Investments

a)The following tables summarize the Company's available-for-sale investments.



	June 30, 2015
(dollars in thousands)	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Unrealized Other-Than- Temporary Impairment Losses			Estimated Fair Value
Fixed maturities:
U.S. Treasury securities and obligations of U.S. government agencies	$	638,848	$	10,695	$	(3,855	)	$	—		$	645,688
Obligations of states, municipalities and political subdivisions	3,862,159		165,902		(17,030		)	—			4,011,031
Foreign governments	1,343,152		113,536		(1,056		)	—			1,455,632
Commercial mortgage-backed securities	427,372		3,530		(1,865		)	—			429,037
Residential mortgage-backed securities	890,612		23,564		(4,273		)	(2,258		)	907,645
Asset-backed securities	65,752		58		(510		)	—			65,300
Corporate bonds	1,981,737		45,276		(16,520		)	(1,662		)	2,008,831
Total fixed maturities	9,209,632		362,561		(45,109		)	(3,920		)	9,523,164
Equity securities:
Insurance, banks and other financial institutions	617,618		735,581		(1,350		)	—			1,351,849
Industrial, consumer and all other	1,578,072		1,458,669		(13,429		)	—			3,023,312
Total equity securities	2,195,690		2,194,250		(14,779		)	—			4,375,161
Short-term investments	2,185,228		26		(5		)	—			2,185,249
Investments, available-for-sale	$	13,590,550	$	2,556,837	$	(59,893	)	$	(3,920	)	$	16,083,574



	December 31, 2014
(dollars in thousands)	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Unrealized Other-Than- Temporary Impairment Losses			Estimated Fair Value
Fixed maturities:
U.S. Treasury securities and obligations of U.S. government agencies	$	662,462	$	12,963	$	(2,163	)	$	—		$	673,262
Obligations of states, municipalities and political subdivisions	4,075,748		245,158		(3,359		)	—			4,317,547
Foreign governments	1,458,255		154,707		(1,041		)	—			1,611,921
Commercial mortgage-backed securities	427,904		5,325		(2,602		)	—			430,627
Residential mortgage-backed securities	954,263		34,324		(3,482		)	(2,258		)	982,847
Asset-backed securities	100,073		99		(682		)	—			99,490
Corporate bonds	2,250,432		69,016		(10,441		)	(1,819		)	2,307,188
Total fixed maturities	9,929,137		521,592		(23,770		)	(4,077		)	10,422,882
Equity securities:
Insurance, banks and other financial institutions	523,739		789,717		(1,531		)	—			1,311,925
Industrial, consumer and all other	1,427,919		1,403,566		(5,834		)	—			2,825,651
Total equity securities	1,951,658		2,193,283		(7,365		)	—			4,137,576
Short-term investments	1,594,819		36		(6		)	—			1,594,849
Investments, available-for-sale	$	13,475,614	$	2,714,911	$	(31,141	)	$	(4,077	)	$	16,155,307

b)The following tables summarize gross unrealized investment losses by the length of time that securities have continuously been in an unrealized loss position.



	June 30, 2015
	Less than 12 months					12 months or longer					Total
(dollars in thousands)	Estimated Fair Value		Gross Unrealized Holding and Other-Than- Temporary Impairment Losses			Estimated Fair Value		Gross Unrealized Holding and Other-Than- Temporary Impairment Losses			Estimated Fair Value		Gross Unrealized Holding and Other-Than- Temporary Impairment Losses
Fixed maturities:
U.S. Treasury securities and obligations of U.S. government agencies	$	97,844	$	(2,842	)	$	114,198	$	(1,013	)	$	212,042	$	(3,855	)
Obligations of states, municipalities and political subdivisions	654,959		(12,765		)	63,885		(4,265		)	718,844		(17,030		)
Foreign governments	31,312		(542		)	44,756		(514		)	76,068		(1,056		)
Commercial mortgage-backed securities	124,536		(703		)	97,983		(1,162		)	222,519		(1,865		)
Residential mortgage-backed securities	112,947		(2,832		)	156,760		(3,699		)	269,707		(6,531		)
Asset-backed securities	12,146		(11		)	46,122		(499		)	58,268		(510		)
Corporate bonds	433,329		(9,696		)	356,992		(8,486		)	790,321		(18,182		)
Total fixed maturities	1,467,073		(29,391		)	880,696		(19,638		)	2,347,769		(49,029		)
Equity securities:
Insurance, banks and other financial institutions	13,307		(578		)	8,040		(772		)	21,347		(1,350		)
Industrial, consumer and all other	84,162		(11,641		)	18,108		(1,788		)	102,270		(13,429		)
Total equity securities	97,469		(12,219		)	26,148		(2,560		)	123,617		(14,779		)
Short-term investments	159,963		(5		)	—		—			159,963		(5		)
Total	$	1,724,505	$	(41,615	)	$	906,844	$	(22,198	)	$	2,631,349	$	(63,813	)

At June 30, 2015, the Company held 666 securities with a total estimated fair value of $2.6 billion and gross unrealized losses of $63.8 million. Of these 666 securities, 275 securities had been in a continuous unrealized loss position for one year or longer and had a total estimated fair value of $906.8 million and gross unrealized losses of $22.2 million. Of these securities, 271 securities were fixed maturities and four were equity securities. The Company does not intend to sell or believe it will be required to sell these fixed maturities before recovery of their amortized cost. The Company has the ability and intent to hold these equity securities for a period of time sufficient to allow for the anticipated recovery of their fair value.



	December 31, 2014
	Less than 12 months					12 months or longer					Total
(dollars in thousands)	Estimated Fair Value		Gross Unrealized Holding and Other-Than- Temporary Impairment Losses			Estimated Fair Value		Gross Unrealized Holding and Other-Than- Temporary Impairment Losses			Estimated Fair Value		Gross Unrealized Holding and Other-Than- Temporary Impairment Losses
Fixed maturities:
U.S. Treasury securities and obligations of U.S. government agencies	$	108,250	$	(62	)	$	163,359	$	(2,101	)	$	271,609	$	(2,163	)
Obligations of states, municipalities and political subdivisions	58,583		(542		)	92,441		(2,817		)	151,024		(3,359		)
Foreign governments	18,856		(386		)	56,217		(655		)	75,073		(1,041		)
Commercial mortgage-backed securities	45,931		(210		)	147,558		(2,392		)	193,489		(2,602		)
Residential mortgage-backed securities	9,613		(2,285		)	207,374		(3,455		)	216,987		(5,740		)
Asset-backed securities	30,448		(20		)	45,160		(662		)	75,608		(682		)
Corporate bonds	141,176		(2,263		)	621,821		(9,997		)	762,997		(12,260		)
Total fixed maturities	412,857		(5,768		)	1,333,930		(22,079		)	1,746,787		(27,847		)
Equity securities:
Insurance, banks and other financial institutions	16,219		(1,531		)	—		—			16,219		(1,531		)
Industrial, consumer and all other	86,062		(5,834		)	—		—			86,062		(5,834		)
Total equity securities	102,281		(7,365		)	—		—			102,281		(7,365		)
Short-term investments	181,964		(6		)	—		—			181,964		(6		)
Total	$	697,102	$	(13,139	)	$	1,333,930	$	(22,079	)	$	2,031,032	$	(35,218	)

At December 31, 2014, the Company held 552 securities with a total estimated fair value of $2.0 billion and gross unrealized losses of $35.2 million. Of these 552 securities, 396 securities had been in a continuous unrealized loss position for one year or longer and had a total estimated fair value of $1.3 billion and gross unrealized losses of $22.1 million. All 396 securities were fixed maturities.

The Company completes a detailed analysis each quarter to assess whether the decline in the fair value of any investment below its cost basis is deemed other-than-temporary. All securities with unrealized losses are reviewed. The Company considers many factors in completing its quarterly review of securities with unrealized losses for other-than-temporary impairment, including the length of time and the extent to which fair value has been below cost and the financial condition and near-term prospects of the issuer. For equity securities, the ability and intent to hold the security for a period of time sufficient to allow for anticipated recovery is considered. For fixed maturities, the Company considers whether it intends to sell the security or if it is more likely than not that it will be required to sell the security before recovery, the implied yield-to-maturity, the credit quality of the issuer and the ability to recover all amounts outstanding when contractually due.

For equity securities, a decline in fair value that is considered to be other-than-temporary is recognized in net income based on the fair value of the security at the time of assessment, resulting in a new cost basis for the security. For fixed maturities where the Company intends to sell the security or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost, a decline in fair value is considered to be other-than-temporary and is recognized in net income based on the fair value of the security at the time of assessment, resulting in a new cost basis for the security. If the decline in fair value of a fixed maturity below its amortized cost is considered to be other-than-temporary based upon other considerations, the Company compares the estimated present value of the cash flows expected to be collected to the amortized cost of the security. The extent to which the estimated present value of the cash flows expected to be collected is less than the amortized cost of the security represents the credit-related portion of the other-than-temporary impairment, which is recognized in net income, resulting in a new cost basis for the security. Any remaining decline in fair value represents the non-credit portion of the other-than-temporary impairment, which is recognized in other comprehensive income (loss). The discount rate used to calculate the estimated present value of the cash flows expected to be collected is the effective interest rate implicit for the security at the date of purchase.

When assessing whether it intends to sell a fixed maturity or if it is likely to be required to sell a fixed maturity before recovery of its amortized cost, the Company evaluates facts and circumstances including decisions to reposition the investment portfolio, potential sales of investments to meet cash flow needs and, ultimately, current market prices.

c)The amortized cost and estimated fair value of fixed maturities at June 30, 2015 are shown below by contractual maturity.



(dollars in thousands)	Amortized Cost		Estimated Fair Value
Due in one year or less	$	599,532	$	603,525
Due after one year through five years	1,874,619		1,923,716
Due after five years through ten years	1,785,413		1,871,155
Due after ten years	3,566,332		3,722,786
	7,825,896		8,121,182
Commercial mortgage-backed securities	427,372		429,037
Residential mortgage-backed securities	890,612		907,645
Asset-backed securities	65,752		65,300
Total fixed maturities	$	9,209,632	$	9,523,164

d)The following table presents the components of net investment income.



	Quarter Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2015			2014			2015			2014
Interest:
Municipal bonds (tax-exempt)	$	24,293		$	25,187		$	50,145		$	48,291
Municipal bonds (taxable)	14,150			12,614			28,250			21,610
Other taxable bonds	34,013			40,109			69,151			75,853
Short-term investments, including overnight deposits	1,116			1,608			2,367			3,082
Dividends on equity securities	18,633			14,508			37,657			31,364
Income from equity method investments	1,712			1,458			3,056			5,041
Other	479			523			540			1,702
	94,396			96,007			191,166			186,943
Investment expenses	(3,810		)	(3,838		)	(7,705		)	(8,059		)
Net investment income	$	90,586		$	92,169		$	183,461		$	178,884

e)Cumulative credit losses recognized in net income on fixed maturities where other-than-temporary impairment was identified and a portion of the other-than-temporary impairment was included in other comprehensive income (loss) were $10.7 million at June 30, 2015 and $12.7 million at December 31, 2014.

f)The following table presents net realized investment gains and the change in net unrealized gains on investments.



	Quarter Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2015			2014			2015			2014
Realized gains:
Sales of fixed maturities	$	770		$	1,642		$	2,338		$	5,643
Sales of equity securities	7,000			14,051			22,956			26,094
Other	1,739			4,405			2,413			14,315
Total realized gains	9,509			20,098			27,707			46,052
Realized losses:
Sales of fixed maturities	(97		)	(8,246		)	(221		)	(16,148		)
Sales of equity securities	(113		)	(99		)	(272		)	(143		)
Other-than-temporary impairments	—			(1,007		)	(5,092		)	(1,007		)
Other	(3,194		)	(3,626		)	(10,446		)	(4,240		)
Total realized losses	(3,404		)	(12,978		)	(16,031		)	(21,538		)
Net realized investment gains	$	6,105		$	7,120		$	11,676		$	24,514
Change in net unrealized gains on investments:
Fixed maturities	$	(286,551	)	$	147,439		$	(180,213	)	$	296,250
Equity securities	(64,792		)	152,256			(6,447		)	218,709
Short-term investments	11			(3		)	(9		)	(2		)
Net increase (decrease)	$	(351,332	)	$	299,692		$	(186,669	)	$	514,957

For the six months ended June 30, 2015, all of the other-than-temporary impairment losses recognized in net income and included in net realized investment gains were attributable to equity securities. For both the quarter and six months ended June 30, 2014, other-than-temporary impairment losses recognized in net income and included in net realized investment gains included losses attributable to fixed maturities totaling $0.2 million and losses attributable to equity securities totaling $0.8 million.