Investments

6 Months Ended

Jun. 30, 2011

Investment [Abstract]

Investments

(3) Investments

Substantially all of our fixed income securities are investment grade. The cost or amortized cost, gross unrealized gain or loss, and fair value of our fixed income securities were as follows:

	Available for sale
	Cost or		Gross		Gross
	amortized		unrealized		unrealized
	cost		gain		loss			Fair value
June 30, 2011
U.S. government and government agency securities	$	353,530	$	9,837	$	(12	)	$	363,355
Fixed income securities of states, municipalities and political subdivisions		997,673		52,388		(2,720	)		1,047,341
Special purpose revenue bonds of states, municipalities and political subdivisions		1,580,332		55,512		(5,464	)		1,630,380
Corporate fixed income securities		681,433		27,179		(2,419	)		706,193
Residential mortgage-backed securities		1,106,984		46,547		(3,933	)		1,149,598
Commercial mortgage-backed securities		227,224		9,919		(1,411	)		235,732
Asset-backed securities		40,672		108		(42	)		40,738
Foreign government securities		252,870		8,927		(373	)		261,424
Total fixed income securities — available for sale	$	5,240,718	$	210,417	$	(16,374	)	$	5,434,761
December 31, 2010
U.S. government and government agency securities	$	315,339	$	9,097	$	(169	)	$	324,267
Fixed income securities of states, municipalities and political subdivisions		1,050,969		38,825		(7,737	)		1,082,057
Special purpose revenue bonds of states, municipalities and political subdivisions		1,614,554		34,764		(21,259	)		1,628,059
Corporate fixed income securities		545,883		26,436		(1,925	)		570,394
Residential mortgage-backed securities		958,404		40,949		(4,245	)		995,108
Commercial mortgage-backed securities		136,746		8,518		(36	)		145,228
Asset-backed securities		12,563		78		(75	)		12,566
Foreign government securities		230,348		11,537		(124	)		241,761
Total fixed income securities — available for sale	$	4,864,806	$	170,204	$	(35,570	)	$	4,999,440

	Held to maturity
	Cost or		Gross		Gross
	amortized		unrealized		unrealized
	cost		gain		loss			Fair value
June 30, 2011
U.S. government securities	$	6,997	$	157	$	—		$	7,154
Corporate fixed income securities		116,937		1,710		(391	)		118,256
Foreign government securities		50,059		883		—			50,942
Total fixed income securities — held to maturity	$	173,993	$	2,750	$	(391	)	$	176,352
December 31, 2010
U.S. government securities	$	12,993	$	264	$	—		$	13,257
Corporate fixed income securities		113,296		1,205		(277	)		114,224
Foreign government securities		67,379		995		(44	)		68,330
Total fixed income securities — held to maturity	$	193,668	$	2,464	$	(321	)	$	195,811

All fixed income securities were income producing in 2011. The following table displays the gross unrealized losses and fair value of all available for sale fixed income securities that were in a continuous unrealized loss position for the periods indicated.

	Less than 12 months					12 months or more					Total
			Unrealized					Unrealized					Unrealized
	Fair value		losses			Fair value		losses			Fair value		losses
June 30, 2011
U.S. government and government agency securities	$	12,816	$	(12	)	$	—	$	—		$	12,816	$	(12	)
Fixed income securities of states, municipalities and political subdivisions		101,478		(2,656	)		1,585		(64	)		103,063		(2,720	)
Special purpose revenue bonds of states, municipalities and political subdivisions		313,517		(5,225	)		8,425		(239	)		321,942		(5,464	)
Corporate fixed income securities		140,455		(2,419	)		—		—			140,455		(2,419	)
Residential mortgage-backed securities		163,755		(3,273	)		10,761		(660	)		174,516		(3,933	)
Commercial mortgage-backed securities		97,766		(1,411	)		—		—			97,766		(1,411	)
Asset-backed securities		13,042		(42	)		—		—			13,042		(42	)
Foreign government securities		23,023		(373	)		—		—			23,023		(373	)
Total	$	865,852	$	(15,411	)	$	20,771	$	(963	)	$	886,623	$	(16,374	)

	Less than 12 months					12 months or more					Total
			Unrealized					Unrealized					Unrealized
	Fair value		losses			Fair value		losses			Fair value		losses
December 31, 2010
U.S. government and government agency securities	$	20,976	$	(169	)	$	—	$	—		$	20,976	$	(169	)
Fixed income securities of states, municipalities and political subdivisions		228,228		(7,621	)		2,279		(116	)		230,507		(7,737	)
Special purpose revenue bonds of states, municipalities and political subdivisions		689,190		(21,156	)		6,344		(103	)		695,534		(21,259	)
Corporate fixed income securities		66,029		(1,925	)		—		—			66,029		(1,925	)
Residential mortgage-backed securities		123,782		(3,081	)		22,152		(1,164	)		145,934		(4,245	)
Commercial mortgage-backed securities		—		—			3,084		(36	)		3,084		(36	)
Asset-backed securities		9,174		(75	)		—		—			9,174		(75	)
Foreign government securities		10,699		(124	)		—		—			10,699		(124	)
Total	$	1,148,078	$	(34,151	)	$	33,859	$	(1,419	)	$	1,181,937	$	(35,570	)

A security has an impairment loss when its fair value is less than its cost or amortized cost at the balance sheet date. We evaluate the securities in our fixed income securities portfolio for possible other-than-temporary impairment losses at each quarter end. Our reviews cover all impaired securities where the loss exceeds $0.5 million and the loss either exceeds 10% of cost or the security had been in a loss position for longer than twelve consecutive months. For other-than-temporary impairment losses, we recognize an other-than-temporary impairment loss in earnings in the period that we determine: 1) we intend to sell the security, 2) it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis or 3) the security has a credit loss. Any non-credit portion of the other-than-temporary impairment loss is recognized in shareholders’ equity.

Our other-than-temporary impairment losses were as follows:

	Six months ended June 30,					Three months ended June 30,
	2011			2010		2011			2010
Total other-than-temporary impairment loss	$	(4,677	)	$	—	$	(1,548	)	$	—
Portion recognized in other comprehensive income		1,198			—		1,198			—
Net other-than-temporary impairment loss recognized in earnings	$	(3,479	)	$	—	$	(350	)	$	—

We have recognized credit losses on certain impaired fixed income securities, for which each security also had an impairment loss recorded in other comprehensive income. The rollforward of these credit losses was as follows:

	Six months ended June 30,					Three months ended June 30,
	2011			2010		2011			2010
Balance at beginning of period	$	4,273		$	3,848	$	6,685		$	3,848
Credit losses recognized in earnings
Securities previously impaired		1,597			—		350			—
Securities previously not impaired		1,882			—		—			—
Securities sold		(3,905	)		—		(3,188	)		—
Balance at June 30	$	3,847		$	3,848	$	3,847		$	3,848

We had $0.9 million of after-tax other-than-temporary impairment losses, related to mortgage-backed securities, included in accumulated other comprehensive income within shareholders’ equity at June 30, 2011. This amount includes the after-tax unrealized We do not consider the $16.4 million of gross unrealized losses in our fixed income securities portfolio at June 30, 2011 to be other-than-temporary impairments because: 1) we received substantially all contractual interest and principal payments on these securities as of June 30, 2011, 2) we do not intend to sell the securities, 3) it is more likely than not that we will not be required to sell the securities before recovery of their amortized cost bases and 4) the unrealized loss relates to non-credit factors, such as interest rate changes and market conditions.

The amortized cost and fair value of our fixed income securities at June 30, 2011, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The weighted-average life of our mortgage-backed and asset-backed securities was 4.9 years at June 30, 2011.

	Available for sale				Held to maturity
	Cost or
	amortized cost		Fair value		Amortized cost		Fair value
Due in 1 year or less	$	266,293	$	270,110	$	54,730	$	55,227
Due after 1 year through 5 years		1,134,360		1,184,638		118,389		120,204
Due after 5 years through 10 years		1,018,126		1,072,105		874		921
Due after 10 years through 15 years		732,546		757,012		—		—
Due after 15 years		714,513		724,828		—		—
Securities with fixed maturities		3,865,838		4,008,693		173,993		176,352
Mortgage-backed and asset-backed securities		1,374,880		1,426,068		—		—
Total fixed income securities	$	5,240,718	$	5,434,761	$	173,993	$	176,352

The sources of net investment income were as follows:

	Six months ended June 30,						Three months ended June 30,
	2011			2010			2011			2010
Fixed income securities	$	104,045		$	99,080		$	52,039		$	50,481
Short-term investments		321			360			165			170
Other		2,030			2,042			1,388			534
Total investment income		106,396			101,482			53,592			51,185
Investment expense		(2,379	)		(2,016	)		(1,170	)		(968	)
Net investment income	$	104,017		$	99,466		$	52,422		$	50,217

Realized pretax gains (losses) on the sale of investments, which exclude other-than-temporary impairment credit losses, were as follows:

	Six months ended June 30,						Three months ended June 30,
	2011			2010			2011			2010
Fixed income securities
Gains	$	4,315		$	7,593		$	4,099		$	2,692
Losses		(3,814	)		(599	)		(3,035	)		(376	)
Net fixed income securities	$	501		$	6,994		$	1,064		$	2,316
Other investments
Gains	$	4		$	2		$	—		$	—
Losses		(10	)		(156	)		(10	)		(1	)
Net other investments	$	(6	)	$	(154	)	$	(10	)	$	(1	)
Total
Gains	$	4,319		$	7,595		$	4,099		$	2,692
Losses		(3,824	)		(755	)		(3,045	)		(377	)
Net realized investment gain	$	495		$	6,840		$	1,054		$	2,315