XML 23 R10.htm IDEA: XBRL DOCUMENT v3.20.2
Investments
 6 Months Ended
Jun. 30, 2020
Investments, Debt and Equity Securities [Abstract]  
Investments Investments
a)The following tables summarize the Company's available-for-sale investments. Commercial and residential mortgage-backed securities include securities issued by U.S. government-sponsored enterprises and U.S. government agencies. The net unrealized holding gains in the tables below are presented before taxes and any reserve deficiency adjustments for life and annuity benefit reserves. See note 11.
 June 30, 2020
(dollars in thousands)Amortized
Cost		Gross
Unrealized
Holding
Gains		Gross
Unrealized
Holding
Losses
Allowance for
Credit
     Losses (1)
Estimated
Fair
Value
Fixed maturity securities:
U.S. Treasury securities$343,467  $11,447  $(19) $—  $354,895  
U.S. government-sponsored enterprises323,864  50,944  —  —  374,808  
Obligations of states, municipalities and political subdivisions3,852,301  354,186  (1,032) —  4,205,455  
Foreign governments1,352,962  172,377  (9,943) —  1,515,396  
Commercial mortgage-backed securities1,730,795  148,218  (35) —  1,878,978  
Residential mortgage-backed securities836,066  71,299  (35) —  907,330  
Asset-backed securities8,122  159  —  —  8,281  
Corporate bonds755,940  62,551  (2,960) (202) 815,329  
Total fixed maturity securities9,203,517  871,181  (14,024) (202) 10,060,472  
Short-term investments931,555  489  (2,772) —  929,272  
Investments, available-for-sale$10,135,072  $871,670  $(16,796) $(202) $10,989,744  

(1)Effective January 1, 2020, the Company adopted ASC 326 and as a result any impairment losses on the Company's available-for-sale investments are recorded as an allowance, subject to reversal. Prior periods have not been restated to conform with the current year presentation. See note 1.

 December 31, 2019
(dollars in thousands)Amortized
Cost		Gross
Unrealized
Holding
Gains		Gross
Unrealized
Holding
Losses		Estimated
Fair
Value
Fixed maturity securities:
U.S. Treasury securities$282,305  $2,883  $(402) $284,786  
U.S. government-sponsored enterprises318,831  23,949  (200) 342,580  
Obligations of states, municipalities and political subdivisions3,954,779  235,915  (812) 4,189,882  
Foreign governments1,415,639  135,763  (9,398) 1,542,004  
Commercial mortgage-backed securities1,761,777  57,450  (1,382) 1,817,845  
Residential mortgage-backed securities855,641  32,949  (517) 888,073  
Asset-backed securities11,042  28  (22) 11,048  
Corporate bonds848,826  47,551  (1,686) 894,691  
Total fixed maturity securities9,448,840  536,488  (14,419) 9,970,909  
Short-term investments1,194,953  1,355  (60) 1,196,248  
Investments, available-for-sale$10,643,793  $537,843  $(14,479) $11,167,157  
b)The following tables summarize gross unrealized investment losses on available-for-sale investments by the length of time that securities have continuously been in an unrealized loss position.
June 30, 2020
Less than 12 months12 months or longerTotal
(dollars in thousands)Estimated
Fair
Value		Gross
Unrealized
Holding Losses		Estimated
Fair
Value		Gross
Unrealized
Holding Losses		Estimated
Fair
Value		Gross
Unrealized
Holding Losses
Fixed maturity securities:
U.S. Treasury securities$7,675  $(19) $—  $—  $7,675  $(19) 
Obligations of states, municipalities and political subdivisions46,271  (1,009) 3,025  (23) 49,296  (1,032) 
Foreign governments173,200  (4,295) 160,104  (5,648) 333,304  (9,943) 
Commercial mortgage-backed securities2,033  (14) 7,425  (21) 9,458  (35) 
Residential mortgage-backed securities3,756  (35) —  —  3,756  (35) 
Asset-backed securities359  —  —  —  359  —  
Corporate bonds85,245  (1,671) 17,362  (1,289) 102,607  (2,960) 
Total fixed maturity securities318,539  (7,043) 187,916  (6,981) 506,455  (14,024) 
Short-term investments566,873  (2,772) —  —  566,873  (2,772) 
Total$885,412  $(9,815) $187,916  $(6,981) $1,073,328  $(16,796) 

At June 30, 2020, the Company held 83 available-for-sale securities with a total estimated fair value of $1.1 billion and gross unrealized losses of $16.8 million. Of these 83 securities, 35 securities had been in a continuous unrealized loss position for one year or longer and had a total estimated fair value of $187.9 million and gross unrealized losses of $7.0 million. The Company does not intend to sell or believe it will be required to sell these available-for-sale securities before recovery of their amortized cost.

December 31, 2019
Less than 12 months12 months or longerTotal
(dollars in thousands)Estimated
Fair
Value		Gross
Unrealized
Holding  Losses		Estimated
Fair
Value		Gross
Unrealized
Holding  Losses		Estimated
Fair
Value		Gross
Unrealized
Holding  Losses
Fixed maturity securities:
U.S. Treasury securities$36,862  $(361) $46,518  $(41) $83,380  $(402) 
U.S. government-sponsored enterprises24,148  (197) 2,868  (3) 27,016  (200) 
Obligations of states, municipalities and political subdivisions127,836  (702) 6,830  (110) 134,666  (812) 
Foreign governments162,907  (3,393) 159,888  (6,005) 322,795  (9,398) 
Commercial mortgage-backed securities202,530  (1,126) 33,853  (256) 236,383  (1,382) 
Residential mortgage-backed securities11,706  (66) 58,162  (451) 69,868  (517) 
Asset-backed securities—  —  3,632  (22) 3,632  (22) 
Corporate bonds41,847  (1,287) 40,274  (399) 82,121  (1,686) 
Total fixed maturity securities607,836  (7,132) 352,025  (7,287) 959,861  (14,419) 
Short-term investments3,316  (60) —  —  3,316  (60) 
Total$611,152  $(7,192) $352,025  $(7,287) $963,177  $(14,479) 

At December 31, 2019, the Company held 201 securities with a total estimated fair value of $963.2 million and gross unrealized losses of $14.5 million. Of these 201 securities, 122 securities had been in a continuous unrealized loss position for one year or longer and had a total estimated fair value of $352.0 million and gross unrealized losses of $7.3 million.
Following the adoption of ASC 326, as described in note 1, beginning January 1, 2020 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 the result of a credit loss. All available-for-sale securities with unrealized losses are reviewed. The Company considers many factors in completing its quarterly review of securities with unrealized losses for credit-related impairment to determine whether a credit loss exists, including the extent to which fair value is below cost, the implied yield to maturity, rating downgrades of the security and whether or not the issuer has failed to make scheduled principal or interest payments. The Company also takes into consideration information about the financial condition of the issuer and industry factors that could negatively impact the capital markets.

If the decline in fair value of an available-for-sale security below its amortized cost is considered to be the result of a credit loss, 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 loss, which is recorded as an allowance and recognized in net income. The allowance is limited to the difference between the fair value and the amortized cost of the security. Any remaining decline in fair value represents the non-credit portion of the impairment, which is recognized in other comprehensive income.

The Company also considers whether it intends to sell an available-for-sale security or if it is more likely than not that it will be required to sell the security before recovery of its amortized cost. In these instances, a decline in fair value 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.

c)The amortized cost and estimated fair value of fixed maturity securities at June 30, 2020 are shown below by contractual maturity.
(dollars in thousands)Amortized
Cost		Estimated
Fair Value
Due in one year or less$338,005  $336,972  
Due after one year through five years1,464,733  1,537,573  
Due after five years through ten years2,122,737  2,306,166  
Due after ten years2,703,059  3,085,172  
6,628,534  7,265,883  
Commercial mortgage-backed securities1,730,795  1,878,978  
Residential mortgage-backed securities836,066  907,330  
Asset-backed securities8,122  8,281  
Total fixed maturity securities$9,203,517  $10,060,472  

d)The following table presents the components of net investment income.
Quarter Ended June 30, Six Months Ended June 30,
(dollars in thousands)2020201920202019
Interest:
Municipal bonds (tax-exempt)$16,157  $17,885  $32,758  $36,711  
Municipal bonds (taxable)16,834  18,613  33,729  37,192  
Other taxable bonds39,616  41,242  79,588  82,023  
Short-term investments, including overnight deposits2,379  13,753  12,622  23,965  
Dividends on equity securities18,020  22,207  46,634  47,993  
Income (loss) from equity method investments5,647  1,174  (14,332) 3,070  
Other46  873  803  3,174  
98,699  115,747  191,802  234,128  
Investment expenses(3,084) (3,916) (7,944) (8,115) 
Net investment income$95,615  $111,831  $183,858  $226,013  
e)The following table presents the components of net investment gains (losses) and the change in net unrealized gains included in other comprehensive income.

 Quarter Ended June 30, Six Months Ended June 30,
(dollars in thousands)2020201920202019
Fixed maturity securities:
Realized gains$5,348  $1,661  $6,733  $1,804  
Realized losses(5,126) (630) (6,271) (911) 
Change in allowance for expected credit losses1,537  —  (202) —  
Short-term investments:
Realized gains1,002  499  1,100  1,334  
Realized losses(184) (2,049) (356) (2,073) 
Cost-method investments:
Realized gains—  —  11,167  —  
Other investment gains (losses):(5,389) 452  (5,245) 460  
Net realized investment gains (losses)(2,812) (67) 6,926  614  
Equity securities:
Change in fair value of securities sold during the period82,523  202  43,458  26,616  
Change in fair value of securities held during the period831,532  425,518  (820,582) 1,010,614  
Total change in fair value914,055  425,720  (777,124) 1,037,230  
Net investment gains (losses)$911,243  $425,653  $(770,198) $1,037,844  
Change in net unrealized gains on available-for-sale investments included in other comprehensive income:
Fixed maturity securities$236,521  $197,248  $335,088  $414,542  
Short-term investments3,128  2,506  (3,578) 3,861  
Reserve deficiency adjustment for life and annuity benefit reserves (see note 11)(22,740) (35,938) (35,612) (61,751) 
Net increase$216,909  $163,816  $295,898  $356,652