Mercury Insurance 2009 Annual Report Download - page 95

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MERCURY GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Accumulated unrealized gains and losses on securities available for sale as of December 31, 2007 are as
follows (amounts in thousands):
Fixed maturities available for sale:
Unrealized gains ............................................... $ 54,975
Unrealized losses .............................................. (26,314)
Tax expense .................................................. (10,031)
Total .................................................... $ 18,630
Equity securities available for sale:
Unrealized gains ............................................... $104,717
Unrealized losses .............................................. (9,463)
Tax expense .................................................. (33,326)
Total .................................................... $ 61,928
Contractual Maturity
At December 31, 2009, bond holdings rated below investment grade or non-rated were 6.4% of total
investments at fair value. Additionally, the Company owns securities that are credit enhanced by financial
guarantors that are subject to uncertainty related to market perception of the guarantors’ ability to
perform. Determining the estimated fair value of municipal bonds could become more difficult should markets
for these securities become illiquid. The estimated fair values at December 31, 2009 by contractual maturity are
shown below. Expected maturities will differ from contractual maturities because borrowers may have the right
to call or prepay obligations with or without call or prepayment penalties.
Estimated Fair Value
(Amounts in thousands)
Fixed maturities:
Due in one year or less ................................. $ 21,692
Due after one year through five years ..................... 318,092
Due after five years through ten years ..................... 570,942
Due after ten years .................................... 1,679,427
Mortgage-backed securities ................................. 114,408
Total ........................................... $2,704,561
Investment Income
A summary of net investment income is shown in the following table:
Year Ended December 31,
2009 2008 2007
(Amounts in thousands)
Fixed maturities ...................................... $137,607 $138,287 $141,021
Equity securities ...................................... 8,558 9,431 9,476
Short-term investments ................................ 1,082 5,582 13,452
Total investment income ........................... $147,247 $153,300 163,949
Less: Investment expense ............................... 2,298 2,020 5,038
Net investment income ............................. $144,949 $151,280 $158,911
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