
	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)

Available for sale debt securities:
Realized gains on disposal	$	888	197	3,379	2,548
Realized losses on disposal	—		—	—	(84)
Held to maturity debt securities:
Realized gains on disposal	2,501		1,246	6,620	2,197
Realized losses on disposal	—		—	—	—

Real estate gains (losses)	2,661		—	2,661	6,888

Other	—		—	—	—

Totals	$	6,050	1,443	12,660	11,549

Disposals in the held to maturity category during the periods shown represent calls initiated by the credit issuer of the debt security. It is the Company's policy to initiate disposals of debt securities in the held to maturity category only in instances in which the credit status of the issuer comes into question and the realization of all or a significant portion of the investment principal of the holding is deemed to be in jeopardy.

In the third quarter of 2020, the Company sold an investment real estate property for a realized gain of $2.7 million. Net real estate gains for the nine months ended September 30, 2019 primarily pertain to the Company's sale of its nursing home operations in Reno, Nevada and San Marcos, Texas as well as a property sold located in Austin, Texas. The sale of the Reno nursing home was completed effective during the first quarter of 2019 and a gain of $5.7 million was realized on the sale of the land and building associated with the operation. The sale of the San Marcos nursing home was concluded during the second quarter of 2019 and the Company recorded a loss of $(2.0) million associated with the sale of the land and building of this operation. The sale of the Company's prior home office was also completed during the second quarter of 2019 and realized a gain on the sale of $3.2 million.

For the three months ended September 30, 2020 and 2019 the percentage of total gains on bonds due to the call of securities was 99.9% and 99.6%, respectively. This includes calls out of the Company's available for sale portfolio of debt securities. For the nine months ended September 30, 2020 and 2019 the percentage of gains on bonds due to the call of securities was 99.8% and 81.0%, respectively.


	Debt Securities Held to Maturity
	Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value	Allowance for Credit Losses
	(In thousands)

U.S. agencies	$	73,153	2,934	—	76,087	(81)
U.S. Treasury	3,798		156	—	3,954	—
States and political subdivisions	437,620		24,976	(124)	462,472	(176)
Foreign governments	1,128		150	—	1,278	—
Public utilities	812,251		71,098	—	883,349	(718)
Corporate	4,549,262		401,764	(7,620)	4,943,406	(4,111)
Commercial mortgage-backed	3,019		34	—	3,053	—
Residential mortgage-backed	944,838		57,854	(1)	1,002,691	—
Asset-backed	2,070		39	—	2,109	—

Totals	$	6,827,139	559,005	(7,745)	7,378,399	(5,086)


	Debt Securities Available for Sale
	Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value	Allowance for Credit Losses
	(In thousands)

States and political subdivisions	$	89,168	8,384	(2)	97,550	—
Foreign governments	9,990		235	—	10,225	—
Public utilities	62,413		5,194	—	67,607	—
Corporate	2,895,799		256,716	(20,349)	3,132,166	—
Commercial mortgage-backed	27,124		1,187	—	28,311	—
Residential mortgage-backed	10,653		1,247	(159)	11,741	—
Asset-backed	61,339		1,759	(42)	63,056	—

Totals	$	3,156,486	274,722	(20,552)	3,410,656	—


	Debt Securities Held to Maturity
	Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
	(In thousands)

U.S. agencies	$	100,910	1,686	—	102,596
U.S. Treasury	3,782		140	—	3,922
States and political subdivisions	431,433		19,440	(84)	450,789
Foreign governments	1,144		55	—	1,199
Public utilities	888,444		36,638	(83)	924,999
Corporate	4,607,826		212,281	(718)	4,819,389
Commercial mortgage-backed	3,032		52	—	3,084
Residential mortgage-backed	1,066,899		32,706	(716)	1,098,889
Asset-backed	2,775		62	(1)	2,836

Totals	$	7,106,245	303,060	(1,602)	7,407,703


	Debt Securities Available for Sale
	Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
	(In thousands)

States and political subdivisions	$	98,037	4,495	(3)	102,529
Foreign governments	9,983		203	—	10,186
Public utilities	67,895		3,476	—	71,371
Corporate	2,921,431		141,705	(2,479)	3,060,657
Commercial mortgage-backed	28,871		1,071	—	29,942
Residential mortgage-backed	12,815		1,077	(117)	13,775
Asset-backed	67,088		1,397	—	68,485

Totals	$	3,206,120	153,424	(2,599)	3,356,945

Unrealized losses for debt securities held to maturity and debt securities available for sale increased at September 30, 2020 from comparable balances at December 31, 2019 primarily due to the widening in interest rate spreads that occurred during the period as a result of COVID-19 effects on financial markets.

Debt securities balances at September 30, 2020 and December 31, 2019 include Ozark National holdings of $335.3 million and $307.2 million in held to maturity and $416.0 million and $415.7 million in available for sale. As part of the acquisition effective January 31, 2019 the Company employed purchase accounting procedures in accordance with GAAP which revalued the acquired investment portfolio to their fair values as of the date of the acquisition. These fair values became the book values for Ozark National from that point going forward. Accordingly, unrealized gains and losses for the Ozark National debt securities represent the changes subsequent to the purchase accounting book values established at the acquisition.


	Debt Securities Held to Maturity
	Less than 12 Months			12 Months or Greater		Total
	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
	(In thousands)



States and political subdivisions	$	13,687	(55)	1,757	(69)	15,444	(124)

Public utilities	—		—	—	—	—	—
Corporate	148,574		(7,464)	5,817	(156)	154,391	(7,620)
Commercial mortgage-backed	—		—	—	—	—	—
Residential mortgage-backed	1,004		(1)	—	—	1,004	(1)
Asset-backed	—		—	—	—	—	—

Totals	$	163,265	(7,520)	7,574	(225)	170,839	(7,745)


	Debt Securities Available for Sale
	Less than 12 Months			12 Months or Greater		Total
	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
	(In thousands)



States and political subdivisions	$	558	(2)	—	—	558	(2)

Public utilities	—		—	—	—	—	—
Corporate	179,742		(17,784)	28,389	(2,565)	208,131	(20,349)
Commercial mortgage-backed	—		—	—	—	—	—
Residential mortgage-backed	—		—	572	(159)	572	(159)
Asset-backed	15,131		(42)	—	—	15,131	(42)

Totals	$	195,431	(17,828)	28,961	(2,724)	224,392	(20,552)


	Debt Securities Held to Maturity
	Less than 12 Months			12 Months or Greater		Total
	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
	(In thousands)



States and political subdivisions	$	5,013	(33)	1,712	(51)	6,725	(84)

Public utilities	2,345		(83)	—	—	2,345	(83)
Corporate	31,419		(337)	17,191	(381)	48,610	(718)
Residential mortgage-backed	25,859		(63)	43,498	(653)	69,357	(716)
Asset-backed	1,349		(1)	—	—	1,349	(1)

Totals	$	65,985	(517)	62,401	(1,085)	128,386	(1,602)


	Debt Securities Available for Sale
	Less than 12 Months			12 Months or Greater		Total
	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
	(In thousands)



States and political subdivisions	$	470	(3)	—	—	470	(3)

Public utilities	—		—	—	—	—	—
Corporate	40,080		(105)	28,582	(2,374)	68,662	(2,479)
Residential mortgage-backed	—		—	710	(117)	710	(117)



Totals	$	40,550	(108)	29,292	(2,491)	69,842	(2,599)

Debt securities. The gross unrealized losses for debt securities are made up of 68 individual issues, or 5.0% of the total debt securities held by the Company at September 30, 2020. The market value of these bonds as a percent of amortized cost approximates 93.3%. Of the 68 securities, 8, or 11.8%, fall in the 12 months or greater aging category; and 45 were rated investment grade at September 30, 2020.

The amortized cost and fair value of investments in debt securities at September 30, 2020, by contractual maturity, are shown below. 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.


	Debt Securities Available for Sale			Debt Securities Held to Maturity
	Amortized Cost		Fair Value	Amortized Cost	Fair Value
	(In thousands)

Due in 1 year or less	$	179,359	182,907	579,550	587,799
Due after 1 year through 5 years	1,361,831		1,450,221	3,004,262	3,204,761
Due after 5 years through 10 years	1,178,727		1,291,931	1,474,459	1,656,357
Due after 10 years	337,453		382,489	818,941	921,629
	3,057,370		3,307,548	5,877,212	6,370,546

Mortgage and asset-backed securities	99,116		103,108	949,927	1,007,853

Totals before allowance for credit losses	3,156,486		3,410,656	6,827,139	7,378,399

Allowance for credit losses	—		—	(5,086)	—

Totals	$	3,156,486	3,410,656	6,822,053	7,378,399

As disclosed in Note (2) New Accounting Pronouncements in the Notes to Condensed Consolidated Financial Statements, the Company adopted new accounting guidance as of January 1, 2020 for credit loss recognition of certain financial assets, including debt securities classified in the held to maturity category. The Company employs a cohort cumulative loss rate method in estimating current expected credit losses with respect to its held to maturity debt securities. This method applies publicly available industry wide statistics of default incidence by defined segmentations of debt security investments combined with future assumptions regarding economic conditions (i.e. GDP forecasts) both in the near term and the long term. The Company utilizes Moody's loss rates by industry type and credit ratings and applies them to each major bond category. These bond categories are further segmented by credit ratings and by maturities of two years and less and more than two years. The following table presents the allowance for credit losses for the three and nine months ended September 30, 2020 and 2019.


	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	Debt Securities Held to Maturity		Debt Securities Available for Sale	Debt Securities Held to Maturity	Debt Securities Available for Sale
	(In thousands)

Balance, beginning of period	$	4,940	—	—	—
Provision January 1, 2020 for adoption of new accounting guidance	—		—	3,334	—

(Releases)/provision during period	146		—	1,752	—

Balance, end of period	$	5,086	—	5,086	—

Provisions to and releases from the allowance for credit losses are recorded in net investment income in the Condensed Consolidated Statements of Earnings (Loss). Previous accounting guidance required the Company to review its portfolio for potential other-than-temporary impairments which would require that affected securities be written down to an adjusted cost basis with the amount of the writedown recorded as part of net realized gains and losses in the Condensed Consolidated Statements of Earnings (Loss).

The Company determines current expected credit losses for available-for-sale debt securities in accordance with FASB ASC Subtopic 326-30 when fair value is less than amortized cost, interest payments are missed and the security is experiencing credit issues. At September 30, 2020, the Company performed additional analyses on certain available-for-sale securities whose market values were negatively impacted by the change in the economic environment precipitated by the COVID-19 pandemic crisis. Based on its review, the Company determined none of these investments required an allowance for credit loss at September 30, 2020. Under the previous guidance, debt securities were not considered to be other-than-temporarily impaired when a decline in market value was attributable to factors such as market volatility, liquidity, spread widening and credit quality in which it was anticipated that a recovery of all amounts due under the contractual terms of the security would occur and the Company had the intent and ability to hold the security until recovery or maturity. There was a $1.9 million and $7.8 million other-than-temporary impairment recorded on a single debt security during the three and nine months ended September 30, 2019, respectively. The Company's operating procedures include monitoring the investment portfolio on an ongoing basis for any changes in issuer facts and circumstances that might lead to future need for a credit loss allowance.


	Debt Securities Held to Maturity
	Amortized Cost		Allowance for Credit Losses	Carrying Value
	(In thousands)

AAA	$	95,861	—	95,861
AA	1,639,976		(379)	1,639,597
A	2,224,126		(939)	2,223,187
BBB	2,737,258		(3,292)	2,733,966
BB and other below investment	129,918		(476)	129,442

Bonds Total	$	6,827,139	(5,086)	6,822,053

A financing receivable is a contractual right to receive money on demand or on fixed or determinable dates that is recognized as an asset in a company's statement of financial position. The Company's mortgage, participation and mezzanine loans on real estate are the only financing receivables included in the Condensed Consolidated Balance Sheets.

Credit and default risk are minimized through strict underwriting guidelines and diversification of underlying property types and geographic locations. In addition to being secured by the property, mortgage loans with leases on the underlying property are often guaranteed by the lease payments. This approach has proved to result in quality mortgage loans with few defaults. Mortgage loan interest income is recognized on an accrual basis with any premium or discount amortized over the life of the loan. Prepayment and late fees are recorded on the date of collection.

Loans in foreclosure, loans considered impaired or loans past due 90 days or more are placed on a non-accrual status. If a mortgage loan is determined to be on non-accrual status, the mortgage loan does not accrue any revenue into the Condensed Consolidated Statements of Earnings (Loss). The loan is independently monitored and evaluated as to potential impairment or foreclosure. If delinquent payments are made and the loan is brought current, then the Company returns the loan to active status and accrues income accordingly. The Company had no mortgage loans past due 90 days or more at September 30, 2020 or 2019 and as a result all interest income was recognized at September 30, 2020 and 2019. As a result of the economic climate change induced by the COVID-19 virus, various mortgage loan borrowers of the Company have requested a temporary forbearance of principal payments on loans in the range of three to nine months. During the nine months ended September 30, 2020 there were eight loans representing an aggregate principal balance of $29.2 million with borrowers meeting specified criteria of the Company that forbearance terms were agreed to.


	September 30, 2020			December 31, 2019
	Amount		%	Amount		%
	(In thousands)			(In thousands)

Mortgage Loans by Loan-to-Value Ratio (1):
Less than 50%	$	52,987	17.4	$	52,778	19.3
50% to 60%	57,744		18.9	56,929		20.8
60% to 70%	148,694		48.7	117,377		43.0
70% to 80%	45,647		15.0	46,013		16.9
80% to 90%	—		—	—		—
Greater than 90%	—		—	—		—
Gross balance	305,072		100.0	273,097		100.0

Allowance for credit losses	(2,357)		(0.8)	(675)		(0.2)

Totals	$	302,715	99.2	$	272,422	99.8

All mortgage loans are analyzed quarterly in order to monitor the financial quality of these assets. Based on ongoing monitoring, mortgage loans with a likelihood of becoming delinquent are identified and placed on an internal “watch list.” Among the criteria that may indicate a potential problem include: major tenant vacancies or bankruptcies, late payments, and loan relief/restructuring requests. The mortgage loan portfolio is analyzed for the need for a valuation allowance on any loan that is on the internal watch list, in the process of foreclosure or that currently has a valuation allowance.

Prior to January 1, 2020, mortgage loans were considered impaired when, based on current information and events, it was probable that the Company would be unable to collect all amounts due according to the contractual terms of the loan agreement. When it was determined that a loan was impaired, a loss was recognized for the difference between the carrying amount of the mortgage loan and the estimated value reduced by the cost to sell. Estimated value was typically based on the loan's observable market price or the fair value of the collateral less cost to sell. Impairments and changes in the valuation allowance were reported in net realized investment gains (losses) in the Condensed Consolidated Statements of Earnings (Loss). The Company held a valuation allowance of $0.7 million at December 31, 2019.

Effective January 1, 2020, the Company implemented FASB ASU 2016-13, Financial Instruments-Credit Losses, which revises the credit loss recognition criteria for certain financial assets measured at amortized cost. The new guidance replaces the existing incurred loss recognition model with an expected loss recognition model (“CECL”). The objective of the CECL model is for the reporting entity to recognize its estimate of current expected credit losses for affected financial assets in a valuation allowance deducted from the amortized cost basis of the related financial assets that results in presenting the net carrying value of the financial assets at the amount expected to be collected. For mortgage loan investments the Company is using the Weighted Average Remaining Maturity ("WARM") method, which uses an average annual charge-off rate applied to each mortgage loan risk category. Under this new accounting guidance, at January 1, 2020 a balance of $1.2 million was recorded which incorporated the previous year-end balance under the prior accounting method. The adjustment resulted in a charge to retained earnings as a change in accounting, net of tax, of $0.4 million. Subsequent changes in the allowance for current expected credit losses are reported in net investment income in the Condensed Consolidated Statements of Earnings (Loss).


	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)

Balance, beginning of the period	$	2,227	675	675	675
Provision January 1, 2020 for adoption of new accounting guidance	—		—	504	—
Provision during the period	130		—	1,178	—
Releases	—		—	—	—

Total ending allowance for credit losses	$	2,357	675	2,357	675

The Company's direct investments in real estate are not a significant portion of its total investment portfolio and totaled approximately $33.9 million and $34.6 million at September 30, 2020 and December 31, 2019, respectively. The Company recognized operating income on real estate properties of approximately $2.2 million and $2.1 million for the first nine months of 2020 and 2019, respectively. In the third quarter of 2020, the Company sold a property located in Travis County, Texas for a realized gain of $2.7 million.