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Investments (Tables)

9 Months Ended

Sep. 30, 2016

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 impairments (“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, 2016
Fixed maturity securities
U.S. Government and federally
sponsored agency obligations (2):
Mortgage-backed securities			$	419,651					$	52,772					$	267					$	472,156					$	-
Other, including
U.S. Treasury securities				449,016						39,383						272						488,127						-
Municipal bonds				1,555,326						228,185						4,770						1,778,741						(1,899	)
Foreign government bonds				71,402						8,437						-						79,839						-
Corporate bonds				2,720,987						239,109						6,758						2,953,338						(340	)
Other mortgage-backed securities				1,691,193						40,302						9,643						1,721,852						1,700
Totals			$	6,907,575					$	608,188					$	21,710					$	7,494,053					$	(539	)
Equity securities (3)			$	124,806					$	14,355					$	1,521					$	137,640					$	-
December 31, 2015
Fixed maturity securities
U.S. Government and federally
sponsored agency obligations (2):
Mortgage-backed securities			$	461,862					$	44,413					$	1,861					$	504,414					$	-
Other, including
U.S. Treasury securities				532,373						21,153						7,415						546,111						-
Municipal bonds				1,553,603						165,680						10,340						1,708,943						(4,140	)
Foreign government bonds				67,441						6,288						112						73,617						-
Corporate bonds				2,687,376						140,873						48,834						2,779,415						-
Other mortgage-backed securities				1,482,971						16,830						20,961						1,478,840						1,382
Totals			$	6,785,626					$	395,237					$	89,523					$	7,091,340					$	(2,758	)
Equity securities (3)			$	95,722					$	8,405					$	4,330					$	99,797					$	-

(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 $203,381 and $231,294; Federal Home Loan Mortgage Corporation (“FHLMC”) of $302,472 and $363,957; and Government National Mortgage Association (“GNMA”) of $122,311 and $130,940 as of September 30, 2016 and December 31, 2015, 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.

		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, 2016
Fixed maturity securities
U.S. Government and federally
sponsored agency obligations:
Mortgage-backed securities			$	9,701				$	60				$	3,564				$	207				$	13,265				$	267
Other				27,728					272					-					-					27,728					272
Municipal bonds				53,583					879					16,768					3,891					70,351					4,770
Foreign government bonds				-					-					-					-					-					-
Corporate bonds				114,009					1,514					63,800					5,244					177,809					6,758
Other mortgage-backed securities				266,884					5,447					207,444					4,196					474,328					9,643
Total fixed
maturity securities				471,905					8,172					291,576					13,538					763,481					21,710
Equity securities (1)				15,494					885					8,603					636					24,097					1,521
Combined totals			$	487,399				$	9,057				$	300,179				$	14,174				$	787,578				$	23,231
Number of positions with a
gross unrealized loss				201										107										308
Fair value as a percentage of
total fixed maturities and
equity securities fair value				6.4	%									3.9	%									10.3	%
December 31, 2015
Fixed maturity securities
U.S. Government and federally
sponsored agency obligations:
Mortgage-backed securities			$	48,097				$	1,748				$	1,595				$	113				$	49,692				$	1,861
Other				248,478					7,338					1,921					77					250,399					7,415
Municipal bonds				168,939					5,382					21,717					4,958					190,656					10,340
Foreign government bonds				11,867					112					-					-					11,867					112
Corporate bonds				858,647					37,244					50,340					11,590					908,987					48,834
Other mortgage-backed securities				929,268					19,165					140,561					1,796					1,069,829					20,961
Total fixed
maturity securities				2,265,296					70,989					216,134					18,534					2,481,430					89,523
Equity securities (1)				38,764					3,022					8,379					1,308					47,143					4,330
Combined totals			$	2,304,060				$	74,011				$	224,513				$	19,842				$	2,528,573				$	93,853
Number of positions with a
gross unrealized loss				684										78										762
Fair value as a percentage of
total fixed maturities and
equity securities fair value				32.0	%									3.1	%									35.1	%

(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, 2016 and 2015 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,
		2016				2015
Cumulative credit loss (1)
Beginning of period		$	7,844			$	2,877
New credit losses			300				5,162
Increases to previously recognized credit losses			2,480				-
Losses related to securities sold or paid down during the period			-				-
End of period		$	10,624			$	8,039

(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

The following table presents the distribution of the Company’s fixed maturity securities portfolio by estimated expected maturity. Estimated expected maturities differ from contractual maturities, reflecting assumptions regarding borrowers’ utilization of the right to call or prepay obligations with or without call or prepayment penalties. 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, 2016
		September 30,					December 31,					Fair					Amortized
		2016					2015					Value					Cost
Estimated expected maturity:
Due in 1 year or less				3.8	%				3.1	%			$	287,079				$	264,641
Due after 1 year through 5 years				27.6					24.2					2,065,099					1,903,694
Due after 5 years through 10 years				37.1					39.6					2,780,699					2,563,365
Due after 10 years
through 20 years				19.7					20.9					1,473,916					1,358,717
Due after 20 years				11.8					12.2					887,260					817,158
Total				100.0	%				100.0	%			$	7,494,053				$	6,907,575
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,
			2016				2015				2016				2015
Fixed maturity securities
Proceeds received		$	94,706			$	81,120			$	351,739			$	327,641
Gross gains realized			2,966				6,400				13,824				18,631
Gross losses realized			(102	)			(3,267	)			(1,542	)			(5,012	)
Equity securities
Proceeds received		$	4,479			$	5,633			$	17,101			$	26,442
Gross gains realized			790				680				1,960				5,878
Gross losses realized			(21	)			(397	)			(862	)			(514	)

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,
			2016						2015					2016					2015
Net unrealized investment gains (losses)
on fixed maturity securities, net of tax
Beginning of period		$	371,456					$	254,827				$	198,714				$	336,604
Change in unrealized investment
gains and losses			20,827						7,436					188,912					(69,787		)
Reclassification of net realized
investment (gains) losses
to net income			(11,072			)			(835		)			(6,415		)			(5,389		)
End of period		$	381,211					$	261,428				$	381,211				$	261,428
Net unrealized investment gains (losses)
on equity securities, net of tax
Beginning of period		$	8,183					$	3,399				$	2,649				$	6,988
Change in unrealized investment
gains and losses			(2,052			)			(2,584		)			4,846					(5,774		)
Reclassification of net realized
investment (gains) losses
to net income			2,211						(169		)			847					(568		)
End of period		$	8,342					$	646				$	8,342				$	646

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 Sheets

Consolidated

Consolidated

Cash

Gross

Balance

Balance

Financial

Collateral

Net

Amounts

Sheets

Sheets

Instruments

Received

Amount

September 30, 2016

Asset derivatives:

Free-standing derivatives

$

4,534

-

$

4,534

-

$

4,770

$

(236

)

December 31, 2015

Asset derivatives:

Free-standing derivatives

2,501

-

2,501

-

2,617

(116

)

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Tabular disclosure of the amount of other than temporary impairment (OTTI) related to credit losses recognized in earnings including: (a) the beginning balance of the amount related to credit losses on debt securities held by the investor at the beginning of the period for which a portion of an OTTI was recognized in other comprehensive income; (b) additions for the amount related to the credit loss for which an OTTI was not previously recognized; (c) reductions for securities sold during the period (realized); (d) reductions for securities for which the amount previously recognized in other comprehensive income was recognized in earnings because the investor intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis; (e) additional increases to the amount related to the credit loss for which an OTTI was previously recognized when the investor does not intend to sell the security and it is not more likely than not that the investor will be required to sell the security before recovery of its amortized cost basis; (f) reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security; and (g) the ending balance of the amount related to credit losses on debt securities held by the entity at the end of the period for which a portion of an OTTI was recognized in other comprehensive income.

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-SubTopic 10
-Section 50
-Paragraph 8
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-Section 50
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