Quarterly report pursuant to Section 13 or 15(d)

Short-Term And Long-Term Investments And Restricted Deposits

v2.4.0.6
Short-Term And Long-Term Investments And Restricted Deposits
9 Months Ended
Sep. 30, 2012
Investments, Debt and Equity Securities [Abstract]  
Short-Term And Long-Term Investments And Restricted Deposits
Short-term and Long-term Investments and Restricted Deposits

Short-term and long-term investments and restricted deposits by investment type consist of the following:
 
September 30, 2012
 
December 31, 2011
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized Losses
 
Fair
Value
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized Losses
 
Fair
Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies
$
60,177

 
$
760

 
$
(6
)
 
$
60,931

 
$
29,014

 
$
638

 
$
(13
)
 
$
29,639

Corporate securities
257,161

 
5,844

 
(6
)
 
262,999

 
186,018

 
3,762

 
(751
)
 
189,029

Restricted certificates of deposit
5,891

 

 

 
5,891

 
5,890

 

 

 
5,890

Restricted cash equivalents
13,150

 

 

 
13,150

 
13,775

 

 

 
13,775

Municipal securities:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

General obligation
91,259

 
1,649

 

 
92,908

 
126,806

 
2,828

 
(26
)
 
129,608

Pre-refunded
16,529

 
130

 

 
16,659

 
33,247

 
465

 

 
33,712

Revenue
85,281

 
1,804

 
(25
)
 
87,060

 
118,507

 
2,387

 
(34
)
 
120,860

Variable rate demand notes
92,225

 

 

 
92,225

 
64,658

 

 

 
64,658

Asset backed securities
74,126

 
1,294

 

 
75,420

 
51,779

 
430

 
(17
)
 
52,192

Cost and equity method investments
10,958

 

 

 
10,958

 
9,395

 

 

 
9,395

Life insurance contracts
14,942

 

 

 
14,942

 
14,699

 

 

 
14,699

Total
$
721,699

 
$
11,481

 
$
(37
)
 
$
733,143

 
$
653,788

 
$
10,510

 
$
(841
)
 
$
663,457



The Company’s investments are classified as available-for-sale with the exception of life insurance contracts and certain cost and equity method investments.  The Company’s investment policies are designed to provide liquidity, preserve capital and maximize total return on invested assets with the focus on high credit quality securities.  The Company limits the size of investment in any single issuer other than U.S. treasury securities and obligations of U.S. government corporations and agencies.  As of September 30, 2012, 38% of the Company’s investments in securities recorded at fair value that carry a rating by Moody’s or S&P were rated AAA, 68% were rated AA- or higher, and 99% were rated A- or higher.  At September 30, 2012, the Company held certificates of deposit, life insurance contracts and cost and equity method investments which did not carry a credit rating.

The fair value of available-for-sale investments with gross unrealized losses by investment type and length of time that individual securities have been in a continuous unrealized loss position were as follows:
 
September 30, 2012
 
December 31, 2011
 
Less Than 12 Months
 
12 Months or More
 
Less Than 12 Months
 
12 Months or More
 
Unrealized Losses
 
Fair
Value
 
Unrealized Losses
 
Fair
Value
 
Unrealized Losses
 
Fair
Value
 
Unrealized Losses
 
Fair
Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies
$
(4
)
 
$
1,196

 
$
(2
)
 
$
202

 
$
(13
)
 
$
2,184

 
$

 
$

Corporate securities
(6
)
 
5,295

 

 

 
(751
)
 
23,040

 

 

Municipal securities:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

General obligation

 

 

 

 
(26
)
 
3,710

 

 

Revenue
(25
)
 
1,825

 

 

 
(34
)
 
12,597

 

 

Asset backed securities

 

 

 

 
(17
)
 
20,417

 

 

Total
$
(35
)
 
$
8,316

 
$
(2
)
 
$
202

 
$
(841
)
 
$
61,948

 
$

 
$



As of September 30, 2012, the gross unrealized losses were generated from 8 positions out of a total of 376 positions.  The decline in fair value of fixed income securities is a result of movement in interest rates subsequent to the purchase of the security.

For each security in an unrealized loss position, the Company assesses whether it intends to sell the security or if it is more likely than not the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes.  If the security meets this criterion, the decline in fair value is other-than-temporary and is recorded in earnings.  The Company does not intend to sell these securities prior to maturity and it is not likely that the Company will be required to sell these securities prior to maturity; therefore, there is no indication of other than temporary impairment for these securities.

The contractual maturities of short-term and long-term investments and restricted deposits are as follows:
 
September 30, 2012
 
December 31, 2011
 
Investments
 
Restricted Deposits
 
Investments
 
Restricted Deposits
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
One year or less
$
138,508

 
$
139,920

 
$
33,108

 
$
33,151

 
$
129,232

 
$
130,499

 
$
19,666

 
$
19,666

One year through five years
423,533

 
432,717

 
358

 
358

 
406,140

 
413,953

 
7,085

 
7,152

Five years through ten years
37,331

 
37,444

 

 

 
34,945

 
34,961

 

 

Greater than ten years
88,860

 
89,553

 

 

 
56,720

 
57,226

 

 

Total
$
688,232

 
$
699,634

 
$
33,466

 
$
33,509

 
$
627,037

 
$
636,639

 
$
26,751

 
$
26,818


 
Actual maturities may differ from contractual maturities due to call or prepayment options.  Asset backed securities are included in the one year through five years category, while equity securities and life insurance contracts are included in the five years through ten years category.  The Company has an option to redeem at amortized cost substantially all of the securities included in the Greater than ten years category listed above.

Realized gains and losses are determined on the basis of specific identification or a first-in, first-out methodology, if specific identification is not practicable.  The Company’s gross recorded realized gains and losses were as follows:

 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2012
 
2011
 
2012
 
2011
Gains
$
1,475

 
$
107

 
$
1,483

 
$
240

Losses
(12
)
 
(1
)
 
(23
)
 
(27
)
Net realized gains
$
1,463

 
$
106

 
$
1,460

 
$
213



During the third quarter of 2012, the company recognized $1,463 in net gains primarily as a result of the liquidation of $75,468 of investments held by the Georgia health plan in order to meet short-term liquidity needs due to the delays in premium receipts.

The Company continuously monitors investments for other-than-temporary impairment.  Certain investments have experienced a decline in fair value due to changes in credit quality, market interest rates and/or general economic conditions.  The Company recognizes an impairment loss for cost and equity method investments when evidence demonstrates that it is other-than-temporarily impaired.  Evidence of a loss in value that is other than temporary may include the absence of an ability to recover the carrying amount of the investment or the inability of the investee to sustain a level of earnings that would justify the carrying amount of the investment.

Investment amortization of $8,676 and $7,545 was recorded in the nine months ended September 30, 2012 and 2011, respectively.