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Investments
 12 Months Ended
Dec. 31, 2017
Investments [Abstract]  
Investments
Investments
At December 31, 2017 and 2016, 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, 2017
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
Available for sale:
 
 
 
 
 
 
 
United States Government full faith and credit
$
11,861

 
$
162

 
$
(147
)
 
$
11,876

United States Government sponsored agencies
1,308,290

 
28,457

 
(31,730
)
 
1,305,017

United States municipalities, states and territories
3,804,360

 
366,048

 
(3,596
)
 
4,166,812

Foreign government obligations
228,214

 
13,171

 
(2,025
)
 
239,360

Corporate securities
28,127,653

 
1,897,005

 
(145,687
)
 
29,878,971

Residential mortgage backed securities
1,028,484

 
79,554

 
(2,471
)
 
1,105,567

Commercial mortgage backed securities
5,531,922

 
82,768

 
(69,840
)
 
5,544,850

Other asset backed securities
3,075,975

 
57,966

 
(13,405
)
 
3,120,536

 
$
43,116,759

 
$
2,525,131

 
$
(268,901
)
 
$
45,372,989

Held for investment:
 
 
 
 
 
 
 
Corporate security
$
77,041

 
$
—

 
$
(581
)
 
$
76,460

 


 


 


 


Other investments: equity securities, available for sale
$
292,429

 
$
—

 
$
—

 
$
292,429

 
 
 
 
 
 
 
 
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
229,589

 
11,832

 
(5,080
)
 
236,341

Corporate securities
26,333,213

 
1,149,978

 
(368,773
)
 
27,114,418

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
$
7,521

 
$
479

 
$
—

 
$
8,000


At December 31, 2017, 37% of our fixed income securities have call features, of which 2.7% ($1.2 billion) were subject to call redemption and another 0.2% ($90.1 million) will become subject to call redemption during 2018. Approximately 73% of our fixed income securities that have call features are not callable until within six months of their stated maturities.
The amortized cost and fair value of fixed maturity securities at December 31, 2017, 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
$
197,449

 
$
201,079

 
$
—

 
$
—

Due after one year through five years
4,958,029

 
5,114,727

 
—

 
—

Due after five years through ten years
10,556,868

 
10,827,764

 
—

 
—

Due after ten years through twenty years
9,214,395

 
10,080,377

 
—

 
—

Due after twenty years
8,553,637

 
9,378,089

 
77,041

 
76,460

 
33,480,378

 
35,602,036

 
77,041

 
76,460

Residential mortgage backed securities
1,028,484

 
1,105,567

 
—

 
—

Commercial mortgage backed securities
5,531,922

 
5,544,850

 
—

 
—

Other asset backed securities
3,075,975

 
3,120,536

 
—

 
—

 
$
43,116,759

 
$
45,372,989

 
$
77,041

 
$
76,460


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,
 
2017
 
2016
 
(Dollars in thousands)
Net unrealized gains on available for sale fixed maturity securities and equity securities
$
2,256,230

 
$
1,107,018

Adjustments for assumed changes in amortization of deferred policy acquisition costs and deferred sales inducements
(1,206,078
)
 
(618,661
)
Deferred income tax valuation allowance reversal
22,534

 
22,534

Deferred income tax expense (a)
(348,087
)
 
(170,925
)
Net unrealized gains reported as accumulated other comprehensive income
$
724,599

 
$
339,966


(a)
Includes $128 million related to the impact of Tax Reform that we expect to reclassify between accumulated other comprehensive income and retained earnings within our consolidated balance sheet during the first quarter of 2018. For more information regarding the timing of reclassification, see Note 1 to our audited consolidated financial statements.
The National Association of Insurance Commissioners ("NAIC") assigns designations to fixed maturity securities. These designations range from Class 1 (highest quality) to Class 6 (lowest quality). In general, securities are assigned a designation based upon the ratings they are given by the Nationally Recognized Statistical Rating Organizations ("NRSRO's"). The NAIC designations are utilized by insurers in preparing their annual statutory statements. NAIC Class 1 and 2 designations are considered "investment grade" while NAIC Class 3 through 6 designations are considered "non-investment grade." Based on the NAIC designations, we had 97% of our fixed maturity portfolio rated investment grade at both December 31, 2017 and 2016, respectively.
The following table summarizes the credit quality, as determined by NAIC designation, of our fixed maturity portfolio as of the dates indicated:
 
 
December 31,
 
 
2017
 
2016
NAIC
Designation
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
 
(Dollars in thousands)
1
 
$
26,669,427

 
$
28,274,379

 
$
25,607,268

 
$
26,507,798

2
 
15,198,551

 
15,869,219

 
13,037,592

 
13,295,648

3
 
1,161,737

 
1,157,420

 
1,201,059

 
1,155,702

4
 
134,838

 
117,542

 
154,226

 
137,188

5
 
17,015

 
20,927

 
17,475

 
24,664

6
 
12,232

 
9,962

 
13,160

 
8,260

 
 
$
43,193,800

 
$
45,449,449

 
$
40,030,780

 
$
41,129,260


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 955 and 1,514 securities, respectively) have been in a continuous unrealized loss position, at December 31, 2017 and 2016:
 
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, 2017
 
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
Available for sale:
 
 
 
 
 
 
 
 
 
 
 
United States Government full faith and credit
$
1,565

 
$
(10
)
 
$
6,731

 
$
(137
)
 
$
8,296

 
$
(147
)
United States Government sponsored agencies
44,794

 
(180
)
 
958,965

 
(31,550
)
 
1,003,759

 
(31,730
)
United States municipalities, states and territories
44,736

 
(128
)
 
128,499

 
(3,468
)
 
173,235

 
(3,596
)
Foreign government obligations
49,663

 
(337
)
 
12,625

 
(1,688
)
 
62,288

 
(2,025
)
Corporate securities:
 
 
 
 
 
 
 
 
 
 
 
Finance, insurance and real estate
456,244

 
(5,135
)
 
600,655

 
(28,043
)
 
1,056,899

 
(33,178
)
Manufacturing, construction and mining
222,985

 
(3,475
)
 
231,196

 
(10,849
)
 
454,181

 
(14,324
)
Utilities and related sectors
395,183

 
(4,099
)
 
249,416

 
(8,901
)
 
644,599

 
(13,000
)
Wholesale/retail trade
152,941

 
(1,249
)
 
178,635

 
(11,371
)
 
331,576

 
(12,620
)
Services, media and other
729,124

 
(19,000
)
 
891,654

 
(53,565
)
 
1,620,778

 
(72,565
)
Residential mortgage backed securities
39,771

 
(387
)
 
32,917

 
(2,084
)
 
72,688

 
(2,471
)
Commercial mortgage backed securities
1,096,757

 
(10,385
)
 
1,306,437

 
(59,455
)
 
2,403,194

 
(69,840
)
Other asset backed securities
765,531

 
(3,499
)
 
217,595

 
(9,906
)
 
983,126

 
(13,405
)
 
$
3,999,294

 
$
(47,884
)
 
$
4,815,325

 
$
(221,017
)
 
$
8,814,619

 
$
(268,901
)
Held for investment:
 
 
 
 
 
 
 
 
 
 
 
Corporate security:
 
 
 
 
 
 
 
 
 
 
 
Insurance
$
—

 
$
—

 
$
76,460

 
$
(581
)
 
$
76,460

 
$
(581
)
 
 
 
 
 
 
 
 
 
 
 
 
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
1,940,107

 
(70,421
)
 
82,907

 
(7,723
)
 
2,023,014

 
(78,144
)
Manufacturing, construction and mining
1,199,420

 
(34,304
)
 
311,591

 
(23,273
)
 
1,511,011

 
(57,577
)
Utilities and related sectors
1,401,650

 
(45,015
)
 
58,597

 
(5,820
)
 
1,460,247

 
(50,835
)
Wholesale/retail trade
637,121

 
(18,880
)
 
29,719

 
(1,930
)
 
666,840

 
(20,810
)
Services, media and other
2,539,519

 
(82,196
)
 
716,857

 
(79,211
)
 
3,256,376

 
(161,407
)
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
)

Based on the results of our process for evaluating available for sale securities in unrealized loss positions for other-than-temporary-impairments, which is discussed in detail later in this footnote, we have determined that the unrealized losses on the securities in the preceding table are temporary. The unrealized losses at December 31, 2017 are principally related to timing of the purchases of these securities, which carry less yield than those available at December 31, 2017.
Approximately 83% and 86% of the unrealized losses on fixed maturity securities shown in the above table for December 31, 2017 and 2016, respectively, are on securities that are rated investment grade, defined as being the highest two NAIC designations. All of the fixed maturity securities with unrealized losses are current with respect to the payment of principal and interest.
Changes in net unrealized gains on investments for the years ended December 31, 2017, 2016 and 2015 are as follows:
 
Year Ended December 31,
 
2017
 
2016
 
2015
 
(Dollars in thousands)
Fixed maturity securities held for investment carried at amortized cost
$
7,478

 
$
3,186

 
$
(10,651
)
Investments carried at fair value:
 
 
 
 
 
Fixed maturity securities, available for sale
$
1,149,691

 
$
508,410

 
$
(1,642,027
)
Equity securities, available for sale
(479
)
 
166

 
17

 
1,149,212

 
508,576

 
(1,642,010
)
Adjustment for effect on other balance sheet accounts:
 
 
 
 
 
Deferred policy acquisition costs and deferred sales inducements
(587,417
)
 
(295,802
)
 
842,412

Deferred income tax asset/liability
(177,162
)
 
(74,471
)
 
279,860

 
(764,579
)
 
(370,273
)
 
1,122,272

Change in net unrealized gains on investments carried at fair value
$
384,633

 
$
138,303

 
$
(519,738
)

Components of net investment income are as follows:
 
Year Ended December 31,
 
2017
 
2016
 
2015
 
(Dollars in thousands)
Fixed maturity securities
$
1,876,542

 
$
1,729,176

 
$
1,566,409

Equity securities
764

 
531

 
441

Mortgage loans on real estate
122,680

 
122,985

 
131,892

Cash and cash equivalents
2,562

 
3,201

 
601

Other
4,073

 
5,499

 
4,858

 
2,006,621

 
1,861,392

 
1,704,201

Less investment expenses
(14,624
)
 
(11,520
)
 
(12,009
)
Net investment income
$
1,991,997

 
$
1,849,872

 
$
1,692,192


Proceeds from sales of available for sale securities for the years ended December 31, 2017, 2016 and 2015 were $0.7 billion, $1.0 billion and $0.4 billion, respectively. Scheduled principal repayments, calls and tenders for available for sale fixed maturity securities for the years ended December 31, 2017, 2016 and 2015 were $1.2 billion, $1.7 billion and $1.2 billion, respectively.
Realized gains and losses on sales are determined on the basis of specific identification of investments based on the trade date. Net realized gains (losses) on investments, excluding net OTTI losses are as follows:
 
Year Ended December 31,
 
2017
 
2016
 
2015
 
(Dollars in thousands)
Available for sale fixed maturity securities:
 
 
 
 
 
Gross realized gains
$
18,254

 
$
14,132

 
$
7,230

Gross realized losses
(9,058
)
 
(4,036
)
 
(5,787
)
 
9,196

 
10,096

 
1,443

Available for sale equity securities:
 
 
 
 
 
Gross realized gains
348

 
—

 
—

 
 
 
 
 
 
Other investments:
 
 
 
 
 
Gain on sale of real estate
56

 
884

 
4,194

Loss on sale of real estate
—

 
(93
)
 
(575
)
Impairment losses on real estate
—

 
—

 
(1,297
)
 
56

 
791

 
2,322

Mortgage loans on real estate:
 
 
 
 
 
Decrease (increase) in allowance for credit losses
278

 
(4,846
)
 
1,018

Recovery of specific allowance
631

 
5,483

 
5,428

 
909

 
637

 
6,446

 
$
10,509

 
$
11,524

 
$
10,211


Losses on available for sale fixed maturity securities in 2017, 2016 and 2015 were realized primarily due to strategies to reposition the fixed maturity security portfolio that result in improved net investment income, credit risk or duration profiles as they pertain to our asset liability management. Securities were sold at losses in 2017, 2016, and 2015 due to our long-term fundamental concern with the issuers' ability to meet their future financial obligations.
The following table summarizes the carrying value of our investments that have been non-income producing for 12 consecutive months:
 
December 31,
 
2017
 
2016
 
(Dollars in thousands)
Fixed maturity securities, available for sale
$
8,680

 
$
1,651


We review and analyze all investments on an ongoing basis for changes in market interest rates and credit deterioration. This review process includes analyzing our ability to recover the amortized cost basis of each investment that has a fair value that is materially lower than its amortized cost and requires a high degree of management judgment and involves uncertainty. The evaluation of securities for other than temporary impairments is a quantitative and qualitative process, which is subject to risks and uncertainties.
We have a policy and process to identify securities that could potentially have impairments that are other than temporary. This process involves monitoring market events and other items that could impact issuers. The evaluation includes but is not limited to such factors as:
•
the length of time and the extent to which the fair value has been less than amortized cost or cost;
•
whether the issuer is current on all payments and all contractual payments have been made as agreed;
•
the remaining payment terms and the financial condition and near-term prospects of the issuer;
•
the lack of ability to refinance due to liquidity problems in the credit market;
•
the fair value of any underlying collateral;
•
the existence of any credit protection available;
•
our intent to sell and whether it is more likely than not we would be required to sell prior to recovery for debt securities;
•
our assessment in the case of equity securities including perpetual preferred stocks with credit deterioration that the security cannot recover to cost in a reasonable period of time;
•
our intent and ability to retain equity securities for a period of time sufficient to allow for recovery;
•
consideration of rating agency actions; and
•
changes in estimated cash flows of mortgage and asset backed securities.
We determine whether other than temporary impairment losses should be recognized for debt and equity securities by assessing all facts and circumstances surrounding each security. Where the decline in fair value of debt securities is attributable to changes in market interest rates or to factors such as market volatility, liquidity and spread widening, and we anticipate recovery of all contractual or expected cash flows, we do not consider these investments to be other than temporarily impaired because we do not intend to sell these investments and it is not more likely than not we will be required to sell these investments before a recovery of amortized cost, which may be maturity. For equity securities, we recognize an impairment charge in the period in which we do not have the intent and ability to hold the securities until recovery of cost or we determine that the security will not recover to book value within a reasonable period of time. We determine what constitutes a reasonable period of time on a security-by-security basis by considering all the evidence available to us, including the magnitude of any unrealized loss and its duration.
Other than temporary impairment losses on equity securities are recognized in operations. If we intend to sell a debt security or if it is more likely than not that we will be required to sell a debt security before recovery of its amortized cost basis, other than temporary impairment has occurred and the difference between amortized cost and fair value will be recognized as a loss in operations.
If we do not intend to sell and it is not more likely than not we will be required to sell the debt security but also do not expect to recover the entire amortized cost basis of the security, an impairment loss would be recognized in operations in the amount of the expected credit loss. We determine the amount of expected credit loss by calculating the present value of the cash flows expected to be collected discounted at each security's acquisition yield based on our consideration of whether the security was of high credit quality at the time of acquisition. The difference between the present value of expected future cash flows and the amortized cost basis of the security is the amount of credit loss recognized in operations. The remaining amount of the other than temporary impairment is recognized in other comprehensive income (loss).
The determination of the credit loss component of a mortgage backed security is based on a number of factors. The primary consideration in this evaluation process is the issuer's ability to meet current and future interest and principal payments as contractually stated at time of purchase. Our review of these securities includes an analysis of the cash flow modeling under various default scenarios considering independent third party benchmarks, the seniority of the specific tranche within the structure of the security, the composition of the collateral and the actual default, loss severity and prepayment experience exhibited. With the input of third party assumptions for default projections, loss severity and prepayment expectations, we evaluate the cash flow projections to determine whether the security is performing in accordance with its contractual obligation.
We utilize the models from a leading structured product software specialist serving institutional investors. These models incorporate each security's seniority and cash flow structure. In circumstances where the analysis implies a potential for principal loss at some point in the future, we use the "best estimate" cash flow projection discounted at the security's effective yield at acquisition to determine the amount of our potential credit loss associated with this security. The discounted expected future cash flows equates to our expected recovery value. Any shortfall of the expected recovery when compared to the amortized cost of the security will be recorded as the credit loss component of the other than temporary impairment.
The cash flow modeling is performed on a security-by-security basis and incorporates actual cash flows on the residential mortgage backed securities through the current period, as well as the projection of remaining cash flows using a number of assumptions including default rates, prepayment rates and loss severity rates. The default curves we use are tailored to the Prime or Alt-A residential mortgage backed securities that we own, which assume lower default rates and loss severity for Prime securities versus Alt-A securities. These default curves are scaled higher or lower depending on factors such as current underlying mortgage loan performance, rating agency loss projections, loan to value ratios, geographic diversity, as well as other appropriate considerations.
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, 2017 and 2016, 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, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prime
 
2005
 
7.0
%
 
7.7
%
 
8
%
 
22
%
 
40
%
 
50
%
 
 
2006
 
7.3
%
 
7.3
%
 
14
%
 
14
%
 
40
%
 
40
%
 
 
2007
 
6.2
%
 
6.7
%
 
15
%
 
27
%
 
50
%
 
60
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
%

The determination of the credit loss component of a corporate bond (including redeemable preferred stocks) is based on the underlying financial performance of the issuer and their ability to meet their contractual obligations. Considerations in our evaluation include, but are not limited to, credit rating changes, financial statement and ratio analysis, changes in management, significant changes in credit spreads, breaches of financial covenants and a review of the economic outlook for the industry and markets in which they trade. In circumstances where an issuer appears unlikely to meet its future obligation, or the security's price decline is deemed other than temporary, an estimate of credit loss is determined. Credit loss is calculated using default probabilities as derived from the credit default swaps markets in conjunction with recovery rates derived from independent third party analysis or a best estimate of credit loss. This credit loss rate is then incorporated into a present value calculation based on an expected principal loss in the future discounted at the yield at the date of purchase and compared to amortized cost to determine the amount of credit loss associated with the security.
In addition, for debt securities which we do not intend to sell and it is not more likely than not we will be required to sell, but our intent changes due to changes or events that could not have been reasonably anticipated, an other than temporary impairment charge is recognized. Once an impairment charge has been recorded, we then continue to review the other than temporarily impaired securities for appropriate valuation on an ongoing basis. Unrealized losses may be recognized in future periods through a charge to earnings should we later conclude that the decline in fair value below amortized cost is other than temporary pursuant to our accounting policy described above. The use of different methodologies and assumptions to determine the fair value of investments and the timing and amount of impairments may have a material effect on the amounts presented in our consolidated financial statements.
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, 2017
 
 
 
 
 
 
 
Fixed maturity securities, available for sale:
 
 
 
 
 
 
 
Corporate securities:
 
 
 
 
 
 
 
Industrial
1

 
$
(2,485
)
 
$
—

 
$
(2,485
)
Residential mortgage backed securities
8

 
(273
)
 
(1,585
)
 
(1,858
)
Other asset backed securities
1

 
—

 
(287
)
 
(287
)
 
10

 
$
(2,758
)
 
$
(1,872
)
 
$
(4,630
)
 
 
 
 
 
 
 
 
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
)

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,
 
2017
 
2016
 
(Dollars in thousands)
Cumulative credit loss at beginning of year
$
(166,375
)
 
$
(145,824
)
Credit losses on securities for which OTTI has not previously been recognized
(2,758
)
 
(18,414
)
Additional credit losses on securities for which OTTI has previously been recognized
(1,872
)
 
(4,265
)
Accumulated losses on securities that were disposed of during the period
13,939

 
2,128

Cumulative credit loss at end of year
$
(157,066
)
 
$
(166,375
)

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, 2017 and 2016:
 

Amortized Cost
 
OTTI Recognized in Other Comprehensive Income
 
Change in Fair Value Since OTTI was Recognized
 

Fair Value
 
(Dollars in thousands)
December 31, 2017
 
 
 
 
 
 
 
Fixed maturity securities, available for sale:
 
 
 
 
 
 
 
Corporate securities
$
13,015

 
$
(4,263
)
 
$
10,739

 
$
19,491

Residential mortgage backed securities
297,582

 
(168,355
)
 
201,620

 
330,847

Other asset backed securities
4,567

 
(1,356
)
 
(1,875
)
 
1,336

 
$
315,164

 
$
(173,974
)
 
$
210,484

 
$
351,674

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


At December 31, 2017 and 2016, fixed maturity securities and short-term investments with an amortized cost of $47.5 billion and $43.5 billion, respectively, were on deposit with state agencies to meet regulatory requirements. There are no restrictions on these assets.
At December 31, 2017 and 2016, we had no investment in any person or its affiliates (other than bonds issued by agencies of the United States Government) that exceeded 10% of stockholders' equity.