The Company did not recognize any other-than-temporary impairments related to its fixed income security portfolio in 2012 or 2011. The Company recognized an other-than-temporary impairment of $6,000 related to its fixed income security portfolio in 2010.
The decrease in net investment income primarily reflects a decline in dividend income related to the Company’s mutual fund investments and a decline in the average yield on the fixed income portfolio. The decline in dividend income primarily reflects the sale of shares of certain mutual funds during the fourth quarter of 2011. The average yield on the fixed income portfolio was 2.47% as of December 31, 2012, compared to 3.04% as of December 31, 2011.
The following table represents the operations of the corporate/other segment for the years ended December 31, 2012 and 2011 (in thousands):
Cash Flows From Continuing Operations for the Years Ended December 31, 2012 and 2011.
The Company performs its annual goodwill impairment test as of September 30.
For the year ended December 31, 2010, the run-off specialty reinsurance segment reported net premiums earned of $1 and total revenue of $4,180. Total revenue for the year ended December 31, 2010 excludes the loss on the sale of Atlantic RE of $14,029. The loss before income taxes in the run-off specialty reinsurance segment totaled $(12,924) for the year ended December 31, 2010.
Consolidated net income (loss), basic shares outstanding, diluted shares outstanding, basic earnings per share, diluted earnings per share and cash dividends per share for the years ended December 31, 2012, 2011 and 2010 were as follows (in thousands, except share and per share data):
For the years ended December 31, 2012, 2011 and 2010, the Company recognized an increase of $1,007, $5, and $1,052 respectively, related to its equity interest in limited partnerships. As of December 31, 2012, the Company’s limited partnership investments include a multi-strategy fund of funds, a structured finance opportunity fund and an open-ended investment fund. The Company obtains audited financial statements of its limited partnership investments on an annual basis. The total assets, total liabilities and results of operations of the limited partnerships in which the Company invests as of and for the year ended December 31, 2011, based on the limited partnerships’ audited financial statements, were as follows (in thousands):
For the years ended December 31, 2012, 2011 and 2010, the Company increased (decreased) its workers’ compensation insurance and segregated portfolio cell reinsurance reserves for unpaid losses and LAE, including the accretion of prior period discount, by the following amounts (in thousands):
As of December 31, 2012 and 2011, the projected benefit obligation, fair value of plan assets and funded status of the pension plan and the postretirement plan were as follows (in thousands):
The net periodic benefit cost incurred by the Company for the years ended December 31, 2012, 2011 and 2010 totaled $77, $60, and $17 for the pension plan and $(21), $(22), and $(7) for the postretirement plan. In July 2011, the Company purchased annuities for plan participants that were receiving benefit payments under the pension plan, which resulted in a reduction of the projected benefit obligation of $1,083 and the recognition of a settlement loss of $134.
The Company offers alternative market workers’ compensation solutions to individual companies, groups and associations (referred to as “segregated portfolio cell dividend participants”) through the creation of segregated portfolio cells. The segregated portfolio cells are segregated pools of assets that function as insurance companies within an insurance company. The pool of assets and associated liabilities of each segregated portfolio cell are solely for the benefit of the segregated portfolio cell dividend participants, and the pool of assets of one segregated portfolio cell are statutorily protected from the creditors of the others. This permits the Company to provide customers with a turn-key alternative markets solution that includes program design, fronting, claims administration, risk management, segregated portfolio cell rental, asset management and segregated portfolio management services. The Company outsources the asset management and segregated portfolio cell management services to a third party. The segregated portfolio cell structure provides dividend participants the opportunity to share in both underwriting profit and investment income derived from their respective segregated portfolio cell’s financial results.
The following table provides the fee revenue generated by the segregated portfolio cell reinsurance segment and included in the Company’s workers’ compensation insurance and corporate/other segments for the years ended December 31, 2012, 2011 and 2010, respectively (in thousands):
Both the Company and AIG Companies have appointed arbitrators. The parties are currently in the process of attempting to select an umpire. As of this date, the parties have obtained completed questionnaires from a selected pool of umpire candidates who are being evaluated by the parties.
Management performed an evaluation of subsequent events through the issuance date of the consolidated financial statements and determined there were no additional recognized or unrecognized subsequent events that would require an adjustment and/or additional disclosure in the consolidated financial statements as of December 31, 2012.