4.	INVESTMENTS

Available-for-sale

The amortized cost and estimated fair values of the Company’s fixed maturity securities classified as available-for-sale were as follows:


	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses Non-OTTI			Fair Value
As at September 30, 2012
U.S. government and agency	$	4,532	$	494	$	—		$	5,026
Non-U.S. government		122,844		4,290		(222	)		126,912
Corporate		169,117		3,436		(538	)		172,015
Residential mortgage-backed		4,701		270		(80	)		4,891
Commercial mortgage-backed		1,376		45		—			1,421
Asset-backed		384		9		(16	)		377

	$	302,954	$	8,544	$	(856	)	$	310,642


	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses Non-OTTI			Fair Value
As at December 31, 2011
U.S. government and agency	$	17,816	$	546	$	(433	)	$	17,929
Non-U.S. government		160,128		9,227		(828	)		168,527
Corporate		366,954		7,937		(2,578	)		372,313
Residential mortgage-backed		13,544		276		(108	)		13,712
Commercial mortgage-backed		12,680		3,044		(7	)		15,717
Asset-backed		19,466		65		(413	)		19,118

	$	590,588	$	21,095	$	(4,367	)	$	607,316

Included within residential and commercial mortgage-backed securities as at September 30, 2012 are securities issued by U.S. governmental agencies with a fair value of $3,889 (as at December 31, 2011: $4,624).

The following tables summarize the Company’s fixed maturity securities classified as available-for-sale in an unrealized loss position as well as the aggregate fair value and gross unrealized loss by length of time the security has continuously been in an unrealized loss position:


	12 Months or Greater					Less Than 12 Months					Total
As at September 30, 2012	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. government and agency	$	—	$	—		$	—	$	—		$	—	$	—
Non-U.S. government		2,599		(133	)		3,770		(89	)		6,369		(222	)
Corporate		15,372		(113	)		18,371		(425	)		33,743		(538	)
Residential mortgage-backed		1,129		(80	)		1		—			1,130		(80	)
Commercial mortgage-backed		—		—			—		—			—		—
Asset-backed		212		(16	)		—		—			212		(16	)

	$	19,312	$	(342	)	$	22,142	$	(514	)	$	41,454	$	(856	)


	12 Months or Greater					Less Than 12 Months					Total
As at December 31, 2011	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. government and agency	$	—	$	—		$	8,318	$	(433	)	$	8,318	$	(433	)
Non-U.S. government		14,982		(466	)		16,305		(362	)		31,287		(828	)
Corporate		47,197		(1,367	)		54,106		(1,211	)		101,303		(2,578	)
Residential mortgage-backed		1,299		(105	)		36		(3	)		1,335		(108	)
Commercial mortgage-backed		—		—			215		(7	)		215		(7	)
Asset-backed		7,577		(187	)		6,491		(226	)		14,068		(413	)

	$	71,055	$	(2,125	)	$	85,471	$	(2,242	)	$	156,526	$	(4,367	)

As at September 30, 2012 and December 31, 2011, the number of securities classified as available-for-sale in an unrealized loss position was 37 and 107, respectively, with a fair value of $41.5 million and $156.5 million, respectively. Of these securities, the number of securities that had been in an unrealized loss position for twelve months or longer was 25 and 59, respectively. As of September 30, 2012, none of these securities were considered to be other than temporarily impaired.

The contractual maturities of the Company’s fixed maturity securities classified as available-for-sale are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


As at September 30, 2012	Amortized Cost		Fair Value		% of Total Fair Value
Due in one year or less	$	225,146	$	227,225		73.1	%
Due after one year through five years		68,264		73,299		23.6	%
Due after five years through ten years		—		—		—
Due after ten years		3,083		3,429		1.1	%

		296,493		303,953		97.8	%
Residential mortgage-backed		4,701		4,891		1.6	%
Commercial mortgage-backed		1,376		1,421		0.5	%
Asset-backed		384		377		0.1	%

	$	302,954	$	310,642		100.0	%


As at December 31, 2011	Amortized Cost		Fair Value		% of Total Fair Value
Due in one year or less	$	230,550	$	230,377		37.9	%
Due after one year through five years		308,062		322,131		53.0	%
Due after five years through ten years		3,296		3,367		0.6	%
Due after ten years		2,990		2,894		0.5	%

		544,898		558,769		92.0	%
Residential mortgage-backed		13,544		13,712		2.3	%
Commercial mortgage-backed		12,680		15,717		2.6	%
Asset-backed		19,466		19,118		3.1	%

	$	590,588	$	607,316		100.0	%

The following tables set forth certain information regarding the credit ratings (provided by major rating agencies) of the Company’s fixed maturity securities classified as available-for-sale:


As at September 30, 2012	Amortized Cost		Fair Value		% of Total Fair Value
AAA	$	111,505	$	115,607		37.2	%
AA		82,714		84,430		27.2	%
A		99,310		100,912		32.5	%
BBB or lower		9,085		8,971		2.9	%
Not Rated		340		722		0.2	%

	$	302,954	$	310,642		100.0	%


As at December 31, 2011	Amortized Cost		Fair Value		% of Total Fair Value
AAA	$	204,967	$	214,873		35.4	%
AA		131,092		132,971		21.9	%
A		210,040		215,225		35.4	%
BBB or lower		44,100		43,526		7.2	%
Not Rated		389		721		0.1	%

	$	590,588	$	607,316		100.0	%

Trading

The estimated fair values of the Company’s investments in fixed maturity securities, short-term investments and equities classified as trading securities were as follows:


	September 30, 2012		December 31, 2011
U.S. government and agency	$	375,150	$	400,908
Non-U.S. government		269,376		212,251
Corporate		1,767,571		1,595,930
Municipal		20,568		25,416
Residential mortgage-backed		119,462		97,073
Commercial mortgage-backed		135,740		70,977
Asset-backed		54,779		43,083
Equities		101,072		89,981

	$	2,843,718	$	2,535,619

The following tables set forth certain information regarding the credit ratings (provided by major rating agencies) of the Company’s fixed maturity securities and short-term investments classified as trading:


As at September 30, 2012	Fair Value		% of Total Fair Value
AAA	$	404,395		14.7	%
AA		1,057,034		38.5	%
A		893,069		32.6	%
BBB or lower		370,240		13.5	%
Not Rated		17,908		0.7	%

	$	2,742,646		100.0	%


As at December 31, 2011	Fair Value		% of Total Fair Value
AAA	$	881,951		36.0	%
AA		400,394		16.4	%
A		796,608		32.6	%
BBB or lower		341,307		14.0	%
Not Rated		25,378		1.0	%

	$	2,445,638		100.0	%

Other Investments

The estimated fair values of the Company’s other investments were as follows:


	September 30, 2012		December 31, 2011
Private equity funds	$	115,199	$	107,388
Bond funds		147,609		54,537
Fixed income hedge funds		52,322		24,395
Equity fund		53,889		—
Real estate debt fund		15,861		—
Other		4,848		5,944

	$	389,728	$	192,264

These investments are discussed in further detail below.

Private equity funds

This class is comprised of several private equity funds that invest primarily in the financial services industry. All of the Company’s investments in private equity funds are subject to restrictions on redemptions and sales that are determined by the governing documents and limit the Company’s ability to liquidate those investments. These restrictions have been in place since the dates the initial investments were made by the Company.

As of September 30, 2012 and December 31, 2011, the Company had $115.2 million and $107.4 million, respectively, of other investments recorded in private equity funds, which represented 2.6% and 2.4% of total investments, cash and cash equivalents and restricted cash and cash equivalents at September 30, 2012 and December 31, 2011. Due to a lag in the valuations reported by the managers, the Company records changes in the investment value with up to a three-month lag.

Bond funds

This class is comprised of a number of positions in diversified bond mutual funds managed by third-party managers.

Fixed income hedge funds

This class is comprised of hedge funds that invest in a diversified portfolio of debt securities. The advisor of the funds intends to seek attractive risk-adjusted total returns for the funds’ investors by acquiring, originating, and actively managing a diversified portfolio of debt securities, with a focus on various forms of asset-backed securities and loans. The funds focus on investments that the advisor believes to be fundamentally undervalued with current market prices that are believed to be compelling relative to intrinsic value. The hedge funds are not currently eligible for redemption due to imposed lock-up periods of three years from the time of the Company’s initial investment. Once eligible, redemptions will be permitted quarterly with 90 days’ notice. The first investment in the funds will be eligible for redemption in March 2014.

Equity fund

This class is comprised of an equity fund that invests in a diversified portfolio of international publicly-traded equity securities. The manager of the fund seeks to maximize the intrinsic value of the portfolio by focusing on price and quality.

Real estate debt fund

This class is comprised of a real estate debt fund that invests primarily in U.S. commercial real estate. A redemption request for this fund can be made 10 days after the date of any monthly valuation; the fund states that it will make commercially reasonable efforts to redeem the investment within the next monthly period.

Other

This class is comprised primarily of the College and University Facility Loan Trust (the “Loan Trust”). The Loan Trust provides loans to educational institutions throughout the U.S. and its territories. The Company holds Class B certificates of the Loan Trust and accordingly receives semi-annual distributions. The Company has no redemption rights with respect to its investment in the Loan Trust.

Redemption restrictions on other investments

The following table presents the total fair value, unfunded commitments and redemption frequency for all other investments. These investments are all valued at net asset value as at September 30, 2012:


	Total Fair Value		Gated/Side Pocket Investments		Investments without Gates or Side Pockets		Unfunded Commitments		Redemption Frequency
Private equity funds	$	115,199	$	—	$	115,199	$	63,099	Not eligible
Bond funds		147,609		—		147,609		—	Daily to monthly
Fixed income hedge funds		52,322		—		52,322		—	Quarterly after lock-up periods expire
Equity funds		53,889		—		53,889		—	Bi-monthly
Real estate debt fund		15,861		—		15,861		—	10 days notice after monthly valuation
Other		4,848		—		4,848		696	Not eligible

	$	389,728	$	—	$	389,728	$	63,795

Certain funds included in other investments are subject to a lock-up period. A lock-up period refers to the initial amount of time an investor is contractually required to invest before having the ability to redeem the investment. Funds that do provide for periodic redemptions may, depending on the funds’ governing documents, have the ability to deny or delay a redemption request, which is called a “gate.” The fund may restrict redemptions because the aggregate amount of redemption requests as of a particular date exceeds a specified level. The gate is a method for executing an orderly redemption process that allows for redemption requests to be executed in a timely manner to reduce the possibility of adversely affecting the remaining investors in the fund. Typically, the imposition of a gate delays a portion of the requested redemption, with the remaining portion to be settled in cash sometime after the redemption date.

Certain funds included in other investments may be allowed to invest a portion of their assets in illiquid securities, such as private equity or convertible debt. In such cases, a common mechanism used is a “side-pocket”, whereby the illiquid security is assigned to a separate memorandum capital account or designated account. Typically, the investor loses its redemption rights in the designated account. Only when the illiquid security is sold, or is otherwise deemed liquid by the fund, may investors redeem their interest in the side-pocket.

Information regarding other investments the Company has with related parties is described in “Note 12 —Related Party Transactions”.

Other-Than-Temporary Impairment Process

The Company assesses whether declines in the fair value of its fixed maturity investments classified as available-for-sale represent impairment losses that are other-than-temporary and whether a credit loss exists in accordance with its accounting policies. The Company had no planned sales of its fixed maturity investments classified as available-for-sale as at September 30, 2012. In assessing whether it is more likely than not that the Company will be required to sell a fixed maturity investment before its anticipated recovery, the Company considers various factors including its future cash flow requirements, legal and regulatory requirements, the level of its cash, cash equivalents, short-term investments and fixed maturity investments available-for-sale in an unrealized gain position, and other relevant factors. For the nine months ended September 30, 2012, the Company did not recognize any other-than-temporary impairments due to required sales. The Company determined that, as at September 30, 2012, no credit losses existed.

Fair Value of Financial Instruments

Fair value is defined as the price at which to sell an asset or transfer a liability (i.e. the “exit price”) in an orderly transaction between market participants. The Company uses a fair value hierarchy that gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data. The hierarchy is broken down into three levels as follows:

•

Level 1 — Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments.

•

Level 2 — Valuations based on quoted prices in active markets for similar assets or liabilities, quoted prices for identical assets or liabilities in inactive markets, or for which significant inputs are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data.

•

Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The unobservable inputs reflect the Company’s own judgment about assumptions that market participants might use.

The following is a summary of valuation techniques or models the Company uses to measure fair value by asset and liability classes.

Fixed Maturity Investments

The Company’s fixed maturity portfolio is managed by the Company’s Chief Investment Officer and outside investment advisors with oversight from the Company’s Investment Committee. Fair value prices for all securities in the fixed maturities portfolio are independently provided by the investment custodian, investment accounting service provider and investment managers, each of which utilize internationally recognized independent pricing services. Interactive Data Corporation is, however, the main pricing service utilized to estimate the fair value measurements for the Company’s fixed maturity investments. The Company records the unadjusted price provided by the investment custodian, investment accounting service provider or the investment manager and validates this price through a process that includes, but is not limited to: (i) comparison of prices between two independent sources, with significant differences requiring additional price sources; (ii) quantitative analysis (e.g., comparing the quarterly return for each managed portfolio to its target benchmark, with significant differences identified and investigated); (iii) evaluation of methodologies used by external parties to estimate fair value, including a review of the inputs used for pricing; and (iv) comparing the price to the Company’s knowledge of the current investment market. The Company’s internal price verification procedures and review of fair value methodology documentation provided by independent pricing services have not historically resulted in adjustment in the prices obtained from the pricing service.

The independent pricing services used by the investment custodian, investment accounting service provider and investment managers obtain actual transaction prices for securities that have quoted prices in active markets. For determining the fair value of securities that are not actively traded, in general, pricing services use “matrix pricing” in which the independent pricing service uses observable market inputs including, but not limited to, reported trades, benchmark yields, broker-dealer quotes, interest rates, prepayment speeds, default rates and such other inputs as are available from market sources to determine a reasonable fair value. In addition, pricing services use valuation models, using observable data, such as an Option Adjusted Spread model, to develop prepayment and interest rate scenarios. The Option Adjusted Spread model is commonly used to estimate fair value for securities such as mortgage-backed and asset-backed securities.

The following describes the techniques generally used to determine the fair value of the Company’s fixed maturities by asset class.

•

U.S. government and agency securities consist of securities issued by the U.S. Treasury and mortgage pass-through agencies such as the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and other agencies. The significant inputs used to determine the fair value of these securities include the spread above the risk-free yield curve, reported trades and broker-dealer quotes. These are considered to be observable market inputs and, therefore, the fair values of these securities are classified within Level 2.

•

Non-U.S. government securities consist of bonds issued by non-U.S. governments and agencies along with supranational organizations. The significant inputs used to determine the fair value of these securities include the spread above the risk-free yield curve, reported trades and broker-dealer quotes. These are considered to be observable market inputs and, therefore, the fair values of these securities are classified within Level 2.

•

Corporate securities consist primarily of investment-grade debt of a wide variety of corporate issuers and industries. The fair values of these securities are determined using the spread above the risk-free yield curve, reported trades, broker-dealer quotes, benchmark yields, and industry and market indicators. These are considered observable market inputs and, therefore, the fair values of these securities are classified within Level 2. Where pricing is unavailable from pricing services, the Company obtains non-binding quotes from broker-dealers. This is generally the case when there is a low volume of trading activity and current transactions are not orderly. In this event, securities are classified within Level 3. As at September 30, 2012, the Company had one corporate security classified as Level 3.

•

Municipal securities consist primarily of bonds issued by U.S.-domiciled state and municipal entities. The fair values of these securities are determined using the spread above the risk-free yield curve, reported trades, broker-dealer quotes and benchmark yields. These are considered observable market inputs and, therefore, the fair values of these securities are classified within Level 2.

•

Asset-backed securities consist primarily of investment-grade bonds backed by pools of loans with a variety of underlying collateral. The significant inputs used to determine the fair value of these securities include the spread above the risk-free yield curve, reported trades, benchmark yields, broker-dealer quotes, prepayment speeds, and default rates. These are considered observable market inputs and, therefore, the fair values of these securities are classified within Level 2.

•

Residential and commercial mortgage-backed securities include both agency and non-agency originated securities. The significant inputs used to determine the fair value of these securities include the spread above the risk-free yield curve, reported trades, benchmark yields, broker-dealer quotes, prepayment speeds, and default rates. These are considered observable market inputs and, therefore, the fair values of these securities are classified within Level 2. Where pricing is unavailable from pricing services, the Company obtains non-binding quotes from broker-dealers. This is generally the case when there is a low volume of trading activity and current transactions are not orderly. In this event, securities are classified within Level 3. As at September 30, 2012, the Company had no residential or commercial mortgage-backed securities classified as Level 3.

Equity Securities

The Company’s equity securities are traded on the major exchanges and are managed by two external advisors. The Company uses Interactive Data Corporation, an internationally recognized pricing service, to estimate the fair value for all of its equity securities. The Company’s equity securities are widely diversified and there is no significant concentration in any specific industry.

The Company has categorized all of its investments in common stock as Level 1 investments because the fair values of these securities are based on quoted prices in active markets for identical assets or liabilities. Because their fair value estimates are based on observable market data, the Company has categorized its investments in preferred stock as Level 2, with the exception of one investment in preferred stock that has been categorized as Level 3.

Other Investments

The Company has ongoing due diligence processes with respect to funds in which it invests and their managers. These processes are designed to assist the Company in assessing the quality of information provided by, or on behalf of, each fund and in determining whether such information continues to be reliable or whether further review is warranted. Certain funds do not provide full transparency of their underlying holdings; however, the Company obtains the audited financial statements for every fund annually, and regularly reviews and discusses the fund performance with the fund managers to corroborate the reasonableness of the reported net asset values. The use of net asset value as an estimate of the fair value for investments in certain entities that calculate net asset value is a permitted practical expedient. While reported net asset value is the primary input to the review, when the net asset value is deemed not to be indicative of fair value, the Company may incorporate adjustments to the reported net asset value (and not use the permitted practical expedient) on an investment by investment basis. These adjustments may involve significant management judgment.

For its investments in private equity funds, the Company measures fair value by obtaining the most recently published net asset value as advised by the external fund manager or third-party administrator. The funds calculate net asset value on a fair value basis. For all publicly-traded companies within the funds, the Company adjusts the net asset value based on the latest share price. The Company has classified its investments in private equity funds as Level 3 investments because they reflect the Company’s own judgment about the assumptions that market participants might use.

The bond funds in which the Company invests have been classified as Level 2 investments because their fair value is estimated using the net asset value reported by Bloomberg and because the bond funds provide daily liquidity.

For its investments in fixed income hedge funds, the Company measures fair value by obtaining the most recently published net asset value as advised by the external fund manager or third-party administrator. The investments in the funds are classified as Level 3 in the fair value hierarchy.

For its investment in the equity fund, the Company measures fair value by obtaining the most recently published net asset value. The investment in the fund is classified as Level 2 because the fair value is provided daily by the administrator and the underlying investments of the fund are publicly-traded equities.

For its investment in the real estate debt fund, the Company measures fair value by obtaining the most recently published net asset value as advised by the external fund manager or third-party administrator. The investment in the fund is classified as Level 3 in the fair value hierarchy.

For its investment in the Loan Trust, the Company measures fair value by obtaining the most recently published financial statements of the Loan Trust. The financial statements of the Loan Trust are audited annually in accordance with U.S. GAAP. In addition to the annual audited financial statements issued by the Loan Trust, it also provides unaudited statements on a semi-annual basis. The investment in the Loan Trust is classified as Level 3 in the fair value hierarchy.

A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets and liabilities. Reclassifications between Level 1, 2 and 3 of the fair value hierarchy are reported as transfers in and/or out as of the beginning of the quarter in which the reclassifications occur.

Fair Value Measurements

In accordance with the provisions of the Fair Value Measurement and Disclosure topic of the FASB Accounting Standards Codification (“ASC”) 820, the Company has categorized its investments that are recorded at fair value among levels as follows:


	September 30, 2012
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
U.S. government and agency	$	—	$	380,176	$	—	$	380,176
Non-U.S. government		—		396,288		—		396,288
Corporate		—		1,939,022		564		1,939,586
Municipal		—		20,568		—		20,568
Residential mortgage-backed		—		124,353		—		124,353
Commercial mortgage-backed		—		137,161		—		137,161
Asset-backed		—		55,156		—		55,156
Equities		92,955		4,825		3,292		101,072
Other investments		—		201,499		188,229		389,728

Total investments	$	92,955	$	3,259,048	$	192,085	$	3,544,088


	December 31, 2011
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
U.S. government and agency	$	—	$	418,837	$	—	$	418,837
Non-U.S. government		—		380,778		—		380,778
Corporate		—		1,967,724		519		1,968,243
Municipal		—		25,416		—		25,416
Residential mortgage-backed		—		110,785		—		110,785
Commercial mortgage-backed		—		86,694		—		86,694
Asset-backed		—		62,201		—		62,201
Equities		82,381		4,625		2,975		89,981
Other investments		—		54,537		137,727		192,264

Total investments	$	82,381	$	3,111,597	$	141,221	$	3,335,199

During 2012 and 2011, the Company had no transfers between Levels 1 and 2.

The following table presents a reconciliation of the beginning and ending balances for all investments measured at fair value on a recurring basis using Level 3 inputs during the three months ended September 30, 2012:


	Fixed Maturity Investments		Other Investments			Equity Securities			Total
Level 3 investments as of July 1, 2012	$	562	$	181,740		$	3,310		$	185,612
Purchases		—		7,084			—			7,084
Sales		—		(1,171	)		—			(1,171	)
Net realized and unrealized gains (losses) through earnings		2		576			(18	)		560
Net transfers into and/or (out of) Level 3		—		—			—			—

Level 3 investments as of September 30, 2012	$	564	$	188,229		$	3,292		$	192,085

The amount of net gains (losses) for the three months ended September 30, 2012 included in earnings attributable to the fair value of changes in assets still held at September 30, 2012 was $0.3 million. All of this amount was included in net realized and unrealized gains (losses).


	Fixed Maturity Investments			Other Investments			Equity Securities			Total
Level 3 investments as of July 1, 2011	$	552		$	148,840		$	4,431		$	153,823
Purchases		—			2,196			—			2,196
Sales		—			(62	)		—			(62	)
Net realized and unrealized losses through earnings		(42	)		(1,501	)		(731	)		(2,274	)
Net transfers into and/or (out of) Level 3		—			—			—			—

Level 3 investments as of September 30, 2011	$	510		$	149,473		$	3,700		$	153,683

The amount of net gains (losses) for the three months ended September 30, 2011 included in earnings attributable to the fair value of changes in assets still held at September 30, 2011 was $(0.3) million. All of this amount was included in net realized and unrealized gains (losses).


	Fixed Maturity Investments		Other Investments			Equity Securities		Total
Level 3 investments as of January 1, 2012	$	519	$	137,727		$	2,975	$	141,221
Purchases		—		57,246			—		57,246
Sales		—		(14,335	)		—		(14,335	)
Net realized and unrealized gains through earnings		45		7,591			317		7,953
Net transfers into and/or (out of) Level 3		—		—			—		—

Level 3 investments as of September 30, 2012	$	564	$	188,229		$	3,292	$	192,085

The amount of net gains (losses) for the nine months ended September 30, 2012 included in earnings attributable to the fair value of changes in assets still held at September 30, 2012 was $8.1 million. All of this amount was included in net realized and unrealized gains (losses).


	Fixed Maturity Investments			Other Investments			Equity Securities		Total
Level 3 investments as of January 1, 2011	$	1,444		$	132,435		$	3,575	$	137,454
Purchases		—			12,760			—		12,760
Sales		(1,043	)		(1,728	)		—		(2,771	)
Net realized and unrealized gains through earnings		109			6,006			125		6,240
Net transfers into and/or (out of) Level 3		—			—			—		—

Level 3 investments as of September 30, 2011	$	510		$	149,473		$	3,700	$	153,683

The amount of net gains (losses) for the nine months ended September 30, 2011 included in earnings attributable to the fair value of changes in assets still held at September 30, 2011 was $6.1 million. All of this amount was included in net realized and unrealized gains (losses).

Components of net realized and unrealized gains (losses) are as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Gross realized gains on available-for-sale securities	$	3,735		$	201		$	5,209		$	769
Gross realized losses on available-for-sale securities		(27	)		(19	)		(450	)		(329	)
Net realized gains on trading securities		3,824			1,317			12,684			4,463
Net unrealized gains (losses) on trading securities		13,059			(10,479	)		25,382			(5,251	)
Net unrealized gains on other investments		7,689			468			12,528			7,331

Net realized and unrealized gains (losses)	$	28,280		$	(8,512	)	$	55,353		$	6,983

Proceeds from sales and maturities of available-for-sale securities	$	112,928		$	70,583		$	296,537		$	332,560

Major categories of net investment income are summarized as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Interest from fixed maturities	$	20,027		$	20,765		$	62,019		$	52,471
Amortization of bond premiums and discounts		(6,208	)		(7,710	)		(22,634	)		(16,717	)
Dividends from equities		593			393			1,904			1,097
Interest from cash and cash equivalents and short-term investments		4,525			2,994			11,684			8,743
Interest on other receivables		1,027			871			6,242			4,971
Other income		733			1,378			4,091			2,723
Interest on deposits held with clients		377			317			988			1,013
Investment expenses		(1,416	)		(510	)		(3,299	)		(1,196	)

	$	19,658		$	18,498		$	60,995		$	53,105

Restricted Investments

The Company is required to maintain investments on deposit with various regulatory authorities to support its insurance and reinsurance operations. The investments on deposit are available to settle insurance and reinsurance liabilities. The Company also utilizes trust accounts to collateralize business with its insurance and reinsurance counterparties. These trust accounts generally take the place of letter of credit requirements. The investments in trusts as collateral are primarily highly rated fixed maturity securities. The carrying value of the Company’s restricted investments as of September 30, 2012 and December 31, 2011 was as follows:


	September 30, 2012		December 31, 2011
Assets used for collateral in trust for third-party agreements	$	482,699	$	571,041
Deposits with regulatory authorities		196,799		200,136
Others		54,643		59,763

	$	734,141	$	830,940