Financing Receivables

6 Months Ended

Jun. 30, 2012

Financing Receivables [Abstract]

Financing Receivables

5. Financing Receivables

The Company has financing receivables that have both a specific maturity date, either on demand or on a fixed or determinable date, and are recognized as an asset in the Consolidated Balance Sheets.

The table below identifies the Company’s financing receivables by classification at June 30, 2012 and December 31, 2011.

	June 30 2012		December 31 2011
Receivables:
Agent receivables, net (allowance $2,230; $2,226 – 2011)	$	1,527	$	1,708
Investment-related financing receivables:
Mortgage loans, net (allowance $2,517; $2,849 – 2011)		579,500		601,923
Total financing receivables	$	581,027	$	603,631

The following table details the activity of the allowance for uncollectible accounts on agent receivables at June 30, 2012 and December 31, 2011.

	June 30 2012			December 31 2011
Beginning of year	$	2,226		$	644
Additions		154			1,724
Deductions		(150	)		(142	)
End of period	$	2,230		$	2,226

The following table details the mortgage loan portfolio as collectively or individually evaluated for impairment.

	June 30 2012			December 31 2011
Mortgage loans collectively evaluated for impairment	$	582,017		$	604,772
Mortgage loans individually evaluated for impairment		-			-
Allowance for potential future losses		(2,517	)		(2,849	)
Carrying value	$	579,500		$	601,923

The following table details the activity of the allowance for potential future losses on mortgage loans at June 30, 2012 and December 31, 2011.

	June 30 2012			December 31 2011
Beginning of year	$	2,849		$	3,410
Additions		32			-
Deductions		(364	)		(561	)
End of period	$	2,517		$	2,849

Agent Receivables

The Company has agent receivables which are classified as financing receivables and are reduced by an allowance for doubtful accounts. These trade receivables from agents are long-term in nature and are specifically assessed as to the collectability of each receivable. The Company’s gross agent receivables totaled $3.7 million at June 30, 2012, and the Company maintained an allowance for doubtful accounts totaling $2.2 million. Gross agent receivables totaled $3.9 million with an allowance for doubtful accounts of $2.2 million at December 31, 2011. The Company has two types of agent receivables, including:

• Agent specific loans. At June 30, 2012, these loans totaled $1.0 million with an allowance for doubtful accounts of $0.2 million. At December 31, 2011, agent specific loans totaled $0.8 million with an allowance for doubtful accounts of $0.2 million.

• Various agent commission advances and other commission receivables. Gross agent receivables in this category totaled $2.7 million, with an allowance for doubtful accounts of $2.0 million at June 30, 2012. Gross agent receivables totaled $3.1 million and the allowance for doubtful accounts was $2.0 million at December 31, 2011.

Mortgage Loans

The Company considers its mortgage loan portfolio to be long-term financing receivables. Mortgage loans are stated at cost, net of an allowance for potential future losses. Mortgage loan interest income is recognized on an accrual basis with any premium or discount amortized over the life of the loan. Prepayment and late fees are recorded on the date of collection. Loans in foreclosure, loans considered impaired, or loans past due 90 days or more are placed on a non-accrual status.

If a mortgage loan is determined to be on non-accrual status, the Company does not accrue interest income. The loan is independently monitored and evaluated as to potential impairment or foreclosure. This evaluation includes assessing the probability of receiving future cash flows, along with consideration of many of the factors described below. If delinquent payments are made and the loan is brought current, then the Company returns the loan to active status and accrues income accordingly.

Generally, the Company considers its mortgage loans to be a portfolio segment. The Company considers its primary class to be property type. The Company primarily uses loan-to-value as its credit risk quality indicator but also monitors additional secondary risk factors, such as geographic distribution both on a regional and specific state basis. The mortgage loan portfolio segment is presented by property-type in a table in Note 3 – Investments, as are geographic distributions for both regional and significant state concentrations. These measures are also supplemented with various other analytics to provide additional information concerning mortgage loans and management’s assessment of financing receivables.

The following table presents an aging schedule for delinquent payments for both principal and interest at June 30, 2012 and December 31, 2011, by property type.

			Amount of Payments Past Due
	Book Value		30-59 Days		60-89 Days		> 90 Days		Total
June 30, 2012
Industrial	$	-	$	-	$	-	$	-	$	-
Medical		-		-		-		-		-
Office		159		9		-		-		9
Other		-		-		-		-		-
Total	$	159	$	9	$	-	$	-	$	9
December 31, 2011
Industrial	$	-	$	-	$	-	$	-	$	-
Office		816		13		-		-		13
Medical		7,019		75		-		-		75
Other		-		-		-		-		-
Total	$	7,835	$	88	$	-	$	-	$	88

At June 30, 2012, there was one mortgage loan that was 30 days past due. Subsequently, payment was received and this loan was brought current in July 2012.

The allowance for potential future losses on mortgage loans is maintained at a level believed by management to be adequate to absorb estimated credit losses. Management’s periodic evaluation and assessment of the adequacy of the reserve is based on known and inherent risks in the portfolio, historical and industry data, current economic conditions, and other relevant factors. The Company assesses the amount it maintains in the mortgage loan allowance through an assessment of what the Company believes are relevant factors at both the macro-environmental level and specific loan basis. A loan is considered impaired if it is probable that contractual amounts due will not be collected. The Company’s allowance for potential future losses was $2.5 million at June 30, 2012 and $2.8 million at December 31, 2011. For information regarding management’s periodic evaluation and assessment of mortgage loans and the allowance for potential future losses, please refer to Note 5 – Financing Receivables in the Company’s 2011 Form 10-K.

The Company has had three mortgage loan defaults in the current and prior year. One loan was foreclosed in the first quarter of 2012 and an impairment of $0.2 million was recorded. One of the loan defaults in 2011 resulted in an impairment of $0.4 million, while the second loan default in 2011 did not result in an impairment based upon the fair value of the property being greater than the loan value. The Company had no troubled loans that were restructured or modified during 2012 or 2011.