The provision related to current year increased by $15.9 million, or 10.1%, in 2012 from 2011. This increase was attributable to a 21.1% increase in title premiums and escrow fees in 2012 from 2011, partially offset by a lower ultimate loss rate for the current policy year in 2012 when compared to 2011. At December 31, 2012, the ultimate loss rate for policy year 2012 was 5.1%. At December 31, 2011, the ultimate loss rate for policy year 2011 was 5.6%.
Other long-term investments consist primarily of investments in affiliates, which are accounted for under either the equity method or the cost method of accounting, investments in real estate and notes receivable. For each of the years ended December 31, 2013 and 2012, the Company recognized $7.8 million of impairment losses on investments in affiliates. For the year ended December 31, 2011, the Company recognized $8.6 million of impairment losses on other long-term investments, including $6.3 million related to investments in affiliates and $2.3 million related to notes receivable. In making the determination as to whether an individual investment in affiliate was impaired, the Company assessed the then-current and expected financial condition of each relevant entity, including, but not limited to, the anticipated ability of the entity to make its contractually required payments to the Company (with respect to debt obligations to us), the results of valuation work performed with respect to the entity, the entity’s anticipated ability to generate sufficient cash flows and the market conditions in the industry in which the entity was operating.
Long-lived assets held and used include property and equipment, capitalized software and other intangible assets with a finite life. Management uses estimated future cash flows (undiscounted and excluding interest) to measure the recoverability of long-lived assets held and used whenever events or changes in circumstances indicate that the carrying value of an asset may not be fully recoverable. If the undiscounted cash flow analysis indicates a long-lived asset is not recoverable, an impairment loss is recorded for the excess of the carrying amount of the asset over its fair value.
The Company’s principal title insurance subsidiary, First American Title Insurance Company (“FATICO”), maintained total statutory capital and surplus of $996.0 million and $956.4 million as of December 31, 2013 and 2012, respectively. Statutory net income for the years ended December 31, 2013, 2012 and 2011 was $199.1 million, $301.9 million and $92.3 million, respectively. FATICO was in compliance with the minimum statutory capital and surplus requirements as of December 31, 2013.
The Company had the following gross unrealized losses as of December 31, 2013 and 2012:
The weighted-average interest rate for the Company’s notes and contracts payable was 4.34% and 2.87% at December 31, 2013 and 2012, respectively.
Company’s income tax returns in several jurisdictions are being examined by various tax authorities. The Company believes that adequate amounts of tax and related interest, if any, have been provided for any adjustments that may result from these examinations.
The Company’s defined benefit pension plan is a noncontributory, qualified plan with benefits based on the employee’s compensation and years of service. The defined benefit pension plan was closed to new entrants effective December 31, 2001 and amended to “freeze” all benefit accruals as of April 30, 2008.
The fair value of loans receivable, net is estimated based on the discounted value of the future cash flows using current rates being offered for loans with similar terms to borrowers of similar credit quality.
For a substantial majority of these lawsuits, however, it is not possible to assess the probability of loss. Most of these lawsuits are putative class actions which require a plaintiff to satisfy a number of procedural requirements before proceeding to trial. These requirements include, among others, demonstration to a court that the law proscribes in some manner the