v2.4.0.8

Investments | 3 Months Ended
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Mar. 31, 2014
Schedule of Investments [Abstract] |
Investments | Investments (a) Fixed Maturities and Other Investments The original or amortized cost, estimated fair value and gross unrealized gains and losses of available-for-sale fixed maturities and other investments as of March 31, 2014 and December 31, 2013, are as follows:
March 31, 2014 |  | Original or amortized cost |  | Gross unrealized gains |  | Gross unrealized losses |  | Fair value
Available-for-sale fixed maturities: |  |  |  |  |  |  |  |
U.S. treasury bonds |  | $ | 16,616 |  |  | $ | 519 |  |  | $ | — |  |  | $ | 17,135 |
U.S. agency bonds – mortgage-backed |  | 1,257,045 |  |  | 12,632 |  |  | (34,207 | ) |  | 1,235,470 |
U.S. agency bonds – other |  | 7,208 |  |  | 988 |  |  | — |  |  | 8,196 |
Non-U.S. government bonds |  | 70,806 |  |  | 3,490 |  |  | (331 | ) |  | 73,965 |
Other mortgage-backed securities |  | 43,952 |  |  | 416 |  |  | — |  |  | 44,368 |
Corporate bonds |  | 1,638,912 |  |  | 98,508 |  |  | (11,652 | ) |  | 1,725,768 |
Municipal bonds – other |  | 62,136 |  |  | 1,781 |  |  | — |  |  | 63,917 |
Total available-for-sale fixed maturities |  | 3,096,675 |  |  | 118,334 |  |  | (46,190 | ) |  | 3,168,819 |
Other investments |  | 5,083 |  |  | 690 |  |  | — |  |  | 5,773 |
Total investments |  | $ | 3,101,758 |  |  | $ | 119,024 |  |  | $ | (46,190 | ) |  | $ | 3,174,592 |
December 31, 2013 |  | Original or amortized cost |  | Gross unrealized gains |  | Gross unrealized losses |  | Fair value
Available-for-sale fixed maturities: |  |  |  |  |  |  |  |
U.S. treasury bonds |  | $ | 16,622 |  |  | $ | 587 |  |  | $ | — |  |  | $ | 17,209 |
U.S. agency bonds – mortgage-backed |  | 1,292,032 |  |  | 11,727 |  |  | (41,104 | ) |  | 1,262,655 |
U.S. agency bonds – other |  | 7,207 |  |  | 901 |  |  | — |  |  | 8,108 |
Non-U.S. government bonds |  | 70,377 |  |  | 3,547 |  |  | (712 | ) |  | 73,212 |
Other mortgage-backed securities |  | 33,676 |  |  | — |  |  | (232 | ) |  | 33,444 |
Corporate bonds |  | 1,546,578 |  |  | 82,952 |  |  | (22,830 | ) |  | 1,606,700 |
Municipal bonds – auction rate |  | 99,170 |  |  | — |  |  | — |  |  | 99,170 |
Municipal bonds – other |  | 62,130 |  |  | 934 |  |  | (1,495 | ) |  | 61,569 |
Total available-for-sale fixed maturities |  | 3,127,792 |  |  | 100,648 |  |  | (66,373 | ) |  | 3,162,067 |
Other investments |  | 4,522 |  |  | 570 |  |  | — |  |  | 5,092 |
Total investments |  | $ | 3,132,314 |  |  | $ | 101,218 |  |  | $ | (66,373 | ) |  | $ | 3,167,159 |
The contractual maturities of our fixed maturities are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or repay obligations with or without prepayment penalties. 4. Investments (continued)
March 31, 2014 |  | Amortized cost |  | Fair value |  | % of Total fair value
Maturity |  |  |  |  |  |
Due in one year or less |  | $ | 54,893 |  |  | $ | 56,249 |  |  | 1.8 | %
Due after one year through five years |  | 422,796 |  |  | 459,480 |  |  | 14.5 | %
Due after five years through ten years |  | 1,226,383 |  |  | 1,277,651 |  |  | 40.3 | %
Due after ten years |  | 91,606 |  |  | 95,601 |  |  | 3.0 | %
|  | 1,795,678 |  |  | 1,888,981 |  |  | 59.6 | %
U.S. agency bonds – mortgage-backed |  | 1,257,045 |  |  | 1,235,470 |  |  | 39.0 | %
Other mortgage-backed securities |  | 43,952 |  |  | 44,368 |  |  | 1.4 | %
Total available-for-sale fixed maturities |  | $ | 3,096,675 |  |  | $ | 3,168,819 |  |  | 100.0 | %
The following tables summarize fixed maturities and other investments in an unrealized loss position and the aggregate fair value and gross unrealized loss by length of time the security has continuously been in an unrealized loss position:
|  | Less than 12 Months |  | 12 Months or more |  | Total
March 31, 2014 |  | Fair value |  | Unrealized losses |  | Fair value |  | Unrealized losses |  | Fair value |  | Unrealized losses
Available-for-sale fixed maturities |  |  |  |  |  |  |  |  |  |  |  |
U.S. agency bonds – mortgage-backed |  | $ | 743,882 |  |  | $ | (30,320 | ) |  | $ | 109,169 |  |  | $ | (3,887 | ) |  | $ | 853,051 |  |  | $ | (34,207 | )
Non–U.S. government bonds |  | 7,968 |  |  | (331 | ) |  | — |  |  | — |  |  | 7,968 |  |  | (331 | )
Corporate bonds |  | 183,710 |  |  | (6,590 | ) |  | 168,371 |  |  | (5,062 | ) |  | 352,081 |  |  | (11,652 | )
Total temporarily impaired available-for-sale fixed maturities |  | $ | 935,560 |  |  | $ | (37,241 | ) |  | $ | 277,540 |  |  | $ | (8,949 | ) |  | $ | 1,213,100 |  |  | $ | (46,190 | )
As of March 31, 2014, there were approximately 103 securities in an unrealized loss position with a fair value of $1,213,100 and unrealized losses of $46,190. Of these securities, there are 24 securities that have been in an unrealized loss position for 12 months or greater with a fair value of $277,540 and unrealized losses of $8,949.
|  | Less than 12 Months |  | 12 Months or more |  | Total
December 31, 2013 |  | Fair value |  | Unrealized losses |  | Fair value |  | Unrealized losses |  | Fair value |  | Unrealized losses
Available-for-sale fixed maturities |  |  |  |  |  |  |  |  |  |  |  |
U.S. agency bonds – mortgage-backed |  | $ | 795,439 |  |  | $ | (38,421 | ) |  | $ | 60,602 |  |  | $ | (2,683 | ) |  | $ | 856,041 |  |  | $ | (41,104 | )
Non–U.S. government bonds |  | 9,946 |  |  | (712 | ) |  | — |  |  | — |  |  | 9,946 |  |  | (712 | )
Other mortgage-backed securities |  | 33,444 |  |  | (232 | ) |  | — |  |  | — |  |  | 33,444 |  |  | (232 | )
Corporate bonds |  | 463,469 |  |  | (16,687 | ) |  | 169,294 |  |  | (6,143 | ) |  | 632,763 |  |  | (22,830 | )
Municipal bonds – other |  | 50,545 |  |  | (1,495 | ) |  | — |  |  | — |  |  | 50,545 |  |  | (1,495 | )
Total temporarily impaired available-for-sale fixed maturities |  | $ | 1,352,843 |  |  | $ | (57,547 | ) |  | $ | 229,896 |  |  | $ | (8,826 | ) |  | $ | 1,582,739 |  |  | $ | (66,373 | )
As of December 31, 2013, there were approximately 140 securities in an unrealized loss position with a fair value of $1,582,739 and unrealized losses of $66,373. Of these securities, there are 19 securities that have been in an unrealized loss position for 12 months or greater with a fair value of $229,896 and unrealized losses of $8,826. 4. Investments (continued) Other-Than-Temporary Impairments ("OTTI") We review our investment portfolio for impairment on a quarterly basis. Impairment of investments results in a charge to operations when a fair value decline below cost is deemed to be other-than-temporary. As of March 31, 2014, we reviewed our portfolio to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of investments. During the three months ended March 31, 2014 and 2013, the Company recognized no OTTI. Based on our qualitative and quantitative OTTI review of each asset class within our fixed maturity portfolio, the unrealized losses on fixed maturities at March 31, 2014 were primarily due to widening of credit spreads since their date of purchase. Because we do not intend to sell these securities and it is not more likely than not that we will be required to sell these securities until a recovery of fair value to amortized cost, we currently believe it is probable that we will collect all amounts due according to their respective contractual terms. Therefore, we do not consider these fixed maturities to be other-than-temporarily impaired at March 31, 2014. The following summarizes the credit ratings of our available-for-sale fixed maturities:
Rating* as of March 31, 2014 |  | Amortized cost |  | Fair value |  | % of Total fair value
U.S. treasury bonds |  | $ | 16,616 |  |  | $ | 17,135 |  |  | 0.5 | %
U.S. agency bonds |  | 1,264,253 |  |  | 1,243,666 |  |  | 39.2 | %
AAA |  | 216,123 |  |  | 231,871 |  |  | 7.3 | %
AA+, AA, AA- |  | 138,743 |  |  | 147,363 |  |  | 4.7 | %
A+, A, A- |  | 688,926 |  |  | 729,160 |  |  | 23.0 | %
BBB+, BBB, BBB- |  | 716,179 |  |  | 742,241 |  |  | 23.5 | %
BB+ or lower |  | 55,835 |  |  | 57,383 |  |  | 1.8 | %
Total |  | $ | 3,096,675 |  |  | $ | 3,168,819 |  |  | 100.0 | %
Rating* as of December 31, 2013 |  | Amortized cost |  | Fair value |  | % of Total fair value
U.S. treasury bonds |  | $ | 16,622 |  |  | $ | 17,209 |  |  | 0.5 | %
U.S. agency bonds |  | 1,299,239 |  |  | 1,270,763 |  |  | 40.2 | %
AAA |  | 210,872 |  |  | 222,417 |  |  | 7.0 | %
AA+, AA, AA- |  | 236,424 |  |  | 242,986 |  |  | 7.7 | %
A+, A, A- |  | 619,148 |  |  | 651,248 |  |  | 20.6 | %
BBB+, BBB, BBB- |  | 689,532 |  |  | 701,529 |  |  | 22.2 | %
BB+ or lower |  | 55,955 |  |  | 55,915 |  |  | 1.8 | %
Total |  | $ | 3,127,792 |  |  | $ | 3,162,067 |  |  | 100.0 | %
*Ratings as assigned by Standard & Poor’s ("S&P") (b) Other Investments The table below shows our portfolio of other investments:
|  | March 31, 2014 |  | December 31, 2013
|  | Fair value |  | % of Total fair value |  | Fair value |  | % of Total fair value
Investments in limited partnerships |  | $ | 4,773 |  |  | 82.7 | % |  | $ | 4,092 |  |  | 80.4 | %
Other |  | 1,000 |  |  | 17.3 | % |  | 1,000 |  |  | 19.6 | %
Total other investments |  | $ | 5,773 |  |  | 100.0 | % |  | $ | 5,092 |  |  | 100.0 | %
The Company has an unfunded commitment on its investments in limited partnerships of approximately $1,380 as of March 31, 2014. 4. Investments (continued) (c) Net Realized Gains on Investment Realized gains or losses on the sale of investments are determined on the basis of the first in first out cost method. The following provides an analysis of net realized gains on investment included in the Condensed Consolidated Statements of Income for the three months ended March 31, 2014 and 2013:
For the Three Months Ended March 31, 2014 |  | Gross gains |  | Gross losses |  | Net
Available-for-sale fixed maturities |  | $ | 1 |  |  | $ | — |  |  | $ | 1 |
Other investments |  | 87 |  |  | — |  |  | 87 |
Net realized gains on investment |  | $ | 88 |  |  | $ | — |  |  | $ | 88 |
For the Three Months Ended March 31, 2013 |  | Gross gains |  | Gross losses |  | Net
Available-for-sale fixed maturities |  | $ | 3,112 |  |  | $ | — |  |  | $ | 3,112 |
Other investments |  | 171 |  |  | — |  |  | 171 |
Net realized gains on investment |  | $ | 3,283 |  |  | $ | — |  |  | $ | 3,283 |
Proceeds from sales of fixed maturities classified as available-for-sale were $105,334 and $45,379 for the three months ended March 31, 2014 and 2013, respectively. Net unrealized gains were as follows:
|  | March 31, 2014 |  | December 31, 2013
Available-for-sale fixed maturities |  | $ | 72,144 |  |  | $ | 34,275 |
Other investments |  | 690 |  |  | 570 |
Total net unrealized gains |  | 72,834 |  |  | 34,845 |
Deferred income tax expense |  | (146 | ) |  | (117 | )
Net unrealized gains, net of deferred income tax |  | $ | 72,688 |  |  | $ | 34,728 |
Change in net unrealized gains, net of deferred income tax |  | $ | 37,960 |  |  | $ | (108,937 | )
(d) Restricted Cash and Cash Equivalents and Investments We are required to maintain assets on deposit to support our reinsurance operations and to serve as collateral for our reinsurance liabilities under various reinsurance agreements. The assets on deposit are available to settle reinsurance liabilities. We also utilize trust accounts to collateralize business with our reinsurance counterparties. These trust accounts generally take the place of letter of credit requirements. The assets in trust as collateral are primarily cash and highly rated fixed maturity securities. The fair value of our restricted assets was as follows:
|  | March 31, 2014 |  | December 31, 2013
Restricted cash and cash equivalents – third party agreements |  | $ | 64,326 |  |  | $ | 72,877 |
Restricted cash and cash equivalents – related party agreements |  | 86,866 |  |  | 4,429 |
Restricted cash and cash equivalents – U.S. state regulatory authorities |  | 20 |  |  | 54 |
Total restricted cash and cash equivalents |  | 151,212 |  |  | 77,360 |
Restricted investments – in trust for third party agreements at fair value (Amortized cost: 2014 – $934,906; 2013 – $933,897) |  | 952,147 |  |  | 939,800 |
Restricted investments – in trust for related party agreements at fair value (Amortized cost: 2014 – $1,211,944; 2013 – $1,183,156) |  | 1,244,654 |  |  | 1,201,473 |
Restricted investments – in trust for U.S. state regulatory authorities (Amortized cost: 2014 – $12,216; 2013 – $12,730) |  | 12,498 |  |  | 13,065 |
Total restricted investments |  | 2,209,299 |  |  | 2,154,338 |
Total restricted cash and cash equivalents and investments |  | $ | 2,360,511 |  |  | $ | 2,231,698 |

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- Definition The entire disclosure for investment holdings. This includes the long positions of investments for the entity. It contains investments in affiliated and unaffiliated issuers. The investments include securities and non securities (i.e. commodities and futures contracts). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -Section S99 -Paragraph 5 -Subparagraph (SX 210.12-13) -URI http://asc.fasb.org/extlink&oid=6955306&loc=d3e611282-123010 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -Section S99 -Paragraph 1 -Subparagraph (SX 210.12-12) -URI http://asc.fasb.org/extlink&oid=6955306&loc=d3e611133-123010 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -Section S99 -Paragraph 4 -Subparagraph (SX 210.12-12C) -URI http://asc.fasb.org/extlink&oid=6955306&loc=d3e611225-123010 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 13 -Article 12 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 12C -Article 12 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 12 -Article 12 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -Section S99 -Paragraph 6 -Subparagraph (SX 210.12-14) -URI http://asc.fasb.org/extlink&oid=6955306&loc=d3e611322-123010 + Details
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