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Investments | 12 Months Ended
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Dec. 31, 2015
Investments, Debt and Equity Securities [Abstract] |
Investments | NOTE 4. INVESTMENTS The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at December 31, 2015 were:
DOLLARS IN MILLIONS |  | Amortized Cost |  | Gross Unrealized |  | Fair Value
Gains |  | Losses |
U.S. Government and Government Agencies and Authorities |  | $ | 298.0 |  |  | $ | 26.2 |  |  | $ | (3.6 | ) |  | $ | 320.6 |
States and Political Subdivisions |  | 1,513.7 |  |  | 111.6 |  |  | (2.7 | ) |  | 1,622.6 |
Corporate Securities: |  |  |  |  |  |  |  |
Bonds and Notes |  | 2,651.5 |  |  | 202.0 |  |  | (40.7 | ) |  | 2,812.8 |
Redeemable Preferred Stocks |  | 3.7 |  |  | 0.1 |  |  | — |  |  | 3.8 |
Collateralized Loan Obligations |  | 90.0 |  |  | 0.3 |  |  | (3.0 | ) |  | 87.3 |
Other Mortgage- and Asset-backed |  | 3.8 |  |  | 1.4 |  |  | — |  |  | 5.2 |
Investments in Fixed Maturities |  | $ | 4,560.7 |  |  | $ | 341.6 |  |  | $ | (50.0 | ) |  | $ | 4,852.3 |
Included in the fair value of Other Mortgage- and Asset-backed investments at December 31, 2015 are $3.8 million of collateralized debt obligations, $1.3 million of non-governmental residential mortgage-backed securities and $0.1 million of other asset-backed securities. The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at December 31, 2014 were:
|  | Amortized Cost |  | Gross Unrealized |  | Fair Value
DOLLARS IN MILLIONS |  | Gains |  | Losses |
U.S. Government and Government Agencies and Authorities |  | $ | 315.2 |  |  | $ | 32.3 |  |  | $ | (2.0 | ) |  | $ | 345.5 |
States and Political Subdivisions |  | 1,352.5 |  |  | 126.4 |  |  | (1.8 | ) |  | 1,477.1 |
Corporate Securities: |  |  |  |  |  |  |  |
Bonds and Notes |  | 2,599.3 |  |  | 294.3 |  |  | (15.1 | ) |  | 2,878.5 |
Redeemable Preferred Stocks |  | 5.9 |  |  | 0.8 |  |  | — |  |  | 6.7 |
Collateralized Loan Obligations |  | 64.9 |  |  | 0.3 |  |  | (0.8 | ) |  | 64.4 |
Other Mortgage- and Asset-backed |  | 3.9 |  |  | 1.5 |  |  | — |  |  | 5.4 |
Investments in Fixed Maturities |  | $ | 4,341.7 |  |  | $ | 455.6 |  |  | $ | (19.7 | ) |  | $ | 4,777.6 |
Included in the fair value of Other Mortgage- and Asset-backed investments at December 31, 2014 are $3.9 million of collateralized debt obligations, $1.3 million of non-governmental residential mortgage-backed securities and $0.2 million of other asset-backed securities. Accrued Expenses and Other Liabilities included unsettled purchases of Investments in Fixed Maturities of $5.6 million at December 31, 2015, all of which settled in the following month. There were no unsettled purchases of Investments in Fixed Maturities at December 31, 2014. There were no unsettled sales of Investments in Fixed Maturities at either December 31, 2015 or December 31, 2014. The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at December 31, 2015 by contractual maturity were:
DOLLARS IN MILLIONS |  | Amortized Cost |  | Fair Value
Due in One Year or Less |  | $ | 52.4 |  |  | $ | 54.6 |
Due after One Year to Five Years |  | 806.8 |  |  | 840.2 |
Due after Five Years to Ten Years |  | 1,475.3 |  |  | 1,507.1 |
Due after Ten Years |  | 2,009.5 |  |  | 2,227.9 |
Mortgage- and Asset-backed Securities Not Due at a Single Maturity Date |  | 216.7 |  |  | 222.5 |
Investments in Fixed Maturities |  | $ | 4,560.7 |  |  | $ | 4,852.3 |
The expected maturities of the Company’s Investments in Fixed Maturities may differ from the contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Investments in Mortgage- NOTE 4. INVESTMENTS (Continued) and Asset-backed Securities Not Due at a Single Maturity Date at December 31, 2015 consisted of securities issued by the Government National Mortgage Association with a fair value of $107.0 million, securities issued by the Federal National Mortgage Association with a fair value of $17.1 million, securities issued by the Federal Home Loan Mortgage Corporation with a fair value of $6.0 million and securities of other non-governmental issuers with a fair value of $92.4 million. Gross unrealized gains and gross unrealized losses on the Company’s Investments in Equity Securities at December 31, 2015 were:
DOLLARS IN MILLIONS |  | Cost |  | Gross Unrealized |  | Fair Value
Gains |  | Losses |
Preferred Stocks: |  |  |  |  |  |  |  |
Finance, Insurance and Real Estate |  | $ | 80.8 |  |  | $ | 4.9 |  |  | $ | (0.8 | ) |  | $ | 84.9 |
Other Industries |  | 17.1 |  |  | 2.7 |  |  | (0.8 | ) |  | 19.0 |
Common Stocks: |  |  |  |  |  |  |  |
Finance, Insurance and Real Estate |  | 18.9 |  |  | 5.3 |  |  | (1.0 | ) |  | 23.2 |
Other Industries |  | 9.4 |  |  | 4.3 |  |  | (0.2 | ) |  | 13.5 |
Other Equity Interests: |  |  |  |  |  |  |  |
Exchange Traded Funds |  | 179.7 |  |  | 1.1 |  |  | (3.7 | ) |  | 177.1 |
Limited Liability Companies and Limited Partnerships |  | 181.0 |  |  | 25.0 |  |  | (0.5 | ) |  | 205.5 |
Investments in Equity Securities |  | $ | 486.9 |  |  | $ | 43.3 |  |  | $ | (7.0 | ) |  | $ | 523.2 |
Gross unrealized gains and gross unrealized losses on the Company’s Investments in Equity Securities at December 31, 2014 were:
DOLLARS IN MILLIONS |  |  |  | Gross Unrealized |  |
| Cost |  | Gains |  | Losses |  | Fair Value
Preferred Stocks: |  |  |  |  |  |  |  |
Finance, Insurance and Real Estate |  | $ | 85.5 |  |  | $ | 5.2 |  |  | $ | (1.0 | ) |  | $ | 89.7 |
Other Industries |  | 16.3 |  |  | 3.5 |  |  | — |  |  | 19.8 |
Common Stocks: |  |  |  |  |  |  |  |
Manufacturing |  | 43.4 |  |  | 14.9 |  |  | (1.1 | ) |  | 57.2 |
Finance, Insurance and Real Estate |  | 34.3 |  |  | 6.2 |  |  | — |  |  | 40.5 |
Other Industries |  | 26.5 |  |  | 10.0 |  |  | (0.4 | ) |  | 36.1 |
Other Equity Interests: |  |  |  |  |  |  |  |
Exchange Traded Funds |  | 195.2 |  |  | 8.2 |  |  | (0.7 | ) |  | 202.7 |
Limited Liability Companies and Limited Partnerships |  | 160.3 |  |  | 27.7 |  |  | (1.8 | ) |  | 186.2 |
Investments in Equity Securities |  | $ | 561.5 |  |  | $ | 75.7 |  |  | $ | (5.0 | ) |  | $ | 632.2 |
There were no unsettled purchases or sales of Investments in Equity Securities at either December 31, 2015 or December 31, 2014. NOTE 4. INVESTMENTS (Continued) An aging of unrealized losses on the Company’s Investments in Fixed Maturities and Equity Securities at December 31, 2015 is presented below.
DOLLARS IN MILLIONS |  | Less Than 12 Months |  | 12 Months or Longer |  | Total
| Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
Fixed Maturities: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government and Government Agencies and Authorities |  | $ | 56.6 |  |  | $ | (1.6 | ) |  | $ | 24.1 |  |  | $ | (2.0 | ) |  | $ | 80.7 |  |  | $ | (3.6 | )
States and Political Subdivisions |  | 131.0 |  |  | (2.6 | ) |  | 0.9 |  |  | (0.1 | ) |  | 131.9 |  |  | (2.7 | )
Corporate Securities: |  |  |  |  |  |  |  |  |  |  |  |
Bonds and Notes |  | 783.8 |  |  | (26.0 | ) |  | 133.6 |  |  | (14.7 | ) |  | 917.4 |  |  | (40.7 | )
Collateralized Loan Obligations |  | 57.4 |  |  | (2.9 | ) |  | 0.8 |  |  | (0.1 | ) |  | 58.2 |  |  | (3.0 | )
Other Mortgage- and Asset-backed |  | — |  |  | — |  |  | 0.3 |  |  | — |  |  | 0.3 |  |  | — |
Total Fixed Maturities |  | 1,028.8 |  |  | (33.1 | ) |  | 159.7 |  |  | (16.9 | ) |  | 1,188.5 |  |  | (50.0 | )
Equity Securities: |  |  |  |  |  |  |  |  |  |  |  |
Preferred Stocks: |  |  |  |  |  |  |  |  |  |  |  |
Finance, Insurance and Real Estate |  | 2.7 |  |  | — |  |  | 12.3 |  |  | (0.8 | ) |  | 15.0 |  |  | (0.8 | )
Other Industries |  | 7.3 |  |  | (0.8 | ) |  | — |  |  | — |  |  | 7.3 |  |  | (0.8 | )
Common Stocks: |  |  |  |  |  |  |  |  |  |  |  |
Finance, Insurance and Real Estate |  | 16.3 |  |  | (1.0 | ) |  | — |  |  | — |  |  | 16.3 |  |  | (1.0 | )
Other Industries |  | 2.8 |  |  | (0.3 | ) |  | — |  |  | — |  |  | 2.8 |  |  | (0.3 | )
Other Equity Interests: |  |  |  |  |  |  |  |  |  |  |  |
Exchange Traded Funds |  | 135.2 |  |  | (3.7 | ) |  | — |  |  | — |  |  | 135.2 |  |  | (3.7 | )
Limited Liability Companies and Limited Partnerships |  | 2.7 |  |  | (0.5 | ) |  | — |  |  | — |  |  | 2.7 |  |  | (0.5 | )
Total Equity Securities |  | 167.0 |  |  | (6.3 | ) |  | 12.3 |  |  | (0.8 | ) |  | 179.3 |  |  | (7.1 | )
Total |  | $ | 1,195.8 |  |  | $ | (39.4 | ) |  | $ | 172.0 |  |  | $ | (17.7 | ) |  | $ | 1,367.8 |  |  | $ | (57.1 | )
The Company regularly reviews its investment portfolio for factors that may indicate that a decline in fair value of an investment is other than temporary. The portions of the declines in the fair values of investments that are determined to be other than temporary are reported as losses in the Consolidated Statements of Income in the periods when such determinations are made. Unrealized losses on fixed maturities, which the Company has determined to be temporary at December 31, 2015, were $50.0 million, of which $16.9 million was related to fixed maturities that were in an unrealized loss position for 12 months or longer. There were $0.2 million unrealized losses at December 31, 2015 related to securities for which the Company has recognized credit losses in earnings in the preceding table under the heading “Less Than 12 Months”. There were no unrealized losses at December 31, 2015 related to securities for which the Company has recognized credit losses in earnings in the preceding table under the heading “12 Months or Longer.” Investment-grade fixed maturity investments comprised $33.5 million and below-investment-grade fixed maturity investments comprised $16.5 million of the unrealized losses on investments in fixed maturities at December 31, 2015. For below-investment-grade fixed maturity investments in an unrealized loss position, the unrealized loss amount, on average, was approximately 8% of the amortized cost basis of the investment. At December 31, 2015, the Company did not have the intent to sell these investments and it was not more likely than not that the Company would be required to sell these investments before recovery of its amortized cost basis, which may be at maturity. Based on the Company’s evaluation at December 31, 2015 of the prospects of the issuers, including, but not limited to, the credit ratings of the issuers of the investments in the fixed maturities, and the Company’s intention to not sell and its determination that it would not be required to sell before recovery of the amortized cost of such investments, the Company concluded that the declines in the fair values of the Company’s investments in fixed maturities presented in the preceding table were temporary at the evaluation date. NOTE 4. INVESTMENTS (Continued) For equity securities, the Company considers various factors when determining whether a decline in the fair value is other than temporary, including, but not limited to:
• | The financial condition and prospects of the issuer;
• | The length of time and magnitude of the unrealized loss;
• | The volatility of the investment;
• | Analyst recommendations and near term price targets;
• | Opinions of the Company’s external investment managers;
• | Market liquidity;
• | Debt-like characteristics of perpetual preferred stocks and issuer ratings; and
• | The Company’s intentions to sell or ability to hold the investments until recovery.
With respect to Investments in Equity Securities, the Company concluded that the unrealized losses on its investments in preferred and common stocks at December 31, 2015 were temporary based on various factors, including the relative short length and magnitude of the losses and overall market volatility. The Company’s investments in other equity interests include investments in limited liability companies and limited partnerships that primarily invest in mezzanine debt, distressed debt, and secondary transactions. By the nature of their underlying investments, the Company believes that some of its investments in the limited liability companies and limited partnerships exhibit debt-like characteristics which, among other factors, the Company also considers when evaluating these investments for impairment. Based on evaluations of the factors in the preceding paragraph, the Company concluded that the declines in the fair values of the Company’s investments in equity securities presented in the preceding table were temporary at December 31, 2015. An aging of unrealized losses on the Company’s Investments in Fixed Maturities and Equity Securities at December 31, 2014 is presented below.
DOLLARS IN MILLIONS |  | Less Than 12 Months |  | 12 Months or Longer |  | Total
| Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
Fixed Maturities: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government and Government Agencies and Authorities |  | $ | 24.9 |  |  | $ | (0.7 | ) |  | $ | 55.5 |  |  | $ | (1.3 | ) |  | $ | 80.4 |  |  | $ | (2.0 | )
States and Political Subdivisions |  | 1.0 |  |  | — |  |  | 126.3 |  |  | (1.8 | ) |  | 127.3 |  |  | (1.8 | )
Corporate Securities: |  |  |  |  |  |  |  |  |  |  |  |
Bonds and Notes |  | 250.4 |  |  | (5.1 | ) |  | 360.5 |  |  | (10.0 | ) |  | 610.9 |  |  | (15.1 | )
Redeemable Preferred Stocks |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Collateralized Loan Obligations |  | 51.2 |  |  | (0.7 | ) |  | 3.4 |  |  | (0.1 | ) |  | 54.6 |  |  | (0.8 | )
Other Mortgage- and Asset-backed |  | — |  |  | — |  |  | 0.4 |  |  | — |  |  | 0.4 |  |  | — |
Total Fixed Maturities |  | 327.5 |  |  | (6.5 | ) |  | 546.1 |  |  | (13.2 | ) |  | 873.6 |  |  | (19.7 | )
Equity Securities: |  |  |  |  |  |  |  |  |  |  |  |
Preferred Stocks: |  |  |  |  |  |  |  |  |  |  |  |
Finance, Insurance and Real Estate |  | 7.5 |  |  | (0.1 | ) |  | 12.1 |  |  | (0.9 | ) |  | 19.6 |  |  | (1.0 | )
Other Industries |  | — |  |  | — |  |  | 0.5 |  |  | — |  |  | 0.5 |  |  | — |
Common Stocks: |  |  |  |  |  |  |  |  |  |  |  |
Manufacturing |  | 15.1 |  |  | (1.1 | ) |  | — |  |  | — |  |  | 15.1 |  |  | (1.1 | )
Other Industries |  | 4.2 |  |  | (0.4 | ) |  | 1.0 |  |  | — |  |  | 5.2 |  |  | (0.4 | )
Other Equity Interests: |  |  |  |  |  |  |  |  |  |  |  |
Exchange Traded Funds |  | 14.9 |  |  | (0.1 | ) |  | 14.4 |  |  | (0.6 | ) |  | 29.3 |  |  | (0.7 | )
Limited Liability Companies and Limited Partnerships |  | 54.4 |  |  | (1.5 | ) |  | 6.6 |  |  | (0.3 | ) |  | 61.0 |  |  | (1.8 | )
Total Equity Securities |  | 96.1 |  |  | (3.2 | ) |  | 34.6 |  |  | (1.8 | ) |  | 130.7 |  |  | (5.0 | )
Total |  | $ | 423.6 |  |  | $ | (9.7 | ) |  | $ | 580.7 |  |  | $ | (15.0 | ) |  | $ | 1,004.3 |  |  | $ | (24.7 | )
NOTE 4. INVESTMENTS (Continued) Unrealized losses on fixed maturities, which the Company determined to be temporary at December 31, 2014, were $19.7 million, of which $13.2 million was related to fixed maturities that were in an unrealized loss position for 12 months or longer. There were no unrealized losses at December 31, 2014 related to securities for which the Company has recognized credit losses in earnings in the preceding table under the heading “Less Than 12 Months” or “12 Months or Longer.” Investment-grade fixed maturity investments comprised $14.1 million and below-investment-grade fixed maturity investments comprised $5.6 million of the unrealized losses on investments in fixed maturities at December 31, 2014. For below-investment-grade fixed maturity investments in an unrealized loss position, the unrealized loss amount, on average, was less than 4% of the amortized cost basis of the investment. At December 31, 2014, the Company did not have the intent to sell these investments and it was not more likely than not that the Company would be required to sell these investments before recovery of its amortized cost basis, which may be at maturity. Based on the Company’s evaluation at December 31, 2014 of the prospects of the issuers, including, but not limited to, the credit ratings of the issuers of the investments in the fixed maturities, and the Company’s intention to not sell and its determination that it would not be required to sell before recovery of the amortized cost of such investments, the Company concluded that the declines in the fair values of the Company’s investments in fixed maturities presented in the preceding table were temporary at the evaluation date. With respect to Investments in Equity Securities, the Company concluded that the unrealized losses on its investments at December 31, 2014 were temporary based on various factors, including the relative short length and magnitude of the losses and overall market volatility, as well as, the debt-like characteristics of investments in certain other equity interests. The following table sets forth the pre-tax amount of OTTI credit losses, recognized in Retained Earnings for Investments in Fixed Maturities held by the Company as of December 31, 2015, 2014 and 2013, for which a portion of the OTTI loss related to factors other than credit has been recognized in AOCI, and the corresponding changes in such amounts.
DOLLARS IN MILLIONS |  | 2015 |  | 2014 |  | 2013
Cumulative Balance of Pre-tax Credit Losses Recognized in Retained Earnings at Beginning of Year |  | $ | 5.3 |  |  | $ | 9.9 |  |  | $ | 4.6 |
Pre-tax Credit Losses on Fixed Maturities without Pre-tax Credit Losses Included in Cumulative Balance at Beginning of Year |  | 0.2 |  |  | 2.4 |  |  | 1.8 |
Additional Pre-tax Credit Losses on Fixed Maturities with Pre-tax Credit Losses Included in Cumulative Balance at Beginning of Year |  | — |  |  | 0.6 |  |  | 7.3 |
Reductions for Change in Impairment Status: |  |  |  |  |  |
From Status of Credit Loss to Status of Intent-to-sell or Required-to-sell |  | (0.4 | ) |  | (2.4 | ) |  | (3.2 | )
Reductions for Investments Sold During Year |  | — |  |  | (5.2 | ) |  | (0.6 | )
Balance at End of Year |  | $ | 5.1 |  |  | $ | 5.3 |  |  | $ | 9.9 |
Equity Method Limited Liability Investments include investments in limited liability investment companies and limited partnerships in which the Company’s interests are not deemed minor and are accounted for under the equity method of accounting. The Company’s investments in Equity Method Limited Liability Investments are generally of a passive nature in that the Company does not take an active role in the management of the investment entity. In 2015, aggregate investment income (losses) from Equity Method Limited Liability Investments exceeded 10% of the Company’s pretax consolidated net income. Accordingly, the Company is disclosing aggregated summarized financial data for its Equity Method Limited Liability Investments. Such aggregated summarized financial data does not represent the Company’s proportionate share of the Equity Method Limited Liability Investment assets or earnings. Aggregate total assets of the Equity Method Limited Liability Investments in which the Company invested totaled $3,801.7 million and $3,349.7 million as of December 31, 2015 and 2014, respectively. Aggregate total liabilities of the Equity Method Limited Liability Investments in which the Company invested totaled $879.1 million and $711.5 million as of December 31, 2015 and 2014, respectively. Aggregate net income of the Equity Method Limited Liability Investments in which the Company invested totaled $159.6 million, $96.2 million and $181.1 million for the years ended December 31, 2015, 2014 and 2013, respectively. The aggregate summarized financial data is based on the most recent and sufficiently-timely financial information available to the Company as of the respective reporting dates and periods. The Company’s maximum exposure to loss at December 31, 2015 is limited to the total carrying value of $190.6 million. In addition, the Company had outstanding commitments totaling approximately $58.8 million to fund Equity Method Limited Liability Investments at December 31, 2015. NOTE 4. INVESTMENTS (Continued) The carrying values of the Company’s Other Investments at December 31, 2015 and 2014 were:
DOLLARS IN MILLIONS |  | 2015 |  | 2014
Loans to Policyholders at Unpaid Principal |  | $ | 288.4 |  |  | $ | 283.4 |
Real Estate at Depreciated Cost |  | 149.8 |  |  | 160.9 |
Trading Securities at Fair Value |  | 4.7 |  |  | 4.9 |
Other |  | 0.3 |  |  | 0.4 |
Total |  | $ | 443.2 |  |  | $ | 449.6 |

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- Definition This item represents the disclosure related to the investments in securities having predetermined or determinable maturity dates, the investments in preferred and common stocks and other forms of securities that provide ownership interests in a corporation, and all other investments. The item also represents disclosure of any investee in which the investor owns 20 percent or more of the voting stock. + References No definition available. + Details
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