Securities in an Unrealized Loss Position

The following table summarizes all securities in an unrealized loss position at June 30, 2012 and December 31, 2011 by the length of time those securities have been continuously in an unrealized loss position:



	Less Than 12 Months				12 Months or Greater				Total
(Dollars in thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
June 30, 2012
U.S. government and agency	$	18,412	$	126	$	—	$	—	$	18,412	$	126
State and municipal	118,623		977		206,125		15,296		324,748		16,273
Mortgage-backed securities	281,422		2,358		62,418		8,973		343,840		11,331
Corporate	215,838		1,997		84,614		17,907		300,452		19,904
Foreign	103,524		4,112		7,959		271		111,483		4,383
Fixed maturity securities	737,819		9,570		361,116		42,447		1,098,935		52,017
Common stocks	62,293		2,415		—		—		62,293		2,415
Preferred stocks	23,302		1,485		38,567		7,472		61,869		8,957
Equity securities	85,595		3,900		38,567		7,472		124,162		11,372
Total	$	823,414	$	13,470	$	399,683	$	49,919	$	1,223,097	$	63,389

December 31, 2011
U.S. government and agency	$	24,668	$	169	$	4,800	$	182	$	29,468	$	351
State and municipal	131,417		827		183,205		15,723		314,622		16,550
Mortgage-backed securities	172,729		2,439		94,243		14,473		266,972		16,912
Corporate	341,764		8,327		125,654		27,760		467,418		36,087
Foreign	197,560		4,078		7,159		571		204,719		4,649
Fixed maturity securities	868,138		15,840		415,061		58,709		1,283,199		74,549
Common stocks	47,098		2,888		—		—		47,098		2,888
Preferred stocks	23,782		125		45,314		14,740		69,096		14,865
Equity securities	70,880		3,013		45,314		14,740		116,194		17,753
Total	$	939,018	$	18,853	$	460,375	$	73,449	$	1,399,393	$	92,302

Fixed Maturity Securities – A summary of the Company’s non-investment grade fixed maturity securities that were in an unrealized loss position at June 30, 2012 is presented in the table below.



(Dollars in thousands)	Number of Securities	Aggregate Fair Value		Gross Unrealized Loss
Unrealized loss less than $5 million:
Mortgage-backed securities	10	$	36,128	$	2,362
Corporate	11	21,363		1,914
State and municipal	4	32,400		2,407
Foreign	5	9,339		2,092
Unrealized loss $5 million or more:
Mortgage-backed security (1)	1	17,058		5,359
Total	31	$	116,288	$	14,134

_______________

(1) This investment is a residential mortgage-backed security that was evaluated based on the performance of the underlying collateral under various economic and default scenarios. The security has met its contractual obligations and the Company expects that it will continue to meet those contractual payment obligations as they become due. Based on this evaluation, the Company does not consider the investment to be OTTI.

For OTTI of fixed maturity securities that management does not intend to sell or, more likely than not, would not be required to sell, the portion of the decline in value considered to be due to credit factors is recognized in earnings and the portion of the decline in value considered to be due to non-credit factors is recognized in other comprehensive income. For the six months ended June 30, 2012 and 2011, there were no changes in the portion of impairments recognized in earnings for those securities that have been impaired due to both credit factors and non-credit factors.

The Company has evaluated its fixed maturity securities in an unrealized loss position and believes the unrealized losses are due primarily to temporary market and sector-related factors rather than to issuer-specific factors. None of these securities are delinquent or in default under financial covenants. Based on its assessment of these issuers, the Company expects them to continue to meet their contractual payment obligations as they become due and does not consider any of these securities to be OTTI.