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Investments (Tables)
 9 Months Ended
Sep. 30, 2018
Investments [Abstract]  
Schedule of Fixed Maturity Securities
At September 30, 2018 and December 31, 2017, 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)
September 30, 2018
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
Available for sale:
 
 
 
 
 
 
 
United States Government full faith and credit
$
11,528

 
$
79

 
$
(645
)
 
$
10,962

United States Government sponsored agencies
1,308,358

 
11,824

 
(95,595
)
 
1,224,587

United States municipalities, states and territories
3,949,293

 
224,586

 
(31,622
)
 
4,142,257

Foreign government obligations
226,931

 
7,240

 
(7,671
)
 
226,500

Corporate securities
28,406,182

 
746,913

 
(673,492
)
 
28,479,603

Residential mortgage backed securities
1,129,176

 
64,183

 
(11,677
)
 
1,181,682

Commercial mortgage backed securities
5,434,044

 
22,684

 
(119,360
)
 
5,337,368

Other asset backed securities
5,222,830

 
35,553

 
(39,325
)
 
5,219,058

 
$
45,688,342

 
$
1,113,062

 
$
(979,387
)
 
$
45,822,017

Held for investment:
 
 
 
 
 
 
 
Corporate security
$
77,213

 
$
—

 
$
(6,100
)
 
$
71,113

 
 
 
 
 
 
 
 
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:
 
 
 
 
 
 
 
Finance, insurance, and real estate
$
292,429

 
$
—

 
$
—

 
$
292,429
Schedule of Fixed Maturity Securities by Contractual Maturity Date
The amortized cost and fair value of fixed maturity securities at September 30, 2018, 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
$
283,309

 
$
287,677

 
$
—

 
$
—

Due after one year through five years
5,564,840

 
5,561,473

 
—

 
—

Due after five years through ten years
9,893,201

 
9,753,983

 
—

 
—

Due after ten years through twenty years
9,562,224

 
9,883,734

 
—

 
—

Due after twenty years
8,598,718

 
8,597,042

 
77,213

 
71,113

 
33,902,292

 
34,083,909

 
77,213

 
71,113

Residential mortgage backed securities
1,129,176

 
1,181,682

 
—

 
—

Commercial mortgage backed securities
5,434,044

 
5,337,368

 
—

 
—

Other asset backed securities
5,222,830

 
5,219,058

 
—

 
—

 
$
45,688,342

 
$
45,822,017

 
$
77,213

 
$
71,113
Schedule of Components of Net Unrealized Gains on Available for Sale Fixed Maturity Securities Reported as Separate Component of Stockholders' Equity
Net unrealized gains on available for sale fixed maturity securities reported as a separate component of stockholders' equity were comprised of the following:
 
September 30, 2018
 
December 31, 2017
 
(Dollars in thousands)
Net unrealized gains on available for sale fixed maturity securities
$
133,675

 
$
2,256,230

Adjustments for assumed changes in amortization of deferred policy acquisition costs and deferred sales inducements
(73,225
)
 
(1,206,078
)
Deferred income tax valuation allowance reversal
22,534

 
22,534

Deferred income tax expense (a)
(12,696
)
 
(348,087
)
Net unrealized gains reported as accumulated other comprehensive income
$
70,288

 
$
724,599


(a)
December 31, 2017 includes $128 million related to the impact of Tax Reform that was reclassified between accumulated other comprehensive income and retained earnings within our consolidated balance sheet during the first quarter of 2018. For more information regarding the reclassification, see Note 1 to our unaudited 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:
 
 
September 30, 2018
 
December 31, 2017
NAIC
Designation
 
Amortized Cost
 
Fair Value
 
Amortized Cost
 
Fair Value
 
 
(Dollars in thousands)
1
 
$
27,186,979

 
$
27,478,961

 
$
26,669,427

 
$
28,274,379

2
 
16,972,448

 
16,868,800

 
15,198,551

 
15,869,219

3
 
1,406,867

 
1,365,147

 
1,161,737

 
1,157,420

4
 
180,233

 
156,449

 
134,838

 
117,542

5
 
11,200

 
16,898

 
17,015

 
20,927

6
 
7,828

 
6,875

 
12,232

 
9,962

 
 
$
45,765,555

 
$
45,893,130

 
$
43,193,800

 
$
45,449,449
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 2,630 and 955 securities, respectively) have been in a continuous unrealized loss position, at September 30, 2018 and December 31, 2017:
 
Less than 12 months
 
12 months or more
 
Total
 
Fair Value
 
Unrealized
Losses
 
Fair Value
 
Unrealized
Losses
 
Fair Value
 
Unrealized
Losses
 
(Dollars in thousands)
September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
Available for sale:
 
 
 
 
 
 
 
 
 
 
 
United States Government full faith and credit
$
3,178

 
$
(98
)
 
$
5,989

 
$
(547
)
 
$
9,167

 
$
(645
)
United States Government sponsored agencies
43,310

 
(2,770
)
 
927,678

 
(92,825
)
 
970,988

 
(95,595
)
United States municipalities, states and territories
684,699

 
(21,142
)
 
123,625

 
(10,480
)
 
808,324

 
(31,622
)
Foreign government obligations
106,283

 
(4,031
)
 
60,641

 
(3,640
)
 
166,924

 
(7,671
)
Corporate securities:
 
 
 
 
 
 
 
 
 
 
 
Finance, insurance and real estate
2,825,957

 
(83,452
)
 
783,568

 
(75,867
)
 
3,609,525

 
(159,319
)
Manufacturing, construction and mining
2,145,542

 
(70,140
)
 
294,755

 
(26,064
)
 
2,440,297

 
(96,204
)
Utilities and related sectors
2,569,490

 
(87,914
)
 
383,587

 
(34,057
)
 
2,953,077

 
(121,971
)
Wholesale/retail trade
1,026,417

 
(36,525
)
 
143,605

 
(18,263
)
 
1,170,022

 
(54,788
)
Services, media and other
4,472,035

 
(135,921
)
 
950,004

 
(105,289
)
 
5,422,039

 
(241,210
)
Residential mortgage backed securities
396,096

 
(9,620
)
 
41,760

 
(2,057
)
 
437,856

 
(11,677
)
Commercial mortgage backed securities
2,423,197

 
(40,541
)
 
1,610,912

 
(78,819
)
 
4,034,109

 
(119,360
)
Other asset backed securities
3,066,340

 
(27,693
)
 
191,639

 
(11,632
)
 
3,257,979

 
(39,325
)
 
$
19,762,544

 
$
(519,847
)
 
$
5,517,763

 
$
(459,540
)
 
$
25,280,307

 
$
(979,387
)
Held for investment:
 
 
 
 
 
 
 
 
 
 
 
Corporate security:
 
 
 
 
 
 
 
 
 
 
 
Insurance
$
—

 
$
—

 
$
71,113

 
$
(6,100
)
 
$
71,113

 
$
(6,100
)
 
 
 
 
 
 
 
 
 
 
 
 
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
)
Schedule of Changes in Net Unrealized Gains/Losses on Investments
Changes in net unrealized gains on investments for the three and nine months ended September 30, 2018 and 2017 are as follows:
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2018
 
2017
 
2018
 
2017
 
(Dollars in thousands)
Fixed maturity securities held for investment carried at amortized cost
$
2,947

 
$
(1,711
)
 
$
(5,519
)
 
$
6,119

Investments carried at fair value:
 
 
 
 
 
 
 
Fixed maturity securities, available for sale
$
(311,954
)
 
$
128,981

 
$
(2,122,555
)
 
$
1,008,483

Equity securities, available for sale
—

 
(457
)
 
—

 
(479
)
 
(311,954
)
 
128,524

 
(2,122,555
)
 
1,008,004

Adjustment for effect on other balance sheet accounts:
 
 
 
 
 
 
 
Deferred policy acquisition costs and deferred sales inducements
172,566

 
(52,572
)
 
1,132,853

 
(516,427
)
Deferred income tax asset/liability
29,270

 
(26,583
)
 
207,837

 
(172,052
)
 
201,836

 
(79,155
)
 
1,340,690

 
(688,479
)
Change in net unrealized gains on investments carried at fair value
$
(110,118
)
 
$
49,369

 
$
(781,865
)
 
$
319,525
Net Realized Gains (Losses) on Investments
Net realized gains (losses) on investments, excluding net OTTI losses for the three and nine months ended September 30, 2018 and 2017, are as follows:
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2018
 
2017
 
2018
 
2017
 
(Dollars in thousands)
Available for sale fixed maturity securities:
 
 
 
 
 
 
 
Gross realized gains
$
505

 
$
1,520

 
$
2,845

 
$
11,571

Gross realized losses
(1,913
)
 
(1
)
 
(43,648
)
 
(4,463
)
 
(1,408
)
 
1,519

 
(40,803
)
 
7,108

Available for sale equity securities:
 
 
 
 
 
 
 
Gross realized gains
—

 
348

 
—

 
348

 
 
 
 
 
 
 
 
Other investments:
 
 
 
 
 
 
 
Gain on sale of real estate
—

 
12

 
—

 
56

 
 
 
 
 
 
 
 
Mortgage loans on real estate:
 
 
 
 
 
 
 
Decrease (increase) in allowance for credit losses
(1,255
)
 
(300
)
 
(785
)
 
278

Recovery of specific allowance
467

 
—

 
1,189

 
—

Gain on sale of mortgage loans
—

 
—

 
124

 
—

 
(788
)
 
(300
)
 
528

 
278

 
$
(2,196
)
 
$
1,579

 
$
(40,275
)
 
$
7,790
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 nine months ended September 30, 2018 and 2017, which are all senior level tranches within the structure of the securities:
 
 
 
 
Discount Rate
 
Default Rate
 
Loss Severity
 
 
Vintage
 
Min
 
Max
 
Min
 
Max
 
Min
 
Max
Nine months ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prime
 
2005
 
7.0
%
 
7.7
%
 
14
%
 
23
%
 
40
%
 
50
%
 
 
2007
 
6.6
%
 
6.6
%
 
17
%
 
17
%
 
60
%
 
60
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prime
 
2005
 
7.0
%
 
7.7
%
 
8
%
 
22
%
 
40
%
 
50
%
 
 
2006
 
7.3
%
 
7.3
%
 
14
%
 
14
%
 
40
%
 
40
%
 
 
2007
 
6.2
%
 
6.6
%
 
15
%
 
19
%
 
50
%
 
60
%
Other Than Temporary Impairment by Asset Type
The following table summarizes other than temporary impairments for the three and nine months ended September 30, 2018 and 2017, 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)
Three months ended September 30, 2018
 
 
 
 
 
 
 
Fixed maturity securities, available for sale:
 
 
 
 
 
 
 
Corporate securities:
 
 
 
 
 
 
 
Capital goods
1

 
$
(719
)
 
$
—

 
$
(719
)
Consumer discretionary
6

 
(5,968
)
 
—

 
(5,968
)
Energy
2

 
(1,212
)
 
—

 
(1,212
)
Financials
5

 
(3,495
)
 
—

 
(3,495
)
Information technology
1

 
(550
)
 
—

 
(550
)
Telecommunications
2

 
(249
)
 
—

 
(249
)
Transportation
1

 
(178
)
 
—

 
(178
)
Utilities
1

 
(94
)
 
—

 
(94
)
Commercial mortgage backed securities
1

 
(1,908
)
 
—

 
(1,908
)
 
20

 
$
(14,373
)
 
$
—

 
$
(14,373
)
 
 
 
 
 
 
 
 
Three months ended September 30, 2017
 
 
 
 
 
 
 
Fixed maturity securities, available for sale:
 
 
 
 
 
 
 
Residential mortgage backed securities
3

 
$
(273
)
 
$
(191
)
 
$
(464
)
 
 
 
 
 
 
 
 
Nine months ended September 30, 2018
 
 
 
 
 
 
 
Fixed maturity securities, available for sale:
 
 
 
 
 
 
 
Corporate securities:
 
 

 
 
 
 
Capital goods
1

 
$
(719
)
 
$
—

 
$
(719
)
Consumer discretionary
7

 
(6,875
)
 
—

 
(6,875
)
Energy
2

 
(1,212
)
 
—

 
(1,212
)
Financials
5

 
(3,495
)
 
—

 
(3,495
)
Information technology
1

 
(550
)
 
—

 
(550
)
Telecommunications
2

 
(249
)
 
—

 
(249
)
Transportation
1

 
(178
)
 
—

 
(178
)
Utilities
1

 
(94
)
 
—

 
(94
)
Residential mortgage backed securities
3

 
(63
)
 
(295
)
 
(358
)
Commercial mortgage backed securities
1

 
(1,908
)
 
—

 
(1,908
)
Other asset backed securities
1

 
(682
)
 
(1,356
)
 
(2,038
)
 
25

 
$
(16,025
)
 
$
(1,651
)
 
$
(17,676
)
 
 
 
 
 
 
 
 
Nine months ended September 30, 2017
 
 
 
 
 
 
 
Fixed maturity securities, available for sale:
 
 
 
 
 
 
 
Residential mortgage backed securities
8

 
$
(273
)
 
$
(994
)
 
$
(1,267
)
Other asset backed securities
1

 
—

 
(287
)
 
(287
)
 
9

 
$
(273
)
 
$
(1,281
)
 
$
(1,554
)
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:
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2018
 
2017
 
2018
 
2017
 
(Dollars in thousands)
Cumulative credit loss at beginning of period
$
(156,469
)
 
$
(153,526
)
 
$
(157,066
)
 
$
(166,375
)
Additions for the amount related to credit losses for which OTTI has not previously been recognized
(14,373
)
 
(273
)
 
(16,025
)
 
(273
)
Additional credit losses on securities for which OTTI has previously been recognized
—

 
(191
)
 
(1,651
)
 
(1,281
)
Accumulated losses on securities that were disposed of during the period
—

 
—

 
3,900

 
13,939

Cumulative credit loss at end of period
$
(170,842
)
 
$
(153,990
)
 
$
(170,842
)
 
$
(153,990
)
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 September 30, 2018 and December 31, 2017:
 
Amortized Cost
 
OTTI
Recognized in
Other
Comprehensive
Income
 
Change in Fair
Value Since
OTTI was
Recognized
 
Fair Value
 
(Dollars in thousands)
September 30, 2018
 
 
 
 
 
 
 
Fixed maturity securities, available for sale:
 
 
 
 
 
 
 
Corporate securities
$
389,729

 
$
(3,700
)
 
$
10,041

 
$
396,070

Residential mortgage backed securities
255,611

 
(168,060
)
 
202,923

 
290,474

Commercial mortgage backed securities
7,823

 
—

 
—

 
7,823

Other asset backed securities
2,529

 
—

 
(1,682
)
 
847

 
$
655,692

 
$
(171,760
)
 
$
211,282

 
$
695,214

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