Radian Group Inc. Notes to Consolidated Financial Statements - (Continued) For certain hybrid financial instruments that would be required to be separated into a host contract and a derivative  instrument, the accounting standard regarding derivatives and hedging permits an entity to irrevocably elect to initially and  subsequently measure that hybrid financial instrument in its entirety at fair value (with changes in fair value recognized in  earnings). We elected to record our convertible securities meeting these criteria at fair value with changes in the fair value  recorded as net gains or losses on investments. All hybrid financial instruments are classified as trading securities.  We record an OTTI on a security if we intend to sell the impaired security or if it is more likely than not that we will be  required to sell the impaired security prior to recovery of its amortized cost basis, or if the present value of cash flows we  expect to collect is less than the amortized cost basis of the security . If a sale is likely, the security is classified as other-than- temporarily impaired and the full amount of the impairment is recognized as a loss in the statement of operations. Otherwise,  losses on securities that are other-than-temporarily impaired are separated into: (i) the portion of loss that represents the credit  loss; and (ii) the portion that is due to other factors.  The credit loss portion is recognized as a loss in the statement of  operations, while the loss due to other factors is recognized in accumulated other comprehensive income (loss), net of taxes.  A  credit loss is determined to exist if the present value of discounted cash flows expected to be collected from the security is less  than the cost basis of the security . The present value of discounted cash flows is determined using the original yield of the  security. In evaluating whether a decline in value is other -than-temporary, we consider several factors in addition to the above,  including, but not limited to, the following: Accounts and notes receivable consist primarily of accrued premiums receivable due from our mortgage insurance and  financial guaranty customers.  Accounts and notes receivable are carried at their estimated collectible amounts, net of any  allowance for doubtful accounts, and are periodically evaluated for collectability based on past payment history and current  economic conditions.  We are the beneficiary of insurance policies on the lives of certain of our current and past of ficers and employees. We  have recognized the amount that could be realized upon surrender of the insurance policies in other assets in our consolidated  balance sheets. At December 31, 2012 and 2011, the cash surrender value of company-owned life insurance totaled  $76.5  million and $73.7 million, respectively. Property and equipment is carried at cost net of depreciation. For financial statement reporting purposes, computer  hardware and software is depreciated over three years and furniture, fixtures and of fice equipment is depreciated over seven  years. Leasehold improvements are depreciated over the lesser of the life of the asset improved or the life of the lease. For  income tax purposes, we use accelerated depreciation methods. The stock-based compensation cost related to share-based liability awards is based on the fair value as of the  measurement date. The compensation cost for equity instruments is measured based on the grant-date fair value at the date of  issuance. Compensation cost is recognized over the periods that an employee provides service in exchange for the award. See  Note 17 for further information. In July 2012, the FASB issued a new accounting standard update that simplifies the impairment test for indefinite-lived  intangible assets other than goodwill. The new guidance gives the option to first assess qualitative factors to determine if it is  more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount as a basis for  determining whether it is necessary to perform a quantitative valuation test.  The new standard is effective for fiscal years, and  interim periods within those fiscal years, beginning on or after September 15, 2012.  We do not anticipate that the adoption of  this update will have a significant impact on our financial position, results of operations or cash flows. 186 Recent Accounting Pronouncements Accounting for Stock-Based Compensation Property and Equipment Company-Owned Life Insurance Accounts and Notes Receivable •  the extent and the duration of the decline in value; •  the reasons for the decline in value (e.g., credit event, interest related or market fluctuations); and •  the financial position, access to capital and near term prospects of the issuer , including the current and future impact of  any specific events.