Mercury Insurance 2007 Annual Report Download - page 73

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2007 MERCURYNOW 71
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2. Investments and Investment Income
INVESTMENT INCOME
A summary of net investment income is shown in the following table:
Year ended December 31,
Amounts in thousands 2007 2006 2005
Interest and dividends on fixed maturities $ 141,021 $ 130,339 $ 100,403
Dividends on equity securities 9,476 8,152 10,149
Interest on short-term investments 13,452 15,557 13,827
Total investment income 163,949 154,048 124,379
Investment expense 5,038 2,949 1,797
Net investment income $ 158,911 $ 151,099 $ 122,582
REALIZED INVESTMENT GAINS AND LOSSES
A summary of net realized investment gains and losses is as follows:
Year ended December 31,
Amounts in thousands 2007 2006 2005
Net realized investment gains (losses):
Fixed maturities $ (12,830) $ (3,611) $ (280)
Equity securities 33,638 19,047 16,440
$ 20,808 $ 15,436 $ 16,160
Net realized investment gains (losses) includes investment write-downs considered to be other-than-temporary impairment losses of $22.7 million,
$2.0 million, and $2.2 million in 2007, 2006, and 2005, respectively. In addition, in 2007, net realized investment gains and losses also includes
$2.0 million gain and $1.4 million loss related to the change in the fair value of trading securities and hybrid financial instruments, respectively.
Gross gains and losses realized on the sales of investments (excluding calls) are shown below:
Year ended December 31,
Amounts in thousands 2007 2006 2005
Fixed maturities available for sale:
Gross realized gains $ 1,626 $ 541 $ 604
Gross realized losses (4,196) (3,778) (1,539)
Net $ (2,570) $ (3,237) $ (935)
Equity securities available for sale:
Gross realized gains $ 69,288 $ 30,990 $ 26,799
Gross realized losses (20,773) (10,955) (8,330)
Net $ 48,515 $ 20,035 $ 18,469
Equity securities trading:
Gross realized gains $ 7,145 $ — $ —
Gross realized losses (5,431) — —
Net $ 1,714 $ — $ —