INVESTMENTS (Tables)

12 Months Ended

Dec. 31, 2016


NET INVESTMENT INCOME
(in thousands)	2016		2015		2014
Interest on fixed income securities	$	46,834	$	48,064	$	48,757
Dividends on equity securities		10,929		11,407		11,962
Interest on cash, short-term investments and other invested assets		120		11		7
Gross investment income	$	57,883	$	59,482	$	60,726
Less investment expenses		(4,808)		(4,838)		(5,118)
Net investment income	$	53,075	$	54,644	$	55,608

Schedule of pretax net realized investment gains (losses) and net changes in unrealized gains (losses) on investments


REALIZED/UNREALIZED GAINS
(in thousands)	2016		2015		2014
Net realized gains (losses):
Fixed income:
Available-for-sale	$	4,314	$	10,832	$	3,955
Available-for-sale OTTI		(95)		—		—
Held-to-maturity		—		—		4
Equity securities		38,709		22,107		29,468
Sale of subsidiary (RLI Indemnity Company)*		—		6,698		—
Other		(8,283)		192		(1,245)
Total	$	34,645	$	39,829	$	32,182

Net changes in unrealized gains (losses) on investments:
Fixed income:
Available-for-sale	$	(10,972)	$	(26,929)	$	37,880
Equity securities		8,659		(44,120)		17,300
Investment in unconsolidated investees		522		(1,886)		(787)
Total	$	(1,791)	$	(72,935)	$	54,393
Net realized gains (losses) and changes in unrealized gains (losses) on investments	$	32,854	$	(33,106)	$	86,575

Schedule of disposition of fixed maturities and equities


							Net
SALES	Proceeds		Gross Realized				Realized
(in thousands)	From Sales		Gains		Losses		Gain (Loss)
2016
Available-for-sale	$	329,091	$	7,158	$	(3,287)	$	3,871
Held-to-maturity		—		—		—		—
Equities		89,909		39,668		(959)		38,709
2015
Available-for-sale	$	436,680	$	14,691	$	(4,067)	$	10,624
Held-to-maturity		—		—		—		—
Equities		53,110		25,985		(3,878)		22,107
2014
Available-for-sale	$	342,308	$	7,208	$	(3,664)	$	3,544
Held-to-maturity		654		4		—		4
Equities		72,869		29,794		(326)		29,468


							Net
CALLS/MATURITIES			Gross Realized				Realized
(in thousands)	Proceeds		Gains		Losses		Gain (Loss)
2016
Available-for-sale	$	141,255	$	445	$	(2)	$	443
Held-to-maturity		—		—		—		—
2015
Available-for-sale	$	156,980	$	217	$	(9)	$	208
Held-to-maturity		—		—		—		—
2014
Available-for-sale	$	101,517	$	414	$	(3)	$	411
Held-to-maturity		—		—		—		—

Schedule of assets measured at fair value on recurring basis

Assets measured at fair value on a recurring basis as of December 31, 2016, are summarized below:


			Significant
	Quoted in Active		Other		Significant
	Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Available-for-sale securities:
U.S. government	$	—	$	76,563	$	—	$	76,563
U.S. agency		—		5,813		—		5,813
Non-U.S. govt. & agency		—		9,151		—		9,151
Agency MBS		—		284,069		—		284,069
ABS/CMBS*		—		93,910		—		93,910
Corporate		—		508,367		—		508,367
Municipal		—		627,336		—		627,336
Equity		369,219		—		—		369,219
Total available-for-sale securities	$	369,219	$	1,605,209	$	—	$	1,974,428

Assets measured at fair value on a recurring basis as of December 31, 2015, are summarized below:


			Significant
	Quoted in Active		Other		Significant
	Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Available-for-sale securities:
U.S. government	$	—	$	43,543	$	—	$	43,543
U.S. agency		—		15,740		—		15,740
Non-U.S. govt. & agency		—		4,478		—		4,478
Agency MBS		—		254,892		—		254,892
ABS/CMBS*		—		91,948		—		91,948
Corporate		—		517,109		—		517,109
Municipal		—		610,400		—		610,400
Equity		375,424		—		—		375,424
Total available-for-sale securities	$	375,424	$	1,538,110	$	—	$	1,913,534

*Non-agency asset-backed & commercial mortgage-backed

Schedule of contractual maturity of securities

The amortized cost and estimated fair value of fixed income securities at December 31, 2016, by contractual maturity, are shown as follows:


(in thousands)	Amortized Cost		Fair Value
Available-for-sale
Due in one year or less	$	20,047	$	20,069
Due after one year through five years		330,837		335,054
Due after five years through 10 years		545,916		550,438
Due after 10 years		322,634		321,669
Mtge/ABS/CMBS*		376,793		377,979
Total available-for-sale	$	1,596,227	$	1,605,209

*Mortgage-backed, asset-backed & commercial mortgage-backed

Schedule of amortized costs and estimated fair values of investments in fixed income and equity securities


2016	Amortized				Gross Unrealized
(in thousands)	Cost		Fair Value		Gains		Losses
Available-for-sale:
U.S. government	$	77,054	$	76,563	$	88	$	(579)
U.S. agency		5,473		5,813		340		—
Non-U.S. govt. & agency		9,517		9,151		2		(368)
Agency MBS		283,002		284,069		4,635		(3,568)
ABS/CMBS*		93,791		93,910		676		(557)
Corporate		503,041		508,367		10,996		(5,670)
Municipal		624,349		627,336		9,575		(6,588)
Total fixed income	$	1,596,227	$	1,605,209	$	26,312	$	(17,330)
Equity securities		187,573		369,219		182,912		(1,266)
Total available-for-sale	$	1,783,800	$	1,974,428	$	209,224	$	(18,596)

Held-to-maturity	$	—	$	—	$	—	$	—
Total	$	1,783,800	$	1,974,428	$	209,224	$	(18,596)

*Non-agency asset-backed & commercial mortgage-backed


2015	Amortized				Gross Unrealized
(in thousands)	Cost		Fair Value		Gains		Losses
Available-for-sale:
U.S. government	$	43,597	$	43,543	$	58	$	(112)
U.S. agency		15,481		15,740		306		(47)
Non-U.S. govt. & agency		5,035		4,478		—		(557)
Agency MBS		250,060		254,892		6,451		(1,619)
ABS/CMBS*		91,559		91,948		995		(606)
Corporate		523,351		517,109		8,565		(14,807)
Municipal		589,073		610,400		21,375		(48)
Total fixed income	$	1,518,156	$	1,538,110	$	37,750	$	(17,796)
Equity securities		202,437		375,424		174,443		(1,456)
Total available-for-sale	$	1,720,593	$	1,913,534	$	212,193	$	(19,252)

Held-to-maturity	$	—	$	—	$	—	$	—
Total	$	1,720,593	$	1,913,534	$	212,193	$	(19,252)

*Non-agency asset-backed & commercial mortgage-backed

Schedule of securities in an unrealized loss position segregated by type and length of time in an unrealized loss position


	December 31, 2016						December 31, 2015
			12 Mos.						12 Mos.
(in thousands)	< 12 Mos.		& Greater		Total		< 12 Mos.		& Greater		Total
U.S. Government
Fair value	$	48,500	$	—	$	48,500	$	36,000	$	—	$	36,000
Cost or amortized cost		49,079		—		49,079		36,112		—		36,112
Unrealized Loss	$	(579)	$	—	$	(579)	$	(112)	$	—	$	(112)

U.S. Agency
Fair value	$	—	$	—	$	—	$	8,070	$	—	$	8,070
Cost or amortized cost		—		—		—		8,117		—		8,117
Unrealized Loss	$	—	$	—	$	—	$	(47)	$	—	$	(47)

Non-U.S. Government
Fair value	$	7,647	$	—	$	7,647	$	4,478	$	—	$	4,478
Cost or amortized cost		8,015		—		8,015		5,035		—		5,035
Unrealized Loss	$	(368)	$	—	$	(368)	$	(557)	$	—	$	(557)

Agency MBS
Fair value	$	175,858	$	5,737	$	181,595	$	100,424	$	18,520	$	118,944
Cost or amortized cost		179,238		5,925		185,163		101,473		19,090		120,563
Unrealized Loss	$	(3,380)	$	(188)	$	(3,568)	$	(1,049)	$	(570)	$	(1,619)

ABS/CMBS*
Fair value	$	48,907	$	5,272	$	54,179	$	51,091	$	8,364	$	59,455
Cost or amortized cost		49,372		5,364		54,736		51,562		8,499		60,061
Unrealized Loss	$	(465)	$	(92)	$	(557)	$	(471)	$	(135)	$	(606)

Corporate
Fair value	$	144,353	$	15,535	$	159,888	$	275,404	$	15,174	$	290,578
Cost or amortized cost		146,979		18,579		165,558		285,515		19,870		305,385
Unrealized Loss	$	(2,626)	$	(3,044)	$	(5,670)	$	(10,111)	$	(4,696)	$	(14,807)

Municipal
Fair value	$	250,930	$	—	$	250,930	$	8,462	$	2,418	$	10,880
Cost or amortized cost		257,518		—		257,518		8,504		2,424		10,928
Unrealized Loss	$	(6,588)	$	—	$	(6,588)	$	(42)	$	(6)	$	(48)

Subtotal, fixed income
Fair value	$	676,195	$	26,544	$	702,739	$	483,929	$	44,476	$	528,405
Cost or amortized cost		690,201		29,868		720,069		496,318		49,883		546,201
Unrealized Loss	$	(14,006)	$	(3,324)	$	(17,330)	$	(12,389)	$	(5,407)	$	(17,796)

Equity securities
Fair value	$	7,438	$	1,973	$	9,411	$	16,476	$	—	$	16,476
Cost or amortized cost		8,029		2,648		10,677		17,932		—		17,932
Unrealized Loss	$	(591)	$	(675)	$	(1,266)	$	(1,456)	$	—	$	(1,456)

Total
Fair value	$	683,633	$	28,517	$	712,150	$	500,405	$	44,476	$	544,881
Cost or amortized cost		698,230		32,516		730,746		514,250		49,883		564,133
Unrealized Loss	$	(14,597)	$	(3,999)	$	(18,596)	$	(13,845)	$	(5,407)	$	(19,252)

*Non-agency asset-backed & commercial mortgage-backed

- Definition

Tabular disclosure of the realized and unrealized gains and losses reported in the statement of income which have resulted from the sale and holding of marketable securities, respectively, as well as the sale or disposal of cost method investments. Such amounts would include realized gains and losses on the sale or disposal of trading, available-for-sale, and held-to-maturity securities, unrealized gains and losses on trading securities, unrealized gains and losses on available-for-sale and held-to-maturity securities transferred to the trading securities category, realized gains and losses on the sale or disposal of cost method investments, and losses recognized for other than temporary impairments (OTTI) of such investments.

+ References + Details