Investments

12 Months Ended

Dec. 31, 2014

Investment [Abstract]

Investments

(2) Investments

The cost or amortized cost, gross unrealized gain or loss, and fair value of our fixed maturity and equity securities, all of which are classified as available for sale, were as follows:

		Cost or		Gross		Gross
		amortized		unrealized		unrealized
		cost		gain		loss		Fair value
December 31, 2014
U.S. government and government agency securities		$	70,279	$	827	$	(137)	$	70,969
Fixed maturity securities of states, municipalities
	and political subdivisions		896,130		58,738		(160)		954,708
Special purpose revenue bonds of states, municipalities
	and political subdivisions		2,246,707		143,291		(986)		2,389,012
Corporate securities			1,251,625		36,759		(11,549)		1,276,835
Residential mortgage-backed securities			805,458		20,215		(3,979)		821,694
Commercial mortgage-backed securities			593,956		19,707		(2,032)		611,631
Asset-backed securities			369,103		316		(2,592)		366,827
Foreign government securities			119,479		767		(1,554)		118,692
	Total fixed maturity securities	$	6,352,737	$	280,620	$	(22,989)	$	6,610,368
Equity securities		$	291,070	$	24,069	$	(18,787)	$	296,352

December 31, 2013
U.S. government and government agency securities		$	91,047	$	2,157	$	(495)	$	92,709
Fixed maturity securities of states, municipalities
	and political subdivisions		941,580		50,885		(5,979)		986,486
Special purpose revenue bonds of states, municipalities
	and political subdivisions		2,240,412		71,541		(46,758)		2,265,195
Corporate securities			1,195,387		40,860		(11,009)		1,225,238
Residential mortgage-backed securities			622,766		15,289		(19,936)		618,119
Commercial mortgage-backed securities			502,069		16,155		(13,336)		504,888
Asset-backed securities			183,660		319		(1,587)		182,392
Foreign government securities			144,566		3,237		(357)		147,446
	Total fixed maturity securities	$	5,921,487	$	200,443	$	(99,457)	$	6,022,473
Equity securities		$	464,388	$	58,842	$	(5,764)	$	517,466

Substantially all of our fixed maturity securities are investment grade. The following tables display the gross unrealized losses and fair value of all available for sale 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
December 31, 2014
Fixed maturity securities
	U.S. government and government agency
		securities		$	14,813	$	(8)	$	11,236	$	(129)	$	26,049	$	(137)
	Fixed maturity securities of states,
		municipalities and political subdivisions			3,857		(21)		19,337		(139)		23,194		(160)
	Special purpose revenue bonds of states,
		municipalities and political subdivisions			4,041		(19)		100,947		(967)		104,988		(986)
	Corporate securities				393,274		(7,085)		69,662		(4,464)		462,936		(11,549)
	Residential mortgage-backed securities				37,434		(100)		226,256		(3,879)		263,690		(3,979)
	Commercial mortgage-backed securities				5,228		(26)		99,868		(2,006)		105,096		(2,032)
	Asset-backed securities				181,579		(1,245)		78,797		(1,347)		260,376		(2,592)
	Foreign government securities				55,280		(1,498)		7,187		(56)		62,467		(1,554)
Equity securities					111,251		(17,839)		3,934		(948)		115,185		(18,787)
			Total	$	806,757	$	(27,841)	$	617,224	$	(13,935)	$	1,423,981	$	(41,776)

December 31, 2013
Fixed maturity securities
	U.S. government and government agency
		securities		$	23,717	$	(495)	$	-	$	-	$	23,717	$	(495)
	Fixed maturity securities of states,
		municipalities and political subdivisions			136,160		(5,277)		8,997		(702)		145,157		(5,979)
	Special purpose revenue bonds of states,
		municipalities and political subdivisions			684,560		(35,832)		83,228		(10,926)		767,788		(46,758)
	Corporate securities				277,853		(8,202)		35,437		(2,807)		313,290		(11,009)
	Residential mortgage-backed securities				306,874		(15,861)		31,687		(4,075)		338,561		(19,936)
	Commercial mortgage-backed securities				203,347		(12,611)		4,915		(725)		208,262		(13,336)
	Asset-backed securities				126,922		(1,587)		-		-		126,922		(1,587)
	Foreign government securities				78,182		(357)		-		-		78,182		(357)
Equity securities					75,620		(5,437)		7,016		(327)		82,636		(5,764)
			Total	$	1,913,235	$	(85,659)	$	171,280	$	(19,562)	$	2,084,515	$	(105,221)

At December 31,2014, we held approximately 2,900fixed maturity and equity securities, of which 24% included at least one lot in an unrealized loss position. 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 our securities for possible other-than-temporary impairment losses at each quarter end. During 2014, our reviews covered all impaired securities where the loss exceeded $1.0 million and the loss either exceeded 10% of cost or the security had been in a loss position for longer than twelve consecutive months. During 2013 and 2012, our reviews covered all impaired securities where the loss exceeded $0.5 million and the loss either exceeded 10% of cost or the security had been in a loss position for longer than twelve consecutive months. Our reviews considered the factors described in the “Other-than-temporary Impairments” section in Note 1.

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. We recognized no other-than-temporary impairment losses in 2014 and 2013. In 2012, we recognized $2.0 million of other-than-temporary impairment losses, of which $1.0 million was recognized in other comprehensive income and $1.0 million was recognized in earnings, as reported in our consolidated statement of earnings.

Certain of the securities for which we had previously recognized an other-than-temporary impairment loss had both a credit loss and an impairment loss recorded in other comprehensive income. The balance of these securities was $5.0 million at January 1, 2012. During 2012, we sold all but one of these securities,and sold the remaining security in 2013. No such securities were held at December 31,2014.

We do not consider the $41.8million of gross unrealized losses in our portfolio at December 31,2014 to be other-than-temporary impairments because: 1) as of that date, we had received all contractual interest and principal payments on the fixed maturity securities, 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 or cost bases and 4) the unrealized loss relates to non-credit factors, such as interest rate changes, fluctuations in exchange rates and market conditions.

The change in our unrealized pretax net gains (losses) on investments during each year was as follows:

		2014		2013		2012
Available for sale fixed maturity securities		$	156,645	$	(324,363)	$	91,947
Equity securities			(47,796)		44,266		8,812
Other investments			-		(2,534)		4,867
	Change in net unrealized investment gains (losses)	$	108,849	$	(282,631)	$	105,626

The amortized cost and fair value of our fixed maturity securities at December 31,2014, 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 5.3 years at December 31,2014.

		Cost or amortized cost		Fair value
Due in 1 year or less		$	168,246	$	171,070
Due after 1 year through 5 years			1,150,042		1,177,120
Due after 5 years through 10 years			1,392,501		1,470,264
Due after 10 years through 15 years			875,679		934,490
Due after 15 years			997,752		1,057,272
	Securities with contractual maturities		4,584,220		4,810,216
Mortgage-backed and asset-backed securities			1,768,517		1,800,152
	Total fixed maturity securities	$	6,352,737	$	6,610,368

At December 31,2014, our domestic insurance companies had deposited fixed maturity securities of $39.0million (amortized cost of $38.7million) to meet the deposit requirements of various state insurance departments. There are withdrawal and other restrictions on these deposits, but we direct how the deposits are invested and we earn interest on the funds.

The sources of our net investment income were as follows:

		2014		2013		2012
Fixed maturity securities		$	210,866	$	212,841	$	221,535
Equity securities			16,555		14,537		3,959
Other			1,434		828		3,476
	Total investment income		228,855		228,206		228,970
Investment expense			(7,235)		(8,024)		(6,336)
	Net investment income	$	221,620	$	220,182	$	222,634

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

			2014		2013		2012
Gains
	Fixed maturity securities		$	9,805	$	20,191	$	32,644
	Equity securities			68,671		20,886		797
	Other investments			-		5,345		2,074
		Total gains		78,476		46,422		35,515
Losses
	Fixed maturity securities			(5,268)		(1,174)		(3,327)
	Equity securities			(6,838)		(3,218)		(1,039)
	Other investments			-		-		(1)
		Total losses		(12,106)		(4,392)		(4,367)
Net
	Fixed maturity securities			4,537		19,017		29,317
	Equity securities			61,833		17,668		(242)
	Other investments			-		5,345		2,073
		Net realized investment gain	$	66,370	$	42,030	$	31,148