Fair Value Measurements

12 Months Ended

Dec. 31, 2013

7.	Fair Value Measurements

Fair value measurements for items measured at fair value included the following as of December 31, 2013 and 2012:

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
December 31, 2013

U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	639,590	$	639,590	$	-	$	-
Obligations of U.S. states and political subdivisions		921,367		-		918,944		2,423
Corporate debt securities		2,171,415		-		2,171,415		-
Asset-backed securities		400,486		-		400,486		-
Residential mortgage-backed securities		358,537		-		358,537		-
Commercial mortgage-backed securities		271,383		-		271,383		-
Collateralized loan obligations		60,295		-		60,295		-
Debt securities issued by foreign sovereign governments		40,852		40,852		-		-
Total debt securities		4,863,925		680,442		4,181,060		2,423
Equity securities		2,894		2,573		-		321
Total investments	$	4,866,819	$	683,015	$	4,181,060	$	2,744
Real estate acquired (1)	$	13,280	$	-	$	-	$	13,280

(1)	Real estate acquired through claim settlement, which is held for sale, is reported in Other Assets on the consolidated balance sheet.

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
December 31, 2012

U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	866,251	$	866,251	$	-	$	-
Obligations of U.S. states and political subdivisions		812,394		-		809,264		3,130
Corporate debt securities		1,480,941		-		1,463,827		17,114
Asset-backed securities		324,436		-		324,436		-
Residential mortgage-backed securities		450,909		-		450,909		-
Commercial mortgage-backed securities		150,342		-		150,342		-
Debt securities issued by foreign sovereign governments		142,066		142,066		-		-
Total debt securities		4,227,339		1,008,317		3,198,778		20,244
Equity securities		2,936		2,615		-		321
Total investments	$	4,230,275	$	1,010,932	$	3,198,778	$	20,565
Real estate acquired (1)	$	3,463	$	-	$	-	$	3,463

(1)	Real estate acquired through claim settlement, which is held for sale, is reported in Other Assets on the consolidated balance sheet.

There were no transfers of securities between Level 1 and Level 2 during 2013 or 2012.

For assets and liabilities measured at fair value using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances for the years ended December 31, 2013 and 2012 is as follows:

	Obligations of U.S. States and Political Subdivisions			Corporate Debt Securities			Equity Securities		Total Investments			Real Estate Acquired
	(In thousands)
Balance at December 31, 2012	$	3,130		$	17,114		$	321	$	20,565		$	3,463
Total realized/unrealized gains (losses):
Included in earnings and reported as realized investment gains (losses), net		-			(225	)		-		(225	)		-
Included in earnings and reported as losses incurred, net		-			-			-		-			(4,959	)
Purchases		30			-			-		30			39,188
Sales		(737	)		(16,889	)		-		(17,626	)		(24,412	)
Transfers into Level 3		-			-			-		-			-
Transfers out of Level 3		-			-			-		-			-
Balance at December 31, 2013	$	2,423		$	-		$	321	$	2,744		$	13,280

Amount of total losses included in earnings for the year ended December 31, 2013 attributable to the change in unrealized losses on assets still held at December 31, 2013	$	-		$	-		$	-	$	-		$	-

	Obligations of U.S. States and Political Subdivisions			Corporate Debt Securities			Equity Securities		Total Investments			Real Estate Acquired
	(In thousands)
Balance at December 31, 2011	$	114,226		$	60,228		$	321	$	174,775		$	1,621
Total realized/unrealized gains (losses):
Included in earnings and reported as realized investment gains (losses), net		(8,669	)		(3,129	)		-		(11,798	)		-
Included in earnings and reported as net impairment losses recognized in earnings		-			(2,310	)		-		(2,310	)		-
Included in earnings and reported as losses incurred, net		-			-			-		-			(1,126	)
Included in other comprehensive income		5,630			733			-		6,363			-
Purchases		27			-			-		27			11,991
Sales		(108,084	)		(38,408	)		-		(146,492	)		(9,023	)
Transfers into Level 3		-			-			-		-			-
Transfers out of Level 3		-			-			-		-			-
Balance at December 31, 2012	$	3,130		$	17,114		$	321	$	20,565		$	3,463

Amount of total losses included in earnings for the year ended December 31, 2012 attributable to the change in unrealized losses on assets still held at December 31, 2012	$	-		$	-		$	-	$	-		$	-

	Obligations of U.S. States and Political Subdivisions			Corporate Debt Securities			Equity Securities		Total Investments			Real Estate Acquired
	(In thousands)
Balance at December 31, 2010	$	295,690		$	70,053		$	321	$	366,064		$	6,220
Total realized/unrealized gains (losses):
Included in earnings and reported as realized investment gains (losses), net		(7,883	)		200			-		(7,683	)		-
Included in earnings and reported as net impairment losses recognized in earnings		-			(662	)		-		(662	)		-
Included in earnings and reported as losses incurred, net		-			-			-		-			(371	)
Included in other comprehensive income		6,894			637			-		7,531			-
Purchases		-			-			-		-			5,279
Sales		(180,475	)		(10,000	)		-		(190,475	)		(9,507	)
Transfers into Level 3		-			-			-		-			-
Transfers out of Level 3		-			-			-		-			-
Balance at December 31, 2011	$	114,226		$	60,228		$	321	$	174,775		$	1,621

Amount of total losses included in earnings for the year ended December 31, 2011 attributable to the change in unrealized losses on assets still held at December 31, 2011	$	-		$	-		$	-	$	-		$	-

Additional fair value disclosures related to our investment portfolio are included in Note 6 – “Investments.” Fair value disclosures related to our debt are included in Note 8 – “Debt.”

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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