XML 33 R22.htm IDEA: XBRL DOCUMENT v3.7.0.1
Investments (Tables)
6 Months Ended
Jun. 30, 2017
Schedule of Investments Debt and Equity Securities [Line Items]  
Schedule of Available-for-sale Securities Reconciliation

The period-end cost or amortized cost, gross unrealized gains and losses, and fair value of available-for-sale fixed-maturity and equity securities follow:

 

 

June 30, 2017

 

 

 

Cost or amortized cost

 

 

Gross unrealized gains

 

 

Gross unrealized losses

 

 

Fair value

 

 

 

(In thousands)

 

Securities available-for-sale, carried at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed-maturity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agencies

 

$

9,087

 

 

$

311

 

 

$

(16

)

 

$

9,382

 

Foreign government

 

 

132,465

 

 

 

6,752

 

 

 

(358

)

 

 

138,859

 

States and political subdivisions

 

 

52,101

 

 

 

1,968

 

 

 

(92

)

 

 

53,977

 

Corporates

 

 

1,328,419

 

 

 

53,378

 

 

 

(3,034

)

 

 

1,378,763

 

Residential mortgage-backed securities

 

 

94,643

 

 

 

4,409

 

 

 

(116

)

 

 

98,936

 

Commercial mortgage-backed securities

 

 

125,096

 

 

 

2,880

 

 

 

(316

)

 

 

127,660

 

Other asset-backed securities

 

 

81,079

 

 

 

482

 

 

 

(155

)

 

 

81,406

 

Total fixed-maturity securities(1)

 

 

1,822,890

 

 

 

70,180

 

 

 

(4,087

)

 

 

1,888,983

 

Equity securities

 

 

35,369

 

 

 

10,667

 

 

 

(100

)

 

 

45,936

 

Total fixed-maturity and equity securities

 

$

1,858,259

 

 

$

80,847

 

 

$

(4,187

)

 

$

1,934,919

 

 

(1)

Includes approximately $0.1 million of other-than-temporary impairment (“OTTI”) losses related to corporates and mortgage- and asset-backed securities recognized in accumulated other comprehensive income.

 

 

December 31, 2016

 

 

 

Cost or amortized cost

 

 

Gross unrealized gains

 

 

Gross unrealized losses

 

 

Fair value

 

 

 

(In thousands)

 

Securities available-for-sale, carried at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed-maturity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agencies

 

$

10,148

 

 

$

350

 

 

$

(24

)

 

$

10,474

 

Foreign government

 

 

124,274

 

 

 

5,719

 

 

 

(687

)

 

 

129,306

 

States and political subdivisions

 

 

43,950

 

 

 

1,903

 

 

 

(129

)

 

 

45,724

 

Corporates

 

 

1,281,630

 

 

 

49,272

 

 

 

(5,529

)

 

 

1,325,373

 

Residential mortgage-backed securities

 

 

94,708

 

 

 

4,963

 

 

 

(120

)

 

 

99,551

 

Commercial mortgage-backed securities

 

 

107,201

 

 

 

2,712

 

 

 

(470

)

 

 

109,443

 

Other asset-backed securities

 

 

72,772

 

 

 

98

 

 

 

(303

)

 

 

72,567

 

Total fixed-maturity securities(1)

 

 

1,734,683

 

 

 

65,017

 

 

 

(7,262

)

 

 

1,792,438

 

Equity securities

 

 

36,818

 

 

 

8,589

 

 

 

(513

)

 

 

44,894

 

Total fixed-maturity and equity securities

 

$

1,771,501

 

 

$

73,606

 

 

$

(7,775

)

 

$

1,837,332

 

 

(1)

Includes approximately $0.1 million of OTTI related to corporates and mortgage- and asset-backed securities recognized in accumulated other comprehensive income.

Fixed-maturity Securities Classified by Contractual Maturity Date

The scheduled maturity distribution of the available-for-sale fixed-maturity portfolio at June 30, 2017 follows:

 

 

Amortized cost

 

 

Fair value

 

 

 

(In thousands)

 

Due in one year or less

 

$

140,732

 

 

$

142,901

 

Due after one year through five years

 

 

752,673

 

 

 

785,331

 

Due after five years through 10 years

 

 

580,961

 

 

 

599,415

 

Due after 10 years

 

 

47,706

 

 

 

53,334

 

 

 

 

1,522,072

 

 

 

1,580,981

 

Mortgage- and asset-backed securities

 

 

300,818

 

 

 

308,002

 

  Total fixed-maturity securities

 

$

1,822,890

 

 

$

1,888,983

 

 

Net Effect on Stockholders' Equity of Unrealized Gains and Losses on Available-for-sale Securities

The net effect on stockholders’ equity of unrealized gains and losses on available-for-sale investments was as follows:

 

 

June 30, 2017

 

 

December 31, 2016

 

 

 

(In thousands)

 

Net unrealized investment gains including OTTI:

 

 

 

 

 

 

 

 

Fixed-maturity and equity securities

 

$

76,660

 

 

$

65,831

 

OTTI

 

 

83

 

 

 

95

 

Net unrealized investment gains excluding OTTI

 

 

76,743

 

 

 

65,926

 

Deferred income taxes

 

 

(26,860

)

 

 

(23,074

)

Net unrealized investment gains excluding OTTI, net of tax

 

$

49,883

 

 

$

42,852

 

 

Costs and Fair Values of Fixed-Maturity and Equity Securities Classified as Trading Securities

We maintain a portfolio mostly of fixed-maturity securities that are classified as trading securities. The costs and fair values of the fixed-maturity and equity securities classified as trading securities were as follows:

 

 

June 30, 2017

 

 

December 31, 2016

 

 

 

Cost

 

 

Fair value

 

 

Cost

 

 

Fair value

 

 

 

(In thousands)

 

Fixed-maturity securities

 

$

14,238

 

 

$

14,236

 

 

$

7,332

 

 

$

7,332

 

Equity securities

 

 

1,300

 

 

 

1,305

 

 

 

50

 

 

 

51

 

Total fixed-maturity and equity securities

 

$

15,538

 

 

$

15,541

 

 

$

7,382

 

 

$

7,383

 

 

Net Investment Income

Investment Income. The components of net investment income were as follows:

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

(In thousands)

 

Fixed-maturity securities (available-for-sale)

 

$

19,200

 

 

$

18,377

 

 

$

38,269

 

 

$

37,626

 

Fixed-maturity security (held-to-maturity)

 

 

6,087

 

 

 

4,605

 

 

 

11,806

 

 

 

8,760

 

Equity securities

 

 

515

 

 

 

502

 

 

 

1,051

 

 

 

1,021

 

Policy loans and other invested assets

 

 

316

 

 

 

351

 

 

 

622

 

 

 

681

 

Cash and cash equivalents

 

 

246

 

 

 

200

 

 

 

439

 

 

 

349

 

Total return on deposit asset underlying

   10% coinsurance agreement

 

 

770

 

 

 

2,185

 

 

 

1,801

 

 

 

4,385

 

  Gross investment income

 

 

27,134

 

 

 

26,220

 

 

 

53,988

 

 

 

52,822

 

Investment expenses

 

 

(1,305

)

 

 

(1,226

)

 

 

(2,546

)

 

 

(2,435

)

   Investment income net of investment expenses

 

 

25,829

 

 

 

24,994

 

 

 

51,442

 

 

 

50,387

 

Interest expense on surplus note

 

 

(6,087

)

 

 

(4,605

)

 

 

(11,806

)

 

 

(8,760

)

    Net investment income

 

$

19,742

 

 

$

20,389

 

 

$

39,636

 

 

$

41,627

 

 

Schedule of Net Realized Investment Gains and Losses

The components of net realized investment gains (losses) as well as details on gross realized investment gains and losses and proceeds from sales or other redemptions were as follows:

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

(In thousands)

 

Net realized investment gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross gains from sales

 

$

770

 

 

$

4,400

 

 

$

1,064

 

 

$

5,685

 

Gross losses from sales

 

 

(13

)

 

 

(378

)

 

 

(28

)

 

 

(523

)

OTTI losses

 

 

(484

)

 

 

(803

)

 

 

(695

)

 

 

(2,830

)

Gains (losses) from bifurcated options

 

 

(169

)

 

 

221

 

 

 

(103

)

 

 

325

 

Net realized investment gains (losses)

 

$

104

 

 

$

3,440

 

 

$

238

 

 

$

2,657

 

 

Schedule of Securities in Unrealized Loss Position

The following tables summarize, for all available-for-sale securities in an unrealized loss position, the aggregate fair value and the gross unrealized loss by length of time such securities have continuously been in an unrealized loss position:

 

 

June 30, 2017

 

 

 

Less than 12 months

 

 

12 months or longer

 

 

 

Fair value

 

 

Unrealized losses

 

 

Number of securities

 

 

Fair value

 

 

Unrealized losses

 

 

Number of securities

 

 

 

(Dollars in thousands)

 

Fixed-maturity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agencies

 

$

5,247

 

 

$

(16

)

 

 

6

 

 

$

-

 

 

$

-

 

 

 

-

 

Foreign government

 

 

29,301

 

 

 

(314

)

 

 

32

 

 

 

1,272

 

 

 

(44

)

 

 

2

 

States and political subdivisions

 

 

8,187

 

 

 

(92

)

 

 

10

 

 

 

-

 

 

 

-

 

 

 

-

 

Corporates

 

 

145,814

 

 

 

(1,885

)

 

 

125

 

 

 

22,838

 

 

 

(1,149

)

 

 

29

 

Residential mortgage-backed securities

 

 

15,066

 

 

 

(97

)

 

 

8

 

 

 

2,493

 

 

 

(19

)

 

 

9

 

Commercial mortgage-backed securities

 

 

36,044

 

 

 

(266

)

 

 

32

 

 

 

7,585

 

 

 

(50

)

 

 

11

 

Other asset-backed securities

 

 

42,259

 

 

 

(148

)

 

 

43

 

 

 

1,196

 

 

 

(7

)

 

 

2

 

Total fixed-maturity securities

 

 

281,918

 

 

 

(2,818

)

 

 

 

 

 

 

35,384

 

 

 

(1,269

)

 

 

 

 

Equity securities

 

 

403

 

 

 

(11

)

 

 

9

 

 

 

402

 

 

 

(89

)

 

 

7

 

Total fixed-maturity and equity

   securities

 

$

282,321

 

 

$

(2,829

)

 

 

 

 

 

$

35,786

 

 

$

(1,358

)

 

 

 

 

 

 

 

December 31, 2016

 

 

 

Less than 12 months

 

 

12 months or longer

 

 

 

Fair value

 

 

Unrealized losses

 

 

Number of securities

 

 

Fair value

 

 

Unrealized losses

 

 

Number of securities

 

 

 

(Dollars in thousands)

 

Fixed-maturity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agencies

 

$

3,668

 

 

$

(24

)

 

 

4

 

 

$

-

 

 

$

-

 

 

 

-

 

Foreign government

 

 

34,538

 

 

 

(526

)

 

 

36

 

 

 

3,048

 

 

 

(161

)

 

 

3

 

States and political subdivisions

 

 

8,902

 

 

 

(129

)

 

 

12

 

 

 

-

 

 

 

-

 

 

 

-

 

Corporates

 

 

232,070

 

 

 

(3,484

)

 

 

225

 

 

 

45,471

 

 

 

(2,045

)

 

 

51

 

Residential mortgage-backed securities

 

 

15,232

 

 

 

(92

)

 

 

9

 

 

 

3,606

 

 

 

(28

)

 

 

9

 

Commercial mortgage-backed securities

 

 

33,335

 

 

 

(423

)

 

 

33

 

 

 

7,663

 

 

 

(47

)

 

 

11

 

Other asset-backed securities

 

 

48,275

 

 

 

(260

)

 

 

45

 

 

 

1,315

 

 

 

(43

)

 

 

3

 

Total fixed-maturity securities

 

 

376,020

 

 

 

(4,938

)

 

 

 

 

 

 

61,103

 

 

 

(2,324

)

 

 

 

 

Equity securities

 

 

4,179

 

 

 

(269

)

 

 

12

 

 

 

1,852

 

 

 

(244

)

 

 

8

 

Total fixed-maturity and equity

   securities

 

$

380,199

 

 

$

(5,207

)

 

 

 

 

 

$

62,955

 

 

$

(2,568

)

 

 

 

 

 

Amortized Cost and Fair Value of Available-for-sale Fixed-maturity Securities in Default

The amortized cost and fair value of available-for-sale fixed-maturity securities in default were as follows:

 

 

June 30, 2017

 

 

December 31, 2016

 

 

 

Amortized cost

 

 

Fair value

 

 

Amortized cost

 

 

Fair value

 

 

 

(In thousands)

 

Fixed-maturity securities in default

 

$

3

 

 

$

141

 

 

$

5

 

 

$

125

 

 

Impairment Charges in Earnings on Available-for-sale Securities

Impairment charges recognized in earnings on available-for-sale securities were as follows:

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

(In thousands)

 

Impairments on fixed-maturity securities not in default

 

$

459

 

 

$

683

 

 

$

535

 

 

$

2,679

 

Impairments on fixed-maturity securities in default

 

 

-

 

 

 

115

 

 

 

-

 

 

 

119

 

Impairments on equity securities

 

 

25

 

 

 

5

 

 

 

160

 

 

 

32

 

Total impairment charges

 

$

484

 

 

$

803

 

 

$

695

 

 

$

2,830

 

 

Schedule of Net Impairment Losses Recognized in Earnings for AFS Securities

The rollforward of the OTTI recognized in net income for all fixed-maturity securities still held follows:

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

(In thousands)

 

Cumulative OTTI recognized in net income for securities still

     held, beginning of period

 

$

5,759

 

 

$

10,880

 

 

$

5,774

 

 

$

11,856

 

Additions for OTTI securities where no OTTI were recognized

     prior to the beginning of the period

 

 

-

 

 

 

798

 

 

 

-

 

 

 

1,231

 

Additions for OTTI securities where OTTI have been recognized

     prior to the beginning of the period

 

 

459

 

 

 

-

 

 

 

535

 

 

 

1,567

 

Reductions due to sales, maturities, calls, amortization or

     increases in cash flows expected to be collected over the

     remaining life of credit impaired securities

 

 

(643

)

 

 

(3,574

)

 

 

(597

)

 

 

(5,494

)

Reductions for exchanges of securities previously impaired

 

 

-

 

 

 

(615

)

 

 

(137

)

 

 

(1,671

)

  Cumulative OTTI recognized in net income for securities

     still held, end of period

 

$

5,575

 

 

$

7,489

 

 

$

5,575

 

 

$

7,489

 

 

Available-for-Sale [Member]  
Schedule of Investments Debt and Equity Securities [Line Items]  
Schedule of Net Impairment Losses Recognized in Earnings for AFS Securities

Net impairment losses recognized in earnings for available-for-sale securities were as follows:

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

(In thousands)

 

Total impairment losses related to securities which the Company

   does not intend to sell or more-likely-than-not will not be

   required to sell:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total OTTI losses recognized

 

$

459

 

 

$

488

 

 

$

535

 

 

$

929

 

Less portion of OTTI loss recognized in accumulated other

   comprehensive income (loss)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Net impairment losses recognized in earnings for securities

   which the Company does not intend to sell or more-likely-

   than-not will not be required to sell before recovery

 

 

459

 

 

 

488

 

 

 

535

 

 

 

929

 

OTTI losses recognized in earnings for securities which the

   Company intends to sell or more-likely-than-not will be

   required to sell before recovery

 

 

25

 

 

 

315

 

 

 

160

 

 

 

1,901

 

Net impairment losses recognized in earnings

 

$

484

 

 

$

803

 

 

$

695

 

 

$

2,830