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Investments
 9 Months Ended
Sep. 30, 2019
Investments Schedule [Abstract]  
Investments Investments — 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. Our securities are reported in our Consolidated Balance Sheets at fair value. The changes in fair value for our fixed-maturity securities (other than hybrid securities) are reported as a component of accumulated other comprehensive income, net of deferred income taxes, in our Consolidated Balance Sheets. The net holding period gains (losses) reported below represent the inception-to-date changes in fair value of the securities. The changes in the net holding period gains (losses) between periods for the hybrid securities and equity securities are recorded as a component of net realized gains (losses) on securities in our Consolidated Statements of Comprehensive Income.
($ in millions)
Cost

 
Gross
Unrealized Gains

 
Gross
Unrealized
Losses

 
Net
Holding Period Gains
(Losses)

 
Fair
Value

 
% of
Total
Fair
Value

September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
Available-for-sale securities:
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities:
 
 
 
 
 
 
 
 
 
 
 
U.S. government obligations
$
13,387.6

 
$
300.3

 
$
(9.2
)
 
$
0

 
$
13,678.7

 
35.4
%
State and local government obligations
1,652.2

 
32.6

 
(1.1
)
 
0

 
1,683.7

 
4.4

Corporate debt securities
7,048.9

 
231.6

 
(0.4
)
 
1.0

 
7,281.1

 
18.9

Residential mortgage-backed securities
677.5

 
5.5

 
(1.5
)
 
0

 
681.5

 
1.8

Commercial mortgage-backed securities
4,547.9

 
93.0

 
(1.9
)
 
0

 
4,639.0

 
12.0

Other asset-backed securities
4,601.0

 
21.5

 
(0.6
)
 
0

 
4,621.9

 
12.0

Redeemable preferred stocks
219.8

 
4.4

 
(2.5
)
 
5.1

 
226.8

 
0.6

Total fixed maturities
32,134.9

 
688.9

 
(17.2
)
 
6.1

 
32,812.7

 
85.1

Short-term investments
1,467.4

 
0

 
0

 
0

 
1,467.4

 
3.8

       Total available-for-sale securities
33,602.3

 
688.9

 
(17.2
)
 
6.1

 
34,280.1

 
88.9

Equity securities:
 
 
 
 
 
 
 
 
 
 
 
Nonredeemable preferred stocks
1,054.2

 
0

 
0

 
74.3

 
1,128.5

 
2.9

Common equities
1,210.3

 
0

 
0

 
1,954.8

 
3,165.1

 
8.2

       Total equity securities
2,264.5

 
0

 
0

 
2,029.1

 
4,293.6

 
11.1

  Total portfolio1,2
$
35,866.8

 
$
688.9

 
$
(17.2
)
 
$
2,035.2

 
$
38,573.7

 
100.0
%

($ in millions)
Cost

 
Gross
Unrealized Gains

 
Gross
Unrealized
Losses

 
Net
Holding Period Gains
(Losses)

 
Fair
Value

 
% of
Total
Fair
Value

September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
Available-for-sale securities:
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities:
 
 
 
 
 
 
 
 
 
 
 
U.S. government obligations
$
9,942.0

 
$
0

 
$
(189.5
)
 
$
0

 
$
9,752.5

 
30.2
%
State and local government obligations
1,610.1

 
1.9

 
(23.2
)
 
0

 
1,588.8

 
4.9

Corporate debt securities
7,229.1

 
4.9

 
(85.2
)
 
(2.0
)
 
7,146.8

 
22.1

Residential mortgage-backed securities
767.8

 
7.6

 
(5.6
)
 
0

 
769.8

 
2.4

Commercial mortgage-backed securities
2,986.5

 
3.3

 
(30.5
)
 
0

 
2,959.3

 
9.1

Other asset-backed securities
3,205.0

 
1.4

 
(13.6
)
 
0.1

 
3,192.9

 
9.9

Redeemable preferred stocks
222.9

 
13.2

 
(1.4
)
 
(2.1
)
 
232.6

 
0.7

Total fixed maturities
25,963.4

 
32.3

 
(349.0
)
 
(4.0
)
 
25,642.7

 
79.3

Short-term investments
2,809.7

 
0

 
0

 
0

 
2,809.7

 
8.7

       Total available-for-sale securities
28,773.1

 
32.3

 
(349.0
)
 
(4.0
)
 
28,452.4

 
88.0

Equity securities:
 
 
 
 
 
 
 
 
 
 
 
Nonredeemable preferred stocks
758.9

 
0

 
0

 
82.0

 
840.9

 
2.6

Common equities
1,135.0

 
0

 
0

 
1,922.3

 
3,057.3

 
9.4

       Total equity securities
1,893.9

 
0

 
0

 
2,004.3

 
3,898.2

 
12.0

  Total portfolio1,2
$
30,667.0

 
$
32.3

 
$
(349.0
)
 
$
2,000.3

 
$
32,350.6

 
100.0
%
 
($ in millions)
Cost

 
Gross
Unrealized Gains

 
Gross
Unrealized
Losses

 
Net
Holding Period Gains
(Losses)

 
Fair
Value

 
% of
Total
Fair
Value

December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
Available-for-sale securities:
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities:
 
 
 
 
 
 
 
 
 
 
 
U.S. government obligations
$
9,897.4

 
$
71.2

 
$
(52.1
)
 
$
0

 
$
9,916.5

 
29.5
%
State and local government obligations
1,654.6

 
7.3

 
(12.8
)
 
0

 
1,649.1

 
4.9

Corporate debt securities
8,808.5

 
13.6

 
(125.3
)
 
(2.5
)
 
8,694.3

 
25.9

Residential mortgage-backed securities
733.5

 
6.0

 
(5.1
)
 
0

 
734.4

 
2.2

Commercial mortgage-backed securities
3,332.8

 
7.8

 
(39.0
)
 
0

 
3,301.6

 
9.8

Other asset-backed securities
3,585.4

 
3.6

 
(11.8
)
 
0.1

 
3,577.3

 
10.7

Redeemable preferred stocks
243.7

 
5.9

 
(3.5
)
 
(7.8
)
 
238.3

 
0.7

Total fixed maturities
28,255.9

 
115.4

 
(249.6
)
 
(10.2
)
 
28,111.5

 
83.7

Short-term investments
1,795.9

 
0

 
0

 
0

 
1,795.9

 
5.4

       Total available-for-sale securities
30,051.8

 
115.4

 
(249.6
)
 
(10.2
)
 
29,907.4

 
89.1

Equity securities:
 
 
 
 
 
 
 
 
 
 
 
Nonredeemable preferred stocks
1,002.6

 
0

 
0

 
31.3

 
1,033.9

 
3.1

Common equities
1,148.9

 
0

 
0

 
1,477.2

 
2,626.1

 
7.8

       Total equity securities
2,151.5

 
0

 
0

 
1,508.5

 
3,660.0

 
10.9

  Total portfolio1,2
$
32,203.3

 
$
115.4

 
$
(249.6
)
 
$
1,498.3

 
$
33,567.4

 
100.0
%

1Our portfolio reflects the effect of unsettled security transactions; at September 30, 2019, we had $286.5 million included in “other liabilities,” compared to $5.2 million and $5.9 million at September 30, 2018 and December 31, 2018, respectively.
2The total fair value of the portfolio at September 30, 2019 and 2018, and December 31, 2018, included $1.5 billion, $1.8 billion, and $2.9 billion, respectively, of securities held in a consolidated, non-insurance subsidiary of the holding company, net of any unsettled security transactions.

At September 30, 2019, bonds and certificates of deposit in the principal amount of $261.0 million were on deposit to meet state insurance regulatory requirements.

Short-Term Investments Our short-term investments may include commercial paper and other investments that are expected to mature or are redeemable within one year.

Also included in short-term investments are reverse repurchase commitment transactions, where we loan cash to approved counterparties and receive U.S. Treasury Notes 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 $400.0 million in open reverse repurchase positions at September 30, 2019. Although we did invest in reverse repurchase transactions during 2018, we did not have any open positions at September 30, 2018 or December 31, 2018. We also participated in repurchase transactions during the first nine months of 2019 and at various times during 2018, but we did not have any open positions at September 30, 2019 and 2018, or December 31, 2018. To the extent we enter into repurchase or reverse repurchase transactions, 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 securities are hybrid securities, which are reported at fair value:

 
September 30,
 
 
(millions)
2019

 
2018

 
December 31, 2018

Fixed maturities:
 
 
 
 
 
State and local government obligations
$
3.5

 
$
3.6

 
$
3.6

Corporate debt securities
91.3

 
159.7

 
158.9

Other asset-backed securities
3.0

 
5.0

 
4.5

Redeemable preferred stocks
90.7

 
72.0

 
77.7

Total hybrid securities
$
188.5

 
$
240.3

 
$
244.7



Certain securities in our portfolio are accounted for as hybrid securities because they contain embedded derivatives that are not deemed to be clearly and closely related to the host investments. Since the embedded derivatives (e.g., change-in-control put option, debt-to-equity conversion, or any other feature unrelated to the credit quality or risk of default of the issuer that could impact the amount or timing of our expected future cash flows) do not have observable intrinsic values, we have elected to record the changes in fair value of these securities through income as realized gains or losses.
Fixed Maturities The composition of fixed maturities by maturity at September 30, 2019, was:
 
(millions)
Cost

 
Fair Value

Less than one year
$
5,620.9

 
$
5,633.4

One to five years
18,862.6

 
19,203.2

Five to ten years
7,582.3

 
7,904.9

Ten years or greater
69.1

 
71.2

Total
$
32,134.9

 
$
32,812.7


 
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 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)
No. of Sec.

Fair
Value

Unrealized Losses

 
No. of Sec.

Fair
Value

Unrealized Losses

September 30, 2019
 
 
 
 
 
 
 
 
 
 
Fixed maturities:
 
 
 
 
 
 
 
 
 
 
U.S. government obligations
14

$
2,708.0

$
(9.2
)
7

$
2,534.4

$
(8.9
)
 
7

$
173.6

$
(0.3
)
State and local government obligations
60

228.3

(1.1
)
25

100.4

(0.7
)
 
35

127.9

(0.4
)
Corporate debt securities
24

245.5

(0.4
)
5

77.2

(0.1
)
 
19

168.3

(0.3
)
Residential mortgage-backed securities
39

301.0

(1.5
)
5

138.7

(0.1
)
 
34

162.3

(1.4
)
Commercial mortgage-backed securities
48

743.3

(1.9
)
26

361.9

(0.8
)
 
22

381.4

(1.1
)
Other asset-backed securities
55

529.4

(0.6
)
20

359.1

(0.2
)
 
35

170.3

(0.4
)
Redeemable preferred stocks
3

57.2

(2.5
)
2

45.9

(1.3
)
 
1

11.3

(1.2
)
Total fixed maturities
243

$
4,812.7

$
(17.2
)
90

$
3,617.6

$
(12.1
)
 
153

$
1,195.1

$
(5.1
)
 
Total No. of Sec.

Total
Fair
Value

Gross Unrealized Losses

Less than 12 Months
 
12 Months or Greater
($ in millions)
No. of Sec.

Fair
Value

Unrealized Losses

 
No. of Sec.

Fair
Value

Unrealized Losses

September 30, 2018
 
 
 
 
 
 
 
 
 
 
Fixed maturities:
 
 
 
 
 
 
 
 
 
 
U.S. government obligations
91

$
9,752.5

$
(189.5
)
39

$
5,025.0

$
(67.2
)
 
52

$
4,727.5

$
(122.3
)
State and local government obligations
459

1,394.3

(23.2
)
227

680.5

(6.4
)
 
232

713.8

(16.8
)
Corporate debt securities
369

5,959.2

(85.2
)
221

3,963.9

(45.3
)
 
148

1,995.3

(39.9
)
Residential mortgage-backed securities
234

521.7

(5.6
)
44

325.0

(0.6
)
 
190

196.7

(5.0
)
Commercial mortgage-backed securities
151

2,392.7

(30.5
)
80

1,164.2

(8.3
)
 
71

1,228.5

(22.2
)
Other asset-backed securities
219

2,828.6

(13.6
)
111

1,821.8

(4.0
)
 
108

1,006.8

(9.6
)
Redeemable preferred stocks
3

30.8

(1.4
)
1

4.7

(0.1
)
 
2

26.1

(1.3
)
Total fixed maturities
1,526

$
22,879.8

$
(349.0
)
723

$
12,985.1

$
(131.9
)
 
803

$
9,894.7

$
(217.1
)
 
Total No. of Sec.

Total
Fair
Value

Gross Unrealized Losses

Less than 12 Months
 
12 Months or Greater
($ in millions)
No. of Sec.

Fair
Value

Unrealized Losses

 
No. of Sec.

Fair
Value

Unrealized Losses

December 31, 2018
 
 
 
 
 
 
 
 
 
 
Fixed maturities:
 
 
 
 
 
 
 
 
 
 
U.S. government obligations
51

$
4,438.0

$
(52.1
)
2

$
126.6

$
(0.1
)
 
49

$
4,311.4

$
(52.0
)
State and local government obligations
299

972.4

(12.8
)
49

192.7

(0.3
)
 
250

779.7

(12.5
)
Corporate debt securities
368

6,723.3

(125.3
)
133

2,613.3

(33.4
)
 
235

4,110.0

(91.9
)
Residential mortgage-backed securities
228

450.2

(5.1
)
32

248.8

(0.8
)
 
196

201.4

(4.3
)
Commercial mortgage-backed securities
140

2,328.5

(39.0
)
48

741.2

(8.9
)
 
92

1,587.3

(30.1
)
Other asset-backed securities
203

2,691.3

(11.8
)
84

1,551.7

(3.2
)
 
119

1,139.6

(8.6
)
Redeemable preferred stocks
3

48.5

(3.5
)
1

18.9

(0.6
)
 
2

29.6

(2.9
)
Total fixed maturities
1,292

$
17,652.2

$
(249.6
)
349

$
5,493.2

$
(47.3
)
 
943

$
12,159.0

$
(202.3
)


Since both September 30, 2018 and December 31, 2018, the number of securities in our fixed-maturity portfolio with unrealized losses decreased, primarily due to valuation increases in nearly all sectors as interest rates declined and credit spreads tightened. We had no material decreases in valuation as a result of credit rating downgrades. A review of the securities in the table above indicated that the issuers were current with respect to their interest obligations and that there was no evidence of deterioration of the current cash flow projections that would indicate we would not receive the remaining principal at maturity.

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,
2018

(millions)
2019

 
2018

 
Fixed maturities:
 
 
 
 
 
Residential mortgage-backed securities
$
(19.7
)
 
$
(19.7
)
 
$
(19.7
)
Commercial mortgage-backed securities
(0.1
)
 
(0.1
)
 
(0.1
)
Total fixed maturities
$
(19.8
)
 
$
(19.8
)
 
$
(19.8
)


The following tables provide rollforwards of the amounts related to credit losses recognized in earnings for the periods ended September 30, 2019 and 2018, 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, 2019
 
Mortgage-Backed
 
 
(millions)
Residential 

 
Commercial 

 
Total

Balance at June 30, 2019
$
0

 
$
0.5

 
$
0.5

Change in recoveries of future cash flows expected to be collected1
0

 
0

 
0

Balance at September 30, 2019
$
0

 
$
0.5

 
$
0.5

 
 
 
 
 
 
 
Three Months Ended September 30, 2018
 
Mortgage-Backed
 
 
(millions)
Residential 

 
Commercial 

 
Total

Balance at June 30, 2018
$
0.3

 
$
0.5

 
$
0.8

Change in recoveries of future cash flows expected to be collected1
0

 
0

 
0

Balance at September 30, 2018
$
0.3

 
$
0.5

 
$
0.8

 
Nine Months Ended September 30, 2019
 
Mortgage-Backed
 
 
(millions)
Residential 

 
Commercial 

 
Total

Balance at December 31, 2018
$
0

 
$
0.5

 
$
0.5

Change in recoveries of future cash flows expected to be collected1
0

 
0

 
0

Balance at September 30, 2019
$
0

 
$
0.5

 
$
0.5

 
 
 
 
 
 
 
Nine Months Ended September 30, 2018
 
Mortgage-Backed
 
 
(millions)
Residential 

 
Commercial 

 
Total

Balance at December 31, 2017
$
0

 
$
0.5

 
$
0.5

Change in recoveries of future cash flows expected to be collected1
0.3

 
0

 
0.3

Balance at September 30, 2018
$
0.3

 
$
0.5

 
$
0.8

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 it is not likely that we will 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, 2019 or 2018.
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)
2019

 
2018

 
2019

 
2018

Gross realized gains on security sales
 
 
 
 
 
 
 
Available-for-sale securities:
 
 
 
 
 
 
 
U.S. government obligations
$
41.5

 
$
0.1

 
$
113.0

 
$
1.8

State and local government obligations
1.8

 
0.2

 
4.0

 
9.4

Corporate and other debt securities
21.3

 
1.7

 
68.5

 
2.1

Residential mortgage-backed securities
0

 
0

 
0.2

 
0

Commercial mortgage-backed securities
2.6

 
0

 
6.2

 
2.0

Other asset-backed securities
0.1

 
0

 
0.8

 
0.1

Redeemable preferred stocks
0

 
0.2

 
0

 
4.5

Total available-for-sale securities
67.3

 
2.2

 
192.7

 
19.9

Equity securities:
 
 
 
 
 
 
 
Nonredeemable preferred stocks
3.6

 
0.1

 
20.2

 
3.7

Common equities
4.7

 
126.8

 
9.4

 
265.2

Total equity securities
8.3

 
126.9

 
29.6

 
268.9

   Subtotal gross realized gains on security sales
75.6

 
129.1

 
222.3


288.8

Gross realized losses on security sales
 
 
 
 
 
 
 
Available-for-sale securities:
 
 
 
 
 
 
 
U.S. government obligations
(1.5
)
 
(7.6
)
 
(13.9
)
 
(46.4
)
State and local government obligations
0

 
(0.6
)
 
(0.7
)
 
(2.5
)
Corporate and other debt securities
(0.2
)
 
(3.2
)
 
(7.7
)
 
(7.3
)
Residential mortgage-backed securities
0

 
0

 
(2.3
)
 
0

Commercial mortgage-backed securities
0

 
0

 
(2.1
)
 
(6.3
)
Other asset-backed securities
0

 
(0.1
)
 
(0.1
)
 
(1.1
)
Redeemable preferred stocks
(0.2
)
 
0

 
(0.3
)
 
0

Total available-for-sale securities
(1.9
)
 
(11.5
)
 
(27.1
)
 
(63.6
)
Equity securities:
 
 
 
 
 
 
 
Nonredeemable preferred stocks
(2.0
)
 
0

 
(2.0
)
 
(2.3
)
Common equities
0

 
(9.2
)
 
(7.9
)
 
(17.1
)
Total equity securities
(2.0
)
 
(9.2
)
 
(9.9
)
 
(19.4
)
   Subtotal gross realized losses on security sales
(3.9
)
 
(20.7
)
 
(37.0
)
 
(83.0
)
Net realized gains (losses) on security sales
 
 
 
 
 
 
 
Available-for-sale securities:
 
 
 
 
 
 
 
U.S. government obligations
40.0

 
(7.5
)
 
99.1

 
(44.6
)
State and local government obligations
1.8

 
(0.4
)
 
3.3

 
6.9

Corporate and other debt securities
21.1

 
(1.5
)
 
60.8

 
(5.2
)
Residential mortgage-backed securities
0

 
0

 
(2.1
)
 
0

Commercial mortgage-backed securities
2.6

 
0

 
4.1

 
(4.3
)
Other asset-backed securities
0.1

 
(0.1
)
 
0.7

 
(1.0
)
Redeemable preferred stocks
(0.2
)
 
0.2

 
(0.3
)
 
4.5

Total available-for-sale securities
65.4

 
(9.3
)
 
165.6

 
(43.7
)
Equity securities:
 
 
 
 
 
 
 
Nonredeemable preferred stocks
1.6

 
0.1

 
18.2

 
1.4

Common equities
4.7

 
117.6

 
1.5

 
248.1

Total equity securities
6.3

 
117.7

 
19.7

 
249.5

  Subtotal net realized gains (losses) on security sales
71.7

 
108.4

 
185.3

 
205.8

Net holding period gains (losses)
 
 
 
 
 
 
 
Hybrid securities
4.2

 
1.3

 
16.3

 
(4.2
)
Equity securities
27.6

 
94.5

 
520.6

 
(1.7
)
  Subtotal net holding period gains (losses)
31.8

 
95.8

 
536.9

 
(5.9
)
Other-than-temporary impairment losses
 
 
 
 
 
 
 
Other asset impairment
(38.1
)
 
(22.1
)
 
(62.4
)
 
(33.2
)
  Subtotal other-than-temporary impairment losses
(38.1
)
 
(22.1
)
 
(62.4
)
 
(33.2
)
     Total net realized gains (losses) on securities
$
65.4

 
$
182.1

 
$
659.8

 
$
166.7



For both 2019 and 2018, the other asset impairment losses related to federal renewable energy tax credit fund investments, which were reported in “other assets” on the balance sheet, based on an analysis that our investments in those funds will not generate the cash flows that we anticipated. See Note 5 – Income Taxes for additional discussion related to 2019 activity.

The following table reflects our holding period realized gains (losses) on equity securities recognized for the three and nine months ended September 30, 2019 and 2018, for equity securities held at quarter end:
 
Three Months
 
Nine Months
(millions)
2019

2018

 
2019

2018

Total net gains (losses) recognized during the period on equity securities
$
33.9

$
212.2

 
$
540.3

$
247.8

Less: Net gains (losses) recognized on equity securities sold during the period
6.3

117.7

 
19.7

249.5

Net holding period gains (losses) recognized during the period on equity securities held at period end
$
27.6

$
94.5

 
$
520.6

$
(1.7
)

Net Investment Income  The components of net investment income for the three and nine months ended September 30, were: 
 
Three Months
 
Nine Months
(millions)
2019

2018

 
2019

2018

Available-for-sale securities:
 
 
 
 
 
   Fixed maturities:
 
 
 
 
 
U.S. government obligations
$
75.8

$
47.7

 
$
198.7

$
133.4

State and local government obligations
8.7

9.0

 
26.9

28.1

Corporate debt securities
65.1

62.1

 
209.8

150.1

Residential mortgage-backed securities
5.4

6.9

 
16.6

20.4

Commercial mortgage-backed securities
35.6

24.1

 
100.7

65.5

Other asset-backed securities
31.4

21.2

 
85.5

50.9

Redeemable preferred stocks
3.9

3.3

 
16.1

8.8

Total fixed maturities
225.9

174.3

 
654.3

457.2

   Short-term investments
7.1

15.7

 
34.3

40.7

    Total available-for-sale securities
233.0

190.0

 
688.6

497.9

Equity securities:
 
 
 
 
 
Nonredeemable preferred stocks
15.9

11.2

 
47.3

32.5

Common equities
14.1

16.9

 
41.3

46.1

    Total equity securities
30.0

28.1

 
88.6

78.6

    Investment income
263.0

218.1

 
777.2

576.5

    Investment expenses
(5.9
)
(5.8
)
 
(18.3
)
(18.0
)
Net investment income
$
257.1

$
212.3

 
$
758.9

$
558.5



The amount of investment income (interest and dividends) we recognize varies based on the average assets held during the year and the book yields of the securities in our portfolio. The increase in net investment income on a year-over-year basis for the three and nine months ended September 30, 2019, was due to a combination of an increase in average assets and an increase in portfolio yields. The increase in average assets was due to strong premium growth, underwriting profitability, and portfolio returns, as well as the proceeds from debt and preferred stock issuances during 2018, partially offset by our common and preferred share dividend payments during the first nine months of 2019. The increase in portfolio yields was a result of our decision to hold a short-duration portfolio, which allowed us to take advantage of opportunities to invest in higher yielding securities with cash from operations and portfolio maturities and paydowns. The portfolio duration at September 30, 2019 was 2.9 years, compared to 2.6 years at September 30, 2018.

Trading Securities At September 30, 2019 and 2018, and December 31, 2018, 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, 2019 and 2018.
Derivative Instruments
At September 30, 2019 and 2018, and December 31, 2018, we had no open derivative positions.