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Investments | 6 Months Ended
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Jun. 30, 2013
Investments Debt And Equity Securities [Abstract] |
Investments | Note 4. Investments The gross unrealized gains and losses on, and the cost and fair value of, those investments classified as held-to-maturity at June 30, 2013 are summarized as follows:
|  | Cost or Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
|  | (in thousands) |
States and political subdivisions |  | $ | 395,641 |  |  | $ | 21,298 |  |  | $ | (1,262 | ) |  | $ | 415,677 |
Corporate bonds |  |  | 77,235 |  |  |  | 1,045 |  |  |  | (74 | ) |  |  | 78,206 |
Commercial mortgage-backed securities |  |  | 51,502 |  |  |  | 4,230 |  |  |  | — |  |  |  | 55,732 |
U.S. agency-based mortgage-backed securities |  |  | 26,732 |  |  |  | 2,179 |  |  |  | — |  |  |  | 28,911 |
U.S. Treasury securities and obligations of U.S. government agencies |  |  | 11,020 |  |  |  | 1,205 |  |  |  | — |  |  |  | 12,225 |
Asset-backed securities |  |  | 3,744 |  |  |  | 216 |  |  |  | (180 | ) |  |  | 3,780 |
Totals |  | $ | 565,874 |  |  | $ | 30,173 |  |  | $ | (1,516 | ) |  | $ | 594,531 |
The gross unrealized gains and losses on, and the cost and fair value of, those investments classified as available-for-sale at June 30, 2013 are summarized as follows:
|  | Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
|  | (in thousands) |
Fixed maturity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions |  | $ | 132,603 |  |  | $ | 2,229 |  |  | $ | (2,567 | ) |  | $ | 132,265 |
Corporate bonds |  |  | 58,566 |  |  |  | 377 |  |  |  | (273 | ) |  |  | 58,670 |
U.S. agency-based mortgage-backed securities |  |  | 10,418 |  |  |  | 2 |  |  |  | (1,981 | ) |  |  | 8,439 |
Total fixed maturity |  |  | 201,587 |  |  |  | 2,608 |  |  |  | (4,821 | ) |  |  | 199,374 |
Equity securities |  |  | 13,881 |  |  |  | 345 |  |  |  | (728 | ) |  |  | 13,498 |
Totals |  | $ | 215,468 |  |  | $ | 2,953 |  |  | $ | (5,549 | ) |  | $ | 212,872 |
The gross unrealized gains and losses on, and the cost and fair value of, those investments classified as held-to-maturity at December 31, 2012 are summarized as follows:
|  | Cost or Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
|  | (in thousands) |
States and political subdivisions |  | $ | 400,687 |  |  | $ | 31,387 |  |  | $ | (106 | ) |  | $ | 431,968 |
Corporate bonds |  |  | 82,824 |  |  |  | 1,565 |  |  |  | (12 | ) |  |  | 84,377 |
Commercial mortgage-backed securities |  |  | 51,529 |  |  |  | 6,433 |  |  |  | — |  |  |  | 57,962 |
U.S. agency-based mortgage-backed securities |  |  | 32,984 |  |  |  | 3,063 |  |  |  | (5 | ) |  |  | 36,042 |
U.S. Treasury securities and obligations of U.S. Government agencies |  |  | 11,034 |  |  |  | 1,721 |  |  |  | — |  |  |  | 12,755 |
Asset-backed securities |  |  | 4,229 |  |  |  | 192 |  |  |  | (176 | ) |  |  | 4,245 |
Totals |  | $ | 583,287 |  |  | $ | 44,361 |  |  | $ | (299 | ) |  | $ | 627,349 |
The gross unrealized gains and losses on, and the cost and fair value of, those investments classified as available-for-sale at December 31, 2012 are summarized as follows:
|  | Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
|  | (in thousands) |
Fixed maturity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions |  | $ | 93,362 |  |  | $ | 5,022 |  |  | $ | (142 | ) |  | $ | 98,242 |
Corporate bonds |  |  | 39,211 |  |  |  | 623 |  |  |  | (24 | ) |  |  | 39,810 |
U.S. agency-based mortgage-backed securities |  |  | 11,941 |  |  |  | 5 |  |  |  | (859 | ) |  |  | 11,087 |
Total fixed maturity |  |  | 144,514 |  |  |  | 5,650 |  |  |  | (1,025 | ) |  |  | 149,139 |
Equity securities |  |  | 7,000 |  |  |  | 451 |  |  |  | (685 | ) |  |  | 6,766 |
Totals |  | $ | 151,514 |  |  | $ | 6,101 |  |  | $ | (1,710 | ) |  | $ | 155,905 |
A summary of the cost or amortized cost and fair value of investments in fixed maturity securities, classified as held-to-maturity at June 30, 2013, by contractual maturity, is as follows:
Remaining Time to Maturity |  | Amortized Cost Basis |  |  | Fair Value |
|  | (in thousands) |
Less than one year |  | $ | 66,726 |  |  | $ | 67,210 |
One to five years |  |  | 143,021 |  |  |  | 150,147 |
Five to ten years |  |  | 132,814 |  |  |  | 143,055 |
More than ten years |  |  | 141,335 |  |  |  | 145,696 |
U.S. agency-based mortgage-backed securities |  |  | 26,732 |  |  |  | 28,911 |
Commercial mortgage-backed securities |  |  | 51,502 |  |  |  | 55,732 |
Asset-backed securities |  |  | 3,744 |  |  |  | 3,780 |
Total |  | $ | 565,874 |  |  | $ | 594,531 |
A summary of the cost or amortized cost and fair value of investments in fixed maturity securities, classified as available-for-sale at June 30, 2013, by contractual maturity, is as follows:
Remaining Time to Maturity |  | Cost Basis |  |  | Fair Value |
|  | (in thousands) |
Less than one year |  | $ | 30,653 |  |  | $ | 30,679 |
One to five years |  |  | 21,431 |  |  |  | 21,653 |
Five to ten years |  |  | 18,252 |  |  |  | 18,370 |
More than ten years |  |  | 120,833 |  |  |  | 120,233 |
U.S. agency-based mortgage-backed securities |  |  | 10,418 |  |  |  | 8,439 |
Total |  | $ | 201,587 |  |  | $ | 199,374 |
The following table summarizes, as of June 30, 2013, gross unrealized losses on a total of 158 securities that were at a loss for either less than twelve months or twelve months or greater:
|  | As of June 30, 2013 |
|  | Less Than 12 Months |  |  | 12 Months or Greater |  |  | Total |
|  | Fair Value of Investments with Unrealized Losses |  |  | Gross Unrealized Losses |  |  | Fair Value of Investments with Unrealized Losses |  |  | Gross Unrealized Losses |  |  | Fair Value of Investments with Unrealized Losses |  |  | Gross Unrealized Losses |
|  | (in thousands) |
Held-to-Maturity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed maturity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds |  | $ | 29,035 |  |  | $ | 74 |  |  | $ | — |  |  | $ | — |  |  | $ | 29,035 |  |  | $ | 74 |
States and political subdivisions |  |  | 47,223 |  |  |  | 1,262 |  |  |  | — |  |  |  | — |  |  |  | 47,223 |  |  |  | 1,262 |
U.S. agency-based mortgage-backed securities |  |  | — |  |  |  | — |  |  |  | 9 |  |  |  | — |  |  |  | 9 |  |  |  | — |
Asset-backed securities |  |  | — |  |  |  | — |  |  |  | 2,047 |  |  |  | 180 |  |  |  | 2,047 |  |  |  | 180 |
Total held-to-maturity securities |  |  | 76,258 |  |  |  | 1,336 |  |  |  | 2,056 |  |  |  | 180 |  |  |  | 78,314 |  |  |  | 1,516 |
Available-for-Sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed maturity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds |  | $ | 26,823 |  |  | $ | 273 |  |  | $ | — |  |  | $ | — |  |  | $ | 26,823 |  |  | $ | 273 |
States and political subdivisions |  |  | 69,199 |  |  |  | 2,567 |  |  |  | — |  |  |  | — |  |  |  | 69,199 |  |  |  | 2,567 |
U.S. agency-based mortgage-backed securities |  |  | 8,309 |  |  |  | 1,981 |  |  |  | — |  |  |  | — |  |  |  | 8,309 |  |  |  | 1,981 |
Equity securities |  |  | 3,917 |  |  |  | 728 |  |  |  | — |  |  |  | — |  |  |  | 3,917 |  |  |  | 728 |
Total available-for-sale securities |  |  | 108,248 |  |  |  | 5,549 |  |  |  | — |  |  |  | — |  |  |  | 108,248 |  |  |  | 5,549 |
Total |  | $ | 184,506 |  |  | $ | 6,885 |  |  | $ | 2,056 |  |  | $ | 180 |  |  | $ | 186,562 |  |  | $ | 7,065 |
The following table summarizes, as of December 31, 2012, gross unrealized losses on a total of 49 securities that were at a loss for either less than twelve months or twelve months or greater:
|  | As of December 31, 2012 |
|  | Less Than 12 Months |  |  | 12 Months or Greater |  |  | Total |
|  | Fair Value of Investments with Unrealized Losses |  |  | Gross Unrealized Losses |  |  | Fair Value of Investments with Unrealized Losses |  |  | Gross Unrealized Losses |  |  | Fair Value of Investments with Unrealized Losses |  |  | Gross Unrealized Losses |
|  | (in thousands) |
Held-to-Maturity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed maturity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds |  | $ | 10,734 |  |  | $ | 12 |  |  | $ | — |  |  | $ | — |  |  | $ | 10,734 |  |  | $ | 12 |
State and political subdivisions |  |  | 11,913 |  |  |  | 106 |  |  |  | — |  |  |  | — |  |  |  | 11,913 |  |  |  | 106 |
U.S. agency-based mortgage-backed securities |  |  | 117 |  |  |  | — |  |  |  | 68 |  |  |  | 5 |  |  |  | 185 |  |  |  | 5 |
Asset-backed securities |  |  | — |  |  |  | — |  |  |  | 2,277 |  |  |  | 176 |  |  |  | 2,277 |  |  |  | 176 |
Total held-to-maturity securities |  |  | 22,764 |  |  |  | 118 |  |  |  | 2,345 |  |  |  | 181 |  |  |  | 25,109 |  |  |  | 299 |
Available-for-Sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed maturity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds |  | $ | 6,411 |  |  | $ | 24 |  |  | $ | — |  |  | $ | — |  |  | $ | 6,411 |  |  | $ | 24 |
States and political subdivisions |  |  | 6,281 |  |  |  | 142 |  |  |  | — |  |  |  | — |  |  |  | 6,281 |  |  |  | 142 |
U.S. agency-based mortgage-backed securities |  |  | 10,919 |  |  |  | 859 |  |  |  | — |  |  |  | — |  |  |  | 10,919 |  |  |  | 859 |
Equity securities |  |  | 4,186 |  |  |  | 685 |  |  |  | — |  |  |  | — |  |  |  | 4,186 |  |  |  | 685 |
Total available-for-sale securities |  |  | 27,797 |  |  |  | 1,710 |  |  |  | — |  |  |  | — |  |  |  | 27,797 |  |  |  | 1,710 |
Total |  | $ | 50,561 |  |  | $ | 1,828 |  |  | $ | 2,345 |  |  | $ | 181 |  |  | $ | 52,906 |  |  | $ | 2,009 |
We regularly review our investment portfolio to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of our investments. We consider various factors in determining if a decline in the fair value of an individual security is other-than-temporary. The key factors we consider are:
| • |  | any reduction or elimination of dividends, or nonpayment of scheduled principal or interest payments;
| • |  | the financial condition and near-term prospects of the issuer of the applicable security, including any specific events that may affect its operations or earnings;
| • |  | how long and by how much the fair value of the security has been below its cost or amortized cost;
| • |  | any downgrades of the security by a rating agency;
| • |  | our intent not to sell the security for a sufficient time period for it to recover its value;
| • |  | the likelihood of being forced to sell the security before the recovery of its value; and
| • |  | an evaluation as to whether there are any credit losses on debt securities.
We reviewed all securities with unrealized losses in accordance with the impairment policy described above. We determined that the unrealized losses in the fixed maturity securities portfolios related primarily to changes in market interest rates since the date of purchase, current conditions in the capital markets and the impact of those conditions on market liquidity and prices generally. We expect to recover the carrying value of these securities since management does not intend to sell the securities and it is not more likely than not that we will be required to sell the security before the recovery of its amortized cost basis. In addition, none of the unrealized losses on debt securities are considered credit losses. In the three months ended June 30, 2013, we sold equity and fixed maturity securities classified as available-for-sale. The cost basis of these securities at disposal was $5.0 million with realized gains on the sale of these securities of $0.6 million. In the three months ended June 30, 2012, we sold equity securities classified as available-for-sale. The cost basis of these securities at disposal was $0.9 million with realized gains on the sale of these securities of $0.1 million. In the six months ended June 30, 2013 and 2012, we sold equity and fixed maturity securities classified as available-for-sale. The cost basis of these securities at disposal was $5.0 million with realized gains on the sale of these securities of $0.6 million for the six months ended June 30, 2013, compared to a cost basis of $20.0 million and realized gains of $1.9 million for the same period in 2012. As a result of the review of our investment portfolio, there were impairment losses recognized for other-than-temporary declines in the fair value of two of our investments in equity securities in the three and six months ended June 30, 2013. These charges are included in “Net realized gains/(losses) on investments” and total $1.9 million. No such impairment charges were taken the first two quarters of 2012.

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