• Filing Date: 2012-03-30
  • Form Type: 10-K
  • Description: Annual report
v2.4.0.6
Investments
12 Months Ended
Dec. 31, 2011
Investments [Abstract]  
Investments

The Company holds investments in fixed maturity securities as well as equity securities, which are classified as available for sale. At December 31, 2011 and 2010, the amortized cost, gross unrealized gains and losses, and estimated fair value of the Company's available-for-sale securities by security type were as follows (in thousands):

 

                                 
     Amortized
Cost
     Gross
Unrealized
Gain
     Gross
Unrealized
Loss
    Fair
Value
 

December 31, 2011

                                  

Fixed Maturity Securities:

                                  

U.S. Treasury and U.S. government agencies

     $     509         47         --        556   

Corporate bonds

     10,199         58         (417     9,840   

Commercial mortgage-backed securities

     10,574         314         (14     10,874   

State, municipalities, and political subdivisions

     9,982         393         (3     10,372   

Other

       2,883         117             --          3,000   

Total

     $34,147         929         (434     34,642   
         

Equity securities

     $  5,364         133         (290       5,207   
         

December 31, 2010

                                  

Fixed Maturity Securities:

                                  

U.S. Treasury and U.S. government agencies

     $8,044         88         (37     8,095   

Corporate bonds

     12,192         149         (75     12,266   

Commercial mortgage-backed securities

     7,756         40         (53     7,743   

Other

          464             5           (9          460   

Total

     $28,456         282         (174     28,564   
         

Equity securities

     $  1,061           12         (189         884   

 

            The scheduled maturities of fixed maturity securities at December 31, 2011 are as follows (in thousands):

 

                     
    Amortized Cost    Fair Value

Available-for-sale

                    

Due in one year or less

      $  1,009          1,010  

Due after one year through five years

      10,148          9,793  

Due after five years through ten years

      6,835          7,075  

Due after ten years

      5,581          5,890  

Commercial mortgage-backed securities

      10,574          10,874  
        $34,147          34,642  

Proceeds received, and the gross realized gains and losses from sales of available for sale securities, for the year ended December 31, 2011 and 2010 were as follows (in thousands):

 

                         
     Proceeds      Gross Realized
Gains
     Gross Realized
Losses
 

Year ended December 31, 2011

                          

Fixed maturity securities

   $ 25,741            545         (110

Equity securities*

   $ 2,155            122         (290
       

Year ended December 31, 2010

                          

Fixed maturity securities

   $ 29,116         1,828         (17

Equity securities*

   $ 4,515            369         (177

*Amounts reported for the year ended December 31, 2011 and 2010 include the gross realized gains and losses from equity option contracts. During the years ended December 31, 2011 and 2010, the Company entered into equity contracts for exchange traded call and put options to meet certain investment objectives. With respect to these option contracts, the Company received net proceeds of $89,000 and $391,000, respectively, and realized gains of $49,000 and $327,000, respectively, during the years ended December 31, 2011 and 2010. Such gains are included in the realized investment gains in the Consolidated Statements of Earnings. There were no open option contracts at December 31, 2011 and 2010.

Other-than-temporary Impairment ("OTTI")

The Company regularly reviews its individual investment securities for OTTI. The Company considers various factors in determining whether each individual security is other-than-temporarily impaired, including:

 

   

the financial condition and near-term prospects of the issuer, including any specific events that may affect its operations or earnings;

   

the length of time and the extent to which the market value of the security has been below its cost or amortized cost;

   

general market conditions and industry or sector specific factors;

   

nonpayment by the issuer of its contractually obligated interest and principal payments; and

   

the Company's intent and ability to hold the investment for a period of time sufficient to allow for the recovery of costs.

Securities with gross unrealized loss positions at December 31, 2011, aggregated by investment category and length of time the individual securities have been in a continuous loss position, are as follows (in thousands):

 

                                                                 
   

Less than Twelve Months

 

Twelve Months

or Greater

 

Total

As of December 31, 2011

 

Gross

Unrealized

Loss

 

Fair

Value

 

Gross

Unrealized

Loss

 

Fair

Value

 

Gross

Unrealized

Loss

 

Fair

Value

Fixed maturity securities

                                                                

Corporate Bonds

           $(417)         5,112         --         --         (417)         5,112  
               

States, municipalities and political
    subdivisions

           (3)         2,449         --         --         (3)         2,449  

Commercial mortgage-backed securities

           (14)            612         --         --         (14)            612  

Total fixed maturity securities

           (434)         8,173         --         --         (434)         8,173  

Equity securities

           (201)           2,696         (89)         87         (290)           2,783  

Total available-for-sale securities

           $(635)         10,869         (89)         87         (724)         10,956  

The Company believes there were no fundamental issues such as credit losses or other factors with respect to any of its available-for-sale securities. The unrealized losses on investments in fixed maturity securities were caused by interest rate changes. It is expected that the securities would not be settled at a price less than the par value of the investments. In determining whether equity securities are other than temporarily impaired, the Company considers its intent and ability to hold a security for a period of time sufficient to allow for the recovery of cost. Because the decline in fair value is attributable to changes in interest rates or market conditions and not credit quality, and because the Company has the ability and intent to hold its available-for-sale investments until a market price recovery or maturity, the Company does not consider any of its investments to be other-than-temporarily impaired at December 31, 2011.

 

Other investments consist primarily of real estate and the related assets and operations of the marina facility acquired in 2011 (see Note 5 – "Business Acquisitions"). Operating activities related to the Company's real estate investment include leasing of office and retail space to tenants, wet and dry boat storage, and fuel services with respect to marina clients and other recreational boaters.

Other invested assets consist of the following as of December 31, 2011 (in thousands):

 

         

Building

     $1,418   

Land

     4,438   

Land improvements

     283   

Other

        404   

Total, at cost

     6,543   

Less accumulated depreciation and amortization

       (60)   

Other investments

     $6,483   

Investment income is summarized as follows (in thousands):

 

                 
    

Year ended December 31,

 
     2011     

2010

 
     

Time deposits

     $538         530   

Short-term investments

     --         94   

Fixed maturity securities

     1,517         1,112   

Cash and cash equivalents

       125           226   
       $2,180         1,962   

The following time deposits and short-term investments exceeded 10% of consolidated stockholders' equity at December 31, 2010 (in thousands):

 

         

Name of Financial Institution

      
   

Paradise Bank

     $    5,260   

Regions Bank

       8,773   
       $  14,033   

At December 31, 2011, the Company had $7.0 million in time deposits at Regions Bank which exceeded 10% of consolidated stockholders' equity at December 31, 2011. At December 31, 2010, the Company had one single investment in U.S. Treasury notes exceeding 10% of consolidated stockholders' equity. This investment was carried at its $4.7 million fair value and included in investments in fixed maturity securities at December 31, 2010.

In addition, at December 31, 2011 and 2010, cash and cash equivalents included $62.8 million and $14.7 million, respectively, on deposit at one national bank. At December 31, 2011 and 2010, the Company also had an aggregate of $18.0 million and $16.4 million, respectively, in cash on deposit at two custodial firms.