Debt and Equity Securities

12 Months Ended

Dec. 31, 2019

Investments Debt And Equity Securities [Abstract]

NOTE 3. Debt and Equity Securities:

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


	Amortized cost		Gross unrealized					Estimated fair value
(in thousands)	Amortized cost		gains		losses			Estimated fair value
December 31, 2019
U.S. Treasury bonds	$	143,825	$	469	$	(353	)	$	143,941
Municipal bonds		1,043,252		47,804		(217	)		1,090,839
Foreign government bonds		179,554		1,497		(961	)		180,090
Governmental agency bonds		316,318		5,820		(219	)		321,919
Governmental agency mortgage-backed securities		3,241,966		43,599		(7,307	)		3,278,258
U.S. corporate debt securities		535,878		18,466		(972	)		553,372
Foreign corporate debt securities		335,962		9,468		(213	)		345,217
	$	5,796,755	$	127,123	$	(10,242	)	$	5,913,636
December 31, 2018
U.S. Treasury bonds	$	162,904	$	741	$	(1,139	)	$	162,506
Municipal bonds		1,050,134		7,210		(12,309	)		1,045,035
Foreign government bonds		158,885		571		(2,159	)		157,297
Governmental agency bonds		319,115		1,145		(4,093	)		316,167
Governmental agency mortgage-backed securities		3,219,585		12,030		(29,016	)		3,202,599
U.S. corporate debt securities		575,646		1,113		(15,499	)		561,260
Foreign corporate debt securities		274,881		551		(6,485	)		268,947
	$	5,761,150	$	23,361	$	(70,700	)	$	5,713,811

Sales of debt securities resulted in realized gains of $12.1 million, $3.3 million and $5.4 million, realized losses of $6.1 million, $20.3 million and $16.4 million, and proceeds of $1.1 billion, $1.3 billion and $821.0 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Gross unrealized losses on investments in debt 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
December 31, 2019
U.S. Treasury bonds	$	12,507	$	(350	)	$	3,193	$	(3	)	$	15,700	$	(353	)
Municipal bonds		29,333		(207	)		2,827		(10	)		32,160		(217	)
Foreign government bonds		112,167		(934	)		11,001		(27	)		123,168		(961	)
Governmental agency bonds		24,493		(142	)		14,923		(77	)		39,416		(219	)
Governmental agency mortgage-backed securities		719,602		(2,785	)		637,009		(4,522	)		1,356,611		(7,307	)
U.S. corporate debt securities		42,607		(451	)		10,216		(521	)		52,823		(972	)
Foreign corporate debt securities		30,895		(108	)		12,373		(105	)		43,268		(213	)
	$	971,604	$	(4,977	)	$	691,542	$	(5,265	)	$	1,663,146	$	(10,242	)
December 31, 2018
U.S. Treasury bonds	$	19,749	$	(85	)	$	55,615	$	(1,054	)	$	75,364	$	(1,139	)
Municipal bonds		172,387		(1,772	)		369,139		(10,537	)		541,526		(12,309	)
Foreign government bonds		23,654		(1,037	)		42,119		(1,122	)		65,773		(2,159	)
Governmental agency bonds		56,270		(748	)		90,631		(3,345	)		146,901		(4,093	)
Governmental agency mortgage-backed securities		850,459		(6,955	)		982,610		(22,061	)		1,833,069		(29,016	)
U.S. corporate debt securities		374,473		(10,537	)		109,844		(4,962	)		484,317		(15,499	)
Foreign corporate debt securities		175,762		(4,575	)		50,802		(1,910	)		226,564		(6,485	)
	$	1,672,754	$	(25,709	)	$	1,700,760	$	(44,991	)	$	3,373,514	$	(70,700	)

Based on the Company’s review of its debt securities in an unrealized loss position at December 31, 2019, it determined that the losses were primarily the result of changes in interest rates, which were considered to be temporary, rather than a deterioration in credit quality. The Company does not intend to sell and it is not more likely than not that the Company will be required to sell these securities prior to recovering their amortized cost. As such, the Company does not consider these securities to be other-than-temporarily impaired at December 31, 2019.

Investments in debt securities at December 31, 2019, 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	$	76,677	$	61,690	$	1,025	$	4,433	$	143,825
Estimated fair value	$	76,735	$	62,050	$	1,070	$	4,086	$	143,941
Municipal bonds
Amortized cost	$	74,228	$	153,668	$	304,195	$	511,161	$	1,043,252
Estimated fair value	$	74,595	$	156,412	$	319,179	$	540,653	$	1,090,839
Foreign government bonds
Amortized cost	$	25,682	$	75,702	$	63,304	$	14,866	$	179,554
Estimated fair value	$	25,634	$	75,872	$	63,155	$	15,429	$	180,090
Governmental agency bonds
Amortized cost	$	9,181	$	102,604	$	138,955	$	65,578	$	316,318
Estimated fair value	$	9,209	$	103,441	$	141,940	$	67,329	$	321,919
U.S. corporate debt securities
Amortized cost	$	38,783	$	298,185	$	164,297	$	34,613	$	535,878
Estimated fair value	$	38,864	$	307,140	$	170,495	$	36,873	$	553,372
Foreign corporate debt securities
Amortized cost	$	25,981	$	201,863	$	78,656	$	29,462	$	335,962
Estimated fair value	$	26,005	$	205,528	$	83,018	$	30,666	$	345,217
Total debt securities, excluding mortgage-backed securities
Amortized cost	$	250,532	$	893,712	$	750,432	$	660,113	$	2,554,789
Estimated fair value	$	251,042	$	910,443	$	778,857	$	695,036	$	2,635,378
Total mortgage-backed securities
Amortized cost									$	3,241,966
Estimated fair value									$	3,278,258
Total debt securities
Amortized cost									$	5,796,755
Estimated fair value									$	5,913,636

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

Investments in equity securities are as follows:

	Cost		Estimated fair value
(in thousands)	Cost		Estimated fair value
December 31, 2019
Preferred stocks	$	21,849	$	18,094
Common stocks		328,110		374,224
	$	349,959	$	392,318
December 31, 2018
Preferred stocks	$	16,892	$	14,162
Common stocks		341,460		339,373
	$	358,352	$	353,535

Net gains (realized and unrealized) of $66.7 million and net losses (realized and unrealized) of $38.6 million were recognized for the years ended December 31, 2019 and 2018, respectively, as a result of changes in the fair values of equity securities. Included in net gains during the year ended December 31, 2019 were net unrealized gains of $52.3 million and included in net losses during the year ended December 31, 2018 were net unrealized losses of $37.6 million, related to equity securities still held at December 31, 2019 and 2018, respectively. For the year ended December 31, 2017, sales of equity securities resulted in realized gains of $30.2 million and realized losses of $2.1 million.

The composition of the investment portfolio at December 31, 2019, by credit rating, is as follows:

	A- or higher				BBB+ to BBB-				Non-Investment Grade				Total
(in thousands, except percentages)	Estimated fair value		Percentage		Estimated fair value		Percentage		Estimated fair value		Percentage		Estimated fair value		Percentage
Debt securities:
U.S. Treasury bonds	$	143,941		100.0	$	—		—	$	—		—	$	143,941		100.0
Municipal bonds		1,045,628		95.9		43,843		4.0		1,368		0.1		1,090,839		100.0
Foreign government bonds		153,718		85.4		23,549		13.0		2,823		1.6		180,090		100.0
Governmental agency bonds		321,919		100.0		—		—		—		—		321,919		100.0
Governmental agency mortgage-backed securities		3,278,258		100.0		—		—		—		—		3,278,258		100.0
U.S. corporate debt securities		244,883		44.2		226,098		40.9		82,391		14.9		553,372		100.0
Foreign corporate debt securities		136,172		39.4		178,779		51.8		30,266		8.8		345,217		100.0
Total debt securities		5,324,519		90.0		472,269		8.0		116,848		2.0		5,913,636		100.0
Preferred stocks		46		0.3		16,865		93.2		1,183		6.5		18,094		100.0
Total	$	5,324,565		89.8	$	489,134		8.2	$	118,031		2.0	$	5,931,730		100.0

Included in debt securities at December 31, 2019, were bank loans totaling $80.7 million, of which $72.1 million were non-investment grade; high yield corporate debt securities totaling $35.3 million, all of which were non-investment grade; and emerging market debt securities totaling $80.2 million, of which $8.1 million were non-investment grade.

The composition of the debt securities portfolio in an unrealized loss position at December 31, 2019, by credit rating, is as follows:

	A- or higher				BBB+ to BBB-				Non-Investment Grade				Total
(in thousands, except percentages)	Estimated fair value		Percentage		Estimated fair value		Percentage		Estimated fair value		Percentage		Estimated fair value		Percentage
U.S. Treasury bonds	$	15,700		100.0	$	—		—	$	—		—	$	15,700		100.0
Municipal bonds		26,521		82.5		5,639		17.5		—		—		32,160		100.0
Foreign government bonds		114,130		92.7		9,038		7.3		—		—		123,168		100.0
Governmental agency bonds		39,416		100.0		—		—		—		—		39,416		100.0
Governmental agency mortgage-backed securities		1,356,611		100.0		—		—		—		—		1,356,611		100.0
U.S. corporate debt securities		9,883		18.7		22,264		42.2		20,676		39.1		52,823		100.0
Foreign corporate debt securities		26,994		62.4		8,925		20.6		7,349		17.0		43,268		100.0
Total	$	1,589,255		95.5	$	45,866		2.8	$	28,025		1.7	$	1,663,146		100.0

Debt securities in an unrealized loss position at December 31, 2019, included bank loans totaling $18.1 million, of which $17.5 million were non-investment grade; high yield corporate debt securities totaling $9.3 million, all of which were non-investment grade; and emerging market debt securities totaling $19.9 million, of which $1.2 million were non-investment grade.

The credit ratings in the above tables reflect published ratings obtained from globally recognized securities rating agencies. 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- or higher” rating category because the payments of principal and interest are guaranteed by the governmental agency that issued the security.