Pre-tax investment income of $9.9 million during 2012 was 7% lower than the 2011 total as pre-tax yields were down nearly 14% on average, reflecting continuing depressed worldwide available rates, principally on shorter-term investments. After tax investment income decreased by a 9% during 2012, compared to the prior year.
Each known claim, regardless of complexity, is handled by a claims adjuster experienced with claims of this nature and a “case” reserve, appropriate for the individual loss occurrence, is established. For very routine “short-tail” claims such as private passenger physical damage, the Company records an initial reserve that is based upon historical loss settlements adjusted for current trends. As information regarding the loss occurrence is gathered in the claim handling process, the initial reserve is adjusted to reflect the anticipated ultimate cost to settle the claim. For more complex claims which can tend toward being “long-tail” in nature, an experienced claims adjuster will review the facts and circumstances surrounding the loss occurrence to make a determination of the reserve to be established. Many of the more complex claims involve litigation and necessitate an evaluation of potential jury awards in addition to the factual information to determine the value of each claim. Each claim is frequently monitored and the recorded reserve is increased or decreased relative to information gathered during the settlement life cycle.
The Company also uses the loss development factor approach for its long-tail lines of business. A minimum of 15 accident years is included in the loss development triangles used to calculate link ratios and the selected loss development factors used to determine the reserves for incurred but not reported losses. A minimum of 20 accident years is used for long-tail workers’ compensation reserve projections. Significant emphasis is placed on the use of tail factors for the Company’s long-tail lines of business.
In addition, the Company's balance sheet includes paid and estimated unpaid amounts recoverable from reinsurers under various agreements totaling $253,112 at December 31, 2013. These recoverables are only partially collateralized. The two largest amounts due from individual reinsurers were $62,812 and $50,050 at December 31, 2013, of which the Company holds an equal amount of collateral and offsetting balances.
On October 31, 2008, the Company purchased a commercial lines specialty insurance agency primarily focusing on the needs of the transportation industry including trucking independent contractors as well as fleet trucking companies for a cash purchase price of $3,500. The acquisition is part of the Company’s property and casualty insurance segment. As part of the purchase, the Company recorded goodwill of $3,152 and intangible assets related to customer relationships and employment agreements of $179 which are included in Other Assets in the consolidated balance sheets and has recorded amortization of intangible assets of $17, $28 and $35 during 2013, 2012, and 2011, respectively. Accumulated amortization on intangible assets was $175 and $158 as of December 31, 2013 and 2012, respectively.