Note 3 – Debt and Equity Securities

Investments in debt securities, classified as available-for-sale, are as follows:

(in thousands)	Amortized cost		Gross unrealized					Estimated fair value
(in thousands)	Amortized cost		Gains		Losses			Estimated fair value
March 31, 2016
U.S. Treasury bonds	$	142,415	$	1,998	$	(19	)	$	144,394
Municipal bonds		682,795		17,384		(655	)		699,524
Foreign government bonds		128,507		1,378		(308	)		129,577
Governmental agency bonds		353,205		2,161		(425	)		354,941
Governmental agency mortgage-backed securities		2,039,111		11,893		(6,046	)		2,044,958
U.S. corporate debt securities		653,692		12,868		(6,695	)		659,865
Foreign corporate debt securities		225,033		3,044		(2,391	)		225,686
	$	4,224,758	$	50,726	$	(16,539	)	$	4,258,945
December 31, 2015
U.S. Treasury bonds	$	130,252	$	421	$	(1,301	)	$	129,372
Municipal bonds		692,000		12,640		(845	)		703,795
Foreign government bonds		129,984		1,132		(1,015	)		130,101
Governmental agency bonds		419,869		1,023		(2,801	)		418,091
Governmental agency mortgage-backed securities		2,065,728		4,984		(15,039	)		2,055,673
U.S. corporate debt securities		642,869		4,297		(12,483	)		634,683
Foreign corporate debt securities		210,162		1,248		(3,778	)		207,632
	$	4,290,864	$	25,745	$	(37,262	)	$	4,279,347

Investments in equity securities, classified as available-for-sale, are as follows:

	Cost		Gross unrealized					Estimated fair value
(in thousands)	Cost		Gains		Losses			Estimated fair value
March 31, 2016
Preferred stocks	$	19,657	$	385	$	(4,596	)	$	15,446
Common stocks		375,062		18,778		(12,649	)		381,191
	$	394,719	$	19,163	$	(17,245	)	$	396,637
December 31, 2015
Preferred stocks	$	18,305	$	420	$	(3,258	)	$	15,467
Common stocks		307,429		13,103		(14,714	)		305,818
	$	325,734	$	13,523	$	(17,972	)	$	321,285

Sales of debt and equity securities resulted in realized gains of $1.0 million and $3.6 million and realized losses of $2.4 million and $6.2 million for the three months ended March 31, 2016 and 2015, respectively.

Gross unrealized losses on investments in debt and equity securities are as follows:

	Less than 12 months					12 months or longer					Total
(in thousands)	Estimated fair value		Unrealized losses			Estimated fair value		Unrealized losses			Estimated fair value		Unrealized losses
March 31, 2016
Debt securities:
U.S. Treasury bonds	$	36,201	$	(18	)	$	1,669	$	(1	)	$	37,870	$	(19	)
Municipal bonds		53,911		(408	)		20,703		(247	)		74,614		(655	)
Foreign government bonds		12,420		(226	)		1,825		(82	)		14,245		(308	)
Governmental agency bonds		28,989		(126	)		8,013		(299	)		37,002		(425	)
Governmental agency mortgage-backed securities		379,752		(2,487	)		412,197		(3,559	)		791,949		(6,046	)
U.S. corporate debt securities		133,784		(4,013	)		51,549		(2,682	)		185,333		(6,695	)
Foreign corporate debt securities		48,983		(1,395	)		14,060		(996	)		63,043		(2,391	)
Total debt securities		694,040		(8,673	)		510,016		(7,866	)		1,204,056		(16,539	)
Equity securities		122,741		(10,289	)		32,700		(6,956	)		155,441		(17,245	)
Total	$	816,781	$	(18,962	)	$	542,716	$	(14,822	)	$	1,359,497	$	(33,784	)
December 31, 2015
Debt securities:
U.S. Treasury bonds	$	105,701	$	(1,285	)	$	1,654	$	(16	)	$	107,355	$	(1,301	)
Municipal bonds		133,465		(733	)		13,190		(112	)		146,655		(845	)
Foreign government bonds		13,601		(890	)		267		(125	)		13,868		(1,015	)
Governmental agency bonds		191,035		(2,497	)		18,237		(304	)		209,272		(2,801	)
Governmental agency mortgage-backed securities		1,096,301		(9,424	)		213,020		(5,615	)		1,309,321		(15,039	)
U.S. corporate debt securities		361,842		(11,272	)		13,511		(1,211	)		375,353		(12,483	)
Foreign corporate debt securities		102,801		(2,725	)		11,246		(1,053	)		114,047		(3,778	)
Total debt securities		2,004,746		(28,826	)		271,125		(8,436	)		2,275,871		(37,262	)
Equity securities		191,248		(12,068	)		31,974		(5,904	)		223,222		(17,972	)
Total	$	2,195,994	$	(40,894	)	$	303,099	$	(14,340	)	$	2,499,093	$	(55,234	)

Investments in debt securities at March 31, 2016, by contractual maturities, are as follows:

(in thousands)	Due in one year or less		Due after one through five years		Due after five through ten years		Due after ten years		Total
U.S. Treasury bonds
Amortized cost	$	29,278	$	84,413	$	11,792	$	16,932	$	142,415
Estimated fair value	$	29,291	$	85,165	$	12,304	$	17,634	$	144,394
Municipal bonds
Amortized cost	$	41,773	$	311,695	$	193,192	$	136,135	$	682,795
Estimated fair value	$	41,824	$	316,813	$	199,772	$	141,115	$	699,524
Foreign government bonds
Amortized cost	$	5,939	$	108,209	$	6,933	$	7,426	$	128,507
Estimated fair value	$	5,951	$	109,288	$	7,135	$	7,203	$	129,577
Governmental agency bonds
Amortized cost	$	20,842	$	270,610	$	31,507	$	30,246	$	353,205
Estimated fair value	$	20,862	$	271,093	$	31,936	$	31,050	$	354,941
U.S. corporate debt securities
Amortized cost	$	12,859	$	318,771	$	257,677	$	64,385	$	653,692
Estimated fair value	$	12,972	$	322,275	$	259,039	$	65,579	$	659,865
Foreign corporate debt securities
Amortized cost	$	10,983	$	109,046	$	89,960	$	15,044	$	225,033
Estimated fair value	$	10,940	$	109,509	$	89,885	$	15,352	$	225,686
Total debt securities excluding mortgage-backed securities
Amortized cost	$	121,674	$	1,202,744	$	591,061	$	270,168	$	2,185,647
Estimated fair value	$	121,840	$	1,214,143	$	600,071	$	277,933	$	2,213,987
Total mortgage-backed securities
Amortized cost									$	2,039,111
Estimated fair value									$	2,044,958
Total debt securities
Amortized cost									$	4,224,758
Estimated fair value									$	4,258,945

Mortgage-backed securities, which include contractual terms to maturity, are not categorized by contractual maturity because borrowers may have the right to call or prepay obligations with, or without, call or prepayment penalties.

The composition of the investment portfolio at March 31, 2016, by credit rating, is as follows:

	A- Ratings or higher			BBB+ to BBB- Ratings			Non-Investment Grade			Total
(in thousands, except percentages)	Estimated fair value		Percentage	Estimated fair value		Percentage	Estimated fair value		Percentage	Estimated fair value		Percentage
March 31, 2016
Debt securities:
U.S. Treasury bonds	$	144,394	100.0	$	—	—	$	—	—	$	144,394	100.0
Municipal bonds		670,617	95.9		23,887	3.4		5,020	0.7		699,524	100.0
Foreign government bonds		120,950	93.3		7,515	5.8		1,112	0.9		129,577	100.0
Governmental agency bonds		354,941	100.0		—	—		—	—		354,941	100.0
Governmental agency mortgage-backed securities		2,044,958	100.0		—	—		—	—		2,044,958	100.0
U.S. corporate debt securities		296,764	45.0		182,015	27.6		181,086	27.4		659,865	100.0
Foreign corporate debt securities		123,272	54.6		60,524	26.8		41,890	18.6		225,686	100.0
Total debt securities		3,755,896	88.2		273,941	6.4		229,108	5.4		4,258,945	100.0
Preferred stocks		—	—		8,869	57.4		6,577	42.6		15,446	100.0
Total	$	3,755,896	87.9	$	282,810	6.6	$	235,685	5.5	$	4,274,391	100.0

The credit ratings in the above table reflect published ratings obtained from Standard & Poor’s Rating Services, DBRS, Inc., Fitch Ratings, Inc. and Moody’s Investor Services, Inc. If a security was rated differently among the rating agencies, the lowest rating was selected. Governmental agency mortgage-backed securities are not rated by any of the ratings agencies; however, these securities have been included in the above table in the A- Ratings or higher category because the payments of principal and interest are guaranteed by the governmental agency that issued the security.

As of March 31, 2016, the estimated fair value of total debt securities included $125.0 million of bank loans, of which $119.0 million was non-investment grade; $97.5 million of high yield corporate debt securities, all of which was non-investment grade; and $46.6 million of emerging market debt securities, of which $7.6 million was non-investment grade.

The composition of the investment portfolio in an unrealized loss position at March 31, 2016, by credit rating, is as follows:

	A- Ratings or higher			BBB+ to BBB- Ratings			Non-Investment Grade			Total
(in thousands, except percentages)	Estimated fair value		Percentage	Estimated fair value		Percentage	Estimated fair value		Percentage	Estimated fair value		Percentage
March 31, 2016
Debt securities:
U.S. Treasury bonds	$	37,870	100.0	$	—	—	$	—	—	$	37,870	100.0
Municipal bonds		64,560	86.6		5,034	6.7		5,020	6.7		74,614	100.0
Foreign government bonds		7,567	53.1		5,566	39.1		1,112	7.8		14,245	100.0
Governmental agency bonds		37,002	100.0		—	—		—	—		37,002	100.0
Governmental agency mortgage-backed securities		791,949	100.0		—	—		—	—		791,949	100.0
U.S. corporate debt securities		37,102	20.1		59,762	32.2		88,469	47.7		185,333	100.0
Foreign corporate debt securities		14,542	23.1		22,219	35.2		26,282	41.7		63,043	100.0
Total debt securities		990,592	82.3		92,581	7.7		120,883	10.0		1,204,056	100.0
Preferred stocks		—	—		8,869	59.0		6,158	41.0		15,027	100.0
Total	$	990,592	81.3	$	101,450	8.3	$	127,041	10.4	$	1,219,083	100.0

As of March 31, 2016, the estimated fair value of total debt securities in an unrealized loss position included $53.3 million of bank loans, of which $51.4 million was non-investment grade; $57.9 million of high yield corporate debt securities, all of which was non-investment grade; and $17.0 million of emerging market debt securities, of which $6.6 million was non-investment grade.