Investments (Tables)

12 Months Ended

Dec. 31, 2016

At December 31, 2016 and 2015, the amortized cost and fair value of fixed maturity securities were as follows:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in thousands)
December 31, 2016
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	11,864	$	229	$	(288	)	$	11,805
United States Government sponsored agencies	1,368,340		23,360		(46,913		)	1,344,787
United States municipalities, states and territories	3,626,395		322,948		(22,393		)	3,926,950
Foreign government obligations	224,588		12,725		(5,080		)	232,233
Corporate securities	26,338,214		1,149,085		(368,773		)	27,118,526
Residential mortgage backed securities	1,166,944		91,445		(3,554		)	1,254,835
Commercial mortgage backed securities	5,422,255		59,994		(117,014		)	5,365,235
Other asset backed securities	1,795,355		31,471		(20,703		)	1,806,123
	$	39,953,955	$	1,691,257	$	(584,718	)	$	41,060,494
Held for investment:
Corporate security	$	76,825	$	—	$	(8,059	)	$	68,766

Other investments - equity securities, available for sale:
Finance, insurance and real estate	$	7,521	$	479	$	—		$	8,000

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

Other investments - equity securities, available for sale:
Finance, insurance and real estate	$	7,515	$	313	$	—		$	7,828

Schedule of Fixed Maturity Securities by Contractual Maturity Date

The amortized cost and fair value of fixed maturity securities at December 31, 2016, 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	$	236,707	$	241,934	$	—	$	—
Due after one year through five years	2,824,776		2,979,768		—		—
Due after five years through ten years	11,659,762		11,738,156		—		—
Due after ten years through twenty years	8,792,470		9,284,726		—		—
Due after twenty years	8,055,686		8,389,717		76,825		68,766
	31,569,401		32,634,301		76,825		68,766
Residential mortgage backed securities	1,166,944		1,254,835		—		—
Commercial mortgage backed securities	5,422,255		5,365,235		—		—
Other asset backed securities	1,795,355		1,806,123		—		—
	$	39,953,955	$	41,060,494	$	76,825	$	68,766

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,
	2016			2015
	(Dollars in thousands)
Net unrealized gains on available for sale fixed maturity securities and equity securities	$	1,107,018		$	598,442
Adjustments for assumed changes in amortization of deferred policy acquisition costs and deferred sales inducements	(618,661		)	(322,859		)
Deferred income tax valuation allowance reversal	22,534			22,534
Deferred income tax expense	(170,925		)	(96,454		)
Net unrealized gains reported as accumulated other comprehensive income	$	339,966		$	201,663

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,
	2016				2015
NAIC Designation	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
1	$	25,607,268	$	26,507,798	$	23,363,259	$	24,207,801
2	13,037,592		13,295,648		11,709,730		11,589,325
3	1,201,059		1,155,702		758,531		643,293
4	154,226		137,188		60,480		44,312
5	17,475		24,664		—		—
6	13,160		8,260		8,332		2,485
	$	40,030,780	$	41,129,260	$	35,900,332	$	36,487,216

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 1,514 and 1,246 securities, respectively) have been in a continuous unrealized loss position, at December 31, 2016 and 2015:



	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, 2016
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	7,405	$	(288	)	$	—	$	—		$	7,405	$	(288	)
United States Government sponsored agencies	995,548		(46,913		)	—		—			995,548		(46,913		)
United States municipalities, states and territories	463,409		(22,393		)	—		—			463,409		(22,393		)
Foreign government obligations	29,158		(913		)	20,388		(4,167		)	49,546		(5,080		)
Corporate securities:
Finance, insurance and real estate	2,302,103		(79,077		)	110,730		(9,834		)	2,412,833		(88,911		)
Manufacturing, construction and mining	2,556,147		(74,144		)	702,978		(74,382		)	3,259,125		(148,526		)
Utilities and related sectors	1,605,742		(53,055		)	196,085		(16,208		)	1,801,827		(69,263		)
Wholesale/retail trade	396,310		(9,433		)	57,708		(5,739		)	454,018		(15,172		)
Services, media and other	857,515		(35,107		)	132,170		(11,794		)	989,685		(46,901		)
Residential mortgage backed securities	81,762		(3,463		)	1,853		(91		)	83,615		(3,554		)
Commercial mortgage backed securities	3,148,395		(116,938		)	895		(76		)	3,149,290		(117,014		)
Other asset backed securities	751,533		(12,289		)	146,167		(8,414		)	897,700		(20,703		)
	$	13,195,027	$	(454,013	)	$	1,368,974	$	(130,705	)	$	14,564,001	$	(584,718	)
Held for investment:
Corporate security:
Insurance	$	—	$	—		$	68,766	$	(8,059	)	$	68,766	$	(8,059	)

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	)

Schedule of Changes in Net Unrealized Gains/Losses on Investments

Changes in net unrealized gains on investments for the years ended December 31, 2016, 2015 and 2014 are as follows:



	Year Ended December 31,
	2016			2015			2014
	(Dollars in thousands)
Fixed maturity securities held for investment carried at amortized cost	$	3,186		$	(10,651	)	$	14,821
Investments carried at fair value:
Fixed maturity securities, available for sale	$	508,410		$	(1,642,027	)	$	2,157,439
Equity securities, available for sale	166			17			21
	508,576			(1,642,010		)	2,157,460
Adjustment for effect on other balance sheet accounts:
Deferred policy acquisition costs and deferred sales inducements	(295,802		)	842,412			(1,118,683		)
Deferred income tax asset/liability	(74,471		)	279,860			(363,572		)
	(370,273		)	1,122,272			(1,482,255		)
Change in net unrealized gains on investments carried at fair value	$	138,303		$	(519,738	)	$	675,205

Components of Net Investment Income

Components of net investment income are as follows:



	Year Ended December 31,
	2016			2015			2014
	(Dollars in thousands)
Fixed maturity securities	$	1,729,176		$	1,566,409		$	1,394,301
Equity securities	531			441			404
Mortgage loans on real estate	122,985			131,892			143,998
Cash and cash equivalents	3,201			601			286
Other	5,499			4,858			6,903
	1,861,392			1,704,201			1,545,892
Less investment expenses	(11,520		)	(12,009		)	(14,225		)
Net investment income	$	1,849,872		$	1,692,192		$	1,531,667

Net Realized Gains (Losses) on Investments

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



	Year Ended December 31,
	2016			2015			2014
	(Dollars in thousands)
Available for sale fixed maturity securities:
Gross realized gains	$	14,132		$	7,230		$	3,273
Gross realized losses	(4,036		)	(5,787		)	(1,006		)
	10,096			1,443			2,267
Other investments:
Gain on sale of real estate	884			4,194			2,454
Loss on sale of real estate	(93		)	(575		)	(231		)
Impairment losses on real estate	—			(1,297		)	(2,441		)
	791			2,322			(218		)
Mortgage loans on real estate:
Decrease (increase) in allowance for credit losses	(4,846		)	1,018			(6,052		)
Recovery of specific allowance	5,483			5,428			—
	637			6,446			(6,052		)
	$	11,524		$	10,211		$	(4,003	)

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,
	2016		2015
	(Dollars in thousands)
Fixed maturity securities, available for sale	$	1,651	$	10
Real estate owned	—		1,800
	$	1,651	$	1,810

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, 2016 and 2015, 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, 2016
Prime	2005	7.7	%	7.7	%	8	%	14	%	50	%	50	%
	2006	6.5	%	7.3	%	12	%	13	%	40	%	50	%
	2007	6.2	%	6.4	%	18	%	31	%	50	%	55	%
Alt-A	2005	7.4	%	7.4	%	11	%	11	%	60	%	60	%

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	%

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, 2016
Fixed maturity securities, available for sale:
Corporate securities:
Energy	2	$	(642	)	$	—		$	(642	)
Materials	1	(4,554		)	1,575			(2,979		)
Telecommunications	1	(4,462		)	562			(3,900		)
Utilities	2	(6,961		)	798			(6,163		)
Residential mortgage backed securities	9	—			(783		)	(783		)
Commercial mortgage backed securities	5	(1,540		)	—			(1,540		)
Other asset backed securities	2	(3,190		)	(3,482		)	(6,672		)
	22	$	(21,349	)	$	(1,330	)	$	(22,679	)

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	)

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,
	2016			2015
	(Dollars in thousands)
Cumulative credit loss at beginning of year	$	(145,824	)	$	(127,050	)
Credit losses on securities for which OTTI has not previously been recognized	(18,414		)	(17,447		)
Additional credit losses on securities for which OTTI has previously been recognized	(4,265		)	(2,089		)
Accumulated losses on securities that were disposed of during the period	2,128			762
Cumulative credit loss at end of year	$	(166,375	)	$	(145,824	)

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, 2016 and 2015:



	Amortized Cost		OTTI Recognized in Other Comprehensive Income			Change in Fair Value Since OTTI was Recognized			Fair Value
	(Dollars in thousands)
December 31, 2016
Fixed maturity securities, available for sale:
Corporate securities	$	17,549	$	(5,910	)	$	13,566		$	25,205
Residential mortgage backed securities	368,862		(169,941		)	205,854			404,775
Commercial mortgage backed securities	6,596		—			(107		)	6,489
Other asset backed securities	6,683		(1,643		)	(1,566		)	3,474
	$	399,690	$	(177,494	)	$	217,747		$	439,943
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