Investments (Tables)

12 Months Ended

Dec. 31, 2015

Schedule of Fixed Maturity and Equity Securites

At December 31, 2015 and 2014, the amortized cost and fair value of fixed maturity securities and equity securities were as follows:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in thousands)
December 31, 2015
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	470,567	$	988	$	(299	)	$	471,256
United States Government sponsored agencies	1,386,219		26,801		(14,409		)	1,398,611
United States municipalities, states and territories	3,422,667		341,328		(8,628		)	3,755,367
Foreign government obligations	210,953		12,547		(10,935		)	212,565
Corporate securities	23,597,530		887,288		(682,424		)	23,802,394
Residential mortgage backed securities	1,366,985		98,576		(3,489		)	1,462,072
Commercial mortgage backed securities	4,238,265		41,412		(105,281		)	4,174,396
Other asset backed securities	1,130,524		34,534		(19,880		)	1,145,178
	$	35,823,710	$	1,443,474	$	(845,345	)	$	36,421,839
Held for investment:
Corporate security	$	76,622	$	—	$	(11,245	)	$	65,377

Equity securities, available for sale:
Finance, insurance and real estate	$	7,515	$	313	$	—		$	7,828

December 31, 2014
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	137,710	$	765	$	(15	)	$	138,460
United States Government sponsored agencies	1,364,424		43,399		(13,933		)	1,393,890
United States municipalities, states and territories	3,293,551		430,469		(711		)	3,723,309
Foreign government obligations	181,128		16,628		(3,953		)	193,803
Corporate securities	19,984,747		1,628,941		(123,396		)	21,490,292
Residential mortgage backed securities	1,616,846		136,704		(2,205		)	1,751,345
Commercial mortgage backed securities	2,720,294		90,649		(3,323		)	2,807,620
Other asset backed securities	906,346		48,022		(7,885		)	946,483
	$	30,205,046	$	2,395,577	$	(155,421	)	$	32,445,202
Held for investment:
Corporate security	$	76,432	$	—	$	(594	)	$	75,838

Equity securities, available for sale:
Finance, insurance and real estate	$	7,509	$	296	$	—		$	7,805

Schedule of Fixed Maturity Securities by Contractual Maturity Date

The amortized cost and fair value of fixed maturity securities at December 31, 2015, by contractual maturity are shown below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. All of our mortgage and other asset backed securities provide for periodic payments throughout their lives and are shown below as separate lines.



	Available for sale				Held for investment
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Due in one year or less	$	134,629	$	138,161	$	—	$	—
Due after one year through five years	2,355,740		2,474,985		—		—
Due after five years through ten years	10,586,688		10,449,194		—		—
Due after ten years through twenty years	8,683,404		9,103,228		—		—
Due after twenty years	7,327,475		7,474,625		76,622		65,377
	29,087,936		29,640,193		76,622		65,377
Residential mortgage backed securities	1,366,985		1,462,072		—		—
Commercial mortgage backed securities	4,238,265		4,174,396		—		—
Other asset backed securities	1,130,524		1,145,178		—		—
	$	35,823,710	$	36,421,839	$	76,622	$	65,377

Schedule of Components of Net Unrealized Gains on Availabe For Sale Fixed Maturity and Equity Securities Reported as Separate Component of Stockholders' Equity

Net unrealized gains on available for sale fixed maturity securities and equity securities reported as a separate component of stockholders' equity were comprised of the following:



	December 31,
	2015			2014
	(Dollars in thousands)
Net unrealized gains on available for sale fixed maturity securities and equity securities	$	598,442		$	2,240,452
Adjustments for assumed changes in amortization of deferred policy acquisition costs and deferred sales inducements	(322,859		)	(1,165,271		)
Deferred income tax valuation allowance reversal	22,534			22,534
Deferred income tax expense	(96,454		)	(376,314		)
Net unrealized gains reported as accumulated other comprehensive income	$	201,663		$	721,401

Schedule of Credit Quality of Fixed Maturity Security Portfolio by NAIC Designation

The following table summarizes the credit quality, as determined by NAIC designation, of our fixed maturity portfolio as of the dates indicated:



	December 31,
	2015				2014
NAIC Designation	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
1	$	23,363,259	$	24,207,801	$	19,223,151	$	20,941,634
2	11,709,730		11,589,325		10,432,593		10,981,618
3	758,531		643,293		602,191		583,313
4	60,480		44,312		22,888		14,089
5	—		—		—		—
6	8,332		2,485		655		386
	$	35,900,332	$	36,487,216	$	30,281,478	$	32,521,040

Schedule of Gross Unrealized Losses on Investments, By Category and Length of Time

The following table shows our investments' gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities (consisting of 1,246 and 402 securities, respectively) have been in a continuous unrealized loss position, at December 31, 2015 and 2014:



	Less than 12 months					12 months or more					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in thousands)
December 31, 2015
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	37,730	$	(299	)	$	—	$	—		$	37,730	$	(299	)
United States Government sponsored agencies	957,053		(14,409		)	—		—			957,053		(14,409		)
United States municipalities, states and territories	261,823		(8,474		)	2,846		(154		)	264,669		(8,628		)
Foreign government obligations	42,966		(1,762		)	15,463		(9,173		)	58,429		(10,935		)
Corporate securities:
Finance, insurance and real estate	2,077,223		(59,607		)	49,912		(14,855		)	2,127,135		(74,462		)
Manufacturing, construction and mining	3,517,967		(246,456		)	376,229		(131,003		)	3,894,196		(377,459		)
Utilities and related sectors	2,240,652		(138,940		)	97,184		(22,565		)	2,337,836		(161,505		)
Wholesale/retail trade	473,050		(17,863		)	38,682		(8,125		)	511,732		(25,988		)
Services, media and other	1,037,011		(39,937		)	32,050		(3,073		)	1,069,061		(43,010		)
Residential mortgage backed securities	162,770		(2,958		)	6,438		(531		)	169,208		(3,489		)
Commercial mortgage backed securities	2,679,510		(105,002		)	11,495		(279		)	2,691,005		(105,281		)
Other asset backed securities	457,055		(10,581		)	46,657		(9,299		)	503,712		(19,880		)
	$	13,944,810	$	(646,288	)	$	676,956	$	(199,057	)	$	14,621,766	$	(845,345	)
Held for investment:
Corporate security:
Insurance	$	65,377	$	(11,245	)	$	—	$	—		$	65,377	$	(11,245	)

December 31, 2014
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	—	$	—		$	498	$	(15	)	$	498	$	(15	)
United States Government sponsored agencies	—		—			610,339		(13,933		)	610,339		(13,933		)
United States municipalities, states and territories	—		—			27,947		(711		)	27,947		(711		)
Foreign government obligations	14,194		(1,068		)	11,542		(2,885		)	25,736		(3,953		)
Corporate securities:
Finance, insurance and real estate	253,439		(2,586		)	399,874		(16,277		)	653,313		(18,863		)
Manufacturing, construction and mining	1,078,089		(35,151		)	694,088		(35,926		)	1,772,177		(71,077		)
Utilities and related sectors	373,952		(8,185		)	344,313		(10,153		)	718,265		(18,338		)
Wholesale/retail trade	88,766		(2,290		)	99,427		(3,122		)	188,193		(5,412		)
Services, media and other	131,940		(1,567		)	277,296		(8,139		)	409,236		(9,706		)
Residential mortgage backed securities	22,115		(1,219		)	20,427		(986		)	42,542		(2,205		)
Commercial mortgage backed securities	241,637		(1,344		)	187,241		(1,979		)	428,878		(3,323		)
Other asset backed securities	142,094		(3,519		)	58,958		(4,366		)	201,052		(7,885		)
	$	2,346,226	$	(56,929	)	$	2,731,950	$	(98,492	)	$	5,078,176	$	(155,421	)
Held for investment:
Corporate security:
Insurance	$	—	$	—		$	75,838	$	(594	)	$	75,838	$	(594	)

Schedule of Changes in Net Unrealized Gains/Losses on Investments

Changes in net unrealized gains on investments for the years ended December 31, 2015, 2014 and 2013 are as follows:



	Year Ended December 31,
	2015			2014			2013
	(Dollars in thousands)
Fixed maturity securities held for investment carried at amortized cost	$	(10,651	)	$	14,821		$	(848	)
Investments carried at fair value:
Fixed maturity securities, available for sale	$	(1,642,027	)	$	2,157,439		$	(2,132,392	)
Equity securities, available for sale	17			21			(8,549		)
	(1,642,010		)	2,157,460			(2,140,941		)
Adjustment for effect on other balance sheet accounts:
Deferred policy acquisition costs and deferred sales inducements	842,412			(1,118,683		)	1,155,386
Deferred income tax asset/liability	279,860			(363,572		)	344,944
	1,122,272			(1,482,255		)	1,500,330
Change in net unrealized gains on investments carried at fair value	$	(519,738	)	$	675,205		$	(640,611	)

Components of Net Investment Income

Components of net investment income are as follows:



	Year Ended December 31,
	2015			2014			2013
	(Dollars in thousands)
Fixed maturity securities	$	1,566,409		$	1,394,301		$	1,229,486
Equity securities	441			404			1,586
Mortgage loans on real estate	131,892			143,998			159,769
Cash and cash equivalents	601			286			775
Other	4,858			6,903			5,711
	1,704,201			1,545,892			1,397,327
Less investment expenses	(12,009		)	(14,225		)	(13,400		)
Net investment income	$	1,692,192		$	1,531,667		$	1,383,927

Net Realized Gains (Losses) on Investments

Net realized gains (losses) on investments, excluding net OTTI losses are as follows:



	Year Ended December 31,
	2015			2014			2013
	(Dollars in thousands)
Available for sale fixed maturity securities:
Gross realized gains	$	7,230		$	3,273		$	39,079
Gross realized losses	(5,787		)	(1,006		)	(6,170		)
	1,443			2,267			32,909
Available for sale equity securities:
Gross realized gains	—			—			9,571

Other investments:
Gain on sale of real estate	4,194			2,454			2,144
Loss on sale of real estate	(575		)	(231		)	(1,317		)
Impairment losses on real estate	(1,297		)	(2,441		)	(1,195		)
	2,322			(218		)	(368		)
Mortgage loans on real estate:
Decrease (increase) in allowance for credit losses	1,018			(6,052		)	(5,621		)
Recovery of specific allowance	5,428			—			4,070
	6,446			(6,052		)	(1,551		)
	$	10,211		$	(4,003	)	$	40,561

Non-Income Producing Investments

The following table summarizes the carrying value of our fixed maturity securities, mortgage loans on real estate and real estate owned that have been non-income producing for 12 consecutive months:



	December 31,
	2015		2014
	(Dollars in thousands)
Fixed maturity securities, available for sale	$	10	$	11
Real estate owned	1,800		868
	$	1,810	$	879

Significant Assumptions Used to Determine the Credit Loss Component of Other Than Temporary Impairment on Residential Mortgage Backed Securities

The following table presents the range of significant assumptions used to determine the credit loss component of other than temporary impairments we have recognized on residential mortgage backed securities for the years ended December 31, 2015 and 2014, which are all senior level tranches within the structure of the securities:



		Discount Rate				Default Rate				Loss Severity
Sector	Vintage	Min		Max		Min		Max		Min		Max
Year ended December 31, 2015
Prime	2006	6.5	%	7.4	%	12	%	14	%	40	%	50	%
	2007	5.8	%	7.0	%	15	%	25	%	45	%	55	%
Alt-A	2005	5.6	%	7.4	%	13	%	99	%	2	%	50	%

Year ended December 31, 2014
Prime	2005	7.5	%	7.5	%	15	%	15	%	50	%	50	%
	2006	6.5	%	7.4	%	11	%	15	%	40	%	50	%
	2007	7.0	%	7.0	%	14	%	14	%	55	%	55	%
Alt-A	2005	5.6	%	6.4	%	87	%	91	%	2	%	2	%

Other Than Temporary Impairment by Asset Type

The following table summarizes other than temporary impairments by asset type:



	Number of Securities	Total OTTI Losses			Portion of OTTI Losses Recognized in (from) Other Comprehensive Income			Net OTTI Losses Recognized in Operations
		(Dollars in thousands)
Year ended December 31, 2015
Fixed maturity securities, available for sale:
Corporate securities:
Industrial	2	$	(15,414	)	$	2,975		$	(12,439	)
Residential mortgage backed securities	11	(133		)	(2,089		)	(2,222		)
Other asset backed securities	1	(10,000		)	5,125			(4,875		)
	14	$	(25,547	)	$	6,011		$	(19,536	)

Year ended December 31, 2014
Fixed maturity securities, available for sale:
Residential mortgage backed securities	7	$	—		$	(2,627	)	$	(2,627	)

Year ended December 31, 2013
Fixed maturity securities, available for sale:
United States Government sponsored agencies	2	$	(2,775	)	$	—		$	(2,775	)
Corporate securities:
Industrial	1	(1,761		)	—			(1,761		)
Residential mortgage backed securities	6	—			(1,270		)	(1,270		)
Equity security, available for sale:
Industrial	1	(428		)	—			(428		)
	10	$	(4,964	)	$	(1,270	)	$	(6,234	)

Other Than Temporary Impairment, Credit Losses Recognized in Earnings

The cumulative portion of other than temporary impairments determined to be credit losses which have been recognized in operations for debt securities are summarized as follows:



	Year Ended December 31,
	2015			2014
	(Dollars in thousands)
Cumulative credit loss at beginning of year	$	(127,050	)	$	(125,960	)
Credit losses on securities for which OTTI has not previously been recognized	(17,447		)	—
Additional credit losses on securities for which OTTI has previously been recognized	(2,089		)	(2,627		)
Accumulated losses on securities that were disposed of during the period	762			1,537
Cumulative credit loss at end of year	$	(145,824	)	$	(127,050	)

Schedule of Other Than Temporary Impairment Losses, Investments

The following table summarizes the cumulative noncredit portion of OTTI and the change in fair value since recognition of OTTI, both of which were recognized in other comprehensive income, by major type of security, for securities that are part of our investment portfolio at December 31, 2015 and 2014:



	Amortized Cost		OTTI Recognized in Other Comprehensive Income			Change in Fair Value Since OTTI was Recognized			Fair Value
	(Dollars in thousands)
December 31, 2015
Fixed maturity securities, available for sale:
Corporate securities	$	6,396	$	(2,975	)	$	9		$	3,430
Residential mortgage backed securities	466,871		(170,724		)	199,149			495,296
Other asset backed securities	8,154		(5,125		)	(553		)	2,476
	$	481,421	$	(178,824	)	$	198,605		$	501,202
December 31, 2014
Fixed maturity securities, available for sale:
Corporate securities	$	—	$	—		$	11		$	11
Residential mortgage backed securities	569,508		(173,494		)	215,625			611,639
	$	569,508	$	(173,494	)	$	215,636		$	611,650