Investments (Tables)

12 Months Ended

Dec. 31, 2019

At December 31, 2019 and 2018, 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, 2019
Fixed maturity securities, available for sale:
United States Government full faith and credit	$	161,492	$	369	$	(96	)	$	161,765
United States Government sponsored agencies	601,672		28,133		(4,785		)	625,020
United States municipalities, states and territories	4,147,343		388,578		(8,250		)	4,527,671
Foreign government obligations	186,993		18,103		—			205,096
Corporate securities	29,822,172		2,796,926		(82,259		)	32,536,839
Residential mortgage backed securities	1,477,738		101,617		(3,691		)	1,575,664
Commercial mortgage backed securities	5,591,167		208,895		(13,783		)	5,786,279
Other asset backed securities	6,250,369		90,978		(179,191		)	6,162,156
	$	48,238,946	$	3,633,599	$	(292,055	)	$	51,580,490

December 31, 2018
Fixed maturity securities, available for sale:
United States Government full faith and credit	$	11,872	$	102	$	(322	)	$	11,652
United States Government sponsored agencies	1,208,468		13,095		(83,034		)	1,138,529
United States municipalities, states and territories	3,880,703		261,222		(15,658		)	4,126,267
Foreign government obligations	226,860		7,573		(4,159		)	230,274
Corporate securities	28,483,138		727,105		(838,729		)	28,371,514
Residential mortgage backed securities	1,134,623		71,661		(4,125		)	1,202,159
Commercial mortgage backed securities	5,492,271		21,558		(134,826		)	5,379,003
Other asset backed securities	5,693,255		41,308		(270,234		)	5,464,329
	$	46,131,190	$	1,143,624	$	(1,351,087	)	$	45,923,727

Schedule of Fixed Maturity Securities by Contractual Maturity Date

The amortized cost and fair value of fixed maturity securities at December 31, 2019, 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
	Amortized Cost		Fair Value
	(Dollars in thousands)
Due in one year or less	$	290,310	$	294,212
Due after one year through five years	5,831,134		6,061,370
Due after five years through ten years	10,199,288		10,829,871
Due after ten years through twenty years	10,519,078		11,812,300
Due after twenty years	8,079,862		9,058,638
	34,919,672		38,056,391
Residential mortgage backed securities	1,477,738		1,575,664
Commercial mortgage backed securities	5,591,167		5,786,279
Other asset backed securities	6,250,369		6,162,156
	$	48,238,946	$	51,580,490

Schedule of Components of Net Unrealized Gains (Losses) on Available For Sale Fixed Maturity Securities Reported as Separate Component of Stockholders' Equity

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



	December 31,
	2019			2018
	(Dollars in thousands)
Net unrealized gains (losses) on available for sale fixed maturity securities	$	3,341,544		$	(207,463	)
Adjustments for assumed changes in amortization of deferred policy acquisition costs and deferred sales inducements	(1,473,966		)	112,571
Deferred income tax valuation allowance reversal	22,534			22,534
Deferred income tax benefit (expense)	(392,191		)	19,926
Net unrealized gains (losses) reported as accumulated other comprehensive income (loss)	$	1,497,921		$	(52,432	)

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,
	2019				2018
NAIC Designation	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
1	$	27,781,525	$	30,122,657	$	26,588,352	$	26,921,843
2	19,278,355		20,316,911		17,901,161		17,528,072
3	1,001,087		977,191		1,396,650		1,269,242
4	114,497		112,534		173,987		137,991
5	57,952		45,205		23,836		19,453
6	5,530		5,992		47,204		47,126
	$	48,238,946	$	51,580,490	$	46,131,190	$	45,923,727

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 1,033 and 2,715 securities, respectively) have been in a continuous unrealized loss position, at December 31, 2019 and 2018:



	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, 2019
Fixed maturity securities, available for sale:
United States Government full faith and credit	$	144,582	$	(96	)	$	—	$	—		$	144,582	$	(96	)
United States Government sponsored agencies	168,732		(1,229		)	201,444		(3,556		)	370,176		(4,785		)
United States municipalities, states and territories	285,481		(8,173		)	3,081		(77		)	288,562		(8,250		)
Corporate securities:
Finance, insurance and real estate	267,521		(4,785		)	121,993		(4,744		)	389,514		(9,529		)
Manufacturing, construction and mining	161,633		(6,039		)	44,606		(3,951		)	206,239		(9,990		)
Utilities and related sectors	334,635		(7,730		)	51,269		(3,482		)	385,904		(11,212		)
Wholesale/retail trade	54,289		(1,751		)	129,364		(9,411		)	183,653		(11,162		)
Services, media and other	275,135		(6,135		)	316,086		(34,231		)	591,221		(40,366		)
Residential mortgage backed securities	212,404		(2,686		)	11,332		(1,005		)	223,736		(3,691		)
Commercial mortgage backed securities	602,394		(9,366		)	194,328		(4,417		)	796,722		(13,783		)
Other asset backed securities	752,413		(11,709		)	3,375,016		(167,482		)	4,127,429		(179,191		)
	$	3,259,219	$	(59,699	)	$	4,448,519	$	(232,356	)	$	7,707,738	$	(292,055	)

December 31, 2018
Fixed maturity securities, available for sale:
United States Government full faith and credit	$	543	$	(3	)	$	7,785	$	(319	)	$	8,328	$	(322	)
United States Government sponsored agencies	30,089		(949		)	953,421		(82,085		)	983,510		(83,034		)
United States municipalities, states and territories	340,103		(6,816		)	162,997		(8,842		)	503,100		(15,658		)
Foreign government obligations	98,511		(1,748		)	11,859		(2,411		)	110,370		(4,159		)
Corporate securities:
Finance, insurance and real estate	2,501,640		(87,220		)	884,870		(77,507		)	3,386,510		(164,727		)
Manufacturing, construction and mining	2,045,859		(84,972		)	349,738		(34,635		)	2,395,597		(119,607		)
Utilities and related sectors	2,313,271		(82,119		)	591,482		(45,838		)	2,904,753		(127,957		)
Wholesale/retail trade	1,032,603		(51,228		)	198,805		(26,326		)	1,231,408		(77,554		)
Services, media and other	4,618,477		(196,520		)	1,072,722		(152,364		)	5,691,199		(348,884		)
Residential mortgage backed securities	145,613		(2,638		)	22,689		(1,487		)	168,302		(4,125		)
Commercial mortgage backed securities	2,141,560		(37,150		)	2,090,835		(97,676		)	4,232,395		(134,826		)
Other asset backed securities	4,073,249		(252,265		)	271,994		(17,969		)	4,345,243		(270,234		)
	$	19,341,518	$	(803,628	)	$	6,619,197	$	(547,459	)	$	25,960,715	$	(1,351,087	)

Schedule of Changes in Net Unrealized Gains/Losses on Investments

Changes in net unrealized gains/losses on investments for the years ended December 31, 2019, 2018 and 2017 are as follows:



	Year Ended December 31,
	2019			2018			2017
	(Dollars in thousands)
Fixed maturity securities held for investment carried at amortized cost	$	—		$	581		$	7,478
Investments carried at fair value:
Fixed maturity securities, available for sale	$	3,549,007		$	(2,463,693	)	$	1,149,691
Equity securities	—			—			(479		)
	3,549,007			(2,463,693		)	1,149,212
Adjustment for effect on other balance sheet accounts:
Deferred policy acquisition costs and deferred sales inducements	(1,586,537		)	1,318,649			(587,417		)
Deferred income tax asset/liability	(412,117		)	240,459			(177,162		)
	(1,998,654		)	1,559,108			(764,579		)
Change in net unrealized gains/losses on investments carried at fair value	$	1,550,353		$	(904,585	)	$	384,633

Components of Net Investment Income

Components of net investment income are as follows:



	Year Ended December 31,
	2019			2018			2017
	(Dollars in thousands)
Fixed maturity securities	$	2,171,768		$	2,027,599		$	1,876,542
Equity securities	4,083			4,735			764
Mortgage loans on real estate	145,344			131,259			122,680
Cash and cash equivalents	5,164			2,320			2,562
Other	3,119			1,548			4,073
	2,329,478			2,167,461			2,006,621
Less investment expenses	(21,843		)	(19,649		)	(14,624		)
Net investment income	$	2,307,635		$	2,147,812		$	1,991,997

Net Realized Gains (Losses) on Investments, Excluding Net OTTI Losses

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



	Year Ended December 31,
	2019			2018			2017
	(Dollars in thousands)
Available for sale fixed maturity securities:
Gross realized gains	$	21,449		$	12,245		$	18,254
Gross realized losses	(6,397		)	(47,974		)	(9,058		)
	15,052			(35,729		)	9,196
Equity securities:
Gross realized gains	—			—			348

Other investments:
Gross realized gains	7,296			—			—
Gross realized losses	(14,446		)	—			—
Gain on sale of real estate	—			—			56
	(7,150		)	—			56

Mortgage loans on real estate:
Decrease (increase) in allowance for credit losses	(940		)	(3,165		)	278
Recovery of specific allowance	—			1,592			631
Gain on sale of mortgage loans	—			124			—
	(940		)	(1,449		)	909
	$	6,962		$	(37,178	)	$	10,509

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,
	2019		2018
	(Dollars in thousands)
Fixed maturity securities, available for sale	$	5,792	$	6,717

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 from Other Comprehensive Income			Net OTTI Losses Recognized in Operations
		(Dollars in thousands)
Year ended December 31, 2019
Fixed maturity securities, available for sale:
Corporate securities:
Energy	3	$	(17,273	)	$	—		$	(17,273	)
Residential mortgage backed securities	3	(101		)	(215		)	(316		)
Commercial mortgage backed securities	2	(488		)	—			(488		)
Other asset backed securities	1	(649		)	—			(649		)
	9	$	(18,511	)	$	(215	)	$	(18,726	)

Year ended December 31, 2018
Fixed maturity securities, available for sale:
Corporate securities:
Capital goods	1	$	(719	)	$	—		$	(719	)
Consumer discretionary	8	(9,533		)	—			(9,533		)
Energy	4	(4,793		)	—			(4,793		)
Financials	5	(3,495		)	—			(3,495		)
Information technology	1	(550		)	—			(550		)
Industrials	1	(2,299		)	—			(2,299		)
Telecommunications	2	(249		)	—			(249		)
Transportation	1	(178		)	—			(178		)
Utilities	2	(5,518		)	—			(5,518		)
Residential mortgage backed securities	3	(63		)	(295		)	(358		)
Commercial mortgage backed securities	5	(4,859		)	—			(4,859		)
Other asset backed securities	2	(2,749		)	(1,356		)	(4,105		)
	35	$	(35,005	)	$	(1,651	)	$	(36,656	)

Year ended December 31, 2017
Fixed maturity securities, available for sale:
Corporate securities:
Industrials	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	)

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,
	2019			2018
	(Dollars in thousands)
Cumulative credit loss at beginning of year	$	(175,398	)	$	(157,066	)
Additions for the amount related to credit losses for which OTTI has not previously been recognized	(18,271		)	(35,005		)
Additional credit losses on securities for which OTTI has previously been recognized	(455		)	(1,651		)
Accumulated losses on securities that were disposed of during the period	24,422			18,324
Cumulative credit loss at end of year	$	(169,702	)	$	(175,398	)

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, 2019 and 2018:



	Amortized Cost		OTTI Recognized in Other Comprehensive Income (Loss)			Change in Fair Value Since OTTI was Recognized			Fair Value
	(Dollars in thousands)
December 31, 2019
Fixed maturity securities, available for sale:
Corporate securities	$	50,755	$	(3,700	)	$	9,268		$	56,323
Residential mortgage backed securities	183,948		(145,446		)	172,577			211,079
Commercial mortgage backed securities	12,776		—			(401		)	12,375
Other asset backed securities	977		—			261			1,238
	$	248,456	$	(149,146	)	$	181,705		$	281,015
December 31, 2018
Fixed maturity securities, available for sale:
Corporate securities	$	69,580	$	(3,700	)	$	6,195		$	72,075
Residential mortgage backed securities	245,691		(167,846		)	199,191			277,036
Commercial mortgage backed securities	35,244		—			—			35,244
Other asset backed securities	1,692		—			326			2,018
	$	352,207	$	(171,546	)	$	205,712		$	386,373