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Investments | 6 Months Ended
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Jun. 30, 2023
Investments, Debt and Equity Securities [Abstract] |
Investments | Note 9 - Investments Fixed Maturities The amortized cost and fair values of the Company’s Investments in Fixed Maturities at June 30, 2023 were:
|  | Amortized Cost |  | Gross Unrealized |  | Allowance for Expected Credit Losses |  | Fair Value
(Dollars in Millions) |  | Gains |  | Losses
U.S. Government and Government Agencies and Authorities |  | $ | 627.8 |  |  | $ | 1.4 |  |  | $ | (83.7) |  |  | $ | — |  |  | $ | 545.5 |
States and Political Subdivisions |  | 1,646.8 |  |  | 21.9 |  |  | (207.3) |  |  | (0.4) |  |  | 1,461.0 |
Foreign Governments |  | 4.8 |  |  | — |  |  | (0.8) |  |  | — |  |  | 4.0 |
Corporate Securities: |  |  |  |  |  |  |  |  |  |
Bonds and Notes |  | 4,083.2 |  |  | 22.5 |  |  | (465.6) |  |  | (6.7) |  |  | 3,633.4 |
Redeemable Preferred Stocks |  | 9.0 |  |  | — |  |  | (1.1) |  |  | — |  |  | 7.9 |
Collateralized Loan Obligations |  | 1,032.7 |  |  | 0.4 |  |  | (45.9) |  |  | — |  |  | 987.2 |
Other Mortgage- and Asset-backed |  | 357.4 |  |  | 0.2 |  |  | (52.8) |  |  | — |  |  | 304.8 |
Investments in Fixed Maturities |  | $ | 7,761.7 |  |  | $ | 46.4 |  |  | $ | (857.2) |  |  | $ | (7.1) |  |  | $ | 6,943.8 |
The amortized cost and fair values of the Company’s Investments in Fixed Maturities at December 31, 2022 were:
|  | Amortized Cost |  | Gross Unrealized |  | Allowance for Expected Credit Losses |  | Fair Value
(Dollars in Millions) |  | Gains |  | Losses |  |
U.S. Government and Government Agencies and Authorities |  | $ | 612.5 |  |  | $ | 1.3 |  |  | $ | (85.8) |  |  | $ | — |  |  | $ | 528.0 |
States and Political Subdivisions |  | 1,797.6 |  |  | 10.3 |  |  | (238.3) |  |  | (0.7) |  |  | 1,568.9 |
Foreign Governments |  | 5.0 |  |  | — |  |  | (0.9) |  |  | — |  |  | 4.1 |
Corporate Securities: |  |  |  |  |  |  |  |  |  |
Bonds and Notes |  | 4,030.3 |  |  | 17.7 |  |  | (499.7) |  |  | (8.9) |  |  | 3,539.4 |
Redeemable Preferred Stocks |  | 9.0 |  |  | — |  |  | (1.0) |  |  | — |  |  | 8.0 |
Collateralized Loan Obligations |  | 1,014.7 |  |  | — |  |  | (60.8) |  |  | — |  |  | 953.9 |
Other Mortgage- and Asset-backed |  | 342.7 |  |  | 0.1 |  |  | (50.3) |  |  | — |  |  | 292.5 |
Investments in Fixed Maturities |  | $ | 7,811.8 |  |  | $ | 29.4 |  |  | $ | (936.8) |  |  | $ | (9.6) |  |  | $ | 6,894.8 |
Other Receivables included $12.5 million and $5.8 million of unsettled sales of Investments in Fixed Maturities at June 30, 2023 and December 31, 2022, respectively. Accrued Expenses and Other Liabilities included unsettled purchases of Investments in Fixed Maturities of $2.7 million and $25.9 million at June 30, 2023 and December 31, 2022, respectively. Note 9 - Investments (Continued) The amortized cost and fair values of the Company’s Investments in Fixed Maturities at June 30, 2023 by contractual maturity were:
(Dollars in Millions) |  | Amortized Cost |  | Fair Value
Due in One Year or Less |  | $ | 196.0 |  |  | $ | 187.3 |
Due after One Year to Five Years |  | 918.7 |  |  | 879.2 |
Due after Five Years to Ten Years |  | 1,111.6 |  |  | 960.4 |
Due after Ten Years |  | 3,664.7 |  |  | 3,217.4 |
Mortgage- and Asset-backed Securities Not Due at a Single Maturity Date |  | 1,870.7 |  |  | 1,699.5 |
Investments in Fixed Maturities |  | $ | 7,761.7 |  |  | $ | 6,943.8 |
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- and Asset-backed Securities Not Due at a Single Maturity Date at June 30, 2023 consisted of securities issued by the Government National Mortgage Association with a fair value of $248.1 million, securities issued by the Federal National Mortgage Association with a fair value of $94.1 million, securities issued by the Federal Home Loan Mortgage Corporation with a fair value of $65.4 million, and securities issued by other non-governmental issuers with a fair value of $1,291.9 million. An aging of unrealized losses on the Company’s Investments in Fixed Maturities at June 30, 2023 is presented below.
|  | Less Than 12 Months |  | 12 Months or Longer |  | Total
(Dollars in Millions) |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
Fixed Maturities: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government and Government Agencies and Authorities |  | $ | 127.6 |  |  | $ | (5.0) |  |  | $ | 365.3 |  |  | $ | (78.7) |  |  | $ | 492.9 |  |  | $ | (83.7) |
States and Political Subdivisions |  | 235.1 |  |  | (8.6) |  |  | 843.1 |  |  | (198.7) |  |  | 1,078.2 |  |  | (207.3) |
Foreign Governments |  | 0.9 |  |  | — |  |  | 2.2 |  |  | (0.8) |  |  | 3.1 |  |  | (0.8) |
Corporate Securities: |  |  |  |  |  |  |  |  |  |  |  |
Bonds and Notes |  | 1,163.4 |  |  | (59.3) |  |  | 2,045.4 |  |  | (406.3) |  |  | 3,208.8 |  |  | (465.6) |
Redeemable Preferred Stocks |  | — |  |  | — |  |  | 7.6 |  |  | (1.1) |  |  | 7.6 |  |  | (1.1) |
Collateralized Loan Obligations |  | 47.4 |  |  | (0.6) |  |  | 884.1 |  |  | (45.3) |  |  | 931.5 |  |  | (45.9) |
Other Mortgage- and Asset-backed |  | 22.7 |  |  | (0.3) |  |  | 277.9 |  |  | (52.5) |  |  | 300.6 |  |  | (52.8) |
Total Fixed Maturities |  | $ | 1,597.1 |  |  | $ | (73.8) |  |  | $ | 4,425.6 |  |  | $ | (783.4) |  |  | $ | 6,022.7 |  |  | $ | (857.2) |
Investment-grade fixed maturity investments comprised $827.1 million and below-investment-grade Fixed Maturity Investments comprised $30.1 million of the unrealized losses on investments in fixed maturities at June 30, 2023. For below-investment-grade fixed maturity investments in an unrealized loss position, the unrealized loss amount, on average, was approximately 9.5% of the amortized cost basis of the investment. Note 9 - Investments (Continued) An aging of unrealized losses on the Company’s Investments in Fixed Maturities at December 31, 2022 is presented below.
|  | Less Than 12 Months |  | 12 Months or Longer |  | Total
(Dollars in Millions) |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
Fixed Maturities: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government and Government Agencies and Authorities |  | $ | 337.3 |  |  | $ | (49.3) |  |  | $ | 126.5 |  |  | $ | (36.5) |  |  | $ | 463.8 |  |  | $ | (85.8) |
States and Political Subdivisions |  | 854.7 |  |  | (140.6) |  |  | 276.8 |  |  | (97.7) |  |  | 1,131.5 |  |  | (238.3) |
Foreign Governments |  | 0.1 |  |  | — |  |  | 2.6 |  |  | (0.9) |  |  | 2.7 |  |  | (0.9) |
Corporate Securities: |  |  |  |  |  |  |  |  |  |  |  |
Bonds and Notes |  | 2,730.6 |  |  | (373.9) |  |  | 424.4 |  |  | (125.8) |  |  | 3,155.0 |  |  | (499.7) |
Redeemable Preferred Stocks |  | 7.7 |  |  | (1.0) |  |  | — |  |  | — |  |  | 7.7 |  |  | (1.0) |
Collateralized Loan Obligations |  | 568.2 |  |  | (34.2) |  |  | 373.9 |  |  | (26.6) |  |  | 942.1 |  |  | (60.8) |
Other Mortgage- and Asset-backed |  | 205.4 |  |  | (28.9) |  |  | 79.5 |  |  | (21.4) |  |  | 284.9 |  |  | (50.3) |
Total Fixed Maturities |  | $ | 4,704.0 |  |  | $ | (627.9) |  |  | $ | 1,283.7 |  |  | $ | (308.9) |  |  | $ | 5,987.7 |  |  | $ | (936.8) |
Investment-grade fixed maturity investments comprised $904.0 million and below-investment-grade Fixed Maturity Investments comprised $32.8 million of the unrealized losses on Investments in Fixed Maturities at December 31, 2022. For below-investment-grade fixed maturity investments in an unrealized loss position, the unrealized loss amount, on average, was approximately 11% of the amortized cost basis of the investment. Fixed Maturities - Expected Credit Losses The following table sets forth the change in allowance for credit losses on fixed maturities available-for-sale by major security type for six months ended June 30, 2023.
|  | States and Political Subdivisions |  |  |  | Corporate Bonds and Notes |  |  |  | Total
(Dollars in Millions)
Beginning of the Year |  | $ | 0.7 |  |  |  |  | $ | 8.9 |  |  |  |  | $ | 9.6 |
Additions for Securities for which No Previous Expected Credit Losses were Recognized |  | — |  |  |  |  | 0.7 |  |  |  |  | 0.7 |
Reduction Due to Sales |  | — |  |  |  |  | (1.9) |  |  |  |  | (1.9) |
Net Decrease in Allowance on Securities for which Expected Credit Losses were Previously Recognized |  | — |  |  |  |  | (1.0) |  |  |  |  | (1.0) |
Write-offs Charged Against Allowance |  | (0.3) |  |  |  |  | — |  |  |  |  | (0.3) |
End of the Period |  | $ | 0.4 |  |  |  |  | $ | 6.7 |  |  |  |  | $ | 7.1 |
Note 9 - Investments (Continued) The following table sets forth the change in allowance for credit losses on fixed maturities available-for-sale by major security type for the six months ended June 30, 2022.
|  |  |  |  |  | Corporate Bonds and Notes |  |  |  | Total
(Dollars in Millions)
Beginning of the Year |  |  |  |  |  | $ | 7.5 |  |  |  |  | $ | 7.5 |
Additions for Securities for which No Previous Expected Credit Losses were Recognized |  |  |  |  |  | 3.8 |  |  |  |  | 3.8 |
Net Increase in Allowance on Securities for which Expected Credit Losses were Previously Recognized |  |  |  |  |  | 5.8 |  |  |  |  | 5.8 |
Write-offs Charged Against Allowance |  |  |  |  |  | (3.5) |  |  |  |  | (3.5) |
End of the Period |  |  |  |  |  | $ | 13.6 |  |  |  |  | $ | 13.6 |
Equity Securities at Fair Value Investments in Equity Securities at Fair Value were $247.0 million and $243.2 million at June 30, 2023 and December 31, 2022, respectively. Net unrealized gains arising during the six months ended June 30, 2023 and recognized in earnings, related to such investments still held as of June 30, 2023, were $9.8 million. There were no unsettled purchases of Investments in Equity Securities at Fair Value at June 30, 2023 or December 31, 2022. There were $31.3 million and $0.0 million in unsettled sales of Investments in Equity Securities at Fair Value at June 30, 2023 and December 31, 2022, respectively. Equity Method Limited Liability Investments 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. The Company’s maximum exposure to loss at June 30, 2023 is limited to the total carrying value of $225.1 million. In addition, the Company had outstanding commitments totaling approximately $90.5 million to fund Equity Method Limited Liability Investments at June 30, 2023. At June 30, 2023, 2.0% of Equity Method Limited Liability Investments were reported without a reporting lag. Of the total carrying value, 5.3% was reported with a one month lag and the remainder was reported with more than a one-month lag. There were no unsettled purchases of Equity Method Limited Liability Investments at June 30, 2023 or December 31, 2022. There were $0.8 million and $35.2 million unsettled sales of Equity Method Limited Liability Investments at June 30, 2023 and December 31, 2022, respectively. Unsettled sales of Equity Method Limited Liability Investments are carried within Other Receivables on the Condensed Consolidated Balance Sheets. Alternative Energy Partnership Investments Alternative Energy Partnership Investments include partnerships formed to invest in newly installed residential solar leases and power purchase agreements. As a result of this investment, the Company has the right to certain investment tax credits and tax depreciation benefits, and to a lesser extent, cash flows generated from the installed solar systems leased to individual consumers for a fixed period of time. The Hypothetical Liquidation Book Value (“HLBV”) equity method of accounting is used for the Company’s investments in Alternative Energy Partnership Investments. The Company’s maximum exposure to loss at June 30, 2023 is limited to the total carrying value of $16.8 million. The Company had no outstanding commitments to fund Alternative Energy Partnership Investments as of June 30, 2023. Alternative Energy Partnership Investments are reported on a three-month lag. Note 9 - Investments (Continued) Loans to Policyholders Loans to Policyholders represents funds loaned to policyholders up to the cash surrender value of the associated insurance policies and are carried at the unpaid principal balances due to the Company from the policyholders. Interest income on policy loans is recognized in Net Investment Income at the contract interest rate when earned. Policy loans are fully collateralized by the cash surrender value of the associated insurance policies. The carrying values of the Company’s Loans to Policyholders at Unpaid Principal investment at June 30, 2023 and December 31, 2022 were $281.6 million and $283.4 million, respectively. Other Investments The carrying values of the Company’s Other Investments at June 30, 2023 and December 31, 2022 were:
(Dollars in Millions) |  | Jun 30, 2023 |  | Dec 31, 2022
Equity Securities at Modified Cost |  | $ | 34.7 |  |  | $ | 38.4 |
Convertible Securities at Fair Value |  | 46.2 |  |  | 43.3 |
Real Estate at Depreciated Cost |  | 96.0 |  |  | 93.6 |
Mortgage Loans |  | 92.6 |  |  | 91.1 |
Other |  | 6.1 |  |  | 3.5 |
Total |  | $ | 275.6 |  |  | $ | 269.9 |
The Company performs a qualitative impairment analysis of its Other Investments on a quarterly basis consisting of various factors such as earnings performance, current market conditions, changes in credit ratings, changes in the regulatory environment and other factors. If the qualitative analysis identifies the presence of impairment indicators, the Company estimates the fair value of the investment. If the estimated fair value is below the carrying value, the Company records an impairment in the Condensed Consolidated Statements of Loss to reduce the carrying value to the estimated fair value. When the Company identifies observable transactions of the same or similar securities to those held by the Company, the Company increases or decreases the carrying value to the observable transaction price. The Company did not recognize any changes in carrying value due to observable transactions for the six months ended June 30, 2023. The Company did not recognize any impairment on Equity Securities at Modified Cost for six months ended June 30, 2023 as a result of the Company’s impairment analysis. The Company recognized no cumulative increases or decreases in the carrying value due to observable transactions and $9.6 million of cumulative impairments on Equity Securities at Modified Cost held as of June 30, 2023. Note 9 - Investments (Continued) Net Investment Income Net Investment Income for the six and three months ended June 30, 2023 and 2022 was:
|  | Six Months Ended |  | Three Months Ended
(Dollars in Millions) |  | Jun 30, 2023 |  | Jun 30, 2022 |  | Jun 30, 2023 |  | Jun 30, 2022
Investment Income: |  |  |  |  |  |  |  |
Interest on Fixed Income Securities |  | $ | 173.3 |  |  | $ | 141.5 |  |  | $ | 87.1 |  |  | $ | 72.8 |
Dividends on Equity Securities Excluding Alternative Investments |  | 2.2 |  |  | 3.2 |  |  | 1.2 |  |  | 1.7 |
Alternative Investments: |  |  |  |  |  |  |  |
Equity Method Limited Liability Investments |  | 3.9 |  |  | 28.6 |  |  | 2.8 |  |  | 15.3 |
Limited Liability Investments Included in Equity Securities |  | 8.9 |  |  | 26.1 |  |  | 6.3 |  |  | 18.5 |
Total Alternative Investments |  | 12.8 |  |  | 54.7 |  |  | 9.1 |  |  | 33.8 |
Short-term Investments |  | 5.9 |  |  | 0.3 |  |  | 3.6 |  |  | 0.2 |
Loans to Policyholders |  | 10.5 |  |  | 10.8 |  |  | 5.1 |  |  | 5.3 |
Real Estate |  | 4.3 |  |  | 4.5 |  |  | 1.9 |  |  | 2.3 |
Company-Owned Life Insurance |  | 16.2 |  |  | 18.1 |  |  | 7.4 |  |  | 9.8 |
Other |  | 8.3 |  |  | 3.4 |  |  | 5.3 |  |  | 1.7 |
Total Investment Income |  | 233.5 |  |  | 236.5 |  |  | 120.7 |  |  | 127.6 |
Investment Expenses: |  |  |  |  |  |  |  |
Real Estate |  | 4.3 |  |  | 3.5 |  |  | 2.2 |  |  | 1.0 |
Other Investment Expenses |  | 21.1 |  |  | 14.5 |  |  | 12.2 |  |  | 8.1 |
Total Investment Expenses |  | 25.4 |  |  | 18.0 |  |  | 14.4 |  |  | 9.1 |
Net Investment Income |  | $ | 208.1 |  |  | $ | 218.5 |  |  | $ | 106.3 |  |  | $ | 118.5 |
Gross gains and losses on sales of investments in fixed maturities for the six and three months ended June 30, 2023 and 2022 were:
|  | Six Months Ended |  | Three Months Ended
(Dollars in Millions) |  | Jun 30, 2023 |  | Jun 30, 2022 |  | Jun 30, 2023 |  | Jun 30, 2022
Fixed Maturities: |  |  |  |  |  |  |  |
Gains on Sales |  | $ | 1.5 |  |  | $ | 13.8 |  |  | $ | 0.4 |  |  | $ | 13.4 |
Losses on Sales |  | (9.3) |  |  | (3.6) |  |  | (6.0) |  |  | (2.8) |
(Losses) Gains on Hedging Activity |  | (0.3) |  |  | 0.3 |  |  | (8.7) |  |  | 0.3 |

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