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Investments (Tables)
 12 Months Ended
Dec. 31, 2017
Investments [Abstract]  
Schedule of Fixed Maturity Securities
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
Schedule of Fixed Maturity Securities by Contractual Maturity Date
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
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,
 
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.
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,
 
 
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
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 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
)
Schedule of Changes in Net Unrealized Gains/Losses on Investments
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
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
Net Realized Gains (Losses) on Investments
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
Non-Income Producing Investments
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
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, 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
%
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, 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
)
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,
 
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
)
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, 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