Mercury Insurance 2012 Annual Report Download - page 66

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45
December 31, 2012
AAA AA(1) A(1) BBB(1) Non-Rated/
Other Total
(Amounts in thousands)
U.S. government bonds and
agencies:
Treasuries $ 10,789 $ 0 $ 0 $ 0 $ 0 $ 10,789
Government Agency 3,415 0 0 0 0 3,415
Total 14,204 0 0 0 0 14,204
100.0% 100.0%
Municipal securities:
Insured 18,515 482,731 500,012 85,796 17,250 1,104,304
Uninsured 261,973 316,100 331,123 141,702 9,893 1,060,791
Total 280,488 798,831 831,135 227,498 27,143 2,165,095
13.0% 36.9% 38.4% 10.5% 1.2% 100.0%
Mortgage-backed securities:
Commercial 0 0 4,271 0 0 4,271
Agencies 11,025 0 0 0 0 11,025
Non-agencies:
Prime 214 1,942 1,482 571 2,969 7,178
Alt-A 0 1,329 299 0 6,601 8,229
Total 11,239 3,271 6,052 571 9,570 30,703
36.6% 10.7% 19.7% 1.8% 31.2% 100.0%
Corporate securities:
Communications 0 0 5,285 6,563 0 11,848
Consumer—cyclical 0 0 8,964 0 81 9,045
Consumer—non-cyclical 0 0 0 9,883 0 9,883
Energy 0 0 0 27,655 6,068 33,723
Financial 0 26,010 23,298 11,698 7,841 68,847
Industrial 0 0 0 7,404 0 7,404
Technology 0 0 0 6,329 0 6,329
Basic materials 0 0 0 5,701 0 5,701
Utilities 0 0 0 2,771 0 2,771
Total 0 26,010 37,547 78,004 13,990 155,551
0.0% 16.7% 24.1% 50.2% 9.0% 100.0%
Collateralized debt obligations:
Corporate 4,702 0 0 0 38,099 42,801
Total 4,702 0 0 0 38,099 42,801
11.0% 89.0% 100.0%
Total $ 310,633 $ 828,112 $ 874,734 $ 306,073 $ 88,802 $ 2,408,354
12.9% 34.4% 36.3% 12.7% 3.7% 100.0%
__________
(1) Intermediate ratings are offered at each level (e.g., AA includes AA+, AA and AA-).
The Company had $25.2 million, 1.0% of its fixed maturity portfolio, at fair value in U.S. government bonds and agencies
and mortgage-backed securities (Agencies). In August 2011, Standard and Poor’s downgraded the U.S. government’s long-term
sovereign credit rating from AAA to AA+. This downgrade has triggered significant volatility in prices for a variety of investments.
While Moody’s and Fitch affirmed their AAA ratings, they placed a negative outlook in November 2011 and warned of a potential
downgrade if no long-term deficit agreement was reached over the next two years. The negative outlook reflects these rating
agencies’ declining confidence that timely fiscal measures will be forthcoming to place U.S. public finances on a sustainable path
and secure the AAA ratings. Standard and Poor’s affirmed the U.S. Treasury’s short-term credit rating of AAA indicating that the
short-term capacity of the U.S. to meet its financial commitment on its outstanding obligations is strong. The Company understands