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Investments
 12 Months Ended
Dec. 31, 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. The net unrealized holding gains in the tables below are presented before taxes and any reserve deficiency adjustments for life and annuity benefit reserves. See note 12.

 
December 31, 2019
(dollars in thousands)
Amortized
Cost
 
Gross
Unrealized
Holding
Gains
 
Gross
Unrealized
Holding
Losses
 
Estimated
Fair
Value
Fixed maturities:
 
 
 
 
 
 
 
U.S. Treasury securities
$
282,305

 
$
2,883

 
$
(402
)
 
$
284,786

U.S. government-sponsored enterprises
318,831

 
23,949

 
(200
)
 
342,580

Obligations of states, municipalities and political subdivisions
3,954,779

 
235,915

 
(812
)
 
4,189,882

Foreign governments
1,415,639

 
135,763

 
(9,398
)
 
1,542,004

Commercial mortgage-backed securities
1,761,777

 
57,450

 
(1,382
)
 
1,817,845

Residential mortgage-backed securities
855,641

 
32,949

 
(517
)
 
888,073

Asset-backed securities
11,042

 
28

 
(22
)
 
11,048

Corporate bonds
848,826

 
47,551

 
(1,686
)
 
894,691

Total fixed maturities
9,448,840

 
536,488

 
(14,419
)
 
9,970,909

Short-term investments
1,194,953

 
1,355

 
(60
)
 
1,196,248

Investments, available-for-sale
$
10,643,793

 
$
537,843

 
$
(14,479
)
 
$
11,167,157

 
 
 
 
 
 
 
 
 
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.

 
December 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
$
36,862

 
$
(361
)
 
$
46,518

 
$
(41
)
 
$
83,380

 
$
(402
)
U.S. government-sponsored enterprises
24,148

 
(197
)
 
2,868

 
(3
)
 
27,016

 
(200
)
Obligations of states, municipalities and political subdivisions
127,836

 
(702
)
 
6,830

 
(110
)
 
134,666

 
(812
)
Foreign governments
162,907

 
(3,393
)
 
159,888

 
(6,005
)
 
322,795

 
(9,398
)
Commercial mortgage-backed securities
202,530

 
(1,126
)
 
33,853

 
(256
)
 
236,383

 
(1,382
)
Residential mortgage-backed securities
11,706

 
(66
)
 
58,162

 
(451
)
 
69,868

 
(517
)
Asset-backed securities
—

 
—

 
3,632

 
(22
)
 
3,632

 
(22
)
Corporate bonds
41,847

 
(1,287
)
 
40,274

 
(399
)
 
82,121

 
(1,686
)
Total fixed maturities
607,836

 
(7,132
)
 
352,025

 
(7,287
)
 
959,861

 
(14,419
)
Short-term investments
3,316

 
(60
)
 
—

 
—

 
3,316

 
(60
)
Total
$
611,152

 
$
(7,192
)
 
$
352,025

 
$
(7,287
)
 
$
963,177

 
$
(14,479
)


At December 31, 2019, the Company held 201 available-for-sale securities with a total estimated fair value of $963.2 million and gross unrealized losses of $14.5 million. Of these 201 securities, 122 securities had been in a continuous unrealized loss position for one year or longer and had a total estimated fair value of $352.0 million and gross unrealized losses of $7.3 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 December 31, 2019 are shown below by contractual maturity.

(dollars in thousands)
Amortized
Cost
 
Estimated
Fair Value
Due in one year or less
$
337,917

 
$
333,759

Due after one year through five years
1,256,079

 
1,289,760

Due after five years through ten years
2,157,624

 
2,274,569

Due after ten years
3,068,760

 
3,355,855

 
6,820,380

 
7,253,943

Commercial mortgage-backed securities
1,761,777

 
1,817,845

Residential mortgage-backed securities
855,641

 
888,073

Asset-backed securities
11,042

 
11,048

Total fixed maturities
$
9,448,840

 
$
9,970,909



Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties, and the lenders may have the right to put the securities back to the borrower. Based on expected maturities, the estimated average duration of fixed maturities at December 31, 2019 was 5.9 years.

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

 
Years Ended December 31,
(dollars in thousands)
2019
 
2018
 
2017
Interest:
 
 
 
 
 
Municipal bonds (tax-exempt)
$
71,351

 
$
80,016

 
$
87,768

Municipal bonds (taxable)
72,818

 
73,058

 
70,771

Other taxable bonds
162,861

 
159,329

 
145,085

Short-term investments, including overnight deposits
50,425

 
48,765

 
26,772

Dividends on equity securities
100,222

 
90,840

 
82,096

Income (loss) from equity method investments
4,368

 
(1,924
)
 
11,076

Other
5,338

 
881

 
(828
)
 
467,383

 
450,965

 
422,740

Investment expenses
(15,495
)
 
(16,750
)
 
(17,031
)
Net investment income
$
451,888

 
$
434,215

 
$
405,709





e)The following table presents net investment gains (losses) and the change in net unrealized gains included in other comprehensive income (loss).

 
Years Ended December 31,
(dollars in thousands)
2019
 
2018
 
2017
Realized gains:
 
 
 
 
 
Sales and maturities of fixed maturities
$
6,851

 
$
4,221

 
$
5,525

Sales of equity securities (1)
—

 
—

 
40,113

Sales and maturities of short-term investments
1,457

 
1,604

 
—

Other
400

 
1,281

 
6,644

Total realized gains
8,708

 
7,106

 
52,282

Realized losses:
 
 
 
 
 
Sales and maturities of fixed maturities
(2,848
)
 
(5,768
)
 
(1,983
)
Sales of equity securities (1)
—

 
—

 
(1,830
)
Sales and maturities of short-term investments
(2,999
)
 
(10,545
)
 
(699
)
Other-than-temporary impairments
—

 
—

 
(7,589
)
Other
(4,343
)
 
(2,767
)
 
(596
)
Total realized losses
(10,190
)
 
(19,080
)
 
(12,697
)
Net realized investment gains (losses)
(1,482
)
 
(11,974
)
 
39,585

Change in fair value of equity securities: (1)
 
 
 
 
 
Equity securities sold during the period
38,291

 
20,177

 
6,989

Equity securities held at the end of the period
1,564,913

 
(445,799
)
 
(51,877
)
Change in fair value of equity securities (1)
1,603,204

 
(425,622
)
 
(44,888
)
Net investment gains (losses)
$
1,601,722

 
$
(437,596
)
 
$
(5,303
)
Change in net unrealized gains included in other comprehensive income (loss):
 
 
 
 
 
Fixed maturities
$
429,654

 
$
(297,158
)
 
$
89,741

Equity securities (1)
—

 
—

 
1,035,793

Short-term investments
3,626

 
(2,288
)
 
(94
)
Reserve deficiency adjustment for life and annuity benefit reserves (see note 12)
(51,390
)
 
—

 
—

Net increase (decrease)
$
381,890

 
$
(299,446
)
 
$
1,125,440


(1) 
Effective January 1, 2018, the Company adopted ASU No. 2016-01. As a result, equity securities are no longer classified as available-for-sale with unrealized gains and losses recognized in other comprehensive income; rather, all changes in the fair value of equity securities are now recognized in net income. Prior periods have not been restated to conform to the current presentation. Prior to adopting ASU No. 2016-01, the Company recorded certain investments in equity securities at estimated fair value with changes in fair value recorded in net income.

f)Total restricted assets are included on the Company's consolidated balance sheets as follows.

 
December 31,
(dollars in thousands)
2019
 
2018
Investments
$
4,134,164

 
$
4,781,566

Restricted cash and cash equivalents
427,546

 
382,264

Total
$
4,561,710

 
$
5,163,830



The following table presents the components of restricted assets.

 
December 31,
(dollars in thousands)
2019
 
2018
Assets held in trust or on deposit to support underwriting activities
$
4,155,621

 
$
4,780,613

Assets pledged as security for letters of credit
406,089

 
383,217

Total
$
4,561,710

 
$
5,163,830



g)At December 31, 2019 and 2018, investments in securities issued by the U.S. Treasury, U.S. government agencies and U.S. government-sponsored enterprises were the only investments in any one issuer that exceeded 10% of shareholders' equity.

At December 31, 2019, the Company's ten largest equity holdings represented $3.0 billion, or 39%, of the equity portfolio. Investments in the property and casualty insurance industry represented $1.2 billion, or 16%, of the equity portfolio at December 31, 2019. Investments in the property and casualty insurance industry included a $721.8 million investment in the common stock of Berkshire Hathaway Inc.