Investments (Tables)

9 Months Ended

Sep. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Unrealized gains and losses on fixed maturities and equity securities

The amortized cost or cost, unrealized investment gains and losses, fair values and other-than-temporary impairment (“OTTI”) included in accumulated other comprehensive income (loss) (“AOCI”) of all fixed maturities and equity securities in the portfolio were as follows:

	Amortized			Unrealized			Unrealized			Fair			OTTI in
	Cost/Cost			Gains			Losses			Value			AOCI (1)
September 30, 2015
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (2):
Mortgage-backed securities		$	471,128		$	53,536		$	984		$	523,680		$	-
Other, including
U.S. Treasury securities			576,895			25,349			3,499			598,745			-
Municipal bonds			1,557,503			166,315			11,409			1,712,409			(4,214	)
Foreign government bonds			59,481			7,016			54			66,443			-
Corporate bonds			2,624,263			175,645			30,271			2,769,637			-
Other mortgage-backed securities			1,387,275			26,158			5,605			1,407,828			1,470
Totals		$	6,676,545		$	454,019		$	51,822		$	7,078,742		$	(2,744	)

Equity securities (3)		$	95,071		$	6,351		$	5,357		$	96,065		$	-

December 31, 2014
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (2):
Mortgage-backed securities		$	484,561		$	52,555		$	1,390		$	535,726		$	-
Other, including
U.S. Treasury securities			512,596			28,652			3,049			538,199			-
Municipal bonds			1,462,717			189,533			4,428			1,647,822			-
Foreign government bonds			52,552			6,984			-			59,536			-
Corporate bonds			2,608,633			237,372			11,256			2,834,749			-
Other mortgage-backed securities			1,254,178			28,772			5,892			1,277,058			2,879
Totals		$	6,375,237		$	543,868		$	26,015		$	6,893,090		$	2,879

Equity securities (3)		$	99,904		$	14,159		$	3,408		$	110,655		$	-

(1)

Related to securities for which an unrealized loss was bifurcated to distinguish the credit related portion and the portion driven by other market factors. Represents the amount of other-than-temporary impairment losses in AOCI which was not included in earnings; amounts also include unrealized gains/(losses) on such impaired securities relating to changes in the fair value of those securities subsequent to the impairment measurement date.

(2)

Fair value includes securities issued by Federal National Mortgage Association (“FNMA”) of $254,810 and $302,222; Federal Home Loan Mortgage Corporation (“FHLMC”) of $406,845 and $432,432; and Government National Mortgage Association (“GNMA”) of $137,291 and $137,867 as of September 30, 2015 and December 31, 2014, respectively.

(3)

Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds.

Summary of fair value and gross unrealized losses of fixed maturity securities and equity securities in an unrealized loss position

For equity securities, the Company has the ability and intent to hold the securities for the recovery of cost and recovery of cost is expected within a reasonable period of time. Therefore, no impairment of these securities was recorded at September 30, 2015.

	12 Months or Less						More than 12 Months							Total
				Gross							Gross							Gross
	Fair Value			Unrealized Losses			Fair Value				Unrealized Losses			Fair Value				Unrealized Losses
September 30, 2015
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	24,742			$	891		$	1,616			$	93		$	26,358			$	984
Other		223,729				3,399			1,899				100			225,628				3,499
Municipal bonds		158,166				5,887			21,189				5,522			179,355				11,409
Foreign government bonds		5,933				54			-				-			5,933				54
Corporate bonds		542,329				24,073			40,187				6,198			582,516				30,271
Other mortgage-backed securities		497,157				4,689			110,542				916			607,699				5,605
Total fixed maturity securities		1,452,056				38,993			175,433				12,829			1,627,489				51,822
Equity securities (1)		46,500				4,498			6,616				859			53,116				5,357
Combined totals	$	1,498,556			$	43,491		$	182,049			$	13,688		$	1,680,605			$	57,179

Number of positions with a gross unrealized loss		519							64							583
Fair value as a percentage of total fixed maturities and equity securities fair value		20.9	%						2.5	%						23.4	%

December 31, 2014
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	2			$	-		$	39,809			$	1,390		$	39,811			$	1,390
Other		10,317				34			117,615				3,015			127,932				3,049
Municipal bonds		31,821				200			59,715				4,228			91,536				4,428
Foreign government bonds		-				-			-				-			-				-
Corporate bonds		213,612				6,883			76,099				4,373			289,711				11,256
Other mortgage-backed securities		477,877				4,797			88,663				1,095			566,540				5,892
Total fixed maturity securities		733,629				11,914			381,901				14,101			1,115,530				26,015
Equity securities (1)		12,955				2,568			6,635				840			19,590				3,408
Combined totals	$	746,584			$	14,482		$	388,536			$	14,941		$	1,135,120			$	29,423

Number of positions with a gross unrealized loss		234							112							346
Fair value as a percentage of total fixed maturities and equity securities fair value		10.7	%						5.5	%						16.2	%

(1)

Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds.

Summary of cumulative credit losses

The following table summarizes the cumulative amounts related to the Company’s credit loss component of the other-than-temporary impairment losses on fixed maturity securities held as of September 30, 2015 and 2014 that the Company did not intend to sell as of those dates, and it was not more likely than not that the Company would be required to sell the securities before the anticipated recovery of the amortized cost bases, for which the non-credit portions of the other-than-temporary impairment losses were recognized in other comprehensive income (loss):

	Nine Months Ended
	September 30,
	2015		2014
Cumulative credit loss (1)
Beginning of period	$	2,877	$	4,097
New credit losses		5,162		280
Losses related to securities sold or paid down during the period		-		-
End of period	$	8,039	$	4,377

(1)

The cumulative credit loss amounts exclude other-than-temporary impairment losses on securities held as of the periods indicated that the Company intended to sell or it was more likely than not that the Company would be required to sell the security before the recovery of the amortized cost basis.

Distribution of the Company's fixed maturity portfolio by estimated expected maturity

For structured securities, including mortgage-backed securities and other asset-backed securities, estimated expected maturities consider broker-dealer survey prepayment assumptions and are verified for consistency with the interest rate and economic environments.

	Percent of Total Fair Value						September 30, 2015
	September 30,			December 31,			Fair			Amortized
	2015			2014			Value			Cost
Estimated expected maturity:
Due in 1 year or less		3.1	%		4.0	%		$	221,731		$	209,133
Due after 1 year through 5 years		24.5			23.4				1,733,636			1,635,135
Due after 5 years through 10 years		39.0			40.1				2,756,711			2,600,082
Due after 10 years through 20 years		21.3			20.1				1,509,166			1,423,418
Due after 20 years		12.1			12.4				857,498			808,777
Total		100.0	%		100.0	%		$	7,078,742		$	6,676,545

Average option-adjusted duration, in years		5.8			5.8

Proceeds received from sales of fixed maturities and equity securities

Proceeds received from sales of fixed maturities and equity securities, each determined using the specific identification method, and gross gains and gross losses realized as a result of those sales for each period were:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Fixed maturity securities
Proceeds received	$	81,120		$	98,942		$	327,641		$	198,191
Gross gains realized		6,400			5,871			18,631			9,998
Gross losses realized		(3,267	)		(4,421	)		(5,012	)		(5,399	)

Equity securities
Proceeds received	$	5,633		$	3,489		$	26,442		$	11,980
Gross gains realized		680			722			5,878			2,196
Gross losses realized		(397	)		(86	)		(514	)		(267	)

Reconciliation of net unrealized investment gains (losses) on fixed maturity securities and equity securities

The following table reconciles the net unrealized investment gains and losses, net of tax, included in accumulated other comprehensive income (loss), before the impact on deferred policy acquisition costs:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Net unrealized investment gains (losses) on fixed maturity securities, net of tax
Beginning of period	$	254,827		$	317,791		$	336,604		$	146,489
Change in unrealized investment gains and losses		7,436			(10,189	)		(69,787	)		163,613
Reclassification of net realized investment (gains) losses to net income		(835	)		(1,824	)		(5,389	)		(4,324	)
End of period	$	261,428		$	305,778		$	261,428		$	305,778

Net unrealized investment gains (losses) on equity securities, net of tax
Beginning of period	$	3,399		$	7,955		$	6,988		$	4,618
Change in unrealized investment gains and losses		(2,584	)		(1,594	)		(5,774	)		2,584
Reclassification of net realized investment (gains) losses to net income		(169	)		(459	)		(568	)		(1,300	)
End of period	$	646		$	5,902		$	646		$	5,902

Offsetting assets and liability

The following table presents the instruments that were subject to a master netting arrangement for the Company.

Net Amounts

of Assets/

Gross

Liabilities

Gross Amounts Not Offset

Amounts

Presented

in the Consolidated

Offset in the

in the

Balance Sheet

Consolidated

Cash

Gross

Balance

Financial

Collateral

Net

Amounts

Sheet

Instruments

Received

Amount

September 30, 2015

Asset derivatives:

Free-standing derivatives

$1,135

$ 1,097

$ 38

December 31, 2014

Asset derivatives:

Free-standing derivatives

2,458

1,955

503