Investments — Our securities are reported at fair value, with the changes in fair value of these securities (other than hybrid securities and derivative instruments) reported as a component of accumulated other comprehensive income, net of deferred income taxes. The changes in fair value of the hybrid securities and derivative instruments are recorded as a component of net realized gains (losses) on securities.

The following tables present the composition of our investment portfolio by major security type, consistent with our classification of how we manage, monitor, and measure the portfolio. The net holding period gains (losses) represent the amounts realized on our hybrid securities only.



($ in millions)	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Net Holding Period Gains (Losses)		Fair Value		% of Total Fair Value
September 30, 2017
Fixed maturities:
U.S. government obligations	$	4,612.2	$	3.0	$	(20.2	)	$	0	$	4,595.0	17.0	%
State and local government obligations	2,332.2		35.0		(3.1		)	0.1		2,364.2		8.7
Foreign government obligations	24.2		0		0			0		24.2		0.1
Corporate debt securities	5,195.7		32.7		(4.2		)	1.4		5,225.6		19.4
Residential mortgage-backed securities	911.3		12.2		(3.2		)	0		920.3		3.4
Agency residential pass-through obligations	35.7		0		(0.4		)	0		35.3		0.1
Commercial mortgage-backed securities	2,763.7		17.0		(12.8		)	0		2,767.9		10.3
Other asset-backed securities	2,485.6		6.4		(2.0		)	0.2		2,490.2		9.2
Redeemable preferred stocks	222.5		16.4		(2.0		)	0.4		237.3		0.9
Total fixed maturities	18,583.1		122.7		(47.9		)	2.1		18,660.0		69.1
Equity securities:
Nonredeemable preferred stocks	700.6		120.4		(7.3		)	0		813.7		3.0
Common equities	1,485.5		1,729.5		(5.5		)	0		3,209.5		11.9
Short-term investments	4,311.5		0		0			0		4,311.5		16.0
Total portfolio^1,2	$	25,080.7	$	1,972.6	$	(60.7	)	$	2.1	$	26,994.7	100.0	%



($ in millions)	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Net Holding Period Gains (Losses)		Fair Value		% of Total Fair Value
September 30, 2016
Fixed maturities:
U.S. government obligations	$	726.0	$	8.9	$	(0.3	)	$	0	$	734.6	3.1	%
State and local government obligations	2,508.9		58.7		(1.6		)	0		2,566.0		10.9
Foreign government obligations	25.4		0		0			0		25.4		0.1
Corporate debt securities	4,327.5		76.9		(1.8		)	0.7		4,403.3		18.7
Residential mortgage-backed securities	1,582.6		25.3		(15.5		)	1.8		1,594.2		6.8
Agency residential pass-through obligations	43.6		0.5		0			0		44.1		0.2
Commercial mortgage-backed securities	2,249.4		35.1		(6.1		)	0		2,278.4		9.7
Other asset-backed securities	2,037.5		7.9		(0.3		)	0.3		2,045.4		8.7
Redeemable preferred stocks	207.1		19.6		(1.2		)	0		225.5		1.0
Total fixed maturities	13,708.0		232.9		(26.8		)	2.8		13,916.9		59.2
Equity securities:
Nonredeemable preferred stocks	726.6		146.2		(13.9		)	1.2		860.1		3.6
Common equities	1,576.1		1,296.3		(4.4		)	0		2,868.0		12.2
Short-term investments	5,876.2		0		0			0		5,876.2		25.0
Total portfolio^1,2	$	21,886.9	$	1,675.4	$	(45.1	)	$	4.0	$	23,521.2	100.0	%



($ in millions)	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Net Holding Period Gains (Losses)		Fair Value		% of Total Fair Value
December 31, 2016
Fixed maturities:
U.S. government obligations	$	2,899.2	$	0	$	(29.1	)	$	0	$	2,870.1	12.2	%
State and local government obligations	2,509.5		13.8		(20.7		)	0		2,502.6		10.7
Foreign government obligations	24.5		0		0			0		24.5		0.1
Corporate debt securities	4,557.8		17.3		(24.3		)	0.1		4,550.9		19.4
Residential mortgage-backed securities	1,448.5		23.7		(15.0		)	1.5		1,458.7		6.2
Agency residential pass-through obligations	41.2		0		(0.6		)	0		40.6		0.2
Commercial mortgage-backed securities	2,266.9		12.0		(25.5		)	0		2,253.4		9.6
Other asset-backed securities	2,350.7		4.6		(4.4		)	0.2		2,351.1		10.0
Redeemable preferred stocks	188.8		5.1		(2.0		)	0		191.9		0.8
Total fixed maturities	16,287.1		76.5		(121.6		)	1.8		16,243.8		69.2
Equity securities:
Nonredeemable preferred stocks	734.2		135.4		(16.1		)	0		853.5		3.6
Common equities	1,437.5		1,377.0		(2.1		)	0		2,812.4		12.0
Short-term investments	3,572.9		0		0			0		3,572.9		15.2
Total portfolio^1,2	$	22,031.7	$	1,588.9	$	(139.8	)	$	1.8	$	23,482.6	100.0	%

¹Our portfolio reflects the effect of unsettled security transactions and collateral on open derivative positions; at September 30, 2017 and 2016, and December 31, 2016, we had $238.3 million, $185.3 million, and $27.8 million, respectively, included in “other liabilities.”

²The total fair value of the portfolio at September 30, 2017 and 2016, and December 31, 2016, included $1.1 billion, $1.0 billion, and $1.3 billion, respectively, of securities held in a consolidated, non-insurance subsidiary of the holding company, net of any unsettled security transactions.

Short-Term Investments Our short-term investments may include commercial paper and other investments that are expected to mature within one year. We did not enter into any repurchase commitment transactions during the first nine months of 2017 or 2016, and we had no open repurchase commitments at September 30, 2017 and 2016, or December 31, 2016.

Also included in short-term investments are reverse repurchase commitment transactions, where we loan cash to approved counterparties and receive U.S. Treasury Notes pledged as collateral against the cash borrowed. Our exposure to credit risk is limited due to the nature of the collateral (i.e., U.S. Treasury Notes) received. We have counterparty exposure on these trades in the event of a counterparty default to the extent the collateral security’s value is below the amount of cash we delivered to acquire the collateral. The short-term duration of the transactions (primarily overnight) reduces that exposure.

We had no open reverse repurchase commitments at September 30, 2017 or December 31, 2016, compared to $68.0 million open at September 30, 2016. We did not enter into any reverse repurchase commitments for the nine months ended September 30, 2017. During the nine months ended September 30, 2016, our largest outstanding balance of reverse repurchase commitments was $265.0 million, which was open for one day. For the 28 days we invested in these transactions, the average daily balance of reverse repurchase commitments was $122.6 million.

To the extent we enter into repurchase or reverse repurchase transactions, and consistent with past practice, we would elect not to offset these transactions and would report them on a gross basis on our balance sheets despite the option to elect to offset these transactions as long as they were with the same counterparty and subject to an enforceable master netting arrangement.

Hybrid Securities Included in our fixed-maturity and equity securities are hybrid securities, which are reported at fair value:



	September 30,				December 31, 2016
(millions)	2017		2016		December 31, 2016
Fixed maturities:
State and local government obligations	$	2.4	$	0	$	0
Corporate debt securities	114.9		31.2		40.1
Residential mortgage-backed securities	0		175.3		170.5
Other asset-backed securities	7.1		9.5		8.9
Redeemable preferred stocks	35.5		0		0
Total fixed maturities	159.9		216.0		219.5
Equity securities:
Nonredeemable preferred stocks	0		13.6		0
Total hybrid securities	$	159.9	$	229.6	$	219.5

The state and local government obligations in the table above were acquired at a premium and contain a contingently exercisable call feature that allows the issuer, at its discretion, to call the securities at par based on a provision that is unrelated to the economic characteristics of the issuer.

Certain corporate debt securities are accounted for as hybrid securities since they were acquired at a premium and contain a change-in-control put option (derivative) that permits the investor, at its sole option if and when a change in control is triggered, to put the security back to the issuer at a 1% premium to par. Due to this change-in-control put option and the substantial market premium paid to acquire these securities, there is the potential that the election to put, upon the change in control, would result in an acceleration of the recognition of the remaining premium paid on these securities in our results of operations. The put feature limits the potential loss in value that could be experienced in the event a corporate action occurs that results in a change in control that materially diminishes the credit quality of the issuer. Exercises of the puts would result in a loss of $9.6 million as of September 30, 2017, if all of the bonds experienced a simultaneous change in control and we elected to exercise all of our put options. We are under no obligation to exercise the put option we hold if a change in control occurs.

The residential mortgage-backed securities accounted for as hybrid securities are obligations of the issuer with payments of principal based on the performance of a reference pool of loans. This embedded derivative results in the securities incorporating the risk of default from both the issuer and the related loan pool. These securities were sold during 2017.

The other asset-backed security in the table above represents one hybrid security that was acquired at a deep discount to par due to a failing auction, and contains a put option that allows the investor to put that security back to the auction at par if the auction is restored. This embedded derivative had the potential to more than double our initial investment yield at acquisition.

The redeemable preferred stock in the table above represents one hybrid security acquired in 2017 with a provision that requires the issuer, in the event of bankruptcy, to convert the security into an equivalent number of shares of a newly-issued perpetual preferred stock. This embedded derivative has the potential to result in the security converting from a debt instrument to an equity instrument.

During 2016, we sold the nonredeemable preferred stocks referred to in the table above. These securities were perpetual preferred stocks with fixed-rate coupons that have call features, whereby the change in value of the call features was a component of the overall change in value of the preferred stocks.

Fixed Maturities The composition of fixed maturities by maturity at September 30, 2017, was:



(millions)	Cost		Fair Value
Less than one year	$	4,088.1	$	4,105.7
One to five years	11,476.9		11,508.8
Five to ten years	2,873.9		2,901.3
Ten years or greater	144.2		144.2
Total	$	18,583.1	$	18,660.0

Asset-backed securities are classified in the maturity distribution table based upon their projected cash flows. All other securities which do not have a single maturity date are reported based upon expected average maturity. Contractual maturities may differ from expected maturities because the issuers of the securities may have the right to call or prepay obligations.

Gross Unrealized Losses As of September 30, 2017, we had $55.2 million of gross unrealized losses in our fixed-income securities (i.e., fixed-maturity securities and nonredeemable preferred stocks) and $5.5 million in our common equities. We currently do not intend to sell the fixed-income securities and determined that it is more likely that we will not be required to sell these securities for the period of time necessary to recover their cost bases. A review of our fixed-income securities indicated that the issuers were current with respect to their interest obligations and that there was no evidence of any deterioration of the current cash flow projections that would indicate we would not receive the remaining principal at maturity.

For common equities, 95% of our common stock portfolio was indexed to the Russell 1000; as such, this portfolio may contain securities in a loss position for an extended period of time, subject to possible write-downs, as described below. We may retain these securities as long as the portfolio and index correlation remain similar. To the extent there is issuer-specific deterioration, we may write down the securities of that issuer. The remaining 5% of our common stocks were part of a managed equity strategy selected and administered by an external investment advisor. If our review of loss position securities were to indicate there was a fundamental, or market, impairment on these securities that was determined to be other-than-temporary, we would recognize a write-down in accordance with our stated policy.

The following tables show the composition of gross unrealized losses by major security type and by the length of time that individual securities have been in a continuous unrealized loss position:



	Total No. of Sec.	Total Fair Value		Gross Unrealized Losses			Less than 12 Months						12 Months or Greater
($ in millions)	Total No. of Sec.	Total Fair Value		Gross Unrealized Losses			No. of Sec.	Fair Value		Unrealized Losses			No. of Sec.	Fair Value		Unrealized Losses
September 30, 2017
Fixed maturities:
U.S. government obligations	54	$	3,804.0	$	(20.2	)	31	$	2,302.2	$	(7.1	)	23	$	1,501.8	$	(13.1	)
State and local government obligations	169	610.4		(3.1		)	40	141.0		(0.7		)	129	469.4		(2.4		)
Corporate debt securities	113	1,523.8		(4.2		)	59	636.0		(1.1		)	54	887.8		(3.1		)
Residential mortgage-backed securities	126	308.8		(3.2		)	14	37.4		(0.1		)	112	271.4		(3.1		)
Agency residential pass-through obligations	65	32.7		(0.4		)	12	1.8		0			53	30.9		(0.4		)
Commercial mortgage-backed securities	105	1,588.9		(12.8		)	61	1,073.5		(4.6		)	44	515.4		(8.2		)
Other asset-backed securities	148	1,393.2		(2.0		)	103	920.8		(1.0		)	45	472.4		(1.0		)
Redeemable preferred stocks	2	21.4		(2.0		)	1	10.9		0			1	10.5		(2.0		)
Total fixed maturities	782	9,283.2		(47.9		)	321	5,123.6		(14.6		)	461	4,159.6		(33.3		)
Equity securities:
Nonredeemable preferred stocks	3	72.4		(7.3		)	0	0		0			3	72.4		(7.3		)
Common equities	67	52.0		(5.5		)	62	49.3		(4.9		)	5	2.7		(0.6		)
Total equity securities	70	124.4		(12.8		)	62	49.3		(4.9		)	8	75.1		(7.9		)
Total portfolio	852	$	9,407.6	$	(60.7	)	383	$	5,172.9	$	(19.5	)	469	$	4,234.7	$	(41.2	)



	Total No. of Sec.	Total Fair Value		Gross Unrealized Losses			Less than 12 Months						12 Months or Greater
($ in millions)	Total No. of Sec.	Total Fair Value		Gross Unrealized Losses			No. of Sec.	Fair Value		Unrealized Losses			No. of Sec.	Fair Value		Unrealized Losses
September 30, 2016
Fixed maturities:
U.S. government obligations	4	$	104.8	$	(0.3	)	4	$	104.8	$	(0.3	)	0	$	0	$	0
State and local government obligations	151	512.0		(1.6		)	117	409.6		(1.0		)	34	102.4		(0.6		)
Corporate debt securities	52	598.3		(1.8		)	42	541.5		(0.8		)	10	56.8		(1.0		)
Residential mortgage-backed securities	138	915.8		(15.5		)	26	108.8		(0.4		)	112	807.0		(15.1		)
Agency residential pass-through obligations	15	4.2		0			7	1.9		0			8	2.3		0
Commercial mortgage-backed securities	56	610.6		(6.1		)	17	194.7		(1.7		)	39	415.9		(4.4		)
Other asset-backed securities	43	488.7		(0.3		)	16	219.5		(0.1		)	27	269.2		(0.2		)
Redeemable preferred stocks	2	31.8		(1.2		)	0	0		0			2	31.8		(1.2		)
Total fixed maturities	461	3,266.2		(26.8		)	229	1,580.8		(4.3		)	232	1,685.4		(22.5		)
Equity securities:
Nonredeemable preferred stocks	7	187.5		(13.9		)	1	9.9		(0.2		)	6	177.6		(13.7		)
Common equities	86	53.4		(4.4		)	83	49.5		(4.2		)	3	3.9		(0.2		)
Total equity securities	93	240.9		(18.3		)	84	59.4		(4.4		)	9	181.5		(13.9		)
Total portfolio	554	$	3,507.1	$	(45.1	)	313	$	1,640.2	$	(8.7	)	241	$	1,866.9	$	(36.4	)



	Total No. of Sec.	Total Fair Value		Gross Unrealized Losses			Less than 12 Months						12 Months or Greater
($ in millions)	Total No. of Sec.	Total Fair Value		Gross Unrealized Losses			No. of Sec.	Fair Value		Unrealized Losses			No. of Sec.	Fair Value		Unrealized Losses
December 31, 2016
Fixed maturities:
U.S. government obligations	30	$	2,774.0	$	(29.1	)	30	$	2,774.0	$	(29.1	)	0	$	0	$	0
State and local government obligations	618	1,497.9		(20.7		)	584	1,404.3		(19.6		)	34	93.6		(1.1		)
Corporate debt securities	184	2,615.1		(24.3		)	175	2,559.9		(24.0		)	9	55.2		(0.3		)
Residential mortgage-backed securities	178	917.7		(15.0		)	69	175.8		(1.1		)	109	741.9		(13.9		)
Agency residential pass-through obligations	55	36.0		(0.6		)	48	33.9		(0.6		)	7	2.1		0
Commercial mortgage-backed securities	111	1,347.3		(25.5		)	85	1,061.2		(22.9		)	26	286.1		(2.6		)
Other asset-backed securities	103	1,605.2		(4.4		)	89	1,423.3		(3.9		)	14	181.9		(0.5		)
Redeemable preferred stocks	2	31.0		(2.0		)	0	0		0			2	31.0		(2.0		)
Total fixed maturities	1,281	10,824.2		(121.6		)	1,080	9,432.4		(101.2		)	201	1,391.8		(20.4		)
Equity securities:
Nonredeemable preferred stocks	13	329.6		(16.1		)	8	175.2		(3.8		)	5	154.4		(12.3		)
Common equities	75	22.1		(2.1		)	69	19.7		(1.7		)	6	2.4		(0.4		)
Total equity securities	88	351.7		(18.2		)	77	194.9		(5.5		)	11	156.8		(12.7		)
Total portfolio	1,369	$	11,175.9	$	(139.8	)	1,157	$	9,627.3	$	(106.7	)	212	$	1,548.6	$	(33.1	)

Since September 30, 2016, the number of securities in our fixed-maturity portfolio with unrealized losses increased, primarily the result of rising interest rates during the latter part of 2016. A narrowing of credit spreads for the first nine months of 2017 resulted in a decrease in the number of fixed-maturity securities with unrealized losses since December 31, 2016. We had no material decreases in valuation as a result of credit rating downgrades on our fixed-maturity securities. All of the fixed-maturity securities in an unrealized loss position at September 30, 2017 in the table above are current with respect to required principal and interest payments.

Since December 31, 2016, our nonredeemable preferred stocks with unrealized losses decreased to three securities, averaging approximately 9% of their total cost. The decrease in the number of securities is the result of valuation increases in the portfolio. We reviewed these securities and concluded that the unrealized losses are market-related adjustments to the values, which we determined not to be other-than-temporary; we expect to recover our initial investments on these securities. The number of issuers with unrealized losses in our common stock portfolio decreased during the first nine months of 2017. A review of the securities in a loss position did not uncover fundamental issues with the issuers that would indicate other-than-temporary impairments existed. Additionally, market expectations for recovery in the next 12 months would put the fair values at or above our current book values. Lastly, we determined, as of the balance sheet date, that it was not likely these securities would be sold prior to that recovery.

Other-Than-Temporary Impairment (OTTI) The following table shows the total non-credit portion of the OTTI recorded in accumulated other comprehensive income, reflecting the original non-credit loss at the time the credit impairment was determined (i.e., unadjusted for valuation changes subsequent to the original write-down):



	September 30,						December 31, 2016
(millions)	2017			2016			December 31, 2016
Fixed maturities:
Residential mortgage-backed securities	$	(19.7	)	$	(43.3	)	$	(43.3	)
Commercial mortgage-backed securities	(0.4		)	(0.6		)	(0.6		)
Total fixed maturities	$	(20.1	)	$	(43.9	)	$	(43.9	)

The following tables provide rollforwards of the amounts related to credit losses recognized in earnings for the periods ended September 30, 2017 and 2016, for which a portion of the OTTI losses were also recognized in accumulated other comprehensive income at the time the credit impairments were determined and recognized:



	Three Months Ended September 30, 2017
	Mortgage-Backed
(millions)	Residential			Commercial			Total
Balance at June 30, 2017	$	0.2		$	0.1		$	0.3
Credit losses for which an OTTI was not previously recognized	0			0.4			0.4
Reductions for securities sold/matured	0			0			0
Change in recoveries of future cash flows expected to be collected¹	0			0			0
Balance at September 30, 2017	$	0.2		$	0.5		$	0.7

	Nine Months Ended September 30, 2017
	Mortgage-Backed
(millions)	Residential			Commercial			Total
Balance at December 31, 2016	$	11.1		$	0.4		$	11.5
Credit losses for which an OTTI was not previously recognized	0			0.4			0.4
Reductions for securities sold/matured	(10.9		)	(0.3		)	(11.2		)
Change in recoveries of future cash flows expected to be collected¹	0			0			0
Balance at September 30, 2017	$	0.2		$	0.5		$	0.7



	Three Months Ended September 30, 2016
	Mortgage-Backed
(millions)	Residential			Commercial		Total
Balance at June 30, 2016	$	11.8		$	0.4	$	12.2
Credit losses for which an OTTI was not previously recognized	0			0		0
Reductions for securities sold/matured	0			0		0
Change in recoveries of future cash flows expected to be collected¹	(0.3		)	0		(0.3		)
Balance at September 30, 2016	$	11.5		$	0.4	$	11.9

	Nine Months Ended September 30, 2016
	Mortgage-Backed
(millions)	Residential			Commercial		Total
Balance at December 31, 2015	$	12.4		$	0.4	$	12.8
Credit losses for which an OTTI was not previously recognized	0			0		0
Reductions for securities sold/matured	0			0		0
Change in recoveries of future cash flows expected to be collected¹	(0.9		)	0		(0.9		)
Balance at September 30, 2016	$	11.5		$	0.4	$	11.9

¹Reflects the current period change in the expected recovery of prior impairments that will be accreted into income over the remaining life of the security.

Although we determined it is more likely that we will not be required to sell the securities prior to the recovery of their respective cost bases (which could be maturity), we are required to measure the amount of potential credit losses on the securities that were in an unrealized loss position. In that process, we considered a number of factors and inputs related to the individual securities. The methodology and significant inputs used to measure the amount of credit losses in our portfolio included: current performance indicators on the business model or underlying assets (e.g., delinquency rates, foreclosure rates, and default rates); credit support (via current levels of subordination); historical credit ratings; and updated cash flow expectations based upon these performance indicators. In order to determine the amount of credit loss, if any, the net present value of the cash flows expected (i.e., expected recovery value) was calculated using the current book yield for each security, and was compared to its current amortized value. In the event that the net present value was below the amortized value, a credit loss would be deemed to exist, and the security would be written down. We did not have any credit impairment write-downs for the nine months ended September 30, 2016.

Realized Gains (Losses) The components of net realized gains (losses) for the three and nine months ended September 30, were:



	Three Months						Nine Months
(millions)	2017			2016			2017			2016
Gross realized gains on security sales
Fixed maturities:
U.S. government obligations	$	0.9		$	6.4		$	5.8		$	24.1
State and local government obligations	4.0			0.6			7.1			16.0
Corporate and other debt securities	5.1			15.6			16.5			38.1
Residential mortgage-backed securities	2.8			0.2			23.8			1.9
Agency residential pass-through obligations	0			0			0			0.1
Commercial mortgage-backed securities	0			5.5			2.4			12.0
Other asset-backed securities	0			0			0.3			0
Redeemable preferred stocks	7.7			0			8.0			0
Total fixed maturities	20.5			28.3			63.9			92.2
Equity securities:
Nonredeemable preferred stocks	3.0			4.9			54.6			11.9
Common equities	5.7			14.4			23.0			43.3
Short-term investments	0			0.1			0			0.1
Subtotal gross realized gains on security sales	29.2			47.7			141.5			147.5
Gross realized losses on security sales
Fixed maturities:
U.S. government obligations	(1.0		)	(0.8		)	(4.6		)	(1.2		)
State and local government obligations	0			0			(0.1		)	(1.6		)
Corporate and other debt securities	(1.8		)	(0.2		)	(4.6		)	(1.9		)
Residential mortgage-backed securities	(0.1		)	0			(0.4		)	0
Agency residential pass-through obligations	0			0			0			(0.2		)
Commercial mortgage-backed securities	(0.5		)	0			(3.6		)	(4.1		)
Redeemable preferred stocks	(6.4		)	(6.5		)	(6.4		)	(6.5		)
Total fixed maturities	(9.8		)	(7.5		)	(19.7		)	(15.5		)
Equity securities:
Nonredeemable preferred stocks	(0.1		)	(0.4		)	(5.9		)	(3.1		)
Common equities	(0.2		)	(0.3		)	(0.3		)	(5.3		)
Subtotal gross realized losses on security sales	(10.1		)	(8.2		)	(25.9		)	(23.9		)
Net realized gains (losses) on security sales
Fixed maturities:
U.S. government obligations	(0.1		)	5.6			1.2			22.9
State and local government obligations	4.0			0.6			7.0			14.4
Corporate and other debt securities	3.3			15.4			11.9			36.2
Residential mortgage-backed securities	2.7			0.2			23.4			1.9
Agency residential pass-through obligations	0			0			0			(0.1		)
Commercial mortgage-backed securities	(0.5		)	5.5			(1.2		)	7.9
Other asset-backed securities	0			0			0.3			0
Redeemable preferred stocks	1.3			(6.5		)	1.6			(6.5		)
Total fixed maturities	10.7			20.8			44.2			76.7
Equity securities:
Nonredeemable preferred stocks	2.9			4.5			48.7			8.8
Common equities	5.5			14.1			22.7			38.0
Short-term investments	0			0.1			0			0.1
Subtotal net realized gains (losses) on security sales	19.1			39.5			115.6			123.6
Other-than-temporary impairment losses
Fixed maturities:
Commercial mortgage-backed securities	(0.4		)	0			(0.4		)	0
Redeemable preferred stocks	0			(25.4		)	0			(25.4		)
Total fixed maturities	(0.4		)	(25.4		)	(0.4		)	(25.4		)
Equity securities:
Common equities	(8.9		)	(1.4		)	(12.5		)	(1.6		)
Subtotal investment other-than-temporary impairment losses	(9.3		)	(26.8		)	(12.9		)	(27.0		)
Other asset impairment	(33.7		)	(34.8		)	(44.9		)	(34.8		)
Subtotal other-than-temporary impairment losses	(43.0		)	(61.6		)	(57.8		)	(61.8		)
Other gains (losses)
Hybrid securities	(0.9		)	0.6			0.3			2.9
Derivative instruments	0			0.7			0			(35.8		)
Litigation settlements	0.1			0.1			1.2			0.1
Subtotal other gains (losses)	(0.8		)	1.4			1.5			(32.8		)
Total net realized gains (losses) on securities	$	(24.7	)	$	(20.7	)	$	59.3		$	29.0

Gross realized gains and losses were predominantly the result of sales transactions in our fixed-income portfolio related to movements in credit spreads and interest rates and sales from our equity portfolios. Our preferred stock portfolio reflects a large realized gain due primarily to one issue called by the issuer at par. This security was held at a deep discount due to previous other-than-temporary impairment write-downs taken during the market crisis of 2008. Subsequent to the write-down, the security experienced significant recovery and was trading near its anticipated call price. Upon call, we recognized the difference between the consideration received and our book value as a realized gain.

In addition, gains and losses reflect recoveries from litigation settlements related to investments and holding period valuation changes on hybrids and derivatives. Also included are write-downs for securities determined to be other-than-temporarily impaired. The other asset impairment relates to renewable energy investments, which are reflected in “other assets” on the balance sheet, under which the future pretax cash flows are expected to be less than the carrying value of the assets.

Net Investment Income The components of net investment income for the three and nine months ended September 30, were:



	Three Months						Nine Months
(millions)	2017			2016			2017			2016
Fixed maturities:
U.S. government obligations	$	18.4		$	3.3		$	48.1		$	12.4
State and local government obligations	12.9			12.6			39.3			39.3
Foreign government obligations	0.1			0.1			0.3			0.3
Corporate debt securities	32.2			27.3			93.1			81.9
Residential mortgage-backed securities	7.8			11.1			27.3			34.9
Agency residential pass-through obligations	0.2			0.3			0.6			0.9
Commercial mortgage-backed securities	20.0			22.4			57.1			62.6
Other asset-backed securities	12.1			6.8			33.8			18.7
Redeemable preferred stocks	2.8			3.8			9.1			11.5
Total fixed maturities	106.5			87.7			308.7			262.5
Equity securities:
Nonredeemable preferred stocks	10.9			12.4			33.0			36.8
Common equities	14.9			13.9			42.8			42.0
Short-term investments	10.6			5.3			26.4			11.4
Investment income	142.9			119.3			410.9			352.7
Investment expenses	(5.8		)	(4.8		)	(18.0		)	(14.9		)
Net investment income	$	137.1		$	114.5		$	392.9		$	337.8

The amount of investment income (interest and dividends) we recognize varies from year to year based on the average assets held during the year and the book yields of the securities in our portfolio. The increase in income year-over-year for the three and nine months was mainly the result of an increase in assets, as yields remained relatively consistent.

Trading Securities At September 30, 2017 and 2016, and December 31, 2016, we did not hold any trading securities and did not have any net realized gains (losses) on trading securities for the three and nine months ended September 30, 2017 and 2016.

Derivative Instruments The following table shows the status of our derivative instruments at September 30, 2017 and 2016, and December 31, 2016, and for the three and nine months ended September 30, 2017 and 2016:



(millions)								Balance Sheet²								Comprehensive Income Statement
									Assets (Liabilities) Fair Value							Pretax Net Realized Gains (Losses)
	Notional Value¹															Three Months Ended					Nine Months Ended
	September 30,				Dec. 31,				September 30,					Dec. 31,		September 30,					September 30,
Derivatives designated as:	2017		2016		2016		Purpose	Classification	2017		2016			2016		2017		2016			2017		2016
Hedging instrument
Closed:
Ineffective cash flow hedge	$	31	$	370	$	370	Manage interest rate risk	NA	$	0	$	0		$	0	$	0	$	(1.4	)	$	0	$	(1.3	)
Non-hedging instruments
Liabilities:
Interest rate swaps	0		315		0		Manage portfolio duration	Other liabilities	0		(13.0		)	0		0		1.7			0		(17.8		)
Closed:
Interest rate swaps	0		435		750		Manage portfolio duration	NA	0		0			0		0		0.3			0		(17.0		)
U.S. Treasury Note futures	0		135		135		Manage portfolio duration	NA	0		0			0		0		0.1			0		0.3
Total	NA		NA		NA				$	0	$	(13.0	)	$	0	$	0	$	0.7		$	0	$	(35.8	)

NA= Not applicable

¹The amounts represent the value held at quarter and year end for open positions and the maximum amount held during the period for closed positions.

²To the extent we hold both derivative assets and liabilities with the same counterparty that are subject to an enforceable master netting arrangement, we reported them on a gross basis on our balance sheets, consistent with our historical presentation.

CASH FLOW HEDGES

During March 2017, we entered into a forecasted debt issuance hedge, against a possible rise in interest rates, in conjunction with the $850 million of 4.125% Senior Notes due 2047 issued in April 2017. Upon issuance, we closed the hedge and recognized, as part of accumulated other comprehensive income, a pretax loss of $8.0 million in April 2017.

During the third quarter 2016, we entered into a $350 million forecasted transaction to hedge against a possible rise in interest rates in anticipation of a debt offering under which we issued $500 million of 2.45% Senior Notes due 2027. When the contract was closed, the $1.4 million loss on the derivative was immediately recognized as a realized loss. The $31 million in 2017 and the remaining $20 million in 2016 of our ineffective cash flow hedge resulted from the repurchase of a portion of our 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067, and we reclassified the unrealized gain on forecasted transactions to net realized gains on securities. The portion repurchased in 2017 resulted in an immaterial gain.

See Note 4 – Debt for further discussion.

INTEREST RATE SWAPS and U.S. TREASURY FUTURES

We use interest rate swaps and treasury futures contracts from time to time to manage the fixed-income portfolio duration. We did not hold any interest rate swap positions at September 30, 2017 or December 31, 2016. At September 30, 2016, we held interest rate swap positions for which we were paying a fixed rate and receiving a variable rate, effectively shortening the duration of our fixed-income portfolio. As of September 30, 2016, the balance of the cash collateral that we delivered to the applicable counterparties on the then open interest rate swaps was $15.1 million. We did not open any U.S. treasury futures during 2017. During 2016, we opened and closed treasury futures; no positions were outstanding at the end of the third quarter or year end.