Annual report pursuant to Section 13 and 15(d)

Short-Term And Long-Term Investments And Restricted Deposits

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Short-Term And Long-Term Investments And Restricted Deposits
12 Months Ended
Dec. 31, 2011
Short-Term And Long-Term Investments And Restricted Deposits [Abstract]  
Short-Term And Long-Term Investments And Restricted Deposits

5. 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, 2011      December 31, 2010  
     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

   $ 29,014       $ 638       $ (13   $ 29,639       $ 28,665       $ 510       $ (140   $ 29,035   

Corporate securities

     186,018         3,762         (751     189,029         197,577         3,124         (586     200,115   

Restricted certificates of deposit

     5,890         —           —          5,890         6,814         —           —          6,814   

Restricted cash equivalents

     13,775         —           —          13,775         8,814         —           —          8,814   

Municipal securities:

                     

General obligation

     126,806         2,828         (26     129,608         109,866         3,601         (6     113,461   

Pre-refunded

     33,247         465         —          33,712         32,442         756         —          33,198   

Revenue

     118,507         2,387         (34     120,860         100,198         2,781         (15     102,964   

Variable rate demand notes

     64,658         —           —          64,658         106,540         —           —          106,540   

Asset backed securities

     51,779         430         (17     52,192         17,391         243         (43     17,591   

Cost and equity method investments

     9,395         —           —          9,395         7,060         —           —          7,060   

Life insurance contracts

     14,699         —           —          14,699         14,391         —           —          14,391   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ 653,788       $ 10,510       $ (841   $ 663,457       $ 629,758       $ 11,015       $ (790   $ 639,983   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

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 December 31, 2011, 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, 76% were rated AA- or higher, and 99% were rated A- or higher. At December 31, 2011, the Company held certificates of deposit, life insurance contracts and cost and equity method invesments 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, 2011      December 31, 2010  
     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

   $ (13   $ 2,184       $ —         $ —         $ (140   $ 9,246       $ —         $ —     

Corporate securities

     (751     23,040         —           —           (586     40,341         —           —     

Municipal securities:

                     

General obligation

     (26     3,710         —           —           (6     1,131         —           —     

Revenue

     (34     12,597         —           —           (15     2,419         —           —     

Asset backed securities

     (17     20,417         —           —           (43     5,276         —           —     
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total

   $ (841   $ 61,948       $ —         $ —         $ (790   $ 58,413       $ —         $ —     
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

As of December 31, 2011, the gross unrealized losses were generated from 31 positions out of a total of 410 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, 2011      December 31, 2010  
     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

   $ 129,232       $ 130,499       $ 19,666       $ 19,666       $ 21,141       $ 21,346       $ 17,387       $ 17,392   

One year through five years

     406,140         413,953         7,085         7,152         464,270         474,255         5,368         5,366   

Five years through ten years

     34,945         34,961         —           —           39,732         39,731         —           —     

Greater than ten years

     56,720         57,226         —           —           81,860         81,893         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 627,037       $ 636,639       $ 26,751       $ 26,818       $ 607,003       $ 617,225       $ 22,755       $ 22,758   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

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 on investments for the years ended December 31, were as follows:

 

     2011     2010     2009  

Gross realized gains

   $ 314      $ 6,036      $ 1,252   

Gross realized losses

     (27     (270     (1,111

Impairment of investment

     —          (5,531     —     
  

 

 

   

 

 

   

 

 

 

Net realized gains (losses)

   $ 287      $ 235      $ 141   
  

 

 

   

 

 

   

 

 

 

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 and other income in 2010 included a net realized gain of $2,479 related to sales of fixed income investments and also included realized gains of $3,287 related to the Reserve Primary money market fund for distributions made during 2010. Investment amortization of $10,335, $10,750 and $7,209 was recorded in the years ended December 31, 2011, 2010 and 2009, respectively.