Investments (Tables)

6 Months Ended

Jun. 30, 2013

Investments, Debt and Equity Securities [Abstract]

Unrealized gains and losses on fixed maturities and equity securities

	Amortized		Unrealized		Unrealized		Fair		OTTI in
	Cost/Cost		Gains		Losses		Value		AOCI (2)
June 30, 2013
Fixed maturity securities
U.S. government and federally sponsored agency obligations (1):
Mortgage-backed securities	$	573,425	$	46,609	$	6,165	$	613,869	$	-
Other, including
U.S. Treasury securities		431,906		17,819		11,420		438,305		-
Municipal bonds		1,413,405		115,166		20,322		1,508,249		-
Foreign government bonds		49,517		5,913		216		55,214		-
Corporate bonds		2,344,406		197,675		28,376		2,513,705		-
Other mortgage-backed securities		778,466		30,938		8,132		801,272		2,653
Totals	$	5,591,125	$	414,120	$	74,631	$	5,930,614	$	2,653
Equity securities	$	78,016	$	6,373	$	1,349	$	83,040	$	-

December 31, 2012
Fixed maturity securities
U.S. government and federally sponsored agency obligations (1):
Mortgage-backed securities	$	547,040	$	72,644	$	125	$	619,559	$	-
Other, including
U.S. Treasury securities		371,706		37,857		135		409,428		-
Municipal bonds		1,402,424		186,261		2,648		1,586,037		-
Foreign government bonds		48,476		9,393		-		57,869		-
Corporate bonds		2,258,554		313,430		4,950		2,567,034		-
Other mortgage-backed securities		683,257		41,080		2,032		722,305		3,214
Totals	$	5,311,457	$	660,665	$	9,890	$	5,962,232	$	3,214
Equity securities	$	52,396	$	2,397	$	1,290	$	53,503	$	-

(1)

Fair value includes securities issued by Federal National Mortgage Association (“FNMA”) of $383,040 and $375,111; Federal Home Loan Mortgage Corporation (“FHLMC”) of $431,649 and $418,174; and Government National Mortgage Association (“GNMA”) of $130,780 and $136,998 as of June 30, 2013 and December 31, 2012, respectively.

(2)

Represents the amount of other-than-temporary impairment losses in AOCI which, beginning April 1, 2009, was not included in earnings under current accounting guidance. Amounts also include unrealized gains/losses on impaired securities relating to changes in the fair value of such securities subsequent to the impairment measurement date.

Summary of fair value and gross unrealized losses of fixed maturity securities and equity securities in an unrealized loss position

	12 Months or Less					More than 12 Months					Total
				Gross					Gross					Gross
	Fair Value			Unrealized Losses		Fair Value			Unrealized Losses		Fair Value			Unrealized Losses
June 30, 2013
Fixed maturity securities
U.S. government and federally sponsored agency obligations:
Mortgage-backed securities	$	103,346		$	6,165	$	44		$	-	$	103,390		$	6,165
Other		167,405			11,420		-			-		167,405			11,420
Municipal bonds		302,729			19,486		9,551			837		312,280			20,323
Foreign government bonds		5,762			216		-			-		5,762			216
Corporate bonds		541,977			24,891		13,749			3,484		555,726			28,375
Other mortgage-backed securities		189,646			6,986		35,632			1,146		225,278			8,132
Total fixed maturity securities		1,310,865			69,164		58,976			5,467		1,369,841			74,631
Equity securities (1)		29,394			926		1,033			423		30,427			1,349
Combined totals	$	1,340,259		$	70,090	$	60,009		$	5,890	$	1,400,268		$	75,980

Number of positions with a gross unrealized loss		435					33					468
Fair value as a percentage of total fixed maturities and equity securities fair value		22.3	%				1.0	%				23.3	%

December 31, 2012
Fixed maturity securities
U.S. government and federally sponsored agency obligations:
Mortgage-backed securities	$	11,006		$	124	$	50		$	1	$	11,056		$	125
Other		9,944			135		-			-		9,944			135
Municipal bonds		108,578			2,605		3,990			43		112,568			2,648
Foreign government bonds		-			-		-			-		-			-
Corporate bonds		56,481			875		26,725			4,075		83,206			4,950
Other mortgage-backed securities		58,218			621		25,014			1,411		83,232			2,032
Total fixed maturity securities		244,227			4,360		55,779			5,530		300,006			9,890
Equity securities (1)		19,344			1,288		9			2		19,353			1,290
Combined totals	$	263,571		$	5,648	$	55,788		$	5,532	$	319,359		$	11,180

Number of positions with a gross unrealized loss		156					43					199
Fair value as a percentage of total fixed maturities and equity securities fair value		4.4	%				0.9	%				5.3	%

(1)	Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds.

Summary of cumulative credit losses

	Six Months Ended
	June 30,
	2013		2012
Cumulative credit loss (1)
Beginning of period	$	2,877	$	3,957
New credit losses (2)		860		-
Losses related to securities sold or paid down during the period		-		-
End of period	$	3,737	$	3,957

(1)	The cumulative credit loss amounts exclude other-than-temporary impairment losses on securities held as of the periods indicated that the Company intended to sell or it was more likely than not that the Company would be required to sell the security before the recovery of the amortized cost basis.
(2)	Other than temporary impairment loss recorded on a Detroit general obligation bond.

Distribution of the Company's fixed maturity portfolio by estimated expected maturity

	Percent of Total Fair Value						June 30, 2013
	June 30,			December 31,			Fair		Amortized
	2013			2012			Value		Cost
Estimated expected maturity:
Due in 1 year or less		4.7	%		4.3	%	$	279,815	$	263,813
Due after 1 year through 5 years		20.7			20.8			1,226,101		1,155,912
Due after 5 years through 10 years		38.2			38.4			2,266,237		2,136,503
Due after 10 years through 20 years		19.3			18.7			1,145,965		1,080,363
Due after 20 years		17.1			17.8			1,012,496		954,534
Total		100.0	%		100.0	%	$	5,930,614	$	5,591,125

Average option-adjusted duration, in years		6.3			6.3

Proceeds received from sales of fixed maturities and equity securities

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Fixed maturity securities
Proceeds received	$	114,804	$	121,228	$	213,986	$	279,529
Gross gains realized		9,878		8,471		14,390		17,362
Gross losses realized		(471)		(2,684)		(481)		(11,829)

Equity securities
Proceeds received	$	6,299	$	915	$	11,133	$	924
Gross gains realized		2,776		8		3,344		17
Gross losses realized		(172)		(76)		(387)		(76)

Reconciliation of net unrealized investment gains (losses) on fixed maturity securities and equity securities

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Net unrealized investment gains (losses) on fixed maturity securities, net of tax
Beginning of period	$	411,979	$	298,096	$	423,004	$	284,338
Change in unrealized investment gains and losses		(182,919)		61,869		(189,828)		75,867
Reclassification of net realized investment (gains) losses to net income		(8,392)		(3,861)		(12,508)		(4,101)
End of period	$	220,668	$	356,104	$	220,668	$	356,104

Net unrealized investment gains (losses) on equity securities, net of tax
Beginning of period	$	3,604	$	2,238	$	720	$	2,408
Change in unrealized investment gains and losses		1,291		882		4,519		727
Reclassification of net realized investment (gains) losses to net income		(1,629)		(2,577)		(1,973)		(2,592)
End of period	$	3,266	$	543	$	3,266	$	543

- Definition

Tabular disclosure of the amount of other than temporary impairment (OTTI) related to credit losses recognized in earnings including: (a) the beginning balance of the amount related to credit losses on debt securities held by the investor at the beginning of the period for which a portion of an OTTI was recognized in other comprehensive income; (b) additions for the amount related to the credit loss for which an OTTI was not previously recognized; (c) reductions for securities sold during the period (realized); (d) reductions for securities for which the amount previously recognized in other comprehensive income was recognized in earnings because the investor intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis; (e) additional increases to the amount related to the credit loss for which an OTTI was previously recognized when the investor does not intend to sell the security and it is not more likely than not that the investor will be required to sell the security before recovery of its amortized cost basis; (f) reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security; and (g) the ending balance of the amount related to credit losses on debt securities held by the entity at the end of the period for which a portion of an OTTI was recognized in other comprehensive income.

+ References+ Details