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INVESTMENTS | 3 Months Ended
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Mar. 31, 2026
Investments, Debt and Equity Securities [Abstract] |
INVESTMENTS | INVESTMENTS We classify our fixed maturity securities into one of two categories: (i) "available for sale" (which we carry at estimated fair value with any unrealized gain or loss, net of any allowance for credit losses and income taxes, recorded as a component of shareholders' equity); or (ii) "trading", which we carry at estimated fair value with changes in such value recognized as either net investment income (classified as investment income from policyholder and other special-purpose portfolios) or investment gains (losses). When the fair value option is elected, unrealized gains and losses are recognized in other investment gains (losses) in the consolidated statement of operations. Trading securities include: (i) investments purchased with the intent of selling in the near term to generate income; and (ii) certain fixed maturity securities containing embedded derivatives for which we have elected the fair value option. The change in fair value of the income generating investments is recognized in income from policyholder and other special-purpose portfolios in the consolidated statement of operations. The change in fair value of securities with embedded derivatives is recognized in other investment gains (losses) in the consolidated statement of operations. When we sell a security (other than trading securities), we report the difference between the sale proceeds and amortized cost (determined based on specific identification) as a realized investment gain or loss. We review our available for sale fixed maturity securities with unrealized losses to determine whether such impairments are the result of credit losses. We analyze various factors to make such determinations including, but not limited to: (i) actions taken by rating agencies; (ii) default by the issuer; (iii) the significance of the decline; (iv) an assessment of our intent to sell the security before recovering the security's amortized cost; (v) an economic analysis of the issuer's industry; and (vi) the financial strength, liquidity, and recoverability of the issuer. We perform a security by security review each quarter to evaluate whether a credit loss has occurred. In determining the credit loss component, we discount the estimated cash flows on a security by security basis. We consider the impact of macroeconomic conditions on inputs used to measure the amount of credit loss. For most structured securities, cash flow estimates are based on bond-specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity, prepayment speeds and structural support, including over-collateralization, excess spread, subordination and guarantees. For corporate bonds, cash flow estimates are derived by considering asset type, rating, time to maturity, and applying an expected loss rate. If a portion of the decline is due to credit-related factors, we separate the credit loss component of the impairment from the amount related to all other factors. The credit loss component is recorded as an allowance and reported in other investment gains (losses) (limited to the difference between estimated fair value and amortized cost). The impairment related to all other factors (non-credit factors) is reported in accumulated other comprehensive loss along with unrealized gains (losses) related to fixed maturity investments, available for sale, net of tax and related adjustments. The allowance is adjusted for any additional credit losses and subsequent recoveries. When recognizing an allowance associated with a credit loss, the cost basis is not adjusted. When we determine a security is uncollectible, the remaining amortized cost will be written off. If we intend to sell an impaired fixed maturity security, available for sale, or identify an impaired fixed maturity security, available for sale, for which it is more likely than not we will be required to sell before anticipated recovery, the difference between the fair value and the amortized cost is included in other investment gains (losses) and the fair value becomes the new amortized cost. The new cost basis is not adjusted for any subsequent recoveries in fair value. The Company reports accrued investment income separately from fixed maturities, available for sale, and has elected not to measure an allowance for credit losses for accrued investment income. Accrued investment income is written off through net investment income at the time the issuer of the bond defaults or is expected to default on payments. At March 31, 2026, the amortized cost, gross unrealized gains, gross unrealized losses, allowance for credit losses and estimated fair value of fixed maturities, available for sale, were as follows (dollars in millions):
| Amortized cost |  | Gross unrealized gains |  | Gross unrealized losses |  | Allowance for credit losses |  | Estimated fair value
Corporate securities | $ | 14,558.6 |  |  | $ | 39.6 |  |  | $ | (1,578.6) |  |  | $ | (37.8) |  |  | $ | 12,981.8 |
United States Treasury securities and obligations of United States government corporations and agencies | 208.9 |  |  | — |  |  | (32.5) |  |  | — |  |  | 176.4 |
States and political subdivisions | 3,250.8 |  |  | 21.4 |  |  | (390.2) |  |  | (2.8) |  |  | 2,879.2 |
Foreign governments | 134.8 |  |  | 0.4 |  |  | (13.4) |  |  | (1.0) |  |  | 120.8 |
Asset-backed securities | 1,844.1 |  |  | 7.8 |  |  | (51.4) |  |  | (0.1) |  |  | 1,800.4 |
Agency residential mortgage-backed securities | 810.6 |  |  | 9.5 |  |  | (0.9) |  |  | — |  |  | 819.2 |
Non-agency residential mortgage-backed securities | 1,556.2 |  |  | 32.7 |  |  | (85.5) |  |  | — |  |  | 1,503.4 |
Collateralized loan obligations | 1,466.5 |  |  | 1.3 |  |  | (4.2) |  |  | — |  |  | 1,463.6 |
Commercial mortgage-backed securities | 2,250.9 |  |  | 4.1 |  |  | (116.5) |  |  | (2.2) |  |  | 2,136.3 |
Total fixed maturities, available for sale | $ | 26,081.4 |  |  | $ | 116.8 |  |  | $ | (2,273.2) |  |  | $ | (43.9) |  |  | $ | 23,881.1 |
At December 31, 2025, the amortized cost, gross unrealized gains, gross unrealized losses, allowance for credit losses and estimated fair value of fixed maturities, available for sale, were as follows (dollars in millions):
| Amortized cost |  | Gross unrealized gains |  | Gross unrealized losses |  | Allowance for credit losses |  | Estimated fair value
Corporate securities | $ | 14,568.8 |  |  | $ | 137.1 |  |  | $ | (1,413.2) |  |  | $ | (30.2) |  |  | $ | 13,262.5 |
United States Treasury securities and obligations of United States government corporations and agencies | 207.2 |  |  | 0.1 |  | (30.2) |  |  | — |  |  | 177.1 |
States and political subdivisions | 3,311.4 |  |  | 25.1 |  | (378.9) |  |  | (2.9) |  |  | 2,954.7 |
Foreign governments | 130.9 |  |  | 0.9 |  | (10.7) |  |  | (0.6) |  |  | 120.5 |
Asset-backed securities | 1,780.8 |  |  | 14.0 |  | (47.4) |  |  | (0.1) |  |  | 1,747.3 |
Agency residential mortgage-backed securities | 838.3 |  |  | 11.4 |  | (0.2) |  |  | — |  |  | 849.5 |
Non-agency residential mortgage-backed securities | 1,639.1 |  |  | 37.5 |  | (90.9) |  |  | — |  |  | 1,585.7 |
Collateralized loan obligations | 1,142.4 |  |  | 2.8 |  | (2.7) |  |  | — |  |  | 1,142.5 |
Commercial mortgage-backed securities | 2,157.5 |  |  | 6.4 |  | (114.7) |  |  | (2.2) |  |  | 2,047.0 |
Total fixed maturities, available for sale | $ | 25,776.4 |  |  | $ | 235.3 |  |  | $ | (2,088.9) |  |  | $ | (36.0) |  |  | $ | 23,886.8 |
The following table sets forth the amortized cost and estimated fair value of fixed maturities, available for sale at March 31, 2026 by contractual maturity. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties. Structured securities (such as asset-backed securities, agency residential mortgage-backed securities, non-agency residential mortgage-backed securities, collateralized loan obligations and commercial mortgage-backed securities, collectively referred to as "structured securities") frequently include provisions for periodic principal payments and permit periodic unscheduled payments.
| Amortized cost |  | Estimated fair value
| (Dollars in millions)
Due in one year or less | $ | 258.3 |  |  | $ | 255.4 |
Due after one year through five years | 2,220.8 |  |  | 2,205.6 |
Due after five years through ten years | 3,001.3 |  |  | 2,966.1 |
Due after ten years | 12,672.7 |  |  | 10,731.1 |
Subtotal | 18,153.1 |  |  | 16,158.2 |
Structured securities | 7,928.3 |  |  | 7,722.9 |
Total fixed maturities, available for sale | $ | 26,081.4 |  |  | $ | 23,881.1 |
Gross Unrealized Investment Losses Our investment strategy is to manage, over a sustained period and within acceptable parameters of quality and risk, capital efficiency through active strategic asset allocation and investment management. Accordingly, we may sell securities at a gain or a loss to enhance the projected total return of the portfolio as market opportunities change, to reflect changing perceptions of risk, or to better match certain characteristics of our investment portfolio with the corresponding characteristics of our insurance liabilities. The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position at March 31, 2026 (dollars in millions):
|  | Less than 12 months |  | 12 months or greater |  | Total
|  | Fair value |  | Unrealized losses |  | Fair value |  | Unrealized losses |  | Fair value |  | Unrealized losses
Corporate securities |  | $ | 2,103.4 |  |  | $ | (75.5) |  |  | $ | 1,866.3 |  |  | $ | (411.6) |  |  | $ | 3,969.7 |  |  | $ | (487.1) |
United States Treasury securities and obligations of United States government corporations and agencies |  | 18.9 |  |  | (0.2) |  |  | 153.3 |  |  | (32.3) |  |  | 172.2 |  |  | (32.5) |
States and political subdivisions |  | 261.4 |  |  | (9.9) |  |  | 846.8 |  |  | (136.5) |  |  | 1,108.2 |  |  | (146.4) |
Foreign governments |  | 8.1 |  |  | (0.2) |  |  | 17.4 |  |  | (3.2) |  |  | 25.5 |  |  | (3.4) |
Asset-backed securities |  | 618.0 |  |  | (5.1) |  |  | 441.5 |  |  | (45.5) |  |  | 1,059.5 |  |  | (50.6) |
Agency residential mortgage-backed securities |  | 100.6 |  |  | (0.6) |  |  | 13.7 |  |  | (0.3) |  |  | 114.3 |  |  | (0.9) |
Non-agency residential mortgage-backed securities |  | 239.5 |  |  | (1.7) |  |  | 624.8 |  |  | (83.9) |  |  | 864.3 |  |  | (85.6) |
Collateralized loan obligations |  | 772.4 |  |  | (2.4) |  |  | 72.9 |  |  | (1.8) |  |  | 845.3 |  |  | (4.2) |
Commercial mortgage-backed securities |  | 605.8 |  |  | (3.7) |  |  | 1,008.8 |  |  | (112.7) |  |  | 1,614.6 |  |  | (116.4) |
Total fixed maturities, available for sale |  | $ | 4,728.1 |  |  | $ | (99.3) |  |  | $ | 5,045.5 |  |  | $ | (827.8) |  |  | $ | 9,773.6 |  |  | $ | (927.1) |
The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position at December 31, 2025 (dollars in millions):
|  | Less than 12 months |  | 12 months or greater |  | Total
|  | Fair value |  | Unrealized losses |  | Fair value |  | Unrealized losses |  | Fair value |  | Unrealized losses
Corporate securities |  | $ | 734.9 |  |  | $ | (44.3) |  |  | $ | 2,645.8 |  |  | $ | (426.7) |  |  | $ | 3,380.7 |  |  | $ | (471.0) |
United States Treasury securities and obligations of United States government corporations and agencies |  | 0.4 |  |  | — |  |  | 153.9 |  |  | (30.2) |  |  | 154.3 |  |  | (30.2) |
States and political subdivisions |  | 275.6 |  |  | (8.5) |  |  | 806.0 |  |  | (127.6) |  |  | 1,081.6 |  |  | (136.1) |
Foreign governments |  | 3.1 |  |  | — |  |  | 24.3 |  |  | (2.7) |  |  | 27.4 |  |  | (2.7) |
Asset-backed securities |  | 187.8 |  |  | (1.8) |  |  | 487.7 |  |  | (44.9) |  |  | 675.5 |  |  | (46.7) |
Agency residential mortgage-backed securities |  | 59.8 |  |  | — |  |  | 13.8 |  |  | (0.2) |  |  | 73.6 |  |  | (0.2) |
Non-agency residential mortgage-backed securities |  | 131.4 |  |  | (0.9) |  |  | 703.3 |  |  | (90.0) |  |  | 834.7 |  |  | (90.9) |
Collateralized loan obligations |  | 227.3 |  |  | (0.9) |  |  | 62.9 |  |  | (1.8) |  |  | 290.2 |  |  | (2.7) |
Commercial mortgage-backed securities |  | 243.7 |  |  | (2.1) |  |  | 1,067.2 |  |  | (112.6) |  |  | 1,310.9 |  |  | (114.7) |
Total fixed maturities, available for sale |  | $ | 1,864.0 |  |  | $ | (58.5) |  |  | $ | 5,964.9 |  |  | $ | (836.7) |  |  | $ | 7,828.9 |  |  | $ | (895.2) |
Based on management's current assessment of investments with unrealized losses at March 31, 2026, the Company believes the issuers of the securities will continue to meet their obligations. We do not have the intent to sell securities with unrealized losses and it is not more likely than not that we will be required to sell securities with unrealized losses prior to their anticipated recovery. If a loss is recognized from a sale subsequent to a balance sheet date due to these unexpected developments, the loss is recognized in the period in which we had the intent to sell the security before its anticipated recovery. The following table summarizes changes in the allowance for credit losses related to fixed maturities, available for sale, for the three months ended March 31, 2026 (dollars in millions):
| Corporate securities |  | Other |  | Total
Allowance at December 31, 2025 | $ | 30.2 |  |  | $ | 5.8 |  |  | $ | 36.0 |
Additions for securities for which credit losses were not previously recorded | 8.9 |  |  | 0.2 |  |  | 9.1 |
Additions for securities where an allowance was previously recorded | 1.4 |  |  | 0.1 |  |  | 1.5 |
Reduction for securities disposed during the period | (2.7) |  |  | — |  |  | (2.7) |
Allowance at March 31, 2026 | $ | 37.8 |  |  | $ | 6.1 |  |  | $ | 43.9 |
The following table summarizes changes in the allowance for credit losses related to fixed maturities, available for sale, for the three months ended March 31, 2025 (dollars in millions):
| Corporate securities |  | Other |  | Total
Allowance at December 31, 2024 | $ | 31.1 |  |  | $ | 6.0 |  |  | $ | 37.1 |
Additions for securities for which credit losses were not previously recorded | 2.5 |  |  | — |  |  | 2.5 |
Additions (reductions) for securities where an allowance was previously recorded | 0.8 |  |  | (0.2) |  |  | 0.6 |
Reduction for securities disposed during the period | (1.3) |  |  | — |  |  | (1.3) |
Allowance at March 31, 2025 | $ | 33.1 |  |  | $ | 5.8 |  |  | $ | 38.9 |
Mortgage Loans Mortgage loans are carried at amortized unpaid balance, net of allowance for estimated credit losses. Interest income is accrued on the principal amount of the loan based on the loan's contractual interest rate. Payment terms specified for mortgage loans may include a prepayment penalty for unscheduled payoff of the investment. Prepayment penalties are recognized as investment income when received. The allowance for estimated credit losses is measured using a loss-rate method on an individual asset basis. Inputs used include asset-specific characteristics, current economic conditions, historical loss information and reasonable and supportable forecasts about future economic conditions. The mortgage loan balance was comprised of commercial and residential mortgage loans. At March 31, 2026, we held commercial mortgage loan investments with an amortized cost and fair value of $1,852.9 million and $1,752.6 million, respectively. At March 31, 2026, there were no commercial mortgage loans that were non-current or in the process of foreclosure. The following table provides the amortized cost by year of origination and estimated fair value of our outstanding commercial mortgage loans and the underlying collateral as of March 31, 2026 (dollars in millions):
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Estimated fair value
Loan-to-value ratio (a) |  | 2026 |  | 2025 |  | 2024 |  | 2023 |  | 2022 |  | Prior |  | Total amortized cost |  | Commercial mortgage loans |  | Collateral
Less than 60% |  | $ | 102.6 |  |  | $ | 303.1 |  |  | $ | 168.8 |  |  | $ | 197.4 |  |  | $ | 140.4 |  |  | $ | 545.4 |  |  | $ | 1,457.7 |  |  | $ | 1,385.5 |  |  | $ | 4,580.5 |
60% to less than 70% |  | — |  |  | 88.6 |  |  | 15.0 |  |  | 17.7 |  |  | 37.4 |  |  | 25.7 |  |  | 184.4 |  |  | 175.4 |  |  | 279.8 |
70% to less than 80% |  | — |  |  | 18.1 |  |  | — |  |  | 59.9 |  |  | 77.4 |  |  | 22.4 |  |  | 177.8 |  |  | 162.8 |  |  | 238.7 |
80% to less than 90% |  | — |  |  | 10.0 |  |  | — |  |  | — |  |  | 13.4 |  |  | — |  |  | 23.4 |  |  | 21.5 |  |  | 29.0 |
90% to less than 100% |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 9.6 |  |  | 9.6 |  |  | 7.4 |  |  | 9.7 |
Total |  | $ | 102.6 |  |  | $ | 419.8 |  |  | $ | 183.8 |  |  | $ | 275.0 |  |  | $ | 268.6 |  |  | $ | 603.1 |  |  | $ | 1,852.9 |  |  | $ | 1,752.6 |  |  | $ | 5,137.7 |
________________ (a)Loan-to-value ratios are calculated as the ratio of: (i) the amortized cost of the commercial mortgage loans; to (ii) the estimated fair value of the underlying collateral. At March 31, 2026, we held residential mortgage loan investments with an amortized cost and fair value of $1,511.9 million and $1,527.8 million, respectively. We consider current or non-current loan status as our primary credit quality indicator in conjunction with other quantitative and qualitative factors. We define non-current loans as those that are 90 or more days past-due and/or in nonaccrual status. At March 31, 2026, there were 38 residential mortgage loans that were non-current with an amortized cost of $28.4 million (of which, 12 loans with an amortized cost of $8.0 million were in foreclosure). The following table summarizes changes in the allowance for credit losses related to mortgage loans for the period indicated (dollars in millions):
|  |  |  | Three months ended
|  |  |  | March 31,
|  |  |  |  |  | 2026 |  | 2025
Allowance at the beginning of the period |  |  |  |  |  | $ | 20.9 |  |  | $ | 13.6 |
Increase (decrease) in provision for expected credit losses |  |  |  |  |  | (3.9) |  |  | 6.5 |
Allowance at the end of the period |  |  |  |  |  | $ | 17.0 |  |  | $ | 20.1 |
Total Investment Gains (Losses) The following table sets forth the total investment gains (losses) for the periods indicated (dollars in millions):
|  | Three months ended |  |
|  | March 31, |  |
|  | 2026 |  | 2025 |  |  |  |
Realized investment gains (losses): |  |  |  |  |  |  |  |
Gross realized gains on sales of fixed maturities, available for sale |  | $ | 52.2 |  |  | $ | 1.0 |  |  |  |  |
Gross realized losses on sales of fixed maturities, available for sale |  | (56.3) |  |  | (2.8) |  |  |  |  |
Equity securities, net |  | (1.9) |  |  | — |  |  |  |  |
Other, net |  | (1.8) |  |  | (2.0) |  |  |  |  |
Total realized investment losses |  | (7.8) |  |  | (3.8) |  |  |  |  |
Change in allowance for credit losses and write-downs |  | (9.6) |  |  | (9.6) |  |  |  |  |
Change in fair value of equity securities (a) |  | (2.0) |  |  | (2.5) |  |  |  |  |
Other changes in fair value (b) (c) |  | (3.3) |  |  | 9.1 |  |  |  |  |
Other investment losses |  | (14.9) |  |  | (3.0) |  |  |  |  |
Total investment losses |  | $ | (22.7) |  |  | $ | (6.8) |  |  |  |  |
_________________ (a) Changes in the estimated fair value of equity securities (that are still held as of the end of the respective periods) were $(3.6) million and $0.4 million for the three months ended March 31, 2026 and 2025, respectively. (b) Other changes in fair value are comprised of (i) gains (losses) related to certain other invested assets and fixed maturity investments with embedded derivatives, including the change in fair value, of $(2.9) million and $7.9 million for the three months ended March 31, 2026 and 2025, respectively; and (ii) the increase (decrease) in fair value of embedded derivatives related to a modified coinsurance agreement of $(0.4) million and $1.2 million for the three months ended March 31, 2026 and 2025, respectively. (c) Changes in the estimated fair value of fixed maturity investments with embedded derivatives that we have elected the fair value option (that are still held as of the end of the respective periods) were $(3.3) million and $5.8 million for the three months ended March 31, 2026 and 2025, respectively. Our fixed maturity investments are generally purchased in the context of various long-term strategies, including funding insurance liabilities, so we do not generally seek to generate short-term realized gains through the purchase and sale of such securities. In certain circumstances, including those in which securities are selling at prices which exceed our view of their underlying economic value, or when it is possible to reinvest the proceeds to better meet our long-term asset-liability objectives, we may sell certain securities. During the three months ended March 31, 2026, the $56.3 million of gross realized losses on sales of $1,657.1 million of fixed maturity securities, available for sale, primarily related to various lower-yielding corporate securities which were reinvested in higher-yielding securities and were largely offset by capital gains. During the three months ended March 31, 2025, the $2.8 million of gross realized losses on sales of $230.3 million of fixed maturity securities, available for sale, primarily related to various corporate securities and commercial mortgage-backed securities. Future events may occur, or additional information may become available, which may necessitate future realized losses in our portfolio. Significant losses could have a material adverse effect on our consolidated financial statements in future periods. At March 31, 2026, the amortized cost and carrying value of fixed maturities that were non-income producing were $5.7 million and $3.5 million, respectively.

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