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v3.19.1

Summary of Investments | 3 Months Ended
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Mar. 31, 2019
Investments [Abstract] |
Summary of Investments | SUMMARY OF INVESTMENTS Fair Value of Investments A reconciliation of the amortized cost (cost for equity securities) to fair value of investments in held-to-maturity and available-for-sale fixed maturity and equity securities, presented on a consolidated basis, as of March 31, 2019 and December 31, 2018, is provided below:
March 31, 2019 |
Type of Investment | Cost or Amortized Cost |  | Gross Unrealized Appreciation |  | Gross Unrealized Depreciation |  | Fair Value
AVAILABLE-FOR-SALE |  |  |  |  |  |  |
Fixed maturities: |  |  |  |  |  |  |
Bonds |  |  |  |  |  |  |
U.S. Treasury | $ | 26,821 |  |  | $ | 13 |  |  | $ | 143 |  |  | $ | 26,691 |
U.S. government agency | 188,529 |  |  | 1,417 |  |  | 405 |  |  | 189,541 |
States, municipalities and political subdivisions |  |  |  |  |  |  |
General obligations: |  |  |  |  |  |  |
Midwest | 86,782 |  |  | 1,995 |  |  | 98 |  |  | 88,679 |
Northeast | 31,266 |  |  | 866 |  |  | — |  |  | 32,132 |
South | 114,500 |  |  | 1,755 |  |  | 475 |  |  | 115,780 |
West | 107,580 |  |  | 2,592 |  |  | 305 |  |  | 109,867 |
Special revenue: |  |  |  |  |  |  |
Midwest | 139,803 |  |  | 3,520 |  |  | 194 |  |  | 143,129 |
Northeast | 62,604 |  |  | 1,123 |  |  | 406 |  |  | 63,321 |
South | 229,505 |  |  | 4,532 |  |  | 1,101 |  |  | 232,936 |
West | 142,974 |  |  | 2,905 |  |  | 537 |  |  | 145,342 |
Foreign bonds | 4,941 |  |  | 106 |  |  | — |  |  | 5,047 |
Public utilities | 62,774 |  |  | 878 |  |  | 444 |  |  | 63,208 |
Corporate bonds |  |  |  |  |  |  |
Energy | 28,158 |  |  | 536 |  |  | 41 |  |  | 28,653 |
Industrials | 53,836 |  |  | 613 |  |  | 171 |  |  | 54,278 |
Consumer goods and services | 48,151 |  |  | 857 |  |  | 209 |  |  | 48,799 |
Health care | 13,974 |  |  | 294 |  |  | 2 |  |  | 14,266 |
Technology, media and telecommunications | 25,895 |  |  | 463 |  |  | 138 |  |  | 26,220 |
Financial services | 91,876 |  |  | 1,366 |  |  | 669 |  |  | 92,573 |
Mortgage-backed securities | 7,401 |  |  | 48 |  |  | 134 |  |  | 7,315 |
Collateralized mortgage obligations |  |  |  |  |  |  |
Government national mortgage association | 77,401 |  |  | 750 |  |  | 763 |  |  | 77,388 |
Federal home loan mortgage corporation | 108,333 |  |  | 889 |  |  | 513 |  |  | 108,709 |
Federal national mortgage association | 52,722 |  |  | 635 |  |  | 204 |  |  | 53,153 |
Asset-backed securities | 3,274 |  |  | 387 |  |  | 125 |  |  | 3,536 |
Total Available-for-Sale Fixed Maturities | $ | 1,709,100 |  |  | $ | 28,540 |  |  | $ | 7,077 |  |  | $ | 1,730,563 |
December 31, 2018 |
Type of Investment | Cost or Amortized Cost |  | Gross Unrealized Appreciation |  | Gross Unrealized Depreciation |  | Fair Value
AVAILABLE-FOR-SALE |  |  |  |  |  |  |
Fixed maturities: |  |  |  |  |  |  |
Bonds |  |  |  |  |  |  |
U.S. Treasury | $ | 27,632 |  |  | $ | 6 |  |  | $ | 220 |  |  | $ | 27,418 |
U.S. government agency | 215,535 |  |  | 896 |  |  | 1,749 |  |  | 214,682 |
States, municipalities and political subdivisions |  |  |  |  |  |  |
General obligations: |  |  |  |  |  |  |
Midwest | 94,806 |  |  | 1,091 |  |  | 685 |  |  | 95,212 |
Northeast | 37,326 |  |  | 432 |  |  | 103 |  |  | 37,655 |
South | 114,710 |  |  | 754 |  |  | 1,553 |  |  | 113,911 |
West | 107,787 |  |  | 1,229 |  |  | 1,175 |  |  | 107,841 |
Special revenue: |  |  |  |  |  |  |
Midwest | 140,025 |  |  | 1,609 |  |  | 870 |  |  | 140,764 |
Northeast | 62,737 |  |  | 452 |  |  | 1,241 |  |  | 61,948 |
South | 237,848 |  |  | 1,669 |  |  | 3,708 |  |  | 235,809 |
West | 143,829 |  |  | 1,294 |  |  | 2,203 |  |  | 142,920 |
Foreign bonds | 9,698 |  |  | 31 |  |  | 13 |  |  | 9,716 |
Public utilities | 56,808 |  |  | 274 |  |  | 1,023 |  |  | 56,059 |
Corporate bonds |  |  |  |  |  |  |  |
Energy | 28,909 |  |  | 43 |  |  | 304 |  |  | 28,648 |
Industrials | 53,867 |  |  | 124 |  |  | 906 |  |  | 53,085 |
Consumer goods and services | 54,323 |  |  | 142 |  |  | 819 |  |  | 53,646 |
Health care | 16,721 |  |  | 42 |  |  | 105 |  |  | 16,658 |
Technology, media and telecommunications | 26,819 |  |  | 35 |  |  | 678 |  |  | 26,176 |
Financial services | 81,286 |  |  | 238 |  |  | 2,175 |  |  | 79,349 |
Mortgage-backed securities | 7,642 |  |  | 14 |  |  | 232 |  |  | 7,424 |
Collateralized mortgage obligations |  |  |  |  |  |  |
Government national mortgage association | 78,055 |  |  | 380 |  |  | 1,734 |  |  | 76,701 |
Federal home loan mortgage corporation | 108,403 |  |  | 524 |  |  | 1,304 |  |  | 107,623 |
Federal national mortgage association | 53,267 |  |  | 213 |  |  | 732 |  |  | 52,748 |
Asset-backed securities | 3,256 |  |  | 352 |  |  | 113 |  |  | 3,495 |
Total Available-for-Sale Fixed Maturities | $ | 1,761,289 |  |  | $ | 11,844 |  |  | $ | 23,645 |  |  | $ | 1,749,488 |
Maturities The amortized cost and fair value of held-to-maturity, available-for-sale and trading fixed maturity securities at March 31, 2019, by contractual maturity, are shown in the following tables. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Asset-backed securities, mortgage-backed securities and collateralized mortgage obligations may be subject to prepayment risk and are therefore not categorized by contractual maturity.
Maturities |  |  |  |  |  |  |  |
|  | Available-For-Sale |  | Trading
March 31, 2019 |  | Amortized Cost |  | Fair Value |  | Amortized Cost |  | Fair Value
Due in one year or less |  | $ | 35,003 |  |  | $ | 35,183 |  |  | $ | 4,572 |  |  | $ | 5,582 |
Due after one year through five years |  | 231,390 |  |  | 234,309 |  |  | 6,292 |  |  | 8,406 |
Due after five years through 10 years |  | 537,692 |  |  | 547,933 |  |  | — |  |  | — |
Due after 10 years |  | 655,884 |  |  | 663,037 |  |  | 1,835 |  |  | 2,421 |
Asset-backed securities |  | 3,274 |  |  | 3,536 |  |  | — |  |  | — |
Mortgage-backed securities |  | 7,401 |  |  | 7,315 |  |  | — |  |  | — |
Collateralized mortgage obligations |  | 238,456 |  |  | 239,250 |  |  | — |  |  | — |
|  | $ | 1,709,100 |  |  | $ | 1,730,563 |  |  | $ | 12,699 |  |  | $ | 16,409 |
Net Realized Investment Gains and Losses Net realized gains on disposition of investments are computed using the specific identification method and are included in the computation of net income. A summary of the components of net realized investment gains (losses) is as follows:
| Three Months Ended March 31,
| 2019 |  | 2018
Net realized investment gains (losses) from continuing operations: |  |  |
Fixed maturities: |  |  |
Available-for-sale | $ | 150 |  |  | $ | 4 |
Trading securities |  |  |
Change in fair value | 1,746 |  |  | (111 | )
Sales | — |  |  | 556 |
Equity securities |  |  |
Change in fair value | 24,634 |  |  | (9,188 | )
Sales | 198 |  |  | 875 |
Mortgage loans | (15 | ) |  | — |
Total net realized investment gains (losses) from continuing operations | $ | 26,713 |  |  | $ | (7,864 | )
Total net realized investment gains (losses) from discontinued operations | — |  |  | (1,057 | )
Total net realized investment gains (losses) | $ | 26,713 |  |  | $ | (8,921 | )
The proceeds and gross realized gains on the sale of available-for-sale fixed maturity securities are as follows:
| Three Months Ended March 31,
| 2019 |  | 2018
Proceeds from sales | $ | 36,490 |  |  | $ | — |
Gross realized gains | 30 |  |  | — |
Gross realized losses | 13 |  |  | — |
Our investment portfolio includes trading securities with embedded derivatives. These securities are primarily convertible securities which are recorded at fair value. Income or loss, including the change in the fair value of these trading securities, is recognized currently in earnings as a component of net realized investment gains. Our portfolio of trading securities had a fair value of $16,409 and $13,240 at March 31, 2019 and December 31, 2018, respectively. Funding Commitment Pursuant to an agreement with one of our limited liability partnership investments, we are contractually committed through July 31, 2028 to make capital contributions upon request of the partnership. Our remaining potential contractual obligation was $18,991 at March 31, 2019. Unrealized Appreciation A summary of the changes in net unrealized investment appreciation during the reporting period is as follows:
| Three Months Ended March 31,
| 2019 |  | 2018
Change in net unrealized investment appreciation |  |  |
Available-for-sale fixed maturities | $ | 33,264 |  |  | $ | (59,126 | )
Deferred policy acquisition costs | — |  |  | 7,274 |
Income tax effect | (6,985 | ) |  | 10,890 |
Net unrealized investment depreciation of discontinued operations, sold | — |  |  | 6,714 |
Cumulative change in accounting principles | — |  |  | (191,244 | )
Total change in net unrealized investment appreciation, net of tax | $ | 26,279 |  |  | $ | (225,492 | )
We continually monitor the difference between our cost basis and the estimated fair value of our investments. Our accounting policy for impairment recognition requires other-than-temporary impairment ("OTTI") charges to be recorded when we determine that it is more likely than not that we will be unable to collect all amounts due according to the contractual terms of the fixed maturity security or that the anticipated recovery in fair value of the equity security will not occur in a reasonable amount of time. Impairment charges on investments are recorded based on the fair value of the investments at the measurement date or based on the value calculated using a discounted cash flow model. Credit-related impairments on fixed maturity securities that we do not plan to sell, and for which we are not more likely than not to be required to sell, are recognized in net income. Any non-credit related impairment is recognized as a component of other comprehensive income. Factors considered in evaluating whether a decline in value is other-than-temporary include: the length of time and the extent to which fair value has been less than cost; the financial condition and near-term prospects of the issuer; our intention to hold the investment; and the likelihood that we will be required to sell the investment. The tables on the following pages summarize our fixed maturity and equity securities that were in an unrealized loss position on a consolidated basis at March 31, 2019 and December 31, 2018. The securities are presented by the length of time they have been continuously in an unrealized loss position. It is possible that we could recognize OTTI charges in future periods on securities held at March 31, 2019, if future events or information cause us to determine that a decline in fair value is other-than-temporary. We have evaluated the near-term prospects of the issuers of our fixed maturity securities in relation to the severity and duration of the unrealized loss and determined that these losses did not warrant the recognition of an OTTI charge at March 31, 2019 or at March 31, 2018. We have no intent to sell, and it is more likely than not that we will not be required to sell, these securities until the fair value recovers to at least equal our cost basis or the securities mature.
March 31, 2019 | Less than 12 months |  | 12 months or longer |  | Total
Type of Investment | Number of Issues |  | Fair Value |  | Gross Unrealized Depreciation |  | Number of Issues |  | Fair Value |  | Gross Unrealized Depreciation |  | Fair Value |  | Gross Unrealized Depreciation
AVAILABLE-FOR-SALE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed maturities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Bonds |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury | 1 |  |  | $ | 8,006 |  |  | $ | 2 |  |  | 5 |  |  | $ | 14,672 |  |  | $ | 141 |  |  | $ | 22,678 |  |  | $ | 143 |
U.S. government agency | — |  |  | — |  |  | — |  |  | 9 |  |  | 44,960 |  |  | 405 |  |  | 44,960 |  |  | 405 |
States, municipalities and political subdivisions |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
General obligations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Midwest | — |  |  | — |  |  | — |  |  | 3 |  |  | 13,089 |  |  | 98 |  |  | 13,089 |  |  | 98 |
South | — |  |  | — |  |  | — |  |  | 8 |  |  | 24,642 |  |  | 475 |  |  | 24,642 |  |  | 475 |
West | — |  |  | — |  |  | — |  |  | 8 |  |  | 24,221 |  |  | 305 |  |  | 24,221 |  |  | 305 |
Special revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Midwest | — |  |  | — |  |  | — |  |  | 8 |  |  | 18,051 |  |  | 194 |  |  | 18,051 |  |  | 194 |
Northeast | — |  |  | — |  |  | — |  |  | 7 |  |  | 19,711 |  |  | 406 |  |  | 19,711 |  |  | 406 |
South | — |  |  | — |  |  | — |  |  | 25 |  |  | 61,235 |  |  | 1,101 |  |  | 61,235 |  |  | 1,101 |
West | — |  |  | — |  |  | — |  |  | 18 |  |  | 50,929 |  |  | 537 |  |  | 50,929 |  |  | 537 |
Public utilities | 4 |  |  | 9,755 |  |  | 244 |  |  | 7 |  |  | 16,101 |  |  | 200 |  |  | 25,856 |  |  | 444 |
Corporate bonds |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Energy | — |  |  | — |  |  | — |  |  | 2 |  |  | 4,224 |  |  | 41 |  |  | 4,224 |  |  | 41 |
Industrials | 1 |  |  | 5,010 |  |  | 17 |  |  | 4 |  |  | 12,389 |  |  | 154 |  |  | 17,399 |  |  | 171 |
Consumer goods and services | — |  |  | — |  |  | — |  |  | 6 |  |  | 12,851 |  |  | 209 |  |  | 12,851 |  |  | 209 |
Health care | — |  |  | — |  |  | — |  |  | 1 |  |  | 351 |  |  | 2 |  |  | 351 |  |  | 2 |
Technology, media and telecommunications | — |  |  | — |  |  | — |  |  | 4 |  |  | 8,929 |  |  | 138 |  |  | 8,929 |  |  | 138 |
Financial services | 1 |  |  | 4,744 |  |  | 256 |  |  | 11 |  |  | 29,445 |  |  | 413 |  |  | 34,189 |  |  | 669 |
Mortgage-backed securities | 9 |  |  | 549 |  |  | 4 |  |  | 27 |  |  | 4,548 |  |  | 130 |  |  | 5,097 |  |  | 134 |
Collateralized mortgage obligations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government national mortgage association | 1 |  |  | 4,841 |  |  | 22 |  |  | 20 |  |  | 43,142 |  |  | 741 |  |  | 47,983 |  |  | 763 |
Federal home loan mortgage corporation | 1 |  |  | — |  |  | — |  |  | 11 |  |  | 26,018 |  |  | 513 |  |  | 26,018 |  |  | 513 |
Federal national mortgage association | — |  |  | — |  |  | — |  |  | 11 |  |  | 21,334 |  |  | 204 |  |  | 21,334 |  |  | 204 |
Asset-backed securities | — |  |  | — |  |  | — |  |  | 1 |  |  | 2,835 |  |  | 125 |  |  | 2,835 |  |  | 125 |
Total Available-for-Sale Fixed Maturities | 18 |  |  | $ | 32,905 |  |  | $ | 545 |  |  | 196 |  |  | $ | 453,677 |  |  | $ | 6,532 |  |  | $ | 486,582 |  |  | $ | 7,077 |
December 31, 2018 | Less than 12 months |  | 12 months or longer |  | Total
Type of Investment | Number of Issues |  | Fair Value |  | Gross Unrealized Depreciation |  | Number of Issues |  | Fair Value |  | Gross Unrealized Depreciation |  | Fair Value |  | Gross Unrealized Depreciation
AVAILABLE-FOR-SALE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed maturities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Bonds |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury | 1 |  |  | $ | 8,018 |  |  | $ | 7 |  |  | 5 |  |  | $ | 14,645 |  |  | $ | 213 |  |  | $ | 22,663 |  |  | $ | 220 |
U.S. government agency | 4 |  |  | 17,907 |  |  | 81 |  |  | 17 |  |  | 80,696 |  |  | 1,668 |  |  | 98,603 |  |  | 1,749 |
States, municipalities and political subdivisions |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
General obligations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Midwest | 2 |  |  | 2,939 |  |  | 5 |  |  | 7 |  |  | 23,749 |  |  | 680 |  |  | 26,688 |  |  | 685 |
Northeast | — |  |  | — |  |  | — |  |  | 3 |  |  | 12,110 |  |  | 103 |  |  | 12,110 |  |  | 103 |
South | 1 |  |  | 778 |  |  | 2 |  |  | 22 |  |  | 50,174 |  |  | 1,551 |  |  | 50,952 |  |  | 1,553 |
West | 1 |  |  | 1,203 |  |  | 5 |  |  | 16 |  |  | 48,499 |  |  | 1,170 |  |  | 49,702 |  |  | 1,175 |
Special revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Midwest | 4 |  |  | 3,892 |  |  | 8 |  |  | 19 |  |  | 43,854 |  |  | 862 |  |  | 47,746 |  |  | 870 |
Northeast | — |  |  | — |  |  | — |  |  | 14 |  |  | 37,629 |  |  | 1,241 |  |  | 37,629 |  |  | 1,241 |
South | 4 |  |  | 4,298 |  |  | 30 |  |  | 45 |  |  | 107,016 |  |  | 3,678 |  |  | 111,314 |  |  | 3,708 |
West | 4 |  |  | 11,115 |  |  | 32 |  |  | 28 |  |  | 69,667 |  |  | 2,171 |  |  | 80,782 |  |  | 2,203 |
Foreign bonds | 1 |  |  | 2,984 |  |  | 13 |  |  | — |  |  | — |  |  | — |  |  | 2,984 |  |  | 13 |
Public utilities | 12 |  |  | 25,781 |  |  | 552 |  |  | 8 |  |  | 17,253 |  |  | 471 |  |  | 43,034 |  |  | 1,023 |
Corporate bonds |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Energy | 7 |  |  | 12,556 |  |  | 148 |  |  | 2 |  |  | 4,099 |  |  | 156 |  |  | 16,655 |  |  | 304 |
Industrials | 9 |  |  | 21,970 |  |  | 397 |  |  | 4 |  |  | 11,040 |  |  | 509 |  |  | 33,010 |  |  | 906 |
Consumer goods and services | 14 |  |  | 30,399 |  |  | 527 |  |  | 5 |  |  | 9,554 |  |  | 292 |  |  | 39,953 |  |  | 819 |
Health care | 3 |  |  | 6,203 |  |  | 97 |  |  | 1 |  |  | 345 |  |  | 8 |  |  | 6,548 |  |  | 105 |
Technology, media and telecommunications | 6 |  |  | 12,638 |  |  | 288 |  |  | 5 |  |  | 9,619 |  |  | 390 |  |  | 22,257 |  |  | 678 |
Financial services | 13 |  |  | 30,177 |  |  | 650 |  |  | 13 |  |  | 32,855 |  |  | 1,525 |  |  | 63,032 |  |  | 2,175 |
Mortgage-backed securities | 22 |  |  | 1,539 |  |  | 34 |  |  | 22 |  |  | 4,166 |  |  | 198 |  |  | 5,705 |  |  | 232 |
Collateralized mortgage obligations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government national mortgage association | 2 |  |  | 3,797 |  |  | 55 |  |  | 22 |  |  | 44,690 |  |  | 1,679 |  |  | 48,487 |  |  | 1,734 |
Federal home loan mortgage corporation | 3 |  |  | 4,541 |  |  | 20 |  |  | 18 |  |  | 38,189 |  |  | 1,284 |  |  | 42,730 |  |  | 1,304 |
Federal national mortgage association | 4 |  |  | 2,107 |  |  | 3 |  |  | 15 |  |  | 38,986 |  |  | 729 |  |  | 41,093 |  |  | 732 |
Asset-backed securities | 1 |  |  | 2,829 |  |  | 113 |  |  | — |  |  | — |  |  | — |  |  | 2,829 |  |  | 113 |
Total Available-for-Sale Fixed Maturities | 118 |  |  | $ | 207,671 |  |  | $ | 3,067 |  |  | 291 |  |  | $ | 698,835 |  |  | $ | 20,578 |  |  | $ | 906,506 |  |  | $ | 23,645 |

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