Investments (Tables)

3 Months Ended

Mar. 31, 2014

Investments, Debt and Equity Securities [Abstract]

Unrealized gains and losses on fixed maturities and equity securities

The amortized cost or cost, unrealized investment gains and losses, fair values and other-than-temporary impairment (“OTTI”) included in accumulated other comprehensive income (loss) (“AOCI”) of all fixed maturities and equity securities in the portfolio were as follows:

	Amortized		Unrealized		Unrealized		Fair		OTTI in
	Cost/Cost		Gains		Losses		Value		AOCI (2)
March 31, 2014
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (1):
Mortgage-backed securities	$	550,737	$	39,324	$	12,793	$	577,268	$	-
Other, including
U.S. Treasury securities		467,644		13,849		14,503		466,990		-
Municipal bonds		1,444,604		117,437		15,882		1,546,159		-
Foreign government bonds		50,623		5,397		157		55,863		-
Corporate bonds		2,572,505		229,135		17,002		2,784,638		-
Other mortgage-backed securities		944,863		29,098		6,437		967,524		2,866
Totals	$	6,030,976	$	434,240	$	66,774	$	6,398,442	$	2,866
Equity securities	$	85,428	$	11,261	$	2,500	$	94,189	$	-
December 31, 2013
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (1):
Mortgage-backed securities	$	555,574	$	33,711	$	19,560	$	569,725	$	-
Other, including
U.S. Treasury securities		449,060		9,865		23,351		435,574		-
Municipal bonds		1,425,441		80,701		34,615		1,471,527		-
Foreign government bonds		50,641		4,700		390		54,951		-
Corporate bonds		2,457,727		188,832		32,150		2,614,409		-
Other mortgage-backed securities		845,762		26,477		8,852		863,387		2,812
Totals	$	5,784,205	$	344,286	$	118,918	$	6,009,573	$	2,812
Equity securities	$	84,754	$	10,723	$	3,619	$	91,858	$	-

(1)

Fair value includes securities issued by Federal National Mortgage Association (“FNMA”) of $343,090 and $336,193; Federal Home Loan Mortgage Corporation (“FHLMC”) of $434,214 and $427,172; and Government National Mortgage Association (“GNMA”) of $132,896 and $126,245 as of March 31, 2014 and December 31, 2013, respectively.

(2)

Represents the amount of other-than-temporary impairment losses in AOCI which, beginning April 1, 2009, was not included in earnings under current accounting guidance. Amounts also include unrealized gains/(losses) on impaired securities relating to changes in the fair value of such securities subsequent to the impairment measurement date.

Summary of fair value and gross unrealized losses of fixed maturity securities and equity securities in an unrealized loss position

	12 Months or Less					More than 12 Months					Total
				Gross					Gross					Gross
	Fair Value			Unrealized Losses		Fair Value			Unrealized Losses		Fair Value			Unrealized Losses
March 31, 2014
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	111,266		$	11,450	$	7,787		$	1,343	$	119,053		$	12,793
Other		179,661			12,184		17,164			2,319		196,825			14,503
Municipal bonds		211,712			9,707		59,942			6,175		271,654			15,882
Foreign government bonds		6,965			157		-			-		6,965			157
Corporate bonds		412,997			13,845		17,263			3,157		430,260			17,002
Other mortgage-backed securities		258,328			4,223		43,116			2,214		301,444			6,437
Total fixed maturity securities		1,180,929			51,566		145,272			15,208		1,326,201			66,774
Equity securities (1)		31,732			2,005		1,473			495		33,205			2,500
Combined totals	$	1,212,661		$	53,571	$	146,745		$	15,703	$	1,359,406		$	69,274

Number of positions with a gross unrealized loss		359					61					420
Fair value as a percentage of total fixed maturities and equity securities fair value		18.7	%				2.3	%				20.9	%

December 31, 2013
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	150,602		$	19,145	$	1,383		$	415	$	151,985		$	19,560
Other		249,765			22,479		4,450			872		254,215			23,351
Municipal bonds		375,523			26,529		42,899			8,086		418,422			34,615
Foreign government bonds		6,738			390		-			-		6,738			390
Corporate bonds		582,849			28,634		12,948			3,516		595,797			32,150
Other mortgage-backed securities		274,983			8,300		20,008			552		294,991			8,852
Total fixed maturity securities		1,640,460			105,477		81,688			13,441		1,722,148			118,918
Equity securities (1)		32,392			3,117		1,405			502		33,797			3,619
Combined totals	$	1,672,852		$	108,594	$	83,093		$	13,943	$	1,755,945		$	122,537

Number of positions with a gross unrealized loss		534					46					580
Fair value as a percentage of total fixed maturities and equity securities fair value		27.4	%				1.4	%				28.8	%

(1)	Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds.

Summary of cumulative credit losses

The following table summarizes the cumulative amounts related to the Company’s credit loss component of the other-than-temporary impairment losses on fixed maturity securities held as of March 31, 2014 and 2013 that the Company did not intend to sell as of those dates, and it was not more likely than not that the Company would be required to sell the securities before the anticipated recovery of the amortized cost bases, for which the non-credit portions of the other-than-temporary impairment losses were recognized in other comprehensive income (loss):

	Three Months Ended
	March 31,
	2014		2013
Cumulative credit loss (1)
Beginning of period	$	4,097	$	2,877
New credit losses		-		-
Losses related to securities sold or paid down during the period		-		-
End of period	$	4,097	$	2,877

(1)

The cumulative credit loss amounts exclude other-than-temporary impairment losses on securities held as of the periods indicated that the Company intended to sell or it was more likely than not that the Company would be required to sell the security before the recovery of the amortized cost basis.

Distribution of the Company's fixed maturity portfolio by estimated expected maturity

The following table presents the distribution of the Company's fixed maturity securities portfolio by estimated expected maturity. Estimated expected maturities differ from contractual maturities, reflecting assumptions regarding borrowers’ utilization of the right to call or prepay obligations with or without call or prepayment penalties. For structured securities, including mortgage-backed securities and other asset-backed securities, estimated expected maturities consider broker-dealer survey prepayment assumptions and are verified for consistency with the interest rate and economic environments.

	Percent of Total Fair Value				March 31, 2014
	March 31,		December 31,			Fair	Amortized
	2014		2013			Value	Cost
Estimated expected maturity:
Due in 1 year or less	4.3	%	4.1	%	$	278,051	$	262,082
Due after 1 year through 5 years	21.9		20.9			1,399,549		1,319,172
Due after 5 years through 10 years	39.5		38.4			2,524,744		2,379,748
Due after 10 years through 20 years	19.9		20.8			1,271,718		1,198,682
Due after 20 years	14.4		15.8			924,380		871,292
Total	100.0	%	100.0	%	$	6,398,442	$	6,030,976

Average option-adjusted duration, in years	6.1		6.3

Proceeds received from sales of fixed maturities and equity securities

Proceeds received from sales of fixed maturities and equity securities, each determined using the specific identification method, and gross gains and gross losses realized as a result of those sales for each period were:

	Three Months Ended
	March 31,
	2014		2013
Fixed maturity securities
Proceeds received	$	52,940	$	99,182
Gross gains realized		1,527		4,512
Gross losses realized		(675)		(10)

Equity securities
Proceeds received	$	3,648	$	4,834
Gross gains realized		479		568
Gross losses realized		(117)		(215)

Reconciliation of net unrealized investment gains (losses) on fixed maturity securities and equity securities

The following table reconciles the net unrealized investment gains and losses, net of tax, included in accumulated other comprehensive income (loss), before the impact on deferred policy acquisition costs:

	Three Months Ended
	March 31,
	2014		2013
Net unrealized investment gains (losses) on fixed maturity securities, net of tax
Beginning of period	$	146,489	$	423,004
Change in unrealized investment gains and losses		93,225		(6,909)
Reclassification of net realized investment (gains) losses to net income		(860)		(4,116)
End of period	$	238,854	$	411,979

Net unrealized investment gains (losses) on equity securities, net of tax
Beginning of period	$	4,618	$	720
Change in unrealized investment gains and losses		1,313		3,228
Reclassification of net realized investment (gains) losses to net income		(236)		(344)
End of period	$	5,695	$	3,604

- Definition

Tabular disclosure of the amount of other than temporary impairment (OTTI) related to credit losses recognized in earnings including: (a) the beginning balance of the amount related to credit losses on debt securities held by the investor at the beginning of the period for which a portion of an OTTI was recognized in other comprehensive income; (b) additions for the amount related to the credit loss for which an OTTI was not previously recognized; (c) reductions for securities sold during the period (realized); (d) reductions for securities for which the amount previously recognized in other comprehensive income was recognized in earnings because the investor intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis; (e) additional increases to the amount related to the credit loss for which an OTTI was previously recognized when the investor does not intend to sell the security and it is not more likely than not that the investor will be required to sell the security before recovery of its amortized cost basis; (f) reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security; and (g) the ending balance of the amount related to credit losses on debt securities held by the entity at the end of the period for which a portion of an OTTI was recognized in other comprehensive income.

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