Investments

a)The following tables summarize the Company's available-for-sale investments. Commercial and residential mortgage-backed securities include securities issued by U.S. government-sponsored enterprises and U.S. government agencies.



	March 31, 2019
(dollars in thousands)	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Estimated Fair Value
Fixed maturities:
U.S. Treasury securities	$	272,837	$	1,048	$	(1,113	)	$	272,772
U.S. government-sponsored enterprises	356,042		12,121		(843		)	367,320
Obligations of states, municipalities and political subdivisions	4,206,957		156,087		(6,191		)	4,356,853
Foreign governments	1,481,680		133,912		(8,693		)	1,606,899
Commercial mortgage-backed securities	1,690,466		17,161		(24,016		)	1,683,611
Residential mortgage-backed securities	879,245		15,176		(4,544		)	889,877
Asset-backed securities	13,185		9		(105		)	13,089
Corporate bonds	952,298		26,346		(6,646		)	971,998
Total fixed maturities	9,852,710		361,860		(52,151		)	10,162,419
Short-term investments	755,264		130		(1,106		)	754,288
Investments, available-for-sale	$	10,607,974	$	361,990	$	(53,257	)	$	10,916,707



	December 31, 2018
(dollars in thousands)	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Estimated Fair Value
Fixed maturities:
U.S. Treasury securities	$	248,286	$	308	$	(1,952	)	$	246,642
U.S. government-sponsored enterprises	357,765		5,671		(4,114		)	359,322
Obligations of states, municipalities and political subdivisions	4,285,068		96,730		(28,868		)	4,352,930
Foreign governments	1,482,826		98,356		(21,578		)	1,559,604
Commercial mortgage-backed securities	1,691,572		3,154		(44,527		)	1,650,199
Residential mortgage-backed securities	886,501		6,170		(12,499		)	880,172
Asset-backed securities	19,614		7		(213		)	19,408
Corporate bonds	979,141		13,234		(17,464		)	974,911
Total fixed maturities	9,950,773		223,630		(131,215		)	10,043,188
Short-term investments	1,080,027		443		(2,774		)	1,077,696
Investments, available-for-sale	$	11,030,800	$	224,073	$	(133,989	)	$	11,120,884

b)The following tables summarize gross unrealized investment losses on available-for-sale investments by the length of time that securities have continuously been in an unrealized loss position.



	March 31, 2019
	Less than 12 months					12 months or longer					Total
(dollars in thousands)	Estimated Fair Value		Gross Unrealized Holding Losses			Estimated Fair Value		Gross Unrealized Holding Losses			Estimated Fair Value		Gross Unrealized Holding Losses
Fixed maturities:
U.S. Treasury securities	$	—	$	—		$	127,227	$	(1,113	)	$	127,227	$	(1,113	)
U.S. government-sponsored enterprises	—		—			93,014		(843		)	93,014		(843		)
Obligations of states, municipalities and political subdivisions	4,781		(33		)	370,149		(6,158		)	374,930		(6,191		)
Foreign governments	137,317		(3,048		)	147,720		(5,645		)	285,037		(8,693		)
Commercial mortgage-backed securities	8,865		(157		)	724,587		(23,859		)	733,452		(24,016		)
Residential mortgage-backed securities	1,874		(12		)	245,331		(4,532		)	247,205		(4,544		)
Asset-backed securities	—		—			12,371		(105		)	12,371		(105		)
Corporate bonds	56,587		(1,385		)	312,113		(5,261		)	368,700		(6,646		)
Total fixed maturities	209,424		(4,635		)	2,032,512		(47,516		)	2,241,936		(52,151		)
Short-term investments	74,250		(1,106		)	—		—			74,250		(1,106		)
Total	$	283,674	$	(5,741	)	$	2,032,512	$	(47,516	)	$	2,316,186	$	(53,257	)

At March 31, 2019, the Company held 618 available-for-sale securities with a total estimated fair value of $2.3 billion and gross unrealized losses of $53.3 million. Of these 618 securities, 560 securities had been in a continuous unrealized loss position for one year or longer and had a total estimated fair value of $2.0 billion and gross unrealized losses of $47.5 million. The Company does not intend to sell or believe it will be required to sell these available-for-sale securities before recovery of their amortized cost.



	December 31, 2018
	Less than 12 months					12 months or longer					Total
(dollars in thousands)	Estimated Fair Value		Gross Unrealized Holding Losses			Estimated Fair Value		Gross Unrealized Holding Losses			Estimated Fair Value		Gross Unrealized Holding Losses
Fixed maturities:
U.S. Treasury securities	$	2,922	$	(83	)	$	156,352	$	(1,869	)	$	159,274	$	(1,952	)
U.S. government-sponsored enterprises	88,854		(1,923		)	96,337		(2,191		)	185,191		(4,114		)
Obligations of states, municipalities and political subdivisions	656,573		(12,455		)	453,736		(16,413		)	1,110,309		(28,868		)
Foreign governments	419,764		(14,461		)	84,776		(7,117		)	504,540		(21,578		)
Commercial mortgage-backed securities	653,410		(10,128		)	709,971		(34,399		)	1,363,381		(44,527		)
Residential mortgage-backed securities	276,777		(3,685		)	242,949		(8,814		)	519,726		(12,499		)
Asset-backed securities	1,645		(11		)	17,030		(202		)	18,675		(213		)
Corporate bonds	313,164		(10,965		)	222,761		(6,499		)	535,925		(17,464		)
Total fixed maturities	2,413,109		(53,711		)	1,983,912		(77,504		)	4,397,021		(131,215		)
Short-term investments	197,643		(2,774		)	—		—			197,643		(2,774		)
Total	$	2,610,752	$	(56,485	)	$	1,983,912	$	(77,504	)	$	4,594,664	$	(133,989	)

At December 31, 2018, the Company held 1,005 securities with a total estimated fair value of $4.6 billion and gross unrealized losses of $134.0 million. Of these 1,005 securities, 541 securities had been in a continuous unrealized loss position for one year or longer and had a total estimated fair value of $2.0 billion and gross unrealized losses of $77.5 million.

The Company completes a detailed analysis each quarter to assess whether the decline in the fair value of any investment below its cost basis is deemed other-than-temporary. All available-for-sale securities with unrealized losses are reviewed. The Company considers many factors in completing its quarterly review of securities with unrealized losses for other-than-temporary impairment, including the length of time and the extent to which fair value has been below cost and the financial condition and near-term prospects of the issuer.

For fixed maturities, the Company considers whether it intends to sell the security or if it is more likely than not that it will be required to sell the security before recovery, the implied yield-to-maturity, the credit quality of the issuer and the ability to recover all amounts outstanding when contractually due. For fixed maturities where the Company intends to sell the security or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost, a decline in fair value is considered to be other-than-temporary and is recognized in net income based on the fair value of the security at the time of assessment, resulting in a new cost basis for the security. If the decline in fair value of a fixed maturity below its amortized cost is considered to be other-than-temporary based upon other considerations, the Company compares the estimated present value of the cash flows expected to be collected to the amortized cost of the security. The extent to which the estimated present value of the cash flows expected to be collected is less than the amortized cost of the security represents the credit-related portion of the other-than-temporary impairment, which is recognized in net income, resulting in a new cost basis for the security. Any remaining decline in fair value represents the non-credit portion of the other-than-temporary impairment, which is recognized in other comprehensive income.

c)The amortized cost and estimated fair value of fixed maturities at March 31, 2019 are shown below by contractual maturity.



(dollars in thousands)	Amortized Cost		Estimated Fair Value
Due in one year or less	$	405,074	$	403,559
Due after one year through five years	1,297,910		1,316,382
Due after five years through ten years	2,140,339		2,221,684
Due after ten years	3,426,491		3,634,217
	7,269,814		7,575,842
Commercial mortgage-backed securities	1,690,466		1,683,611
Residential mortgage-backed securities	879,245		889,877
Asset-backed securities	13,185		13,089
Total fixed maturities	$	9,852,710	$	10,162,419

d)The following table presents the components of net investment income.



	Three Months Ended March 31,
(dollars in thousands)	2019			2018
Interest:
Municipal bonds (tax-exempt)	$	18,826		$	20,935
Municipal bonds (taxable)	18,579			17,633
Other taxable bonds	40,781			37,469
Short-term investments, including overnight deposits	10,212			10,590
Dividends on equity securities	25,786			24,007
Income from equity method investments	1,896			1,778
Other	2,301			(110		)
	118,381			112,302
Investment expenses	(4,199		)	(4,286		)
Net investment income	$	114,182		$	108,016

e)The following table presents net investment gains (losses) and the change in net unrealized gains on available-for-sale investments.



	Three Months Ended March 31,
(dollars in thousands)	2019			2018
Realized gains:
Sales and maturities of fixed maturities	$	144		$	141
Sales and maturities of short-term investments	1,591			2,865
Other	8			889
Total realized gains	1,743			3,895
Realized losses:
Sales and maturities of fixed maturities	(280		)	(952		)
Sales and maturities of short-term investments	(782		)	(1,158		)
Other	—			(2,731		)
Total realized losses	(1,062		)	(4,841		)
Net realized investment gains (losses)	681			(946		)
Change in fair value of equity securities:
Change in fair value of equity securities sold during the period	10,558			5,130
Change in fair value of equity securities held at the end of the period	600,952			(127,182		)
Change in fair value of equity securities	611,510			(122,052		)
Net investment gains (losses)	$	612,191		$	(122,998	)
Change in net unrealized gains on available-for-sale investments included in other comprehensive income (loss):
Fixed maturities	$	217,294		$	(144,168	)
Short-term investments	1,355			47
Net increase (decrease)	$	218,649		$	(144,121	)