INVESTMENTS

The Company considers all of its investments as available-for-sale securities. Realized gains and losses on the sale of investments are determined on a specific identification basis.

The amortized cost, gross unrealized gain or loss and estimated fair value of short-term and long-term investments by security type were as follows at December 31, 2012 and 2011 (in thousands):



	Amortized Cost		Unrealized Gain		Unrealized Loss			Fair Value
As of December 31, 2012
State and municipal bonds	$	1,176,016	$	78,272	$	(499	)	$	1,253,789
U.S. Treasury securities	78,264		669		(2		)	78,931
Government-sponsored enterprise securities ⁽¹⁾	72,394		1,139		(1		)	73,532
Residential mortgage-backed securities ⁽²⁾	302,012		10,703		(74		)	312,641
Commercial mortgage-backed securities	21,416		193		(19		)	21,590
Asset-backed securities ⁽³⁾	23,421		211		(6		)	23,626
Corporate debt and other securities	971,230		20,726		(346		)	991,610
	$	2,644,753	$	111,913	$	(947	)	$	2,755,719
Equity method investments ⁽⁴⁾								24,605
								$	2,780,324



	Amortized Cost		Unrealized Gain		Unrealized Loss			Fair Value
As of December 31, 2011
State and municipal bonds	$	970,746	$	62,215	$	(7	)	$	1,032,954
U.S. Treasury securities	88,934		2,410		(4		)	91,340
Government-sponsored enterprise securities ⁽¹⁾	140,595		2,694		(11		)	143,278
Residential mortgage-backed securities ⁽²⁾	354,713		14,097		(12		)	368,798
Commercial mortgage-backed securities	13,801		1,024		—			14,825
Asset-backed securities ⁽³⁾	12,840		664		—			13,504
Corporate debt and other securities	1,051,874		23,804		(10,178		)	1,065,500
	$	2,633,503	$	106,908	$	(10,212	)	$	2,730,199
Equity method investments ⁽⁴⁾								21,315
								$	2,751,514


⁽¹⁾	Includes FDIC-insured Temporary Liquidity Guarantee Program (“TLGP”) securities. As of December 31, 2012, the Company no longer held any TLGP securities.


⁽²⁾	Includes Agency pass-through securities, with the timely payment of principal and interest guaranteed.


⁽³⁾	Includes auto loans, credit card debt, and rate reduction bonds.


⁽⁴⁾	Includes investments in entities accounted for under the equity method of accounting and therefore are presented at their carrying value.

The Company acquired eight separate investments (tranches) in a limited liability company that invests in equipment leased to third parties, through its acquisition of First Health Group Corp. on January 28, 2005. The total investment as of December 31, 2012 was $23.7 million and is accounted for using the equity method. The Company’s proportionate share of the limited liability company’s income is included in other income in the Company’s statements of operations and comprehensive income. The Company has between a 20% and 25% interest in the limited liability company’s share of each individual tranche of the limited liability company (approximately 10% of the total limited liability company).

The amortized cost and estimated fair value of available for sale debt securities by contractual maturity were as follows at December 31, 2012 and 2011 (in thousands):



	As of December 31, 2012				As of December 31, 2011
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturities:
Within 1 year	$	362,116	$	363,559	$	315,362	$	317,067
1 to 5 years	798,143		822,448		984,503		1,006,221
5 to 10 years	652,941		693,504		536,577		574,207
Over 10 years	831,553		876,208		797,061		832,704
Total	$	2,644,753	$	2,755,719	$	2,633,503	$	2,730,199

Investments with long-term option adjusted maturities, such as residential and commercial mortgage-backed securities, are included in the “Over 10 years” category. Actual maturities may differ due to call or prepayment rights.

Gross investment gains of $41.5 million and gross investment losses of $1.1 million were realized on sales of investments for the year ended December 31, 2012. This compares to gross investment gains of $17.4 million and gross investment losses of $0.4 million realized on sales of investments for the year ended December 31, 2011, and gross investment gains of $15.5 million and gross investment losses of $4.5 million realized on sales for the year ended December 31, 2010. The Company’s realized gains and losses are recorded in other income, net in the Company’s consolidated statements of operations and comprehensive income.

The following table shows the Company’s investments’ gross unrealized losses and fair value at December 31, 2012 and December 31, 2011, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands).



At December 31, 2012	Less than 12 months					12 months or more					Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
State and municipal bonds	$	61,342	$	(499	)	$	—	$	—		$	61,342	$	(499	)
U.S. Treasury securities	2,458		(1		)	1,065		(1		)	3,523		(2		)
Government sponsored enterprises	15,714		(1		)	—		—			15,714		(1		)
Residential mortgage-backed securities	23,861		(73		)	59		(1		)	23,920		(74		)
Commercial mortgage-backed securities	7,701		(19		)	—		—			7,701		(19		)
Asset-backed securities	14,492		(6		)	—		—			14,492		(6		)
Corporate debt and other securities	79,381		(345		)	614		(1		)	79,995		(346		)
Total	$	204,949	$	(944	)	$	1,738	$	(3	)	$	206,687	$	(947	)



At December 31, 2011	Less than 12 months					12 months or more					Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
State and municipal bonds	$	9,436	$	(7	)	$	—	$	—		$	9,436	$	(7	)
U.S. Treasury securities	4,932		(4		)	—		—			4,932		(4		)
Government sponsored enterprises	12,495		(11		)	—		—			12,495		(11		)
Residential mortgage-backed securities	5,127		(11		)	43		(1		)	5,170		(12		)
Commercial mortgage-backed securities	—		—			—		—			—		—
Asset-backed securities	—		—			—		—			—		—
Corporate debt and other securities	350,294		(10,178		)	—		—			350,294		(10,178		)
Total	$	382,284	$	(10,211	)	$	43	$	(1	)	$	382,327	$	(10,212	)

The unrealized losses presented in this table do not meet the criteria for treatment as an other-than-temporary impairment. The unrealized losses are the result of interest rate movements. The Company has not decided to sell and it is not more-likely-than not that the Company will be required to sell before a recovery of the amortized cost basis of these securities.

The Company continues to review its investment portfolios under its impairment review policy. Given the current market conditions and the significant judgments involved, there is a continuing risk that declines in fair value may occur and that other-than-temporary impairments may be recorded in future periods.