2012 | Investments in LPs/LLCs, at cost | $ | 28,362 |
| | $ | 25,092 |
| FHLB capital stock, at cost | 3,449 |
| | 4,278 |
| Other, principally an annuity, at amortized cost | 1,500 |
| | 1,715 |
| | $ | 33,311 |
| | $ | 31,085 |
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| Unconsolidated Subsidiaries |
ProAssurance holds investments in unconsolidated subsidiaries, accounted for under the equity method. The investments include the following: | | | | | | | | | | | | | | | | | June 30, 2013 | | Carrying Value | (In thousands) | Unfunded
Commitments | | Percentage
Ownership | | June 30,
2013 | | December 31,
2012 | Investment in LPs/LLCs: | | | | | | | | | Tax credit partnerships | $ | 53,555 |
| | See below | | $ | 147,200 |
| | $ | 87,310 |
| Secured debt fund | 28,400 |
| | < | 20% | | 11,637 |
| | — |
| Long equity fund | None |
| | < | 20% | | 5,657 |
| | — |
| Long/Short equity fund | None |
| | < | 20% | | 8,602 |
| | 17,115 |
| Non-public equity funds | 42,563 |
| | < | 20% | | 18,653 |
| | 16,624 |
| | | | | | | $ | 191,749 |
| | $ | 121,049 |
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| Investments held in an unrealized loss position |
The following tables provide summarized information with respect to investments held in an unrealized loss position at June 30, 2013 and December 31, 2012, including the length of time the investment had been held in a continuous unrealized loss position. | | | | | | | | | | | | | | | | | | | | | | | | | | June 30, 2013 | | Total | | Less than 12 months | | More than 12 months | | Fair | | Unrealized | | Fair | | Unrealized | | Fair | | Unrealized | (In thousands) | Value | | Loss | | Value | | Loss | | Value | | Loss | Fixed maturities, available for sale | | | | | | | | | | | | U.S. Treasury obligations | $ | 54,610 |
| | $ | (1,383 | ) | | $ | 54,610 |
| | $ | (1,383 | ) | | $ | — |
| | $ | — |
| U.S. Government-sponsored enterprise obligations | 5,579 |
| | (293 | ) | | 5,579 |
| | (293 | ) | | — |
| | — |
| State and municipal bonds | 210,096 |
| | (7,113 | ) | | 208,105 |
| | (7,089 | ) | | 1,991 |
| | (24 | ) | Corporate debt | 423,388 |
| | (16,314 | ) | | 416,240 |
| | (15,961 | ) | | 7,148 |
| | (353 | ) | Residential mortgage-backed securities | 75,441 |
| | (1,993 | ) | | 74,789 |
| | (1,990 | ) | | 652 |
| | (3 | ) | Agency commercial mortgage-backed securities | 5,252 |
| | (69 | ) | | 4,765 |
| | (59 | ) | | 487 |
| | (10 | ) | Other commercial mortgage-backed securities | 13,309 |
| | (260 | ) | | 13,309 |
| | (260 | ) | | — |
| | — |
| Other asset-backed securities | 26,728 |
| | (393 | ) | | 23,397 |
| | (158 | ) | | 3,331 |
| | (235 | ) | | $ | 814,403 |
| | $ | (27,818 | ) | | $ | 800,794 |
| | $ | (27,193 | ) | | $ | 13,609 |
| | $ | (625 | ) | Other investments | | | | | | | | | | | | Investments in LPs/LLCs carried at cost | $ | 4,972 |
| | $ | (325 | ) | | $ | 3,906 |
| | $ | (294 | ) | | $ | 1,066 |
| | $ | (31 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2012 | | Total | | Less than 12 months | | More than 12 months | | Fair | | Unrealized | | Fair | | Unrealized | | Fair | | Unrealized | (In thousands) | Value | | Loss | | Value | | Loss | | Value | | Loss | Fixed maturities, available for sale | | | | | | | | | | | | U.S. Treasury obligations | $ | 4,073 |
| | $ | (51 | ) | | $ | 4,073 |
| | $ | (51 | ) | | $ | — |
| | $ | — |
| State and municipal bonds | 11,234 |
| | (94 | ) | | 9,232 |
| | (65 | ) | | 2,002 |
| | (29 | ) | Corporate debt | 90,154 |
| | (1,543 | ) | | 81,878 |
| | (1,377 | ) | | 8,276 |
| | (166 | ) | Residential mortgage-backed securities | 10,721 |
| | (210 | ) | | 10,029 |
| | (205 | ) | | 692 |
| | (5 | ) | Agency commercial mortgage-backed securities | 1,643 |
| | (25 | ) | | 498 |
| | (2 | ) | | 1,145 |
| | (23 | ) | Other commercial mortgage-backed securities | 2,100 |
| | (5 | ) | | 1,103 |
| | (1 | ) | | 997 |
| | (4 | ) | Other asset-backed securities | 10,746 |
| | (601 | ) | | 7,707 |
| | (20 | ) | | 3,039 |
| | (581 | ) | | $ | 130,671 |
| | $ | (2,529 | ) | | $ | 114,520 |
| | $ | (1,721 | ) | | $ | 16,151 |
| | $ | (808 | ) | Other investments | | | | | | | | | | | | Investments in LPs/LLCs carried at cost | $ | 9,474 |
| | $ | (851 | ) | | $ | 8,697 |
| | $ | (688 | ) | | $ | 777 |
| | $ | (163 | ) |
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| Net Investment Income |
Net investment income by investment category was as follows: | | | | | | | | | | | | | | | | | | Three Months Ended June 30 | | Six Months Ended June 30 | (In thousands) | 2013 | | 2012 | | 2013 | | 2012 | Fixed maturities | $ | 32,160 |
| | $ | 34,093 |
| | $ | 63,015 |
| | $ | 67,363 |
| Equities | 2,422 |
| | 1,608 |
| | 4,605 |
| | 2,649 |
| Short-term investments and Other invested assets | 66 |
| | 77 |
| | 514 |
| | 498 |
| Business owned life insurance | 439 |
| | 461 |
| | 875 |
| | 918 |
| Investment fees and expenses | (1,820 | ) | | (1,729 | ) | | (3,616 | ) | | (3,425 | ) | Net investment income | $ | 33,267 |
| | $ | 34,510 |
| | $ | 65,393 |
| | $ | 68,003 |
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| Net realized investment gains (losses) |
The following table provides detailed information regarding net realized investment gains (losses): | | | | | | | | | | | | | | | | | | Three Months Ended June 30 | | Six Months Ended June 30 | (In thousands) | 2013 | | 2012 | | 2013 | | 2012 | Total other-than-temporary impairment losses: | | | | | | | | State and municipal bonds | $ | (71 | ) | | $ | — |
| | $ | (71 | ) | | $ | — |
| Residential mortgage-backed securities | — |
| | (218 | ) | | — |
| | (463 | ) | Corporate debt | — |
| | — |
| | — |
| | (830 | ) | Other investments | — |
| | — |
| | — |
| | (131 | ) | Portion recognized in (reclassified from) Other Comprehensive Income: | | | | | | | | Residential mortgage-backed securities | — |
| | (201 | ) | | — |
| | (201 | ) | Net impairment losses recognized in earnings | (71 | ) | | (419 | ) | | (71 | ) | | (1,625 | ) | Gross realized gains, available-for-sale securities | 3,809 |
| | 2,262 |
| | 6,923 |
| | 6,150 |
| Gross realized (losses), available-for-sale securities | (890 | ) | | (89 | ) | | (965 | ) | | (183 | ) | Net realized gains (losses), trading securities | 6,043 |
| | (50 | ) | | 8,832 |
| | 727 |
| Change in unrealized holding gains (losses), trading securities | (420 | ) | | (3,032 | ) | | 20,432 |
| | 4,905 |
| Decrease (increase) in the fair value of liabilities carried at fair value | — |
| | (220 | ) | | — |
| | (844 | ) | Net realized investment gains (losses) | $ | 8,471 |
| | $ | (1,548 | ) | | $ | 35,151 |
| | $ | 9,130 |
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| Cumulative credit losses recorded in earnings related to impaired debt securities for which a portion of the OTTI has been recorded in OCI |
The following table presents a roll forward of cumulative credit losses recorded in earnings related to impaired debt securities for which a portion of the other-than-temporary impairment was recorded in Other Comprehensive Income. | | | | | | | | | | | | | | | | | | Three Months Ended June 30 | | Six Months Ended June 30 | (In thousands) | 2013 | | 2012 | | 2013 | | 2012 | Balance beginning of period | $ | 3,301 |
| | $ | 5,937 |
| | $ | 3,301 |
| | $ | 5,870 |
| Additional credit losses recognized during the period, related to securities for which: | | | | | | | | OTTI has been previously recognized | — |
| | 201 |
| | — |
| | 268 |
| Reductions due to: | | | | | | | | Securities sold during the period (realized) | (2,888 | ) | | — |
| | (2,888 | ) | | — |
| Balance June 30 | $ | 413 |
| | $ | 6,138 |
| | $ | 413 |
| | $ | 6,138 |
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| Information regarding sales and purchases of available-for-sale securities |
Other information regarding sales and purchases of available-for-sale securities is as follows: | | | | | | | | | | | | | | | | | | Three Months Ended June 30 | | Six Months Ended June 30 | (In millions) | 2013 | | 2012 | | 2013 | | 2012 | Proceeds from sales (exclusive of maturities and paydowns) | $ | 128.7 |
| | $ | 99.8 |
| | $ | 257.1 |
| | $ | 305.9 |
| Purchases | $ | 206.6 |
| | $ | 99.5 |
| | $ | 307.4 |
| | $ | 347.1 |
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