10-Q 1 ufcs-2017630x10q.htm 10-Q Document

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2017
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-34257
ufglogo2017.jpg
________________________
 UNITED FIRE GROUP, INC.
(Exact name of registrant as specified in its charter)
____________________________
 
 
 
Iowa
 
45-2302834
 
 
 
 
(State of Incorporation)
 
(IRS Employer Identification No.)
 
 

118 Second Avenue, S.E., Cedar Rapids, Iowa 52401
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (319) 399-5700

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES R NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES R NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer R 
Accelerated filer o 
 
Non-accelerated filer o 
 
Smaller reporting company o
 
Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO R
As of July 31, 2017, 25,028,746 shares of common stock were outstanding.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



United Fire Group, Inc.
Index to Quarterly Report on Form 10-Q
June 30, 2017
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



FORWARD-LOOKING INFORMATION
This report may contain forward-looking statements about our operations, anticipated performance and other similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor under the Securities Act of 1933 (the "Securities Act") and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), for forward-looking statements. The forward-looking statements are not historical facts and involve risks and uncertainties that could cause actual results to differ from those expected and/or projected. Such forward-looking statements are based on current expectations, estimates, forecasts and projections about United Fire Group, Inc. ("UFG," the "Registrant," the "Company," "we," "us," or "our"), the industry in which we operate, and beliefs and assumptions made by management. Words such as "expect(s)," "anticipate(s)," "intend(s)," "plan(s)," "believe(s)," "continue(s)," "seek(s)," "estimate(s)," "goal(s)," "target(s)," "forecast(s)," "project(s)," "predict(s)," "should," "could," "may," "will continue," "might," "hope," "can" and other words and terms of similar meaning or expression in connection with a discussion of future operations, financial performance or financial condition, are intended to identify forward-looking statements. See Part I, Item 1A "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2016 and Part II, Item 1A "Risk Factors" of this report for more information concerning factors that could cause actual results to differ materially from those in the forward-looking statements.
Risks and uncertainties that may affect the actual financial condition and results of the Company include, but are not limited to, the following:

The frequency and severity of claims, including those related to catastrophe losses and the impact those claims have on our loss reserve adequacy; the occurrence of catastrophic events, including international events, significant severe weather conditions, climate change, acts of terrorism, acts of war and pandemics;
The adequacy of our reserves for property and casualty insurance losses and loss settlement expenses and our life insurance reserve for future policy benefits;
Geographic concentration risk in both property and casualty insurance and life insurance segments;
The potential disruption of our operations and reputation due to unauthorized data access, cyber-attacks or cyber-terrorism and other security breaches;
Developments in general economic conditions, domestic and global financial markets, interest rates and other-than-temporary impairment losses that could affect the performance of our investment portfolio;
Our ability to effectively underwrite and adequately price insured risks;
Changes in industry trends, an increase in competition and significant industry developments;
Litigation or regulatory actions that could require us to pay significant damages, fines or penalties or change the way we do business;
Lowering of one or more of the financial strength ratings of our operating subsidiaries or our issuer credit ratings and the adverse impact such action may have on our premium writings, policy retention, profitability and liquidity;
Governmental actions, policies and regulations, including, but not limited to, domestic health care reform, financial services regulatory reform, corporate governance, new laws or regulations or court decisions interpreting existing laws and regulations or policy provisions; changes in laws, regulations and stock exchange requirements relating to corporate governance and the cost of compliance;
Our relationship with and the financial strength of our reinsurers; and
Competitive, legal, regulatory or tax changes that affect the distribution cost or demand for our products through our independent agent/agency distribution network.

These are representative of the risks, uncertainties, and assumptions that could cause actual outcomes and results to differ materially from what is expressed in forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report or as of the date they are made. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission ("SEC"), we do not have any intention or obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.




1


PART I — FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
 
United Fire Group, Inc.
Consolidated Balance Sheets
(In Thousands, Except Share Data)
June 30,
2017
 
December 31,
2016
 
(unaudited)
 
 
ASSETS
 
 
 
Investments
 
 
 
Fixed maturities
 
 
 
Held-to-maturity, at amortized cost (fair value $192 in 2017 and $199 in 2016)
$
192

 
$
198

Available-for-sale, at fair value (amortized cost $2,912,326 in 2017 and $2,887,505 in 2016)
2,955,079

 
2,898,126

Trading securities, at fair value (amortized cost $13,945 in 2017 and $13,054 in 2016)
15,828

 
14,390

Equity securities
 
 
 
Available-for-sale, at fair value (cost $62,533 in 2017 and $68,504 in 2016)
276,306

 
270,416

Trading securities, at fair value (cost $6,046 in 2017 and $5,434 in 2016)
6,612

 
5,644

Mortgage loans
3,573

 
3,706

Policy loans
5,499

 
5,366

Other long-term investments
65,664

 
67,639

Short-term investments
175

 
175

 
3,328,928

 
3,265,660

Cash and cash equivalents
130,421

 
110,853

Accrued investment income
25,530

 
25,056

Premiums receivable (net of allowance for doubtful accounts of $1,178 in 2017 and $1,255 in 2016)
361,866

 
306,202

Deferred policy acquisition costs
167,512

 
164,112

Property and equipment (primarily land and buildings, at cost, less accumulated depreciation of $51,144 in 2017 and $50,925 in 2016)
57,726

 
55,524

Reinsurance receivables and recoverables
73,967

 
69,413

Prepaid reinsurance premiums
3,966

 
3,782

Income taxes receivable
8,288

 
15,061

Goodwill and intangible assets
24,355

 
24,740

Other assets
14,853

 
14,355

TOTAL ASSETS
$
4,197,412

 
$
4,054,758

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Liabilities
 
 
 
Future policy benefits and losses, claims and loss settlement expenses
 
 
 
Property and casualty insurance
$
1,180,478

 
$
1,123,896

Life insurance
1,329,855

 
1,350,503

Unearned premiums
502,415

 
443,873

Accrued expenses and other liabilities
173,610

 
159,014

Deferred income taxes
48,466

 
35,588

TOTAL LIABILITIES
$
3,234,824

 
$
3,112,874

Stockholders’ Equity
 
 
 
Common stock, $0.001 par value; authorized 75,000,000 shares; 25,028,037 and 25,429,769 shares issued and outstanding in 2017 and 2016, respectively
$
25

 
$
25

Additional paid-in capital
199,759

 
216,482

Retained earnings
625,836

 
616,322

Accumulated other comprehensive income, net of tax
136,968

 
109,055

TOTAL STOCKHOLDERS’ EQUITY
$
962,588

 
$
941,884

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
4,197,412

 
$
4,054,758

The Notes to unaudited Consolidated Financial Statements are an integral part of these statements.


2


United Fire Group, Inc.
Consolidated Statements of Income and Comprehensive Income (Unaudited)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(In Thousands, Except Share Data)
2017
 
2016
 
2017
 
2016
Revenues
 
 
 
 
 
 
 
Net premiums earned
$
259,563

 
$
253,487

 
$
513,435

 
$
494,785

Investment income, net of investment expenses
24,610

 
24,507

 
49,645

 
46,731

Net realized investment gains (includes reclassifications for net unrealized investment gains on available-for-sale securities of $1,975 and $5,380 in 2017 and $700 and $2,346 in 2016; previously included in accumulated other comprehensive income)
2,680


1,596

 
6,634

 
3,651

Other income
126

 
183

 
324

 
291

Total revenues
$
286,979

 
$
279,773

 
$
570,038

 
$
545,458

Benefits, Losses and Expenses
 
 
 
 
 
 
 
Losses and loss settlement expenses
$
197,698

 
$
180,412

 
$
365,321

 
$
322,540

Increase in liability for future policy benefits
5,281

 
16,002

 
13,860

 
28,554

Amortization of deferred policy acquisition costs
53,093

 
52,585

 
105,227

 
102,816

Other underwriting expenses (includes reclassifications for employee benefit costs of $1,352 and $2,704 in 2017 and $1,371 and $2,742 in 2016; previously included in accumulated other comprehensive income)
26,201

 
24,772

 
51,091

 
51,525

Interest on policyholders’ accounts
4,651

 
5,138

 
9,395

 
10,385

Total benefits, losses and expenses
$
286,924

 
$
278,909

 
$
544,894

 
$
515,820

Income before income taxes
$
55

 
$
864

 
$
25,144

 
$
29,638

Federal income tax expense (benefit) (includes reclassifications of $219 and $937 in 2017 and ($234) and ($138) in 2016; previously included in accumulated other comprehensive income)
(2,903
)
 
(2,250
)
 
2,250

 
4,097

Net income
$
2,958

 
$
3,114

 
$
22,894

 
$
25,541

Other comprehensive income
 
 
 
 
 
 
 
Change in net unrealized appreciation on investments
$
30,653

 
$
49,332

 
$
45,619

 
$
93,208

Change in liability for underfunded employee benefit plans

 

 

 

Other comprehensive income , before tax and reclassification adjustments
$
30,653

 
$
49,332

 
$
45,619

 
$
93,208

Income tax effect
(10,729
)
 
(17,267
)
 
(15,967
)
 
(32,624
)
Other comprehensive income, after tax, before reclassification adjustments
$
19,924

 
$
32,065

 
$
29,652

 
$
60,584

Reclassification adjustment for net realized investment gains included in income
$
(1,975
)
 
$
(700
)
 
$
(5,380
)
 
$
(2,346
)
Reclassification adjustment for employee benefit costs included in expense
1,352

 
1,371

 
2,704

 
2,742

Total reclassification adjustments, before tax
$
(623
)
 
$
671

 
$
(2,676
)
 
$
396

Income tax effect
219

 
(234
)
 
937

 
(138
)
Total reclassification adjustments, after tax
$
(404
)
 
$
437

 
$
(1,739
)
 
$
258

Comprehensive income
$
22,478

 
$
35,616

 
$
50,807

 
$
86,383

 
 
 
 
 
 
 
 
Weighted average common shares outstanding
25,133,035

 
25,366,283

 
25,288,068

 
25,288,086

Basic earnings per common share
$
0.12

 
$
0.12

 
$
0.91

 
$
1.01

Diluted earnings per common share
0.12

 
0.12

 
0.89

 
1.00

The Notes to unaudited Consolidated Financial Statements are an integral part of these statements.


3


United Fire Group, Inc.
Consolidated Statement of Stockholders’ Equity (Unaudited)

(In Thousands, Except Share Data)
Six Months Ended June 30, 2017
 
 
Common stock
 
Balance, beginning of year
$
25

Shares repurchased (496,608 shares)

Shares issued for stock-based awards (104,634 shares)

Balance, end of period
$
25

 
 
Additional paid-in capital
 
Balance, beginning of year
$
216,482

Compensation expense and related tax benefit for stock-based award grants
2,254

Shares repurchased
(21,184
)
Shares issued for stock-based awards
2,207

Balance, end of period
$
199,759

 
 
Retained earnings
 
Balance, beginning of year
$
616,322

Net income
22,894

Dividends on common stock ($0.53 per share)
(13,380
)
Balance, end of period
$
625,836

 
 
Accumulated other comprehensive income, net of tax
 
Balance, beginning of year
$
109,055

Change in net unrealized investment appreciation(1)
26,156

Change in liability for underfunded employee benefit plans(2)
1,757

Balance, end of period
$
136,968

 
 
Summary of changes
 
Balance, beginning of year
$
941,884

Net income
22,894

All other changes in stockholders’ equity accounts
(2,190
)
Balance, end of period
$
962,588

(1)
The change in net unrealized appreciation is net of reclassification adjustments and income taxes.
(2)
The change in liability for underfunded employee benefit plans is net of reclassification adjustments and income taxes.

The Notes to unaudited Consolidated Financial Statements are an integral part of these statements.



4


United Fire Group, Inc.
Consolidated Statements of Cash Flows (Unaudited)

Six Months Ended June 30,
(In Thousands)
2017
 
2016
Cash Flows From Operating Activities
 
 
 
Net income
$
22,894

 
$
25,541

Adjustments to reconcile net income to net cash provided by operating activities
 
 
 
Net accretion of bond premium
7,857

 
7,076

Depreciation and amortization
2,333

 
3,179

Stock-based compensation expense
2,254

 
1,865

Net realized investment gains
(6,634
)
 
(3,651
)
Net cash flows from trading investments
(1,524
)
 
256

Deferred income tax benefit
(1,040
)
 
(1,761
)
Changes in:
 
 
 
Accrued investment income
(474
)
 
235

Premiums receivable
(55,664
)
 
(63,334
)
Deferred policy acquisition costs
(7,153
)
 
(11,007
)
Reinsurance receivables
(4,554
)
 
(7,413
)
Prepaid reinsurance premiums
(184
)
 
(363
)
Income taxes receivable
6,773

 
(12,341
)
Other assets
(498
)
 
47

Future policy benefits and losses, claims and loss settlement expenses
71,378

 
78,807

Unearned premiums
58,542

 
60,851

Accrued expenses and other liabilities
17,300

 
7,083

Income taxes payable

 
(4,917
)
Deferred income taxes
(1,112
)
 
(550
)
Other, net
1,640

 
1,474

Total adjustments
$
89,240

 
$
55,536

Net cash provided by operating activities
$
112,134

 
$
81,077

Cash Flows From Investing Activities
 
 
 
Proceeds from sale of available-for-sale investments
$
5,059

 
$
3,042

Proceeds from call and maturity of held-to-maturity investments
7

 
14

Proceeds from call and maturity of available-for-sale investments
147,717

 
311,478

Proceeds from short-term and other investments
3,320

 
1,412

Purchase of available-for-sale investments
(174,022
)
 
(338,213
)
Purchase of short-term and other investments
(2,985
)
 
(415
)
Net purchases and sales of property and equipment
(3,861
)
 
(2,825
)
Net cash used in investing activities
$
(24,765
)
 
$
(25,507
)
Cash Flows From Financing Activities
 
 
 
Policyholders’ account balances
 
 
 
Deposits to investment and universal life contracts
$
38,382

 
$
45,467

Withdrawals from investment and universal life contracts
(73,826
)
 
(81,672
)
Payment of cash dividends
(13,380
)
 
(11,898
)
Repurchase of common stock
(21,184
)
 

Issuance of common stock
2,207

 
6,138

Tax impact from issuance of common stock

 
(354
)
Net cash used in financing activities
$
(67,801
)
 
$
(42,319
)
Net Change in Cash and Cash Equivalents
$
19,568

 
$
13,251

Cash and Cash Equivalents at Beginning of Period
110,853

 
106,449

Cash and Cash Equivalents at End of Period
$
130,421

 
$
119,700

The Notes to unaudited Consolidated Financial Statements are an integral part of these statements.


5



UNITED FIRE GROUP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share amounts or as otherwise noted)

NOTE 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Nature of Business
United Fire Group, Inc. ("UFG," the "Registrant," the "Company," "we," "us," or "our") and its consolidated subsidiaries and affiliates are engaged in the business of writing property and casualty insurance and life insurance and selling annuities through a network of independent agencies. We report our operations in two business segments: property and casualty insurance and life insurance. Our insurance company subsidiaries are licensed as a property and casualty insurer in 46 states and the District of Columbia, and as a life insurer in 37 states.
Basis of Presentation
The unaudited consolidated interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial reporting and with the instructions to Form 10-Q and Regulation S-X promulgated by the SEC. Certain financial information that is included in our Annual Report on Form 10-K, including certain financial statement footnote disclosures, are not required by the rules and regulations of the SEC for interim financial reporting and have been condensed or omitted.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The financial statement categories that are most dependent on management estimates and assumptions include: investments; deferred policy acquisition costs; reinsurance receivables and recoverables; future policy benefits and losses, claims and loss settlement expenses; and pension and postretirement benefit obligations.
Certain prior year amounts have been reclassified to conform to the current year presentation.
Management of UFG believes the accompanying unaudited Consolidated Financial Statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. All significant intercompany transactions have been eliminated in consolidation. The results reported for the interim periods are not necessarily indicative of the results of operations that may be expected for the year. The unaudited Consolidated Financial Statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2016. The review report of Ernst & Young LLP as of June 30, 2017 and for the three- and six-month periods ended June 30, 2017 and 2016 accompanies the unaudited Consolidated Financial Statements included in Part I, Item 1 "Financial Statements."
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include cash, money market accounts, and non-negotiable certificates of deposit with original maturities of three months or less.
For the six-month periods ended June 30, 2017 and 2016, we made payments for income taxes totaling $7,628 and $24,017, respectively. We received a tax refund of $10,000 during the six-month period ended June 30, 2017. We did not receive a tax refund during the six-month period ended June 30, 2016.
For the six-month periods ended June 30, 2017 and 2016, we made no interest payments (excluding interest credited to policyholders’ accounts).



6


Deferred Policy Acquisition Costs ("DAC")

Certain costs associated with underwriting new business (primarily commissions, premium taxes and variable underwriting and policy issue expenses associated with successful acquisition efforts) are deferred. The following table is a summary of the components of DAC, including the related amortization recognized for the six-month period ended June 30, 2017.
 
 
 
 
 
Property & Casualty Insurance
 
Life Insurance
 
Total
Recorded asset at beginning of period
$
93,362

 
$
70,750

 
$
164,112

Underwriting costs deferred
109,900

 
2,480

 
112,380

Amortization of deferred policy acquisition costs
(101,859
)
 
(3,368
)
 
(105,227
)
Ending unamortized deferred policy acquisition costs
$
101,403

 
$
69,862

 
$
171,265

Impact of unrealized gains and losses on available-for-sale securities

 
(3,753
)
 
(3,753
)
Recorded asset at June 30, 2017
$
101,403

 
$
66,109

 
$
167,512


Property and casualty insurance policy acquisition costs deferred are amortized as premium revenue is recognized. The method followed in computing DAC limits the amount of such deferred costs to their estimated realizable value. This takes into account the premium to be earned, losses and loss settlement expenses expected to be incurred and certain other costs expected to be incurred as the premium is earned.

For traditional life insurance policies, DAC is amortized to income over the premium-paying period in proportion to the ratio of the expected annual premium revenue to the expected total premium revenue. Expected premium revenue and gross profits are based on the same mortality and withdrawal assumptions used in determining future policy benefits. These assumptions are not revised after policy issuance unless the recorded DAC asset is deemed to be unrecoverable from future expected profits.

For non-traditional life insurance policies, DAC is amortized over the anticipated terms in proportion to the ratio of the expected annual gross profits to the total expected gross profits. Changes in the amount or timing of expected gross profits result in adjustments to the cumulative amortization of these costs. The effect on amortization of DAC for revisions to estimated gross profits is reported in earnings in the period the estimated gross profits are revised.

The effect on DAC that results from the assumed realization of unrealized gains (losses) on investments allocated to non-traditional life insurance business is recognized with an offset to net unrealized investment appreciation as of the balance sheet date. The impact of unrealized gains and losses on available-for-sale securities decreased the DAC asset by $10,166 and $6,413 at June 30, 2017 and December 31, 2016, respectively.
Income Taxes
Deferred tax assets and liabilities are established based on differences between the financial statement bases of assets and liabilities and the tax bases of those same assets and liabilities, using the currently enacted statutory tax rates. Deferred income tax expense is measured by the year-to-year change in the net deferred tax asset or liability, except for certain changes in deferred tax amounts that affect stockholders' equity and do not impact federal income tax expense.
We reported a federal income tax expense of $2,250 and $4,097 for the six-month periods ended June 30, 2017 and 2016, respectively. Our effective tax rate is different than the federal statutory rate of 35.0 percent due principally to the effect of tax-exempt municipal bond interest income and non-taxable dividend income.
The Company performs a quarterly review of its tax positions and makes a determination of whether it is more likely than not that the tax position will be sustained upon examination. If based on review, it appears not more likely than


7


not that the positions will be sustained, the Company will calculate any unrecognized tax benefits and, if necessary, calculate and accrue any related interest and penalties. We did not recognize any liability for unrecognized tax benefits at June 30, 2017 or December 31, 2016. In addition, we have not accrued for interest and penalties related to unrecognized tax benefits. However, if interest and penalties would need to be accrued related to unrecognized tax benefits, such amounts would be recognized as a component of federal income tax expense.
We file a consolidated federal income tax return. We also file income tax returns in various state jurisdictions. We are no longer subject to federal or state income tax examination for years before 2009 or for the year 2012. The Internal Revenue Service is conducting routine examinations of our income tax return for the 2011 and 2015 tax years.

Subsequent Events

In the preparation of the accompanying financial statements, the Company has evaluated all material subsequent events or transactions that occurred after the balance sheet date through the date on which the financial statements were issued for potential recognition or disclosure in the Company's financial statements. The Company concluded there are no material subsequent events or transactions that have occurred after the balance sheet date through the date on which the financial statements were issued.
Recently Issued Accounting Standards
Accounting Standards Adopted in 2017
Share-Based Payments
In March 2016, the Financial Accounting Standards Board ("FASB") issued new guidance on the accounting for share-based payments. The new guidance was issued to simplify the accounting of share-based payments, specifically in the areas of income taxes, classification on the balance sheets as liabilities or equity and classification in the cash flow statement. The new guidance is effective for annual periods beginning after December 15, 2016 and interim periods within those years. The Company adopted the new guidance prospectively as of January 1, 2017. The new guidance resulted in classification changes between the financing and operating section of the Statement of Cash Flow for stock based compensation expense. The adoption also resulted in a tax benefit of $354 and $484 during the three- and six-months ended June 30, 2017.
Income Taxes
In December 2015, the FASB issued guidance on the balance sheet classification of deferred taxes. The new guidance eliminates the requirement to split deferred tax liabilities and assets between current and non-current in a classified balance sheet. The new guidance allows deferred tax liabilities and assets to be included in non-current accounts. The Company adopted the new guidance as of January 1, 2017. The adoption had no impact on the Company's financial position and results of operations since we do not currently report deferred taxes in classified balance sheets.
Pending Adoption of Accounting Standards
Revenue Recognition
In May 2014, the FASB issued comprehensive new guidance on revenue recognition which supersedes nearly all existing revenue recognition guidance under GAAP. The new guidance requires a company to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard creates a five-step model that requires companies to exercise judgment when considering the terms of the contract(s) and all relevant facts and circumstances. Insurance contracts are not within the scope of this new guidance. The new guidance is effective for annual and interim periods beginning after December 15, 2017. The Company will adopt the guidance as of January 1, 2018. The adoption of the new guidance will have no impact on the Company's reporting and disclosure of net


8


premiums earned, net investment income or net realized gains and losses, as these items are not within the scope of this new guidance. The Company is currently evaluating the impact on the Company's financial position and results of operations with other revenue streams under this new guidance. These other revenue streams, currently reported in other income in the Consolidated Statements of Income and Comprehensive Income, are not a material amount of the Company's total revenue.
Financial Instruments
In January 2016, the FASB issued guidance updating certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments in this update supersede the guidance to classify equity securities with readily determinable fair values into different categories (for example, trading or available-for-sale) and require equity securities to be measured at fair value with changes in the fair value recognized through net income. The new guidance also simplifies the impairment process for equity investments without readily determinable fair values. The new guidance is effective for annual periods beginning after December 15, 2017 and interim periods within those years. The Company will adopt the new guidance as of January 1, 2018 and is currently evaluating the impact on the Company's financial position, results of operations and key processes. If the new guidance were adopted as of March 31, 2017, there would be a reclassification from accumulated other comprehensive income to retained earnings equal to the amount of net unrealized gains and losses on available-for-sale equity securities at December 31, 2016 disclosed in Note 2 "Summary of Investments," of this section. The impact to net realized gains (losses) would equal the change in net unrealized gains and losses on available-for-sale equity securities between June 30, 2017 and December 31, 2016, in the same tables.
Statement of Cash Flows - Classification of Certain Cash Receipts and Payments
In August 2016, the FASB issued an update that clarifies the classification of certain cash receipts and payments in the Statement of Cash Flows. The update addresses eight existing cash flow issues by clarifying the correct classification to establish uniformity in practice. The updated guidance is effective for annual periods beginning after December 15, 2017 and interim periods within those years. The Company will adopt the new guidance as of January 1, 2018 and is currently reviewing the updates to the eight existing cash flow issues. Currently, management believes that one existing cash flow issue will be impacted by these updates. Management believes the update will have no impact on the Company's financial position and results of operations but may effect the current classification of the cash flow in the Statement of Cash Flows.
Defined Benefit Retirement Plan Cost
In March 2017, the FASB issued guidance on the presentation of net periodic benefit costs of defined benefit retirement benefit plans in the Statements of Income. The new guidance requires the service cost component of net periodic benefit cost of defined benefit plans to be presented in the same line in the Statements of Income as other employee compensation expenses. Also, under the new guidance, the service cost component of the net periodic benefit costs will be the only portion of costs subject to be capitalized in assets. The new guidance is effective for annual periods beginning after December 15, 2017 and interim periods within those years. The Company will adopt the new guidance as of January 1, 2018 and is currently evaluating the presentation of net periodic benefit costs in its financial statements and the impact on the Company's financial position and results of operations.
Leases
In February 2016, the FASB issued guidance on the accounting for leases. The new guidance requires lessees to place most leases on their balance sheets with expenses recognized on the income statement in a similar manner as previous methods. The new guidance is effective for annual periods beginning after December 15, 2018 and interim periods within those years. The Company will adopt the new guidance as of January 1, 2019. The Company has created an inventory of its leases and has calculated the current minimum future lease payment, which is disclosed in Note 13 "Lease Commitments" of our Annual Report on Form 10-K for the year ended December 31, 2016.



9


Financial Instruments - Credit Losses
In June 2016, the FASB issued new guidance on the measurement of credit losses for most financial instruments. The new guidance replaces the current incurred loss model for recognizing credit losses with an expected loss model for instruments measured at amortized cost and requires allowances to be recorded for available-for-sale debt securities rather than reduce the carrying amount. These allowances will be remeasured each reporting period. The new guidance is effective for annual periods beginning after December 15, 2020 and interim periods within those years. The Company will adopt the new guidance as of January 1, 2021 and is currently evaluating the impact on the Company's financial position, results of operations and key processes.
Income Taxes - Intra-entity Transfers
In October 2016, the FASB issued new guidance on the income tax treatment of intra-entity transfers. The new guidance replaces the current guidance which prohibits the recognition of current and deferred income taxes of intra-entity transfers until the asset is sold externally. Under the new guidance, the exemption is eliminated and income taxes will be recognized on transfers of intra-entity assets. The new guidance is effective for annual periods beginning after December 15, 2018 and interim periods beginning after December 15, 2019. The Company will adopt the new guidance as of January 1, 2019 and is currently evaluating the impact on the Company's financial position and results of operations.
Goodwill
In January 2017, the FASB issued new guidance which simplifies the test for goodwill impairment. The new guidance eliminates the implied fair value calculation when measuring a goodwill impairment charge. Under the new guidance, impairment charges will be based on the excess of the carrying value over fair value of goodwill. The new guidance is effective for annual and interim periods beginning after December 15, 2019. The Company will adopt the new guidance as of January 1, 2020 and is currently evaluating the impact on the Company's financial position and results of operations.
Share-Based Payments
In May 2017, the FASB issued new guidance which clarifies and addresses the diversity in practice when there is a change in the terms of a share-based payment award. The updated guidance clarifies when to use modification accounting when there is a change in the terms of a share-based payment and provides three conditions where modification accounting should not be applied. The new guidance is effective for annual and interim periods beginning after December 15, 2017. The Company will adopt the new guidance as of January 1, 2018 and is currently evaluating the impact on the Company's financial position and results of operations.





10


NOTE 2. SUMMARY OF INVESTMENTS
Fair Value of Investments
A reconciliation of the amortized cost (cost for equity securities) to fair value of investments in held-to-maturity and available-for-sale fixed maturity and equity securities as of June 30, 2017 and December 31, 2016 is as follows:
June 30, 2017
 
Type of Investment
Cost or Amortized Cost
 
Gross Unrealized Appreciation
 
Gross Unrealized Depreciation
 
Fair Value
HELD-TO-MATURITY
 
 
 
 
 
 
 
Fixed maturities:
 
 
 
 
 
 
 
Bonds
 
 
 
 
 
 
 
Corporate bonds - financial services
$
150

 
$

 
$

 
$
150

Mortgage-backed securities
42

 

 

 
42

Total Held-to-Maturity Fixed Maturities
$
192

 
$

 
$

 
$
192

AVAILABLE-FOR-SALE
 
 
 
 
 
 
 
Fixed maturities:
 
 
 
 
 
 
 
Bonds
 
 
 
 
 
 
 
U.S. Treasury
$
22,068

 
$
56

 
$
80

 
$
22,044

U.S. government agency
79,643

 
1,574

 
424

 
80,793

States, municipalities and political subdivisions
 
 
 
 
 
 
 
General obligations:
 
 
 
 
 
 
 
Midwest
128,921

 
2,588

 
555

 
130,954

Northeast
54,322

 
1,348

 
91

 
55,579

South
141,845

 
2,496

 
1,350

 
142,991

West
120,651

 
2,468

 
1,165

 
121,954

Special revenue:
 
 
 
 
 
 
 
Midwest
163,411

 
3,579

 
678

 
166,312

Northeast
80,282

 
926

 
1,229

 
79,979

South
258,666

 
3,871

 
3,547

 
258,990

West
152,224

 
2,614

 
2,377

 
152,461

Foreign bonds
55,503

 
1,987

 

 
57,490

Public utilities
207,437

 
4,474

 
240

 
211,671

Corporate bonds

 

 

 

Energy
99,416

 
2,249

 
200

 
101,465

Industrials
214,919

 
5,726

 
219

 
220,426

Consumer goods and services
179,992

 
4,927

 
157

 
184,762

Health care
75,863

 
2,469

 

 
78,332

Technology, media and telecommunications
143,209

 
3,224

 
175

 
146,258

Financial services
261,314

 
6,763

 
526

 
267,551

Mortgage-backed securities
15,515

 
178

 
195

 
15,498

Collateralized mortgage obligations
 
 
 
 
 
 
 
Government national mortgage association
155,129

 
2,228

 
1,490

 
155,867

Federal home loan mortgage corporation
194,556

 
2,566

 
2,894

 
194,228



11


Federal national mortgage association
103,061

 
2,367

 
752

 
104,676

Asset-backed securities
4,379

 
419

 

 
4,798

Total Available-for-Sale Fixed Maturities
$
2,912,326

 
$
61,097

 
$
18,344

 
$
2,955,079

Equity securities:

 

 

 

Common stocks

 

 

 

Public utilities
$
6,394

 
$
15,062

 
$
140

 
$
21,316

Energy
6,514

 
7,133

 
121

 
13,526

Industrials
13,116

 
44,356

 
181

 
57,291

Consumer goods and services
10,070

 
15,379

 
118

 
25,331

Health care
7,763

 
24,958

 

 
32,721

Technology, media and telecommunications
6,009

 
8,837

 
107

 
14,739

Financial services
11,630

 
98,733

 
51

 
110,312

Nonredeemable preferred stocks
1,037

 
33

 

 
1,070

Total Available-for-Sale Equity Securities
$
62,533

 
$
214,491

 
$
718

 
$
276,306

Total Available-for-Sale Securities
$
2,974,859

 
$
275,588

 
$
19,062

 
$
3,231,385






































12


December 31, 2016
 
Type of Investment
Cost or Amortized Cost
 
Gross Unrealized Appreciation
 
Gross Unrealized Depreciation
 
Fair Value
HELD-TO-MATURITY
 
 
 
 
 
 
 
Fixed maturities:
 
 
 
 
 
 
 
Bonds
 
 
 
 
 
 
 
Corporate bonds - financial services
$
150

 
$

 
$

 
$
150

Mortgage-backed securities
48

 
1

 

 
49

Total Held-to-Maturity Fixed Maturities
$
198

 
$
1

 
$

 
$
199

AVAILABLE-FOR-SALE

 

 

 

Fixed maturities:

 

 

 

Bonds

 

 

 

U.S. Treasury
$
23,216

 
$
87

 
$
108

 
$
23,195

U.S. government agency
76,692

 
1,445

 
540

 
77,597

States, municipalities and political subdivisions
 
 
 
 
 
 
 
General obligations:
 
 
 
 
 
 
 
Midwest
143,747

 
1,808

 
1,412

 
144,143

Northeast
57,731

 
909

 
231

 
58,409

South
129,475

 
1,249

 
2,355

 
128,369

West
114,524

 
1,380

 
2,173

 
113,731

Special revenue:
 
 
 
 
 
 
 
Midwest
167,430

 
2,313

 
1,433

 
168,310

Northeast
70,202

 
487

 
2,624

 
68,065

South
244,225

 
1,753

 
6,791

 
239,187

West
134,287

 
1,509

 
4,052

 
131,744

Foreign bonds
62,995

 
2,239

 

 
65,234

Public utilities
212,360

 
3,761

 
447

 
215,674

Corporate bonds

 


 

 

Energy
107,084

 
2,195

 
419

 
108,860

Industrials
225,526

 
5,359

 
982

 
229,903

Consumer goods and services
178,135

 
3,847

 
295

 
181,687

Health care
81,211

 
2,063

 
151

 
83,123

Technology, media and telecommunications
143,402

 
2,029

 
819

 
144,612

Financial services
269,981

 
5,328

 
1,358

 
273,951

Mortgage-backed securities
17,288

 
201

 
241

 
17,248

Collateralized mortgage obligations
 
 
 
 
 
 
 
Government national mortgage association
145,947

 
1,279

 
2,766

 
144,460

Federal home loan mortgage corporation
176,226

 
1,638

 
3,406

 
174,458

Federal national mortgage association
101,414

 
1,816

 
1,334

 
101,896

Asset-backed securities
4,407

 
145

 
282

 
4,270

Total Available-for-Sale Fixed Maturities
$
2,887,505

 
$
44,840

 
$
34,219

 
$
2,898,126

Equity securities:

 

 

 

Common stocks

 

 

 



13


Public utilities
$
6,394

 
$
13,465

 
$
188

 
$
19,671

Energy
6,514

 
8,555

 
22

 
15,047

Industrials
13,252

 
38,715

 
173

 
51,794

Consumer goods and services
10,324

 
13,851

 
58

 
24,117

Health care
7,763

 
19,657

 

 
27,420

Technology, media and telecommunications
5,931

 
9,476

 
38

 
15,369

Financial services
17,289

 
98,728

 
67

 
115,950

Nonredeemable preferred stocks
1,037

 
11

 

 
1,048

Total Available-for-Sale Equity Securities
$
68,504

 
$
202,458

 
$
546

 
$
270,416

Total Available-for-Sale Securities
$
2,956,009

 
$
247,298

 
$
34,765

 
$
3,168,542

Maturities
The amortized cost and fair value of held-to-maturity, available-for-sale and trading fixed maturity securities at June 30, 2017, by contractual maturity, are shown in the following table. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Asset-backed securities, mortgage-backed securities and collateralized mortgage obligations may be subject to prepayment risk and are therefore not categorized by contractual maturity.
 
Held-To-Maturity
 
Available-For-Sale
 
Trading
June 30, 2017
Amortized Cost
 
Fair Value
 
Amortized Cost
 
Fair Value
 
Amortized Cost
 
Fair Value
Due in one year or less
$
150

 
$
150

 
$
141,196

 
$
142,309

 
$
2,958

 
$
3,300

Due after one year through five years

 

 
787,370

 
808,996

 
7,532

 
8,733

Due after five years through 10 years

 

 
769,568

 
788,131

 
1,302

 
1,379

Due after 10 years

 

 
741,552

 
740,576

 
2,153

 
2,416

Asset-backed securities

 

 
4,379

 
4,798

 

 

Mortgage-backed securities
42

 
42

 
15,515

 
15,498

 

 

Collateralized mortgage obligations

 

 
452,746

 
454,771

 

 

 
$
192

 
$
192

 
$
2,912,326

 
$
2,955,079

 
$
13,945

 
$
15,828















14


Net Realized Investment Gains and Losses
Net realized gains on disposition of investments are computed using the specific identification method and are included in the computation of net income. A summary of the components of net realized investment gains (losses) is as follows:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
Net realized investment gains (losses)
 
 
 
 
 
 
 
Fixed maturities:
 
 
 
 
 
 
 
Available-for-sale
$
676

 
$
846

 
$
2,671

 
$
1,362

Trading securities
 
 
 
 
 
 
 
Change in fair value
176

 
98

 
547

 
371

Sales
(11
)
 
461

 
46

 
461

Equity securities:
 
 
 
 
 
 
 
Available-for-sale
1,299

 

 
2,709

 
984

Trading securities
 
 
 
 
 
 
 
Change in fair value
245

 
237

 
356

 
330

Sales
6

 
(26
)
 
16

 
(26
)
Short-term investments

 
(43
)
 

 

Cash equivalents

 
23

 

 
169

Real estate
289

 

 
289

 

Total net realized investment gains
$
2,680

 
$
1,596

 
$
6,634

 
$
3,651

The proceeds and gross realized gains on the sale of available-for-sale fixed maturity securities are as follows:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
Proceeds from sales
$

 
$
1,074

 
$
5,059

 
$
3,042

Gross realized gains

 
54

 
2,300

 
975

Gross realized losses

 

 
(78
)
 

There were no sales of held-to-maturity securities during the three- and six-month periods ended June 30, 2017 and 2016.

Our investment portfolio includes trading securities with embedded derivatives. These securities are primarily convertible securities which are recorded at fair value. Income or loss, including the change in the fair value of these trading securities, is recognized currently in earnings as a component of net realized investment gains. Our portfolio of trading securities had a fair value of $22,440 and $20,034 at June 30, 2017 and December 31, 2016, respectively.

Funding Commitment

Pursuant to an agreement with one of our limited liability partnership investments, we are contractually committed through December 31, 2023 to make capital contributions upon request of the partnership. Our remaining potential contractual obligation was $5,576 at June 30, 2017.







15


Unrealized Appreciation
A summary of the changes in net unrealized investment appreciation during the reporting period is as follows:
 
Six Months Ended June 30,
 
2017
 
2016
Change in net unrealized investment appreciation
 
 
 
Available-for-sale fixed maturities
$
32,132

 
$
98,381

Available-for-sale equity securities
11,861

 
12,700

Deferred policy acquisition costs
(3,753
)
 
(20,220
)
Income tax effect
(14,084
)
 
(31,802
)
Total change in net unrealized investment appreciation, net of tax
$
26,156

 
$
59,059

We continually monitor the difference between our cost basis and the estimated fair value of our investments. Our accounting policy for impairment recognition requires other-than-temporary impairment ("OTTI") charges to be recorded when we determine that it is more likely than not that we will be unable to collect all amounts due according to the contractual terms of the fixed maturity security or that the anticipated recovery in fair value of the equity security will not occur in a reasonable amount of time. Impairment charges on investments are recorded based on the fair value of the investments at the measurement date or based on the value calculated using a discounted cash flow model. Credit-related impairments on fixed maturity securities that we do not plan to sell, and for which we are not more likely than not to be required to sell, are recognized in net income. Any non-credit related impairment is recognized as a component of other comprehensive income. Factors considered in evaluating whether a decline in value is other-than-temporary include: the length of time and the extent to which fair value has been less than cost; the financial condition and near-term prospects of the issuer; our intention to hold the investment; and the likelihood that we will be required to sell the investment.
The tables on the following pages summarize our fixed maturity and equity securities that were in an unrealized loss position at June 30, 2017 and December 31, 2016. The securities are presented by the length of time they have been continuously in an unrealized loss position. It is possible that we could recognize OTTI charges in future periods on securities held at June 30, 2017, if future events or information cause us to determine that a decline in fair value is other-than-temporary.
We have evaluated the near-term prospects of the issuers of our fixed maturity securities in relation to the severity and duration of the unrealized loss and determined that these losses did not warrant the recognition of an OTTI charge at June 30, 2017 or at June 30, 2016. We have no intent to sell, and it is more likely than not that we will not be required to sell, these securities until the fair value recovers to at least equal our cost basis or the securities mature.
We have evaluated the near-term prospects of the issuers of our equity securities in relation to the severity and duration of the unrealized loss and determined that these losses did not warrant the recognition of an OTTI charge at June 30, 2017 or at June 30, 2016. Our largest unrealized loss greater than 12 months on an individual equity security at June 30, 2017 was $173. We have no intention to sell any of these securities prior to a recovery in value, but will continue to monitor the fair value reported for these securities as part of our overall process to evaluate investments for OTTI recognition.









16


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2017
Less than 12 months
 
12 months or longer
 
Total
Type of Investment
Number
of Issues
 
Fair
Value
 
Gross Unrealized
Depreciation
 
Number
of Issues
 
Fair
Value
 
Gross Unrealized Depreciation
 
Fair
Value
 
Gross Unrealized Depreciation
AVAILABLE-FOR-SALE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bonds
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury
4

 
$
10,159

 
$
78

 
2

 
$
1,604

 
$
2

 
$
11,763

 
$
80

U.S. government agency
8

 
33,669

 
424

 

 

 

 
33,669

 
424

States, municipalities and political subdivisions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
General obligations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Midwest
5

 
17,233

 
381

 
1

 
5,254

 
174

 
22,487

 
555

Northeast
1

 
3,574

 
91

 

 

 

 
3,574

 
91

South
15

 
36,447

 
839

 
2

 
9,271

 
511

 
45,718

 
1,350

West
9

 
29,069

 
1,061

 
1

 
2,029

 
104

 
31,098

 
1,165

Special revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Midwest
12

 
28,702

 
678

 

 

 

 
28,702

 
678

Northeast
16

 
48,096

 
1,229

 

 

 

 
48,096

 
1,229

South
33

 
82,121

 
2,461

 
4

 
15,640

 
1,086

 
97,761

 
3,547

West
27

 
69,324

 
2,377

 

 

 

 
69,324

 
2,377

Public utilities
8

 
16,557

 
235

 
1

 
92

 
5

 
16,649

 
240

Corporate bonds
 
 
 
 
 
 
 
 
 
 
 
 


 


Energy
5

 
12,755

 
200

 

 

 

 
12,755

 
200

Industrials
5

 
9,004

 
75

 
2

 
4,803

 
144

 
13,807

 
219

Consumer goods and services
8

 
13,832

 
157

 

 

 

 
13,832

 
157

Technology, media and telecommunications
7

 
20,121

 
62

 
2

 
10,584

 
113

 
30,705

 
175

Financial services
15

 
36,947

 
526

 

 

 

 
36,947

 
526

Mortgage-backed securities
14

 
8,927

 
152

 
2

 
996

 
43

 
9,923

 
195

Collateralized mortgage obligations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government national mortgage association
18

 
56,024

 
945

 
8

 
18,631

 
545

 
74,655

 
1,490

Federal home loan mortgage corporation
26

 
107,586

 
2,693

 
3

 
4,814

 
201

 
112,400

 
2,894

Federal national mortgage association
12

 
33,550

 
480

 
5

 
8,327

 
272

 
41,877

 
752

Total Available-for-Sale Fixed Maturities
248

 
$
673,697

 
$
15,144

 
33

 
$
82,045

 
$
3,200

 
$
755,742

 
$
18,344

Equity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stocks
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Public utilities

 
$

 
$

 
1

 
$
168

 
$
140

 
$
168

 
$
140

Energy
2

 
553

 
95

 
1

 
160

 
26

 
713

 
121

Industrials

 

 

 
6

 
231

 
181

 
231

 
181

Consumer goods and services
1

 
22

 
1

 
4

 
215

 
117

 
237

 
118

Technology, media and telecommunications
3

 
544

 
55

 
1

 
14

 
52

 
558

 
107

Financial services
1

 
52

 
3

 
2

 
166

 
48

 
218

 
51

Total Available-for-Sale Equity Securities
7

 
$
1,171

 
$
154

 
15

 
$
954

 
$
564

 
$
2,125

 
$
718

Total Available-for-Sale Securities
255

 
$
674,868

 
$
15,298

 
48

 
$
82,999

 
$
3,764

 
$
757,867

 
$
19,062





17


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
Less than 12 months
 
12 months or longer
 
Total
Type of Investment
Number
of Issues
 
Fair
Value
 
Gross Unrealized Depreciation
 
Number
of Issues
 
Fair
Value
 
Gross Unrealized Depreciation
 
Fair
Value
 
Gross Unrealized Depreciation
AVAILABLE-FOR-SALE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bonds
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury
9

 
$
10,800

 
$
108

 

 
$

 
$

 
$
10,800

 
$
108

U.S. government agency
10

 
36,593

 
540

 

 

 

 
36,593

 
540

States, municipalities and political subdivisions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
General obligations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Midwest
27

 
40,545

 
1,412

 

 

 

 
40,545

 
1,412

Northeast
9

 
9,874

 
231

 

 

 

 
9,874

 
231

South
37

 
53,699

 
2,355