v2.4.0.6

Investments | 12 Months Ended
--- | ---
Dec. 31, 2011
Investments | ## 3. Investments ### (a) Available-for-Sale Securities The amortized cost, estimated fair value and gross unrealized appreciation and depreciation of fixed and equity securities are presented in the tables below:
(Amounts in Thousands) As of December 31, 2011 |  | Original or Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
Preferred stock |  | $ | 5,091 |  |  | $ | — |  |  | $ | (777 | ) |  | $ | 4,314 |
Common stock |  |  | 28,950 |  |  |  | 5,228 |  |  |  | (2,892 | ) |  |  | 31,286 |
U.S. treasury securities |  |  | 50,474 |  |  |  | 3,057 |  |  |  | (257 | ) |  |  | 53,274 |
U.S. government agencies |  |  | 6,268 |  |  |  | 522 |  |  |  | — |  |  |  | 6,790 |
Municipal bonds |  |  | 268,240 |  |  |  | 7,290 |  |  |  | (513 | ) |  |  | 275,017 |
Corporate bonds: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Finance |  |  | 534,810 |  |  |  | 13,059 |  |  |  | (31,918 | ) |  |  | 515,951 |
Industrial |  |  | 131,489 |  |  |  | 4,392 |  |  |  | (2,990 | ) |  |  | 132,891 |
Utilities |  |  | 38,434 |  |  |  | 1,790 |  |  |  | (1,718 | ) |  |  | 38,506 |
Commercial mortgage backed securities |  |  | 150 |  |  |  | — |  |  |  | — |  |  |  | 150 |
Residential mortgage backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency backed |  |  | 345,112 |  |  |  | 18,946 |  |  |  | (58 | ) |  |  | 364,000 |
Non-agency backed |  |  | 7,886 |  |  |  | — |  |  |  | (222 | ) |  |  | 7,664 |
|  | $ | 1,416,904 |  |  | $ | 54,284 |  |  | $ | (41,345 | ) |  | $ | 1,429,843 |
(Amounts in Thousands) As of December 31, 2010 |  | Original or Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
Preferred stock |  | $ | 7,175 |  |  | $ | 107 |  |  | $ | (245 | ) |  | $ | 7,037 |
Common stock |  |  | 11,402 |  |  |  | 1,224 |  |  |  | (2,251 | ) |  |  | 10,375 |
U.S. treasury securities |  |  | 82,279 |  |  |  | 1,634 |  |  |  | (1,466 | ) |  |  | 82,447 |
U.S. government agencies |  |  | 6,483 |  |  |  | 679 |  |  |  | — |  |  |  | 7,162 |
Municipal bonds |  |  | 67,396 |  |  |  | 438 |  |  |  | (1,158 | ) |  |  | 66,676 |
Corporate bonds: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Finance |  |  | 411,532 |  |  |  | 9,756 |  |  |  | (15,276 | ) |  |  | 406,012 |
Industrial |  |  | 47,828 |  |  |  | 1,970 |  |  |  | (45 | ) |  |  | 49,753 |
Utilities |  |  | 36,375 |  |  |  | 1,204 |  |  |  | (268 | ) |  |  | 37,311 |
Commercial mortgage backed securities |  |  | 1,970 |  |  |  | 106 |  |  |  | — |  |  |  | 2,076 |
Residential mortgage backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency backed |  |  | 528,683 |  |  |  | 18,653 |  |  |  | (1,238 | ) |  |  | 546,098 |
Non-agency backed |  |  | 7,779 |  |  |  | 817 |  |  |  | (5 | ) |  |  | 8,591 |
Asset-backed securities |  |  | 2,519 |  |  |  | 168 |  |  |  | — |  |  |  | 2,687 |
|  | $ | 1,211,421 |  |  | $ | 36,756 |  |  | $ | (21,952 | ) |  | $ | 1,226,225 |
Proceeds from the sale of investments in available-for-sale securities during the years ended December 31, 2011, 2010, and 2009 were approximately $2,140,557, $3,639,191, and $421,355, respectively. A summary of the Company’s available-for-sale fixed securities as of December 31, 2011 and 2010, by contractual maturity, is shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
|  | December 31, 2011
(Amounts in Thousands) |  | Amortized Cost |  | Fair Value
Due in one year or less |  | $ | 10,044 |  |  | $ | 18,661 |
Due after one through five years |  |  | 286,007 |  |  |  | 277,959 |
Due after five through ten years |  |  | 501,490 |  |  |  | 494,290 |
Due after ten years |  |  | 228,695 |  |  |  | 231,519 |
Mortgage backed securities |  |  | 356,627 |  |  |  | 371,814 |
Total fixed maturities |  | $ | 1,382,863 |  |  | $ | 1,394,243 |
|  | December 31, 2010
(Amounts in Thousands) |  | Amortized Cost |  | Fair Value
Due in one year or less |  | $ | 5,153 |  |  | $ | 5,241 |
Due after one through five years |  |  | 102,536 |  |  |  | 103,222 |
Due after five through ten years |  |  | 451,481 |  |  |  | 450,164 |
Due after ten years |  |  | 92,723 |  |  |  | 90,734 |
Mortgage backed securities |  |  | 540,951 |  |  |  | 559,452 |
Total fixed maturities |  | $ | 1,192,844 |  |  | $ | 1,208,813 |
### (b) Investment Income Net investment income for the years ended December 31, 2011, 2010 and 2009 was derived from the following sources:
(Amounts in Thousands) |  | 2011 |  | 2010 |  | 2009
Fixed maturity securities |  | $ | 53,595 |  |  | $ | 43,789 |  |  | $ | 47,675 |
Equity securities |  |  | 981 |  |  |  | 702 |  |  |  | 2,084 |
Cash and short term investments |  |  | 1,966 |  |  |  | 4,042 |  |  |  | 4,173 |
Interest on note receivable – related party |  |  | — |  |  |  | 2,612 |  |  |  | 2,967 |
|  |  | 56,542 |  |  |  | 51,145 |  |  |  | 56,899 |
Less: Investment expenses and interest expense on securities sold under agreement to repurchase |  |  | (1,027 | ) |  |  | (628 | ) |  |  | (1,612 | )
|  | $ | 55,515 |  |  |  | 50,517 |  |  | $ | 55,287 |
### (c) Other Than Temporary Impairment OTTI charges of our fixed-maturities and equity securities for the years ended December 31, 2011, 2010 and 2009 are presented in the table below:
(Amounts in Thousands) |  | 2011 |  | 2010 |  | 2009
Equity securities recognized in earnings |  | $ | 937 |  |  | $ | 10,656 |  |  | $ | 20,639 |
Fixed maturity securities recognized in earnings |  |  | 3,474 |  |  |  | 10,540 |  |  |  | 4,139 |
|  | $ | 4,411 |  |  | $ | 21,196 |  |  | $ | 24,778 |
The tables below summarize the gross unrealized losses of our fixed maturity and equity securities by length of time the security has continuously been in an unrealized loss position as of December 31, 2011 and 2010:
|  | Less Than 12 Months |  | 12 Months or More |  | Total
(Amounts in Thousands) December 31, 2011 |  | Fair Market Value |  | Unrealized Losses |  | No. of Positions Held |  | Fair Market Value |  | Unrealized Losses |  | No. of Positions Held |  | Fair Market Value |  | Unrealized Losses
Common and preferred stock |  | $ | 4,211 |  |  | $ | (648 | ) |  |  | 7 |  |  | $ | 4,573 |  |  | $ | (3,021 | ) |  |  | 17 |  |  | $ | 8,784 |  |  | $ | (3,669 | )
U.S. treasury securities |  |  | 7,523 |  |  |  | (257 | ) |  |  | 4 |  |  |  | 773 |  |  |  | — |  |  |  | 1 |  |  |  | 8,296 |  |  |  | (257 | )
Municipal bonds |  |  | 43,452 |  |  |  | (452 | ) |  |  | 10 |  |  |  | 4,098 |  |  |  | (61 | ) |  |  | 1 |  |  |  | 47,550 |  |  |  | (513 | )
Corporate bonds: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Finance |  |  | 221,950 |  |  |  | (13,250 | ) |  |  | 81 |  |  |  | 104,461 |  |  |  | (18,668 | ) |  |  | 17 |  |  |  | 326,411 |  |  |  | (31,918 | )
Industrial |  |  | 35,105 |  |  |  | (2,125 | ) |  |  | 11 |  |  |  | 2,500 |  |  |  | (865 | ) |  |  | 1 |  |  |  | 37,605 |  |  |  | (2,990 | )
Utilities |  |  | 21,483 |  |  |  | (1,261 | ) |  |  | 9 |  |  |  | 5,766 |  |  |  | (457 | ) |  |  | 1 |  |  |  | 27,249 |  |  |  | (1,718 | )
Commercial mortgage backed securities |  |  | 150 |  |  |  | — |  |  |  | 2 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 150 |  |  |  | — |
Residential mortgage backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency backed |  |  | 31,986 |  |  |  | (58 | ) |  |  | 9 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 31,986 |  |  |  | (58 | )
Non-agency backed |  |  | 7,641 |  |  |  | (216 | ) |  |  | 1 |  |  |  | 22 |  |  |  | (6 | ) |  |  | 1 |  |  |  | 7,663 |  |  |  | (222 | )
Total temporarily impaired |  | $ | 373,501 |  |  | $ | (18,267 | ) |  |  | 134 |  |  | $ | 122,193 |  |  | $ | (23,078 | ) |  |  | 39 |  |  | $ | 495,694 |  |  | $ | (41,345 | )
|  | Less Than 12 Months |  | 12 Months or More |  | Total
(Amounts in Thousands) December 31, 2010 |  | Fair Market Value |  | Unrealized Losses |  | No. of Positions Held |  | Fair Market Value |  | Unrealized Losses |  | No. of Positions Held |  | Fair Market Value |  | Unrealized Losses
Common and preferred stock |  | $ | 1,291 |  |  | $ | (208 | ) |  |  | 1 |  |  | $ | 7,148 |  |  | $ | (2,288 | ) |  |  | 54 |  |  | $ | 8,439 |  |  | $ | (2,496 | )
U.S. treasury securities |  |  | 49,390 |  |  |  | (1,466 | ) |  |  | 6 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 49,390 |  |  |  | (1,466 | )
Municipal bonds |  |  | 50,301 |  |  |  | (1,147 | ) |  |  | 14 |  |  |  | 1,204 |  |  |  | (11 | ) |  |  | 1 |  |  |  | 51,505 |  |  |  | (1,158 | )
Corporate bonds: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Finance |  |  | 79,451 |  |  |  | (1,700 | ) |  |  | 16 |  |  |  | 160,126 |  |  |  | (13,576 | ) |  |  | 31 |  |  |  | 239,577 |  |  |  | (15,276 | )
Industrial |  |  | 6,319 |  |  |  | (45 | ) |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 6,319 |  |  |  | (45 | )
Utilities |  |  | 1,981 |  |  |  | (106 | ) |  |  | 1 |  |  |  | 11,635 |  |  |  | (162 | ) |  |  | 2 |  |  |  | 13,616 |  |  |  | (268 | )
Residential mortgage backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency backed |  |  | 150,575 |  |  |  | (1,238 | ) |  |  | 3 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 150,575 |  |  |  | (1,238 | )
Non-agency backed |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 26 |  |  |  | (5 | ) |  |  | 1 |  |  |  | 26 |  |  |  | (5 | )
Total temporarily impaired |  | $ | 339,308 |  |  | $ | (5,910 | ) |  |  | 42 |  |  | $ | 180,139 |  |  | $ | (16,042 | ) |  |  | 89 |  |  | $ | 519,447 |  |  | $ | (21,952 | )
There are 173 and 131 securities at December 31, 2011 and 2010, respectively that account for the gross unrealized loss, none of which is deemed by the Company to be OTTI. Significant factors influencing the Company’s determination that unrealized losses were temporary included the magnitude of the unrealized losses in relation to each security’s cost, the nature of the investment and management’s intent not to sell these securities and it being not more likely than not that the Company will be required to sell these investments before anticipated recovery of fair value to the Company’s cost basis. ### (d) Realized Gains and Losses The tables below indicate the gross realized gains and losses for the years ended December 31, 2011, 2010 and 2009.
(Amounts in Thousands) Year Ended December 31, 2011 |  | Gross Gains |  | Gross Losses |  | Net Gains and Losses
Fixed maturity securities |  | $ | 7,631 |  |  | $ | (266 | ) |  | $ | 7,365 |
Equity securities |  |  | 569 |  |  |  | (755 | ) |  |  | (186 | )
Write-down of fixed maturity securities |  |  | — |  |  |  | (3,474 | ) |  |  | (3,474 | )
Write-down of equity securities |  |  | — |  |  |  | (937 | ) |  |  | (937 | )
|  | $ | 8,200 |  |  | $ | (5,432 | ) |  | $ | 2,768 |
(Amounts in Thousands) Year Ended December 31, 2010 |  | Gross Gains |  | Gross Losses |  | Net Gains and Losses
Fixed maturity securities |  | $ | 17,860 |  |  | $ | (4,353 | ) |  | $ | 13,507 |
Equity securities |  |  | 19,656 |  |  |  | (6,047 | ) |  |  | 13,609 |
Derivatives |  |  | 33 |  |  |  | — |  |  |  | 33 |
Write-down of fixed maturity securities |  |  | — |  |  |  | (10,540 | ) |  |  | (10,540 | )
Write-down of equity securities |  |  | — |  |  |  | (10,656 | ) |  |  | (10,656 | )
|  | $ | 37,549 |  |  | $ | (31,596 | ) |  | $ | 5,953 |
(Amounts in Thousands) Year Ended December 31, 2009 |  | Gross Gains |  | Gross Losses |  | Net Gains and Losses
Fixed maturity securities |  | $ | 6,421 |  |  | $ | (5,536 | ) |  | $ | 885 |
Equity securities |  |  | 5,617 |  |  |  | (10,734 | ) |  |  | (5,117 | )
Derivatives |  |  | — |  |  |  | (4,569 | ) |  |  | (4,569 | )
Write-down of fixed maturity securities |  |  | — |  |  |  | (4,429 | ) |  |  | (4,429 | )
Write-down of equity securities |  |  | — |  |  |  | (20,349 | ) |  |  | (20,349 | )
|  | $ | 12,038 |  |  | $ | (45,617 | ) |  | $ | (33,579 | )
### (e) Unrealized Gains and Losses The net unrealized gain (loss) on available-for-sale securities were as follows:
(Amounts in Thousands) Year Ended December 31, |  | 2011 |  | 2010 |  | 2009
Fixed maturity securities |  | $ | 11,380 |  |  | $ | 15,969 |  |  | $ | 4,444 |
Equity securities |  |  | 1,559 |  |  |  | (1,165 | ) |  |  | (10,283 | )
Total net unrealized gain (loss) |  |  | 12,939 |  |  |  | 14,804 |  |  |  | (5,839 | )
Deferred income tax benefit (expense) |  |  | (4,529 | ) |  |  | (5,181 | ) |  |  | 2,044 |
Net unrealized gains (loss), net of deferred income tax |  |  | 8,410 |  |  |  | 9,623 |  |  |  | (3,795 | )
(Decrease) increase in net unrealized gains, net of deferred income tax |  | $ | (1,213 | ) |  | $ | 13,418 |  |  | $ | 83,087 |
### (f) Derivatives The Company from time to time invests in a limited amount of derivatives and other financial instruments as part of its investment portfolio to manage interest rate changes or other exposures to a particular financial market. The Company records changes in valuation on its derivative positions not designated as a hedge as a component of net realized gains and losses. The Company records changes in valuation on its hedged positions as a component of other comprehensive income. As of December 31, 2011, the Company had two interest rate swap agreements designated as a hedge and were recorded as a liability in the amount of $3,508 and were included as a component of accrued expenses and other liabilities. The following table presents the notional amounts by remaining maturity of the Company’s Interest Rate Swaps as of December 31, 2011:
|  | Remaining Life of Notional Amount(1)
(Amounts in Thousands) |  | One Year |  | Two Through Five Years |  | Six Through Ten Years |  | After Ten Years |  | Total
Interest rate swaps |  | $ | — |  |  | $ | 30,000 |  |  | $ | 40,000 |  |  | $ | — |  |  | $ | 70,000 |
| (1) | Notional amount is not representative of either market risk or credit risk and is not recorded in the consolidated balance sheet.
### (g) Restricted Cash and Investments The Company, in order to conduct business in certain states, is required to maintain letters of credit or assets on deposit to support state mandated regulatory requirements and certain third party agreements. The Company also utilizes trust accounts to collateralize business with its reinsurance counterparties. These assets held are primarily in the form of cash or certain high grade securities. The fair values of our restricted assets are as follows:
(Amounts in Thousands) As of December 31, |  | 2011 |  | 2010
Restricted cash |  | $ | 23,104 |  |  | $ | 17,130 |
Restricted investments |  |  | 187,227 |  |  |  | 35,682 |
Total restricted cash and investments |  | $ | 210,331 |  |  | $ | 52,812 |
### (h) Other Securities sold but not yet purchased, represent obligations of the Company to deliver the specified security at the contracted price and, thereby, create a liability to purchase the security in the market at prevailing prices. The Company’s liability for securities to be delivered is measured at their fair value and as of December 31, 2011 and 2010 was $55,830 and $8,483 for corporate bonds, respectively, and $112 and $364 for equity securities, respectively. These transactions result in off-balance sheet risk, as the Company’s ultimate cost to satisfy the delivery of securities sold, not yet purchased, may exceed the amount reflected at December 31, 2011. Substantially all securities owned are pledged to the clearing broker to sell or repledge the securities to others subject to certain limitations. The Company entered into repurchase agreements, which are accounted for as collateralized borrowing transactions and are recorded at contract amounts. The Company receives cash or securities, that it invests or holds in short term or fixed income securities. As of December 31, 2011 there were $191,718 principal amount outstanding at interest rates between 0.4% and 0.45%. Interest expense associated with these repurchase agreements for the year ended December 31, 2011 was $1,028 of which $0 was accrued as of December 31, 2011. The Company has $210,890 of collateral pledged in support of these agreements. As of December 31, 2010 there were $347,617 principal amount outstanding at interest rates between 0.32% and 0.4%. Interest expense associated with these repurchase agreements for the year ended December 31, 2010 was $610 of which $63 was accrued as of December 31, 2010. The Company had $351,211 of collateral pledged in support of these agreements. Interest expense related to repurchase agreements is recorded as a component of investment income.

X
- Definition This item represents the entire disclosure related to Investments in Certain Debt and Equity Securities (and certain other trading assets) which include all debt and equity securities (other than those equity securities accounted for under the equity or cost methods of accounting) with readily determinable fair values. Other trading assets include assets that are carried on the balance sheet at fair value and held for trading purposes. A debt security represents a creditor relationship with an enterprise that is in the form of a security. Debt securities include, among other items, US Treasury securities, US government securities, municipal securities, corporate bonds, convertible debt, commercial paper, and all securitized debt instruments. An equity security represents an ownership interest in an enterprise or the right to acquire or dispose of an ownership interest in an enterprise at fixed or determinable prices. Equity securities include, among other things, common stock, certain preferred stock, warrant rights, call options, and put options, but do not include convertible debt. An entity may opt to provide the reader with additional narrative text to better understand the nature of investments in debt and equity securities (and other trading assets). + References No definition available. + Details
Name: | afsi_InvestmentsInDebtAndMarketableEquitySecuritiesAndCertainTradingAssetsTextBlock
Namespace Prefix: | afsi_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration