XML 70 R10.htm IDEA: XBRL DOCUMENT v3.19.3
Investments
 9 Months Ended
Sep. 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.

 
September 30, 2019
(dollars in thousands)
Amortized
Cost
 
Gross
Unrealized
Holding
Gains
 
Gross
Unrealized
Holding
Losses
 
Estimated
Fair
Value
Fixed maturities:
 
 
 
 
 
 
 
U.S. Treasury securities
$
293,954

 
$
3,201

 
$
(199
)
 
$
296,956

U.S. government-sponsored enterprises
331,356

 
28,628

 
(11
)
 
359,973

Obligations of states, municipalities and political subdivisions
4,047,517

 
272,703

 
(112
)
 
4,320,108

Foreign governments
1,471,214

 
158,652

 
(14,252
)
 
1,615,614

Commercial mortgage-backed securities
1,708,617

 
81,696

 
(230
)
 
1,790,083

Residential mortgage-backed securities
868,317

 
42,015

 
(663
)
 
909,669

Asset-backed securities
9,881

 
46

 
(3
)
 
9,924

Corporate bonds
871,042

 
37,905

 
(7,249
)
 
901,698

Total fixed maturities
9,601,898

 
624,846

 
(22,719
)
 
10,204,025

Short-term investments
1,546,129

 
364

 
(1,100
)
 
1,545,393

Investments, available-for-sale
$
11,148,027

 
$
625,210

 
$
(23,819
)
 
$
11,749,418


 
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.

 
September 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
$
7,481

 
$
(6
)
 
$
81,674

 
$
(193
)
 
$
89,155

 
$
(199
)
U.S. government-sponsored enterprises
—

 
—

 
35,386

 
(11
)
 
35,386

 
(11
)
Obligations of states, municipalities and political subdivisions
1,053

 
(13
)
 
25,289

 
(99
)
 
26,342

 
(112
)
Foreign governments
157,525

 
(5,764
)
 
166,998

 
(8,488
)
 
324,523

 
(14,252
)
Commercial mortgage-backed securities
—

 
—

 
34,144

 
(230
)
 
34,144

 
(230
)
Residential mortgage-backed securities
2,105

 
(9
)
 
71,317

 
(654
)
 
73,422

 
(663
)
Asset-backed securities
—

 
—

 
2,242

 
(3
)
 
2,242

 
(3
)
Corporate bonds
168,843

 
(5,862
)
 
78,519

 
(1,387
)
 
247,362

 
(7,249
)
Total fixed maturities
337,007

 
(11,654
)
 
495,569

 
(11,065
)
 
832,576

 
(22,719
)
Short-term investments
115,139

 
(1,100
)
 
—

 
—

 
115,139

 
(1,100
)
Total
$
452,146

 
$
(12,754
)
 
$
495,569

 
$
(11,065
)
 
$
947,715

 
$
(23,819
)


At September 30, 2019, the Company held 220 available-for-sale securities with a total estimated fair value of $947.7 million and gross unrealized losses of $23.8 million. Of these 220 securities, 162 securities had been in a continuous unrealized loss position for one year or longer and had a total estimated fair value of $495.6 million and gross unrealized losses of $11.1 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 September 30, 2019 are shown below by contractual maturity.

(dollars in thousands)
Amortized
Cost
 
Estimated
Fair Value
Due in one year or less
$
491,999

 
$
485,791

Due after one year through five years
1,285,281

 
1,310,381

Due after five years through ten years
2,081,192

 
2,197,791

Due after ten years
3,156,611

 
3,500,386

 
7,015,083

 
7,494,349

Commercial mortgage-backed securities
1,708,617

 
1,790,083

Residential mortgage-backed securities
868,317

 
909,669

Asset-backed securities
9,881

 
9,924

Total fixed maturities
$
9,601,898

 
$
10,204,025



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

 
Quarter Ended September 30,
 
Nine Months Ended September 30,
(dollars in thousands)
2019
 
2018
 
2019
 
2018
Interest:
 
 
 
 
 
 
 
Municipal bonds (tax-exempt)
$
17,456

 
$
19,588

 
$
54,167

 
$
60,810

Municipal bonds (taxable)
18,442

 
18,634

 
55,634

 
54,487

Other taxable bonds
40,560

 
40,932

 
122,583

 
117,949

Short-term investments, including overnight deposits
14,294

 
13,719

 
38,259

 
36,224

Dividends on equity securities
25,493

 
21,721

 
73,486

 
66,202

Income (loss) from equity method investments
366

 
(3,556
)
 
3,436

 
(3,268
)
Other
797

 
255

 
3,971

 
242

 
117,408

 
111,293

 
351,536

 
332,646

Investment expenses
(4,026
)
 
(4,986
)
 
(12,141
)
 
(12,936
)
Net investment income
$
113,382

 
$
106,307

 
$
339,395

 
$
319,710



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

 
Quarter Ended September 30,
 
Nine Months Ended September 30,
(dollars in thousands)
2019
 
2018
 
2019
 
2018
Realized gains:
 
 
 
 
 
 
 
Sales and maturities of fixed maturities
$
856

 
$
2,916

 
$
2,660

 
$
3,748

Sales and maturities of short-term investments
1,540

 
1,447

 
1,288

 
1,624

Other
124

 
171

 
584

 
1,008

Total realized gains
2,520

 
4,534

 
4,532

 
6,380

Realized losses:
 
 
 
 
 
 
 
Sales and maturities of fixed maturities
(198
)
 
(1,003
)
 
(1,109
)
 
(2,652
)
Sales and maturities of short-term investments
(2,172
)
 
(3,997
)
 
(2,659
)
 
(10,044
)
Other
—

 
(30
)
 
—

 
(2,768
)
Total realized losses
(2,370
)
 
(5,030
)
 
(3,768
)
 
(15,464
)
Net realized investment gains (losses)
150

 
(496
)
 
764

 
(9,084
)
Change in fair value of equity securities:
 
 
 
 
 
 
 
Change in fair value of equity securities sold during the period
(345
)
 
151

 
35,786

 
10,230

Change in fair value of equity securities held at the end of the period
32,339

 
426,420

 
1,033,438

 
407,180

Change in fair value of equity securities
31,994

 
426,571

 
1,069,224

 
417,410

Net investment gains
$
32,144

 
$
426,075

 
$
1,069,988

 
$
408,326

Change in net unrealized gains (losses) on available-for-sale investments included in other comprehensive income (loss):
 
 
 
 
 
 
 
Fixed maturities
$
95,170

 
$
(103,083
)
 
$
509,712

 
$
(384,176
)
Short-term investments
(2,266
)
 
1,417

 
1,595

 
239

Net increase (decrease)
$
92,904

 
$
(101,666
)
 
$
511,307

 
$
(383,937
)