Investments

(a) Our HTM fixed income securities as of March 31, 2019 represented less than 1% of our total invested assets, largely unchanged compared to December 31, 2018. The carry value and net unrealized/unrecognized gains were $36.5 million and $1.5 million, respectively, at March 31, 2019, and $37.1 million and $1.3 million, respectively, at December 31, 2018. Included in the net unrealized/unrecognized gains were gross unrealized/unrecognized losses of $0.1 million at March 31, 2019 and $0.2 million at December 31, 2018.

Unrecognized holding gains and losses of HTM securities are not reflected in the Financial Statements, as they represent fair value fluctuations from the date a security is designated as HTM through the date of the balance sheet.

(b) Information regarding our AFS securities as of March 31, 2019 and December 31, 2018 was as follows:



March 31, 2019
($ in thousands)	Cost/ Amortized Cost		Unrealized Gains	Unrealized Losses		Fair Value
AFS fixed income securities:
U.S. government and government agencies	$	125,664	1,766	(341	)	127,089
Foreign government	20,238		299	(11	)	20,526
Obligations of states and political subdivisions	1,110,504		39,936	(197	)	1,150,243
Corporate securities	1,651,773		32,355	(6,113	)	1,678,015
Collateralized loan obligations and other asset-backed securities ("CLO and other ABS")	722,573		5,050	(5,383	)	722,240
Commercial mortgage-backed securities ("CMBS")	557,148		11,867	(815	)	568,200
Residential mortgage-backed securities (“RMBS”)	1,275,373		27,100	(1,428	)	1,301,045
Total AFS securities	$	5,463,273	118,373	(14,288	)	5,567,358



December 31, 2018
($ in thousands)	Cost/ Amortized Cost		Unrealized Gains	Unrealized Losses		Fair Value
AFS fixed income securities:
U.S. government and government agencies	$	120,092	1,810	(592	)	121,310
Foreign government	23,202		36	(107	)	23,131
Obligations of states and political subdivisions	1,121,615		19,485	(2,631	)	1,138,469
Corporate securities	1,639,852		5,521	(27,965	)	1,617,408
CLO and other ABS	720,193		4,112	(6,943	)	717,362
CMBS	527,409		3,417	(3,748	)	527,078
RMBS	1,118,435		12,988	(3,081	)	1,128,342
Total AFS securities	$	5,270,798	47,369	(45,067	)	5,273,100

Unrealized gains and losses of AFS securities represent fair value fluctuations from the later of: (i) the date a security is designated as AFS; or (ii) the date that an other-than-temporary impairment ("OTTI") charge is recognized on an AFS security, through the date of the balance sheet. These unrealized gains and losses are recorded in AOCI on the Consolidated Balance Sheets.

(c) The severity of impairment on AFS securities in an unrealized/unrecognized loss position averaged approximately 1% of amortized cost at March 31, 2019 and approximately 2% at December 31, 2018. Quantitative information regarding these losses is provided below.



March 31, 2019	Less than 12 months				12 months or longer			Total
($ in thousands)	Fair Value		Unrealized Losses¹		Fair Value	Unrealized Losses¹		Fair Value	Unrealized Losses¹
AFS fixed income securities:
U.S. government and government agencies	$	13,443	(41	)	25,774	(300	)	39,217	(341	)
Foreign government	—		—		3,509	(11	)	3,509	(11	)
Obligations of states and political subdivisions	15,257		(71	)	21,676	(126	)	36,933	(197	)
Corporate securities	158,607		(2,783	)	160,121	(3,330	)	318,728	(6,113	)
CLO and other ABS	366,775		(4,231	)	79,489	(1,152	)	446,264	(5,383	)
CMBS	112,025		(505	)	63,774	(310	)	175,799	(815	)
RMBS	22,881		(258	)	83,792	(1,170	)	106,673	(1,428	)
Total AFS securities	$	688,988	(7,889	)	438,135	(6,399	)	1,127,123	(14,288	)



December 31, 2018	Less than 12 months				12 months or longer			Total
($ in thousands)	Fair Value		Unrealized Losses¹		Fair Value	Unrealized Losses¹		Fair Value	Unrealized Losses¹
AFS fixed income securities:
U.S. government and government agencies	$	6,693	(174	)	23,163	(418	)	29,856	(592	)
Foreign government	12,208		(93	)	1,482	(14	)	13,690	(107	)
Obligations of states and political subdivisions	196,798		(2,074	)	42,821	(557	)	239,619	(2,631	)
Corporate securities	1,041,952		(23,649	)	78,953	(4,316	)	1,120,905	(27,965	)
CLO and other ABS	516,106		(6,750	)	16,800	(193	)	532,906	(6,943	)
CMBS	229,338		(2,548	)	66,294	(1,200	)	295,632	(3,748	)
RMBS	139,338		(1,660	)	45,661	(1,421	)	184,999	(3,081	)
Total AFS fixed income securities	$	2,142,433	(36,948	)	275,174	(8,119	)	2,417,607	(45,067	)

¹Gross unrealized losses include non-OTTI unrealized amounts and OTTI losses recognized in AOCI.

The decrease in the less than 12 months unrealized loss position was due to: (i) lower interest rates, with a 21-basis point decrease in 2-year U.S. Treasury Note yields and a 28-basis point decrease in 10-year U.S. Treasury Note yields during First Quarter 2019; and (ii) tightening option adjusted corporate credit spreads, with a 34-basis point decrease in the Bloomberg Barclays U.S. Aggregate Corporate Bond Index during First Quarter 2019. We do not currently intend to sell any of the securities in the tables above, nor will we be required to sell any of these securities. Considering these factors, and in accordance with our review of these securities under our OTTI policy, as described in Note 2. “Summary of Significant Accounting Policies” within Item 8. “Financial Statements and Supplementary Data.” of our 2018 Annual Report, we have concluded that they are temporarily impaired as we believe: (i) they will mature at par value; (ii) they have not incurred a credit impairment; and (iii) future values of these securities will fluctuate with changes in interest rates. This conclusion reflects our current judgment as to the financial position and future prospects of the entity that issued the investment security and underlying collateral.

(d) Fixed income securities at March 31, 2019, by contractual maturity, are shown below. Mortgage-backed securities are included in the maturity tables using the estimated average life of each security. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations, with or without call or prepayment penalties.

Listed below are the contractual maturities of fixed income securities at March 31, 2019:



	AFS		HTM
($ in thousands)	Fair Value		Carrying Value	Fair Value
Due in one year or less	$	238,650	12,795	12,927
Due after one year through five years	2,126,600		17,574	18,728
Due after five years through 10 years	3,060,270		6,124	6,287
Due after 10 years	141,838		—	—
Total fixed income securities	$	5,567,358	36,493	37,942

(e) The following table summarizes our other investment portfolio by strategy:



Other Investments	March 31, 2019				December 31, 2018
($ in thousands)	Carrying Value		Remaining Commitment	Maximum Exposure to Loss¹	Carrying Value	Remaining Commitment	Maximum Exposure to Loss¹
Alternative Investments
Private equity	$	92,371	101,297	193,668	84,352	93,688	178,040
Private credit	30,518		90,812	121,330	41,682	81,453	123,135
Real assets	28,844		25,152	53,996	27,862	27,129	54,991
Total alternative investments	151,733		217,261	368,994	153,896	202,270	356,166
Other securities	24,492		—	24,492	25,042	—	25,042
Total other investments	$	176,225	217,261	393,486	178,938	202,270	381,208

¹The maximum exposure to loss includes both the carry value of these investments and the related unfunded commitments. In addition, tax credits that have been previously recognized in Other securities are subject to the risk of recapture, which we do not consider significant.

We do not have a future obligation to fund losses or debts on behalf of the investments above; however, we are contractually committed to make additional investments up to the remaining commitment outlined above. We have not provided any non-contractual financial support at any time during 2019 or 2018.

The following table sets forth gross summarized financial information for our other investments portfolio, including the portion not owned by us. The majority of these investments are carried under the equity method of accounting. The last line of the table below reflects our share of the aggregate income or loss, which is the portion included in our Financial Statements. As the majority of these investments report results to us on a one quarter lag, the summarized financial statement information for the three-month period ended December 31 is included in our First Quarter results. This information is as follows:



Income Statement Information	Quarter ended March 31,
($ in millions)	2019			2018
Net investment income (loss)	$	(150.1	)	(56.2	)
Realized gains (losses)	143.3			1,003.0
Net change in unrealized appreciation	554.3			96.2
Net gain	$	547.5		1,043.0
Selective’s insurance subsidiaries’ alternative investments gain	$	0.6		1.6

(f) We have pledged certain AFS fixed income securities as collateral related to our relationships with the Federal Home Loan Bank of Indianapolis ("FHLBI") and the Federal Home Loan Bank of New York ("FHLBNY"). In addition, certain securities were on deposit with various state and regulatory agencies at March 31, 2019 to comply with insurance laws. We retain all rights regarding all securities pledged as collateral.

The following table summarizes the market value of these securities at March 31, 2019:



($ in millions)	FHLBI Collateral		FHLBNY Collateral	State and Regulatory Deposits	Total
U.S. government and government agencies	$	—	—	22.5	22.5
Obligations of states and political subdivisions	—		—	3.9	3.9
Corporate securities	—		—	0.3	0.3
CMBS	7.2		20.8	—	28.0
RMBS	57.3		96.6	—	153.9
Total pledged as collateral	$	64.5	117.4	26.7	208.6

(g) We did not have exposure to any credit concentration risk of a single issuer greater than 10% of our stockholders' equity, other than certain U.S. government-backed investments, as of March 31, 2019 or December 31, 2018.

(h) The components of pre-tax net investment income earned were as follows:



	Quarter ended March 31,
($ in thousands)	2019			2018
Fixed income securities	$	49,033		42,041
Equity securities	1,640			1,977
Short-term investments	2,044			523
Other investments	660			1,563
Investment expenses	(2,759		)	(2,873	)
Net investment income earned	$	50,618		43,231

(i) OTTI charges were $0.1 million and $1.2 million in First Quarter 2019 and First Quarter 2018, respectively. All of these charges were related to securities for which we had the intent to sell. For a discussion of our evaluation for OTTI, refer to Note 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data." of our 2018 Annual Report.

(j) Net realized and unrealized gains and losses (excluding OTTI charges) for First Quarter 2019 and 2018 included the following:



	Quarter ended March 31,
($ in thousands)	2019			2018
Net realized gains (losses) on the disposals of securities:
Fixed income securities	$	1,143		(3,335	)
Equity securities	2,280			8,069
Short-term investments	14			(3	)
Other investments	7			—
Net realized gains on the disposal of securities	3,444			4,731
OTTI charges	(104		)	(1,212	)
Net realized gains	3,340			3,519
Unrealized gains (losses) recognized in income on equity securities¹	10,111			(14,068	)
Total net realized and unrealized investment gains (losses)	$	13,451		(10,549	)

¹Includes unrealized holding gains (losses) of: (i) $12.0 million in First Quarter 2019 and $(5.1) million in First Quarter 2018 on equity securities remaining in our portfolio as of March 31, 2019 and 2018, respectively; and (ii) $(1.9) million in First Quarter 2019 and $(9.0) million in First Quarter 2018 on equity securities sold in each respective period.

The components of net realized gains on disposals of securities for the periods indicated were as follows:



	Quarter ended March 31,
($ in thousands)	2019			2018
HTM fixed income securities
Gains	$	—		2
Losses	—			—
AFS fixed income securities
Gains	1,844			2,623
Losses	(701		)	(5,960	)
Equity securities
Gains	2,280			8,399
Losses	—			(330	)
Short-term investments
Gains	14			1
Losses	—			(4	)
Other investments
Gains	7			—
Losses	—			—
Total net realized gains on disposals of securities	$	3,444		4,731

Realized gains and losses on the sale of investments are determined on the basis of the cost of the specific investments sold.

Proceeds from the sales of AFS fixed income securities were $218.4 million and $675.4 million in First Quarter 2019 and First Quarter 2018, respectively. Proceeds from the sales of equity securities were $3.7 million and $40.7 million in First Quarter 2019 and First Quarter 2018, respectively.