NYM Nymagic, Inc.

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number: 1-11238

NYMAGIC, INC.

(Exact name of registrant as specified in its charter)

New York (State or other jurisdiction of incorporation or organization)		13-3534162 (I.R.S. Employer Identification No.)
919 Third Avenue (Address of principal executive offices)		10022 (Zip Code)

212 551-0600
(Registrant’s telephone number, including area code)

None
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at November 1, 2009
Common Stock, $1.00 par value per share		8,442,488 shares

 

 

FORWARD—LOOKING STATEMENTS

This report contains certain forward-looking statements concerning the Company’s operations, economic performance and financial condition, including, in particular, the likelihood of the Company’s success in developing and expanding its business. Any forward-looking statements concerning the Company’s operations, economic performance and financial condition contained herein, including statements related to the outlook for the Company’s performance in 2009 and beyond, are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon a number of assumptions and estimates which inherently are subject to uncertainties and contingencies, many of which are beyond the control of the Company. Some of these assumptions may not materialize and unanticipated events may occur which could cause actual results to differ materially from such statements. These include, but are not limited to, the cyclical nature of the insurance and reinsurance industry, premium rates, investment results, hedge fund results, the estimation of loss reserves and loss reserve development, uncertainties associated with asbestos and environmental claims, including difficulties with assessing latent injuries and the impact of litigation settlements, bankruptcies and potential legislation, the uncertainty surrounding the losses related to the attacks of September 11, 2001, and those associated with catastrophic hurricanes, the occurrence and effects of wars and acts of terrorism, net loss retention, the effect of competition, the ability to collect reinsurance receivables and the timing of such collections, the availability and cost of reinsurance, the possibility that the outcome of any litigation or arbitration proceeding is unfavorable, the ability to pay dividends, regulatory changes, changes in the ratings assigned to the Company by rating agencies, failure to retain key personnel, the possibility that our relationship with Mariner Partners, Inc. could terminate or change, and the fact that ownership of our common stock is concentrated among a few major stockholders and is subject to the voting agreement, as well as assumptions underlying any of the foregoing and are generally expressed with words such as “intends,” “intend,” “intended,” “believes,” “estimates,” “expects,” “anticipates,” “plans,” “projects,” “forecasts,” “goals,” “could have,” “may have” and similar expressions. These risks could cause actual results for the 2009 year and beyond to differ materially from those expressed in any forward-looking statements. The Company undertakes no obligation to update publicly or revise any forward-looking statements.

NYMAGIC, INC.
INDEX

		Page No.
Part I. Financial Information
Item 1. Financial Statements			2
Consolidated Balance Sheets — September 30, 2009 (Unaudited) and December 31, 2008			2
Consolidated Statements of Operations — Nine months ended September 30, 2009 (Unaudited) and September 30, 2008			3
Consolidated Statements of Operations — Three months ended September 30, 2009 (Unaudited) and September 30, 2008			4
Consolidated Statements of Cash Flows — Nine months ended September 30, 2009 (Unaudited) and September 30, 2008			5
Notes to Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			25
Item 3. Quantitative and Qualitative Disclosures About Market Risk			39
Item 4. Controls and Procedures			40
Part II. Other Information
Item 1. Legal Proceedings			41
Item 1A. Risk Factors			41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			41
Item 3. Defaults Upon Senior Securities			41
Item 4. Submission of Matters to a Vote of Security Holders			42
Item 5. Other Information			42
Item 6. Exhibits			42
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

Item 1. Financial Statements

NYMAGIC, INC.
CONSOLIDATED BALANCE SHEETS

		September 30,				December 31,
		2009				2008
		(unaudited)
ASSETS
Investments:
Fixed maturities:
Held to maturity at amortized cost (fair value $62,131,620 and $42,329,432)		$	57,199,582			$	61,246,212
Available for sale at fair value (amortized cost $309,140,914 and $149,402,001)			318,036,188				144,978,426
Trading at fair value (amortized cost $0 and $22,203,883)			—				17,399,090
Equity securities — trading at fair value (cost $0 and $15,159,200)			—				11,822,620
Commercial loans at fair value (amortized cost $6,736,458 and $6,907,368)			4,292,444				2,690,317
Limited partnerships at equity (cost $111,648,817 and $98,101,553)			158,798,157				122,927,697
Short-term investments			64,863,945				110,249,779
Cash and cash equivalents			67,891,455				75,672,102
Total cash and investments			671,081,771				546,986,243
Accrued investment income			3,420,445				4,978,920
Premiums and other receivables, net			28,455,773				23,426,525
Receivable for investments disposed			1,571,664				25,415,261
Reinsurance receivables on unpaid losses, net			207,631,304				213,906,569
Reinsurance receivables on paid losses, net			21,456,640				28,429,945
Deferred policy acquisition costs			17,088,852				14,663,710
Prepaid reinsurance premiums			23,087,406				19,225,185
Deferred income taxes			30,481,581				35,514,597
Property, improvements and equipment, net			13,767,979				10,033,489
Other assets			5,403,093				23,895,902
Total assets		$	1,023,446,508			$	946,476,346
LIABILITIES
Unpaid losses and loss adjustment expenses		$	558,764,963			$	548,749,589
Reserve for unearned premiums			95,541,752				83,364,396
Ceded reinsurance payable			23,573,807				23,809,871
Notes payable			100,000,000				100,000,000
Payable for securities purchased			5,445,700				—
Dividends payable			749,529				671,059
Other liabilities			32,671,215				25,808,669
Total liabilities			816,746,966				782,403,584
SHAREHOLDERS’ EQUITY
Common stock			15,776,465				15,742,215
Paid-in capital			51,074,740				49,539,886
Accumulated other comprehensive loss			(18,962,171	)			(2,875,317	)
Retained earnings			246,847,099				189,702,569
			294,736,133				252,109,353
Treasury stock, at cost, 7,333,977 shares			(88,036,591	)			(88,036,591	)
Total shareholders’ equity			206,699,542				164,072,762
Total liabilities and shareholders’ equity		$	1,023,446,508			$	946,476,346

The accompanying notes are an integral part of these consolidated financial statements.

NYMAGIC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

		Nine months ended September 30,
		2009				2008
Revenues:
Net premiums earned		$	117,676,922			$	128,473,249
Net investment income (loss)			34,320,641				(47,539,914	)
Total other-than-temporary impairments			(478,407	)			—
Portion of loss recognized in OCI (before taxes)			—				—
Net impairment loss recognized in earnings			(478,407	)			—
Net realized investment gains (losses)			2,320,323				(46,313,522	)
Commission and other income			3,439,012				107,792
Total revenues			157,278,491				34,727,605
Expenses:
Net losses and loss adjustment expenses incurred			57,843,159				90,971,704
Policy acquisition expenses			26,899,347				29,398,298
General and administrative expenses			30,876,796				28,141,458
Interest expense			5,047,269				5,035,860
Total expenses			120,666,571				153,547,320
Income (loss) before income taxes			36,611,920				(118,819,715	)
Income tax provision:
Current			4,712,535				(16,064,257	)
Deferred			(357,982	)			(18,187,590	)
Total income tax expense (benefit)			4,354,553				(34,251,847	)
Net income (loss)		$	32,257,367			$	(84,567,868	)
Weighted average number of shares of common stock outstanding-basic			8,422,448				8,582,768
Basic earnings (loss) per share		$	3.83			$	(9.85	)
Weighted average number of shares of common stock outstanding-diluted			8,624,267				8,582,768
Diluted earnings (loss) per share		$	3.74			$	(9.85	)
Dividends declared per share		$	.14			$	.24

The accompanying notes are an integral part of these consolidated financial statements.

NYMAGIC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

		Three months ended September 30,
		2009				2008
Revenues:
Net premiums earned		$	38,506,255			$	40,476,732
Net investment income (loss)			14,577,937				(39,434,923	)
Total other-than-temporary impairments			—				—
Portion of loss recognized in OCI (before taxes)			—				—
Net impairment loss recognized in earnings			—				—
Net realized investment gains (losses)			545,780				(14,963,262	)
Commission and other income			3,311,542				(31,646	)
Total revenues			56,941,514				(13,953,099	)
Expenses:
Net losses and loss adjustment expenses incurred			19,831,468				28,080,754
Policy acquisition expenses			9,072,957				10,053,153
General and administrative expenses			10,398,637				9,703,807
Interest expense			1,683,238				1,679,549
Total expenses			40,986,300				49,517,263
Income (loss) before income taxes			15,955,214				(63,470,362	)
Income tax provision:
Current			4,353,745				(14,631,113	)
Deferred			(2,973,658	)			1,234,346
Total income tax expense (benefit)			1,380,087				(13,396,767	)
Net income (loss)		$	14,575,127			$	(50,073,595	)
Weighted average number of shares of common stock outstanding-basic			8,431,788				8,405,619
Basic earnings (loss) per share		$	1.73			$	(5.96	)
Weighted average number of shares of common stock outstanding-diluted			8,657,247				8,405,619
Diluted earnings (loss) per share		$	1.68			$	(5.96	)
Dividends declared per share		$	.06			$	.08

The accompanying notes are an integral part of these consolidated financial statements.

NYMAGIC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

		Nine months ended September 30,
		2009				2008
Cash flows provided by operating activities:
Net income (loss)		$	32,257,367			$	(84,567,868	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Provision for deferred taxes			(357,982	)			(18,187,590	)
Net realized investment (gain) loss			(2,320,323	)			46,313,522
Net impairment loss recognized in earnings			478,407				—
Equity in (earnings) loss of limited partnerships			(20,492,356	)			13,963,661
Net amortization from bonds and commercial loans			821,888				148,383
Depreciation and other, net			1,024,857				873,335
Trading portfolio activities			29,217,972				59,832,465
Commercial loan activities			(1,615,100	)			1,206,886
Changes in:
Premiums and other receivables			(5,029,248	)			(21,387,908	)
Reinsurance receivables paid and unpaid, net			13,248,570				33,064,249
Ceded reinsurance payable			(236,064	)			(4,046,115	)
Accrued investment income			1,558,475				52,367
Deferred policy acquisition costs			(2,425,142	)			(1,403,807	)
Prepaid reinsurance premiums			(3,862,221	)			(976,777	)
Other assets			18,492,809				(16,280,516	)
Unpaid losses and loss adjustment expenses			10,015,374				4,202,284
Reserve for unearned premiums			12,177,356				6,474,964
Other liabilities			6,862,546				(6,183,971	)
Total adjustments			57,559,818				97,665,432
Net cash provided by operating activities			89,817,185				13,097,564
Cash flows used in investing activities:
Held to maturity fixed maturities matured, repaid and redeemed			6,712,876				—
Available for sale fixed maturities acquired			(423,889,045	)			(159,465,754	)
Available for sale fixed maturities sold			264,735,655				56,849,498
Available for sale fixed maturities matured, repaid and redeemed			—				9,278,880
Capital contributed to limited partnerships			(27,235,000	)			(44,859,990	)
Distributions and redemptions from limited partnerships			11,856,894				60,092,204
Net sale of short-term investments			45,254,806				—
Receivable for investments disposed and not yet settled			23,843,597				6,876,900
Payable for securities not yet settled			5,445,700				4,903,438
Acquisition of property & equipment, net			(4,759,347	)			(5,019,168	)
Net cash used in investing activities			(98,033,864	)			(71,343,992	)
Cash flows provided by (used in) from financing activities:
Proceeds from stock issuance and other			1,569,104				1,787,914
Cash dividends paid to stockholders			(1,133,072	)			(2,091,648	)
Net purchase of treasury stock			—				(7,653,602	)
Payable for treasury stock purchased and not yet settled			—				(1,911,187	)
Net cash provided by (used in) financing activities			436,032				(9,868,523	)
Net decrease in cash			(7,780,647	)			(68,114,951	)
Cash and cash equivalents at beginning of period			75,672,102				204,913,343
Cash and cash equivalents at end of period		$	67,891,455			$	136,798,392
Supplemental disclosures:
Interest paid		$	6,501,388			$	6,500,055
Net federal income tax received		$	9,148,020			$	—

The accompanying notes are an integral part of these consolidated financial statements.

NYMAGIC, INC.
Notes to Consolidated Financial Statements September 30, 2009 and 2008

(1) Basis of Presentation and Accounting Policies

Basis of presentation

The interim consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles (GAAP) and are unaudited. In the opinion of management, all material adjustments necessary for a fair presentation of results have been reflected for such periods. Adjustments to financial statements consist of normal recurring items. The results of operations for any interim period are not necessarily indicative of results for the full year. These financial statements and related notes should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and claims and expenses during the reporting period. Actual results could differ from those estimates.

Adoption of new accounting pronouncements

In June 2009, the FASB issued ASC 105, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles ” (“ASC 105”). ASC 105 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements that are presented in conformity with U.S. GAAP. ASC 105 establishes the FASB Accounting Standards Codification (“the Codification”) as the single source of authoritative accounting principles recognized by the FASB in the preparation of financial statements in conformity with U.S. GAAP. The Codification does not create new accounting and reporting guidance; rather, it reorganizes U.S. GAAP pronouncements into approximately 90 topics within a consistent structure. All guidance contained in the Codification carries an equal level of authority. Relevant portions of authoritative content, issued by the SEC, for SEC registrants, have been included in the Codification. After the effective date of ASC 105, all nongrandfathered, literature not included in the Codification is superseded and deemed nonauthoritative (other than Securities and Exchange guidance for publicly-traded companies). ASC 105 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption of ASC 105 has had no impact on our consolidated financial statements.

Future adoption of new accounting pronouncements

In December 2008, the FASB issued ASC 715, Employers’ Disclosures about Postretirement Benefit Plan Assets . ASC 715 requires an employer to provide certain disclosures about plan assets of its defined benefit pension or other postretirement plans. The disclosures required include the investment policies and strategies of the plans, the fair value of the major categories of plan assets, the inputs and valuation techniques used to develop fair value measurements and a description of significant concentrations of risk in plan assets. ASC 715 is effective for fiscal years ending after December 15, 2009. The adoption of ASC 715 will not have an impact on the Company’s operations, financial position or liquidity.

In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial Assets (“SFAS 166”). (This pronouncement has not been Codified as of the filing of this report, therefore reference is made to the pre-Codified standard). SFAS 166 amends the derecognition guidance in Statement 140 and eliminates the concept of qualifying special-purpose entities (“QSPEs”). SFAS 166 is effective for fiscal years and interim periods beginning after November 15, 2009. Early adoption of SFAS 166 is prohibited. The Company will adopt SFAS No. 166 during the first quarter of 2010 and has not yet determined the impact adoption will have on its results of operations, financial position or liquidity.

In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46 (“SFAS 167”), which amends the consolidation guidance applicable to variable interest entities (“VIE“). (This pronouncement has not been Codified as of the filing of this report, therefore reference is made to the pre-Codified standard). An entity would consolidate a VIE, as the primary beneficiary, when the entity has both of the following characteristics: (a) The power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) The obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE. Ongoing reassessment of whether an enterprise is the primary beneficiary of a VIE is required. SFAS 167 amends interpretation 46(R) to eliminate the quantitative approach previously required for determining the primary beneficiary of a VIE. This Statement is effective for fiscal years and interim periods beginning after November 15, 2009. The Company will adopt SFAS No. 167 during the first quarter of 2010 and has not yet determined the impact adoption will have on its results of operations, financial position or liquidity.

NYMAGIC, INC.
Notes to Consolidated Financial Statements September 30, 2009 and 2008

In August 2009, the FASB issued ASU 2009-05, Measuring Liabilities at Fair Value . ASU 2009-05 is an amendment of ASC 820, Fair Value Measurements and Disclosures . ASU 2009-05 applies to all entities that measure liabilities at fair value within the scope of ASC 820, Fair Value Measurements and Disclosures . ASU 2009-05 provides guidance on measuring the fair value of liabilities under circumstances in which a quoted price in an active market for the identical liability is not available. ASU 2009-05 is effective for the first interim or annual reporting period beginning after August 28, 2009. The Company will adopt ASU 2009-05 during the fourth quarter of 2009 and has determined ASU 2009-05 will not have a material impact on its financial position or results of operations.

In September 2009, the FASB issued ASU 2009-12, Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). ASU 2009-12 provides guidance on estimating the fair value of alternative investments when using the net asset value per share provided by the investment entity. The effective date of ASU 2009-12 is for interim and annual periods ending after December 15, 2009, with early adoption permitted. The Company will adopt ASU 2009-12 in the fourth quarter of 2009 and has not yet determined the impact adoption will have on its results of operations, financial position or liquidity.

NYMAGIC, INC.
Notes to Consolidated Financial Statements September 30, 2009 and 2008

(2) Investments:

A summary of the Company’s investment portfolio components at September 30, 2009 and December 31, 2008 is presented below:

		September 30, 2009				Percent				December 31, 2008				Percent
Fixed maturities held to maturity (amortized cost):
Residential mortgage-backed securities		$	57,199,582				8.53	%		$	61,246,212				11.20	%
Total fixed maturities held to maturity		$	57,199,582				8.53	%		$	61,246,212				11.20	%
Fixed maturities available for sale (fair value):
U.S. Treasury securities		$	54,877,110				8.18	%		$	40,783,969				7.46	%
Municipal obligations			154,230,914				22.98	%			90,483,461				16.54	%
Corporate securities			108,928,164				16.23	%			13,710,996				2.51	%
Total fixed maturities available for sale		$	318,036,188				47.39	%		$	144,978,426				26.51	%
Fixed maturities trading (fair value):
Municipal obligations		$	—				0.00	%		$	17,399,090				3.18	%
Total fixed maturities trading		$	—				0.00	%		$	17,399,090				3.18	%
Total fixed maturities		$	375,235,770				55.92	%		$	223,623,728				40.89	%
Equity securities trading (fair value):
Preferred stock		$	—				0.00	%		$	11,822,620				2.16	%
Total equity securities		$	—				0.00	%		$	11,822,620				2.16	%
Cash and short-term investments			132,755,400				19.78	%			185,921,881				33.99	%
Total fixed maturities, equity securities, cash and short-term investments		$	507,991,170				75.70	%		$	421,368,229				77.04	%
Commercial loans (fair value)			4,292,444				0.64	%			2,690,317				0.49	%
Limited partnership hedge funds (equity)			158,798,157				23.66	%			122,927,697				22.47	%
Total investment portfolio		$	671,081,771				100.00	%		$	546,986,243				100.00	%

As of September 30, 2009, 94.5% of the carrying value of the Company’s fixed income and short-term investment portfolios were considered investment grade by S&P.

Short-term investments, which have maturity of one year or less from the date of purchase, are carried at amortized cost, which approximates fair value. The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. The Company’s investment in limited partnerships at equity include hedge fund interests in limited partnerships and limited liability companies.

NYMAGIC, INC.
Notes to Consolidated Financial Statements September 30, 2009 and 2008

Details of the residential mortgage-backed securities portfolio as of September 30, 2009, including publicly available qualitative information, are presented below:

														Weighted				Average
														Average				FICO								Credit
														Loan to				Credit				Delinquency				Support
														Value %				Score				Rate				Level				S&P				Moody’s
Security description		Issue date				Amortized cost				Fair value				(1)				(2)				(3)				(4)				Rating				Rating
AHMA 2006-3			7/2006			$	11,521,788			$	11,646,880				85.8				705				39.9				43.4			AA+				Caa1
CWALT 2005-69			11/2005				7,291,385				7,433,475				82.0				699				47.5				48.8			CCC				Ba3
CWALT 2005-76			12/2005				7,215,803				6,180,018				82.5				699				51.1				49.5			CCC					B2
RALI 2005-QO3			10/2005				7,227,789				7,854,855				81.5				704				38.9				45.0				A-				B1
WaMu 2005-AR17			12/2005				6,222,054				7,482,223				74.7				715				28.7				51.0			AAA					A1
WaMu 2006-AR9			7/2006				8,713,422				9,801,677				75.3				731				31.1				25.7				B			Ba1
WaMu 2006-AR13			9/2006				9,007,341				11,732,492				76.1				728				29.8				26.2			AA-					B3
						$	57,199,582			$	62,131,620

The Company has investments in residential mortgage-backed securities (“RMBS”) amounting to $57.2 million at September 30, 2009. These securities are classified as held to maturity after the Company transferred these holdings from the available for sale portfolio effective October 1, 2008. Upon acquisition of the RMBS portfolio and prior to October 1, 2008, the Company was uncertain as to the duration for which it would hold the RMBS portfolio and appropriately classified such securities as available for sale. As a result of the increasing market uncertainty surrounding the projected cash flows on these securities, as well as the widely disparate estimated prices of such securities among brokers depending on facts and assumptions utilized, we developed a process to perform an extensive analysis of the underlying structure of each RMBS in order to assure ourselves of its collectability. Accordingly, we constructed cash models to estimate the potential for impairment to these securities based upon default rates, severity rates and prepayment speeds consistent with reasonable expectations of their underlying cash flows. These assumptions were further stressed to provide a range of potential outcomes allowing us to assess any impairment. After reviewing the results of the analytical evaluation of the RMBS portfolio, we concluded that the economic or intrinsic value of these securities was not impaired. Additionally, we concluded, on the basis of this analysis, that there were no other-than-temporary impairments to these securities required to be recorded. Accordingly, the Company transferred such securities to the held to maturity classification as we had the intent and the ability to hold such securities to maturity. The Company had never previously transferred securities to held to maturity, but considered this an unprecedented situation brought upon by the financial crisis in the markets. The adjusted cost basis (amortized cost) of these securities is based on a determination of the fair value of these securities on the date they were transferred.

Prior to the transfer to the held to maturity classification, the Company incurred cumulative write-downs from other-than-temporary impairments (“OTTI”) declines in the fair value of these securities, amounting to approximately $40.7 million in 2008. The collection of principal repayments on these securities through September 30, 2009 resulted in approximately $545,000 in realized investment gains and $2.1 million in reductions in unrealized losses.

The Company’s cash flow analysis for each of these securities attempts to estimate the likelihood of any future impairment. While the Company does not believe there are any OTTI currently, future estimates may change depending upon the actual performance statistics reported for each security to the Company. This may result in future charges based upon revised estimates for delinquency rates, severity rates or prepayment patterns. These changes in estimates may be material. These securities are collateralized by pools of “Alt-A” mortgages, and receive priority payments from these pools. The Company’s securities rank senior to subordinated tranches of debt collateralized by each respective pool of mortgages. The Company has collected all applicable interest and principal repayments on such securities to date. As of October 25, 2009, the levels of subordination ranged from 26% to 51% of the total debt outstanding for each pool. Delinquencies within the underlying mortgage pools ranged from 29% to 51% of total amounts outstanding. For comparison purposes, in September 2008, delinquencies ranged from 11.3% to 33.1%, while subordination levels have remained consistent. Delinquency rates are not the same as severity rates, or actual loss, but are an indication of the potential for losses of some degree in future periods.

NYMAGIC, INC.
Notes to Consolidated Financial Statements September 30, 2009 and 2008

Under ASC 320, effective April 1, 2009, the Company records any future principal payments received on its RMBS in excess of its carrying amount as credits to other comprehensive income instead of recording the excess in the Company’s income statement. Since April 1, 2009, the Company recorded $2.1 million of principal payments received on its RMBS in excess of its carrying amount as a credit before income taxes to other comprehensive income.

These RMBS investments, as of December 31, 2008 were rated AAA/Aaa by S&P/Moody’s. As of September 30, 2009, these securities are rated CCC to AAA by S&P and Caa1 to A1 by Moody’s.

The fair value of each RMBS investment is based on the framework established in ASC 820 (See Note 3). Fair value is determined by estimating the price at which an asset might be sold on the measurement date. There has been a considerable amount of turmoil in the U.S. housing market since 2007, which has led to market declines in the Company’s RMBS securities. Because the pricing of these investments is complex and has many variables affecting price including, projected delinquency rates, projected severity rates, estimated loan to value ratios, vintage year, subordination levels, projected prepayment speeds and expected rates of return required by prospective purchasers, the estimated price of such securities will differ among brokers depending on these facts and assumptions. While many of the inputs utilized in pricing are observable, many other inputs are unobservable and will vary depending upon the broker. During periods of market dislocation, such as current market conditions, it is increasingly difficult to value such investments because trading becomes less frequent and/or market data becomes less observable. As a result, valuations may include inputs and assumptions that are less observable or require greater estimation and judgment as well as valuation methods that are more complex. For example, assumptions regarding projected delinquency and severity rates have become very pessimistic due to uncertainties associated with the residential real estate markets. Additionally, there are only a limited number of prospective purchasers of such securities and such purchasers generally demand high expected returns in the current market. This has resulted in lower quotes from securities dealers, who are, themselves, reluctant to position such securities because of financing uncertainties. Accordingly, the dealer quotes used to establish fair value may not be reflective of the expected future cash flows from a security and, therefore, not reflective of its intrinsic value.

As of September 30, 2009, there was substantial variance in RMBS securities prices from different pricing sources. Additionally, to management’s knowledge, there have been very few trades in securities within the Company’s RMBS portfolio. This is consistent with management’s previously established view that the market is dislocated and illiquid. Accordingly, the Company has elected to deviate from quoted prices using a matrix pricing analysis.

The Company used a weighted pricing matrix to determine fair value. The pricing matrix was based on risk profile, qualitative and quantitative data for similar vintage RMBS securities that had recent prices. The securities were evaluated in each of the following 9 categories: sector, collateral, current S&P rating, current credit support, 3 month CDR, 3 month VPR, 1 month loss severity, 60+ delinquencies, and FICO score. The price for each RMBS was based upon the prices of those RMBS securities that had the most similar underlying characteristics to the Company’s RMBS portfolio.

There are government sponsored programs that may affect the performance of the Company’s RMBS and the Company is uncertain as to the impact, if any, these programs will have on their fair value. The fair value of such securities at September 30, 2009 was approximately $62 million.

As a result of the recent downgrades of such securities and in accordance with applicable statutory accounting guidance under SSAP 43R, which became effective September 30, 2009, the Company recorded decreases in the fair value of six of seven of the RMBS securities in its portfolio, resulting in a decline of $29.6 million before applicable taxes, to the Company’s consolidated statutory surplus, which was approximately $187 million as of September 30, 2009.

NYMAGIC, INC.
Notes to Consolidated Financial Statements September 30, 2009 and 2008

The gross unrealized gains and losses on fixed maturities held to maturity and available for sale at September 30, 2009 and December 31, 2008 are as follows:

		September 30, 2009
						OTTI				Amortized				Gross				Gross
		Amortized				Recognized				Cost after				Unrealized				Unrealized				Fair
		Cost				In OCI (a)				OTTI				Gains				Losses				Value
Residential mortgage-backed securities held to maturity		$	95,267,425			$	(38,067,843	)		$	57,199,582			$	5,967,823			$	(1,035,785	)		$	62,131,620
U.S. Treasury securities available for sale			54,368,401				—				54,368,401				508,709				—				54,877,110
Municipal obligations available for sale			152,001,527				—				152,001,527				2,258,831				(29,444	)			154,230,914
Corporate securities available for sale			102,770,986				—				102,770,986				6,157,178				—				108,928,164
Totals		$	404,408,339			$	(38,067,843	)		$	366,340,496			$	14,892,541			$	(1,065,229	)		$	380,167,808

		December 31, 2008
						Gross				Gross
		Amortized				Unrealized				Unrealized				Fair				Carrying
		Cost				Gains				Losses				Value				Value
Residential mortgage-backed securities held to maturity		$	61,246,212			$	—			$	(18,916,780	)		$	42,329,432			$	61,246,212
U.S. Treasury securities available for sale			38,917,878				1,866,091				—				40,783,969				40,783,969
Municipal obligations available for sale			97,166,677				220,718				(6,903,934	)			90,483,461				90,483,461
Corporate securities available for sale			13,317,446				395,344				(1,794	)			13,710,996				13,710,996
Totals		$	210,648,213			$	2,482,153			$	(25,822,508	)		$	187,307,858			$	206,224,638

(a) Effective April 1, 2009, the Company adopted a new accounting standard promulgated by the FASB (ASC 320), which applies to the Company’s investment portfolio. The Company’s total stockholders’ equity was unchanged by adopting this new accounting standard. However, retained earnings were increased by an after tax amount of $26.1 million and accumulated comprehensive income was reduced by the same amount. These changes are attributable to a reclassification in the amount of $40.1 million of non-credit investment impairment losses previously recognized on the Company’s RMBS holdings that are currently being held to maturity. These securities are categorized as non-credit based on the Company’s impairment analysis. The Company will accrete from OCI to the amortized cost of the RMBS over their remaining life in a prospective manner on the basis of the amount and timing of future cash flows. The amount of the accretion since April 1, 2009 was $2.1 million.

NYMAGIC, INC.
Notes to Consolidated Financial Statements September 30, 2009 and 2008

Net investment income (loss) from each major category of investments for the periods indicated is as follows:

		Nine months ended								Three months ended
		September 30,								September 30,
		2009				2008				2009				2008
		(in millions)
Fixed maturities held to maturity		$	1.5			$	—			$	0.4			$	—
Fixed maturities available for sale			7.1				5.6				2.4				1.9
Trading securities			4.5				(37.2	)			0.8				(25.8	)
Commercial loans			2.1				(0.7	)			0.1				(0.4	)
Equity in earnings of limited partnerships			20.5				(14.0	)			11.3				(14.6	)
Short-term investments			0.3				2.2				0.1				0.7
Total investment (loss) income			36.0				(44.1	)			15.1				(38.2	)
Investment expenses			(1.7	)			(3.4	)			(0.6	)			(1.2	)
Net investment (loss) income		$	34.3			$	(47.5	)		$	14.5			$	(39.4	)

Details related to investment income (loss) from commercial loans and trading activities presented in the preceding table are as follows:

		Nine months ended								Three months ended
		September 30,								September 30,
		2009				2008				2009				2008
		(in millions)
Interest and dividends earned		$	1.0			$	8.4			$	0.3			$	1.5
Net realized losses			(1.0	)			(32.2	)			(0.7	)			(31.0	)
Net unrealized appreciation (depreciation)			6.6				(14.1	)			1.3				3.3
Total investment income (loss) from commercial loans and trading activities		$	6.6			$	(37.9	)		$	0.9			$	(26.2	)

The following tables summarize all fixed maturity securities in an unrealized loss position at September 30, 2009 and December 31, 2008, disclosing the aggregate fair value and gross unrealized loss for less than as well as more than 12 months:

		September 30, 2009
		Less than 12 months								12 months or longer								Total
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
		Value				Loss				Value				Loss				Value				Loss
Residential mortgage-backed securities held to maturity		$	—			$	—			$	6,180,018			$	(1,035,785	)		$	6,180,018				(1,035,785	)
Municipal obligations available for sale			13,659,485				(29,444	)			—				—				13,659,485				(29,444	)
Corporate securities available for sale			—				—				—				—				—				—
Total temporarily impaired securities		$	13,659,485			$	(29,444	)		$	6,180,018			$	(1,035,785	)		$	19,839,503			$	(1,065,229	)

NYMAGIC, INC.
Notes to Consolidated Financial Statements September 30, 2009 and 2008

		December 31, 2008
		Less than 12 months								12 months or longer								Total
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
		Value				Loss				Value				Loss				Value				Loss
Residential mortgage-backed securities held to maturity		$	42,329,432			$	(18,916,780	)		$	—			$	—			$	42,329,432			$	(18,916,780	)
Municipal obligations available for sale			79,343,141				(6,903,934	)			—				—				79,343,141				(6,903,934	)
Corporate securities available for sale			100,068				(1,794	)			—				—				100,068				(1,794	)
Total temporarily impaired securities		$	121,772,641			$	(25,822,508	)		$	—			$	—			$	121,772,641			$	(25,822,508	)

At September 30, 2009, the Company was holding four fixed maturity securities that were in an unrealized loss position. The Company believes these unrealized losses are temporary, as they resulted from changes in market conditions, including interest rates or sector spreads, and are not considered to be credit risk related. The Company does not intend to sell nor does it expect to be required to sell the securities outlined above.

The amortized cost and fair value of debt securities that are not included in the Company’s Commercial Loans portfolio at September 30, 2009 are shown below by contractual maturity. 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.

		Amortized				Fair
		Cost				Value
Due in one year or less		$	10,766,782			$	10,781,045
Due after one year through five years			166,505,980				171,247,456
Due after five years through ten years			112,101,385				115,771,088
Due after ten years			19,766,767				20,236,599
			309,140,914				318,036,188
Residential mortgage-backed securities			57,199,582				62,131,620
Totals		$	366,340,496			$	380,167,808

NYMAGIC, INC.
Notes to Consolidated Financial Statements September 30, 2009 and 2008

The components for net realized gains (losses) for the nine months and third quarter ended September 30, 2009 and 2008 are as follows:

		Nine months ended								Three months ended
		September 30,								September 30,
		2009				2008				2009				2008
		(in millions)
Realized gains (losses) on investments:
Fixed maturities gains		$	4.8			$	1.5			$	1.0			$	0.4
Fixed maturities losses			(2.4	)			(1.8	)			(0.5	)			(1.8	)
Fixed maturities impairments			(0.5	)			(46.0	)			—				(13.6	)
Short-term investments			(0.1	)			—				—				—
Net realized investment gains (losses)		$	1.8			$	(46.3	)		$	0.5			$	(15.0	)

Proceeds from redemptions in investments held to maturity or disposals of investments available for sale for the nine months ended September 30, 2009 and 2008 were $271,448,477 and $66,128,378, respectively. Gross gains of $545,363 were realized on repayments of held to maturity investments for the nine months ended September 30, 2009. Gross gains of $4,284,970 and $85,452 and gross losses of $2,857,388 and $501,569 were realized on sales, maturities, repayments and/or redemptions of available for sale investments for the nine months ended September 30, 2009 and 2008, respectively.

The Company recorded declines it considered OTTI in values of investments of $478,407 and $46,025,472 for the nine months ended September 30, 2009 and 2008, respectively. The Company recorded declines it considered OTTI in values of investments of $0 and $13,629,036 for the three months ended September 30, 2009 and 2008, respectively. Under ASC 320 and ASC 958, “Recognition and Presentation of Other-Than-Temporary Impairments” impairment is considered to be other than temporary if an entity (1) intends to sell the security, (2) more likely than not will be required to sell the security before recovering its amortized cost basis, or (3) does not expect to recover the security’s entire amortized cost basis. The OTTI of $478,407 recognized for the nine months ended September 30, 2009 resulted from the Company’s intention to sell certain municipal securities under circumstances in which those securities are not expected to recover their entire amortized cost prior to sale. Credit impairment occurs under ASC 320 if the present value of cash flows expected to be collected from the debt security is less than the amortized cost basis of the security. There were no credit impairments recorded during the three months and nine months ended September 30, 2009. Substantially all of the other-than-temporary declines recorded during the three months and nine months ended September 30, 2008 were from the Company’s RMBS portfolio. The decision to write down such securities was based upon the Company’s uncertainty at September 30, 2008 that such securities would be held until the fair value decline recovered.

The Company maintains a portfolio of municipal bonds that has an average S&P rating of AA. The average S&P rating includes certain municipal bonds that carry the benefit of insurance that provides credit enhancement. Excluding the benefit of this credit enhancement, the portfolio of municipal bonds has an average underlying S&P rating of AA-. The Company purchases municipal bonds with the intent to rely upon the underlying credit rating of the security exclusive of the credit enhancement provided by any financial guarantor.

NYMAGIC, INC.
Notes to Consolidated Financial Statements September 30, 2009 and 2008

The following table lists the financial guarantors, as well as the average S&P ratings and the average underlying S&P ratings, excluding the impact of credit enhancement, of the guaranteed municipal bonds in our investment portfolio in which there are a total of 22 municipal securities with a fair value of $112.7 million containing credit enhancements. The Company does not have any investments directly in the following financial guarantors.

		Fair				Average		Average
		Value				S&P		Underlying
Financial Guarantors		(in millions)				Rating		Rating
AMBAC ST GTD		$	5.0			AA-		AA-
FGIC			0.3			AAA		AAA
FSA & FSA-CR Ambac			39.6			AAA		AA
Natl-Re			51.7			AA-		AA-
Natl-Re FGIC			16.1			A+		A
Total		$	112.7

(3) Fair Value Measurements:

The Company’s estimates of fair value for financial assets and financial liabilities are based on the framework established in ASC 820. The framework is based on the inputs used in valuation and gives the highest priority to quoted prices in active markets and requires that observable inputs be used in the valuations when available. The disclosure of fair value estimates in the ASC 820 hierarchy is based on whether the significant inputs into the valuation are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions. The standard describes three levels of inputs that may be used to measure fair value and categorize the assets and liabilities within the hierarchy:

Level 1 —Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities. These prices generally provide the most reliable evidence and are used to measure fair value whenever available. Active markets are defined as having the following for the measured asset/liability: i) many transactions, ii) current prices, iii) price quotes not varying substantially among market makers, iv) narrow bid/ask spreads and v) most information publicly available.

The Company’s Level 1 assets are comprised of U.S. Treasury securities, which are highly liquid and traded in active exchange markets.

The Company uses the quoted market prices as fair value for assets classified as Level 1. The Company receives quoted market prices from a third party, a nationally recognized pricing service. Prices are obtained from available sources for market transactions involving identical assets. For the majority of Level 1 investments, the Company receives quoted market prices from an independent pricing service. The Company validates primary source prices by back testing to trade data to confirm that the pricing service’s significant inputs are observable.

The Company also compares the prices received from the third party service to other third party sources to validate the consistency of the prices received on securities.

Level 2 —Fair value is based on significant inputs, other than Level 1 inputs, that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset through corroboration with observable market data. Level 2 inputs include quoted market prices in active markets for similar assets, non-binding quotes in markets that are not active for identical or similar assets and other market observable inputs (e.g., interest rates, yield curves, prepayment speeds, default rates and loss severities).

The Company’s Level 2 assets include municipal debt obligations and corporate debt securities.

NYMAGIC, INC.
Notes to Consolidated Financial Statements September 30, 2009 and 2008

The Company generally obtains valuations from third party pricing services and/or security dealers for identical or comparable assets or liabilities by obtaining non-binding broker quotes (when pricing service information is not available) in order to determine an estimate of fair value. The Company bases all of its estimates of fair value for assets on the bid price as it represents what a third party market participant would be willing to pay in an arm’s length transaction. Prices from pricing services are validated by the Company through comparison to prices from corroborating sources and are validated by back testing to trade data to confirm that the pricing service’s significant inputs are observable. Under certain conditions, the Company may conclude the prices received from independent third party pricing services or brokers are not reasonable or reflective of market activity or that significant inputs are not observable, in which case it may choose to over-ride the third-party pricing information or quotes received and apply internally developed values to the related assets or liabilities. In such cases, those valuations would be generally classified as Level 3. Generally, the Company utilizes an independent pricing service to price its municipal debt obligations and corporate debt securities. Currently, these securities are exhibiting low trade volume. The Company considers such investments to be in the Level 2 category.

Level 3 —Fair value is based on at least one or more significant unobservable inputs that are supported by little or no market activity for the asset. These inputs reflect the Company’s understanding about the assumptions market participants would use in pricing the asset or liability.

The Company’s Level 3 assets include its RMBS (which are held to maturity) and commercial loans, as they are illiquid and trade in inactive markets. These markets are considered inactive as a result of the low level of trades of such investments.

All prices provided by primary pricing sources are reviewed for reasonableness, based on the Company’s understanding of the respective market. Prices may then be determined using valuation methodologies such as discounted cash flow models, as well as matrix pricing analyses performed on non-binding quotes from brokers or other market-makers. As of September 30, 2009, the Company utilized cash flow models, matrix pricing and non-binding broker quotes obtained from the primary pricing sources to determine the fair value of its RMBS and commercial loan investments. Because pricing of these investments is complex and has many variables affecting price including, delinquency rate, severity rate, loan to value ratios, vintage year, discount rate, subordination levels and prepayment speeds, the price of such securities will differ by broker depending on the weight given to the various inputs. While many of the inputs utilized in pricing are observable, some inputs are unobservable and the weight given these unobservable inputs will vary depending upon the broker. During periods of market dislocation, such as the current market conditions, it is increasingly difficult to value such investments because trading becomes less frequent and/or market data becomes less observable. As a result, valuations may include inputs and assumptions that are less observable or require greater estimation and judgment as well as valuation methods that are more complex. For example, prepayment speeds, delinquency rates and severity rates have become increasingly stressed by brokers due to market uncertainty connected with these types of investments resulting in lower quoted prices. These inputs are used in pricing models to assist the broker in determining a current price for these investments. After considering all of the relevant information at September 30, 2009, the Company adjusted the price received for two commercial loan investments. The Company considers such investments to be in the Level 3 category because the establishment of fair valuation is significantly reliant upon unobservable inputs.

The following are the major categories of assets measured at fair value on a recurring basis for the period ended September 30, 2009, using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):

		Level 1:
		Quoted
		Prices in				Level 2:
		Active				Significant				Level 3:
		Markets for				Other				Significant				Total at
		Identical				Observable				Unobservable				September 30,
		Assets				Inputs				Inputs				2009
Fixed maturities available for sale		$	54,877,110			$	263,159,078			$	—			$	318,036,188
Commercial loans			—				—				4,292,444				4,292,444
Total		$	54,877,110			$	263,159,078			$	4,292,444			$	322,328,632

The investments classified as Level 3 in the above table consist of commercial loans, for which the Company has determined that quoted market prices of similar investments are not determinative of fair value. Since the broker quotes do not reflect current market information from actual transactions, the Company has elected to deviate from quoted prices using a matrix pricing analysis. The following table presents a reconciliation of the beginning and ending balances for all investments measured at fair value using Level 3 inputs during the nine months and three months ended September 30, 2009.

NYMAGIC, INC.
Notes to Consolidated Financial Statements September 30, 2009 and 2008

		Nine months ended								Three months ended
		September 30, 2009								September 30, 2009
		Commercial								Commercial
		Loans				Total				Loans				Total
Beginning balance		$	2,690,317			$	2,690,317			$	4,287,759			$	4,287,759
Total unrealized gains or losses:
Included in earnings (or changes in net assets)			1,773,037				1,773,037				42,511				42,511
Included in other comprehensive income			—				—				—				—
Purchases, sales, maturities, repayments, redemptions and amortization			(170,910	)			(170,910	)			(37,826	)			(37,826	)
Transfers from Level 3			—				—				—				—
Transfers to Level 3
Ending balance		$	4,292,444			$	4,292,444			$	4,292,444			$	4,292,444

There were no investments classified as Level 3 for the nine months and three month periods ending September 30, 2008.

The Company elected the fair value option for approximately $8.3 million in commercial loans upon its adoption of ASC 825 effective January 1, 2008. The ASC 825 adoption did not have an impact on the Company’s results of operations, financial position or liquidity. The Company utilized the fair value election under ASC 825 for all of its $10.3 million of commercial loan purchases during the first three months of 2008. Management believes that the use of the ASC 825 fair value option to record commercial loan purchases was consistent with its trading objective for such investments. Accordingly, the entire commercial loan portfolio of $4.3 million at September 30, 2009 was recorded at fair value. The amortized cost of the commercial loan portfolio at September 30, 2009 was $6.7 million. All loans are current with respect to interest payments. The Company did not utilize the fair value election under ASC 825 for any investment purchases during the first nine months of 2009.

The changes in the fair value of these debt instruments were recorded in investment income. Investment income for the nine months ended September 30, 2009 reflected no realized gains or losses from sales and repayments, unrealized losses from fair value changes of $1,773,037 and interest income earned of $277,865. Investment income for the nine months ended September 30, 2008 reflected realized losses from repayments of $52,039, unrealized losses from fair value changes of $1,604,201 and interest income earned of $988,563.

(4) Income Taxes:

The Company files tax returns subject to the tax regulations of federal, state and local tax authorities. A tax benefit taken in the tax return but not in the financial statements is known as an “unrecognized tax benefit.” The Company had no unrecognized tax benefits at either September 30, 2009 or September 30, 2008. The Company’s policy is to record interest and penalties related to unrecognized tax benefits to income tax expense. The Company did not incur any interest or penalties related to unrecognized tax benefits for each of the nine month periods ended September 30, 2009 and 2008.

The Company is subject to federal, state and local examinations by tax authorities for tax year 2006 and subsequent. The Company had federal, state and local deferred tax assets amounting to potential future tax benefits of approximately $30.5 million and $35.5 million at September 30, 2009 and December 31, 2008, respectively. As of September 30, 2009, the Company has recorded a valuation allowance of $11.6 million with respect to the uncertainty in the realization of capital loss carryforwards. The Company considered various tax planning strategies to support the recoverability of existing deferred income taxes for capital loss carryforwards. This included an analysis of the timing and availability of unrealized positions in the fixed income maturity portfolio. The Company recorded tax benefits of $5.9 million for the nine months ended September 30, 2009 as a result of the partial reversal of the deferred tax valuation allowance previously provided for capital losses. This resulted from realized and unrealized capital gains in the investment portfolio during the first nine months of 2009. Management believes the deferred tax asset, net of the recorded valuation allowance account, as of September 30, 2009 will more-likely-than-not be fully realized.

NYMAGIC, INC.
Notes to Consolidated Financial Statements September 30, 2009 and 2008

(5) Comprehensive Income

The Company’s comparative comprehensive income is as follows:

		Nine months ended								Three months ended
		September 30,								September 30,
		2009				2008				2009				2008
		(in thousands)
Net income (loss)		$	32,257			$	(84,568	)		$	14,575			$	(50,074	)
Other comprehensive (loss) income, net of deferred taxes:
Unrealized holding (losses) gains on securities, net of deferred tax expense (benefit) of $5,306, $(18,175), $2,197 and $(9,183)			9,854				(33,753	)			4,079				(17,054	)
Noncredit component of other than temporarily impaired securities (a):
Held-to-maturity, net of deferred tax (benefit) of $(14,053), $0, $0 and $0			(26,099	)			—				—				—
Accretion of noncredit portion of impairment on held-to-maturity, net of deferred tax expense of $729, $0, $376 and $0			1,355				—				698				—
Less : reclassification adjustment
for gains (losses) realized in net income, net of tax expense (benefit) of 812, $(16,210), $191 and $(5,237)			1,508				(30,104	)			355				(9,726	)
Less : reclassification adjustment
for impairment (losses) recognized in net income, net of tax (benefit) of $(167), $0, $0 and $0			(311	)			—				—				—
Other comprehensive (loss) income			(16,087	)			(3,649	)			4,422				(7,328	)
Comprehensive (loss) income		$	16,170			$	(88,217	)		$	18,997			$	(57,402	)