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Investments
 6 Months Ended
Jun. 30, 2019
Investments, Debt and Equity Securities [Abstract]  
Investments 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.

 
June 30, 2019
(dollars in thousands)
Amortized
Cost
 
Gross
Unrealized
Holding
Gains
 
Gross
Unrealized
Holding
Losses
 
Estimated
Fair
Value
Fixed maturities:
 
 
 
 
 
 
 
U.S. Treasury securities
$
295,201

 
$
2,894

 
$
(422
)
 
$
297,673

U.S. government-sponsored enterprises
337,100

 
19,863

 
(104
)
 
356,859

Obligations of states, municipalities and political subdivisions
4,140,140

 
222,904

 
(847
)
 
4,362,197

Foreign governments
1,478,894

 
160,709

 
(7,028
)
 
1,632,575

Commercial mortgage-backed securities
1,709,453

 
52,568

 
(3,999
)
 
1,758,022

Residential mortgage-backed securities
877,279

 
34,118

 
(1,428
)
 
909,969

Asset-backed securities
11,150

 
56

 
(10
)
 
11,196

Corporate bonds
902,466

 
30,372

 
(2,689
)
 
930,149

Total fixed maturities
9,751,683

 
523,484

 
(16,527
)
 
10,258,640

Short-term investments
1,382,042

 
1,911

 
(381
)
 
1,383,572

Investments, available-for-sale
$
11,133,725

 
$
525,395

 
$
(16,908
)
 
$
11,642,212


 
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.

 
June 30, 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
$
7,467

 
$
(15
)
 
$
100,175

 
$
(407
)
 
$
107,642

 
$
(422
)
U.S. government-sponsored enterprises
—

 
—

 
40,324

 
(104
)
 
40,324

 
(104
)
Obligations of states, municipalities and political subdivisions
3,250

 
(18
)
 
90,245

 
(829
)
 
93,495

 
(847
)
Foreign governments
79,769

 
(2,956
)
 
161,043

 
(4,072
)
 
240,812

 
(7,028
)
Commercial mortgage-backed securities
—

 
—

 
310,891

 
(3,999
)
 
310,891

 
(3,999
)
Residential mortgage-backed securities
2,423

 
(1
)
 
103,658

 
(1,427
)
 
106,081

 
(1,428
)
Asset-backed securities
—

 
—

 
4,052

 
(10
)
 
4,052

 
(10
)
Corporate bonds
45,258

 
(1,295
)
 
161,727

 
(1,394
)
 
206,985

 
(2,689
)
Total fixed maturities
138,167

 
(4,285
)
 
972,115

 
(12,242
)
 
1,110,282

 
(16,527
)
Short-term investments
17,045

 
(316
)
 
1,777

 
(65
)
 
18,822

 
(381
)
Total
$
155,212

 
$
(4,601
)
 
$
973,892

 
$
(12,307
)
 
$
1,129,104

 
$
(16,908
)


At June 30, 2019, the Company held 304 available-for-sale securities with a total estimated fair value of $1.1 billion and gross unrealized losses of $16.9 million. Of these 304 securities, 267 securities had been in a continuous unrealized loss position for one year or longer and had a total estimated fair value of $973.9 million and gross unrealized losses of $12.3 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 June 30, 2019 are shown below by contractual maturity.

(dollars in thousands)
Amortized
Cost
 
Estimated
Fair Value
Due in one year or less
$
457,283

 
$
454,221

Due after one year through five years
1,348,961

 
1,380,636

Due after five years through ten years
2,078,025

 
2,188,372

Due after ten years
3,269,532

 
3,556,224

 
7,153,801

 
7,579,453

Commercial mortgage-backed securities
1,709,453

 
1,758,022

Residential mortgage-backed securities
877,279

 
909,969

Asset-backed securities
11,150

 
11,196

Total fixed maturities
$
9,751,683

 
$
10,258,640



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

 
Quarter Ended June 30,
 
Six Months Ended June 30,
(dollars in thousands)
2019
 
2018
 
2019
 
2018
Interest:
 
 
 
 
 
 
 
Municipal bonds (tax-exempt)
$
17,885

 
$
20,287

 
$
36,711

 
$
41,222

Municipal bonds (taxable)
18,613

 
18,220

 
37,192

 
35,853

Other taxable bonds
41,242

 
39,548

 
82,023

 
77,017

Short-term investments, including overnight deposits
13,753

 
11,915

 
23,965

 
22,505

Dividends on equity securities
22,207

 
20,474

 
47,993

 
44,481

Income (loss) from equity method investments
1,174

 
(1,490
)
 
3,070

 
288

Other
873

 
97

 
3,174

 
(13
)
 
115,747

 
109,051

 
234,128

 
221,353

Investment expenses
(3,916
)
 
(3,664
)
 
(8,115
)
 
(7,950
)
Net investment income
$
111,831

 
$
105,387

 
$
226,013

 
$
213,403



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

 
Quarter Ended June 30,
 
Six Months Ended June 30,
(dollars in thousands)
2019
 
2018
 
2019
 
2018
Realized gains:
 
 
 
 
 
 
 
Sales and maturities of fixed maturities
$
1,661

 
$
1,085

 
$
1,804

 
$
1,226

Sales and maturities of short-term investments
499

 
21

 
1,334

 
787

Other
452

 
789

 
460

 
867

Total realized gains
2,612

 
1,895

 
3,598

 
2,880

Realized losses:
 
 
 
 
 
 
 
Sales and maturities of fixed maturities
(630
)
 
(1,092
)
 
(911
)
 
(2,044
)
Sales and maturities of short-term investments
(2,049
)
 
(7,609
)
 
(2,073
)
 
(6,657
)
Other
—

 
(836
)
 
—

 
(2,767
)
Total realized losses
(2,679
)
 
(9,537
)
 
(2,984
)
 
(11,468
)
Net realized investment gains (losses)
(67
)
 
(7,642
)
 
614

 
(8,588
)
Change in fair value of equity securities:
 
 
 
 
 
 
 
Change in fair value of equity securities sold during the period
202

 
9,631

 
26,616

 
13,897

Change in fair value of equity securities held at the end of the period
425,518

 
103,260

 
1,010,614

 
(23,058
)
Change in fair value of equity securities
425,720

 
112,891

 
1,037,230

 
(9,161
)
Net investment gains (losses)
$
425,653

 
$
105,249

 
$
1,037,844

 
$
(17,749
)
Change in net unrealized gains on available-for-sale investments included in other comprehensive income (loss):
 
 
 
 
 
 
 
Fixed maturities
$
197,248

 
$
(143,593
)
 
$
414,542

 
$
(281,093
)
Short-term investments
2,506

 
5,499

 
3,861

 
(1,178
)
Net increase (decrease)
$
199,754

 
$
(138,094
)
 
$
418,403

 
$
(282,271
)