Discontinued Operations

6 Months Ended

Jun. 30, 2012

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

During the three months ended June 30, 2012, the Company signed a stock purchase agreement for the sale of 100% of its wholly-owned insurance companies to White Mountains Solutions.  The financial terms of the deal anticipate obtaining department of insurance approval for a pre-close dividend to be paid from one, or both of the insurance entities to the Company before the sale.  The final purchase price will be adjusted depending on the amount of the dividend that is received prior to the close as well as any other increase or decrease in statutory surplus of the insurance companies between June 30, 2012 and closing.  The transaction is expected to be approved by the Ohio and California departments of insurance and is expected to close by the end of 2012. 

The Company expects approval for a pre-close dividend of approximately $25 million, which would result in a purchase price, net of selling costs of approximately $19.6 million, and a loss on sale of $5.4 million before income taxes which has been recorded in the accompanying consolidated statement of operations for the three months ended June 30, 2012.  The income tax benefit for the loss on sale is estimated to be $3 million. However, consistent with the Company's overall conclusion that it is not more likely than not that the Company will recognize the deferred tax assets, a full valuation allowance has been recorded on this benefit. 

As a result of the pending transaction, the assets and liabilities of the insurance segment qualify as held for sale at June 30, 2012 and have been classified as discontinued operations in the accompanying consolidated financial statements as of the earliest period presented.  Consequently, prior periods presented have been recast from amounts previously reported to reflect the insurance segment as discontinued operations. 

The net income or loss in each period, significant assets and liabilities are as follows (in thousands):

	Three months ended			Three months ended			Six Months Ended			Six Months Ended
	June 30, 2012			June 30, 2011			June 30, 2012			June 30, 2011
Net investment income	$	239		$	318		$	474		$	590
Net realized gain on investments	550			5,721			636			9,084
Other income	111			24			121			42
	900			6,063			1,231			9,716
Operating and other costs	(462		)	(287		)	(650		)	(802		)
Income before income taxes	438			5,776			581			8,914
Provision (benefit) for income taxes	293			2,014			(182		)	3,081
Income from operations	145			3,762			763			5,833
Loss on write down of assets to fair value	(5,369		)				(5,369		)
Net income (loss)	$	(5,224	)	$	3,762		$	(4,606	)	$	5,833

	June 30, 2012			December 31, 2011
ASSETS
Available-for-sale investments	$	34,475		$	35,170
Cash and cash equivalents	24,368			25,999
Reinsurance receivables	15,242			15,475
Other assets	305			404
Less: write down of assets to fair value (purchase price discount)	(5,072		)
Total assets	69,318			77,048
LIABILITIES
Unpaid losses and loss adjustment expenses	22,854			23,292
Other liabilities	1,802			4,532
Total liabilities	24,656			27,824
Net carrying value	$	44,662		$	49,224