Iowa
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45-2302834
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(State of Incorporation)
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(IRS Employer Identification No.)
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118 Second Avenue SE
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PO Box 73909
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Cedar Rapids, Iowa 52407-3909
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(Address of principal executive offices) (Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $0.001 par value
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The NASDAQ Global Select Market
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Large accelerated filer
£
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Accelerated filer
R
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Non-accelerated filer
£
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Smaller reporting company
£
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PAGE
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Item 4.
Mine Safety Disclosures
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Exhibit 12
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Exhibit 21
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Exhibit 23.1
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Exhibit 23.2
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Exhibit 23.3
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Exhibit 31.1
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Exhibit 31.2
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Exhibit 32.1
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Exhibit 32.2
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FORWARD-LOOKING INFORMATION
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GENERAL DESCRIPTION
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•
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Annual reports (Form 10-K)
|
•
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Quarterly reports (Form 10-Q)
|
•
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Current reports (Form 8-K)
|
•
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Beneficial ownership reports (Forms 3, 4 and 5)
|
•
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Amendments to reports filed or furnished pursuant to Section 13(a), 15(d) or 16(a) of the Exchange Act.
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GEOGRAPHIC DISTRIBUTION
|
|
Years Ended December 31,
|
% of Total
|
|||||||||||||
(In Thousands)
|
2011
|
2010
|
2009
|
2011
|
2010
|
2009
|
|||||||||
Texas
|
$
|
74,845
|
|
$
|
68,655
|
|
$
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69,900
|
|
12.9
|
%
|
15.8
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%
|
15.4
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%
|
Iowa
|
73,762
|
|
68,373
|
|
69,515
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12.7
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15.7
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15.3
|
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|||
California
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61,500
|
|
13
|
|
6
|
|
10.6
|
|
—
|
|
—
|
|
|||
Missouri
|
42,202
|
|
40,342
|
|
41,185
|
|
7.3
|
|
9.3
|
|
9.1
|
|
|||
Louisiana
|
36,685
|
|
37,263
|
|
41,743
|
|
6.3
|
|
8.6
|
|
9.2
|
|
|||
New Jersey
|
33,793
|
|
—
|
|
—
|
|
5.8
|
|
—
|
|
—
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|
|||
Illinois
|
32,241
|
|
31,330
|
|
33,465
|
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5.6
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7.2
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7.4
|
|
|||
Colorado
|
29,250
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28,775
|
|
33,938
|
|
5.0
|
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6.6
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|
7.5
|
|
|||
All Other States
|
196,610
|
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160,955
|
|
164,294
|
|
33.8
|
|
36.8
|
|
36.1
|
|
|||
Direct Premiums Written
(1)
|
$
|
580,888
|
|
$
|
435,706
|
|
$
|
454,046
|
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
(1)
|
The Measurement of Results section of Part II, Item 7, defines data prepared in accordance with statutory accounting practices, which is a comprehensive basis of accounting other than U.S. GAAP.
|
|
Years Ended December 31
|
% of Total
|
|||||||||||||
(In Thousands)
|
2011
|
2010
|
2009
|
2011
|
2010
|
2009
|
|||||||||
Iowa
|
$
|
51,132
|
|
$
|
45,336
|
|
$
|
94,658
|
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29.7
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%
|
32.6
|
%
|
36.8
|
%
|
Minnesota
|
20,409
|
|
11,875
|
|
23,128
|
|
11.9
|
|
8.5
|
|
9.0
|
|
|||
Illinois
|
17,643
|
|
13,629
|
|
17,720
|
|
10.2
|
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9.8
|
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6.9
|
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|||
Nebraska
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16,553
|
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11,317
|
|
33,103
|
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9.6
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8.1
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12.9
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|||
Wisconsin
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16,507
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13,942
|
|
21,548
|
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9.6
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10.0
|
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8.4
|
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|||
All Other States
|
49,915
|
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42,901
|
|
67,083
|
|
29.0
|
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31.0
|
|
26.0
|
|
|||
Direct Statutory Premiums Written
(1)
|
$
|
172,159
|
|
$
|
139,000
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$
|
257,240
|
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
(1)
|
The Measurement of Results section of Part II, Item 7, defines data prepared in accordance with statutory accounting practices, which is a comprehensive basis of accounting other than U.S. GAAP.
|
PRICING
|
COMPETITION
|
•
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Strong agency relationships —
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◦
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The average tenure of our employees, approximately 12.0 years, allows our agents to work with the same, highly-experienced personnel each day.
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◦
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Our organization is relatively flat, allowing our agents to be close to the highest levels of management and ensuring that our agents will receive answers quickly to their questions.
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◦
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We have relatively fewer agents appointed to each state than our competitors, which is valued by our agents, as they do not have to compete with other agents in their area to represent the Company.
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•
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Exceptional service — our agents and policyholders always have the option to speak with a real person.
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•
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Fair and prompt claims handling — we view claims as an opportunity to prove to our customers that they have chosen the right insurance company.
|
•
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Disciplined underwriting — we empower our underwriters with the knowledge and tools needed to make good decisions for the Company.
|
•
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Superior loss control services — our loss control representatives make multiple visits to businesses and job sites each year to ensure safety.
|
•
|
Effective and efficient use of technology — we use technology to provide enhanced service to our agents and policyholders, not to replace our personal relationships, but to reinforce them.
|
OPERATING SEGMENTS
|
REINSURANCE
|
RESERVES
|
(In Thousands)
|
|
|
|
|
|
||||||
Years Ended December 31
|
2011
|
|
2010
|
|
2009
|
||||||
Gross liability for losses and loss settlement expenses
at beginning of year |
$
|
603,090
|
|
|
$
|
606,045
|
|
|
$
|
586,109
|
|
Ceded loss and loss settlement expenses
|
(39,000
|
)
|
|
(33,754
|
)
|
|
(52,508
|
)
|
|||
Net liability for losses and loss settlement expenses
at beginning of year |
$
|
564,090
|
|
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$
|
572,291
|
|
|
$
|
533,601
|
|
Reserves acquired in Mercer Insurance Group acquisition, net
|
252,598
|
|
|
—
|
|
|
—
|
|
|||
Beginning balance, as adjusted
|
$
|
816,688
|
|
|
$
|
572,291
|
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|
$
|
533,601
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|
Losses and loss settlement expenses incurred
for claims occurring during |
|
|
|
|
|
||||||
Current year
|
$
|
468,926
|
|
|
$
|
335,315
|
|
|
$
|
339,506
|
|
Prior years
|
(61,095
|
)
|
|
(45,878
|
)
|
|
26,215
|
|
|||
Total incurred
|
$
|
407,831
|
|
|
$
|
289,437
|
|
|
$
|
365,721
|
|
Losses and loss settlement expense payments
for claims occurring during |
|
|
|
|
|
||||||
Current year
|
$
|
253,175
|
|
|
$
|
132,592
|
|
|
$
|
131,507
|
|
Prior years
|
146,653
|
|
|
165,046
|
|
|
195,524
|
|
|||
Total paid
|
$
|
399,828
|
|
|
$
|
297,638
|
|
|
$
|
327,031
|
|
Net liability for losses and loss settlement expenses
at end of year |
$
|
824,692
|
|
|
$
|
564,090
|
|
|
$
|
572,291
|
|
Ceded loss and loss settlement expenses
(1)
|
120,359
|
|
|
39,000
|
|
|
33,754
|
|
|||
Gross liability for losses and loss settlement expenses
at end of year |
$
|
945,051
|
|
|
$
|
603,090
|
|
|
$
|
606,045
|
|
(In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Years Ended December 31
|
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
2011
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Gross liability for loss and loss
settlement expenses |
$
|
363,819
|
|
$
|
392,649
|
|
$
|
427,049
|
|
$
|
464,889
|
|
$
|
620,100
|
|
$
|
518,886
|
|
$
|
496,083
|
|
$
|
586,109
|
|
$
|
606,045
|
|
$
|
603,090
|
|
$
|
945,051
|
|
Ceded loss and loss settlement
expenses |
36,909
|
|
35,760
|
|
27,309
|
|
28,609
|
|
60,137
|
|
40,560
|
|
38,800
|
|
52,508
|
|
33,754
|
|
39,000
|
|
120,359
|
|
|||||||||||
Net liability for loss and loss
settlement expenses |
$
|
326,910
|
|
$
|
356,889
|
|
$
|
399,740
|
|
$
|
436,280
|
|
$
|
559,963
|
|
$
|
478,326
|
|
$
|
457,283
|
|
$
|
533,601
|
|
$
|
572,291
|
|
$
|
564,090
|
|
$
|
824,692
|
|
Cumulative net paid as of:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
One year later
|
$
|
112,546
|
|
$
|
107,271
|
|
$
|
100,895
|
|
$
|
110,016
|
|
$
|
230,455
|
|
$
|
148,593
|
|
$
|
140,149
|
|
$
|
195,524
|
|
$
|
165,046
|
|
$
|
146,653
|
|
|
||
Two years later
|
172,538
|
|
172,158
|
|
167,384
|
|
166,592
|
|
321,110
|
|
235,975
|
|
265,361
|
|
304,622
|
|
260,872
|
|
|
|
|||||||||||||
Three years later
|
215,002
|
|
214,307
|
|
203,861
|
|
213,144
|
|
380,294
|
|
332,768
|
|
345,092
|
|
373,765
|
|
|
|
|
||||||||||||||
Four years later
|
240,973
|
|
237,150
|
|
231,278
|
|
242,579
|
|
456,919
|
|
390,763
|
|
392,676
|
|
|
|
|
|
|||||||||||||||
Five years later
|
252,969
|
|
253,026
|
|
250,787
|
|
264,015
|
|
502,455
|
|
422,669
|
|
|
|
|
|
|
||||||||||||||||
Six years later
|
264,311
|
|
265,304
|
|
263,631
|
|
276,214
|
|
527,136
|
|
|
|
|
|
|
|
|||||||||||||||||
Seven years later
|
273,153
|
|
273,066
|
|
272,826
|
|
282,654
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Eight years later
|
277,868
|
|
280,152
|
|
277,645
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Nine years later
|
282,970
|
|
283,635
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Ten years later
|
285,334
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net liability re-estimated as of:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
End of year
|
$
|
326,910
|
|
$
|
356,889
|
|
$
|
399,740
|
|
$
|
436,280
|
|
$
|
559,963
|
|
$
|
478,326
|
|
$
|
457,283
|
|
$
|
533,601
|
|
$
|
572,291
|
|
$
|
564,090
|
|
$
|
824,692
|
|
One year later
|
315,854
|
|
344,590
|
|
361,153
|
|
358,796
|
|
534,998
|
|
433,125
|
|
457,831
|
|
559,816
|
|
526,413
|
|
502,995
|
|
|
||||||||||||
Two years later
|
323,354
|
|
340,502
|
|
331,693
|
|
330,137
|
|
508,774
|
|
453,474
|
|
502,177
|
|
547,824
|
|
497,136
|
|
|
|
|||||||||||||
Three years later
|
321,168
|
|
324,582
|
|
317,187
|
|
319,335
|
|
538,451
|
|
497,629
|
|
503,992
|
|
537,912
|
|
|
|
|
||||||||||||||
Four years later
|
318,125
|
|
313,745
|
|
309,146
|
|
326,340
|
|
574,484
|
|
500,071
|
|
503,720
|
|
|
|
|
|
|||||||||||||||
Five years later
|
309,033
|
|
308,304
|
|
316,227
|
|
327,626
|
|
582,343
|
|
507,507
|
|
|
|
|
|
|
||||||||||||||||
Six years later
|
307,790
|
|
312,188
|
|
314,522
|
|
327,741
|
|
592,772
|
|
|
|
|
|
|
|
|||||||||||||||||
Seven years later
|
311,367
|
|
314,680
|
|
316,705
|
|
322,875
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Eight years later
|
312,433
|
|
316,378
|
|
311,385
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Nine years later
|
313,953
|
|
310,478
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Ten years later
|
309,044
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net redundancy (deficiency)
|
$
|
17,866
|
|
$
|
46,411
|
|
$
|
88,355
|
|
$
|
113,405
|
|
$
|
(32,809
|
)
|
$
|
(29,181
|
)
|
$
|
(46,437
|
)
|
$
|
(4,311
|
)
|
$
|
75,155
|
|
$
|
61,095
|
|
|
||
Net re-estimated liability
|
309,044
|
|
310,478
|
|
311,385
|
|
322,875
|
|
592,772
|
|
507,507
|
|
503,720
|
|
537,912
|
|
497,136
|
|
502,995
|
|
|
||||||||||||
Re-estimated ceded loss and loss
settlement expenses |
$
|
44,288
|
|
$
|
44,980
|
|
$
|
39,724
|
|
$
|
39,582
|
|
$
|
97,622
|
|
$
|
63,562
|
|
$
|
57,220
|
|
$
|
64,209
|
|
$
|
48,366
|
|
$
|
49,198
|
|
|
||
Gross re-estimated liability
|
$
|
353,333
|
|
$
|
355,459
|
|
$
|
351,109
|
|
$
|
362,457
|
|
$
|
690,394
|
|
$
|
571,069
|
|
$
|
560,940
|
|
$
|
602,121
|
|
$
|
545,502
|
|
$
|
552,193
|
|
|
||
Gross redundancy (deficiency)
|
$
|
10,486
|
|
$
|
37,190
|
|
$
|
75,940
|
|
$
|
102,432
|
|
$
|
(70,294
|
)
|
$
|
(52,183
|
)
|
$
|
(64,857
|
)
|
$
|
(16,012
|
)
|
$
|
60,543
|
|
$
|
50,897
|
|
|
INVESTMENTS
|
REGULATION
|
•
|
insurance company licensing and examination and the licensing of agents and adjusters;
|
•
|
price setting or premium rates;
|
•
|
trade practices;
|
•
|
approval of policy forms;
|
•
|
accounting methods;
|
•
|
the nature, quality and concentration of investments;
|
•
|
claims practices;
|
•
|
participation in shared markets and guaranty funds;
|
•
|
reserve adequacy;
|
•
|
insurer solvency;
|
•
|
restrictions on transactions between our subsidiaries and their affiliates;
|
•
|
restrictions on the payment of dividends;
|
•
|
underwriting standards;
|
•
|
advertising and marketing practices; and
|
•
|
the collection, remittance and reporting of certain taxes and fees.
|
FINANCIAL STRENGTH RATING
|
ITEM 1A. RISK FACTORS
|
•
|
The incidence, frequency and severity of catastrophe losses are unpredictable and may adversely affect the results of our operations, liquidity and financial condition.
|
•
|
Our reserves for property and casualty insurance losses and costs related to settlement of property and casualty insurance losses and our life insurance reserves for future policy benefits may be inadequate, which would have an unfavorable impact on our financial results.
|
•
|
The cyclical nature of the property and casualty insurance business may affect our financial performance.
|
•
|
We are subject to interest rate fluctuations and declines in the value of investments held in our investment portfolio due to various market factors that could negatively affect our profitability.
|
•
|
Continued difficult conditions in the global capital markets and the economy generally may materially and adversely affect our business and results of operations.
|
•
|
Our investment portfolio contains various types of municipal bonds that expose us to the risk of default.
|
•
|
Unauthorized data access and other security breaches could have an adverse impact on our business and reputation.
|
•
|
The effects of emerging claim and coverage issues and class action litigation on our business are uncertain.
|
•
|
Judicial expansion of policy coverage and the impact of new theories of liability.
|
•
|
An increase of plaintiffs targeting property and casualty insurers, including us, in purported class action litigation regarding claims handling and other practices.
|
•
|
An increase in the variety, number and size of claims relating to liability losses, which often present complex coverage and damage valuation questions.
|
•
|
Adverse changes in loss cost trends, including inflationary pressure in medical cost and auto and home repair costs.
|
•
|
We are exposed to credit risk in certain areas of our operations.
|
•
|
We are subject to comprehensive state laws and regulations that pose particular risks to our ability to earn profits.
|
•
|
Required licensing.
Our insurance company subsidiaries, operate under licenses issued by various state insurance agencies. If a regulatory authority were to revoke an existing license or deny or delay granting a new license, our ability to continue to sell insurance or to enter or offer new insurance products in that market would be substantially impaired.
|
•
|
Regulation of insurance rates and approval of policy forms.
The insurance laws of most states in which we operate require insurance companies to file insurance premium rate schedules and policy forms for review and approval. When our loss ratio compares favorably to that of the industry, state regulatory authorities may resist or delay our efforts to raise premium rates in the future, even if the property and casualty industry generally is not experiencing regulatory resistance to premium rate increases. If premium rate increases we deem necessary are not approved, we may not be able to respond to market developments and increased costs in that state. State regulatory authorities may even impose premium rate rollbacks or require us to pay premium refunds to policyholders, affecting our profitability. If insurance policy forms we seek to use are not approved by a state insurance agency, our ability to offer new products and grow our business in that state could be substantially impaired.
|
•
|
Restrictions on cancellation, nonrenewal or withdrawal.
Many states have laws and regulations restricting an insurance company's ability to cease or significantly reduce its sales of certain types of insurance in that state, except pursuant to a plan that is approved by the state insurance agencies. These laws and regulations could limit our ability to exit or reduce our business in unprofitable markets or discontinue unprofitable products. For example, the State of Louisiana has a law prohibiting the nonrenewal of homeowners policies written for longer than three years except under certain circumstances, such as for nonpayment of premium or fraud committed by the insured.
|
•
|
Risk-based capital and capital adequacy requirements.
Our insurance company subsidiaries and affiliate, are subject to risk-based capital requirements that require us to report our results of risk-based capital calculations to state insurance departments and the NAIC. Any failure to meet applicable risk based capital requirements or minimum statutory capital requirements could subject us or our subsidiaries and affiliate to further examination or corrective action by state regulators, including limitations on our writing of additional business, state supervision or liquidation.
|
•
|
Transactions between insurance companies and their affiliates.
Transactions between us, our subsidiary insurance companies and our affiliates generally must be disclosed to, and in some cases approved by, state insurance agencies. State insurance agencies may refuse to approve or delay their approval of a transaction, which may impact our ability to innovate or operate efficiently.
|
•
|
Required participation in guaranty funds and assigned risk pools.
Certain states have enacted laws that require a property and casualty insurer conducting business in that state to participate in assigned risk plans, reinsurance facilities, and joint underwriting associations where participating insurers are required to provide coverage for assigned risks. The number of risks assigned to us by these plans is based on our share of total premiums written in the voluntary insurance market for that state. Pricing is controlled by the plan, often restricting our ability to charge the premium rate we might otherwise charge. Wherever possible, we utilize a designated servicing carrier to fulfill our obligations under these plans. Designated servicing carriers charge us fees to issue policies, adjust and settle claims and handle administrative reporting on our behalf. In these markets, we may be compelled to underwrite significant amounts of business at lower than desired premium rates, possibly leading to an unacceptable return on equity. While these facilities are
|
•
|
Restrictions on the amount, type, nature, quality and concentration of investments.
The various states in which we operate have certain restrictions on the amount, type, nature, quality and concentration of our investments. Generally speaking, these regulations require us to be conservative in the nature and quality of our investments and restrict our ability to invest in riskier, but often higher yield investments. These restrictions may make it more difficult for us to obtain our desired investment results.
|
•
|
State and federal tax laws.
Under current federal and state income tax law, our life insurance and annuity products receive favorable tax treatment. This favorable treatment may give these products a competitive advantage over other noninsurance products. Congress, from time to time, considers legislation that would reduce or eliminate the favorable policyholder tax treatment currently applicable to life insurance and annuities. Congress also considers proposals to reduce the taxation of certain products or investments that may compete with life insurance and annuities. Legislation that increases the taxation on insurance products or reduces the taxation on competing products could lessen the advantage or create a disadvantage for certain of our products, making them less competitive. Such proposals, if adopted, could have a material adverse effect on our financial position or ability to sell such products and could result in the surrender of some existing contracts and policies.
|
•
|
Terrorism Risk Insurance.
The Terrorism Risk Insurance Program Reauthorization Act of 2007 ("TRIPRA")requires the federal government and the insurance industry to share in insured losses up to $100 billion per year resulting from future terrorist attacks within the United States. For further information about TRIPRA and its effect on our operations, refer to the information in the Results of Operations section in Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations.”
|
•
|
A reduction in our financial strength ratings could adversely affect our business and financial condition.
|
•
|
Market conditions may affect our access to and the cost of reinsurance and our reinsurers may not pay losses in a timely manner, or at all.
|
•
|
Our geographic concentration in both our property and casualty insurance and life insurance segments ties our performance to the business, economic and regulatory conditions of certain states.
|
•
|
We face significant competitive pressures in our business that could cause demand for our products to fall and reduce our revenue and profitability.
|
•
|
Our business depends on the uninterrupted operations of our facilities, systems and business functions.
|
•
|
Adverse capital and credit market conditions may significantly affect our ability to meet liquidity needs, as well as our access to capital and cost of capital.
|
•
|
If we are unable to successfully introduce new products or services or fail to keep pace with advances in technology, our business, financial condition and results of operations will be adversely affected.
|
•
|
We are unable to predict the impact on us of the new federal financial regulatory reform.
|
•
|
We incurred significant costs and expenses in connection with the acquisition; the integration of Mercer Insurance Group into our business operations may result in significant expenses and accounting charges, all of which will adversely affect our operating results and financial condition.
|
•
|
Integrating Mercer Insurance Group into our existing operations involves considerable risks and may not be successful, and we may fail to realize the potential benefits of the acquisition of Mercer Insurance Group.
|
•
|
difficulties and delays in the integration of Mercer Insurance Group's operations, personnel, technologies, products, services, business relationships and information and other systems;
|
•
|
the diversion of management's attention from normal daily operations of our business;
|
•
|
difficulties associated with managing a larger, more complex, combined business;
|
•
|
the occurrence of adverse development of loss reserves;
|
•
|
contractual and/or intellectual property disputes;
|
•
|
lost agents, agencies or policyholders as a result of agents, agencies or policyholders of either of the two companies deciding not to do business with the combined companies;
|
•
|
conflicts in agency, marketing or other important relationships;
|
•
|
difficulties caused by entering geographic and business markets in which we have limited or no prior experience;
|
•
|
acquired products and services that may not attract policyholders;
|
•
|
loss of key employees and disruptions among employees that may erode employee morale;
|
•
|
inability to implement uniform standards, controls, policies and procedures; and
|
•
|
failure to achieve anticipated levels of revenue, profitability or productivity.
|
•
|
We incurred debt as part of the acquisition transaction.
|
•
|
Integration of Mercer Insurance Group's information technology systems with ours may result in a loss of technical support from some information technology vendors.
|
•
|
The ability of our subsidiaries to pay dividends may affect our liquidity and ability to meet our obligations.
|
•
|
The price of our common stock may be volatile.
|
•
|
Variations in our actual or anticipated operating results or changes in the expectations of financial market analysts with respect to our results.
|
•
|
Investor perceptions of the insurance industry in general and the Company in particular.
|
•
|
Market conditions in the insurance industry and any significant volatility in the market.
|
•
|
Major catastrophic events.
|
•
|
Departure of key personnel.
|
•
|
Certain provisions of our organizational documents, as well as applicable insurance laws, could impede an attempt to replace or remove our management, prevent the sale of the Company or prevent or frustrate any attempt by stockholders to change the direction of the Company, each of which could diminish the value of our common stock.
|
•
|
Our Board of Directors is divided into three classes. At any annual meeting of our stockholders, our stockholders have the right to appoint approximately one-third of the directors on our Board of Directors. Consequently, it will take at least two annual stockholder meetings to effect a change in control of our Board of Directors.
|
•
|
Our articles of incorporation limit the rights of stockholders to call special stockholder meetings.
|
•
|
Our articles of incorporation set the minimum number of directors constituting the entire Board of Directors at nine and the maximum at 15, and they require approval of holders of 60.0 percent of all outstanding shares to amend these provisions. Within the range, the Board of Directors may increase by one each year the number of directors serving on the Board of Directors.
|
•
|
Our articles of incorporation require the affirmative vote of 60.0 percent of all outstanding shares to approve any plan of merger, consolidation, or sale or exchange of all, or substantially all, of our assets.
|
•
|
Our Board of Directors may fill vacancies on the Board of Directors.
|
•
|
Our Board of Directors has the authority, without further approval of our stockholders, to issue shares of preferred stock having such rights, preferences and privileges as the Board of Directors may determine.
|
•
|
Section 490.1110 of the Iowa Business Corporation Act imposes restrictions on mergers and other business combinations between us and any holder of 10.0 percent or more of our common stock.
|
•
|
Section 490.624A of the Iowa Business Corporation Act authorizes the terms and conditions of stock rights or options issued by us to include restrictions or conditions that preclude or limit the exercise, transfer, or receipt of such rights or options by a person, or group of persons, owning or offering to acquire a specified number or percentage of the outstanding common shares or other securities of the corporation.
|
Location
|
Utilized by
|
Owned or Leased
|
Lease Expiration Date
|
Corporate Headquarters –
|
|
|
|
Cedar Rapids, Iowa (118 Second Avenue SE)
|
Corporate Administration,
Property and Casualty Insurance Segment |
Owned
|
N/A
|
Cedar Rapids, Iowa (119 Second Avenue SE)
|
Corporate Administration,
Life Insurance Segment |
Owned
|
N/A
|
Cedar Rapids, Iowa (109 Second Street SE)
|
Property and Casualty Insurance Segment
|
Owned
|
N/A
|
Denver Regional Office – Westminster, Colorado
|
Property and Casualty Insurance Segment
|
Leased
|
June 30, 2015
|
Gulf Coast Regional Office – Galveston, Texas
|
Property and Casualty Insurance Segment
|
Leased
|
November 30, 2014
|
Lock Haven Regional Office - Lock Haven, Pennsylvania
|
Property and Casualty Insurance Segment
|
Owned
|
N/A
|
New Orleans Claims Office – Metairie, Louisiana
|
Property and Casualty Insurance Segment
|
Leased
|
September 30, 2012
|
Pennington Regional Office - Pennington, New Jersey
|
Property and Casualty Insurance Segment
|
Owned
|
N/A
|
Rocklin Townhouse - Rocklin, California
|
Property and Casualty Insurance Segment
|
Owned
|
N/A
|
Rocklin Regional Office - Rocklin, California
|
Property and Casualty Insurance Segment
|
Owned
|
N/A
|
|
Share Price
|
|
Cash Dividends
Declared
|
|||||||
|
High
|
Low
|
|
|||||||
2011
|
|
|
|
|
||||||
Quarter Ended:
|
|
|
|
|
||||||
March 31
|
$
|
23.29
|
|
$
|
18.50
|
|
|
$
|
0.15
|
|
June 30
|
21.95
|
|
17.10
|
|
|
0.15
|
|
|||
September 30
|
18.52
|
|
14.79
|
|
|
0.15
|
|
|||
December 31
|
21.16
|
|
16.20
|
|
|
0.15
|
|
|||
|
|
|
|
|
||||||
2010
|
|
|
|
|
||||||
Quarter Ended:
|
|
|
|
|
||||||
March 31
|
$
|
18.92
|
|
$
|
15.99
|
|
|
$
|
0.15
|
|
June 30
|
24.57
|
|
17.55
|
|
|
0.15
|
|
|||
September 30
|
22.67
|
|
18.86
|
|
|
0.15
|
|
|||
December 31
|
23.41
|
|
19.82
|
|
|
0.15
|
|
Period
|
Total
Number of
Shares Purchased
(1)
|
|
Average Price
Paid per Share
|
|
Total Number of Shares
Purchased as a Part of
Publicly Announced
Plans or Programs
|
|
Maximum Number of
Shares that may be
Purchased Under the
Plans or Programs
|
|||||
10/1/11 - 10/31/11
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
471,686
|
|
11/1/11 - 11/30/11
|
—
|
|
|
—
|
|
|
—
|
|
|
471,686
|
|
|
12/1/11 - 12/31/11
|
1,807
|
|
|
20.14
|
|
|
1,807
|
|
|
469,879
|
|
|
Period Ending
|
||||||||||||||||||||||
Index
|
12/31/06
|
|
12/31/07
|
|
12/31/08
|
|
12/31/09
|
|
12/31/10
|
|
12/31/11
|
||||||||||||
United Fire & Casualty Company
|
$
|
100.00
|
|
|
$
|
83.82
|
|
|
$
|
91.36
|
|
|
$
|
55.40
|
|
|
$
|
69.86
|
|
|
$
|
65.18
|
|
S&P 500 Index
|
100.00
|
|
|
105.49
|
|
|
66.46
|
|
|
84.05
|
|
|
96.71
|
|
|
98.76
|
|
||||||
S&P 600 P&C Index
|
100.00
|
|
|
87.92
|
|
|
81.36
|
|
|
70.15
|
|
|
85.53
|
|
|
93.56
|
|
(In Thousands, Except Per Share Data)
|
|
|
|
|
|
|
|
|
|
||||||||||
Years Ended December 31
|
2011
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total cash and investments
|
$
|
3,052,535
|
|
|
$
|
2,662,955
|
|
|
$
|
2,542,693
|
|
|
$
|
2,205,355
|
|
|
$
|
2,399,141
|
|
Total assets
|
3,618,924
|
|
|
3,007,439
|
|
|
2,902,544
|
|
|
2,687,130
|
|
|
2,760,554
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Future policy benefits and losses, claims and loss settlement expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Property and casualty insurance
(1)
|
945,051
|
|
|
603,090
|
|
|
606,045
|
|
|
586,109
|
|
|
496,083
|
|
|||||
Life insurance
|
1,476,281
|
|
|
1,389,331
|
|
|
1,321,600
|
|
|
1,167,665
|
|
|
1,184,977
|
|
|||||
Unearned premiums
|
288,991
|
|
|
200,341
|
|
|
206,010
|
|
|
216,966
|
|
|
224,530
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total liabilities
|
2,922,783
|
|
|
2,291,015
|
|
|
2,229,809
|
|
|
2,045,389
|
|
|
2,009,057
|
|
|||||
Net unrealized gains, after tax
(2)
|
124,376
|
|
|
102,649
|
|
|
82,491
|
|
|
25,543
|
|
|
85,579
|
|
|||||
Repurchase of United Fire & Casualty Company common stock
|
(12,433
|
)
|
|
(6,280
|
)
|
|
(1,545
|
)
|
|
(14,817
|
)
|
|
(16,078
|
)
|
|||||
Total stockholders’ equity
(3)
|
696,141
|
|
|
716,424
|
|
|
672,735
|
|
|
641,741
|
|
|
751,497
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Book value per share
|
27.29
|
|
|
27.35
|
|
|
25.35
|
|
|
24.10
|
|
|
27.63
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated Income Statement Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||||||
Net premiums written
(4)
|
$
|
604,867
|
|
|
$
|
463,892
|
|
|
$
|
467,427
|
|
|
$
|
496,897
|
|
|
$
|
501,849
|
|
Net premiums earned
|
586,783
|
|
|
469,473
|
|
|
478,498
|
|
|
503,375
|
|
|
505,763
|
|
|||||
Investment income, net of investment expenses
(5)
|
109,494
|
|
|
111,685
|
|
|
106,075
|
|
|
107,577
|
|
|
122,439
|
|
|||||
Realized investment gains (losses)
(6)
|
6,440
|
|
|
8,489
|
|
|
(13,179
|
)
|
|
(10,383
|
)
|
|
9,670
|
|
|||||
Other income
|
2,291
|
|
|
1,425
|
|
|
799
|
|
|
880
|
|
|
654
|
|
|||||
Consolidated revenues
|
$
|
705,008
|
|
|
$
|
591,072
|
|
|
$
|
572,193
|
|
|
$
|
601,449
|
|
|
$
|
638,526
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Losses and loss settlement expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Property and casualty insurance
(7)
|
407,831
|
|
|
289,437
|
|
|
365,721
|
|
|
393,349
|
|
|
245,845
|
|
|||||
Life insurance
|
22,558
|
|
|
20,359
|
|
|
16,773
|
|
|
13,291
|
|
|
14,869
|
|
|||||
Amortization of deferred policy acquisition costs
(8)
|
153,176
|
|
|
113,371
|
|
|
114,893
|
|
|
129,158
|
|
|
136,805
|
|
|||||
Other underwriting expenses
(9)
|
58,757
|
|
|
39,321
|
|
|
39,298
|
|
|
28,252
|
|
|
22,918
|
|
|||||
Net income (loss)
(10)
|
11
|
|
|
47,513
|
|
|
(10,441
|
)
|
|
(13,064
|
)
|
|
111,392
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Property and Casualty Insurance Segment Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net premiums written
(4)
|
551,923
|
|
|
414,908
|
|
|
424,827
|
|
|
459,571
|
|
|
470,402
|
|
|||||
Net premiums earned
|
533,771
|
|
|
420,373
|
|
|
435,677
|
|
|
465,581
|
|
|
473,134
|
|
|||||
Net income (loss)
|
(7,639
|
)
|
|
34,726
|
|
|
(17,677
|
)
|
|
(15,156
|
)
|
|
98,225
|
|
|||||
Combined ratio
(4)
|
112.1
|
%
|
|
99.9
|
%
|
|
115.2
|
%
|
|
113.9
|
%
|
|
81.3
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Life Insurance Segment Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net premiums earned
|
53,012
|
|
|
49,100
|
|
|
42,821
|
|
|
37,794
|
|
|
32,629
|
|
|||||
Net income
|
7,650
|
|
|
12,787
|
|
|
7,236
|
|
|
2,092
|
|
|
13,167
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings Per Share Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic earnings (loss) per common share
(11)
|
—
|
|
|
1.81
|
|
|
(0.39
|
)
|
|
(0.48
|
)
|
|
4.04
|
|
|||||
Diluted earnings (loss) per common share
|
—
|
|
|
1.80
|
|
|
(0.39
|
)
|
|
(0.48
|
)
|
|
4.03
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Supplemental Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends declared per common share
|
0.60
|
|
|
0.60
|
|
|
0.60
|
|
|
0.60
|
|
|
0.555
|
|
(1)
|
Property and casualty reserves may be affected by both internal and external events, such as changes in claims handling procedures, judicial or legislative actions, inflation, and catastrophes. In 2011, our acquisition of Mercer Insurance Group and a significant level of catastrophes were factors in the change in our reserves. In prior years, the fluctuations in our reserves primarily related to losses incurred from Hurricanes Ike and Gustav, which occurred in 2008, and the adverse claims litigation that has resulted from Hurricane Katrina, which occurred in 2005. For further discussion of our acquisition of Mercer Insurance Group, refer to Note 16, “Business Combinations” contained in Part II, Item 8, “Financial Statements and Supplementary Data.”
|
(2)
|
Net unrealized gains, after tax, were impacted in 2008 by the volatility in the financial markets. The severe downturn in the financial
|
(3)
|
In 2011, our stockholders' equity decreased as a result of stockholder dividends, stock repurchases and an increase in the underfunded status of our employee benefit plans. The decrease was somewhat offset by an increase in net unrealized gains. In 2010, our stockholders' equity improved due to an increase in net unrealized gains and a significant improvement in our earnings. In 2008 and 2009, our stockholders’ equity was impacted by the overall state of the economy and the volatility in the financial markets, which impaired our ability to generate an underwriting profit and reduced our net investment income and net unrealized investment gains.
|
(4)
|
For further information on this line, please refer to the Results of Operations and Measurement of Results sections in Part II, Item 7.
|
(5)
|
The decline in investment income since 2007 was due to lower market interest rates earned on our investment portfolio, which affected the amount we earned on our short-term investments and cash and cash equivalents, and the changes in the value of certain investments in limited liability partnerships. Additionally in 2009 and 2008, investment income was affected by agency bonds that were called during 2009, the proceeds were reinvested at a lower interest rate than was previously available in prior years, and the reduction or discontinuation of dividend payments by some of our equity securities that previously had paid regular dividends.
|
(6)
|
Realized investment gains and losses could be material to our results of operations over the long term, and the occurrence and timing of realized gains and losses may cause our earnings to fluctuate substantially. GAAP requires us to recognize gains and losses from certain changes in the fair value of securities without the actual sale of those securities. The realized investment losses in 2009 and 2008 were primarily due to pre-tax realized losses from other-than-temporary investment charges incurred on our fixed maturity securities and equity securities. We recorded other-than-temporary investment charges of
$0.4 million
,
$0.5 million
,
$18.3 million
, $9.9 million and $0.1 million in
2011
,
2010
,
2009
,
2008
and
2007
, respectively.
|
(7)
|
For further information on this line, please refer to the Results of Operations section in Part II, Item 7.
|
(8)
|
Amortization of deferred policy acquisitions costs increased in 2011 as a result of our acquisition of Mercer Insurance Group and the impact of amortization of the value of business acquired ("VOBA") asset. The VOBA asset is being amortized in the first 12 months of operations subsequent to the acquisition, in correlation to the remaining term of Mercer Insurance Group policies that we acquired.
|
(9)
|
In 2011, our acquisition of Mercer Insurance Group primarily accounts for the fluctuation in other underwriting expenses when compared to prior years. The two factors that historically cause most of the fluctuation in other underwriting expenses are the level of deferrable underwriting expenses, which generally correlates to our level of written premiums, and changes in the expense for our employee benefit plans.
|
(10)
|
Our net income in 2011 reflects an increase in loss and loss settlement expenses from catastrophes and an increased level of other underwriting expenses, primarily as a result of our acquisition of Mercer Insurance Group. Our net losses in 2009 and 2008 were due to lower revenues from premiums earned, a decrease in net investment income, realized losses, higher expenses from losses, and other underwriting expenses. For further discussion of net income (loss) refer to our “Results of Operations” contained in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
|
(11)
|
Our basic earnings (loss) per common share is calculated by dividing our net income (loss) by the weighted average common shares outstanding during the reporting period.
|
FORWARD-LOOKING STATEMENTS
|
•
|
The frequency and severity of claims, including those related to catastrophe losses, and the impact those claims have on our loss reserve adequacy.
|
•
|
Developments in the domestic and global financial markets that could affect our investment portfolio.
|
•
|
The calculation and recovery of deferred policy acquisition costs (“DAC”).
|
•
|
The valuation of pension and other postretirement benefit obligations.
|
•
|
Our relationship with our agencies and agents.
|
•
|
Our relationship with our reinsurers.
|
•
|
The financial strength rating of our reinsurers.
|
•
|
Changes in industry trends and significant industry developments.
|
•
|
Our exposure to international catastrophes through our assumed reinsurance program.
|
•
|
Governmental actions, policies and regulations, including, but not limited to, domestic health care reform, financial services regulatory reform, corporate governance, new laws or regulations or court decisions interpreting existing laws and regulations or policy provisions.
|
•
|
NASDAQ policies or regulations relating to corporate governance and the cost to comply.
|
INTRODUCTION
|
•
|
Our Business
|
•
|
Measurement of Results
|
•
|
Consolidated Financial Highlights
|
•
|
Results of Operations for the Years Ended
December 31, 2011
,
2010
, and
2009
|
•
|
Investments
|
•
|
Liquidity and Capital Resources
|
•
|
Critical Accounting Estimates
|
•
|
Pending Accounting Standards
|
OUR BUSINESS
|
•
|
property and casualty insurance, which includes commercial insurance, personal insurance, and assumed insurance; and
|
•
|
life insurance, which includes deferred and immediate annuities, universal life products and traditional life (primarily single premium whole life insurance) products.
|
MEASUREMENT OF RESULTS
|
|
Years Ended December 31
|
||||||||||
(In Thousands)
|
2011
|
|
2010
|
|
2009
|
||||||
Net premiums written
|
$
|
604,867
|
|
|
$
|
463,892
|
|
|
$
|
467,427
|
|
Net change in unearned premium
|
(16,401
|
)
|
|
5,669
|
|
|
10,956
|
|
|||
Net change in prepaid reinsurance premium
|
(1,683
|
)
|
|
(88
|
)
|
|
115
|
|
|||
Net premiums earned
|
$
|
586,783
|
|
|
$
|
469,473
|
|
|
$
|
478,498
|
|
|
Years Ended December 31
|
||||||||||
(In Thousands)
|
2011
|
|
2010
|
|
2009
|
||||||
ISO catastrophes
(1)
|
$
|
57,238
|
|
|
$
|
16,230
|
|
|
$
|
20,781
|
|
Non-ISO catastrophes
(2)
|
23,555
|
|
|
3,540
|
|
|
1,616
|
|
|||
Total catastrophes
|
$
|
80,793
|
|
|
$
|
19,770
|
|
|
$
|
22,397
|
|
CONSOLIDATED FINANCIAL HIGHLIGHTS
|
|
|
|
|
|
|
|
% Change
|
||||||||||
(In Thousands)
|
|
|
|
|
|
|
2011
|
|
2010
|
||||||||
Years ended December 31
|
2011
|
|
2010
|
|
2009
|
|
vs. 2010
|
|
vs. 2009
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||||
Net premiums earned
|
$
|
586,783
|
|
|
$
|
469,473
|
|
|
$
|
478,498
|
|
|
25.0
|
%
|
|
(1.9
|
)%
|
Investment income, net
|
109,494
|
|
|
111,685
|
|
|
106,075
|
|
|
(2.0
|
)
|
|
5.3
|
|
|||
Realized investment gains (losses)
|
|
|
|
|
|
|
|
|
|
||||||||
Other-than-temporary impairment charges
|
(395
|
)
|
|
(459
|
)
|
|
(18,307
|
)
|
|
13.9
|
|
|
97.5
|
|
|||
Other realized gains, net
|
6,835
|
|
|
8,948
|
|
|
5,128
|
|
|
(23.6
|
)
|
|
74.5
|
|
|||
Total realized investment gains (losses)
|
6,440
|
|
|
8,489
|
|
|
(13,179
|
)
|
|
(24.1
|
)
|
|
164.4
|
|
|||
Other income
|
2,291
|
|
|
1,425
|
|
|
799
|
|
|
60.8
|
|
|
78.3
|
|
|||
Total Revenues
|
$
|
705,008
|
|
|
$
|
591,072
|
|
|
$
|
572,193
|
|
|
19.3
|
%
|
|
3.3
|
%
|
Benefits, Losses and Expenses
|
|
|
|
|
|
|
|
|
|
||||||||
Loss and loss settlement expenses
|
$
|
430,389
|
|
|
$
|
309,796
|
|
|
$
|
382,494
|
|
|
38.9
|
%
|
|
(19.0
|
)%
|
Liability for future policy benefits
|
32,567
|
|
|
27,229
|
|
|
23,897
|
|
|
19.6
|
|
|
13.9
|
|
|||
Amortization of deferred policy acquisition costs
|
153,176
|
|
|
113,371
|
|
|
114,893
|
|
|
35.1
|
|
|
(1.3
|
)
|
|||
Other underwriting expenses
|
58,757
|
|
|
39,321
|
|
|
39,298
|
|
|
49.4
|
|
|
0.1
|
|
|||
Disaster charges and other related expenses,
net of recoveries |
—
|
|
|
(16
|
)
|
|
(1,335
|
)
|
|
NM
|
|
|
98.8
|
|
|||
Interest on policyholders’ accounts
|
42,834
|
|
|
42,988
|
|
|
41,652
|
|
|
(0.4
|
)
|
|
3.2
|
|
|||
Total Benefits, Losses and Expenses
|
$
|
717,723
|
|
|
$
|
532,689
|
|
|
$
|
600,899
|
|
|
34.7
|
%
|
|
(11.4
|
)%
|
Income (loss) before income taxes
|
(12,715
|
)
|
|
58,383
|
|
|
(28,706
|
)
|
|
(121.8
|
)
|
|
NM
|
|
|||
Federal income tax expense (benefit)
|
(12,726
|
)
|
|
10,870
|
|
|
(18,265
|
)
|
|
NM
|
|
|
159.5
|
|
|||
Net Income (Loss)
|
$
|
11
|
|
|
$
|
47,513
|
|
|
$
|
(10,441
|
)
|
|
(100.0
|
)%
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share
|
$
|
—
|
|
|
$
|
1.81
|
|
|
$
|
(0.39
|
)
|
|
(100.0
|
)%
|
|
NM
|
|
Diluted earnings (loss) per share
|
$
|
—
|
|
|
$
|
1.80
|
|
|
$
|
(0.39
|
)
|
|
(100.0
|
)
|
|
NM
|
|
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009
|
Property & Casualty Insurance Segment Results of Operations
|
|
|
% Change
|
||||||||||
(In Thousands)
|
|
|
|
2011
|
2010
|
||||||||
Years ended December 31
|
2011
|
2010
|
2009
|
vs. 2010
|
vs. 2009
|
||||||||
Net premiums written
(1)
|
$
|
551,923
|
|
$
|
414,908
|
|
$
|
424,827
|
|
33.0
|
%
|
(2.3
|
)%
|
Net premiums earned
|
$
|
533,771
|
|
$
|
420,373
|
|
$
|
435,677
|
|
27.0
|
|
(3.5
|
)
|
Loss and loss settlement expenses
|
407,831
|
|
289,437
|
|
365,721
|
|
40.9
|
|
(20.9
|
)
|
|||
Amortization of deferred policy acquisition costs
|
143,952
|
|
100,310
|
|
105,606
|
|
43.5
|
|
(5.0
|
)
|
|||
Other underwriting expenses
|
46,404
|
|
30,329
|
|
30,553
|
|
53.0
|
|
(0.7
|
)
|
|||
Underwriting income (loss)
|
$
|
(64,416
|
)
|
$
|
297
|
|
$
|
(66,203
|
)
|
NM
|
|
100.4
|
%
|
|
|
|
|
|
|
||||||||
Investment income, net
|
35,513
|
|
34,787
|
|
31,542
|
|
2.1
|
%
|
10.3
|
%
|
|||
Realized investment gains (losses)
|
|
|
|
|
|
||||||||
Other-than-temporary impairment charges
|
—
|
|
(153
|
)
|
(9,824
|
)
|
100.0
|
|
98.4
|
|
|||
Other realized gains, net
|
3,081
|
|
3,746
|
|
3,009
|
|
(17.8
|
)
|
24.5
|
|
|||
Total realized investment gains (losses)
|
3,081
|
|
3,593
|
|
(6,815
|
)
|
(14.2
|
)
|
152.7
|
|
|||
Other income
|
1,592
|
|
147
|
|
194
|
|
NM
|
|
(24.2
|
)
|
|||
Disaster charges and other related expenses,
net of recoveries |
—
|
|
(16
|
)
|
(1,335
|
)
|
100.0
|
|
98.8
|
|
|||
Income (loss) before income taxes
|
$
|
(24,230
|
)
|
$
|
38,824
|
|
$
|
(39,947
|
)
|
(162.4
|
)%
|
197.2
|
%
|
(1)
|
The Measurement of Results section of this report defines data prepared in accordance with statutory accounting practices, which is a comprehensive basis of accounting other than U.S. GAAP.
|
|
|
|
|
|
|
|
Increase
(Decrease) in Ratios
|
|||||||
|
|
|
|
|
|
|
2011
|
|
2010
|
|||||
Years ended December 31
|
2011
|
|
2010
|
|
2009
|
|
vs. 2010
|
|
vs. 2009
|
|||||
GAAP combined ratio:
|
|
|
|
|
|
|
|
|
|
|||||
Net loss ratio (without catastrophes)
|
61.3
|
%
|
|
64.2
|
%
|
|
78.8
|
%
|
|
(4.5
|
)%
|
|
(18.5
|
)%
|
Catastrophe losses - effect on net loss ratio
|
15.1
|
|
|
4.7
|
|
|
5.1
|
|
|
221.3
|
|
|
(7.8
|
)
|
Net loss ratio
|
76.4
|
%
|
|
68.9
|
%
|
|
83.9
|
%
|
|
10.9
|
%
|
|
(17.9
|
)%
|
Expense ratio
(1)
|
35.7
|
|
|
31.0
|
|
|
31.3
|
|
|
15.2
|
|
|
(1.0
|
)
|
Combined ratio
|
112.1
|
%
|
|
99.9
|
%
|
|
115.2
|
%
|
|
12.2
|
%
|
|
(13.3
|
)%
|
Statutory combined ratio:
(2)
|
|
|
|
|
|
|
|
|
|
|||||
Net loss ratio (without catastrophes)
|
61.3
|
%
|
|
64.2
|
%
|
|
78.8
|
%
|
|
(4.5
|
)%
|
|
(18.5
|
)%
|
Catastrophe losses - effect on net loss ratio
|
15.1
|
|
|
4.7
|
|
|
5.1
|
|
|
221.3
|
|
|
(7.8
|
)
|
Net loss ratio
|
76.4
|
%
|
|
68.9
|
%
|
|
83.9
|
%
|
|
10.9
|
%
|
|
(17.9
|
)%
|
Expense ratio
(1)
|
32.2
|
|
|
31.0
|
|
|
30.3
|
|
|
3.9
|
|
|
2.3
|
|
Combined ratio
|
108.6
|
%
|
|
99.9
|
%
|
|
114.2
|
%
|
|
8.7
|
%
|
|
(12.5
|
)%
|
Industry statutory combined ratio:
(2)(3)
|
|
|
|
|
|
|
|
|
|
|||||
Net loss ratio
|
79.1
|
%
|
|
72.0
|
%
|
|
70.8
|
%
|
|
9.9
|
%
|
|
1.7
|
%
|
Expense ratio
(1)
|
28.4
|
|
|
29.0
|
|
|
28.7
|
|
|
(2.1
|
)
|
|
1.0
|
|
Combined ratio
|
107.5
|
%
|
|
101.0
|
%
|
|
99.5
|
%
|
|
6.4
|
%
|
|
1.5
|
%
|
Combined ratio (without catastrophes)
|
97.4
|
%
|
|
96.4
|
%
|
|
96.1
|
%
|
|
1.0
|
%
|
|
0.3
|
%
|
(1)
|
Includes policyholder dividends.
|
(2)
|
The Measurement of Results section of this report defines data prepared in accordance with statutory accounting practices, which is a comprehensive basis of accounting other than U.S. GAAP.
|
(3)
|
A.M. Best Company estimate.
|
|
|
|
|
|
|
|
% Change
|
||||||||||
(In Thousands)
|
|
|
|
|
|
|
2011
|
|
2010
|
||||||||
Years ended December 31
|
2011
|
|
2010
|
|
2009
|
|
vs. 2010
|
|
vs. 2009
|
||||||||
Direct premiums written
|
$
|
580,890
|
|
|
$
|
435,706
|
|
|
$
|
454,046
|
|
|
33.3
|
%
|
|
(4.0
|
)%
|
Assumed premiums written
|
14,954
|
|
|
11,713
|
|
|
7,820
|
|
|
27.7
|
|
|
49.8
|
|
|||
Ceded premiums written
|
(43,921
|
)
|
|
(32,511
|
)
|
|
(37,039
|
)
|
|
35.1
|
|
|
(12.2
|
)
|
|||
Net premiums written
(1)
|
$
|
551,923
|
|
|
$
|
414,908
|
|
|
$
|
424,827
|
|
|
33.0
|
%
|
|
(2.3
|
)%
|
Net premiums earned
|
533,771
|
|
|
420,373
|
|
|
435,677
|
|
|
27.0
|
|
|
(3.5
|
)
|
(1)
|
The Measurement of Results section of this report defines data prepared in accordance with statutory accounting practices, which is a comprehensive basis of accounting other than U.S. GAAP.
|
Name of Reinsurer
|
A.M. Best
|
S&P Rating
|
Arch Reinsurance Company
|
A+
|
A+
|
Argo Re Ltd
|
A
|
N/A
|
FM Global Group
|
A+
|
N/A
|
Hannover Rueckversicherung AG
(1) (2)
|
A
|
AA-
|
Lloyd's
|
A
|
A+
|
Platinum Underwriters Reinsurance, Inc
|
A
|
A-
|
QBE Reinsurance Corporation
(1)
|
A
|
A+
|
R&V Versicherung AG
(2)
|
N/A
|
AA-
|
SCOR Reinsurance Company
|
A
|
A
|
Tokio Millennium Re Ltd
|
A++
|
AA-
|
(1)
|
Primary insurers participating on the property and casualty excess of loss programs.
|
(2)
|
Primary insurers participating on the surety excess of loss program.
|
(In Thousands)
|
|
|
|
|
|
||||||
Years ended December 31
|
2011
|
|
2010
|
|
2009
|
||||||
Savings from:
|
|
|
|
|
|
||||||
Salvage and subrogation
|
$
|
4,905
|
|
|
$
|
4,070
|
|
|
$
|
5,968
|
|
Estimated alternative dispute resolution
|
10,129
|
|
|
11,182
|
|
|
12,957
|
|
|||
Workers’ compensation medical bill review
|
5,225
|
|
|
3,830
|
|
|
3,516
|
|
|||
Other
|
47,364
|
|
|
35,372
|
|
|
(10,680
|
)
|
|||
Net redundancy excluding Hurricane Katrina
|
67,623
|
|
|
54,454
|
|
|
11,761
|
|
|||
Adverse development from Hurricane Katrina
|
(6,528
|
)
|
|
(8,576
|
)
|
|
(37,976
|
)
|
|||
Net redundancy (deficiency)
|
$
|
61,095
|
|
|
45,878
|
|
|
$
|
(26,215
|
)
|
Years ended December 31
|
2011
|
|
2010
|
|
2009
|
|||||||||||||||||||||||||||
(In Thousands)
|
Net Premiums Earned
|
|
Net Losses and Loss Settlement Expenses Incurred
|
|
Net Loss Ratio
|
|
Net Premiums Earned
|
|
Net Losses and Loss Settlement Expenses Incurred
|
|
Net Loss Ratio
|
|
Net Premiums Earned
|
|
Net Losses and Loss Settlement Expenses Incurred
|
|
Net Loss Ratio
|
|||||||||||||||
Commercial lines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Other liability
|
$
|
159,977
|
|
|
$
|
75,589
|
|
|
47.2
|
%
|
|
$
|
113,555
|
|
|
$
|
94,645
|
|
|
83.3
|
%
|
|
$
|
119,587
|
|
|
$
|
119,200
|
|
|
99.7
|
%
|
Fire and allied lines
|
117,812
|
|
|
123,418
|
|
|
104.8
|
|
|
98,673
|
|
|
78,174
|
|
|
79.2
|
|
|
102,265
|
|
|
100,436
|
|
|
98.2
|
|
||||||
Automobile
|
115,230
|
|
|
84,221
|
|
|
73.1
|
|
|
93,160
|
|
|
66,946
|
|
|
71.9
|
|
|
97,948
|
|
|
75,123
|
|
|
76.7
|
|
||||||
Workers’ compensation
|
54,404
|
|
|
47,153
|
|
|
86.7
|
|
|
45,174
|
|
|
27,238
|
|
|
60.3
|
|
|
51,992
|
|
|
41,283
|
|
|
79.4
|
|
||||||
Fidelity and surety
|
16,665
|
|
|
1,349
|
|
|
8.1
|
|
|
19,113
|
|
|
3,133
|
|
|
16.4
|
|
|
21,354
|
|
|
1,838
|
|
|
8.6
|
|
||||||
Other
|
854
|
|
|
(410
|
)
|
|
(48.0
|
)
|
|
804
|
|
|
1,048
|
|
|
130.3
|
|
|
854
|
|
|
214
|
|
|
25.1
|
|
||||||
Total commercial lines
|
$
|
464,942
|
|
|
$
|
331,320
|
|
|
71.3
|
%
|
|
$
|
370,479
|
|
|
$
|
271,184
|
|
|
73.2
|
%
|
|
$
|
394,000
|
|
|
$
|
338,094
|
|
|
85.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Personal lines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Fire and allied lines
|
$
|
36,027
|
|
|
$
|
36,086
|
|
|
100.2
|
%
|
|
$
|
24,668
|
|
|
$
|
13,850
|
|
|
56.1
|
%
|
|
$
|
22,317
|
|
|
$
|
12,254
|
|
|
54.9
|
%
|
Automobile
|
18,744
|
|
|
15,542
|
|
|
82.9
|
|
|
14,616
|
|
|
12,642
|
|
|
86.5
|
|
|
13,053
|
|
|
10,725
|
|
|
82.2
|
|
||||||
Other
|
797
|
|
|
97
|
|
|
12.2
|
|
|
447
|
|
|
(916
|
)
|
|
(204.9
|
)
|
|
365
|
|
|
662
|
|
|
181.4
|
|
||||||
Total personal lines
|
$
|
55,568
|
|
|
$
|
51,725
|
|
|
93.1
|
%
|
|
$
|
39,731
|
|
|
$
|
25,576
|
|
|
64.4
|
%
|
|
$
|
35,735
|
|
|
$
|
23,641
|
|
|
66.2
|
%
|
Reinsurance assumed
|
$
|
13,261
|
|
|
$
|
24,786
|
|
|
186.9
|
%
|
|
$
|
10,163
|
|
|
$
|
(7,323
|
)
|
|
(72.1
|
)%
|
|
$
|
5,942
|
|
|
$
|
3,986
|
|
|
67.1
|
%
|
Total
|
$
|
533,771
|
|
|
$
|
407,831
|
|
|
76.4
|
%
|
|
$
|
420,373
|
|
|
$
|
289,437
|
|
|
68.9
|
%
|
|
$
|
435,677
|
|
|
$
|
365,721
|
|
|
83.9
|
%
|
Life Insurance Segment Results of Operations
|
|
|
|
|
|
% Change
|
|||||||||||
(In Thousands)
|
|
|
|
|
|
|
2011
|
|
2010
|
||||||||
Years ended December 31
|
2011
|
|
2010
|
|
2009
|
|
vs. 2010
|
|
vs. 2009
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||||
Net premiums written
(1)
|
$
|
52,944
|
|
|
$
|
48,984
|
|
|
$
|
42,600
|
|
|
8.1
|
%
|
|
15.0
|
%
|
Net premiums earned
|
$
|
53,012
|
|
|
$
|
49,100
|
|
|
$
|
42,821
|
|
|
8.0
|
%
|
|
14.7
|
%
|
Investment income, net
|
73,981
|
|
|
76,898
|
|
|
74,533
|
|
|
(3.8
|
)
|
|
3.2
|
|
|||
Realized investment gains (losses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Other-than-temporary impairment charges
|
(395
|
)
|
|
(306
|
)
|
|
(8,482
|
)
|
|
(29.1
|
)
|
|
96.4
|
|
|||
Other realized gains, net
|
3,754
|
|
|
5,202
|
|
|
2,118
|
|
|
(27.8
|
)
|
|
145.6
|
|
|||
Total realized investment gains (losses)
|
3,359
|
|
|
4,896
|
|
|
(6,364
|
)
|
|
(31.4
|
)
|
|
176.9
|
|
|||
Other income
|
699
|
|
|
1,278
|
|
|
605
|
|
|
(45.3
|
)
|
|
111.2
|
|
|||
Total Revenues
|
$
|
131,051
|
|
|
$
|
132,172
|
|
|
$
|
111,595
|
|
|
(0.8
|
)%
|
|
18.4
|
%
|
|
|
|
|
|
|
|
|
|
|
||||||||
Benefits, Losses and Expenses
|
|
|
|
|
|
|
|
|
|
||||||||
Loss and loss settlement expenses
|
$
|
22,558
|
|
|
$
|
20,359
|
|
|
$
|
16,773
|
|
|
10.8
|
%
|
|
21.4
|
%
|
Increase in liability for future policy benefits
|
32,567
|
|
|
27,229
|
|
|
23,897
|
|
|
19.6
|
|
|
13.9
|
|
|||
Amortization of deferred policy acquisition costs
|
9,224
|
|
|
10,735
|
|
|
9,287
|
|
|
(14.1
|
)
|
|
15.6
|
|
|||
Other underwriting expenses
|
12,353
|
|
|
11,318
|
|
|
8,745
|
|
|
9.1
|
|
|
29.4
|
|
|||
Interest on policyholders’ accounts
|
42,834
|
|
|
42,988
|
|
|
41,652
|
|
|
(0.4
|
)
|
|
3.2
|
|
|||
Total Benefits, Losses and Expenses
|
$
|
119,536
|
|
|
$
|
112,629
|
|
|
$
|
100,354
|
|
|
6.1
|
%
|
|
12.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Income Before Income Taxes
|
$
|
11,515
|
|
|
$
|
19,543
|
|
|
$
|
11,241
|
|
|
(41.1
|
)%
|
|
73.9
|
%
|
(1)
|
The Measurement of Results section of this report defines data prepared in accordance with statutory accounting practices, which is a comprehensive basis of accounting other than U.S. GAAP.
|
INVESTMENTS
|
|
Property & Casualty
Insurance Segment
|
|
Life
Insurance Segment
|
|
Total
|
|||||||||||||||
(In Thousands)
|
|
|
% of
Total
|
|
|
|
% of
Total
|
|
|
|
% of
Total
|
|||||||||
Fixed maturities
(1)
|
$
|
1,083,860
|
|
|
86.1
|
%
|
|
$
|
1,617,531
|
|
|
98.0
|
%
|
|
$
|
2,701,391
|
|
|
92.9
|
%
|
Equity securities
|
141,693
|
|
|
11.3
|
|
|
17,758
|
|
|
1.1
|
|
|
159,451
|
|
|
5.5
|
|
|||
Trading securities
|
13,454
|
|
|
1.1
|
|
|
—
|
|
|
—
|
|
|
13,454
|
|
|
0.5
|
|
|||
Mortgage loans
|
—
|
|
|
—
|
|
|
4,829
|
|
|
0.3
|
|
|
4,829
|
|
|
0.2
|
|
|||
Policy loans
|
—
|
|
|
—
|
|
|
7,209
|
|
|
0.4
|
|
|
7,209
|
|
|
0.2
|
|
|||
Other long-term investments
|
17,249
|
|
|
1.4
|
|
|
3,325
|
|
|
0.2
|
|
|
20,574
|
|
|
0.7
|
|
|||
Short-term investments
|
1,100
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
1,100
|
|
|
—
|
|
|||
Total
|
$
|
1,257,356
|
|
|
100.0
|
%
|
|
$
|
1,650,652
|
|
|
100.0
|
%
|
|
$
|
2,908,008
|
|
|
100.0
|
%
|
(1)
|
Available-for-sale fixed maturities are carried at fair value. Held-to-maturity fixed maturities are carried at amortized cost.
|
(In Thousands)
|
|
December 31, 2011
|
|
December 31, 2010
|
||||||||||
Rating
|
|
Carrying Value
|
|
% of Total
|
|
Carrying Value
|
|
% of Total
|
||||||
AAA
|
|
$
|
409,124
|
|
|
15.0
|
%
|
|
$
|
279,009
|
|
|
12.1
|
%
|
AA
|
|
631,250
|
|
|
23.3
|
|
|
480,478
|
|
|
20.9
|
|
||
A
|
|
626,927
|
|
|
23.1
|
|
|
476,044
|
|
|
20.7
|
|
||
Baa/BBB
|
|
929,188
|
|
|
34.2
|
|
|
938,781
|
|
|
40.9
|
|
||
Other/Not Rated
|
|
118,356
|
|
|
4.4
|
|
|
123,367
|
|
|
5.4
|
|
||
|
|
$
|
2,714,845
|
|
|
100.0
|
%
|
|
$
|
2,297,679
|
|
|
100.0
|
%
|
(In Thousands)
|
Held-To-Maturity
|
|
Available-For-Sale
|
|
Trading
|
||||||||||||||||||
|
Amortized
|
|
Fair
|
|
Amortized
|
|
Fair
|
|
Amortized
|
|
Fair
|
||||||||||||
December 31, 2011
|
Cost
|
|
Value
|
|
Cost
|
|
Value
|
|
Cost
|
|
Value
|
||||||||||||
Due in one year or less
|
$
|
395
|
|
|
$
|
397
|
|
|
$
|
56,442
|
|
|
$
|
56,777
|
|
|
$
|
2,544
|
|
|
$
|
2,860
|
|
Due after one year through five years
|
2,969
|
|
|
2,955
|
|
|
276,288
|
|
|
288,784
|
|
|
4,880
|
|
|
4,749
|
|
||||||
Due after five years through 10 years
|
—
|
|
|
—
|
|
|
577,503
|
|
|
633,598
|
|
|
497
|
|
|
439
|
|
||||||
Due after 10 years
|
—
|
|
|
—
|
|
|
46,484
|
|
|
48,521
|
|
|
5,508
|
|
|
5,406
|
|
||||||
Asset-backed securities
|
—
|
|
|
—
|
|
|
967
|
|
|
1,024
|
|
|
—
|
|
|
—
|
|
||||||
Mortgage-backed securities
|
3
|
|
|
3
|
|
|
34,353
|
|
|
35,390
|
|
|
—
|
|
|
—
|
|
||||||
Collateralized mortgage obligations
|
—
|
|
|
—
|
|
|
15,563
|
|
|
16,399
|
|
|
—
|
|
|
—
|
|
||||||
|
$
|
3,367
|
|
|
$
|
3,355
|
|
|
$
|
1,007,600
|
|
|
$
|
1,080,493
|
|
|
$
|
13,429
|
|
|
$
|
13,454
|
|
(In Thousands)
|
Held-To-Maturity
|
|
Available-For-Sale
|
||||||||||||
|
Amortized
|
|
Fair
|
|
Amortized
|
|
Fair
|
||||||||
December 31, 2011
|
Cost
|
|
Value
|
|
Cost
|
|
Value
|
||||||||
Due in one year or less
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
214,812
|
|
|
$
|
218,583
|
|
Due after one year through five years
|
375
|
|
|
378
|
|
|
808,506
|
|
|
851,218
|
|
||||
Due after five years through 10 years
|
—
|
|
|
—
|
|
|
386,949
|
|
|
396,992
|
|
||||
Due after 10 years
|
—
|
|
|
—
|
|
|
76,103
|
|
|
78,238
|
|
||||
Asset-backed securities
|
—
|
|
|
—
|
|
|
4,834
|
|
|
5,272
|
|
||||
Mortgage-backed securities
|
353
|
|
|
378
|
|
|
—
|
|
|
—
|
|
||||
Collateralized mortgage obligations
|
48
|
|
|
50
|
|
|
63,982
|
|
|
66,452
|
|
||||
|
$
|
776
|
|
|
$
|
806
|
|
|
$
|
1,555,186
|
|
|
$
|
1,616,755
|
|
(In Thousands)
|
|
|
|
|
|
|
% Change
|
||||||||||
|
|
|
|
|
|
|
2011
|
|
2010
|
||||||||
As of and for the Years Ended December 31
|
2011
|
|
2010
|
|
2009
|
|
vs. 2010
|
|
vs. 2009
|
||||||||
Investment income, net
|
$
|
109,494
|
|
|
$
|
111,685
|
|
|
$
|
106,075
|
|
|
(2.0
|
)%
|
|
5.3
|
%
|
Realized investment gains (losses)
|
|
|
|
|
|
|
|
|
|
||||||||
Other-than-temporary impairment charges
|
$
|
(395
|
)
|
|
$
|
(459
|
)
|
|
$
|
(18,307
|
)
|
|
13.9
|
|
|
97.5
|
|
Other realized gains, net
|
6,835
|
|
|
8,948
|
|
|
5,128
|
|
|
(23.6
|
)
|
|
74.5
|
|
|||
Total realized investment gains (losses)
|
$
|
6,440
|
|
|
$
|
8,489
|
|
|
$
|
(13,179
|
)
|
|
(24.1
|
)%
|
|
164.4
|
%
|
Net unrealized gains, after tax
|
$
|
124,376
|
|
|
$
|
102,649
|
|
|
$
|
82,491
|
|
|
21.2
|
%
|
|
24.4
|
%
|
(1)
|
Represents the change in value of our holdings in limited liability partnership funds, which are accounted for under the equity method of accounting.
|
(In Thousands)
|
|
|
|
|
|
|||||
Years ended December 31
|
Average
Invested Assets
|
|
Investment
Income, Net
|
|
Annualized Yield on
Average Invested Assets
|
|||||
2011
|
$
|
2,744,095
|
|
|
$
|
109,494
|
|
|
4.0
|
%
|
2010
|
2,482,643
|
|
|
111,685
|
|
|
4.5
|
%
|
||
2009
|
2,307,260
|
|
|
106,075
|
|
|
4.6
|
%
|
(In Thousands)
Years Ended December 31
|
2011
|
|
2010
|
|
2009
|
||||||
Realized investment gains (losses)
|
|
|
|
|
|
||||||
Fixed maturities
|
$
|
4,389
|
|
|
$
|
4,079
|
|
|
$
|
(4,117
|
)
|
Equity securities
|
2,984
|
|
|
5,030
|
|
|
(11,362
|
)
|
|||
Trading securities
|
(865
|
)
|
|
(127
|
)
|
|
1,965
|
|
|||
Mortgage loans
|
—
|
|
|
(362
|
)
|
|
—
|
|
|||
Other long-term investments
|
(68
|
)
|
|
(131
|
)
|
|
332
|
|
|||
Short-term investments
|
—
|
|
|
—
|
|
|
3
|
|
|||
Total realized investment gains (losses)
|
$
|
6,440
|
|
|
$
|
8,489
|
|
|
$
|
(13,179
|
)
|
December 31, 2011
|
-200 Basis
|
|
-100 Basis
|
|
|
|
+100 Basis
|
|
+ 200 Basis
|
||||||||||
(In Thousands)
|
Points
|
|
Points
|
|
Base
|
|
Points
|
|
Points
|
||||||||||
HELD-TO-MATURITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
|
||||||||||
Bonds
|
|
|
|
|
|
|
|
|
|
||||||||||
States, municipalities and political subdivisions
|
|
|
|
|
|
|
|
|
|
||||||||||
General obligations
|
$
|
502
|
|
|
$
|
502
|
|
|
$
|
501
|
|
|
$
|
501
|
|
|
$
|
500
|
|
Special revenue
|
|
|
|
|
|
|
|
|
|
||||||||||
Midwest
|
|
|
|
|
|
|
|
|
|
||||||||||
North central - East
|
257
|
|
|
256
|
|
|
254
|
|
|
252
|
|
|
251
|
|
|||||
North central - West
|
231
|
|
|
230
|
|
|
230
|
|
|
230
|
|
|
230
|
|
|||||
South
|
586
|
|
|
580
|
|
|
573
|
|
|
567
|
|
|
561
|
|
|||||
West
|
2,177
|
|
|
2,174
|
|
|
2,172
|
|
|
2,169
|
|
|
2,154
|
|
|||||
Collateralized mortgage obligations
|
50
|
|
|
50
|
|
|
50
|
|
|
49
|
|
|
48
|
|
|||||
Mortgage-backed securities
|
391
|
|
|
388
|
|
|
381
|
|
|
374
|
|
|
366
|
|
|||||
Total Held-to-Maturity Fixed Maturities
|
$
|
4,194
|
|
|
$
|
4,180
|
|
|
$
|
4,161
|
|
|
$
|
4,142
|
|
|
$
|
4,110
|
|
AVAILABLE-FOR-SALE
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
|
||||||||||
Bonds
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. government and government-sponsored enterprises
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasury
|
$
|
46,012
|
|
|
$
|
44,963
|
|
|
$
|
43,951
|
|
|
$
|
42,974
|
|
|
$
|
42,030
|
|
Agency
|
97,679
|
|
|
97,161
|
|
|
96,395
|
|
|
92,542
|
|
|
86,056
|
|
|||||
States, municipalities and political subdivisions
|
|
|
|
|
|
|
|
|
|
||||||||||
General obligations
|
|
|
|
|
|
|
|
|
|
||||||||||
Midwest
|
|
|
|
|
|
|
|
|
|
||||||||||
North central - East
|
139,247
|
|
|
134,349
|
|
|
129,605
|
|
|
124,797
|
|
|
119,641
|
|
|||||
North central - West
|
90,417
|
|
|
87,322
|
|
|
84,311
|
|
|
81,334
|
|
|
78,242
|
|
|||||
Northeast
|
44,269
|
|
|
42,524
|
|
|
40,863
|
|
|
39,240
|
|
|
37,569
|
|
|||||
South
|
123,952
|
|
|
119,628
|
|
|
115,473
|
|
|
111,350
|
|
|
107,101
|
|
|||||
West
|
80,522
|
|
|
77,412
|
|
|
74,378
|
|
|
71,294
|
|
|
68,027
|
|
|||||
Special revenue
|
|
|
|
|
|
|
|
|
|
||||||||||
Midwest
|
|
|
|
|
|
|
|
|
|
||||||||||
North central - East
|
76,002
|
|
|
73,353
|
|
|
70,813
|
|
|
68,295
|
|
|
65,657
|
|
|||||
North central - West
|
60,837
|
|
|
58,002
|
|
|
55,236
|
|
|
52,421
|
|
|
49,550
|
|
|||||
Northeast
|
15,932
|
|
|
15,316
|
|
|
14,733
|
|
|
14,176
|
|
|
13,634
|
|
|||||
South
|
111,824
|
|
|
107,354
|
|
|
103,074
|
|
|
98,859
|
|
|
94,684
|
|
|||||
West
|
65,291
|
|
|
62,376
|
|
|
59,621
|
|
|
56,959
|
|
|
54,305
|
|
|||||
Foreign bonds
|
|
|
|
|
|
|
|
|
|
||||||||||
Canadian
|
76,525
|
|
|
74,305
|
|
|
72,176
|
|
|
70,061
|
|
|
68,007
|
|
|||||
Other foreign
|
155,017
|
|
|
148,627
|
|
|
142,639
|
|
|
137,018
|
|
|
131,734
|
|
|||||
Public utilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Electric
|
251,265
|
|
|
242,099
|
|
|
233,479
|
|
|
225,368
|
|
|
217,715
|
|
|||||
Gas distribution
|
28,109
|
|
|
26,839
|
|
|
25,658
|
|
|
24,557
|
|
|
23,532
|
|
|||||
Other
|
11,706
|
|
|
11,310
|
|
|
10,934
|
|
|
10,577
|
|
|
10,237
|
|
|||||
Corporate bonds
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and gas
|
212,074
|
|
|
204,406
|
|
|
197,192
|
|
|
190,396
|
|
|
183,983
|
|
|||||
Chemicals
|
66,783
|
|
|
64,452
|
|
|
62,261
|
|
|
60,197
|
|
|
58,251
|
|
|||||
Basic resources
|
26,729
|
|
|
25,345
|
|
|
24,061
|
|
|
22,867
|
|
|
21,760
|
|
|||||
Construction and materials
|
25,514
|
|
|
24,907
|
|
|
24,330
|
|
|
23,779
|
|
|
23,253
|
|
|||||
Industrial goods and services
|
200,057
|
|
|
192,293
|
|
|
185,025
|
|
|
178,112
|
|
|
171,515
|
|
|||||
Autos and parts
|
20,117
|
|
|
19,140
|
|
|
18,229
|
|
|
17,378
|
|
|
16,582
|
|
|||||
Food and beverage
|
73,665
|
|
|
71,388
|
|
|
69,241
|
|
|
67,215
|
|
|
65,298
|
|
|||||
Personal and household goods
|
65,936
|
|
|
63,892
|
|
|
61,963
|
|
|
60,137
|
|
|
58,409
|
|
|||||
Health care
|
125,233
|
|
|
120,292
|
|
|
115,671
|
|
|
111,344
|
|
|
107,284
|
|
|||||
Retail
|
64,555
|
|
|
62,239
|
|
|
60,063
|
|
|
58,014
|
|
|
56,084
|
|
|||||
Media
|
45,591
|
|
|
43,711
|
|
|
41,969
|
|
|
40,351
|
|
|
38,846
|
|
|||||
Travel and leisure
|
2,858
|
|
|
2,766
|
|
|
2,678
|
|
|
2,593
|
|
|
2,511
|
|
Telecommunications
|
42,464
|
|
|
41,149
|
|
|
39,915
|
|
|
38,755
|
|
|
37,663
|
|
|||||
Banks
|
137,620
|
|
|
134,682
|
|
|
131,876
|
|
|
129,114
|
|
|
126,430
|
|
|||||
Insurance
|
25,326
|
|
|
24,490
|
|
|
23,700
|
|
|
22,952
|
|
|
22,242
|
|
|||||
Real estate
|
24,956
|
|
|
23,952
|
|
|
23,022
|
|
|
22,159
|
|
|
21,356
|
|
|||||
Financial services
|
90,597
|
|
|
88,609
|
|
|
86,703
|
|
|
84,873
|
|
|
83,113
|
|
|||||
Technology
|
33,652
|
|
|
32,321
|
|
|
31,064
|
|
|
29,876
|
|
|
28,750
|
|
|||||
Collateralized mortgage obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Government
|
90,704
|
|
|
87,682
|
|
|
82,691
|
|
|
76,357
|
|
|
69,576
|
|
|||||
Other
|
232
|
|
|
191
|
|
|
160
|
|
|
147
|
|
|
134
|
|
|||||
Mortgage backed securities
|
35,480
|
|
|
35,646
|
|
|
35,390
|
|
|
34,474
|
|
|
32,910
|
|
|||||
Asset-backed securities
|
6,660
|
|
|
6,474
|
|
|
6,296
|
|
|
6,128
|
|
|
5,967
|
|
|||||
Redeemable preferred stock
|
439
|
|
|
424
|
|
|
409
|
|
|
395
|
|
|
382
|
|
|||||
Total Available-For-Sale Fixed Maturities
|
$
|
2,891,848
|
|
|
$
|
2,793,391
|
|
|
$
|
2,697,248
|
|
|
$
|
2,599,435
|
|
|
$
|
2,500,020
|
|
TRADING
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
|
||||||||||
Bonds
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign bonds
|
|
|
|
|
|
|
|
|
|
||||||||||
Canadian
|
$
|
1,612
|
|
|
$
|
1,570
|
|
|
$
|
1,530
|
|
|
$
|
1,490
|
|
|
$
|
1,452
|
|
Other foreign
|
1,471
|
|
|
1,455
|
|
|
1,376
|
|
|
1,166
|
|
|
952
|
|
|||||
Corporate bonds
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic resources
|
1,448
|
|
|
1,445
|
|
|
1,443
|
|
|
1,440
|
|
|
1,437
|
|
|||||
Food and beverage
|
1,093
|
|
|
1,076
|
|
|
1,059
|
|
|
1,042
|
|
|
1,026
|
|
|||||
Health care
|
1,943
|
|
|
1,671
|
|
|
1,450
|
|
|
1,271
|
|
|
1,126
|
|
|||||
Banks
|
1,565
|
|
|
1,399
|
|
|
1,237
|
|
|
1,095
|
|
|
971
|
|
|||||
Insurance
|
490
|
|
|
464
|
|
|
440
|
|
|
416
|
|
|
394
|
|
|||||
Financial services
|
479
|
|
|
429
|
|
|
386
|
|
|
349
|
|
|
317
|
|
|||||
Technology
|
2,127
|
|
|
1,754
|
|
|
1,458
|
|
|
1,220
|
|
|
1,030
|
|
|||||
Redeemable preferred stock
|
3,102
|
|
|
3,089
|
|
|
3,075
|
|
|
3,063
|
|
|
3,050
|
|
|||||
Total Trading Fixed Maturities
|
$
|
15,330
|
|
|
$
|
14,352
|
|
|
$
|
13,454
|
|
|
$
|
12,552
|
|
|
$
|
11,755
|
|
Total Fixed Maturity Securities
|
$
|
2,911,372
|
|
|
$
|
2,811,923
|
|
|
$
|
2,714,863
|
|
|
$
|
2,616,129
|
|
|
$
|
2,515,885
|
|
December 31, 2010
|
-200 Basis
|
|
-100 Basis
|
|
|
|
+100 Basis
|
|
+200 Basis
|
||||||||||
(In Thousands)
|
Points
|
|
Points
|
|
Base
|
|
Points
|
|
Points
|
||||||||||
HELD-TO-MATURITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
|
||||||||||
Bonds
|
|
|
|
|
|
|
|
|
|
||||||||||
States, municipalities and political subdivisions
|
|
|
|
|
|
|
|
|
|
||||||||||
General obligations
|
$
|
782
|
|
|
$
|
761
|
|
|
$
|
741
|
|
|
$
|
722
|
|
|
$
|
704
|
|
Special revenue
|
|
|
|
|
|
|
|
|
|
||||||||||
Midwest
|
|
|
|
|
|
|
|
|
|
||||||||||
North central - East
|
405
|
|
|
397
|
|
|
391
|
|
|
383
|
|
|
376
|
|
|||||
North central - West
|
536
|
|
|
523
|
|
|
511
|
|
|
499
|
|
|
487
|
|
|||||
Northeast
|
247
|
|
|
244
|
|
|
242
|
|
|
240
|
|
|
238
|
|
|||||
South
|
1,006
|
|
|
984
|
|
|
963
|
|
|
944
|
|
|
924
|
|
|||||
West
|
3,189
|
|
|
3,089
|
|
|
2,993
|
|
|
2,900
|
|
|
2,811
|
|
|||||
Collateralized mortgage obligations
|
89
|
|
|
88
|
|
|
87
|
|
|
86
|
|
|
84
|
|
|||||
Mortgage-backed securities
|
508
|
|
|
502
|
|
|
494
|
|
|
485
|
|
|
475
|
|
|||||
Total Held-to-Maturity Fixed Maturities
|
$
|
6,762
|
|
|
$
|
6,588
|
|
|
$
|
6,422
|
|
|
$
|
6,259
|
|
|
$
|
6,099
|
|
AVAILABLE-FOR-SALE
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
|
||||||||||
Bonds
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. government and government-sponsored enterprises
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasury
|
$
|
41,057
|
|
|
$
|
40,048
|
|
|
$
|
39,076
|
|
|
$
|
38,141
|
|
|
$
|
37,240
|
|
Agency
|
105,348
|
|
|
104,868
|
|
|
103,131
|
|
|
98,919
|
|
|
93,668
|
|
|||||
States, municipalities and political subdivisions
|
|
|
|
|
|
|
|
|
|
||||||||||
General obligations
|
|
|
|
|
|
|
|
|
|
||||||||||
Midwest
|
|
|
|
|
|
|
|
|
|
||||||||||
North central - East
|
145,061
|
|
|
136,082
|
|
|
127,770
|
|
|
120,069
|
|
|
112,929
|
|
|||||
North central - West
|
91,965
|
|
|
86,348
|
|
|
81,132
|
|
|
76,282
|
|
|
71,774
|
|
|||||
Northeast
|
33,299
|
|
|
31,343
|
|
|
29,525
|
|
|
27,836
|
|
|
26,265
|
|
|||||
South
|
112,383
|
|
|
105,595
|
|
|
99,297
|
|
|
93,452
|
|
|
88,021
|
|
|||||
West
|
64,210
|
|
|
59,966
|
|
|
56,053
|
|
|
52,444
|
|
|
49,110
|
|
|||||
Special revenue
|
|
|
|
|
|
|
|
|
|
||||||||||
Midwest
|
|
|
|
|
|
|
|
|
|
||||||||||
North central - East
|
68,036
|
|
|
64,445
|
|
|
61,093
|
|
|
57,962
|
|
|
55,035
|
|
|||||
North central - West
|
45,709
|
|
|
42,897
|
|
|
40,305
|
|
|
37,912
|
|
|
35,703
|
|
|||||
Northeast
|
5,385
|
|
|
5,051
|
|
|
4,743
|
|
|
4,457
|
|
|
4,193
|
|
|||||
South
|
84,160
|
|
|
79,271
|
|
|
74,747
|
|
|
70,558
|
|
|
66,676
|
|
|||||
West
|
50,035
|
|
|
47,188
|
|
|
44,545
|
|
|
42,089
|
|
|
39,807
|
|
|||||
Foreign bonds
|
|
|
|
|
|
|
|
|
|
||||||||||
Canadian
|
77,147
|
|
|
75,020
|
|
|
72,923
|
|
|
70,878
|
|
|
68,915
|
|
|||||
Other foreign
|
95,475
|
|
|
92,553
|
|
|
89,754
|
|
|
87,073
|
|
|
84,503
|
|
|||||
Public utilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Electric
|
239,027
|
|
|
232,018
|
|
|
225,324
|
|
|
218,938
|
|
|
212,835
|
|
|||||
Gas distribution
|
23,516
|
|
|
22,831
|
|
|
22,185
|
|
|
21,574
|
|
|
20,996
|
|
|||||
Other
|
21,964
|
|
|
21,769
|
|
|
21,580
|
|
|
21,398
|
|
|
21,222
|
|
|||||
Corporate bonds
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and gas
|
195,117
|
|
|
190,179
|
|
|
185,436
|
|
|
180,885
|
|
|
176,513
|
|
|||||
Chemicals
|
58,091
|
|
|
56,499
|
|
|
54,971
|
|
|
53,497
|
|
|
52,055
|
|
|||||
Basic resources
|
7,793
|
|
|
7,607
|
|
|
7,427
|
|
|
7,252
|
|
|
7,082
|
|
|||||
Construction and materials
|
21,241
|
|
|
20,741
|
|
|
20,258
|
|
|
19,789
|
|
|
19,336
|
|
|||||
Industrial goods and services
|
162,848
|
|
|
158,887
|
|
|
155,058
|
|
|
151,193
|
|
|
147,416
|
|
|||||
Autos and parts
|
19,361
|
|
|
18,860
|
|
|
18,384
|
|
|
17,929
|
|
|
17,496
|
|
|||||
Food and beverage
|
76,973
|
|
|
75,475
|
|
|
74,033
|
|
|
72,648
|
|
|
71,314
|
|
|||||
Personal and household goods
|
73,331
|
|
|
71,319
|
|
|
69,387
|
|
|
67,534
|
|
|
65,755
|
|
|||||
Health care
|
89,875
|
|
|
86,512
|
|
|
83,342
|
|
|
80,351
|
|
|
77,524
|
|
|||||
Retail
|
46,727
|
|
|
45,309
|
|
|
43,960
|
|
|
42,675
|
|
|
41,453
|
|
|||||
Media
|
35,874
|
|
|
34,520
|
|
|
33,254
|
|
|
32,067
|
|
|
30,952
|
|
Travel and leisure
|
6,143
|
|
|
6,002
|
|
|
5,866
|
|
|
5,735
|
|
|
5,609
|
|
|||||
Telecommunications
|
38,444
|
|
|
37,703
|
|
|
36,984
|
|
|
36,285
|
|
|
35,592
|
|
|||||
Banks
|
128,570
|
|
|
125,057
|
|
|
121,634
|
|
|
118,278
|
|
|
115,048
|
|
|||||
Insurance
|
27,886
|
|
|
27,160
|
|
|
26,467
|
|
|
25,805
|
|
|
25,173
|
|
|||||
Real estate
|
23,808
|
|
|
22,733
|
|
|
21,737
|
|
|
20,812
|
|
|
19,951
|
|
|||||
Financial services
|
87,856
|
|
|
85,611
|
|
|
83,455
|
|
|
81,386
|
|
|
79,398
|
|
|||||
Technology
|
18,312
|
|
|
17,476
|
|
|
16,688
|
|
|
15,947
|
|
|
15,248
|
|
|||||
Collateralized mortgage obligations
|
21,178
|
|
|
20,435
|
|
|
19,577
|
|
|
18,682
|
|
|
17,793
|
|
|||||
Mortgage backed securities
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|||||
Asset-backed securities
|
7,953
|
|
|
7,630
|
|
|
7,326
|
|
|
7,039
|
|
|
6,769
|
|
|||||
Total Available-For-Sale Fixed Maturities
|
$
|
2,451,160
|
|
|
$
|
2,363,010
|
|
|
$
|
2,278,429
|
|
|
$
|
2,195,773
|
|
|
$
|
2,116,371
|
|
TRADING
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
|
||||||||||
Bonds
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign bonds
|
$
|
3,336
|
|
|
$
|
2,751
|
|
|
$
|
2,283
|
|
|
$
|
1,907
|
|
|
$
|
1,603
|
|
Corporate bonds
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and gas
|
3,371
|
|
|
3,087
|
|
|
2,843
|
|
|
2,636
|
|
|
2,457
|
|
|||||
Health care
|
2,563
|
|
|
2,208
|
|
|
1,917
|
|
|
1,678
|
|
|
1,480
|
|
|||||
Banks
|
1,533
|
|
|
1,349
|
|
|
1,198
|
|
|
1,072
|
|
|
967
|
|
|||||
Financial services
|
384
|
|
|
384
|
|
|
384
|
|
|
384
|
|
|
384
|
|
|||||
Technology
|
2,060
|
|
|
1,688
|
|
|
1,394
|
|
|
1,162
|
|
|
977
|
|
|||||
Redeemable preferred stock
|
2,866
|
|
|
2,866
|
|
|
2,867
|
|
|
2,866
|
|
|
2,866
|
|
|||||
Total Trading Fixed Maturities
|
$
|
16,113
|
|
|
$
|
14,333
|
|
|
$
|
12,886
|
|
|
$
|
11,705
|
|
|
$
|
10,734
|
|
Total Fixed Maturity Securities
|
$
|
2,474,035
|
|
|
$
|
2,383,931
|
|
|
$
|
2,297,737
|
|
|
$
|
2,213,737
|
|
|
$
|
2,133,204
|
|
(In Thousands)
|
|
-10%
|
|
Base
|
|
+10%
|
||||||
Estimated fair value of equity securities at
|
|
|
|
|
|
|
||||||
December 31, 2011
|
|
$
|
143,506
|
|
|
$
|
159,451
|
|
|
$
|
175,396
|
|
December 31, 2010
|
|
134,735
|
|
|
149,706
|
|
|
164,677
|
|
LIQUIDITY AND CAPITAL RESOURCES
|
Cash Flow Summary
|
Years Ended December 31
|
||||||||||
(In Thousands)
|
2011
|
|
2010
|
|
2009
|
||||||
Cash provided by (used in)
|
|
|
|
|
|
||||||
Operating activities
|
$
|
74,430
|
|
|
$
|
71,216
|
|
|
$
|
100,409
|
|
Investing activities
|
(175,191
|
)
|
|
(94,711
|
)
|
|
(130,089
|
)
|
|||
Financing activities
|
65,231
|
|
|
12,700
|
|
|
110,950
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
(35,530
|
)
|
|
$
|
(10,795
|
)
|
|
$
|
81,270
|
|
(In Thousands)
|
Payments Due By Period
|
|||||||||||||
Contractual Obligations
|
Total
|
|
Less Than
One Year
|
|
One to
Three Years
|
|
Three to
Five Years
|
|
More Than
Five Years
|
|||||
Future policy benefit reserves
(1)
|
2,314,309
|
|
|
228,157
|
|
|
460,169
|
|
|
374,271
|
|
|
1,251,712
|
|
Loss and loss settlement expense reserves
|
945,051
|
|
|
304,165
|
|
|
281,801
|
|
|
141,758
|
|
|
217,327
|
|
Line of credit
|
45,000
|
|
|
—
|
|
|
—
|
|
|
45,000
|
|
|
—
|
|
Operating leases
|
19,968
|
|
|
6,024
|
|
|
9,996
|
|
|
3,061
|
|
|
887
|
|
Trust preferred securities
|
15,626
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,626
|
|
Interest expense
|
19,669
|
|
|
1,719
|
|
|
3,208
|
|
|
3,210
|
|
|
11,532
|
|
Profit-sharing commissions
|
9,699
|
|
|
9,699
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Pension plan contributions
|
7,000
|
|
|
7,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
3,376,322
|
|
|
556,764
|
|
|
755,174
|
|
|
567,300
|
|
|
1,497,084
|
|
(1)
|
This projection of our obligation for future policy benefits considers only actual future cash outflows. The future policy benefit reserves presented on the Consolidated Balance Sheets is the net present value of the benefits to be paid, less the net present value of future net premiums.
|
CRITICAL ACCOUNTING ESTIMATES
|
•
|
Level 1: Valuations are based on unadjusted quoted prices in active markets for identical financial instruments that we have the ability to access.
|
•
|
Level 2: Valuations are based on quoted prices for similar financial instruments, other than quoted prices included in Level 1, in markets that are not active or on inputs that are observable either directly or indirectly for the full term of the financial instrument.
|
•
|
Level 3: Valuations are based on pricing or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement of the financial instrument. Such inputs may reflect management’s own assumptions about the assumptions a market participant would use in pricing the financial instrument.
|
(In Thousands)
|
|
|
Fair Value Measurements
|
||||||||||||
Description
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets as of December 31, 2011
|
|
|
|
|
|
|
|
||||||||
Available-for-sale fixed maturities
|
$
|
2,697,248
|
|
|
$
|
409
|
|
|
$
|
2,674,523
|
|
|
$
|
22,316
|
|
Equity securities
|
159,451
|
|
|
155,667
|
|
|
258
|
|
|
3,526
|
|
||||
Trading securities
|
13,454
|
|
|
1,659
|
|
|
11,795
|
|
|
—
|
|
||||
Short-term investments
|
1,100
|
|
|
1,100
|
|
|
—
|
|
|
—
|
|
||||
Money market accounts
|
62,899
|
|
|
62,899
|
|
|
—
|
|
|
—
|
|
||||
Total assets measured at fair value
|
$
|
2,934,152
|
|
|
$
|
221,734
|
|
|
$
|
2,686,576
|
|
|
$
|
25,842
|
|
|
|
|
|
|
|
|
|
|
|||||||
Assets as of December 31, 2010
|
|
|
|
|
|
|
|
|
|||||||
Available-for-sale fixed maturities
|
$
|
2,278,429
|
|
|
$
|
—
|
|
|
$
|
2,252,799
|
|
|
$
|
25,630
|
|
Equity securities
|
149,706
|
|
|
147,908
|
|
|
263
|
|
|
1,535
|
|
||||
Trading securities
|
12,886
|
|
|
1,476
|
|
|
11,410
|
|
|
—
|
|
||||
Short-term investments
|
1,100
|
|
|
1,100
|
|
|
—
|
|
|
—
|
|
||||
Money market accounts
|
34,384
|
|
|
34,384
|
|
|
—
|
|
|
—
|
|
||||
Total assets measured at fair value
|
$
|
2,476,505
|
|
|
$
|
184,868
|
|
|
$
|
2,264,472
|
|
|
$
|
27,165
|
|
(In Thousands)
|
Available-for-sale
fixed maturities
|
|
Equity
securities
|
|
Total
|
||||||
Balance at January 1, 2011
|
$
|
25,630
|
|
|
$
|
1,535
|
|
|
$
|
27,165
|
|
Realized gains
(1)
|
12
|
|
|
10
|
|
|
22
|
|
|||
Unrealized gains (losses)
(1)
|
184
|
|
|
(8
|
)
|
|
176
|
|
|||
Amortization
|
(15
|
)
|
|
—
|
|
|
(15
|
)
|
|||
Purchases
|
1,543
|
|
|
3,271
|
|
|
4,814
|
|
|||
Disposals
|
(4,838
|
)
|
|
(1,282
|
)
|
|
(6,120
|
)
|
|||
Transfers in
|
16,956
|
|
|
—
|
|
|
16,956
|
|
|||
Transfers out
|
(17,156
|
)
|
|
—
|
|
|
(17,156
|
)
|
|||
Balance at December 31, 2011
|
$
|
22,316
|
|
|
$
|
3,526
|
|
|
$
|
25,842
|
|
(1)
|
Realized gains are recorded as a component of current operations whereas unrealized gains (losses) are recorded as a component of comprehensive income.
|
(In Thousands)
|
Available-for-sale
fixed maturities |
|
Equity
securities |
|
Short-term
investments |
|
Total
|
||||||||
Balance at January 1, 2010
|
$
|
30,459
|
|
|
$
|
—
|
|
|
$
|
254
|
|
|
$
|
30,713
|
|
Realized gains
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Unrealized gains
(1)
|
351
|
|
|
—
|
|
|
—
|
|
|
351
|
|
||||
Amortization
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||
Purchases
|
7
|
|
|
1,535
|
|
|
—
|
|
|
1,542
|
|
||||
Disposals
|
(5,439
|
)
|
|
—
|
|
|
—
|
|
|
(5,439
|
)
|
||||
Transfers in
|
254
|
|
|
—
|
|
|
—
|
|
|
254
|
|
||||
Transfers out
|
—
|
|
|
—
|
|
|
(254
|
)
|
|
(254
|
)
|
||||
Balance at December 31, 2010
|
$
|
25,630
|
|
|
$
|
1,535
|
|
|
$
|
—
|
|
|
$
|
27,165
|
|
(1)
|
Realized gains are recorded as a component of current operations whereas unrealized gains are recorded as a component of comprehensive income.
|
(In Thousands)
|
Level
Three |
|
% of Level Three
|
|
Total from Balance Sheet
|
|
% of Total
Fair Value |
||||||
AVAILABLE-FOR-SALE
|
|
|
|
|
|
|
|
||||||
Fixed maturities
|
|
|
|
|
|
|
|
||||||
Bonds
|
|
|
|
|
|
|
|
||||||
U.S. government and government-sponsored enterprises
|
|
|
|
|
|
|
|
||||||
U.S. Treasury
|
$
|
—
|
|
|
—
|
%
|
|
$
|
43,951
|
|
|
1.6
|
%
|
Agency
|
—
|
|
|
—
|
|
|
96,395
|
|
|
3.6
|
|
||
States, municipalities and political subdivisions
|
|
|
|
|
|
|
|
||||||
General obligations
|
|
|
|
|
|
|
|
||||||
Midwest
|
|
|
|
|
|
|
|
||||||
North central - East
|
—
|
|
|
—
|
|
|
129,605
|
|
|
4.8
|
|
||
North central - West
|
—
|
|
|
—
|
|
|
84,311
|
|
|
3.1
|
|
||
Northeast
|
—
|
|
|
—
|
|
|
40,863
|
|
|
1.5
|
|
||
South
|
—
|
|
|
—
|
|
|
115,473
|
|
|
4.3
|
|
||
West
|
—
|
|
|
—
|
|
|
74,378
|
|
|
2.7
|
|
||
Special revenue
|
|
|
|
|
|
|
|
||||||
Midwest
|
|
|
|
|
|
|
|
||||||
North central - East
|
880
|
|
|
3.9
|
|
|
70,813
|
|
|
2.6
|
|
||
North central - West
|
—
|
|
|
—
|
|
|
55,236
|
|
|
2.0
|
|
||
Northeast
|
—
|
|
|
—
|
|
|
14,733
|
|
|
0.5
|
|
||
South
|
—
|
|
|
—
|
|
|
103,074
|
|
|
3.8
|
|
||
West
|
—
|
|
|
—
|
|
|
59,621
|
|
|
2.2
|
|
||
Foreign bonds
|
|
|
|
|
|
|
|
||||||
Canadian
|
—
|
|
|
—
|
|
|
72,176
|
|
|
2.7
|
|
||
Other foreign
|
836
|
|
|
3.7
|
|
|
142,639
|
|
|
5.3
|
|
||
Public utilities
|
|
|
|
|
|
|
|
||||||
Electric
|
—
|
|
|
—
|
|
|
233,479
|
|
|
8.7
|
|
||
Gas distribution
|
—
|
|
|
—
|
|
|
25,658
|
|
|
0.9
|
|
||
Other
|
—
|
|
|
—
|
|
|
10,934
|
|
|
0.4
|
|
||
Corporate bonds
|
|
|
|
|
|
|
|
||||||
Oil and gas
|
—
|
|
|
—
|
|
|
197,192
|
|
|
7.3
|
|
||
Chemicals
|
—
|
|
|
—
|
|
|
62,261
|
|
|
2.3
|
|
||
Basic resources
|
—
|
|
|
—
|
|
|
24,061
|
|
|
0.9
|
|
||
Construction and materials
|
—
|
|
|
—
|
|
|
24,330
|
|
|
0.9
|
|
||
Industrial goods and services
|
2,897
|
|
|
13.0
|
|
|
185,025
|
|
|
6.9
|
|
||
Autos and parts
|
—
|
|
|
—
|
|
|
18,229
|
|
|
0.7
|
|
||
Food and beverage
|
1,415
|
|
|
6.4
|
|
|
69,241
|
|
|
2.6
|
|
||
Personal and household goods
|
—
|
|
|
—
|
|
|
61,963
|
|
|
2.3
|
|
||
Health care
|
—
|
|
|
—
|
|
|
115,671
|
|
|
4.3
|
|
||
Retail
|
—
|
|
|
—
|
|
|
60,063
|
|
|
2.2
|
|
||
Media
|
—
|
|
|
—
|
|
|
41,969
|
|
|
1.6
|
|
||
Travel and leisure
|
—
|
|
|
—
|
|
|
2,678
|
|
|
0.1
|
|
||
Telecommunications
|
—
|
|
|
—
|
|
|
39,915
|
|
|
1.5
|
|
||
Banks
|
7,230
|
|
|
32.4
|
|
|
131,876
|
|
|
4.9
|
|
||
Insurance
|
—
|
|
|
—
|
|
|
23,700
|
|
|
0.9
|
|
||
Real estate
|
7,780
|
|
|
34.9
|
|
|
23,022
|
|
|
0.9
|
|
||
Financial services
|
963
|
|
|
4.3
|
|
|
86,703
|
|
|
3.2
|
|
||
Technology
|
—
|
|
|
—
|
|
|
31,064
|
|
|
1.2
|
|
||
Collateralized mortgage obligations
|
|
|
|
|
|
|
|
||||||
Government
|
—
|
|
|
—
|
|
|
82,691
|
|
|
3.1
|
|
Other
|
—
|
|
|
—
|
|
|
160
|
|
|
—
|
|
||
Mortgage-backed securities
|
—
|
|
|
—
|
|
|
35,390
|
|
|
1.3
|
|
||
Asset-backed securities
|
315
|
|
|
1.4
|
|
|
6,296
|
|
|
0.2
|
|
||
Redeemable preferred stock
|
—
|
|
|
—
|
|
|
409
|
|
|
—
|
|
||
Total Available-For-Sale Fixed Maturities
|
$
|
22,316
|
|
|
100.0
|
%
|
|
$
|
2,697,248
|
|
|
100.0
|
%
|
Equity securities
|
|
|
|
|
|
|
|
||||||
Common stocks
|
|
|
|
|
|
|
|
||||||
Public utilities
|
|
|
|
|
|
|
|
||||||
Electric
|
$
|
—
|
|
|
—
|
%
|
|
$
|
12,419
|
|
|
7.8
|
%
|
Gas distribution
|
—
|
|
|
—
|
|
|
2,223
|
|
|
1.4
|
|
||
Other
|
—
|
|
|
—
|
|
|
93
|
|
|
—
|
|
||
Corporate
|
|
|
|
|
|
|
|
||||||
Oil and gas
|
—
|
|
|
—
|
|
|
12,210
|
|
|
7.7
|
|
||
Chemicals
|
—
|
|
|
—
|
|
|
5,039
|
|
|
3.2
|
|
||
Industrial goods and services
|
—
|
|
|
—
|
|
|
23,517
|
|
|
14.7
|
|
||
Autos and parts
|
—
|
|
|
—
|
|
|
580
|
|
|
0.4
|
|
||
Food and beverage
|
—
|
|
|
—
|
|
|
6,106
|
|
|
3.8
|
|
||
Personal and household goods
|
—
|
|
|
—
|
|
|
8,671
|
|
|
5.4
|
|
||
Health care
|
—
|
|
|
—
|
|
|
15,988
|
|
|
10.0
|
|
||
Retail
|
—
|
|
|
—
|
|
|
3,207
|
|
|
2.0
|
|
||
Media
|
—
|
|
|
—
|
|
|
134
|
|
|
0.1
|
|
||
Telecommunications
|
—
|
|
|
—
|
|
|
6,160
|
|
|
3.9
|
|
||
Banks
|
3,526
|
|
|
100.0
|
|
|
41,514
|
|
|
26.0
|
|
||
Insurance
|
—
|
|
|
—
|
|
|
13,034
|
|
|
8.2
|
|
||
Real Estate
|
—
|
|
|
—
|
|
|
1,114
|
|
|
0.7
|
|
||
Financial services
|
—
|
|
|
—
|
|
|
428
|
|
|
0.3
|
|
||
Technology
|
—
|
|
|
—
|
|
|
3,724
|
|
|
2.3
|
|
||
Nonredeemable preferred stocks
|
—
|
|
|
—
|
|
|
3,290
|
|
|
2.1
|
|
||
Total Available-for-Sale Equity Securities
|
$
|
3,526
|
|
|
100.0
|
%
|
|
$
|
159,451
|
|
|
100.0
|
%
|
(In Thousands)
|
Level
Three |
|
% of Level Three
|
|
Total from Balance Sheet
|
|
% of Total
Fair Value |
||||||
AVAILABLE-FOR-SALE
|
|
|
|
|
|
|
|
||||||
Fixed maturities
|
|
|
|
|
|
|
|
||||||
Bonds
|
|
|
|
|
|
|
|
||||||
U.S. government and government-sponsored enterprises
|
|
|
|
|
|
|
|
||||||
U.S. Treasury
|
$
|
—
|
|
|
—
|
%
|
|
$
|
39,076
|
|
|
1.7
|
%
|
Agency
|
—
|
|
|
—
|
|
|
103,131
|
|
|
4.5
|
|
||
States, municipalities and political subdivisions
|
|
|
|
|
|
|
|
||||||
General obligations
|
|
|
|
|
|
|
|
||||||
Midwest
|
|
|
|
|
|
|
|
||||||
North central - East
|
—
|
|
|
—
|
|
|
127,770
|
|
|
5.6
|
|
||
North central - West
|
—
|
|
|
—
|
|
|
81,132
|
|
|
3.6
|
|
||
Northeast
|
—
|
|
|
—
|
|
|
29,525
|
|
|
1.3
|
|
||
South
|
—
|
|
|
—
|
|
|
99,297
|
|
|
4.4
|
|
||
West
|
—
|
|
|
—
|
|
|
56,053
|
|
|
2.5
|
|
||
Special revenue
|
|
|
|
|
|
|
|
||||||
Midwest
|
|
|
|
|
|
|
|
||||||
North central - East
|
1,001
|
|
|
3.9
|
|
|
61,093
|
|
|
2.7
|
|
||
North central - West
|
—
|
|
|
—
|
|
|
40,305
|
|
|
1.8
|
|
||
Northeast
|
—
|
|
|
—
|
|
|
4,743
|
|
|
0.2
|
|
||
South
|
—
|
|
|
—
|
|
|
74,747
|
|
|
3.3
|
|
||
West
|
—
|
|
|
—
|
|
|
44,545
|
|
|
1.9
|
|
||
Foreign bonds
|
|
|
|
|
|
|
|
||||||
Canadian
|
—
|
|
|
—
|
|
|
72,923
|
|
|
3.2
|
|
||
Other foreign
|
1,115
|
|
|
4.3
|
|
|
89,754
|
|
|
3.9
|
|
||
Public utilities
|
|
|
|
|
|
|
|
||||||
Electric
|
35
|
|
|
0.1
|
|
|
225,324
|
|
|
9.9
|
|
||
Gas distribution
|
—
|
|
|
—
|
|
|
22,185
|
|
|
1.0
|
|
||
Other
|
—
|
|
|
—
|
|
|
21,580
|
|
|
0.9
|
|
||
Corporate bonds
|
|
|
|
|
|
|
|
||||||
Oil and gas
|
—
|
|
|
—
|
|
|
185,436
|
|
|
8.1
|
|
||
Chemicals
|
—
|
|
|
—
|
|
|
54,971
|
|
|
2.4
|
|
||
Basic resources
|
—
|
|
|
—
|
|
|
7,427
|
|
|
0.3
|
|
||
Construction and materials
|
—
|
|
|
—
|
|
|
20,258
|
|
|
0.9
|
|
||
Industrial goods and services
|
2,897
|
|
|
11.3
|
|
|
155,058
|
|
|
6.8
|
|
||
Autos and parts
|
—
|
|
|
—
|
|
|
18,384
|
|
|
0.8
|
|
||
Food and beverage
|
1,482
|
|
|
5.8
|
|
|
74,033
|
|
|
3.2
|
|
||
Personal and household goods
|
2,503
|
|
|
9.8
|
|
|
69,387
|
|
|
3.0
|
|
||
Health care
|
—
|
|
|
—
|
|
|
83,342
|
|
|
3.7
|
|
||
Retail
|
—
|
|
|
—
|
|
|
43,960
|
|
|
1.9
|
|
||
Media
|
—
|
|
|
—
|
|
|
33,254
|
|
|
1.5
|
|
||
Travel and leisure
|
—
|
|
|
—
|
|
|
5,866
|
|
|
0.3
|
|
||
Telecommunications
|
—
|
|
|
—
|
|
|
36,984
|
|
|
1.6
|
|
||
Banks
|
7,523
|
|
|
29.4
|
|
|
121,634
|
|
|
5.3
|
|
||
Insurance
|
—
|
|
|
—
|
|
|
26,467
|
|
|
1.2
|
|
||
Real estate
|
7,973
|
|
|
31.1
|
|
|
21,737
|
|
|
1.0
|
|
||
Financial services
|
1,101
|
|
|
4.3
|
|
|
83,455
|
|
|
3.7
|
|
||
Technology
|
—
|
|
|
—
|
|
|
16,688
|
|
|
0.7
|
|
||
Collateralized mortgage obligations
|
—
|
|
|
—
|
|
|
19,577
|
|
|
0.9
|
|
||
Mortgage-backed securities
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
Asset-backed securities
|
—
|
|
|
—
|
|
|
7,326
|
|
|
0.3
|
|
||
Total Available-For-Sale Fixed Maturities
|
25,630
|
|
|
100.0
|
|
|
2,278,429
|
|
|
100.0
|
|
||
Equity securities
|
|
|
|
|
|
|
|
||||||
Common stocks
|
|
|
|
|
|
|
|
||||||
Public utilities
|
|
|
|
|
|
|
|
||||||
Electric
|
—
|
|
|
—
|
|
|
10,390
|
|
|
6.9
|
|
||
Gas distribution
|
—
|
|
|
—
|
|
|
676
|
|
|
0.4
|
|
||
Corporate
|
|
|
|
|
|
|
|
||||||
Oil and gas
|
—
|
|
|
—
|
|
|
13,134
|
|
|
8.8
|
|
||
Chemicals
|
—
|
|
|
—
|
|
|
6,079
|
|
|
4.1
|
|
||
Industrial goods and services
|
—
|
|
|
—
|
|
|
23,297
|
|
|
15.6
|
|
||
Autos and parts
|
—
|
|
|
—
|
|
|
794
|
|
|
0.5
|
|
||
Food and beverage
|
—
|
|
|
—
|
|
|
4,474
|
|
|
3.0
|
|
||
Personal and household goods
|
—
|
|
|
—
|
|
|
8,603
|
|
|
5.7
|
|
||
Health care
|
—
|
|
|
—
|
|
|
12,548
|
|
|
8.4
|
|
||
Retail
|
—
|
|
|
—
|
|
|
728
|
|
|
0.5
|
|
||
Travel and leisure
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||
Telecommunications
|
—
|
|
|
—
|
|
|
5,814
|
|
|
3.9
|
|
||
Banks
|
1,535
|
|
|
100.0
|
|
|
43,760
|
|
|
29.2
|
|
||
Insurance
|
—
|
|
|
—
|
|
|
14,408
|
|
|
9.6
|
|
||
Real Estate
|
—
|
|
|
—
|
|
|
1,020
|
|
|
0.7
|
|
||
Financial services
|
—
|
|
|
—
|
|
|
559
|
|
|
0.4
|
|
||
Technology
|
—
|
|
|
—
|
|
|
2,031
|
|
|
1.4
|
|
||
Nonredeemable preferred stocks
|
—
|
|
|
—
|
|
|
1,390
|
|
|
0.9
|
|
||
Total Available-for-Sale Equity Securities
|
1,535
|
|
|
100.0
|
|
|
149,706
|
|
|
100.0
|
|
|
Year Ended December 31,
|
||||||
(In Thousands)
|
2011
|
|
2010
|
||||
Deferred policy acquisition costs at December 31, 2010
|
$
|
44,681
|
|
|
$
|
45,562
|
|
Value of business acquired
|
27,436
|
|
|
—
|
|
||
Amortization of value of business acquired
|
(25,763
|
)
|
|
—
|
|
||
Current deferred costs
|
132,503
|
|
|
101,755
|
|
||
Current amortization
|
(118,189
|
)
|
|
(102,636
|
)
|
||
Recorded deferred policy acquisition costs at December 31, 2011
|
$
|
60,668
|
|
|
$
|
44,681
|
|
Sensitivity Analysis — Impact of Changes in Assumed Loss and Loss Settlement Expense Ratios
|
|||||||||||||||||||
(In Thousands)
|
-10%
|
|
-5%
|
|
Base
|
|
+5%
|
|
+10%
|
||||||||||
Premium deficiency charge estimated
|
$
|
619
|
|
|
$
|
1,325
|
|
|
$
|
2,598
|
|
|
$
|
6,518
|
|
|
$
|
11,735
|
|
|
Years Ended December 31
|
||||||
(In Thousands)
|
2011
|
|
2010
|
||||
Deferred policy acquisition costs at December 31, 2010
|
$
|
42,843
|
|
|
$
|
46,943
|
|
Underwriting costs deferred
|
8,965
|
|
|
8,807
|
|
||
Amortization of deferred costs
|
(9,224
|
)
|
|
(10,735
|
)
|
||
Ending unamortized deferred policy acquisition costs
|
$
|
42,584
|
|
|
$
|
45,015
|
|
Change in “shadow” deferred policy acquisition costs
|
3,402
|
|
|
(2,172
|
)
|
||
Recorded deferred policy acquisition costs at December 31, 2011
|
$
|
45,986
|
|
|
$
|
42,843
|
|
(In Thousands)
|
Case Basis
|
|
IBNR
|
|
Loss
Settlement
Expense
|
|
Total Reserves
|
||||||||
Commercial lines
|
|
|
|
|
|
|
|
||||||||
Fire and allied lines
|
$
|
49,824
|
|
|
$
|
15,023
|
|
|
$
|
17,096
|
|
|
$
|
81,943
|
|
Other liability
|
150,058
|
|
|
208,015
|
|
|
147,882
|
|
|
505,955
|
|
||||
Automobile
|
70,228
|
|
|
31,599
|
|
|
21,586
|
|
|
123,413
|
|
||||
Workers' compensation
|
131,061
|
|
|
6,340
|
|
|
20,086
|
|
|
157,487
|
|
||||
Fidelity and surety
|
6,213
|
|
|
6,337
|
|
|
1,564
|
|
|
14,114
|
|
||||
Miscellaneous
|
716
|
|
|
893
|
|
|
226
|
|
|
1,835
|
|
||||
Total commercial lines
|
$
|
408,100
|
|
|
$
|
268,207
|
|
|
$
|
208,440
|
|
|
$
|
884,747
|
|
Personal lines
|
|
|
|
|
|
|
|
||||||||
Automobile
|
$
|
6,921
|
|
|
$
|
2,359
|
|
|
$
|
1,640
|
|
|
$
|
10,920
|
|
Fire and allied lines
|
14,410
|
|
|
6,149
|
|
|
2,723
|
|
|
23,282
|
|
||||
Miscellaneous
|
254
|
|
|
337
|
|
|
121
|
|
|
712
|
|
||||
Total personal lines
|
$
|
21,585
|
|
|
$
|
8,845
|
|
|
$
|
4,484
|
|
|
$
|
34,914
|
|
Reinsurance assumed
|
17,568
|
|
|
7,720
|
|
|
102
|
|
|
25,390
|
|
||||
Total
|
$
|
447,253
|
|
|
$
|
284,772
|
|
|
$
|
213,026
|
|
|
$
|
945,051
|
|
•
|
To the best of our knowledge, there are no new latent trends that would impact our case-basis reserves;
|
•
|
Our case-basis reserves reflect the most up-to-date information available about the unique circumstances of each claim;
|
•
|
No new judicial decisions or regulatory actions will increase our case-basis obligations;
|
•
|
The historical patterns of claim frequency and claim severity utilized within our IBNR reserve calculation, without considering unusual events, are consistent and will continue to be consistent; and
|
•
|
The Company’s historical ratio of loss settlement expenses paid to losses paid is consistent and will continue to be consistent.
|
(In Thousands)
|
|
|
|
||||
Change in level of net case-basis reserve development
|
5%
|
|
10%
|
||||
Impact on reported net case-basis reserves
|
$
|
19,918
|
|
|
$
|
39,836
|
|
(In Thousands)
|
|
|
|
||||
Change in LAE paid to losses paid ratio
|
1%
|
|
2%
|
||||
Impact due to change in LAE reserving assumptions
|
$
|
1,938
|
|
|
$
|
3,875
|
|
•
|
Reporting time lag;
|
•
|
The number of parties involved in the underlying tort action;
|
•
|
Whether the “event” triggering coverage is confined to only one time period or is spread over multiple time periods;
|
•
|
The potential dollars involved in the individual claim actions;
|
•
|
Whether such claims were reasonably foreseeable and intended to be covered at the time the contracts were written (i.e., coverage disputes); and
|
•
|
The potential for mass claim actions.
|
•
|
Establishing reserves that are appropriate and reasonable, but assuming a pessimistic view of potential outcomes.
|
•
|
Using claims negotiation to control the size of settlements.
|
•
|
Assuming that we have liability for all claims, even though the issue of liability may, in some cases, be resolved in our favor.
|
•
|
Promoting claims management services to encourage return-to-work programs, case management by nurses for serious injuries and management of medical provider services and billings.
|
•
|
Using programs and services to help prevent fraud and to assist in favorably resolving cases.
|
Assumption
|
Determination Methodology
|
Potential One-Time Effect on DAC Asset, Net of Unearned Revenue Liabilities
|
Mortality Experience
|
Based on our mortality experience with consideration given to industry experience and trends
|
A 10.0% increase in expected mortality experience for all future years would result in a reduction in DAC and an increase in current period amortization expense of $3.6 million.
|
Surrender Rates
|
Based on our policy surrender experience with consideration given to industry experience and trends
|
A 10.0% increase in expected surrender rates for all future years would result in a reduction in DAC and an increase in current period amortization expense of $2.2 million.
|
Interest Spreads
|
Based on our expected future investment returns and expected future crediting rates applied to policyholder account balances; future crediting rates include constraints imposed by policy guarantees
|
A 10-basis-point reduction in future interest rate spreads would result in a reduction in DAC and an increase in current period amortization expense of $2.3 million.
|
Maintenance Expenses
|
Based on our experience using an internal expense allocation methodology
|
A 10.0% increase in future maintenance expenses would result in a reduction in DAC and an increase in current period amortization expense of $0.7 million.
|
•
|
Estimated mortality of the employees and retirees eligible for benefits;
|
•
|
Estimated expected long-term rates of returns on investments;
|
•
|
Estimated compensation increases;
|
•
|
Estimated employee turnover;
|
•
|
Estimated medical trend rate; and
|
•
|
Estimated rate used to discount the ultimate estimated liability to a present value.
|
PENDING ACCOUNTING STANDARDS
|
(In Thousands, Except Per Share Data and Number of Shares)
|
2011
|
|
2010
|
||||
ASSETS
|
|
|
|
||||
Investments
|
|
|
|
||||
Fixed maturities
|
|
|
|
||||
Held-to-maturity, at amortized cost (fair value $4,161 in 2011 and $6,422 in 2010)
|
$
|
4,143
|
|
|
$
|
6,364
|
|
Available-for-sale, at fair value (amortized cost $2,562,786 in 2011 and $2,178,666 in 2010)
|
2,697,248
|
|
|
2,278,429
|
|
||
Equity securities, at fair value (cost $68,559 in 2011 and $54,139 in 2010
|
159,451
|
|
|
149,706
|
|
||
Trading securities, at fair value (amortized cost $13,429 in 2011 and $12,322 in 2010)
|
13,454
|
|
|
12,886
|
|
||
Mortgage loans
|
4,829
|
|
|
6,497
|
|
||
Policy loans
|
7,209
|
|
|
7,875
|
|
||
Other long-term investments
|
20,574
|
|
|
20,041
|
|
||
Short-term investments
|
1,100
|
|
|
1,100
|
|
||
|
$
|
2,908,008
|
|
|
$
|
2,482,898
|
|
Cash and cash equivalents
|
$
|
144,527
|
|
|
$
|
180,057
|
|
Accrued investment income
|
32,219
|
|
|
28,977
|
|
||
Premiums receivable (net of allowance for doubtful accounts of $825 in 2011 and $1,001 in 2010)
|
172,348
|
|
|
124,459
|
|
||
Deferred policy acquisition costs
|
106,654
|
|
|
87,524
|
|
||
Property and equipment (primarily land and buildings, at cost, less accumulated depreciation of $35,248 in 2011 and $33,397 in 2010)
|
45,644
|
|
|
21,554
|
|
||
Reinsurance receivables and recoverables
|
128,574
|
|
|
46,731
|
|
||
Prepaid reinsurance premiums
|
6,191
|
|
|
1,586
|
|
||
Income taxes receivable
|
26,742
|
|
|
17,772
|
|
||
Goodwill and intangible assets
|
30,801
|
|
|
430
|
|
||
Other assets
|
17,216
|
|
|
15,451
|
|
||
TOTAL ASSETS
|
$
|
3,618,924
|
|
|
$
|
3,007,439
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Future policy benefits and losses, claims and loss settlement expenses
|
|
|
|
||||
Property and casualty insurance
|
$
|
945,051
|
|
|
$
|
603,090
|
|
Life insurance
|
1,476,281
|
|
|
1,389,331
|
|
||
Unearned premiums
|
288,991
|
|
|
200,341
|
|
||
Accrued expenses and other liabilities
|
138,210
|
|
|
78,439
|
|
||
Deferred income taxes
|
13,624
|
|
|
19,814
|
|
||
Debt
|
45,000
|
|
|
—
|
|
||
Trust preferred securities
|
15,626
|
|
|
—
|
|
||
TOTAL LIABILITIES
|
$
|
2,922,783
|
|
|
$
|
2,291,015
|
|
Stockholders' Equity
|
|
|
|
||||
Common stock, $0.001 par value; authorized 75,000,000 shares; 25,505,350 and 26,195,552 shares issued and outstanding in 2011 and 2010, respectively
|
$
|
25
|
|
|
$
|
26
|
|
Additional paid-in capital
|
213,045
|
|
|
223,439
|
|
||
Retained earnings
|
400,485
|
|
|
415,981
|
|
||
Accumulated other comprehensive income, net of tax
|
82,586
|
|
|
76,978
|
|
||
TOTAL STOCKHOLDERS' EQUITY
|
$
|
696,141
|
|
|
$
|
716,424
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
3,618,924
|
|
|
$
|
3,007,439
|
|
(In Thousands, Except Per Share Data and Number of Shares)
|
2011
|
|
2010
|
|
2009
|
||||||
|
|
|
|
|
|
||||||
Revenues
|
|
|
|
|
|
||||||
Net premiums earned
|
$
|
586,783
|
|
|
$
|
469,473
|
|
|
$
|
478,498
|
|
Investment income, net of investment expenses
|
109,494
|
|
|
111,685
|
|
|
106,075
|
|
|||
Realized investment gains (losses)
|
|
|
|
|
|
||||||
Other-than-temporary impairment charges
|
(395
|
)
|
|
(459
|
)
|
|
(18,307
|
)
|
|||
Other realized gains, net
|
6,835
|
|
|
8,948
|
|
|
5,128
|
|
|||
Total realized investment gains (losses)
|
6,440
|
|
|
8,489
|
|
|
(13,179
|
)
|
|||
Other income
|
2,291
|
|
|
1,425
|
|
|
799
|
|
|||
|
$
|
705,008
|
|
|
$
|
591,072
|
|
|
$
|
572,193
|
|
|
|
|
|
|
|
||||||
Benefits, Losses and Expenses
|
|
|
|
|
|
||||||
Losses and loss settlement expenses
|
$
|
430,389
|
|
|
$
|
309,796
|
|
|
$
|
382,494
|
|
Increase in liability for future policy benefits
|
32,567
|
|
|
27,229
|
|
|
23,897
|
|
|||
Amortization of deferred policy acquisition costs
|
153,176
|
|
|
113,371
|
|
|
114,893
|
|
|||
Other underwriting expenses
|
58,757
|
|
|
39,321
|
|
|
39,298
|
|
|||
Disaster charges and other related expenses, net of recoveries
|
—
|
|
|
(16
|
)
|
|
(1,335
|
)
|
|||
Interest on policyholders’ accounts
|
42,834
|
|
|
42,988
|
|
|
41,652
|
|
|||
|
$
|
717,723
|
|
|
$
|
532,689
|
|
|
$
|
600,899
|
|
|
|
|
|
|
|
||||||
Income (loss) before income taxes
|
$
|
(12,715
|
)
|
|
$
|
58,383
|
|
|
$
|
(28,706
|
)
|
Federal income tax expense (benefit)
|
(12,726
|
)
|
|
10,870
|
|
|
(18,265
|
)
|
|||
Net income (loss)
|
$
|
11
|
|
|
$
|
47,513
|
|
|
$
|
(10,441
|
)
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding
|
25,878,535
|
|
|
26,318,214
|
|
|
26,590,458
|
|
|||
Basic earnings (loss) per share
|
$
|
—
|
|
|
$
|
1.81
|
|
|
$
|
(0.39
|
)
|
Diluted earnings (loss) per share
|
$
|
—
|
|
|
$
|
1.80
|
|
|
$
|
(0.39
|
)
|
Cash dividends declared per share
|
$
|
0.60
|
|
|
$
|
0.60
|
|
|
$
|
0.60
|
|
(In Thousands, Except Per Share Data and Number of Shares)
|
2011
|
|
2010
|
|
2009
|
||||||
|
|
|
|
|
|
||||||
Common stock
|
|
|
|
|
|
||||||
Balance, beginning of year
|
$
|
26
|
|
|
$
|
26
|
|
|
$
|
26
|
|
Shares repurchased (702,947 in 2011; 343,328 in 2010; and 92,721 in 2009)
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||
Shares issued for stock-based awards (12,745 in 2011; 5,840 in 2010; and 1,675 in 2009)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance, end of year
|
$
|
25
|
|
|
$
|
26
|
|
|
$
|
26
|
|
|
|
|
|
|
|
||||||
Additional paid-in capital
|
|
|
|
|
|
||||||
Balance, beginning of year
|
$
|
223,439
|
|
|
$
|
227,820
|
|
|
$
|
227,232
|
|
Compensation expense and related tax benefit for stock-based award grants
|
1,830
|
|
|
1,801
|
|
|
2,107
|
|
|||
Shares repurchased
|
(12,432
|
)
|
|
(6,280
|
)
|
|
(1,545
|
)
|
|||
Shares issued for stock-based awards
|
208
|
|
|
98
|
|
|
26
|
|
|||
Balance, end of year
|
$
|
213,045
|
|
|
$
|
223,439
|
|
|
$
|
227,820
|
|
|
|
|
|
|
|
||||||
Retained earnings
|
|
|
|
|
|
||||||
Balance, beginning of year
|
$
|
415,981
|
|
|
$
|
384,242
|
|
|
$
|
410,634
|
|
Net income (loss)
|
11
|
|
|
47,513
|
|
|
(10,441
|
)
|
|||
Dividends on common stock ($0.60 per share in 2011, 2010 and 2009)
|
(15,507
|
)
|
|
(15,774
|
)
|
|
(15,951
|
)
|
|||
Balance, end of year
|
$
|
400,485
|
|
|
$
|
415,981
|
|
|
$
|
384,242
|
|
|
|
|
|
|
|
||||||
Accumulated other comprehensive income, net of tax
|
|
|
|
|
|
||||||
Balance, beginning of year
|
$
|
76,978
|
|
|
$
|
60,647
|
|
|
$
|
3,849
|
|
Change in net unrealized appreciation
(1)
|
21,727
|
|
|
20,158
|
|
|
56,948
|
|
|||
Change in underfunded status of employee benefit plans
(2)
|
(16,119
|
)
|
|
(3,827
|
)
|
|
(150
|
)
|
|||
Balance, end of year
|
$
|
82,586
|
|
|
$
|
76,978
|
|
|
$
|
60,647
|
|
|
|
|
|
|
|
||||||
Summary of changes
|
|
|
|
|
|
||||||
Balance, beginning of year
|
$
|
716,424
|
|
|
$
|
672,735
|
|
|
$
|
641,741
|
|
Net income (loss)
|
11
|
|
|
47,513
|
|
|
(10,441
|
)
|
|||
All other changes in stockholders' equity accounts
|
(20,294
|
)
|
|
(3,824
|
)
|
|
41,435
|
|
|||
Balance, end of year
|
$
|
696,141
|
|
|
$
|
716,424
|
|
|
$
|
672,735
|
|
|
|
|
|
|
|
||||||
Comprehensive income (loss)
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
11
|
|
|
$
|
47,513
|
|
|
$
|
(10,441
|
)
|
Change in net unrealized appreciation
(1)
|
21,727
|
|
|
20,158
|
|
|
56,948
|
|
|||
Change in underfunded status of employee benefit plans
(2)
|
(16,119
|
)
|
|
(3,827
|
)
|
|
(150
|
)
|
|||
Comprehensive income for the year
|
$
|
5,619
|
|
|
$
|
63,844
|
|
|
$
|
46,357
|
|
(1)
|
The change in net unrealized appreciation is net of reclassification adjustments and income taxes.
|
(2)
|
The recognition of the underfunded status of employee benefit plans is net of income taxes.
|
(In Thousands)
|
2011
|
|
2010
|
|
2009
|
||||||
Cash Flows From Operating Activities
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
11
|
|
|
$
|
47,513
|
|
|
$
|
(10,441
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities
|
|
|
|
|
|
||||||
Net accretion of bond premium
|
$
|
11,638
|
|
|
$
|
4,727
|
|
|
$
|
2,951
|
|
Depreciation and amortization
|
5,583
|
|
|
2,872
|
|
|
3,533
|
|
|||
Stock-based compensation expense
|
1,829
|
|
|
1,787
|
|
|
2,084
|
|
|||
Realized investment (gains) losses
|
(6,440
|
)
|
|
(8,489
|
)
|
|
13,179
|
|
|||
Net cash flows from trading investments
|
(1,993
|
)
|
|
(585
|
)
|
|
(2,492
|
)
|
|||
Deferred income tax expense (benefit)
|
(6,288
|
)
|
|
977
|
|
|
(10,858
|
)
|
|||
Changes in
|
|
|
|
|
|
||||||
Accrued investment income
|
499
|
|
|
(280
|
)
|
|
(848
|
)
|
|||
Premiums receivable
|
(12,067
|
)
|
|
2,997
|
|
|
6,839
|
|
|||
Deferred policy acquisition costs
|
11,709
|
|
|
2,340
|
|
|
2,804
|
|
|||
Reinsurance receivables
|
(23,649
|
)
|
|
(5,795
|
)
|
|
19,339
|
|
|||
Prepaid reinsurance premiums
|
1,684
|
|
|
87
|
|
|
(114
|
)
|
|||
Income taxes receivable/payable
|
(6,310
|
)
|
|
10,425
|
|
|
(1,223
|
)
|
|||
Other assets
|
9,970
|
|
|
2,228
|
|
|
1,851
|
|
|||
Funds on deposit for Hurricane Katrina litigation
|
—
|
|
|
—
|
|
|
29,026
|
|
|||
Future policy benefits and losses, claims and loss settlement expenses
|
67,302
|
|
|
30,134
|
|
|
45,474
|
|
|||
Unearned premiums
|
16,401
|
|
|
(5,669
|
)
|
|
(10,956
|
)
|
|||
Accrued expenses and other liabilities
|
3,504
|
|
|
(12,382
|
)
|
|
10,054
|
|
|||
Deferred income taxes
|
(82
|
)
|
|
(1,177
|
)
|
|
(275
|
)
|
|||
Other, net
|
1,130
|
|
|
(494
|
)
|
|
482
|
|
|||
Total adjustments
|
$
|
74,420
|
|
|
$
|
23,703
|
|
|
$
|
110,850
|
|
Net cash provided by operating activities
|
$
|
74,431
|
|
|
$
|
71,216
|
|
|
$
|
100,409
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
||||||
Proceeds from sale of available-for-sale investments
|
$
|
39,496
|
|
|
$
|
3,402
|
|
|
$
|
13,432
|
|
Proceeds from call and maturity of held-to-maturity investments
|
2,243
|
|
|
3,278
|
|
|
5,600
|
|
|||
Proceeds from call and maturity of available-for-sale investments
|
563,515
|
|
|
471,499
|
|
|
348,581
|
|
|||
Proceeds from short-term and other investments
|
4,741
|
|
|
4,353
|
|
|
31,937
|
|
|||
Purchase of available-for-sale investments
|
(595,162
|
)
|
|
(567,499
|
)
|
|
(502,392
|
)
|
|||
Purchase of short-term and other investments
|
(3,357
|
)
|
|
(7,653
|
)
|
|
(16,672
|
)
|
|||
Net purchases and sales of property and equipment
|
(14,048
|
)
|
|
(2,091
|
)
|
|
(10,575
|
)
|
|||
Acquisition of property and casualty company, net of cash acquired
|
(172,620
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash used in investing activities
|
$
|
(175,192
|
)
|
|
$
|
(94,711
|
)
|
|
$
|
(130,089
|
)
|
Cash Flows From Financing Activities
|
|
|
|
|
|
||||||
Policyholders’ account balances
|
|
|
|
|
|
||||||
Deposits to investment and universal life contracts
|
$
|
170,678
|
|
|
$
|
141,614
|
|
|
$
|
264,994
|
|
Withdrawals from investment and universal life contracts
|
(119,716
|
)
|
|
(106,972
|
)
|
|
(136,597
|
)
|
|||
Borrowings of short-term debt
|
124,900
|
|
|
—
|
|
|
—
|
|
|||
Repayment of short-term debt
|
(82,900
|
)
|
|
—
|
|
|
—
|
|
|||
Payment of cash dividends
|
(15,507
|
)
|
|
(15,774
|
)
|
|
(15,951
|
)
|
|||
Repurchase of common stock
|
(12,433
|
)
|
|
(6,280
|
)
|
|
(1,545
|
)
|
|||
Issuance of common stock
|
208
|
|
|
98
|
|
|
26
|
|
|||
Tax impact from issuance of common stock
|
1
|
|
|
14
|
|
|
23
|
|
|||
Net cash provided by financing activities
|
$
|
65,231
|
|
|
$
|
12,700
|
|
|
$
|
110,950
|
|
Net change in cash and cash equivalents
|
$
|
(35,530
|
)
|
|
$
|
(10,795
|
)
|
|
$
|
81,270
|
|
Cash and cash equivalents at beginning of year
|
180,057
|
|
|
190,852
|
|
|
109,582
|
|
|||
Cash and cash equivalents at end of year
|
$
|
144,527
|
|
|
$
|
180,057
|
|
|
$
|
190,852
|
|
Index of Notes to Consolidated Financial Statements
|
Page
|
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
Useful Life
|
Computer equipment
|
Three years
|
Furniture and fixtures
|
Seven years
|
Leasehold improvements
|
Shorter of the lease term or useful life of the asset
|
Real estate
|
Seven to thirty-nine years
|
Software
|
Three years
|
NOTE 2. SUMMARY OF INVESTMENTS
|
December 31, 2011
|
(In Thousands)
|
||||||||||||||
Type of Investment
|
Cost or
Amortized Cost
|
|
Gross Unrealized
Appreciation
|
|
Gross Unrealized
Depreciation
|
|
Fair Value
|
||||||||
HELD-TO-MATURITY
|
|
|
|
|
|
|
|
||||||||
Fixed maturities
|
|
|
|
|
|
|
|
||||||||
Bonds
|
|
|
|
|
|
|
|
||||||||
States, municipalities and political subdivisions
|
|
|
|
|
|
|
|
||||||||
General obligations
|
$
|
496
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
501
|
|
Special revenue
|
|
|
|
|
|
|
|
||||||||
North central - East
|
242
|
|
|
12
|
|
|
—
|
|
|
254
|
|
||||
North central - West
|
218
|
|
|
12
|
|
|
—
|
|
|
230
|
|
||||
South
|
633
|
|
|
1
|
|
|
61
|
|
|
573
|
|
||||
West
|
2,150
|
|
|
22
|
|
|
—
|
|
|
2,172
|
|
||||
Collateralized mortgage obligations
|
48
|
|
|
2
|
|
|
—
|
|
|
50
|
|
||||
Mortgage-backed securities
|
356
|
|
|
25
|
|
|
—
|
|
|
381
|
|
||||
Total Held-to-Maturity Fixed Maturities
|
$
|
4,143
|
|
|
$
|
79
|
|
|
$
|
61
|
|
|
$
|
4,161
|
|
AVAILABLE-FOR-SALE
|
|
|
|
|
|
|
|
||||||||
Fixed maturities
|
|
|
|
|
|
|
|
||||||||
Bonds
|
|
|
|
|
|
|
|
||||||||
U.S. government and government-sponsored enterprises
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury
|
$
|
42,530
|
|
|
$
|
1,421
|
|
|
$
|
—
|
|
|
$
|
43,951
|
|
Agency
|
95,813
|
|
|
582
|
|
|
—
|
|
|
96,395
|
|
||||
States, municipalities and political subdivisions
|
|
|
|
|
|
|
|
||||||||
General obligations
|
|
|
|
|
|
|
|
||||||||
Midwest
|
|
|
|
|
|
|
|
||||||||
North central - East
|
118,456
|
|
|
11,149
|
|
|
—
|
|
|
129,605
|
|
||||
North central - West
|
76,986
|
|
|
7,325
|
|
|
—
|
|
|
84,311
|
|
||||
Northeast
|
37,436
|
|
|
3,428
|
|
|
1
|
|
|
40,863
|
|
||||
South
|
105,034
|
|
|
10,439
|
|
|
—
|
|
|
115,473
|
|
||||
West
|
68,329
|
|
|
6,049
|
|
|
—
|
|
|
74,378
|
|
||||
Special revenue
|
|
|
|
|
|
|
|
||||||||
Midwest
|
|
|
|
|
|
|
|
||||||||
North central - East
|
66,188
|
|
|
4,625
|
|
|
—
|
|
|
70,813
|
|
||||
North central - West
|
50,658
|
|
|
4,578
|
|
|
—
|
|
|
55,236
|
|
||||
Northeast
|
13,780
|
|
|
955
|
|
|
2
|
|
|
14,733
|
|
||||
South
|
95,565
|
|
|
7,514
|
|
|
5
|
|
|
103,074
|
|
||||
West
|
54,607
|
|
|
5,014
|
|
|
—
|
|
|
59,621
|
|
||||
Foreign bonds
|
|
|
|
|
|
|
|
||||||||
Canadian
|
69,107
|
|
|
3,269
|
|
|
200
|
|
|
72,176
|
|
||||
Other foreign
|
137,765
|
|
|
5,497
|
|
|
623
|
|
|
142,639
|
|
||||
Public utilities
|
|
|
|
|
|
|
|
||||||||
Electric
|
220,682
|
|
|
13,047
|
|
|
250
|
|
|
233,479
|
|
||||
Gas distribution
|
24,044
|
|
|
1,677
|
|
|
63
|
|
|
25,658
|
|
||||
Other
|
10,096
|
|
|
838
|
|
|
—
|
|
|
10,934
|
|
||||
Corporate bonds
|
|
|
|
|
|
|
|
||||||||
Oil and gas
|
189,902
|
|
|
7,567
|
|
|
277
|
|
|
197,192
|
|
||||
Chemicals
|
59,569
|
|
|
2,692
|
|
|
—
|
|
|
62,261
|
|
||||
Basic resources
|
24,448
|
|
|
129
|
|
|
516
|
|
|
24,061
|
|
||||
Construction and materials
|
23,962
|
|
|
384
|
|
|
16
|
|
|
24,330
|
|
||||
Industrial goods and services
|
177,717
|
|
|
7,426
|
|
|
118
|
|
|
185,025
|
|
||||
Autos and parts
|
17,743
|
|
|
801
|
|
|
315
|
|
|
18,229
|
|
||||
Food and beverage
|
66,753
|
|
|
2,621
|
|
|
133
|
|
|
69,241
|
|
||||
Personal and household goods
|
59,256
|
|
|
2,721
|
|
|
14
|
|
|
61,963
|
|
||||
Health care
|
109,219
|
|
|
6,497
|
|
|
45
|
|
|
115,671
|
|
||||
Retail
|
57,345
|
|
|
2,718
|
|
|
—
|
|
|
60,063
|
|
||||
Media
|
40,346
|
|
|
1,670
|
|
|
47
|
|
|
41,969
|
|
||||
Travel and leisure
|
2,851
|
|
|
11
|
|
|
184
|
|
|
2,678
|
|
||||
Telecommunications
|
38,203
|
|
|
1,715
|
|
|
3
|
|
|
39,915
|
|
||||
Banks
|
129,326
|
|
|
3,755
|
|
|
1,205
|
|
|
131,876
|
|
||||
Insurance
|
22,878
|
|
|
831
|
|
|
9
|
|
|
23,700
|
|
||||
Real estate
|
20,981
|
|
|
2,222
|
|
|
181
|
|
|
23,022
|
|
||||
Financial services
|
85,341
|
|
|
2,267
|
|
|
905
|
|
|
86,703
|
|
Technology
|
29,766
|
|
|
1,566
|
|
|
268
|
|
|
31,064
|
|
||||
Collateralized mortgage obligations
|
|
|
|
|
|
|
|
||||||||
Government
|
79,269
|
|
|
3,490
|
|
|
68
|
|
|
82,691
|
|
||||
Other
|
276
|
|
|
—
|
|
|
116
|
|
|
160
|
|
||||
Mortgage-backed securities
|
34,353
|
|
|
1,041
|
|
|
4
|
|
|
35,390
|
|
||||
Asset-backed securities
|
5,801
|
|
|
495
|
|
|
—
|
|
|
6,296
|
|
||||
Redeemable preferred stock
|
405
|
|
|
4
|
|
|
—
|
|
|
409
|
|
||||
Total Available-For-Sale Fixed Maturities
|
$
|
2,562,786
|
|
|
$
|
140,030
|
|
|
$
|
5,568
|
|
|
$
|
2,697,248
|
|
Equity securities
|
|
|
|
|
|
|
|
||||||||
Common stocks
|
|
|
|
|
|
|
|
||||||||
Public utilities
|
|
|
|
|
|
|
|
||||||||
Electric
|
$
|
6,227
|
|
|
$
|
6,290
|
|
|
$
|
98
|
|
|
$
|
12,419
|
|
Gas distribution
|
928
|
|
|
1,295
|
|
|
—
|
|
|
2,223
|
|
||||
Other
|
76
|
|
|
17
|
|
|
—
|
|
|
93
|
|
||||
Corporate
|
|
|
|
|
|
|
|
||||||||
Oil and gas
|
5,094
|
|
|
7,116
|
|
|
—
|
|
|
12,210
|
|
||||
Chemicals
|
2,734
|
|
|
2,305
|
|
|
—
|
|
|
5,039
|
|
||||
Industrial goods and services
|
9,944
|
|
|
13,848
|
|
|
275
|
|
|
23,517
|
|
||||
Autos and parts
|
277
|
|
|
310
|
|
|
7
|
|
|
580
|
|
||||
Food and beverage
|
2,124
|
|
|
3,982
|
|
|
—
|
|
|
6,106
|
|
||||
Personal and household goods
|
5,513
|
|
|
3,158
|
|
|
—
|
|
|
8,671
|
|
||||
Health care
|
8,212
|
|
|
8,008
|
|
|
232
|
|
|
15,988
|
|
||||
Retail
|
2,836
|
|
|
532
|
|
|
161
|
|
|
3,207
|
|
||||
Media
|
147
|
|
|
—
|
|
|
13
|
|
|
134
|
|
||||
Telecommunications
|
2,399
|
|
|
3,778
|
|
|
17
|
|
|
6,160
|
|
||||
Banks
|
11,690
|
|
|
30,196
|
|
|
372
|
|
|
41,514
|
|
||||
Insurance
|
3,209
|
|
|
9,902
|
|
|
77
|
|
|
13,034
|
|
||||
Real estate
|
393
|
|
|
793
|
|
|
72
|
|
|
1,114
|
|
||||
Financial services
|
300
|
|
|
150
|
|
|
22
|
|
|
428
|
|
||||
Technology
|
2,822
|
|
|
1,018
|
|
|
116
|
|
|
3,724
|
|
||||
Nonredeemable preferred stocks
|
3,634
|
|
|
40
|
|
|
384
|
|
|
3,290
|
|
||||
Total Available-for-Sale Equity Securities
|
$
|
68,559
|
|
|
$
|
92,738
|
|
|
$
|
1,846
|
|
|
$
|
159,451
|
|
Total Available-for-Sale Securities
|
$
|
2,631,345
|
|
|
$
|
232,768
|
|
|
$
|
7,414
|
|
|
$
|
2,856,699
|
|
December 31, 2010
|
(In Thousands)
|
||||||||||||||
Type of Investment
|
Cost or
Amortized Cost
|
|
Gross Unrealized
Appreciation
|
|
Gross Unrealized
Depreciation
|
|
Fair Value
|
||||||||
HELD-TO-MATURITY
|
|
|
|
|
|
|
|
||||||||
Fixed maturities
|
|
|
|
|
|
|
|
||||||||
Bonds
|
|
|
|
|
|
|
|
||||||||
U.S. government and government-sponsored enterprises
|
|
|
|
|
|
|
|
||||||||
General obligations
|
$
|
731
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
741
|
|
Special revenue
|
|
|
|
|
|
|
|
||||||||
North central - East
|
364
|
|
|
27
|
|
|
—
|
|
|
391
|
|
||||
North central - West
|
488
|
|
|
23
|
|
|
—
|
|
|
511
|
|
||||
Northeast
|
230
|
|
|
12
|
|
|
—
|
|
|
242
|
|
||||
South
|
1,067
|
|
|
4
|
|
|
108
|
|
|
963
|
|
||||
West
|
2,957
|
|
|
36
|
|
|
—
|
|
|
2,993
|
|
||||
Collateralized mortgage obligations
|
83
|
|
|
4
|
|
|
—
|
|
|
87
|
|
||||
Mortgage-backed securities
|
444
|
|
|
50
|
|
|
—
|
|
|
494
|
|
||||
Total Held-to-Maturity Fixed Maturities
|
$
|
6,364
|
|
|
$
|
166
|
|
|
$
|
108
|
|
|
$
|
6,422
|
|
AVAILABLE-FOR-SALE
|
|
|
|
|
|
|
|
||||||||
Fixed maturities
|
|
|
|
|
|
|
|
||||||||
Bonds
|
|
|
|
|
|
|
|
||||||||
U.S. government and government-sponsored enterprises
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury
|
$
|
38,133
|
|
|
$
|
943
|
|
|
$
|
—
|
|
|
$
|
39,076
|
|
Agency
|
104,049
|
|
|
96
|
|
|
1,014
|
|
|
103,131
|
|
||||
States, municipalities and political subdivisions
|
|
|
|
|
|
|
|
||||||||
General obligations
|
|
|
|
|
|
|
|
||||||||
Midwest
|
|
|
|
|
|
|
|
||||||||
North central - East
|
121,273
|
|
|
6,634
|
|
|
137
|
|
|
127,770
|
|
||||
North central - West
|
76,699
|
|
|
4,491
|
|
|
58
|
|
|
81,132
|
|
||||
Northeast
|
27,861
|
|
|
1,664
|
|
|
—
|
|
|
29,525
|
|
||||
South
|
92,795
|
|
|
6,555
|
|
|
53
|
|
|
99,297
|
|
||||
West
|
53,160
|
|
|
2,983
|
|
|
90
|
|
|
56,053
|
|
||||
Special revenue
|
|
|
|
|
|
|
|
||||||||
Midwest
|
|
|
|
|
|
|
|
||||||||
North central - East
|
59,063
|
|
|
2,205
|
|
|
175
|
|
|
61,093
|
|
||||
North central - West
|
38,827
|
|
|
1,744
|
|
|
266
|
|
|
40,305
|
|
||||
Northeast
|
4,505
|
|
|
247
|
|
|
9
|
|
|
4,743
|
|
||||
South
|
71,486
|
|
|
3,405
|
|
|
144
|
|
|
74,747
|
|
||||
West
|
42,363
|
|
|
2,182
|
|
|
—
|
|
|
44,545
|
|
||||
Foreign bonds
|
|
|
|
|
|
|
|
||||||||
Canadian
|
69,209
|
|
|
3,908
|
|
|
194
|
|
|
72,923
|
|
||||
Other foreign
|
85,434
|
|
|
4,588
|
|
|
268
|
|
|
89,754
|
|
||||
Public utilities
|
|
|
|
|
|
|
|
||||||||
Electric
|
213,636
|
|
|
12,207
|
|
|
519
|
|
|
225,324
|
|
||||
Gas distribution
|
21,131
|
|
|
1,124
|
|
|
70
|
|
|
22,185
|
|
||||
Other
|
21,029
|
|
|
551
|
|
|
—
|
|
|
21,580
|
|
||||
Corporate bonds
|
|
|
|
|
|
|
|
||||||||
Oil and gas
|
177,973
|
|
|
7,890
|
|
|
427
|
|
|
185,436
|
|
||||
Chemicals
|
52,561
|
|
|
2,445
|
|
|
35
|
|
|
54,971
|
|
||||
Basic resources
|
6,971
|
|
|
456
|
|
|
—
|
|
|
7,427
|
|
||||
Construction and materials
|
19,385
|
|
|
873
|
|
|
—
|
|
|
20,258
|
|
||||
Industrial goods and services
|
148,212
|
|
|
7,208
|
|
|
362
|
|
|
155,058
|
|
||||
Autos and parts
|
17,500
|
|
|
1,003
|
|
|
119
|
|
|
18,384
|
|
||||
Food and beverage
|
70,613
|
|
|
3,531
|
|
|
111
|
|
|
74,033
|
|
||||
Personal and household goods
|
66,597
|
|
|
3,079
|
|
|
289
|
|
|
69,387
|
|
||||
Health care
|
78,595
|
|
|
4,933
|
|
|
186
|
|
|
83,342
|
|
||||
Retail
|
42,150
|
|
|
2,139
|
|
|
329
|
|
|
43,960
|
|
||||
Media
|
31,702
|
|
|
1,552
|
|
|
—
|
|
|
33,254
|
|
||||
Travel and leisure
|
5,882
|
|
|
61
|
|
|
77
|
|
|
5,866
|
|
||||
Telecommunications
|
34,706
|
|
|
2,329
|
|
|
51
|
|
|
36,984
|
|
||||
Banks
|
117,506
|
|
|
5,817
|
|
|
1,689
|
|
|
121,634
|
|
||||
Insurance
|
25,682
|
|
|
799
|
|
|
14
|
|
|
26,467
|
|
||||
Real estate
|
20,903
|
|
|
1,101
|
|
|
267
|
|
|
21,737
|
|
||||
Financial services
|
80,803
|
|
|
3,635
|
|
|
983
|
|
|
83,455
|
|
||||
Technology
|
15,952
|
|
|
1,070
|
|
|
334
|
|
|
16,688
|
|
||||
Collateralized mortgage obligations
|
17,564
|
|
|
2,013
|
|
|
—
|
|
|
19,577
|
|
||||
Mortgage-backed securities
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Asset-backed securities
|
6,754
|
|
|
572
|
|
|
—
|
|
|
7,326
|
|
||||
Total Available-For-Sale Fixed Maturities
|
$
|
2,178,666
|
|
|
$
|
108,033
|
|
|
$
|
8,270
|
|
|
$
|
2,278,429
|
|
Equity securities
|
|
|
|
|
|
|
|
||||||||
Common stocks
|
|
|
|
|
|
|
|
||||||||
Public utilities
|
|
|
|
|
|
|
|
Electric
|
$
|
6,229
|
|
|
$
|
4,164
|
|
|
$
|
3
|
|
|
$
|
10,390
|
|
Gas distribution
|
90
|
|
|
586
|
|
|
—
|
|
|
676
|
|
||||
Corporate
|
|
|
|
|
|
|
|
||||||||
Oil and gas
|
5,740
|
|
|
7,394
|
|
|
—
|
|
|
13,134
|
|
||||
Chemicals
|
2,734
|
|
|
3,345
|
|
|
—
|
|
|
6,079
|
|
||||
Industrial goods and services
|
8,112
|
|
|
15,185
|
|
|
—
|
|
|
23,297
|
|
||||
Autos and parts
|
257
|
|
|
537
|
|
|
—
|
|
|
794
|
|
||||
Food and beverage
|
682
|
|
|
3,792
|
|
|
—
|
|
|
4,474
|
|
||||
Personal and household goods
|
5,233
|
|
|
3,370
|
|
|
—
|
|
|
8,603
|
|
||||
Health care
|
6,367
|
|
|
6,367
|
|
|
186
|
|
|
12,548
|
|
||||
Retail
|
380
|
|
|
348
|
|
|
—
|
|
|
728
|
|
||||
Travel and leisure
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Telecommunications
|
2,376
|
|
|
3,438
|
|
|
—
|
|
|
5,814
|
|
||||
Banks
|
9,498
|
|
|
34,363
|
|
|
101
|
|
|
43,760
|
|
||||
Insurance
|
3,129
|
|
|
11,320
|
|
|
41
|
|
|
14,408
|
|
||||
Real estate
|
393
|
|
|
667
|
|
|
40
|
|
|
1,020
|
|
||||
Financial services
|
300
|
|
|
274
|
|
|
15
|
|
|
559
|
|
||||
Technology
|
1,157
|
|
|
874
|
|
|
—
|
|
|
2,031
|
|
||||
Nonredeemable preferred stocks
|
1,461
|
|
|
3
|
|
|
74
|
|
|
1,390
|
|
||||
Total Available-for-Sale Equity Securities
|
$
|
54,139
|
|
|
$
|
96,027
|
|
|
$
|
460
|
|
|
$
|
149,706
|
|
Total Available-for-Sale Securities
|
$
|
2,232,805
|
|
|
$
|
204,060
|
|
|
$
|
8,730
|
|
|
$
|
2,428,135
|
|
(In Thousands)
|
Held-To-Maturity
|
|
Available-For-Sale
|
|
Trading
|
||||||||||||||||||
|
Amortized
|
|
Fair
|
|
Amortized
|
|
Fair
|
|
Amortized
|
|
Fair
|
||||||||||||
December 31, 2011
|
Cost
|
|
Value
|
|
Cost
|
|
Value
|
|
Cost
|
|
Value
|
||||||||||||
Due in one year or less
|
$
|
395
|
|
|
$
|
397
|
|
|
$
|
271,254
|
|
|
$
|
275,360
|
|
|
$
|
2,544
|
|
|
$
|
2,860
|
|
Due after one year through five years
|
3,344
|
|
|
3,333
|
|
|
1,084,794
|
|
|
1,140,002
|
|
|
4,880
|
|
|
4,749
|
|
||||||
Due after five years through 10 years
|
—
|
|
|
—
|
|
|
964,452
|
|
|
1,030,590
|
|
|
497
|
|
|
439
|
|
||||||
Due after 10 years
|
—
|
|
|
—
|
|
|
122,587
|
|
|
126,759
|
|
|
5,508
|
|
|
5,406
|
|
||||||
Asset-backed securities
|
—
|
|
|
—
|
|
|
5,801
|
|
|
6,296
|
|
|
—
|
|
|
—
|
|
||||||
Mortgage-backed securities
|
356
|
|
|
381
|
|
|
34,353
|
|
|
35,390
|
|
|
—
|
|
|
—
|
|
||||||
Collateralized mortgage obligations
|
48
|
|
|
50
|
|
|
79,545
|
|
|
82,851
|
|
|
—
|
|
|
—
|
|
||||||
|
$
|
4,143
|
|
|
$
|
4,161
|
|
|
$
|
2,562,786
|
|
|
$
|
2,697,248
|
|
|
$
|
13,429
|
|
|
$
|
13,454
|
|
(In Thousands)
|
|
|
|
|
|
||||||
Years Ended December 31
|
2011
|
|
2010
|
|
2009
|
||||||
Realized investment gains (losses)
|
|
|
|
|
|
||||||
Fixed maturities
|
$
|
4,389
|
|
|
$
|
4,079
|
|
|
$
|
(4,117
|
)
|
Equity securities
|
2,984
|
|
|
5,030
|
|
|
(11,362
|
)
|
|||
Trading securities
|
|
|
|
|
|
|
|
|
|||
Change in fair value
|
(539
|
)
|
|
(325
|
)
|
|
1,547
|
|
|||
Sales
|
(326
|
)
|
|
198
|
|
|
418
|
|
|||
Mortgage loans
|
—
|
|
|
(362
|
)
|
|
—
|
|
|||
Other long-term investments
|
(68
|
)
|
|
(131
|
)
|
|
332
|
|
|||
Short-term investments
|
—
|
|
|
—
|
|
|
3
|
|
|||
Total realized investment gains (losses)
|
$
|
6,440
|
|
|
$
|
8,489
|
|
|
$
|
(13,179
|
)
|
(In Thousands)
|
|
|
|
|
|
||||||
Years Ended December 31
|
2011
|
|
2010
|
|
2009
|
||||||
Investment income
|
|
|
|
|
|
||||||
Interest on fixed maturities
|
$
|
109,467
|
|
|
$
|
108,754
|
|
|
$
|
106,023
|
|
Dividends on equity securities
|
4,628
|
|
|
3,675
|
|
|
3,950
|
|
|||
Income (loss) on other long-term investments
|
|
|
|
|
|
||||||
Interest
|
224
|
|
|
24
|
|
|
(6
|
)
|
|||
Change in value
(1)
|
(137
|
)
|
|
387
|
|
|
(1,127
|
)
|
|||
Interest on mortgage loans
|
285
|
|
|
479
|
|
|
587
|
|
|||
Interest on short-term investments
|
4
|
|
|
6
|
|
|
558
|
|
|||
Interest on cash and cash equivalents
|
913
|
|
|
1,064
|
|
|
1,094
|
|
|||
Other
|
2,542
|
|
|
2,686
|
|
|
1,253
|
|
|||
Total investment income
|
$
|
117,926
|
|
|
$
|
117,075
|
|
|
$
|
112,332
|
|
Less investment expenses
|
8,432
|
|
|
5,390
|
|
|
6,257
|
|
|||
Investment income, net
|
$
|
109,494
|
|
|
$
|
111,685
|
|
|
$
|
106,075
|
|
(1)
|
Represents the change in value of our holdings in limited liability partnership funds, which are accounted for under the equity method of accounting.
|
(In Thousands)
|
|
|
|
|
|
||||||
Years Ended December 31
|
2011
|
|
2010
|
|
2009
|
||||||
Changes in net unrealized investment appreciation
|
|
|
|
|
|
||||||
Available-for-sale fixed maturities
|
$
|
34,699
|
|
|
$
|
17,105
|
|
|
$
|
126,555
|
|
Equity securities
|
(4,675
|
)
|
|
16,155
|
|
|
24,673
|
|
|||
Deferred policy acquisition costs
|
3,402
|
|
|
(2,172
|
)
|
|
(63,425
|
)
|
|||
Income tax effect
|
(11,699
|
)
|
|
(10,930
|
)
|
|
(30,855
|
)
|
|||
Total change in net unrealized appreciation, net of tax
|
$
|
21,727
|
|
|
$
|
20,158
|
|
|
$
|
56,948
|
|
(In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
December 31, 2011
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||||||||
|
|
|
|
|
Gross
|
|
|
|
|
|
Gross
|
|
|
|
Gross
|
||||||||||||||
|
Number
|
|
Fair
|
|
Unrealized
|
|
Number
|
|
Fair
|
|
Unrealized
|
|
Fair
|
|
Unrealized
|
||||||||||||||
Type of Investment
|
of Issues
|
|
Value
|
|
Depreciation
|
|
of Issues
|
|
Values
|
|
Depreciation
|
|
Values
|
|
Depreciation
|
||||||||||||||
HELD-TO-MATURITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Bonds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
States, municipalities and political subdivisions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Special revenue
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
1
|
|
|
$
|
473
|
|
|
$
|
61
|
|
|
$
|
473
|
|
|
$
|
61
|
|
Total Held-to-Maturity Fixed Maturities
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
1
|
|
|
$
|
473
|
|
|
$
|
61
|
|
|
$
|
473
|
|
|
$
|
61
|
|
AVAILABLE-FOR-SALE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Bonds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
States, municipalities and political subdivisions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
General obligations
|
2
|
|
|
$
|
1,506
|
|
|
$
|
1
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,506
|
|
|
$
|
1
|
|
Special revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Northeast
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
619
|
|
|
2
|
|
|
619
|
|
|
2
|
|
||||||
South
|
4
|
|
|
2,049
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,049
|
|
|
5
|
|
||||||
Foreign bonds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Canadian
|
1
|
|
|
5,667
|
|
|
97
|
|
|
2
|
|
|
2,930
|
|
|
103
|
|
|
8,597
|
|
|
200
|
|
||||||
Other foreign
|
12
|
|
|
12,334
|
|
|
391
|
|
|
4
|
|
|
11,193
|
|
|
232
|
|
|
23,527
|
|
|
623
|
|
||||||
Public utilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Electric
|
4
|
|
|
6,486
|
|
|
97
|
|
|
1
|
|
|
1,068
|
|
|
153
|
|
|
7,554
|
|
|
250
|
|
||||||
Gas distribution
|
2
|
|
|
3,093
|
|
|
63
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,093
|
|
|
63
|
|
||||||
Corporate bonds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Oil and gas
|
2
|
|
|
5,436
|
|
|
53
|
|
|
1
|
|
|
5,223
|
|
|
224
|
|
|
10,659
|
|
|
277
|
|
||||||
Basic resources
|
3
|
|
|
10,861
|
|
|
328
|
|
|
2
|
|
|
5,238
|
|
|
188
|
|
|
16,099
|
|
|
516
|
|
||||||
Construction and materials
|
3
|
|
|
10,560
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,560
|
|
|
16
|
|
||||||
Industrial goods and services
|
3
|
|
|
4,243
|
|
|
15
|
|
|
1
|
|
|
2,897
|
|
|
103
|
|
|
7,140
|
|
|
118
|
|
||||||
Autos and parts
|
1
|
|
|
2,685
|
|
|
315
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,685
|
|
|
315
|
|
||||||
Food and beverage
|
1
|
|
|
1,012
|
|
|
1
|
|
|
5
|
|
|
3,932
|
|
|
132
|
|
|
4,944
|
|
|
133
|
|
||||||
Personal and household goods
|
1
|
|
|
1,047
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,047
|
|
|
14
|
|
||||||
Health care
|
2
|
|
|
5,027
|
|
|
45
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,027
|
|
|
45
|
|
||||||
Media
|
2
|
|
|
7,081
|
|
|
47
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,081
|
|
|
47
|
|
||||||
Travel and leisure
|
2
|
|
|
616
|
|
|
184
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
616
|
|
|
184
|
|
||||||
Telecommunications
|
1
|
|
|
1,966
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,966
|
|
|
3
|
|
||||||
Banks
|
18
|
|
|
16,946
|
|
|
264
|
|
|
8
|
|
|
17,267
|
|
|
941
|
|
|
34,213
|
|
|
1,205
|
|
||||||
Insurance
|
2
|
|
|
504
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
504
|
|
|
9
|
|
||||||
Real estate
|
2
|
|
|
378
|
|
|
10
|
|
|
1
|
|
|
4,396
|
|
|
171
|
|
|
4,774
|
|
|
181
|
|
||||||
Financial services
|
1
|
|
|
2,245
|
|
|
9
|
|
|
17
|
|
|
7,229
|
|
|
896
|
|
|
9,474
|
|
|
905
|
|
||||||
Technology
|
10
|
|
|
5,101
|
|
|
268
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,101
|
|
|
268
|
|
||||||
Collateralized mortgage obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Government
|
6
|
|
|
4,306
|
|
|
25
|
|
|
3
|
|
|
5,209
|
|
|
43
|
|
|
9,515
|
|
|
68
|
|
||||||
Other
|
1
|
|
|
160
|
|
|
116
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
160
|
|
|
116
|
|
||||||
Mortgage-backed securities
|
5
|
|
|
684
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
684
|
|
|
4
|
|
||||||
Total Available-For-Sale Fixed Maturities
|
91
|
|
|
$
|
111,993
|
|
|
$
|
2,380
|
|
|
46
|
|
|
$
|
67,201
|
|
|
$
|
3,188
|
|
|
$
|
179,194
|
|
|
$
|
5,568
|
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Common stocks
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Public utilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Electric
|
3
|
|
|
$
|
210
|
|
|
$
|
98
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
210
|
|
|
$
|
98
|
|
Corporate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial goods and services
|
7
|
|
|
975
|
|
|
155
|
|
|
8
|
|
|
577
|
|
|
120
|
|
|
1,552
|
|
|
275
|
|
||||||
Autos and parts
|
6
|
|
|
14
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
7
|
|
||||||
Health care
|
5
|
|
|
768
|
|
|
94
|
|
|
4
|
|
|
455
|
|
|
138
|
|
|
1,223
|
|
|
232
|
|
||||||
Retail
|
6
|
|
|
611
|
|
|
143
|
|
|
3
|
|
|
431
|
|
|
18
|
|
|
1,042
|
|
|
161
|
|
||||||
Media
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
134
|
|
|
13
|
|
|
134
|
|
|
13
|
|
||||||
Telecommunications
|
4
|
|
|
60
|
|
|
8
|
|
|
1
|
|
|
10
|
|
|
9
|
|
|
70
|
|
|
17
|
|
||||||
Banks
|
11
|
|
|
875
|
|
|
250
|
|
|
1
|
|
|
434
|
|
|
122
|
|
|
1,309
|
|
|
372
|
|
||||||
Insurance
|
4
|
|
|
742
|
|
|
47
|
|
|
2
|
|
|
107
|
|
|
30
|
|
|
849
|
|
|
77
|
|
||||||
Real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
205
|
|
|
72
|
|
|
205
|
|
|
72
|
|
||||||
Financial services
|
1
|
|
|
259
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
259
|
|
|
22
|
|
||||||
Technology
|
3
|
|
|
511
|
|
|
116
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
511
|
|
|
116
|
|
||||||
Nonredeemable preferred stocks
|
3
|
|
|
1,171
|
|
|
31
|
|
|
2
|
|
|
878
|
|
|
353
|
|
|
2049
|
|
|
384
|
|
||||||
Total Available-for-Sale Equity Securities
|
53
|
|
|
$
|
6,196
|
|
|
$
|
971
|
|
|
25
|
|
|
$
|
3,231
|
|
|
$
|
875
|
|
|
$
|
9,427
|
|
|
$
|
1,846
|
|
Total Available-for-Sale Securities
|
144
|
|
|
$
|
118,189
|
|
|
$
|
3,351
|
|
|
71
|
|
|
$
|
70,432
|
|
|
$
|
4,063
|
|
|
$
|
188,621
|
|
|
$
|
7,414
|
|
Total
|
144
|
|
|
$
|
118,189
|
|
|
$
|
3,351
|
|
|
72
|
|
|
$
|
70,905
|
|
|
$
|
4,124
|
|
|
$
|
189,094
|
|
|
$
|
7,475
|
|
(In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
December 31, 2010
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||||||||
|
|
|
|
|
Gross
|
|
|
|
|
|
Gross
|
|
|
|
Gross
|
||||||||||||||
|
Number
|
|
Fair
|
|
Unrealized
|
|
Number
|
|
Fair
|
|
Unrealized
|
|
Fair
|
|
Unrealized
|
||||||||||||||
Type of Investment
|
of Issues
|
|
Value
|
|
Depreciation
|
|
of Issues
|
|
Values
|
|
Depreciation
|
|
Values
|
|
Depreciation
|
||||||||||||||
HELD-TO-MATURITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Bonds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
States, municipalities and political subdivisions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Special revenue
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
2
|
|
|
$
|
590
|
|
|
$
|
108
|
|
|
$
|
590
|
|
|
$
|
108
|
|
Total Held-to-Maturity Fixed Maturities
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
2
|
|
|
$
|
590
|
|
|
$
|
108
|
|
|
$
|
590
|
|
|
$
|
108
|
|
AVAILABLE-FOR-SALE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Bonds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
U.S. government and government-sponsored enterprises
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Agency
|
12
|
|
|
$
|
41,374
|
|
|
$
|
626
|
|
|
7
|
|
|
$
|
30,661
|
|
|
$
|
388
|
|
|
$
|
72,035
|
|
|
$
|
1,014
|
|
States, municipalities and political subdivisions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
General obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Midwest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
North central - East
|
3
|
|
|
2,346
|
|
|
105
|
|
|
1
|
|
|
497
|
|
|
32
|
|
|
2,843
|
|
|
137
|
|
||||||
North central - West
|
1
|
|
|
860
|
|
|
58
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
860
|
|
|
58
|
|
||||||
South
|
2
|
|
|
947
|
|
|
53
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
947
|
|
|
53
|
|
||||||
West
|
3
|
|
|
2,723
|
|
|
90
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,723
|
|
|
90
|
|
||||||
Special revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Midwest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
North central - East
|
7
|
|
|
8,275
|
|
|
96
|
|
|
2
|
|
|
2,553
|
|
|
79
|
|
|
10,828
|
|
|
175
|
|
||||||
North central - West
|
2
|
|
|
3,092
|
|
|
102
|
|
|
2
|
|
|
2,555
|
|
|
164
|
|
|
5,647
|
|
|
266
|
|
||||||
Northeast
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
771
|
|
|
9
|
|
|
771
|
|
|
9
|
|
||||||
South
|
3
|
|
|
3,964
|
|
|
144
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,964
|
|
|
144
|
|
||||||
Foreign bonds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Canadian
|
1
|
|
|
5,687
|
|
|
194
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,687
|
|
|
194
|
|
||||||
Other foreign
|
2
|
|
|
6,634
|
|
|
235
|
|
|
2
|
|
|
2,873
|
|
|
33
|
|
|
9,507
|
|
|
268
|
|
||||||
Public utilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Electric
|
3
|
|
|
4,490
|
|
|
100
|
|
|
3
|
|
|
10,003
|
|
|
419
|
|
|
14,493
|
|
|
519
|
|
||||||
Gas distribution
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1,420
|
|
|
70
|
|
|
1,420
|
|
|
70
|
|
||||||
Corporate bonds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Oil and gas
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
10,168
|
|
|
427
|
|
|
10,168
|
|
|
427
|
|
||||||
Chemicals
|
3
|
|
|
3,366
|
|
|
19
|
|
|
1
|
|
|
4,939
|
|
|
16
|
|
|
8,305
|
|
|
35
|
|
||||||
Industrial goods and services
|
5
|
|
|
13,642
|
|
|
171
|
|
|
2
|
|
|
5,821
|
|
|
191
|
|
|
19,463
|
|
|
362
|
|
||||||
Autos and parts
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
3,928
|
|
|
119
|
|
|
3,928
|
|
|
119
|
|
||||||
Food and beverage
|
1
|
|
|
2,006
|
|
|
12
|
|
|
2
|
|
|
4,491
|
|
|
99
|
|
|
6,497
|
|
|
111
|
|
||||||
Personal and household goods
|
3
|
|
|
9,233
|
|
|
241
|
|
|
2
|
|
|
3,039
|
|
|
48
|
|
|
12,272
|
|
|
289
|
|
||||||
Health care
|
4
|
|
|
14,416
|
|
|
186
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,416
|
|
|
186
|
|
||||||
Retail
|
4
|
|
|
9,370
|
|
|
321
|
|
|
1
|
|
|
2,308
|
|
|
8
|
|
|
11,678
|
|
|
329
|
|
||||||
Travel and leisure
|
1
|
|
|
2,013
|
|
|
69
|
|
|
2
|
|
|
792
|
|
|
8
|
|
|
2,805
|
|
|
77
|
|
||||||
Telecommunications
|
2
|
|
|
2,696
|
|
|
51
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,696
|
|
|
51
|
|
||||||
Banks
|
1
|
|
|
2,920
|
|
|
18
|
|
|
15
|
|
|
28,887
|
|
|
1,671
|
|
|
31,807
|
|
|
1,689
|
|
||||||
Insurance
|
1
|
|
|
2,169
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,169
|
|
|
14
|
|
||||||
Real Estate
|
1
|
|
|
4,539
|
|
|
177
|
|
|
1
|
|
|
2,256
|
|
|
90
|
|
|
6,795
|
|
|
267
|
|
||||||
Financial services
|
3
|
|
|
11,660
|
|
|
236
|
|
|
15
|
|
|
5,270
|
|
|
747
|
|
|
16,930
|
|
|
983
|
|
||||||
Technology
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
8,628
|
|
|
334
|
|
|
8,628
|
|
|
334
|
|
Total Available-For-Sale Fixed Maturities
|
68
|
|
|
$
|
158,422
|
|
|
$
|
3,318
|
|
|
68
|
|
|
$
|
131,860
|
|
|
$
|
4,952
|
|
|
$
|
290,282
|
|
|
$
|
8,270
|
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Common stocks
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Public utilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Electric
|
3
|
|
|
$
|
306
|
|
|
$
|
2
|
|
|
4
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
306
|
|
|
$
|
3
|
|
Corporate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Health care
|
2
|
|
|
1,437
|
|
|
62
|
|
|
1
|
|
|
371
|
|
|
124
|
|
|
1,808
|
|
|
186
|
|
||||||
Banks
|
2
|
|
|
614
|
|
|
33
|
|
|
1
|
|
|
488
|
|
|
68
|
|
|
1,102
|
|
|
101
|
|
||||||
Insurance
|
1
|
|
|
260
|
|
|
28
|
|
|
1
|
|
|
43
|
|
|
13
|
|
|
303
|
|
|
41
|
|
||||||
Real estate
|
1
|
|
|
79
|
|
|
10
|
|
|
2
|
|
|
158
|
|
|
30
|
|
|
237
|
|
|
40
|
|
||||||
Financial services
|
1
|
|
|
267
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
267
|
|
|
15
|
|
||||||
Nonredeemable preferred stocks
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
1,158
|
|
|
74
|
|
|
1,158
|
|
|
74
|
|
||||||
Total Available-for-Sale Equity Securities
|
10
|
|
|
$
|
2,963
|
|
|
$
|
150
|
|
|
11
|
|
|
$
|
2,218
|
|
|
$
|
310
|
|
|
$
|
5,181
|
|
|
$
|
460
|
|
Total Available-for-Sale Securities
|
78
|
|
|
$
|
161,385
|
|
|
$
|
3,468
|
|
|
79
|
|
|
$
|
134,078
|
|
|
$
|
5,262
|
|
|
$
|
295,463
|
|
|
$
|
8,730
|
|
Total
|
78
|
|
|
$
|
161,385
|
|
|
$
|
3,468
|
|
|
81
|
|
|
$
|
134,668
|
|
|
$
|
5,370
|
|
|
$
|
296,053
|
|
|
$
|
8,838
|
|
NOTE 3. FAIR VALUE OF FINANCIAL INSTRUMENTS
|
At December 31
|
2011
|
|
2010
|
||||||||||||
(In Thousands)
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Investments
|
|
|
|
|
|
|
|
||||||||
Held-to-maturity fixed maturities
|
$
|
4,161
|
|
|
$
|
4,143
|
|
|
$
|
6,422
|
|
|
$
|
6,364
|
|
Available-for-sale fixed maturities
|
2,697,248
|
|
|
2,697,248
|
|
|
2,278,429
|
|
|
2,278,429
|
|
||||
Trading securities
|
13,454
|
|
|
13,454
|
|
|
12,886
|
|
|
12,886
|
|
||||
Equity securities
|
159,451
|
|
|
159,451
|
|
|
149,706
|
|
|
149,706
|
|
||||
Mortgage loans
|
5,219
|
|
|
4,829
|
|
|
7,658
|
|
|
6,497
|
|
||||
Policy loans
|
7,209
|
|
|
7,209
|
|
|
7,875
|
|
|
7,875
|
|
||||
Other long-term investments
|
20,574
|
|
|
20,574
|
|
|
20,041
|
|
|
20,041
|
|
||||
Short-term investments
|
1,100
|
|
|
1,100
|
|
|
1,100
|
|
|
1,100
|
|
||||
Cash and cash equivalents
|
144,527
|
|
|
144,527
|
|
|
180,057
|
|
|
180,057
|
|
||||
Accrued investment income
|
32,219
|
|
|
32,219
|
|
|
28,977
|
|
|
28,977
|
|
||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Policy Reserves
|
|
|
|
|
|
|
|
||||||||
Annuity (accumulations)
(1)
|
$
|
1,074,661
|
|
|
$
|
999,534
|
|
|
$
|
965,932
|
|
|
$
|
948,920
|
|
Annuity (benefit payments)
|
133,921
|
|
|
94,465
|
|
|
102,511
|
|
|
86,874
|
|
(1)
|
Annuity accumulations represent deferred annuity contracts that are currently earning interest.
|
•
|
Level 1: Valuations are based on unadjusted quoted prices in active markets for identical financial instruments that we have the ability to access.
|
•
|
Level 2: Valuations are based on quoted prices for similar financial instruments, other than quoted prices included in Level 1, in markets that are not active or on inputs that are observable either directly or indirectly for the full term of the financial instrument.
|
•
|
Level 3: Valuations are based on pricing or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement of the financial instrument. Such inputs may reflect management’s own assumptions about the assumptions a market participant would use in pricing the financial instrument.
|
(In Thousands)
|
|
|
Fair Value Measurements
|
||||||||||||
Description
|
December 31, 2011
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
AVAILABLE-FOR-SALE
|
|
|
|
|
|
|
|
||||||||
Fixed maturities
|
|
|
|
|
|
|
|
||||||||
Bonds
|
|
|
|
|
|
|
|
||||||||
U.S. government and government-sponsored enterprises
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury
|
$
|
43,951
|
|
|
$
|
—
|
|
|
$
|
43,951
|
|
|
$
|
—
|
|
Agency
|
96,395
|
|
|
—
|
|
|
96,395
|
|
|
—
|
|
||||
States, municipalities and political subdivisions
|
|
|
|
|
|
|
|
||||||||
General obligations
|
|
|
|
|
|
|
|
||||||||
Midwest
|
|
|
|
|
|
|
|
||||||||
North central - East
|
129,605
|
|
|
—
|
|
|
129,605
|
|
|
—
|
|
||||
North central - West
|
84,311
|
|
|
—
|
|
|
84,311
|
|
|
—
|
|
||||
Northeast
|
40,863
|
|
|
—
|
|
|
40,863
|
|
|
—
|
|
||||
South
|
115,473
|
|
|
—
|
|
|
115,473
|
|
|
—
|
|
||||
West
|
74,378
|
|
|
—
|
|
|
74,378
|
|
|
—
|
|
||||
Special revenue
|
|
|
|
|
|
|
|
||||||||
Midwest
|
|
|
|
|
|
|
|
||||||||
North central - East
|
70,813
|
|
|
—
|
|
|
69,933
|
|
|
880
|
|
||||
North central - West
|
55,236
|
|
|
—
|
|
|
55,236
|
|
|
—
|
|
||||
Northeast
|
14,733
|
|
|
—
|
|
|
14,733
|
|
|
—
|
|
||||
South
|
103,074
|
|
|
—
|
|
|
103,074
|
|
|
—
|
|
||||
West
|
59,621
|
|
|
—
|
|
|
59,621
|
|
|
—
|
|
||||
Foreign bonds
|
|
|
|
|
|
|
|
||||||||
Canadian
|
72,176
|
|
|
—
|
|
|
72,176
|
|
|
—
|
|
||||
Other foreign
|
142,639
|
|
|
—
|
|
|
141,803
|
|
|
836
|
|
||||
Public utilities
|
|
|
|
|
|
|
|
||||||||
Electric
|
233,479
|
|
|
—
|
|
|
233,479
|
|
|
—
|
|
||||
Gas distribution
|
25,658
|
|
|
—
|
|
|
25,658
|
|
|
—
|
|
||||
Other
|
10,934
|
|
|
—
|
|
|
10,934
|
|
|
—
|
|
||||
Corporate bonds
|
|
|
|
|
|
|
|
||||||||
Oil and gas
|
197,192
|
|
|
—
|
|
|
197,192
|
|
|
—
|
|
||||
Chemicals
|
62,261
|
|
|
—
|
|
|
62,261
|
|
|
—
|
|
||||
Basic resources
|
24,061
|
|
|
—
|
|
|
24,061
|
|
|
—
|
|
||||
Construction and materials
|
24,330
|
|
|
—
|
|
|
24,330
|
|
|
—
|
|
||||
Industrial goods and services
|
185,025
|
|
|
—
|
|
|
182,128
|
|
|
2,897
|
|
||||
Autos and parts
|
18,229
|
|
|
—
|
|
|
18,229
|
|
|
—
|
|
||||
Food and beverage
|
69,241
|
|
|
—
|
|
|
67,826
|
|
|
1,415
|
|
||||
Personal and household goods
|
61,963
|
|
|
—
|
|
|
61,963
|
|
|
—
|
|
||||
Health care
|
115,671
|
|
|
—
|
|
|
115,671
|
|
|
—
|
|
||||
Retail
|
60,063
|
|
|
—
|
|
|
60,063
|
|
|
—
|
|
||||
Media
|
41,969
|
|
|
—
|
|
|
41,969
|
|
|
—
|
|
||||
Travel and leisure
|
2,678
|
|
|
—
|
|
|
2,678
|
|
|
—
|
|
||||
Telecommunications
|
39,915
|
|
|
—
|
|
|
39,915
|
|
|
—
|
|
||||
Banks
|
131,876
|
|
|
—
|
|
|
124,646
|
|
|
7,230
|
|
||||
Insurance
|
23,700
|
|
|
—
|
|
|
23,700
|
|
|
—
|
|
||||
Real estate
|
23,022
|
|
|
—
|
|
|
15,242
|
|
|
7,780
|
|
||||
Financial services
|
86,703
|
|
|
—
|
|
|
85,740
|
|
|
963
|
|
||||
Technology
|
31,064
|
|
|
—
|
|
|
31,064
|
|
|
—
|
|
||||
Collateralized mortgage obligations
|
|
|
|
|
|
|
|
||||||||
Government
|
82,691
|
|
|
—
|
|
|
82,691
|
|
|
—
|
|
||||
Other
|
160
|
|
|
—
|
|
|
160
|
|
|
—
|
|
||||
Mortgage-backed securities
|
35,390
|
|
|
—
|
|
|
35,390
|
|
|
—
|
|
||||
Asset-backed securities
|
6,296
|
|
|
—
|
|
|
5,981
|
|
|
315
|
|
||||
Redeemable preferred stock
|
409
|
|
|
409
|
|
|
—
|
|
|
—
|
|
||||
Total Available-For-Sale Fixed Maturities
|
$
|
2,697,248
|
|
|
$
|
409
|
|
|
$
|
2,674,523
|
|
|
$
|
22,316
|
|
Equity securities
|
|
|
|
|
|
|
|
||||||||
Common stocks
|
|
|
|
|
|
|
|
||||||||
Public utilities
|
|
|
|
|
|
|
|
||||||||
Electric
|
$
|
12,419
|
|
|
$
|
12,419
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Gas distribution
|
2,223
|
|
|
2,223
|
|
|
—
|
|
|
—
|
|
||||
Other
|
93
|
|
|
93
|
|
|
—
|
|
|
—
|
|
||||
Corporate
|
|
|
|
|
|
|
|
||||||||
Oil and gas
|
12,210
|
|
|
12,210
|
|
|
—
|
|
|
—
|
|
||||
Chemicals
|
5,039
|
|
|
5,039
|
|
|
—
|
|
|
—
|
|
||||
Industrial goods and services
|
23,517
|
|
|
23,517
|
|
|
—
|
|
|
—
|
|
||||
Autos and parts
|
580
|
|
|
580
|
|
|
—
|
|
|
—
|
|
||||
Food and beverage
|
6,106
|
|
|
6,106
|
|
|
—
|
|
|
—
|
|
||||
Personal and household goods
|
8,671
|
|
|
8,671
|
|
|
—
|
|
|
—
|
|
||||
Health care
|
15,988
|
|
|
15,988
|
|
|
—
|
|
|
—
|
|
||||
Retail
|
3,207
|
|
|
3,207
|
|
|
—
|
|
|
—
|
|
||||
Media
|
134
|
|
|
134
|
|
|
—
|
|
|
—
|
|
||||
Telecommunications
|
6,160
|
|
|
6,160
|
|
|
—
|
|
|
—
|
|
||||
Banks
|
41,514
|
|
|
37,988
|
|
|
—
|
|
|
3,526
|
|
||||
Insurance
|
13,034
|
|
|
13,034
|
|
|
—
|
|
|
—
|
|
||||
Real Estate
|
1,114
|
|
|
1,114
|
|
|
—
|
|
|
—
|
|
||||
Financial services
|
428
|
|
|
428
|
|
|
—
|
|
|
—
|
|
||||
Technology
|
3,724
|
|
|
3,724
|
|
|
—
|
|
|
—
|
|
||||
Nonredeemable preferred stocks
|
3,290
|
|
|
3,032
|
|
|
258
|
|
|
—
|
|
||||
Total Available-for-Sale Equity Securities
|
$
|
159,451
|
|
|
$
|
155,667
|
|
|
$
|
258
|
|
|
$
|
3,526
|
|
Total Available-for-Sale Securities
|
$
|
2,856,699
|
|
|
$
|
156,076
|
|
|
$
|
2,674,781
|
|
|
$
|
25,842
|
|
TRADING
|
|
|
|
|
|
|
|
||||||||
Fixed maturities
|
|
|
|
|
|
|
|
||||||||
Bonds
|
|
|
|
|
|
|
|
||||||||
Foreign bonds
|
|
|
|
|
|
|
|
||||||||
Canadian
|
$
|
1,530
|
|
|
$
|
—
|
|
|
$
|
1,530
|
|
|
$
|
—
|
|
Other foreign
|
1,376
|
|
|
—
|
|
|
1,376
|
|
|
—
|
|
||||
Corporate bonds
|
|
|
|
|
|
|
|
||||||||
Basic resources
|
1,443
|
|
|
—
|
|
|
1,443
|
|
|
—
|
|
||||
Food and beverage
|
1,059
|
|
|
—
|
|
|
1,059
|
|
|
—
|
|
||||
Health care
|
1,450
|
|
|
—
|
|
|
1,450
|
|
|
—
|
|
||||
Banks
|
1,237
|
|
|
—
|
|
|
1,237
|
|
|
—
|
|
||||
Insurance
|
440
|
|
|
—
|
|
|
440
|
|
|
—
|
|
||||
Financial services
|
386
|
|
|
—
|
|
|
386
|
|
|
—
|
|
||||
Technology
|
1,458
|
|
|
—
|
|
|
1,458
|
|
|
—
|
|
||||
Redeemable Preferred Stock
|
3,075
|
|
|
1,659
|
|
|
1,416
|
|
|
—
|
|
||||
Total Trading Fixed Maturities
|
$
|
13,454
|
|
|
$
|
1,659
|
|
|
$
|
11,795
|
|
|
$
|
—
|
|
Short-Term Investments
|
$
|
1,100
|
|
|
$
|
1,100
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Money Market Accounts
|
$
|
62,899
|
|
|
$
|
62,899
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total Assets Measured at Fair Value
|
$
|
2,934,152
|
|
|
$
|
221,734
|
|
|
$
|
2,686,576
|
|
|
$
|
25,842
|
|
(In Thousands)
|
|
|
Fair Value Measurements
|
||||||||||||
Description
|
December 31, 2010
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
AVAILABLE-FOR-SALE
|
|
|
|
|
|
|
|
||||||||
Fixed maturities
|
|
|
|
|
|
|
|
||||||||
Bonds
|
|
|
|
|
|
|
|
||||||||
U.S. government and government-sponsored enterprises
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury
|
$
|
39,076
|
|
|
$
|
—
|
|
|
$
|
39,076
|
|
|
$
|
—
|
|
Agency
|
103,131
|
|
|
—
|
|
|
103,131
|
|
|
—
|
|
||||
States, municipalities and political subdivisions
|
|
|
|
|
|
|
|
||||||||
General obligations
|
|
|
|
|
|
|
|
||||||||
Midwest
|
|
|
|
|
|
|
|
||||||||
North central - East
|
127,770
|
|
|
—
|
|
|
127,770
|
|
|
—
|
|
||||
North central - West
|
81,132
|
|
|
—
|
|
|
81,132
|
|
|
—
|
|
||||
Northeast
|
29,525
|
|
|
—
|
|
|
29,525
|
|
|
—
|
|
||||
South
|
99,297
|
|
|
—
|
|
|
99,297
|
|
|
—
|
|
||||
West
|
56,053
|
|
|
—
|
|
|
56,053
|
|
|
—
|
|
||||
Special revenue
|
|
|
|
|
|
|
|
||||||||
Midwest
|
|
|
|
|
|
|
|
||||||||
North central - East
|
61,093
|
|
|
—
|
|
|
60,092
|
|
|
1,001
|
|
||||
North central - West
|
40,305
|
|
|
—
|
|
|
40,305
|
|
|
—
|
|
||||
Northeast
|
4,743
|
|
|
—
|
|
|
4,743
|
|
|
—
|
|
||||
South
|
74,747
|
|
|
—
|
|
|
74,747
|
|
|
—
|
|
||||
West
|
44,545
|
|
|
—
|
|
|
44,545
|
|
|
—
|
|
||||
Foreign bonds
|
|
|
|
|
|
|
|
||||||||
Canadian
|
72,923
|
|
|
—
|
|
|
72,923
|
|
|
—
|
|
||||
Other foreign
|
89,754
|
|
|
—
|
|
|
88,639
|
|
|
1,115
|
|
||||
Public utilities
|
|
|
|
|
|
|
|
||||||||
Electric
|
225,324
|
|
|
—
|
|
|
225,289
|
|
|
35
|
|
||||
Gas distribution
|
22,185
|
|
|
—
|
|
|
22,185
|
|
|
—
|
|
||||
Other
|
21,580
|
|
|
—
|
|
|
21,580
|
|
|
—
|
|
||||
Corporate bonds
|
|
|
|
|
|
|
|
||||||||
Oil and gas
|
185,436
|
|
|
—
|
|
|
185,436
|
|
|
—
|
|
||||
Chemicals
|
54,971
|
|
|
—
|
|
|
54,971
|
|
|
—
|
|
||||
Basic resources
|
7,427
|
|
|
—
|
|
|
7,427
|
|
|
—
|
|
||||
Construction and materials
|
20,258
|
|
|
—
|
|
|
20,258
|
|
|
—
|
|
||||
Industrial goods and services
|
155,058
|
|
|
—
|
|
|
152,161
|
|
|
2,897
|
|
||||
Autos and parts
|
18,384
|
|
|
—
|
|
|
18,384
|
|
|
—
|
|
||||
Food and beverage
|
74,033
|
|
|
—
|
|
|
72,551
|
|
|
1,482
|
|
||||
Personal and household goods
|
69,387
|
|
|
—
|
|
|
66,884
|
|
|
2,503
|
|
||||
Health care
|
83,342
|
|
|
—
|
|
|
83,342
|
|
|
—
|
|
||||
Retail
|
43,960
|
|
|
—
|
|
|
43,960
|
|
|
—
|
|
||||
Media
|
33,254
|
|
|
—
|
|
|
33,254
|
|
|
—
|
|
||||
Travel and leisure
|
5,866
|
|
|
—
|
|
|
5,866
|
|
|
—
|
|
||||
Telecommunications
|
36,984
|
|
|
—
|
|
|
36,984
|
|
|
—
|
|
||||
Banks
|
121,634
|
|
|
—
|
|
|
114,111
|
|
|
7,523
|
|
||||
Insurance
|
26,467
|
|
|
—
|
|
|
26,467
|
|
|
—
|
|
||||
Real estate
|
21,737
|
|
|
—
|
|
|
13,764
|
|
|
7,973
|
|
||||
Financial services
|
83,455
|
|
|
—
|
|
|
82,354
|
|
|
1,101
|
|
||||
Technology
|
16,688
|
|
|
—
|
|
|
16,688
|
|
|
—
|
|
||||
Collateralized mortgage obligations
|
19,577
|
|
|
—
|
|
|
19,577
|
|
|
—
|
|
||||
Mortgage-backed securities
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Asset-backed securities
|
7,326
|
|
|
—
|
|
|
7,326
|
|
|
—
|
|
||||
Total Available-For-Sale Fixed Maturities
|
$
|
2,278,429
|
|
|
$
|
—
|
|
|
$
|
2,252,799
|
|
|
$
|
25,630
|
|
Equity securities
|
|
|
|
|
|
|
|
||||||||
Common stocks
|
|
|
|
|
|
|
|
||||||||
Public utilities
|
|
|
|
|
|
|
|
||||||||
Electric
|
$
|
10,390
|
|
|
$
|
10,390
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Gas distribution
|
676
|
|
|
676
|
|
|
—
|
|
|
—
|
|
||||
Corporate
|
|
|
|
|
|
|
|
||||||||
Oil and gas
|
13,134
|
|
|
13,134
|
|
|
—
|
|
|
—
|
|
||||
Chemicals
|
6,079
|
|
|
6,079
|
|
|
—
|
|
|
—
|
|
Industrial goods and services
|
23,297
|
|
|
23,297
|
|
|
—
|
|
|
—
|
|
||||
Autos and parts
|
794
|
|
|
794
|
|
|
—
|
|
|
—
|
|
||||
Food and beverage
|
4,474
|
|
|
4,474
|
|
|
—
|
|
|
—
|
|
||||
Personal and household goods
|
8,603
|
|
|
8,603
|
|
|
—
|
|
|
—
|
|
||||
Health care
|
12,548
|
|
|
12,548
|
|
|
—
|
|
|
—
|
|
||||
Retail
|
728
|
|
|
728
|
|
|
—
|
|
|
—
|
|
||||
Travel and leisure
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Telecommunications
|
5,814
|
|
|
5,783
|
|
|
31
|
|
|
—
|
|
||||
Banks
|
43,760
|
|
|
42,225
|
|
|
—
|
|
|
1,535
|
|
||||
Insurance
|
14,408
|
|
|
14,408
|
|
|
—
|
|
|
—
|
|
||||
Real Estate
|
1,020
|
|
|
1,020
|
|
|
—
|
|
|
—
|
|
||||
Financial services
|
559
|
|
|
559
|
|
|
—
|
|
|
—
|
|
||||
Technology
|
2,031
|
|
|
2,031
|
|
|
—
|
|
|
—
|
|
||||
Nonredeemable preferred stocks
|
1,390
|
|
|
1,158
|
|
|
232
|
|
|
—
|
|
||||
Total Available-for-Sale Equity Securities
|
$
|
149,706
|
|
|
$
|
147,908
|
|
|
$
|
263
|
|
|
$
|
1,535
|
|
Total Available-for-Sale Securities
|
$
|
2,428,135
|
|
|
$
|
147,908
|
|
|
$
|
2,253,062
|
|
|
$
|
27,165
|
|
TRADING
|
|
|
|
|
|
|
|
||||||||
Fixed maturities
|
|
|
|
|
|
|
|
||||||||
Bonds
|
|
|
|
|
|
|
|
||||||||
Foreign bonds
|
$
|
2,283
|
|
|
$
|
—
|
|
|
$
|
2,283
|
|
|
$
|
—
|
|
Corporate bonds
|
|
|
|
|
|
|
|
||||||||
Oil and gas
|
2,843
|
|
|
—
|
|
|
2,843
|
|
|
—
|
|
||||
Health care
|
1,917
|
|
|
—
|
|
|
1,917
|
|
|
—
|
|
||||
Banks
|
1,198
|
|
|
—
|
|
|
1,198
|
|
|
—
|
|
||||
Financial services
|
384
|
|
|
—
|
|
|
384
|
|
|
—
|
|
||||
Technology
|
1,394
|
|
|
—
|
|
|
1,394
|
|
|
—
|
|
||||
Redeemable Preferred Stock
|
2,867
|
|
|
1,476
|
|
|
1,391
|
|
|
—
|
|
||||
Total Trading Fixed Maturities
|
$
|
12,886
|
|
|
$
|
1,476
|
|
|
$
|
11,410
|
|
|
$
|
—
|
|
Short-Term Investments
|
$
|
1,100
|
|
|
$
|
1,100
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Money Market Accounts
|
$
|
34,384
|
|
|
$
|
34,384
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total Assets Measured at Fair Value
|
$
|
2,476,505
|
|
|
$
|
184,868
|
|
|
$
|
2,264,472
|
|
|
$
|
27,165
|
|
(In Thousands)
|
States, municipalities and political subdivisions
|
Foreign bonds
|
Public utilities
|
Corporate bonds
|
Asset-backed securities
|
Equities
|
Total
|
||||||||||||||
Balance at January 1, 2011
|
$
|
1,001
|
|
$
|
1,115
|
|
$
|
35
|
|
$
|
23,479
|
|
$
|
—
|
|
$
|
1,535
|
|
$
|
27,165
|
|
Realized gains
(1)
|
—
|
|
—
|
|
—
|
|
—
|
|
12
|
|
10
|
|
22
|
|
|||||||
Unrealized gains (losses)
(1)
|
—
|
|
7
|
|
(2
|
)
|
178
|
|
1
|
|
(8
|
)
|
176
|
|
|||||||
Amortization
|
—
|
|
—
|
|
—
|
|
—
|
|
(15
|
)
|
—
|
|
(15
|
)
|
|||||||
Purchases
|
—
|
|
—
|
|
—
|
|
106
|
|
1,437
|
|
3,271
|
|
4,814
|
|
|||||||
Disposals
|
(121
|
)
|
(286
|
)
|
(33
|
)
|
(3,278
|
)
|
(1,120
|
)
|
(1,282
|
)
|
(6,120
|
)
|
|||||||
Transfers in
|
—
|
|
—
|
|
—
|
|
16,956
|
|
—
|
|
—
|
|
16,956
|
|
|||||||
Transfers out
|
—
|
|
—
|
|
—
|
|
(17,156
|
)
|
—
|
|
—
|
|
(17,156
|
)
|
|||||||
Balance at December 31, 2011
|
$
|
880
|
|
$
|
836
|
|
$
|
—
|
|
$
|
20,285
|
|
$
|
315
|
|
$
|
3,526
|
|
$
|
25,842
|
|
(1)
|
Realized gains are recorded as a component of current operations whereas unrealized gains (losses) are recorded as a component of comprehensive income.
|
(In Thousands)
|
States, municipalities and political subdivisions
|
Foreign bonds
|
Public utilities
|
Corporate bonds
|
Equities
|
Short-term investments
|
Total
|
||||||||||||||
Balance at January 1, 2010
|
$
|
1,110
|
|
$
|
1,394
|
|
$
|
70
|
|
$
|
27,885
|
|
$
|
—
|
|
$
|
254
|
|
$
|
30,713
|
|
Realized losses
(1)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||
Unrealized gains (losses)
(1)
|
—
|
|
7
|
|
(1
|
)
|
345
|
|
—
|
|
—
|
|
351
|
|
|||||||
Amortization
|
—
|
|
—
|
|
(1
|
)
|
(1
|
)
|
—
|
|
—
|
|
(2
|
)
|
|||||||
Purchases
|
—
|
|
—
|
|
—
|
|
7
|
|
1,535
|
|
—
|
|
1,542
|
|
|||||||
Disposals
|
(109
|
)
|
(286
|
)
|
(33
|
)
|
(5,011
|
)
|
—
|
|
—
|
|
(5,439
|
)
|
|||||||
Transfers in
|
—
|
|
—
|
|
—
|
|
254
|
|
—
|
|
—
|
|
254
|
|
|||||||
Transfers out
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(254
|
)
|
(254
|
)
|
|||||||
Balance at December 31, 2010
|
$
|
1,001
|
|
$
|
1,115
|
|
$
|
35
|
|
$
|
23,479
|
|
$
|
1,535
|
|
$
|
—
|
|
$
|
27,165
|
|
(1)
|
Realized losses are recorded as a component of current operations whereas unrealized gains (losses) are recorded as a component of comprehensive income.
|
NOTE 4. REINSURANCE
|
(In Thousands)
|
2011 & 2010 Reinsurance Programs
|
||||||||
Type of Reinsurance
|
Stated Retention
|
|
Limits
|
|
Coverage
|
||||
Casualty excess of loss
|
$
|
2,000
|
|
|
$
|
40,000
|
|
|
100% of $38,000
|
Property excess of loss
|
2,000
|
|
|
15,000
|
|
|
100% of $13,000
|
||
Surety excess of loss
|
1,500
|
|
|
28,000
|
|
|
91% of $26,500
|
||
Property catastrophe, excess
|
20,000
|
|
|
200,000
|
|
|
95% of $180,000
|
||
Boiler and machinery
|
N/A
|
|
|
50,000
|
|
|
100% of $50,000
|
(In Thousands)
|
2011 Reinsurance Programs
|
||||||||
Type of Reinsurance
|
Stated Retention
|
|
Limits
|
|
Coverage
|
||||
Casualty excess of loss
(1)
|
$
|
1,000
|
|
|
$
|
5,000
|
|
|
100% of $4,000
|
Property excess of loss
(1)
|
1,000
|
|
|
10,000
|
|
|
100% of $9,000
|
||
Umbrella excess of loss
(1)
|
1,000
|
|
|
11,000
|
|
|
75% of first $1,000 and 100% of remaining $9,000
|
||
Surety excess of loss
|
500
|
|
|
4,500
|
|
|
90% of $4,000 less $500 deductible
|
||
Property catastrophe, excess
|
5,000
|
|
|
55,000
|
|
|
100% of $50,000
|
||
Boiler and machinery
|
N/A
|
|
|
50,000
|
|
|
100% of $50,000
|
(In Thousands)
|
|
|
|
|
|
||||||
Years Ended December 31
|
2011
|
|
2010
|
|
2009
|
||||||
Ceded Business
|
|
|
|
|
|
||||||
Ceded insurance in-force
|
$
|
974,556
|
|
|
$
|
959,145
|
|
|
$
|
910,775
|
|
Ceded premiums earned
|
2,318
|
|
|
2,123
|
|
|
1,935
|
|
|||
Loss and loss settlement expenses ceded
|
3,786
|
|
|
3,072
|
|
|
809
|
|
NOTE 5. RESERVES FOR LOSS AND LOSS SETTLEMENT EXPENSES
|
NOTE 6. STATUTORY REPORTING, CAPITAL REQUIREMENTS AND DIVIDENDS AND RETAINED EARNINGS RESTRICTIONS
|
(In Thousands)
|
Statutory Capital and Surplus
|
|
Statutory Net Income (Loss)
|
||||
2011
|
|
|
|
||||
Property and casualty (1)
|
$
|
565,843
|
|
|
$
|
10,529
|
|
Life, accident and health
|
167,164
|
|
|
6,180
|
|
||
2010
|
|
|
|
||||
Property and casualty (1)
|
$
|
594,308
|
|
|
$
|
52,803
|
|
Life, accident and health
|
158,379
|
|
|
13,443
|
|
||
2009
|
|
|
|
||||
Property and casualty (1)
|
$
|
556,265
|
|
|
$
|
(12,350
|
)
|
Life, accident and health
|
160,179
|
|
|
3,523
|
|
(1)
|
Because United Fire & Casualty Company owns United Life Insurance Company, the property and casualty statutory capital and surplus includes life, accident and health statutory capital and surplus, and therefore represents our total consolidated statutory capital and surplus.
|
NOTE 7. FEDERAL INCOME TAX
|
(In Thousands)
|
|
|
|
|
|
||||||
Years Ended December 31
|
2011
|
|
2010
|
|
2009
|
||||||
Current
|
$
|
(3,517
|
)
|
|
$
|
11,070
|
|
|
$
|
(7,132
|
)
|
Deferred
|
(9,209
|
)
|
|
(200
|
)
|
|
(11,133
|
)
|
|||
Total
|
$
|
(12,726
|
)
|
|
$
|
10,870
|
|
|
$
|
(18,265
|
)
|
(In Thousands)
|
|
|
|
||||
December 31
|
2011
|
|
2010
|
||||
Deferred tax liabilities
|
|
|
|
||||
Net unrealized appreciation on investment securities:
|
|
|
|
|
|
||
Equity securities
|
31,812
|
|
|
33,448
|
|
||
All other securities
|
47,026
|
|
|
34,882
|
|
||
Deferred policy acquisition costs
|
32,795
|
|
|
26,279
|
|
||
Prepaid pension cost
|
3,053
|
|
|
2,709
|
|
||
Net bond discount accretion and premium amortization
|
3,678
|
|
|
3,161
|
|
||
Depreciation
|
2,844
|
|
|
632
|
|
||
Revaluation of investment basis
(1)
|
5,734
|
|
|
—
|
|
||
Identifiable intangible assets
(1)
|
5,328
|
|
|
—
|
|
||
Other
|
2,594
|
|
|
960
|
|
||
Gross deferred tax liability
|
$
|
134,864
|
|
|
$
|
102,071
|
|
Deferred tax assets
|
|
|
|
||||
Financial statement reserves in excess of income tax reserves
|
$
|
42,273
|
|
|
$
|
30,476
|
|
Unearned premium adjustment
|
19,771
|
|
|
13,842
|
|
||
Net operating loss carryforwards
|
8,055
|
|
|
4,004
|
|
||
Underfunded benefit plan obligation
|
22,503
|
|
|
13,823
|
|
||
Postretirement benefits other than pensions
|
8,599
|
|
|
7,597
|
|
||
Investment impairments
|
8,124
|
|
|
8,824
|
|
||
Contingent ceding commission accrual
(1)
|
6,672
|
|
|
—
|
|
||
Salvage and subrogation
|
1,526
|
|
|
1,748
|
|
||
Compensation expense related to stock options
|
3,392
|
|
|
2,750
|
|
||
Other
|
3,781
|
|
|
3,197
|
|
||
Gross deferred tax asset
|
$
|
124,696
|
|
|
$
|
86,261
|
|
Valuation allowance
|
(3,456
|
)
|
|
(4,004
|
)
|
||
Deferred tax asset
|
$
|
121,240
|
|
|
$
|
82,257
|
|
Net deferred tax liability
|
$
|
13,624
|
|
|
$
|
19,814
|
|
NOTE 8. EMPLOYEE BENEFITS
|
•
|
Fixed maturity securities, which may include bonds and convertible securities.
|
•
|
Equity securities, which may include various types of stock, such as large-cap, mid-cap and small-cap stocks, international stocks and our common stock.
|
•
|
An arbitrage fund, which is a fund that takes advantage of price discrepancies, primarily equity securities, for the same asset in different markets.
|
•
|
A group annuity contract that is administered by United Life.
|
•
|
Cash and cash equivalents, which include money market funds.
|
Pension Plan Assets
|
|
|
|
|
Target
|
||||||
(In Thousands)
|
2011
|
% of Total
|
2010
|
% of Total
|
Allocation
|
||||||
Fixed maturity securities
|
|
|
|
|
|
||||||
Corporate bonds
|
$
|
4,000
|
|
6.1
|
%
|
$
|
3,686
|
|
5.9
|
%
|
0 - 10%
|
Redeemable preferred stock
|
2,067
|
|
3.2
|
|
1,524
|
|
2.4
|
|
0 - 5%
|
||
U.S. government securities
|
—
|
|
—
|
|
—
|
|
—
|
|
0 - 10%
|
||
Equity securities
|
|
|
|
|
|
||||||
United Fire Group, Inc. common stock
|
4,078
|
|
6.3
|
|
4,510
|
|
7.2
|
|
0 - 10%
|
||
Unaffiliated common stock
|
34,085
|
|
52.2
|
|
35,018
|
|
55.8
|
|
50 - 70%
|
||
Arbitrage fund
|
5,239
|
|
8.0
|
|
4,073
|
|
6.5
|
|
0 - 10%
|
||
United Life annuity
|
7,803
|
|
12.0
|
|
9,376
|
|
15.0
|
|
10 - 20%
|
||
Cash and cash equivalents
|
7,995
|
|
12.2
|
|
4,543
|
|
7.2
|
|
10 - 25%
|
||
Total plan assets
|
$
|
65,267
|
|
100.0
|
%
|
$
|
62,730
|
|
100.0
|
%
|
|
(In Thousands)
|
|
|
Fair Value Measurements
|
||||||||||||
Description
|
December 31, 2011
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
$
|
4,000
|
|
|
$
|
—
|
|
|
$
|
4,000
|
|
|
$
|
—
|
|
Redeemable preferred stock
|
2,067
|
|
|
2,067
|
|
|
—
|
|
|
—
|
|
||||
Equity securities
|
|
|
|
|
|
|
|
||||||||
United Fire Group, Inc. common stock
|
4,078
|
|
|
4,078
|
|
|
—
|
|
|
—
|
|
||||
Unaffiliated common stock
|
34,085
|
|
|
34,085
|
|
|
—
|
|
|
—
|
|
||||
Arbitrage fund
|
5,239
|
|
|
—
|
|
|
5,239
|
|
|
|
|
||||
Money market funds
|
4,763
|
|
|
4,763
|
|
|
—
|
|
|
—
|
|
||||
Total assets measured at fair value
|
$
|
54,232
|
|
|
$
|
44,993
|
|
|
$
|
9,239
|
|
|
$
|
—
|
|
(In Thousands)
|
|
|
Fair Value Measurements
|
||||||||||||
Description
|
December 31, 2010
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
$
|
3,686
|
|
|
$
|
—
|
|
|
$
|
3,686
|
|
|
$
|
—
|
|
Redeemable preferred stock
|
1,524
|
|
|
1,524
|
|
|
—
|
|
|
—
|
|
||||
Equity securities
|
|
|
|
|
|
|
|
||||||||
United Fire Group, Inc. common stock
|
4,510
|
|
|
4,510
|
|
|
—
|
|
|
—
|
|
||||
Unaffiliated common stock
|
35,018
|
|
|
35,018
|
|
|
—
|
|
|
—
|
|
||||
Arbitrage fund
|
4,073
|
|
|
—
|
|
|
4,073
|
|
|
|
|||||
Money market funds
|
2,354
|
|
|
2,354
|
|
|
—
|
|
|
—
|
|
||||
Total assets measured at fair value
|
$
|
51,165
|
|
|
$
|
43,406
|
|
|
$
|
7,759
|
|
|
$
|
—
|
|
Weighted-average assumptions as of
|
Pension Benefits
|
|
Postretirement Benefits
|
||||||||
December 31
|
2011
|
|
2010
|
|
2011
|
|
2010
|
||||
Discount rate
|
4.50
|
%
|
|
5.50
|
%
|
|
4.50
|
%
|
|
5.50
|
%
|
Rate of compensation increase
|
3.75
|
|
|
4.00
|
|
|
N/A
|
|
|
N/A
|
|
Weighted-average assumptions as of
|
Pension Benefits
|
|
Postretirement Benefits
|
||||||||||||||
January 1
|
2011
|
|
2010
|
|
2009
|
|
2011
|
|
2010
|
|
2009
|
||||||
Discount rate
|
4.50
|
%
|
|
5.50
|
%
|
|
6.00
|
%
|
|
4.50
|
%
|
|
5.50
|
%
|
|
6.00
|
%
|
Expected long-term rate of return on plan assets
|
8.00
|
|
|
8.25
|
|
|
8.25
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
Rate of compensation increase
|
3.75
|
|
|
4.00
|
|
|
4.00
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Health Care Benefits
|
|
Dental Claims
|
||||||||
Years Ended December 31
|
2011
|
|
2010
|
|
2011
|
|
2010
|
||||
Health care cost trend rates assumed for next year
|
10.00
|
%
|
|
10.00
|
%
|
|
5.25
|
%
|
|
5.25
|
%
|
Rate to which the health care trend rate is assumed to decline (ultimate trend rate)
|
5.25
|
%
|
|
5.25
|
%
|
|
N/A
|
|
|
N/A
|
|
Year that the rate reaches the ultimate trend rate
|
2017
|
|
|
2016
|
|
|
N/A
|
|
|
N/A
|
|
(In Thousands)
|
|
1% Increase
|
|
1% Decrease
|
||||
Effect on the net periodic postretirement health care benefit cost
|
|
$
|
807
|
|
|
$
|
(631
|
)
|
Effect on the accumulated postretirement benefit obligation
|
|
7,054
|
|
|
(5,632
|
)
|
(In Thousands)
|
Pension Benefits
|
|
Postretirement Benefits
|
||||||||||||
Years Ended December 31
|
2011
|
|
2010
|
|
2011
|
|
2010
|
||||||||
Reconciliation of benefit obligation
(1)
|
|
|
|
|
|
|
|
||||||||
Benefit obligation at beginning of year
|
$
|
88,723
|
|
|
$
|
76,410
|
|
|
$
|
28,886
|
|
|
$
|
23,096
|
|
Service cost
|
3,166
|
|
|
2,853
|
|
|
1,985
|
|
|
1,514
|
|
||||
Interest cost
|
4,761
|
|
|
4,569
|
|
|
1,590
|
|
|
1,433
|
|
||||
Actuarial loss
|
17,379
|
|
|
7,489
|
|
|
4,421
|
|
|
3,338
|
|
||||
Benefit payments and adjustments
|
(2,689
|
)
|
|
(2,598
|
)
|
|
(548
|
)
|
|
(495
|
)
|
||||
Benefit obligation at end of year
|
$
|
111,340
|
|
|
$
|
88,723
|
|
|
$
|
36,334
|
|
|
$
|
28,886
|
|
Reconciliation of fair value of plan assets
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets at beginning of year
|
$
|
62,730
|
|
|
$
|
54,822
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Actual return on plan assets
|
(74
|
)
|
|
7,145
|
|
|
—
|
|
|
—
|
|
||||
Employer contributions
|
5,300
|
|
|
3,361
|
|
|
548
|
|
|
495
|
|
||||
Benefit payments and adjustments
|
(2,689
|
)
|
|
(2,598
|
)
|
|
(548
|
)
|
|
(495
|
)
|
||||
Fair value of plan assets at end of year
|
$
|
65,267
|
|
|
$
|
62,730
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Funded status at end of year
|
$
|
(46,073
|
)
|
|
$
|
(25,993
|
)
|
|
$
|
(36,334
|
)
|
|
$
|
(28,886
|
)
|
(1)
|
For the pension plan, the benefit obligation is the projected benefit obligation. For the postretirement benefit plan, the benefit obligation is the accumulated postretirement benefit obligation.
|
(In Thousands)
|
|
Pension Benefits
|
|
Postretirement Benefits
|
||||||||||||
Years Ended December 31
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
||||||||
Amounts recognized in AOCI
|
|
|
|
|
|
|
|
|
||||||||
Unrecognized prior service cost
|
|
$
|
8
|
|
|
$
|
18
|
|
|
$
|
(6
|
)
|
|
$
|
(38
|
)
|
Unrecognized actuarial loss
|
|
53,076
|
|
|
32,719
|
|
|
11,216
|
|
|
6,795
|
|
||||
Total amounts recognized in AOCI
|
|
$
|
53,084
|
|
|
$
|
32,737
|
|
|
$
|
11,210
|
|
|
$
|
6,757
|
|
(In Thousands)
|
|
Pension benefits
|
|
Postretirement Benefits
|
||||||||||||||||||||
Years Ended December 31
|
|
2011
|
|
2010
|
|
2009
|
|
2011
|
|
2010
|
|
2009
|
||||||||||||
Net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service cost
|
|
$
|
3,166
|
|
|
$
|
2,853
|
|
|
$
|
2,747
|
|
|
$
|
1,985
|
|
|
$
|
1,514
|
|
|
$
|
1,347
|
|
Interest cost
|
|
4,761
|
|
|
4,569
|
|
|
4,218
|
|
|
1,590
|
|
|
1,433
|
|
|
1,222
|
|
||||||
Expected return on plan assets
|
|
(5,288
|
)
|
|
(4,526
|
)
|
|
(4,003
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of prior service cost
|
|
10
|
|
|
11
|
|
|
74
|
|
|
(32
|
)
|
|
(54
|
)
|
|
(55
|
)
|
||||||
Amortization of net loss
|
|
2,368
|
|
|
2,181
|
|
|
2,411
|
|
|
224
|
|
|
71
|
|
|
—
|
|
||||||
Net periodic benefit cost
|
|
$
|
5,017
|
|
|
$
|
5,088
|
|
|
$
|
5,447
|
|
|
$
|
3,767
|
|
|
$
|
2,964
|
|
|
$
|
2,514
|
|
(In Thousands)
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017 - 2021
|
||||||||||||
Pension benefits
|
|
$
|
3,088
|
|
|
$
|
3,262
|
|
|
$
|
3,532
|
|
|
$
|
3,769
|
|
|
$
|
3,976
|
|
|
$
|
23,864
|
|
Postretirement benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Excluding Modernization Act subsidy
|
|
837
|
|
|
938
|
|
|
1,052
|
|
|
1,192
|
|
|
1,343
|
|
|
9,884
|
|
||||||
Expected Modernization Act subsidy
|
|
(97
|
)
|
|
(113
|
)
|
|
(132
|
)
|
|
(150
|
)
|
|
(169
|
)
|
|
(1,226
|
)
|
||||||
Postretirement benefits
|
|
$
|
740
|
|
|
$
|
825
|
|
|
$
|
920
|
|
|
$
|
1,042
|
|
|
$
|
1,174
|
|
|
$
|
8,658
|
|
NOTE 9. STOCK OPTION PLANS
|
|
Year-Ended
|
|
Inception
|
||
Authorized Shares Available for Future Award Grants
|
December 31, 2011
|
|
to Date
|
||
Beginning balance
|
833,495
|
|
|
1,900,000
|
|
Number of awards granted
|
(206,459
|
)
|
|
(1,345,689
|
)
|
Number of awards forfeited or expired
|
26,475
|
|
|
99,200
|
|
Ending balance
|
653,511
|
|
|
653,511
|
|
Number of option awards exercised
|
10,725
|
|
|
178,017
|
|
Number of unrestricted stock awards vested
|
730
|
|
|
2,485
|
|
Number of restricted stock awards vested
|
—
|
|
|
—
|
|
|
Year-Ended
|
|
Inception
|
||
Authorized Shares Available for Future Award Grants
|
December 31, 2011
|
|
to Date
|
||
Beginning balance
|
37,003
|
|
|
150,000
|
|
Additional authorization
|
150,000
|
|
|
150,000
|
|
Number of awards granted
|
(26,994
|
)
|
|
(145,994
|
)
|
Number of awards forfeited or expired
|
—
|
|
|
6,003
|
|
Ending balance
|
160,009
|
|
|
160,009
|
|
Number of awards exercised
|
—
|
|
|
—
|
|
(In Thousands)
|
|
||
2012
|
$
|
1,432
|
|
2013
|
996
|
|
|
2014
|
765
|
|
|
2015
|
533
|
|
|
2016
|
58
|
|
|
Total
|
$
|
3,784
|
|
Options
|
Shares
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Life (Yrs)
|
|
Aggregate Intrinsic Value (In Thousands)
|
||||||
Outstanding at January 1, 2011
|
1,025,191
|
|
|
$
|
29.30
|
|
|
|
|
|
|||
Granted
|
204,984
|
|
|
20.52
|
|
|
|
|
|
||||
Exercised
|
(11,925
|
)
|
|
15.99
|
|
|
|
|
|
||||
Forfeited or expired
|
(29,478
|
)
|
|
27.10
|
|
|
|
|
|
||||
Outstanding at December 31, 2011
|
1,188,772
|
|
|
$
|
27.95
|
|
|
5.89
|
|
|
$
|
555
|
|
Exercisable at December 31, 2011
|
710,003
|
|
|
$
|
31.09
|
|
|
4.49
|
|
|
$
|
268
|
|
December 31,
|
2011
|
|
2010
|
|
2009
|
||||||
Risk-free interest rate
|
2.99
|
%
|
|
3.03
|
%
|
|
2.72
|
%
|
|||
Expected volatility
|
55.47
|
%
|
|
59.03
|
%
|
|
54.88
|
%
|
|||
Expected option life (in years)
|
7
|
|
|
7
|
|
|
7
|
|
|||
Expected dividends
|
$
|
0.60
|
|
|
$
|
0.60
|
|
|
$
|
0.60
|
|
Weighted-average grant-date fair value of options granted during the year
|
$
|
8.99
|
|
|
$
|
9.00
|
|
|
$
|
7.52
|
|
|
Options Outstanding
|
Options Exercisable
|
||||||||||
Range of Exercise Prices
|
Number Outstanding
|
Weighted-Average Remaining Contractual Life (Yrs)
|
Weighted-Average Exercise Price
|
Number Exercisable
|
Weighted-Average Exercise Price
|
|||||||
$15.01 - 21.00
|
401,959
|
|
7.72
|
|
$
|
18.97
|
|
91,775
|
|
$
|
17.26
|
|
21.01 - 28.00
|
149,647
|
|
5.04
|
|
22.64
|
|
94,450
|
|
22.76
|
|
||
28.01 - 35.00
|
328,166
|
|
5.15
|
|
33.01
|
|
250,878
|
|
32.80
|
|
||
35.01 - 41.00
|
309,000
|
|
4.71
|
|
36.85
|
|
272,900
|
|
37.07
|
|
||
$15.01 - 41.00
|
1,188,772
|
|
5.89
|
|
$
|
27.95
|
|
710,003
|
|
$
|
31.09
|
|
NOTE 10. SEGMENT INFORMATION
|
(In Thousands)
|
|
|
|
|
|
||||||
Years Ended December 31
|
2011
|
|
2010
|
|
2009
|
||||||
Property and Casualty Insurance Segment
|
|
|
|
|
|
||||||
Net premiums earned
|
|
|
|
|
|
||||||
Fire and allied lines
|
$
|
153,839
|
|
|
$
|
123,341
|
|
|
$
|
124,582
|
|
Other liability
|
159,977
|
|
|
113,555
|
|
|
119,587
|
|
|||
Automobile
|
133,974
|
|
|
107,776
|
|
|
111,001
|
|
|||
Workers’ compensation
|
54,404
|
|
|
45,174
|
|
|
51,992
|
|
|||
Fidelity and surety
|
16,665
|
|
|
19,113
|
|
|
21,354
|
|
|||
Reinsurance assumed
|
13,261
|
|
|
10,163
|
|
|
5,942
|
|
|||
Other
|
1,651
|
|
|
1,251
|
|
|
1,219
|
|
|||
Total net premiums earned
|
$
|
533,771
|
|
|
$
|
420,373
|
|
|
$
|
435,677
|
|
Life Insurance Segment
|
|
|
|
|
|
||||||
Net premiums earned
|
|
|
|
|
|
||||||
Ordinary life (excluding Universal life)
|
$
|
30,374
|
|
|
$
|
28,463
|
|
|
$
|
23,842
|
|
Universal life policy fees
|
10,995
|
|
|
10,774
|
|
|
10,554
|
|
|||
Accident and health
|
1,472
|
|
|
1,538
|
|
|
1,634
|
|
|||
Immediate annuities with life contingencies
|
10,276
|
|
|
8,354
|
|
|
6,755
|
|
|||
Credit life
|
46
|
|
|
76
|
|
|
140
|
|
|||
Group life
|
216
|
|
|
210
|
|
|
206
|
|
|||
Total net premiums earned
|
$
|
53,379
|
|
|
$
|
49,415
|
|
|
$
|
43,131
|
|
(In Thousands)
|
|
|
|
|
|
||||||
Years Ended December 31
|
2011
|
|
2010
|
|
2009
|
||||||
Property and Casualty Insurance Segment
|
|
|
|
|
|
||||||
Revenues
|
|
|
|
|
|
||||||
Net premiums earned
|
$
|
533,771
|
|
|
$
|
420,373
|
|
|
$
|
435,677
|
|
Investment income, net of investment expenses
|
35,690
|
|
|
34,968
|
|
|
31,715
|
|
|||
Realized investment gains (losses)
|
3,066
|
|
|
3,402
|
|
|
(6,815
|
)
|
|||
Other income
|
1,592
|
|
|
147
|
|
|
194
|
|
|||
Total reportable segment
|
$
|
574,119
|
|
|
$
|
458,890
|
|
|
$
|
460,771
|
|
Intersegment eliminations
|
(162
|
)
|
|
10
|
|
|
(173
|
)
|
|||
Total revenues
|
$
|
573,957
|
|
|
$
|
458,900
|
|
|
$
|
460,598
|
|
Net income (loss) before income taxes
|
|
|
|
|
|
||||||
Revenues
|
$
|
574,119
|
|
|
$
|
458,890
|
|
|
$
|
460,771
|
|
Benefits, losses and expenses
|
598,684
|
|
|
420,374
|
|
|
500,855
|
|
|||
Total reportable segment
|
$
|
(24,565
|
)
|
|
$
|
38,516
|
|
|
$
|
(40,084
|
)
|
Intersegment eliminations
|
335
|
|
|
324
|
|
|
137
|
|
|||
Income (loss) before income taxes
|
$
|
(24,230
|
)
|
|
$
|
38,840
|
|
|
$
|
(39,947
|
)
|
Income tax expense (benefit)
|
(16,591
|
)
|
|
4,114
|
|
|
(22,270
|
)
|
|||
Net income (loss)
|
$
|
(7,639
|
)
|
|
$
|
34,726
|
|
|
$
|
(17,677
|
)
|
Assets
|
|
|
|
|
|
||||||
Total reportable segment
|
$
|
2,117,352
|
|
|
$
|
1,591,392
|
|
|
$
|
1,561,474
|
|
Intersegment eliminations
|
(252,205
|
)
|
|
(245,419
|
)
|
|
(237,165
|
)
|
|||
Total assets
|
$
|
1,865,147
|
|
|
$
|
1,345,973
|
|
|
$
|
1,324,309
|
|
Life Insurance Segment
|
|
|
|
|
|
||||||
Revenues
|
|
|
|
|
|
||||||
Net premiums earned
|
$
|
53,379
|
|
|
$
|
49,415
|
|
|
$
|
43,131
|
|
Investment income, net of investment expenses
|
73,977
|
|
|
76,898
|
|
|
74,533
|
|
|||
Realized investment gains (losses)
|
3,647
|
|
|
4,896
|
|
|
(6,364
|
)
|
|||
Other income
|
699
|
|
|
1,278
|
|
|
605
|
|
|||
Total reportable segment
|
$
|
131,702
|
|
|
$
|
132,487
|
|
|
$
|
111,905
|
|
Intersegment eliminations
|
(651
|
)
|
|
(315
|
)
|
|
(310
|
)
|
|||
Total revenues
|
$
|
131,051
|
|
|
$
|
132,172
|
|
|
$
|
111,595
|
|
Net income before income taxes
|
|
|
|
|
|
||||||
Revenues
|
$
|
131,702
|
|
|
$
|
132,487
|
|
|
$
|
111,905
|
|
Benefits, losses and expenses
|
119,712
|
|
|
112,810
|
|
|
100,528
|
|
|||
Total reportable segment
|
$
|
11,990
|
|
|
$
|
19,677
|
|
|
$
|
11,377
|
|
Intersegment eliminations
|
(475
|
)
|
|
(134
|
)
|
|
(136
|
)
|
|||
Income before income taxes
|
$
|
11,515
|
|
|
$
|
19,543
|
|
|
$
|
11,241
|
|
Income tax expense
|
3,865
|
|
|
6,756
|
|
|
4,005
|
|
|||
Net income
|
$
|
7,650
|
|
|
$
|
12,787
|
|
|
$
|
7,236
|
|
Assets
|
$
|
1,753,777
|
|
|
$
|
1,661,466
|
|
|
$
|
1,578,235
|
|
Consolidated Totals
|
|
|
|
|
|
||||||
Total consolidated revenues
|
$
|
705,008
|
|
|
$
|
591,072
|
|
|
$
|
572,193
|
|
Total consolidated net income (loss)
|
$
|
11
|
|
|
$
|
47,513
|
|
|
$
|
(10,441
|
)
|
Total consolidated assets
|
$
|
3,618,924
|
|
|
$
|
3,007,439
|
|
|
$
|
2,902,544
|
|
NOTE 11. QUARTERLY SUPPLEMENTARY FINANCIAL INFORMATION (UNAUDITED)
|
(In Thousands Except Per Share Data)
|
|
|
|
|
|
|
|
|
|
||||||||||
Quarters
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Total
|
||||||||||
Year Ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues
|
$
|
144,076
|
|
|
$
|
181,804
|
|
|
$
|
187,574
|
|
|
$
|
191,554
|
|
|
$
|
705,008
|
|
Income (loss) before income taxes
|
6,939
|
|
|
(30,996
|
)
|
|
(10,474
|
)
|
|
21,816
|
|
|
(12,715
|
)
|
|||||
Net income (loss)
|
$
|
5,810
|
|
|
$
|
(17,914
|
)
|
|
$
|
(4,776
|
)
|
|
$
|
16,891
|
|
|
$
|
11
|
|
Basic earnings per share
(1)
|
$
|
0.22
|
|
|
$
|
(0.69
|
)
|
|
$
|
(0.19
|
)
|
|
$
|
0.66
|
|
|
$
|
—
|
|
Diluted earnings per share
(1)
|
0.22
|
|
|
(0.69
|
)
|
|
(0.19
|
)
|
|
0.66
|
|
|
—
|
|
|||||
Year Ended December 31, 2010
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues
|
$
|
145,125
|
|
|
$
|
148,014
|
|
|
$
|
147,904
|
|
|
$
|
150,029
|
|
|
$
|
591,072
|
|
Income before income taxes
|
23,842
|
|
|
18,340
|
|
|
1,492
|
|
|
14,709
|
|
|
58,383
|
|
|||||
Net income
|
$
|
19,113
|
|
|
$
|
13,931
|
|
|
$
|
2,923
|
|
|
$
|
11,546
|
|
|
$
|
47,513
|
|
Basic earnings per share
(1)
|
$
|
0.72
|
|
|
$
|
0.53
|
|
|
$
|
0.11
|
|
|
$
|
0.44
|
|
|
$
|
1.81
|
|
Diluted earnings per share
(1)
|
0.72
|
|
|
0.53
|
|
|
0.11
|
|
|
0.44
|
|
|
1.80
|
|
(1)
|
The sum of the quarterly reported amounts may not equal the full year, as each is computed independently.
|
NOTE 12. EARNINGS PER COMMON SHARE
|
Years ended December 31
|
2011
|
|
2010
|
|
2009
|
||||||||||||||||||
(In Thousands Except Per Share Data)
|
Basic
|
|
Diluted
|
|
Basic
|
|
Diluted
|
|
Basic
|
|
Diluted
|
||||||||||||
Net income (loss)
|
$
|
11
|
|
|
$
|
11
|
|
|
$
|
47,513
|
|
|
$
|
47,513
|
|
|
$
|
(10,441
|
)
|
|
$
|
(10,441
|
)
|
Weighted-average common shares outstanding
|
25,879
|
|
|
25,879
|
|
|
26,318
|
|
|
26,318
|
|
|
26,590
|
|
|
26,590
|
|
||||||
Add dilutive effect of restricted stock awards
|
—
|
|
|
50
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
—
|
|
||||||
Add dilutive effect of stock options
|
—
|
|
|
30
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||||
Weighted-average common shares for EPS calculation
|
25,879
|
|
|
25,959
|
|
|
26,318
|
|
|
26,338
|
|
|
26,590
|
|
|
26,590
|
|
||||||
Earnings (loss) per share
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.81
|
|
|
$
|
1.80
|
|
|
$
|
(0.39
|
)
|
|
$
|
(0.39
|
)
|
Awards excluded from diluted EPS calculation
(1)
|
—
|
|
|
989
|
|
|
—
|
|
|
806
|
|
|
—
|
|
|
932
|
|
NOTE 13. COMPREHENSIVE INCOME
|
|
Years Ended December 31
|
||||||||||
(In Thousands)
|
2011
|
|
2010
|
|
2009
|
||||||
Net income (loss)
|
$
|
11
|
|
|
$
|
47,513
|
|
|
$
|
(10,441
|
)
|
|
|
|
|
|
|
||||||
Other comprehensive income
|
|
|
|
|
|
||||||
Change in net unrealized appreciation on investments
|
$
|
39,866
|
|
|
$
|
39,577
|
|
|
$
|
74,624
|
|
Adjustment for net realized (gains) losses included in income
|
(6,440
|
)
|
|
(8,489
|
)
|
|
13,179
|
|
|||
Change in unrecognized employee benefit costs
|
(27,528
|
)
|
|
(8,097
|
)
|
|
(2,661
|
)
|
|||
Adjustment for costs included in employee benefit expense
|
2,570
|
|
|
2,209
|
|
|
2,430
|
|
|||
Other comprehensive income, before tax
|
$
|
8,468
|
|
|
$
|
25,200
|
|
|
$
|
87,572
|
|
Income tax effect
|
(2,860
|
)
|
|
(8,869
|
)
|
|
(30,774
|
)
|
|||
Other comprehensive income, after tax
|
$
|
5,608
|
|
|
$
|
16,331
|
|
|
$
|
56,798
|
|
|
|
|
|
|
|
||||||
Comprehensive income
|
$
|
5,619
|
|
|
$
|
63,844
|
|
|
$
|
46,357
|
|
NOTE 14. LEASE COMMITMENTS
|
NOTE 15. CONTINGENT LIABILITIES
|
NOTE 16. BUSINESS COMBINATIONS
|
(In Thousands)
|
March 28, 2011
|
||
|
|
||
Assets
|
|
||
Available-for-sale fixed maturity securities
|
$
|
401,548
|
|
Equity securities
|
10,266
|
|
|
Short-term investments
|
400
|
|
|
Cash and cash equivalents
|
18,855
|
|
|
Accrued investment income
|
3,741
|
|
|
Premiums receivable
|
35,822
|
|
|
Value of business acquired
|
27,436
|
|
|
Property and equipment
|
14,985
|
|
|
Reinsurance receivables and recoverables
|
58,193
|
|
|
Prepaid reinsurance premiums
|
6,289
|
|
|
Income taxes receivable
|
2,657
|
|
|
Deferred income taxes
|
2,837
|
|
|
Goodwill and intangible assets
|
32,293
|
|
|
Other assets
|
11,353
|
|
|
Total assets
|
$
|
626,675
|
|
|
|
||
Liabilities
|
|
||
Reserves for losses, claims and loss settlement expenses
|
$
|
310,647
|
|
Unearned premiums
|
72,249
|
|
|
Accrued expenses and other liabilities
|
33,690
|
|
|
Debt
|
3,000
|
|
|
Trust preferred securities
|
15,614
|
|
|
Total liabilities
|
$
|
435,200
|
|
Total net assets acquired
|
$
|
191,475
|
|
(In Thousands)
|
Year Ended December 31,
|
||||||
|
2011
|
|
2010
|
||||
Revenue
|
$
|
741,833
|
|
|
$
|
744,630
|
|
Net income
(1)
|
8,139
|
|
|
62,249
|
|
||
Basic earnings per share
|
0.31
|
|
|
2.37
|
|
||
Diluted earnings per share
|
0.31
|
|
|
2.36
|
|
NOTE 17. DEBT
|
NOTE 18. TRUST PREFERRED SECURITIES
|
(In Thousands)
|
Issue Date
|
|
Amount
|
|
Interest Rate
|
|
Maturity Date
|
||
Financial Pacific Statutory Trust I
|
12/4/2002
|
|
$
|
5,032
|
|
|
LIBOR + 4.00%
|
|
12/4/2032
|
Financial Pacific Statutory Trust II
|
5/15/2003
|
|
3,017
|
|
|
LIBOR + 4.10%
|
|
5/15/2033
|
|
Financial Pacific Trust III
|
9/30/2003
|
|
7,577
|
|
|
LIBOR + 4.05%
|
|
9/30/2033
|
|
Total Trust Preferred Securities
|
|
|
$
|
15,626
|
|
|
|
|
|
NOTE 19. INTANGIBLE ASSETS
|
|
Year Ended December 31,
|
||||||
(In Thousands)
|
2011
|
|
2010
|
||||
Agency relationships
|
$
|
10,338
|
|
|
$
|
1,680
|
|
Accumulated amortization - agency relationships
|
(1,743
|
)
|
|
(1,250
|
)
|
||
|
$
|
8,595
|
|
|
$
|
430
|
|
|
|
|
—
|
|
|||
Software
|
$
|
3,260
|
|
|
$
|
—
|
|
Accumulated amortization - software
|
(1,223
|
)
|
|
—
|
|
||
|
$
|
2,037
|
|
|
$
|
—
|
|
|
|
|
|
||||
Trade names
|
$
|
1,978
|
|
|
$
|
—
|
|
Accumulated amortization - trade names
|
(99
|
)
|
|
—
|
|
||
|
$
|
1,879
|
|
|
$
|
—
|
|
|
|
|
|
||||
Favorable contract
|
$
|
286
|
|
|
$
|
—
|
|
Accumulated amortization - favorable contract
|
(107
|
)
|
|
—
|
|
||
|
$
|
179
|
|
|
$
|
—
|
|
|
|
|
|
||||
State insurance licenses
(1)
|
$
|
3,020
|
|
|
$
|
—
|
|
|
|
|
|
||||
Net intangible assets
|
$
|
15,710
|
|
|
$
|
430
|
|
/s/Ernst & Young LLP
|
|
Ernst & Young LLP
|
|
|
|
Chicago, Illinois
|
|
March 15, 2012
|
|
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
|
MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
|
/s/ Randy A. Ramlo
|
|
|
Randy A. Ramlo
|
|
|
Chief Executive Officer
|
|
|
|
|
|
/s/ Dianne M. Lyons
|
|
|
Dianne M. Lyons
|
|
|
Chief Financial Officer
|
|
ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM
|
/s/ Ernst & Young LLP
|
|
Ernst & Young LLP
|
|
|
|
Chicago, Illinois
|
|
March 15, 2012
|
|
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
|
EXECUTIVE OFFICERS AND CERTAIN SIGNIFICANT EMPLOYEES
|
Name
|
Age
|
Position
|
Randy A. Ramlo
(1)
|
50
|
President and Chief Executive Officer
|
Michael T. Wilkins
(1)
|
48
|
Executive Vice President, Corporate Administration
|
Dianne M. Lyons
(1)
|
48
|
Vice President and Chief Financial Officer
|
Brian S. Berta
|
47
|
Vice President, Great Lakes regional office
|
David E. Conner
(1)
|
53
|
Vice President and Chief Claims Officer
|
Raymond E. Dudonis
|
55
|
Vice President, East Coast regional office
|
Barrie W. Ernst
(1)
|
57
|
Vice President and Chief Investment Officer
|
Kevin W. Helbing
|
46
|
Controller
|
David L. Hellen
|
59
|
Vice President, Denver regional office
|
Joseph B. Johnson
|
59
|
Vice President, Gulf Coast regional office
|
David A. Lange
|
54
|
Corporate Secretary and Fidelity and Surety Claims Manager
|
Janice A. Martin
|
50
|
Treasurer
|
Scott A. Minkel
|
49
|
Vice President, Information Services
|
Douglas L. Penn
|
62
|
Vice President, Midwest regional office
|
Dennis J. Richmann
|
47
|
Vice President, Fidelity and Surety
|
Neal R. Scharmer
(1)
|
55
|
Vice President, General Counsel and Corporate Secretary
|
Michael J. Sheeley
(1)
|
51
|
Vice President and Chief Operating Officer, United Life Insurance Company
|
Allen R. Sorensen
|
53
|
Vice President, Corporate Underwriting
|
Colleen R. Sova
|
56
|
Vice President, e-Solutions
|
Timothy G. Spain
|
59
|
Vice President, Human Resources
|
|
Page
|
|
|
|
|
|
|
All other schedules have been omitted as not required, not applicable, not deemed material or because the information is included the Consolidated Financial Statements.
|
|
(a) 3. See the Exhibit Index immediately following the signature page of this Annual Report on Form 10-K.
|
|
December 31, 2011
|
(In Thousands)
|
||||||||||
|
Cost or Amortized Cost
|
|
|
|
Amounts at Which Shown in Balance Sheet
|
||||||
Type of Investment
|
|
Fair Value
|
|
||||||||
Fixed maturities
|
|
|
|
|
|
||||||
Bonds
|
|
|
|
|
|
||||||
United States Government and government agencies and authorities
|
$
|
252,369
|
|
|
$
|
258,858
|
|
|
$
|
258,831
|
|
States, municipalities and political subdivisions
|
690,778
|
|
|
751,837
|
|
|
751,846
|
|
|||
Foreign governments
|
209,773
|
|
|
217,721
|
|
|
217,721
|
|
|||
Public utilities
|
254,822
|
|
|
270,071
|
|
|
270,071
|
|
|||
All other corporate bonds
|
1,169,018
|
|
|
1,212,892
|
|
|
1,212,892
|
|
|||
Redeemable preferred stock
|
3,598
|
|
|
3,484
|
|
|
3,484
|
|
|||
Total fixed maturities
|
$
|
2,580,358
|
|
|
$
|
2,714,863
|
|
|
$
|
2,714,845
|
|
Equity securities
|
|
|
|
|
|
||||||
Common stocks
|
|
|
|
|
|
||||||
Public utilities
|
$
|
7,231
|
|
|
$
|
14,735
|
|
|
$
|
14,735
|
|
Banks, trusts and insurance companies
|
15,199
|
|
|
54,976
|
|
|
54,976
|
|
|||
Industrial, miscellaneous and all other
|
42,495
|
|
|
86,450
|
|
|
86,450
|
|
|||
Nonredeemable preferred stocks
|
3,634
|
|
|
3,290
|
|
|
3,290
|
|
|||
Total equity securities
|
$
|
68,559
|
|
|
$
|
159,451
|
|
|
$
|
159,451
|
|
Mortgage loans on real estate
|
$
|
4,829
|
|
|
$
|
5,219
|
|
|
$
|
4,829
|
|
Policy loans
|
7,209
|
|
|
7,209
|
|
|
7,209
|
|
|||
Other long-term investments
|
20,574
|
|
|
20,574
|
|
|
20,574
|
|
|||
Short-term investments
|
1,100
|
|
|
1,100
|
|
|
1,100
|
|
|||
Total investments
|
$
|
2,682,629
|
|
|
$
|
2,908,416
|
|
|
$
|
2,908,008
|
|
(In Thousands)
|
Deferred Policy Acquisition Costs
|
|
Future Policy Benefits, Losses, Claims and Loss Expenses
|
|
Unearned Premiums
|
|
Earned Premium Revenue
|
|
Investment Income, Net
|
|
Benefits, Claims, Losses and Settlement Expenses
|
|
Amortization of Deferred Policy Acquisition Costs
(4)
|
|
Other Underwriting Expenses
|
|
Interest on Policyholders' Accounts
|
|
Premiums Written
(2)
|
||||||||||||||||||||
Year Ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Property and casualty
|
$
|
60,668
|
|
|
$
|
945,051
|
|
|
$
|
288,868
|
|
|
$
|
533,771
|
|
|
$
|
35,513
|
|
|
$
|
407,831
|
|
|
$
|
143,952
|
|
|
$
|
46,404
|
|
|
$
|
—
|
|
|
$
|
551,923
|
|
Life, accident and health
(1)
|
45,986
|
|
|
1,476,281
|
|
|
123
|
|
|
53,012
|
|
|
73,981
|
|
|
55,125
|
|
|
9,224
|
|
|
12,353
|
|
|
42,834
|
|
|
—
|
|
||||||||||
Total
|
$
|
106,654
|
|
|
$
|
2,421,332
|
|
|
$
|
288,991
|
|
|
$
|
586,783
|
|
|
$
|
109,494
|
|
|
$
|
462,956
|
|
|
$
|
153,176
|
|
|
$
|
58,757
|
|
|
$
|
42,834
|
|
|
$
|
551,923
|
|
Year Ended December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Property and casualty
(3)
|
$
|
44,681
|
|
|
$
|
603,090
|
|
|
$
|
200,151
|
|
|
$
|
420,373
|
|
|
$
|
34,787
|
|
|
$
|
289,437
|
|
|
$
|
100,310
|
|
|
$
|
30,329
|
|
|
$
|
—
|
|
|
$
|
414,908
|
|
Life, accident and health
(1)
|
42,843
|
|
|
1,389,331
|
|
|
190
|
|
|
49,100
|
|
|
76,898
|
|
|
47,588
|
|
|
10,735
|
|
|
11,318
|
|
|
42,988
|
|
|
—
|
|
||||||||||
Total
|
$
|
87,524
|
|
|
$
|
1,992,421
|
|
|
$
|
200,341
|
|
|
$
|
469,473
|
|
|
$
|
111,685
|
|
|
$
|
337,025
|
|
|
$
|
111,045
|
|
|
$
|
41,647
|
|
|
$
|
42,988
|
|
|
$
|
414,908
|
|
Year Ended December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Property and casualty
(3)
|
$
|
45,562
|
|
|
$
|
606,045
|
|
|
$
|
205,703
|
|
|
$
|
435,677
|
|
|
$
|
31,542
|
|
|
$
|
365,721
|
|
|
$
|
105,606
|
|
|
$
|
30,553
|
|
|
$
|
—
|
|
|
$
|
424,827
|
|
Life, accident and health
(1)
|
46,943
|
|
|
1,321,600
|
|
|
307
|
|
|
42,821
|
|
|
74,533
|
|
|
40,670
|
|
|
9,287
|
|
|
8,745
|
|
|
41,652
|
|
|
—
|
|
||||||||||
Total
|
$
|
92,505
|
|
|
$
|
1,927,645
|
|
|
$
|
206,010
|
|
|
$
|
478,498
|
|
|
$
|
106,075
|
|
|
$
|
406,391
|
|
|
$
|
114,893
|
|
|
$
|
39,298
|
|
|
$
|
41,652
|
|
|
$
|
424,827
|
|
(1)
|
Annuity deposits are included in future policy benefits, losses, claims and loss expenses.
|
(2)
|
Pursuant to Regulation S-X, premiums written does not apply to life insurance companies. Please refer to the Measurement of Results section of Part II, Item 7, for further explanation of this measure.
|
(3)
|
Disaster charges and other related expenses incurred in
2010
and
2009
are not included in this table. Please refer to the Consolidated Statements of Income for this amount.
|
(4)
|
For 2011, this line includes amortization of the value of business acquired asset that was recorded as a result of our acquisition of Mercer Insurance Group totaling $25,763,000.
|
(In Thousands)
|
Gross Amount
|
|
Ceded to Other Companies
|
|
Assumed From Other Companies
|
|
Net Amount
|
|
Percentage of Amount Assumed to Net Earned
|
|||||||||
Year Ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Life insurance in force
|
$
|
4,916,833
|
|
|
$
|
974,556
|
|
|
$
|
42
|
|
|
$
|
3,942,319
|
|
|
|
|
Premiums earned
|
|
|
|
|
|
|
|
|
|
|||||||||
Property and casualty insurance
|
$
|
564,506
|
|
|
$
|
45,604
|
|
|
$
|
14,869
|
|
|
$
|
533,771
|
|
|
2.79
|
%
|
Life, accident and health insurance
|
55,330
|
|
|
2,318
|
|
|
—
|
|
|
53,012
|
|
|
—
|
%
|
||||
Total
|
$
|
619,836
|
|
|
$
|
47,922
|
|
|
$
|
14,869
|
|
|
$
|
586,783
|
|
|
2.53
|
%
|
Year Ended December 31, 2010
|
|
|
|
|
|
|
|
|
|
|||||||||
Life insurance in force
|
$
|
4,804,095
|
|
|
$
|
959,145
|
|
|
$
|
72
|
|
|
$
|
3,845,022
|
|
|
|
|
Premiums earned
|
|
|
|
|
|
|
|
|
|
|||||||||
Property and casualty insurance
|
$
|
441,303
|
|
|
$
|
32,598
|
|
|
$
|
11,668
|
|
|
$
|
420,373
|
|
|
2.78
|
%
|
Life, accident and health insurance
|
51,222
|
|
|
2,123
|
|
|
1
|
|
|
49,100
|
|
|
—
|
%
|
||||
Total
|
$
|
492,525
|
|
|
$
|
34,721
|
|
|
$
|
11,669
|
|
|
$
|
469,473
|
|
|
2.49
|
%
|
Year Ended December 31, 2009
|
|
|
|
|
|
|
|
|
|
|||||||||
Life insurance in force
|
$
|
4,715,138
|
|
|
$
|
910,775
|
|
|
$
|
120
|
|
|
$
|
3,804,483
|
|
|
|
|
Premiums earned
|
|
|
|
|
|
|
|
|
|
|||||||||
Property and casualty insurance
|
$
|
464,698
|
|
|
$
|
36,925
|
|
|
$
|
7,904
|
|
|
$
|
435,677
|
|
|
1.81
|
%
|
Life, accident and health insurance
|
44,754
|
|
|
1,935
|
|
|
2
|
|
|
42,821
|
|
|
—
|
%
|
||||
Total
|
$
|
509,452
|
|
|
$
|
38,860
|
|
|
$
|
7,906
|
|
|
$
|
478,498
|
|
|
1.65
|
%
|
(In Thousands)
|
Balance at beginning of period
|
|
Charged to costs and expenses
|
|
Deductions
|
|
Balance at end of period
|
||||||||
Description
|
|
|
|
||||||||||||
Allowance for bad debts
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2011
|
$
|
1,001
|
|
|
$
|
—
|
|
|
$
|
176
|
|
|
$
|
825
|
|
Year Ended December 31, 2010
|
688
|
|
|
313
|
|
|
—
|
|
|
1,001
|
|
||||
Year Ended December 31, 2009
|
655
|
|
|
33
|
|
|
—
|
|
|
688
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Deferred tax asset valuation allowance
(1)
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2011
|
$
|
4,004
|
|
|
$
|
—
|
|
|
$
|
548
|
|
|
$
|
3,456
|
|
Year Ended December 31, 2010
|
5,647
|
|
|
—
|
|
|
1,643
|
|
|
4,004
|
|
||||
Year Ended December 31, 2009
|
5,647
|
|
|
—
|
|
|
—
|
|
|
5,647
|
|
(1)
|
Recorded in connection with the purchase of American Indemnity Financial Corporation in 1999.
|
(In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Affiliation with Registrant: United Fire & Casualty Company and consolidated property and casualty subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
Claims and Claim Adjustment Expenses Incurred Related to:
|
|
Amortization of Deferred Policy Acquisition Costs
(1)
|
|
|
|
|
||||||||||||||||||||||||
|
|
Reserves for Unpaid Claims and Claim Adjustment Expenses
|
|
|
|
|
|
Net Realized Investment Gains (Losses)
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Deferred Policy Acquisition Costs
|
|
|
|
|
|
|
|
Net Investment Income
|
|
|
|
Paid Claims and Claim Adjustment Expenses
|
|
|
|||||||||||||||||||||||||||||
|
|
Unearned Premiums
|
|
Earned Premiums
|
|
|
|
Current Year
|
|
Prior Years
|
|
|
|
Premiums Written
|
|||||||||||||||||||||||||||||
2011
|
$
|
60,668
|
|
|
$
|
945,051
|
|
|
$
|
288,868
|
|
|
$
|
533,771
|
|
|
$
|
3,081
|
|
|
$
|
35,513
|
|
|
$
|
468,926
|
|
|
$
|
(61,095
|
)
|
|
$
|
143,952
|
|
|
$
|
399,828
|
|
|
$
|
551,923
|
|
2010
|
$
|
44,681
|
|
|
$
|
603,090
|
|
|
$
|
200,151
|
|
|
$
|
420,373
|
|
|
$
|
3,593
|
|
|
$
|
34,787
|
|
|
$
|
335,315
|
|
|
$
|
(45,878
|
)
|
|
$
|
100,310
|
|
|
$
|
297,638
|
|
|
$
|
414,908
|
|
2009
|
$
|
45,562
|
|
|
$
|
606,045
|
|
|
$
|
205,703
|
|
|
$
|
435,677
|
|
|
$
|
(6,815
|
)
|
|
$
|
31,542
|
|
|
$
|
339,507
|
|
|
$
|
26,215
|
|
|
$
|
105,606
|
|
|
$
|
327,032
|
|
|
$
|
424,827
|
|
(1)
|
For 2011, this line includes amortization of the value of business acquired asset that was recorded as a result of our acquisition of Mercer Insurance Group totaling $25,763,000.
|
By:
|
/s/ Randy A. Ramlo
|
|
Randy A. Ramlo, Chief Executive Officer, Director and Principal Executive Officer
|
|
|
Date:
|
3/15/2012
|
|
|
By:
|
/s/ Dianne M. Lyons
|
|
Dianne M. Lyons, Vice President, Chief Financial Officer and Principal Accounting Officer
|
|
|
Date:
|
3/15/2012
|
By
|
/s/ Jack B. Evans
|
|
By
|
/s/ Christopher R. Drahozal
|
|
Jack B. Evans, Chairman and Director
|
|
|
Christopher R. Drahozal, Director
|
|
|
|
|
|
Date
|
3/15/2012
|
|
Date
|
3/15/2012
|
|
|
|
|
|
By
|
/s/ Thomas W. Hanley
|
|
By:
|
/s/ Douglas M. Hultquist
|
|
|
|
|
|
|
Thomas W. Hanley, Director
|
|
|
Douglas M. Hultquist, Director
|
|
|
|
|
|
Date
|
3/15/2012
|
|
Date
|
3/15/2012
|
|
|
|
|
|
By
|
/s/ Casey D. Mahon
|
|
By
|
/s/ George D. Milligan
|
|
|
|
|
|
|
Casey D. Mahon, Director
|
|
|
George D. Milligan, Director
|
|
|
|
|
|
Date
|
3/15/2012
|
|
Date
|
3/15/2012
|
|
|
|
|
|
By
|
/s/ James W. Noyce
|
|
By
|
/s/ Michael W. Phillips
|
|
|
|
|
|
|
James W. Noyce, Director
|
|
|
Michael W. Phillips, Director
|
|
|
|
|
|
Date
|
3/15/2012
|
|
Date
|
3/15/2012
|
|
|
|
|
|
By
|
/s/ Mary K. Quass
|
|
By
|
/s/ John A. Rife
|
|
|
|
|
|
|
Mary K. Quass, Director
|
|
|
John A. Rife, Vice Chairman and Director
|
|
|
|
|
|
Date
|
3/15/2012
|
|
Date
|
3/15/2012
|
|
|
|
|
|
By
|
/s/ Kyle D. Skogman
|
|
By
|
/s/ Frank S. Wilkinson Jr.
|
|
|
|
|
|
|
Kyle D. Skogman, Director
|
|
|
Frank S. Wilkinson Jr., Director
|
|
|
|
|
|
Date
|
3/15/2012
|
|
Date
|
3/15/2012
|
|
|
|
|
|
|
Incorporated by reference
|
||||||||
Exhibit number
|
|
Exhibit description
|
Filed herewith
|
|
Form
|
|
Period ending
|
|
Exhibit
|
|
Filing date
|
|||
2.1
|
|
|
|
Agreement and Plan of Merger among United Fire & Casualty Company, Red Oak Acquisition Corp.and Mercer Insurance Group, Inc.
|
|
|
8-K
|
|
|
|
2.1
|
|
|
12/1/2010
|
3.1
|
|
|
|
Articles of Incorporation of United Fire Group, Inc.
|
|
|
S-4
|
|
|
|
Annex II
|
|
|
5/25/2011
|
3.2
|
|
|
|
Bylaws of United Fire Group, Inc.
|
|
|
S-4
|
|
|
|
Annex II
|
|
|
5/25/2011
|
10.1
|
|
|
|
Employee Stock Purchase Plan
|
|
|
10-K
|
|
12/31/2007
|
|
10.2
|
|
|
2/27/2008
|
10.2
|
|
*
|
|
2005 Non-qualified Non-employee Director Stock Option and Restricted Stock Plan
|
|
|
S-8
|
|
|
|
4.1
|
|
|
11/23/2005
|
10.4
|
|
*
|
|
United Fire Group, Inc. Amended and Restated Annual Incentive Plan (Amended February 24, 2012)
|
X
|
|
|
|
|
|
|
|
|
|
10.5
|
|
*
|
|
Non-qualified Deferred Compensation Plan
|
|
|
10-Q
|
|
9/30/2007
|
|
10.3
|
|
|
10/25/2007
|
10.6
|
|
*
|
|
Form of Non-qualified Employee Stock Option Agreement under the 2008 Stock Plan
|
|
|
10-K
|
|
12/31/2007
|
|
10.7
|
|
|
2/27/2008
|
10.7
|
|
*
|
|
Form of Option Issued Pursuant to the 2005 Non-qualified Non-employee Director Stock Option and Restricted Stock Plan
|
|
|
10-K
|
|
12/31/2007
|
|
10.8
|
|
|
2/27/2008
|
10.8
|
|
*
|
|
2008 Stock Plan
|
|
|
8-K
|
|
|
|
99.1
|
|
|
5/22/2008
|
10.9
|
|
*
|
|
Form of Stock Award Agreement under 2008 Stock Plan
|
|
|
8-K
|
|
|
|
99.2
|
|
|
5/22/2008
|
10.10
|
|
*
|
|
Form of Non-qualified Stock Option Agreement for the Purchase of Stock under 2008 Stock Plan
|
|
|
8-K
|
|
|
|
99.3
|
|
|
5/22/2008
|
10.11
|
|
*
|
|
Form of Incentive Stock Option Agreement for the Purchase of Stock under 2008 Stock Plan
|
|
|
8-K
|
|
|
|
99.4
|
|
|
5/22/2008
|
10.12
|
|
*
|
|
Amendment to Non-qualified Stock Option Agreements for John A. Rife
|
|
|
8-K/A
|
|
|
|
99.1
|
|
|
2/24/2009
|
10.13
|
|
|
|
Credit Agreement
|
|
|
8-K
|
|
|
|
10.1
|
|
|
12/23/2011
|
10.14
|
|
*
|
|
Form of Restricted Stock Agreement under 2005 Nonqualified Non-employee Director Stock Option Plan
|
X
|
|
|
|
|
|
|
|
|
|
10.15
|
|
*
|
|
United Fire Group, Inc. Plan for Allocation of Equity Compensation to Management Team
|
X
|
|
|
|
|
|
|
|
|
|
11
|
|
|
|
Statement Re Computation of Per Share Earnings. All information required by Exhibit 11 is presented within Note 12 of the Notes to Consolidated Financial Statements
|
X
|
|
|
|
|
|
|
|
|
|
12
|
|
|
|
Statement Re Computation of Ratios
|
X
|
|
|
|
|
|
|
|
|
|
14
|
|
|
|
Code of Ethics
|
|
|
10-K
|
|
12/31/2006
|
|
3.4
|
|
|
3/1/2007
|
|
|
|
|
|
|
Incorporated by reference
|
|||||||
Exhibit number
|
|
Exhibit description
|
Filed herewith
|
|
Form
|
|
Period ending
|
|
Exhibit
|
|
Filing date
|
||
21
|
|
|
|
Subsidiaries of the Registrant
|
X
|
|
|
|
|
|
|
|
|
23.1
|
|
|
|
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm
|
X
|
|
|
|
|
|
|
|
|
23.2
|
|
|
|
Consent of Griffith, Ballard & Company, Independent Actuary
|
X
|
|
|
|
|
|
|
|
|
23.3
|
|
|
|
Consent of Regnier Consulting Group, Inc., Independent Actuary
|
X
|
|
|
|
|
|
|
|
|
31.1
|
|
|
|
Certification of Randy A. Ramlo Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
X
|
|
|
|
|
|
|
|
|
31.2
|
|
|
|
Certification of Dianne M. Lyons Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
X
|
|
|
|
|
|
|
|
|
32.1
|
|
|
|
Certification of Randy A. Ramlo Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
X
|
|
|
|
|
|
|
|
|
32.2
|
|
|
|
Certification of Dianne M. Lyons Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
X
|
|
|
|
|
|
|
|
|
101.1
|
|
|
|
The following financial information from United Fire Group, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2011 formatted in XBRL: (i) Consolidated Balance Sheets at December 31, 2011 and 2010; (ii) Consolidated Statements of Income for the years ended December 31, 2011, 2010 and 2009; (iii) Consolidated Statement of Stockholders’ Equity for the years ended December 31, 2011, 2010 and 2009; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2011, 2010 and 2009; and (v) Notes to Consolidated Financial Statements, tagged as a block of text.
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United Fire Group, Inc.
|
|
|
|
|
|
|
|
|
|
Amended and Restated
|
|
|
|
|
|
|
|
|
|
Annual Incentive Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
Plan Objectives. The objectives of this Annual Incentive Plan are to:
|
2.
|
Definitions.
|
3.
|
Performance Measures.
|
4.
|
Amount and Calculation of Awards.
|
5.
|
Distribution of Awards.
|
6.
|
General.
|
|
UNITED FIRE GROUP, INC.
|
|
|
|
|
|
,
|
|
|
|
|
|
DIRECTOR
|
|
|
|
|
|
Print Name:
|
|
UNITED FIRE GROUP, INC.
|
PLAN FOR ALLOCATION OF EQUITY
COMPENSATION TO MANAGEMENT TEAM
|
1.1
|
focuses the attention of the Management Team on the achievement of certain Performance Measures determined from time to time by the Board.
|
Section 4.1 Table
Illustration
(1)
|
|||||||||||||
a
|
|
b
|
|
c
|
|
d
|
|
e
|
|||||
Level
|
|
ROE Range of Achievement for Prior Year
|
|
%
|
|
Total Salary in Determination Year
|
|
Value of Equity Compensation Pool in the Determination Year
|
|||||
Gold
|
|
Over 20%
|
|
80
|
%
|
|
$
|
2,000,000
|
|
|
$
|
1,600,000
|
|
A
|
|
Over 12% to 20%
|
|
65
|
%
|
|
$
|
2,000,000
|
|
|
$
|
1,300,000
|
|
B
|
|
Over 8% to 12%
|
|
50
|
%
|
|
$
|
2,000,000
|
|
|
$
|
1,000,000
|
|
C
|
|
4% to 8%
|
|
35
|
%
|
|
$
|
2,000,000
|
|
|
$
|
700,000
|
|
D
|
|
Below 4%
|
|
—
|
%
|
|
$
|
2,000,000
|
|
|
—
|
|
(1)
|
All amounts shown are for illustration purposes only.
|
Section 5.1 Table
Illustration
(1)
|
||||||||||
a
|
b
|
c
|
d
|
e
|
f
|
|||||
Title
|
Tier
|
Salary
|
% of Salary
|
Salary to be Considered in Determining Percentage
|
Percentage of Equity Compensation Pool
|
|||||
CEO
|
3
|
$
|
400,000
|
|
85%
|
$
|
340,000
|
|
29.8
|
%
|
CFO
|
2
|
$
|
275,000
|
|
70%
|
$
|
192,500
|
|
16.9
|
%
|
EVP
|
2
|
$
|
255,000
|
|
70%
|
$
|
178,500
|
|
15.7
|
%
|
CIO
|
1
|
$
|
250,000
|
|
55%
|
$
|
137,500
|
|
12.1
|
%
|
CG
|
1
|
$
|
175,000
|
|
55%
|
$
|
96,250
|
|
8.4
|
%
|
Others
|
1
|
$
|
645,000
|
|
55%
|
$
|
195,250
|
|
17.1
|
%
|
Total
|
|
$
|
2,000,000
|
|
|
$
|
1,140,000
|
|
100
|
%
|
(1)
|
All amounts shown are for illustration purposes only.
|
Section 6.1 Table
Illustration
(1)
|
|||||||||||||||||
a
|
b
|
c
|
d
|
e
|
f
|
g
|
|||||||||||
|
|
Level
|
|||||||||||||||
Title
|
Percentage of Equity Compensation Pool
(2)
|
Gold
80%
|
A
65%
|
B
50%
|
C
35%
|
D
0%
|
|||||||||||
CEO
|
29.8
|
%
|
$
|
476,800
|
|
$
|
387,400
|
|
$
|
298,000
|
|
208,600
|
|
$
|
—
|
|
|
CFO
|
16.9
|
%
|
$
|
270,400
|
|
$
|
219,700
|
|
$
|
169,000
|
|
118,300
|
|
$
|
—
|
|
|
EVP
|
15.7
|
%
|
$
|
251,200
|
|
$
|
204,100
|
|
$
|
157,000
|
|
109,900
|
|
$
|
—
|
|
|
CIO
|
12.1
|
%
|
$
|
193,600
|
|
$
|
157,300
|
|
$
|
121,000
|
|
84,700
|
|
$
|
—
|
|
|
CG
|
8.4
|
%
|
$
|
134,400
|
|
$
|
109,200
|
|
$
|
84,000
|
|
58,800
|
|
$
|
—
|
|
|
Others
|
17.1
|
%
|
$
|
273,600
|
|
$
|
222,300
|
|
$
|
171,000
|
|
119,700
|
|
$
|
—
|
|
|
Total
|
100
|
%
|
$
|
1,600,000
|
|
$
|
1,300,000
|
|
$
|
1,000,000
|
|
$
|
700,000
|
|
$
|
—
|
|
(1)
|
All amounts shown are for illustration purposes only. This table assumes Total Salary is $2,000,000.
|
(2)
|
From column f of the Section 5.1 Table.
|
(In Thousands)
|
|
|
|
|
|
|||||
Years ended December 31
|
2011
|
2010
|
2009
|
2008
|
2007
|
|||||
Earnings:
|
|
|
|
|
|
|||||
Income before income taxes
|
(12,715
|
)
|
58,383
|
|
(28,706
|
)
|
(33,136
|
)
|
159,334
|
|
Add: fixed charges
|
44,022
|
|
43,889
|
|
42,494
|
|
40,994
|
|
44,046
|
|
Total earnings
|
31,307
|
|
102,272
|
|
13,788
|
|
7,858
|
|
203,380
|
|
Fixed Charges:
|
|
|
|
|
|
|||||
Interest on policyholders' accounts
|
42,988
|
|
42,988
|
|
41,652
|
|
40,177
|
|
43,089
|
|
Portion of rent representative of interest factor
|
1,034
|
|
901
|
|
842
|
|
817
|
|
957
|
|
Total fixed charges
|
44,022
|
|
43,889
|
|
42,494
|
|
40,994
|
|
44,046
|
|
Preferred stock dividend requirement
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Combined fixed charges and preferred stock dividend requirements
|
44,022
|
|
43,889
|
|
42,494
|
|
40,994
|
|
44,046
|
|
Ratio of earnings to fixed charges
|
0.71
|
|
2.33
|
|
0.32
|
|
0.19
|
|
4.62
|
|
Ratio of earnings to combined fixed charges and preferred stock dividend requirements
|
0.71
|
|
2.33
|
|
0.32
|
|
0.19
|
|
4.62
|
|
Subsidiary
|
|
Jurisdiction of
Organization
|
|
% of Ownership by United Fire Group, Inc. or one of its Subsidiaries
|
United Fire & Casualty Company
|
|
Iowa
|
|
100 % owned by United Fire Group, Inc.
|
United Life Insurance Company
|
|
Iowa
|
|
100 % owned by United Fire & Casualty Company
|
Addison Insurance Company
|
|
Iowa
|
|
100 % owned by United Fire & Casualty Company
|
Lafayette Insurance Company
|
|
Louisiana
|
|
100 % owned by United Fire & Casualty Company
|
United Fire & Indemnity Company
|
|
Texas
|
|
100 % owned by United Fire & Casualty Company
|
American Indemnity Financial Corporation
|
|
Delaware
|
|
100 % owned by United Fire & Casualty Company
|
Texas General Indemnity Company
|
|
Colorado
|
|
100 % owned by American Indemnity Financial Corporation
|
United Fire Lloyds
|
|
Texas
|
|
Operationally and financially controlled by United Fire & Indemnity Company
|
Mercer Insurance Group, Inc.
|
|
Pennsylvania
|
|
100 % owned by United Fire & Casualty Company
|
Mercer Insurance Company
|
|
Pennsylvania
|
|
100 % owned by Mercer Insurance Group, Inc.
|
Mercer Insurance Company of New Jersey, Inc.
|
|
New Jersey
|
|
100 % owned by Mercer Insurance Company
|
Franklin Insurance Company
|
|
Pennsylvania
|
|
100 % owned by Mercer Insurance Company
|
BICUS Services Corporation
|
|
Pennsylvania
|
|
100 % owned by Mercer Insurance Company
|
Financial Pacific Insurance Group, Inc.
|
|
Delaware
|
|
100 % owned by Mercer Insurance Group, Inc.
|
Financial Pacific Insurance Company
|
|
California
|
|
100 % owned by Financial Pacific Insurance Group, Inc.
|
Financial Pacific Insurance Agency
|
|
California
|
|
100 % owned by Financial Pacific Insurance Group, Inc.
|
Financial Pacific Statutory Trust I
|
|
Connecticut
|
|
100 % owned by Financial Pacific Insurance Group, Inc.
|
Financial Pacific Statutory Trust II
|
|
Connecticut
|
|
100 % owned by Financial Pacific Insurance Group, Inc.
|
Financial Pacific Statutory Trust III
|
|
Delaware
|
|
100 % owned by Financial Pacific Insurance Group, Inc.
|
/s/ Ernst & Young LLP
|
Ernst & Young LLP
|
March 15, 2012
|
|
/s/ Steve Griffith
|
|
|
Griffith, Ballard and Company
|
|
|
President
|
March 15, 2012
|
|
/s/ Steven J. Regnier
|
|
|
Regnier Consulting Group, Inc.
|
|
|
Steven J. Regnier, President
|
1.
|
I have reviewed this annual report on Form 10-K of United Fire Group, Inc.;
|
2.
|
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
|
3.
|
Based on my knowledge, the Consolidated Financial Statements and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of and for, the periods presented in this annual report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP;
|
c.
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
March 15, 2012
|
|
|
|
|
|
|
/s/ Randy A. Ramlo
|
|
|
Randy A. Ramlo
|
|
|
Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K of United Fire Group, Inc.;
|
2.
|
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
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3.
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Based on my knowledge, the Consolidated Financial Statements and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of and for, the periods presented in this annual report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
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a.
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP;
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c.
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evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
|
a.
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date:
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March 15, 2012
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/s/ Dianne M. Lyons
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Dianne M. Lyons
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Chief Financial Officer
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(1)
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The Report fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934; and
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(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
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Date:
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March 15, 2012
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/s/ Randy A. Ramlo
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Randy A. Ramlo
|
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Chief Executive Officer
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(1)
|
The Report fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934; and
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(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
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Date:
|
March 15, 2012
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|
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/s/ Dianne M. Lyons
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|
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Dianne M. Lyons
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Chief Financial Officer
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