Michigan | 38-2626206 | |
(State of Incorporation) | (IRS Employer Identification No.) |
Page
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PART I – FINANCIAL INFORMATION
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ITEM 1 –
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2 - 3
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4
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5
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6
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7
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8 - 27
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ITEM 2 –
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28 - 45
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ITEM 3 –
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46 - 47
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ITEM 4 –
|
48
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PART II – OTHER INFORMATION
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ITEM 1 –
|
49
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ITEM 1A –
|
49
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ITEM 2 –
|
49
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ITEM 3 –
|
49
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ITEM 4 –
|
49
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ITEM 5 –
|
49
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ITEM 6 –
|
50
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51 |
As Adjusted
|
||||||||
2012
|
2011
|
|||||||
(Unaudited)
|
||||||||
(In thousands, except share data)
|
||||||||
Revenues
|
||||||||
Premiums earned
|
||||||||
Gross
|
$ | 265,619 | $ | 225,219 | ||||
Ceded
|
(42,212 | ) | (31,632 | ) | ||||
Net earned premiums
|
223,407 | 193,587 | ||||||
Net commissions and fees
|
7,410 | 7,293 | ||||||
Net investment income
|
13,815 | 13,502 | ||||||
Realized gains (losses):
|
||||||||
Total other-than-temporary impairments on securities
|
- | - | ||||||
Portion of loss recognized in other comprehensive income
|
- | - | ||||||
Net other-than-temporary impairments on securities recognized in earnings
|
- | - | ||||||
Net realized gains excluding other-than-temporary impairments on securities
|
902 | 363 | ||||||
Net realized gains
|
902 | 363 | ||||||
Total revenues
|
245,534 | 214,745 | ||||||
Expenses
|
||||||||
Losses and loss adjustment expenses
|
242,847 | 153,809 | ||||||
Reinsurance recoveries
|
(30,149 | ) | (24,853 | ) | ||||
Net losses and loss adjustment expenses
|
212,698 | 128,956 | ||||||
Policy acquisition and other underwriting expenses
|
71,373 | 64,833 | ||||||
General, selling and administrative expenses
|
5,745 | 5,876 | ||||||
General corporate expenses
|
717 | 273 | ||||||
Amortization expense
|
1,372 | 1,208 | ||||||
Interest expense
|
2,372 | 2,066 | ||||||
Total expenses
|
294,277 | 203,212 | ||||||
(Loss) income before taxes and equity earnings
|
(48,743 | ) | 11,533 | |||||
Federal and state income tax (benefit) expense
|
(21,357 | ) | 2,531 | |||||
Equity earnings of affiliates, net of tax
|
791 | 649 | ||||||
Equity (losses) earnings of unconsolidated subsidiaries, net of tax
|
(15 | ) | (8 | ) | ||||
Net (loss) income
|
$ | (26,610 | ) | $ | 9,643 | |||
(Losses) Earnings Per Share
|
||||||||
Basic
|
$ | (0.53 | ) | $ | 0.18 | |||
Diluted
|
$ | (0.53 | ) | $ | 0.18 | |||
Weighted average number of common shares
|
||||||||
Basic
|
49,776,011 | 52,240,813 | ||||||
Diluted
|
49,776,011 | 52,355,581 | ||||||
Dividends paid per common share
|
$ | 0.05 | $ | 0.04 |
As Adjusted
|
||||||||
2012
|
2011
|
|||||||
(Unaudited)
|
||||||||
(In thousands, except share data)
|
||||||||
Revenues
|
||||||||
Premiums earned
|
||||||||
Gross
|
$ | 741,646 | $ | 635,581 | ||||
Ceded
|
(114,121 | ) | (89,866 | ) | ||||
Net earned premiums
|
627,525 | 545,715 | ||||||
Net commissions and fees
|
24,927 | 23,628 | ||||||
Net investment income
|
41,230 | 40,839 | ||||||
Realized gains (losses):
|
||||||||
Total other-than-temporary impairments on securities
|
- | (84 | ) | |||||
Portion of loss recognized in other comprehensive income
|
- | - | ||||||
Net other-than-temporary impairments on securities recognized in earnings
|
- | (84 | ) | |||||
Net realized gains excluding other-than-temporary impairments on securities
|
3,201 | 2,353 | ||||||
Net realized gains
|
3,201 | 2,269 | ||||||
Total revenues
|
696,883 | 612,451 | ||||||
Expenses
|
||||||||
Losses and loss adjustment expenses
|
601,342 | 423,889 | ||||||
Reinsurance recoveries
|
(90,139 | ) | (68,268 | ) | ||||
Net losses and loss adjustment expenses
|
511,203 | 355,621 | ||||||
Policy acquisition and other underwriting expenses
|
203,479 | 185,684 | ||||||
General, selling and administrative expenses
|
18,411 | 17,751 | ||||||
General corporate expenses
|
2,848 | 909 | ||||||
Amortization expense
|
4,095 | 3,646 | ||||||
Interest expense
|
6,382 | 6,320 | ||||||
Total expenses
|
746,418 | 569,931 | ||||||
(Loss) income before taxes and equity earnings
|
(49,535 | ) | 42,520 | |||||
Federal and state income tax (benefit) expense
|
(21,284 | ) | 10,313 | |||||
Equity earnings of affiliates, net of tax
|
2,041 | 1,895 | ||||||
Equity losses of unconsolidated subsidiaries, net of tax
|
(28 | ) | (30 | ) | ||||
Net (loss) income
|
$ | (26,238 | ) | $ | 34,072 | |||
(Losses) Earnings Per Share
|
||||||||
Basic
|
$ | (0.52 | ) | $ | 0.64 | |||
Diluted
|
$ | (0.52 | ) | $ | 0.64 | |||
Weighted average number of common shares
|
||||||||
Basic
|
50,312,285 | 52,860,729 | ||||||
Diluted
|
50,312,285 | 52,974,390 | ||||||
Dividends paid per common share
|
$ | 0.15 | $ | 0.12 |
As Adjusted
|
||||||||
2012
|
2011
|
|||||||
(Unaudited)
|
||||||||
(In thousands)
|
||||||||
Net (loss) income
|
$ | (26,610 | ) | $ | 9,643 | |||
Other comprehensive (loss) income, net of tax:
|
||||||||
Unrealized gain on securities
|
11,921 | 16,788 | ||||||
Unrealized gains in affiliates and unconsolidated subsidiaries
|
57 | 23 | ||||||
Increase on non-credit other-than-temporary impairments on securities
|
271 | 74 | ||||||
Net deferred derivative losses - hedging activity
|
(72 | ) | (275 | ) | ||||
Less reclassification adjustment for investment gains included in net income
|
(880 | ) | (342 | ) | ||||
Other comprehensive gains
|
11,297 | 16,268 | ||||||
Comprehensive (loss) income
|
$ | (15,313 | ) | $ | 25,911 |
As Adjusted
|
||||||||
2012
|
2011
|
|||||||
(Unaudited)
|
||||||||
(In thousands)
|
||||||||
Net (loss) income
|
$ | (26,238 | ) | $ | 34,072 | |||
Other comprehensive (loss) income, net of tax:
|
||||||||
Unrealized gains on securities
|
19,653 | 27,936 | ||||||
Unrealized gains in affiliates and unconsolidated subsidiaries
|
222 | 22 | ||||||
Increase on non-credit other-than-temporary impairments on securities
|
563 | 159 | ||||||
Net deferred derivative (losses) gains - hedging activity
|
(185 | ) | 10 | |||||
Less reclassification adjustment for investment gains included in net income
|
(3,236 | ) | (2,222 | ) | ||||
Other comprehensive gains
|
17,017 | 25,905 | ||||||
Comprehensive (loss) income
|
$ | (9,221 | ) | $ | 59,977 |
As Adjusted
|
||||||||
September 30,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
(Unaudited)
|
||||||||
(In thousands, except share data)
|
||||||||
ASSETS
|
||||||||
Investments
|
||||||||
Debt securities available for sale, at fair value (amortized cost of $1,397,121 and $1,252,775)
|
$ | 1,527,482 | $ | 1,358,749 | ||||
Equity securities available for sale, at fair value (cost of $22,559 and $25,176)
|
25,615 | 27,174 | ||||||
Cash and cash equivalents
|
111,144 | 101,757 | ||||||
Accrued investment income
|
15,216 | 13,757 | ||||||
Premiums and agent balances receivable, net
|
225,943 | 183,160 | ||||||
Reinsurance recoverable on:
|
||||||||
Paid losses
|
14,251 | 9,870 | ||||||
Unpaid losses
|
366,998 | 315,884 | ||||||
Prepaid reinsurance premiums
|
52,756 | 33,754 | ||||||
Deferred policy acquisition costs
|
84,372 | 74,467 | ||||||
Goodwill
|
121,041 | 120,792 | ||||||
Other intangible assets
|
31,465 | 34,483 | ||||||
Other assets
|
121,097 | 96,251 | ||||||
Total assets
|
$ | 2,697,380 | $ | 2,370,098 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
Liabilities
|
||||||||
Losses and loss adjustment expenses
|
$ | 1,409,422 | $ | 1,194,977 | ||||
Unearned premiums
|
465,076 | 386,750 | ||||||
Debt
|
70,000 | 28,375 | ||||||
Debentures
|
80,930 | 80,930 | ||||||
Accounts payable and accrued expenses
|
35,923 | 38,716 | ||||||
Funds held and reinsurance balances payable
|
43,016 | 25,903 | ||||||
Payable to insurance companies
|
3,855 | 4,321 | ||||||
Deferred income taxes, net
|
13,489 | 8,453 | ||||||
Other liabilities
|
18,342 | 16,522 | ||||||
Total liabilities
|
2,140,053 | 1,784,947 | ||||||
Shareholders' Equity
|
||||||||
Common stock, $0.01 par value; authorized 75,000,000 shares; 49,776,011 and
|
||||||||
51,050,204 shares issued and outstanding
|
505 | 520 | ||||||
Additional paid-in capital
|
272,336 | 279,005 | ||||||
Retained earnings
|
200,360 | 238,539 | ||||||
Note receivable from officer
|
(745 | ) | (767 | ) | ||||
Accumulated other comprehensive income
|
84,871 | 67,854 | ||||||
Total shareholders' equity
|
557,327 | 585,151 | ||||||
Total liabilities and shareholders' equity
|
$ | 2,697,380 | $ | 2,370,098 |
Common
Stock
|
Additional Paid-
In Capital
|
Retained
Earnings
|
Note
Receivable
from Officer
|
Accumulated Other
Comprehensive
Income
|
Total
Shareholders'
Equity
|
|||||||||||||||||||
(Unaudited, In thousands)
|
||||||||||||||||||||||||
Balances December 31, 2011 (As previously reported)
|
$ | 520 | $ | 279,005 | $ | 245,816 | $ | (767 | ) | $ | 67,854 | $ | 592,428 | |||||||||||
Cumulative effect of adjustment resulting from adoption of new accounting guidance
|
- | - | (7,277 | ) | - | - | (7,277 | ) | ||||||||||||||||
As Adjusted Balances December 31, 2011
|
520 | 279,005 | 238,539 | (767 | ) | 67,854 | 585,151 | |||||||||||||||||
Net loss
|
- | - | (26,238 | ) | - | - | (26,238 | ) | ||||||||||||||||
Dividends declared
|
- | - | (7,546 | ) | - | - | (7,546 | ) | ||||||||||||||||
Change in unrealized gain or loss on available for sale securities, net of tax
|
- | - | - | - | 16,539 | 16,539 | ||||||||||||||||||
Change in valuation allowance on deferred tax assets
|
- | - | - | - | 441 | 441 | ||||||||||||||||||
Net deferred derivative loss - hedging activity
|
- | - | - | - | (185 | ) | (185 | ) | ||||||||||||||||
Stock award
|
- | 279 | - | - | - | 279 | ||||||||||||||||||
Long term incentive plan; stock award for 2012 plan years
|
- | 159 | - | - | - | 159 | ||||||||||||||||||
Change in investment of affiliates, net of tax
|
- | - | - | - | 197 | 197 | ||||||||||||||||||
Change in investment of unconsolidated subsidiaries
|
- | - | - | - | 25 | 25 | ||||||||||||||||||
Repurchase of 1,267,300 shares of common stock
|
(15 | ) | (7,107 | ) | (4,395 | ) | - | - | (11,517 | ) | ||||||||||||||
Note receivable from officer
|
- | - | - | 22 | - | 22 | ||||||||||||||||||
Balances September 30, 2012
|
$ | 505 | $ | 272,336 | $ | 200,360 | $ | (745 | ) | $ | 84,871 | $ | 557,327 |
As Adjusted
|
||||||||
2012
|
2011
|
|||||||
(Unaudited)
|
||||||||
(In thousands)
|
||||||||
Cash Flows From Operating Activities
|
||||||||
Net (loss) income
|
$ | (26,238 | ) | $ | 34,072 | |||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Amortization of other intangible assets
|
4,095 | 3,646 | ||||||
Amortization of deferred debenture issuance costs
|
94 | 94 | ||||||
Depreciation of furniture, equipment, and building
|
3,916 | 3,916 | ||||||
Net amortization of discount and premiums on bonds
|
4,680 | 3,092 | ||||||
Gain on sale of investments, net
|
(3,236 | ) | (2,222 | ) | ||||
Gain on sale of fixed assets
|
(66 | ) | (47 | ) | ||||
Long-term incentive plan expense (benefit)
|
159 | (1,195 | ) | |||||
Stock award
|
279 | 454 | ||||||
Equity earnings of affiliates, net of taxes
|
(2,041 | ) | (1,895 | ) | ||||
Equity losses of unconsolidated subsidiaries, net of tax
|
28 | 30 | ||||||
Deferred income tax benefit
|
(3,437 | ) | (9,304 | ) | ||||
Goodwill adjustment
|
(249 | ) | - | |||||
Write-off of book of business
|
123 | - | ||||||
Changes in operating assets and liabilities:
|
||||||||
(Increase) in:
|
||||||||
Premiums and agent balances receivable
|
(42,783 | ) | (23,829 | ) | ||||
Reinsurance recoverable on paid and unpaid losses
|
(55,495 | ) | (23,655 | ) | ||||
Prepaid reinsurance premiums
|
(19,002 | ) | (6,502 | ) | ||||
Deferred policy acquisition costs
|
(9,905 | ) | (8,335 | ) | ||||
Other assets
|
(3,773 | ) | (3,409 | ) | ||||
Increase (decrease) in:
|
||||||||
Losses and loss adjustment expenses
|
214,445 | 92,397 | ||||||
Unearned premiums
|
78,326 | 45,328 | ||||||
Payable to insurance companies
|
(466 | ) | 55 | |||||
Funds held and reinsurance balances payable
|
17,113 | 5,409 | ||||||
Other liabilities
|
(28,676 | ) | (13,225 | ) | ||||
Total adjustments
|
154,129 | 60,803 | ||||||
Net cash provided by operating activities
|
127,891 | 94,875 | ||||||
Cash Flows From Investing Activities
|
||||||||
Purchase of debt securities available for sale
|
(242,172 | ) | (170,746 | ) | ||||
Proceeds from sales and maturities of debt securities available for sale
|
103,529 | 104,272 | ||||||
Proceeds from sales of equity securities available for sale
|
3,090 | 700 | ||||||
Capital expenditures
|
(2,183 | ) | (5,606 | ) | ||||
Acquisition of rights renewals
|
- | (164 | ) | |||||
Other investing activities
|
(4,008 | ) | 132 | |||||
Net cash used in investing activities
|
(141,744 | ) | (71,412 | ) | ||||
Cash Flows From Financing Activities
|
||||||||
Proceeds from term loan
|
30,000 | - | ||||||
Proceeds from line of credit
|
20,000 | - | ||||||
Proceeds from FHLB advance
|
30,000 | - | ||||||
Payments on term loan
|
(23,875 | ) | (10,188 | ) | ||||
Payments on line of credit
|
(14,500 | ) | - | |||||
Book overdrafts
|
656 | (593 | ) | |||||
Dividends paid on common stock
|
(7,546 | ) | (6,336 | ) | ||||
Share repurchases
|
(11,517 | ) | (20,441 | ) | ||||
Other financing activities
|
22 | 29 | ||||||
Net cash provided by (used in) financing activities
|
23,240 | (37,529 | ) | |||||
Net increase (decrease) in cash and cash equivalents
|
9,387 | (14,066 | ) | |||||
Cash and cash equivalents, beginning of period
|
101,757 | 90,414 | ||||||
Cash and cash equivalents, end of period
|
$ | 111,144 | $ | 76,348 | ||||
Supplemental Disclosure of Cash Flow Information:
|
||||||||
Interest paid
|
$ | 5,951 | $ | 6,074 | ||||
Net income taxes paid
|
$ | 3,510 | $ | 18,279 | ||||
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
|
||||||||
Stock-based employee compensation
|
$ | 279 | $ | 454 |
December 31, 2011
|
||||||||||||
(In thousands)
|
As Previously
Reported
|
Adjustment
|
As Adjusted
Reported
|
|||||||||
Deferred policy acquisition costs
|
$ | 85,663 | $ | (11,196 | ) | $ | 74,467 | |||||
Total assets
|
2,381,294 | (11,196 | ) | 2,370,098 | ||||||||
Deferred income tax, net
|
12,372 | (3,919 | ) | 8,453 | ||||||||
Total liabilities
|
1,788,866 | (3,919 | ) | 1,784,947 | ||||||||
Retained earnings
|
245,816 | (7,277 | ) | 238,539 | ||||||||
Total shareholders' equity
|
592,428 | (7,277 | ) | 585,151 | ||||||||
Total liabilities and shareholders' equity
|
2,381,294 | (11,196 | ) | 2,370,098 |
Three Months Ended September 30, 2011
|
||||||||||||
(In thousands)
|
As Previously
Reported
|
Adj.
|
As Adjusted
Reported
|
|||||||||
Policy acquisition and other underwriting expenses
|
$ | 64,665 | $ | 168 | $ | 64,833 | ||||||
Total expenses
|
203,044 | 168 | 203,212 | |||||||||
Income before taxes and equity earnings
|
11,701 | (168 | ) | 11,533 | ||||||||
Federal and state income tax expense
|
2,590 | (59 | ) | 2,531 | ||||||||
Net income
|
9,752 | (109 | ) | 9,643 | ||||||||
Comprehensive income
|
26,020 | (109 | ) | 25,911 | ||||||||
Earnings per share
|
||||||||||||
Basic
|
$ | 0.19 | $ | (0.01 | ) | $ | 0.18 | |||||
Diluted
|
$ | 0.19 | $ | (0.01 | ) | $ | 0.18 |
Nine Months Ended September 30, 2011
|
||||||||||||
(In thousands)
|
As Previously
Reported
|
Adj.
|
As Adjusted
Reported
|
|||||||||
Policy acquisition and other underwriting expenses
|
$ | 184,553 | $ | 1,131 | $ | 185,684 | ||||||
Total expenses
|
568,800 | 1,131 | 569,931 | |||||||||
Income before taxes and equity earnings
|
43,651 | (1,131 | ) | 42,520 | ||||||||
Federal and state income tax expense
|
10,709 | (396 | ) | 10,313 | ||||||||
Net income
|
34,807 | (735 | ) | 34,072 | ||||||||
Comprehensive income
|
60,712 | (735 | ) | 59,977 | ||||||||
Earnings per share
|
||||||||||||
Basic
|
$ | 0.66 | $ | (0.02 | ) | $ | 0.64 | |||||
Diluted
|
$ | 0.66 | $ | (0.02 | ) | $ | 0.64 |
Nine Months Ended September 30, 2011
|
||||||||||||
(In thousands)
|
As Previously
Reported
|
Adjustment
|
As Adjusted
Reported
|
|||||||||
Net income
|
$ | 34,807 | $ | (735 | ) | $ | 34,072 | |||||
Deferred income tax expense
|
(8,908 | ) | (396 | ) | (9,304 | ) | ||||||
Deferred policy acquisition costs
|
(9,466 | ) | 1,131 | (8,335 | ) |
September 30, 2012
|
||||||||||||||||||||
Cost or
Amortized
Cost
|
Gross Unrealized
|
Estimated
Fair Value
|
||||||||||||||||||
Gains
|
Losses
|
Non-Credit
OTTI
|
||||||||||||||||||
Debt Securities:
|
||||||||||||||||||||
U.S. Government and agencies
|
$ | 19,298 | $ | 1,745 | $ | - | $ | - | $ | 21,043 | ||||||||||
Obligations of states and political subs
|
638,724 | 55,903 | - | - | 694,627 | |||||||||||||||
Corporate securities
|
566,869 | 57,765 | (63 | ) | - | 624,571 | ||||||||||||||
Redeemable preferred stock
|
1,743 | 441 | - | - | 2,184 | |||||||||||||||
Residential mortgage-backed securities
|
124,525 | 10,222 | (1 | ) | - | 134,746 | ||||||||||||||
Commercial mortgage-backed securities
|
35,556 | 2,877 | - | - | 38,433 | |||||||||||||||
Other asset-backed securities
|
10,406 | 1,714 | (242 | ) | - | 11,878 | ||||||||||||||
Total debt securities available for sale
|
1,397,121 | 130,667 | (306 | ) | - | 1,527,482 | ||||||||||||||
Equity Securities:
|
||||||||||||||||||||
Perpetual preferred stock
|
7,796 | 1,940 | - | - | 9,736 | |||||||||||||||
Common stock
|
14,763 | 1,281 | (165 | ) | - | 15,879 | ||||||||||||||
Total equity securities available for sale
|
22,559 | 3,221 | (165 | ) | - | 25,615 | ||||||||||||||
Total securities available for sale
|
$ | 1,419,680 | $ | 133,888 | $ | (471 | ) | $ | - | $ | 1,553,097 |
December 31, 2011
|
||||||||||||||||||||
Cost or
Amortized
Cost
|
Gross Unrealized
|
Estimated
Fair Value
|
||||||||||||||||||
Gains
|
Losses
|
Non-Credit
OTTI
|
||||||||||||||||||
Debt Securities:
|
||||||||||||||||||||
U.S. Government and agencies
|
$ | 20,510 | $ | 1,856 | $ | - | $ | - | $ | 22,366 | ||||||||||
Obligations of states and political subs
|
556,265 | 49,742 | (5 | ) | - | 606,002 | ||||||||||||||
Corporate securities
|
469,770 | 40,591 | (1,292 | ) | - | 509,069 | ||||||||||||||
Redeemable preferred stock
|
1,924 | 330 | - | - | 2,254 | |||||||||||||||
Residential mortgage-backed securities
|
152,719 | 11,534 | (40 | ) | (228 | ) | 163,985 | |||||||||||||
Commercial mortgage-backed securities
|
37,191 | 2,337 | - | - | 39,528 | |||||||||||||||
Other asset-backed securities
|
14,396 | 1,695 | (33 | ) | (513 | ) | 15,545 | |||||||||||||
Total debt securities available for sale
|
1,252,775 | 108,085 | (1,370 | ) | (741 | ) | 1,358,749 | |||||||||||||
Equity Securities:
|
||||||||||||||||||||
Perpetual preferred stock
|
10,413 | 1,792 | (58 | ) | - | 12,147 | ||||||||||||||
Common stock
|
14,763 | 597 | (333 | ) | - | 15,027 | ||||||||||||||
Total equity securities available for sale
|
25,176 | 2,389 | (391 | ) | - | 27,174 | ||||||||||||||
Total securities available for sale
|
$ | 1,277,951 | $ | 110,474 | $ | (1,761 | ) | $ | (741 | ) | $ | 1,385,923 |
September 30,
2012
|
December 31,
2011
|
|||||||
Unrealized gains
|
$ | 133,888 | $ | 110,474 | ||||
Unrealized losses
|
(471 | ) | (1,761 | ) | ||||
Non-credit OTTI
|
- | (741 | ) | |||||
Net unrealized gains
|
133,417 | 107,972 | ||||||
Deferred federal income tax expense
|
(46,696 | ) | (37,790 | ) | ||||
Net unrealized gains on investments, net of deferred federal income taxes
|
$ | 86,721 | $ | 70,182 |
For the Three Months
Ended September 30,
|
For the Nine Months
Ended September 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Realized gains (losses):
|
||||||||||||||||
Debt securities:
|
||||||||||||||||
Gross realized gains
|
$ | 818 | $ | 274 | $ | 2,812 | $ | 2,141 | ||||||||
Gross realized losses
|
(16 | ) | (22 | ) | (49 | ) | (163 | ) | ||||||||
Total debt securities
|
802 | 252 | 2,763 | 1,978 | ||||||||||||
Equity securities:
|
||||||||||||||||
Gross realized gains
|
78 | 90 | 473 | 244 | ||||||||||||
Gross realized losses
|
- | - | - | - | ||||||||||||
Total equity securities
|
78 | 90 | 473 | 244 | ||||||||||||
Net realized gains
|
$ | 880 | $ | 342 | $ | 3,236 | $ | 2,222 | ||||||||
OTTI included in realized losses on securities above
|
$ | - | $ | - | $ | - | $ | (84 | ) |
Available for Sale
|
||||||||
|
Amortized
Cost
|
Estimated
Fair Value
|
||||||
Due in one year or less
|
$ | 45,884 | $ | 46,446 | ||||
Due after one year through five years
|
353,917 | 377,406 | ||||||
Due after five years through ten years
|
634,545 | 713,525 | ||||||
Due after ten years
|
192,288 | 205,048 | ||||||
Mortgage-backed securities, collateralized obligations and asset-backed securities
|
170,487 | 185,057 | ||||||
$ | 1,397,121 | $ | 1,527,482 |
For the Three Months
Ended September 30,
|
For the Nine Months
Ended September 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Net Investment Income Earned From:
|
||||||||||||||||
Debt securities
|
$ | 13,544 | $ | 13,207 | $ | 40,348 | $ | 39,834 | ||||||||
Equity Securities
|
421 | 452 | 1,297 | 1,431 | ||||||||||||
Cash and cash equivalents
|
197 | 176 | 610 | 567 | ||||||||||||
Total gross investment income
|
14,162 | 13,835 | 42,255 | 41,832 | ||||||||||||
Less investment expenses
|
347 | 333 | 1,025 | 993 | ||||||||||||
Net investment income
|
$ | 13,815 | $ | 13,502 | $ | 41,230 | $ | 40,839 |
|
·
|
Historical and implied volatility of the security;
|
|
·
|
Length of time and extent to which the fair value has been less than amortized cost;
|
|
·
|
Conditions specifically related to the security such as default rates, loss severities, loan to value ratios, current levels of subordination, third party guarantees, and vintage;
|
|
·
|
Specific conditions in an industry or geographic area;
|
|
·
|
Any changes to the rating of the security by a rating agency;
|
|
·
|
Failure, if any, of the issuer of the security to make scheduled payments; and
|
|
·
|
Recoveries or additional declines in fair value subsequent to the balance sheet date.
|
September 30, 2012
|
||||||||||||||||||||||||||||||||||||
Less than 12 months
|
Greater than 12 months
|
Total
|
||||||||||||||||||||||||||||||||||
Number of
Issues
|
Fair Value of
Investments
with
Unrealized
Losses
|
Gross
Unrealized
Losses and
Non-Credit
OTTI
|
Number
of
Issues
|
Fair Value of
Investments
with Unrealized
Losses
|
Gross
Unrealized
Losses and
Non-Credit
OTTI
|
Number
of
Issues
|
Fair Value of
Investments
with
Unrealized
Losses
|
Gross
Unrealized
Losses and
Non-Credit
OTTI
|
||||||||||||||||||||||||||||
Debt Securities:
|
||||||||||||||||||||||||||||||||||||
U.S. Government and agencies
|
- | $ | - | $ | - | - | $ | - | $ | - | - | $ | - | $ | - | |||||||||||||||||||||
Obligations of states and political subs
|
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Corporate securities
|
3 | 5,305 | (29 | ) | 1 | 3,071 | (34 | ) | 4 | 8,376 | (63 | ) | ||||||||||||||||||||||||
Redeemable preferred stock
|
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Residential mortgage-backed securities
|
1 | 1 | - | 1 | 24 | (1 | ) | 2 | 25 | (1 | ) | |||||||||||||||||||||||||
Commercial mortgage-backed securities
|
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Other asset-backed securities
|
3 | 2,001 | (26 | ) | 5 | 1,348 | (216 | ) | 8 | 3,349 | (242 | ) | ||||||||||||||||||||||||
Total debt securities
|
7 | 7,307 | (55 | ) | 7 | 4,443 | (251 | ) | 14 | 11,750 | (306 | ) | ||||||||||||||||||||||||
Equity Securities:
|
||||||||||||||||||||||||||||||||||||
Perpetual preferred stock
|
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Common stock
|
- | - | - | 2 | 4,606 | (165 | ) | 2 | 4,606 | (165 | ) | |||||||||||||||||||||||||
Total equity securities
|
- | - | - | 2 | 4,606 | (165 | ) | 2 | 4,606 | (165 | ) | |||||||||||||||||||||||||
Total securities
|
7 | $ | 7,307 | $ | (55 | ) | 9 | $ | 9,049 | $ | (416 | ) | 16 | $ | 16,356 | $ | (471 | ) |
December 31, 2011
|
||||||||||||||||||||||||||||||||||||
Less than 12 months
|
Greater than 12 months
|
Total
|
||||||||||||||||||||||||||||||||||
Number of
Issues
|
Fair Value of
Investments
with
Unrealized
Losses
|
Gross
Unrealized
Losses and
Non-Credit
OTTI
|
Number
of
Issues
|
Fair Value of
Investments
with Unrealized
Losses
|
Gross
Unrealized
Losses and
Non-Credit
OTTI
|
Number
of
Issues
|
Fair Value of
Investments
with Unrealized
Losses
|
Gross
Unrealized
Losses and
Non-Credit
OTTI
|
||||||||||||||||||||||||||||
Debt Securities:
|
||||||||||||||||||||||||||||||||||||
U.S. Government and agencies
|
- | $ | - | $ | - | - | $ | - | $ | - | - | $ | - | $ | - | |||||||||||||||||||||
Obligations of states and political subs
|
1 | 202 | (2 | ) | 2 | 923 | (3 | ) | 3 | 1,125 | (5 | ) | ||||||||||||||||||||||||
Corporate securities
|
15 | 27,154 | (1,292 | ) | - | - | - | 15 | 27,154 | (1,292 | ) | |||||||||||||||||||||||||
Redeemable preferred stock
|
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Residential mortgage-backed securities
|
4 | 183 | (38 | ) | 2 | 3,561 | (230 | ) | 6 | 3,744 | (268 | ) | ||||||||||||||||||||||||
Commercial mortgage-backed securities
|
1 | 683 | - | - | - | - | 1 | 683 | - | |||||||||||||||||||||||||||
Other asset-backed securities
|
3 | 1,163 | (27 | ) | 8 | 1,831 | (519 | ) | 11 | 2,994 | (546 | ) | ||||||||||||||||||||||||
Total debt securities
|
24 | 29,385 | (1,359 | ) | 12 | 6,315 | (752 | ) | 36 | 35,700 | (2,111 | ) | ||||||||||||||||||||||||
Equity Securities:
|
||||||||||||||||||||||||||||||||||||
Perpetual preferred stock
|
3 | 1,079 | (58 | ) | - | - | - | 3 | 1,079 | (58 | ) | |||||||||||||||||||||||||
Common stock
|
1 | 279 | (12 | ) | 3 | 4,851 | (321 | ) | 4 | 5,130 | (333 | ) | ||||||||||||||||||||||||
Total equity securities
|
4 | 1,358 | (70 | ) | 3 | 4,851 | (321 | ) | 7 | 6,209 | (391 | ) | ||||||||||||||||||||||||
Total securities
|
28 | $ | 30,743 | $ | (1,429 | ) | 15 | $ | 11,166 | $ | (1,073 | ) | 43 | $ | 41,909 | $ | (2,502 | ) |
Balance as of December 31, 2011
|
$ | (789 | ) | |
Additional credit impairments on:
|
||||
Previously impaired securities
|
- | |||
Securities for which an impairment was not previously recognized
|
- | |||
Reductions
|
- | |||
Balance as of September 30, 2012
|
$ | (789 | ) |
Fair Value Measurements Using
|
||||||||||||||||
September 30,
2012
|
Quoted Prices
in Active
Markets for
Identical Assets
|
Significant Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
|||||||||||||
Total
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
Debt Securities:
|
||||||||||||||||
U.S. Government and agencies
|
$ | 21,043 | $ | - | $ | 21,043 | $ | - | ||||||||
Obligations of states and political subs
|
694,627 | - | 694,627 | - | ||||||||||||
Corporate securities
|
624,571 | - | 623,449 | 1,122 | ||||||||||||
Redeemable preferred stock
|
2,184 | 2,184 | - | - | ||||||||||||
Residential mortgage-backed securities
|
134,746 | - | 134,717 | 29 | ||||||||||||
Commercial mortgage-backed securities
|
38,433 | - | 37,705 | 728 | ||||||||||||
Other asset-backed securities
|
11,878 | - | 7,442 | 4,436 | ||||||||||||
Total debt securities available for sale
|
1,527,482 | 2,184 | 1,518,983 | 6,315 | ||||||||||||
Equity Securities:
|
||||||||||||||||
Perpetual preferred stock
|
9,736 | 8,976 | 760 | - | ||||||||||||
Common stock
|
15,879 | 15,879 | - | - | ||||||||||||
Total equity securities available for sale
|
25,615 | 24,855 | 760 | - | ||||||||||||
Total securities available for sale
|
$ | 1,553,097 | $ | 27,039 | $ | 1,519,743 | $ | 6,315 | ||||||||