Annual report pursuant to Section 13 and 15(d)

Short-Term And Long-Term Investments And Restricted Deposits

v2.4.0.6
Short-Term And Long-Term Investments And Restricted Deposits
 12 Months Ended
Dec. 31, 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:
 
December 31, 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
$
117,434

 
$
594

 
$
(221
)
 
$
117,807

 
$
29,014

 
$
638

 
$
(13
)
 
$
29,639

Corporate securities
315,807

 
5,101

 
(198
)
 
320,710

 
186,018

 
3,762

 
(751
)
 
189,029

Restricted certificates of deposit
5,890

 
—

 
—

 
5,890

 
5,890

 
—

 
—

 
5,890

Restricted cash equivalents
14,460

 
—

 
—

 
14,460

 
13,775

 
—

 
—

 
13,775

Municipal securities:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

General obligation
88,690

 
1,173

 
(26
)
 
89,837

 
126,806

 
2,828

 
(26
)
 
129,608

Pre-refunded
5,337

 
85

 
—

 
5,422

 
33,247

 
465

 
—

 
33,712

Revenue
84,726

 
1,331

 
(30
)
 
86,027

 
118,507

 
2,387

 
(34
)
 
120,860

Variable rate demand notes
37,685

 
—

 
—

 
37,685

 
64,658

 
—

 
—

 
64,658

Asset backed securities
83,295

 
1,197

 
(17
)
 
84,475

 
51,779

 
430

 
(17
)
 
52,192

Cost and equity method investments
11,298

 
—

 
—

 
11,298

 
9,395

 
—

 
—

 
9,395

Life insurance contracts
15,023

 
—

 
—

 
15,023

 
14,699

 
—

 
—

 
14,699

Total
$
779,645

 
$
9,481

 
$
(492
)
 
$
788,634

 
$
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 investment grade 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 December 31, 2012, 40% of the Company’s investments in securities recorded at fair value that carry a rating by S&P or Moody’s were rated AAA/Aaa, 61% were rated AA-/Aa3 or higher and 95% were rated A-/A3 or higher.  At December 31, 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:
 
December 31, 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
$
(219
)
 
$
56,033

 
$
(2
)
 
$
202

 
$
(13
)
 
$
2,184

 
$
—

 
$
—

Corporate securities
(198
)
 
44,758

 
—

 
—

 
(751
)
 
23,040

 
—

 
—

Municipal securities:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

General obligation
(26
)
 
8,464

 
—

 
—

 
(26
)
 
3,710

 
—

 
—

Revenue
(30
)
 
3,325

 
—

 
—

 
(34
)
 
12,597

 
—

 
—

Asset backed securities
(17
)
 
9,321

 
—

 
—

 
(17
)
 
20,417

 
—

 
—

Total
$
(490
)
 
$
121,901

 
$
(2
)
 
$
202

 
$
(841
)
 
$
61,948

 
$
—

 
$
—



As of December 31, 2012, the gross unrealized losses were generated from 34 positions out of a total of 371 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:
 
December 31, 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
$
138,011

 
$
139,118

 
$
34,403

 
$
34,435

 
$
129,232

 
$
130,499

 
$
19,666

 
$
19,666

One year through five years
474,068

 
481,381

 
358

 
358

 
406,140

 
413,953

 
7,085

 
7,152

Five years through ten years
94,006

 
93,878

 
—

 
—

 
34,945

 
34,961

 
—

 
—

Greater than ten years
38,799

 
39,464

 
—

 
—

 
56,720

 
57,226

 
—

 
—

Total
$
744,884

 
$
753,841

 
$
34,761

 
$
34,793

 
$
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:

 
Year Ended December 31,
 
2012
 
2011
 
2010
Gains
$
1,509

 
$
314

 
$
6,036

Losses
(25
)
 
(27
)
 
(270
)
Impairment of investment
—

 
—

 
(5,531
)
Net realized gains
$
1,484

 
$
287

 
$
235



During 2012, the company recognized $1,484 in net gains from sales 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 from the state.

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. During 2010, the Company determined it had an other-than-temporary impairment of its investment in Casenet, LLC. As a result, the Company recorded an impairment charge of $5,531, including $3,531 of convertible promissory notes. The impairment charge is included in investment and other income.

Investment amortization of $11,151, $10,335, and $10,750 was recorded in the years ended December 31, 2012, 2011 and 2010, respectively.