Investment Securities

12 Months Ended

Dec. 31, 2012

Investment Securities

Note 6: Investment Securities

The amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of fixed-maturity securities held in trust at December 31, 2012, are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Trading Securities:
Obligations of U.S. government sponsored enterprises	$	97,103	$	1,416	$	(156)	$	98,363
Corporate debt securities		91,997		3,010		(34)		94,973
Commercial paper		54,949		—		—		54,949
Foreign corporate debt securities		18,305		379		(18)		18,666
Commercial mortgage-backed securities		10,541		64		(87)		10,518
Total fixed-maturity securities		272,895		4,869		(295)		277,469
Less total unrestricted fixed-maturity securities		75,659		168		(18)		75,809
Total fixed-maturity securities held in trust	$	197,236	$	4,701	$	(277)	$	201,660

The amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of fixed-maturity securities held in trust at December 31, 2011, are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Trading Securities:
U.S. Treasury securities	$	250	$	—	$	—	$	250
Obligations of U.S. government sponsored enterprises		122,874		2,029		(267)		124,636
Corporate debt securities		129,916		3,791		(845)		132,862
Foreign corporate debt securities		26,800		546		(117)		27,229
Commercial mortgage-backed securities		19,138		76		(146)		19,068
Total fixed-maturity securities		298,978		6,442		(1,375)		304,045
Less total unrestricted fixed-maturity securities		5,348		151		(9)		5,490
Total fixed-maturity securities held in trust	$	293,630	$	6,291	$	(1,366)	$	298,555

Amortized cost and estimated fair value of fixed-maturity securities at December 31, 2012 by contractual maturity are as follows:

	Amortized Cost		Estimated Fair Value
Maturity in:
2013	$	82,371	$	82,577
2014-2017		99,575		103,196
2018-2022		39,888		40,136
Thereafter		40,520		41,042
Mortgage-backed securities		10,541		10,518
Total fixed-maturity securities	$	272,895	$	277,469

Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

Net investment income for the periods ending December 31, 2012, 2011 and 2010, is summarized as follows:

	Successor		Predecessor		Predecessor		Predecessor
	Period from March 20, 2012 through December 31, 2012		Period from January 1, 2012 through March 19, 2012		Year ended December 31, 2011		Year ended December 31, 2010
Investment income:
Amortization of premium or discount on fixed-maturity	$	(1,837)	$	(523)	$	(2,750)	$	(2,822)
Investment income on fixed-maturity securities		7,232		2,467		12,920		17,410
Interest income on cash and equivalents		161		3		49		47
Realized net gain (loss) from sale of investment		2,747		176		1,206		4,796
Unrealized (losses) gains on trading securities held at period end		(1,410)		1,049		(2,828)		396
Net investment income	$	6,893	$	3,172	$	8,597	$	19,827

The following tables show how the Company’s investments are categorized in accordance with fair value measurement, as of December 31, 2012 and 2011:

	December 31, 2012
	Level 1		Level 2		Level 3		Total
Class of Security:
Obligations of U.S. government sponsored securities	$	11,362	$	87,001	$	—	$	98,363
Corporate debt securities		22,833		72,141		—		94,974
Commercial paper		54,948		—		—		54,948
Foreign corporate debt securities		1,001		17,665		—		18,666
Commercial mortgage-backed securities		—		10,518		—		10,518
Total	$	90,144	$	187,325	$	—	$	277,469

	December 31, 2011
	Level 1		Level 2		Level 3		Total
Class of Security:
U.S. Treasury securities	$	250	$	—	$	—	$	250
Obligations of U.S. government sponsored securities		42,927		81,709		—		124,636
Corporate debt securities		—		132,862		—		132,862
Foreign corporate debt securities		—		27,229		—		27,229
Commercial mortgage-backed securities		—		19,068		—		19,068
Total	$	43,177	$	260,868	$	—	$	304,045

A review of the fair value hierarchy classifications of the Company’s investments is conducted quarterly. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Reclassifications are reported as transfers in or transfers out of the applicable Level at end of the calendar quarter in which the reclassifications occur. During the year ended December 31, 2012, $17.7 million of investments were transferred from Level 2 to Level 1 as a result of improving market conditions for short-term and investment grade corporate securities.

	2012				2011
	Transfers from Level 1 to Level 2		Transfers from Level 2 to Level 1		Transfers from Level 1 to Level 2		Transfers from Level 2 to Level 1
Class of Securities:
Corporate securities	$	—	$	16,745	$	—	$	—
Foreign corporate debt securities		—		1,001		—		—
Total Transfers	$	—	$	17,746	$	—	$	—