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Investments | 9 Months Ended
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Sep. 30, 2012
Investments, Debt and Equity Securities [Abstract] |
Investments | Investments (a) Available-for-Sale Securities The amortized cost, estimated market value and gross unrealized appreciation and depreciation of available-for-sale securities as of September 30, 2012, are presented in the table below:
(Amounts in Thousands) | Original or amortized cost |  | Gross unrealized gains |  | Gross unrealized losses |  | Market value
Preferred stock | $ | 5,091 |  |  | $ | 107 |  |  | $ | (211 | ) |  | $ | 4,987 |
Common stock | 15,111 |  |  | 1,085 |  |  | (2,865 | ) |  | 13,331 |
U.S. treasury securities | 45,442 |  |  | 2,905 |  |  | (6 | ) |  | 48,341 |
U.S. government agencies | 45,341 |  |  | 964 |  |  | — |  |  | 46,305 |
Municipal bonds | 251,610 |  |  | 13,487 |  |  | (86 | ) |  | 265,011 |
Corporate bonds: |  |  |  |  |  |  |  |  |  |  |
Finance | 729,724 |  |  | 50,337 |  |  | (6,587 | ) |  | 773,474 |
Industrial | 314,663 |  |  | 17,726 |  |  | (2,120 | ) |  | 330,269 |
Utilities | 32,773 |  |  | 2,455 |  |  | — |  |  | 35,228 |
Commercial mortgage backed securities | 10,057 |  |  | 152 |  |  | — |  |  | 10,209 |
Residential mortgage backed securities: |  |  |  |  |  |  |  |  |  |  |
Agency backed | 312,258 |  |  | 20,211 |  |  | (442 | ) |  | 332,027 |
Non-agency backed | 7,831 |  |  | — |  |  | (1,072 | ) |  | 6,759 |
| $ | 1,769,901 |  |  | $ | 109,429 |  |  | $ | (13,389 | ) |  | $ | 1,865,941 |
Proceeds from the sale of investments in available-for-sale securities during the nine months ended September 30, 2012 and 2011 were approximately $761,757 and $1,827,485, respectively. A summary of the Company’s available-for-sale fixed securities as of September 30, 2012, 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.
(Amounts in Thousands) | Amortized Cost |  | Fair Value
Due in one year or less | $ | 7,296 |  |  | $ | 7,359 |
Due after one through five years | 388,443 |  |  | 393,753 |
Due after five through ten years | 785,711 |  |  | 848,460 |
Due after ten years | 238,103 |  |  | 249,056 |
Mortgage backed securities | 330,146 |  |  | 348,995 |
Total fixed maturities | $ | 1,749,699 |  |  | $ | 1,847,623 |
(b) Investment Income Net investment income for the three and nine months ended September 30, 2012 and 2011 was derived from the following sources:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(Amounts in Thousands) | 2012 |  | 2011 |  | 2012 |  | 2011
Fixed maturity securities | $ | 18,185 |  |  | $ | 13,601 |  |  | $ | 47,908 |  |  | $ | 39,577 |
Equity maturities | 325 |  |  | 141 |  |  | 823 |  |  | 427 |
Cash and short term investments | 120 |  |  | 1,075 |  |  | 1,096 |  |  | 2,647 |
| 18,630 |  |  | 14,817 |  |  | 49,827 |  |  | 42,651 |
Less: |  |  |  |  |  |  |  |  |  |  |
Investment expenses and interest expense on securities sold under agreement to repurchase | 201 |  |  | 361 |  |  | 536 |  |  | 836 |
| $ | 18,429 |  |  | $ | 14,456 |  |  | $ | 49,291 |  |  | $ | 41,815 |
(c) Other-Than-Temporary Impairment The table below summarizes the gross unrealized losses of our fixed maturity and equity securities by length of time the security has continuously been in an unrealized position as of September 30, 2012:
| Less Than 12 Months |  | 12 Months or More |  | Total
(Amounts in Thousands) | 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 | $ | 7,015 |  |  | $ | (1,446 | ) |  | 30 |  |  | $ | 2,453 |  |  | $ | (1,630 | ) |  | 9 |  |  | $ | 9,468 |  |  | $ | (3,076 | )
U.S. treasury securities | 994 |  |  | (6 | ) |  | 1 |  |  | — |  |  | — |  |  | — |  |  | 994 |  |  | (6 | )
Municipal bonds | 24,177 |  |  | (82 | ) |  | 6 |  |  | 8,071 |  |  | (4 | ) |  | 1 |  |  | 32,248 |  |  | (86 | )
Corporate bonds: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Finance | 40,776 |  |  | (1,223 | ) |  | 12 |  |  | 94,994 |  |  | (5,364 | ) |  | 15 |  |  | 135,770 |  |  | (6,587 | )
Industrial | 39,595 |  |  | (1,795 | ) |  | 17 |  |  | 5,760 |  |  | (325 | ) |  | 1 |  |  | 45,355 |  |  | (2,120 | )
Residential mortgage backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency backed | 4,674 |  |  | (1 | ) |  | 1 |  |  | 25,429 |  |  | (441 | ) |  | 1 |  |  | 30,103 |  |  | (442 | )
Non-agency backed | 6,734 |  |  | (1,069 | ) |  | 1 |  |  | 25 |  |  | (3 | ) |  | 1 |  |  | 6,759 |  |  | (1,072 | )
Total temporarily impaired securities | $ | 123,965 |  |  | $ | (5,622 | ) |  | 68 |  |  | $ | 136,732 |  |  | $ | (7,767 | ) |  | 28 |  |  | $ | 260,697 |  |  | $ | (13,389 | )
There are 96 securities at September 30, 2012 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) 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 hedge positions as a component of other comprehensive income. As of September 30, 2012, the Company had two interest rate swaps designated as hedges that were recorded as a liability in the total amount of $4,973 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 September 30, 2012:
|  | 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 |  | $ | — |  |  | $ | 70,000 |  |  | $ | — |  |  | $ | — |  |  | $ | 70,000 |
(1) | Notional amount is not representative of either market risk or credit risk and is not recorded in the consolidated balance sheet.
(e) 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 are primarily in the form of cash and certain high grade securities. The fair values of our restricted assets as of September 30, 2012 and December 31, 2011 are as follows:
(Amounts in Thousands) | 2012 |  | 2011
Restricted cash | $ | 46,795 |  |  | $ | 23,104 |
Restricted investments | 292,941 |  |  | 187,227 |
Total restricted cash and investments | $ | 339,736 |  |  | $ | 210,331 |
(f) 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 September 30, 2012 was $57,155 for U.S treasury bonds and $43 for equity securities. These transactions result in off-balance sheet risk, as the Company’s ultimate cost to satisfy the delivery of securities sold but not yet purchased may exceed the amount reflected at September 30, 2012. Subject to certain limitations, all securities owned, to the extent required to cover the Company’s obligations to sell or repledge the securities to others, are pledged to the clearing broker. The Company enters 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 September 30, 2012, there were $226,098 principal amount outstanding at interest rates between .40% and .45%. Interest expense associated with these repurchase agreements for the three months ended September 30, 2012 and 2011 was $341 and $361, respectively, and interest expense associated with these repurchase agreements for the nine months ended September 30, 2012 and 2011 was $676 and $836, respectively, of which $0 was accrued as of September 30, 2012. The Company has approximately $244,064 of collateral pledged in support of these agreements. Additionally, during the three and nine months ended September 30, 2012, the Company entered into a reverse repurchase agreement in the amount of $57,000 that is included in cash and cash equivalents as of September 30, 2012. The Company retains collateral of $57,000 related to this agreement.

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- Definition The entire disclosure for the schedule applicable to insurance companies summarizing investments held as of the most recent audited balance sheet. At a minimum, such summary is by three major categories of investments including: (1) fixed maturities primarily consisting of bonds, including convertibles and bonds with warrants, and redeemable preferred stocks, (2) equity securities primarily consisting of common stocks and nonredeemable preferred stocks, and (3) other investments including mortgage loans on real estate, real estate held for investment, real estate acquired in satisfaction of debt, policy loans, other long-term investments, and short-term investments not otherwise categorized. The information provided with respect to each item within each category includes: (A) the original cost of equity securities and, as to fixed maturity securities, original cost reduced by repayments and adjusted for amortization of premiums or accrual of discounts, (B) fair value as of the reporting date, and (C) the amount at which the item within each category is shown in the statement of financial position; with respect to (C), if the amount at which shown in the statement of financial position is different from the items original [amortized] cost or fair value, an explanation of the difference may be included herein. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 15 -Article 12 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -Section S99 -Paragraph 7 -Subparagraph (SX 210.12-15) -URI http://asc.fasb.org/extlink&oid=6955306&loc=d3e611379-123010 + Details
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