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Fair Value of Financial Instruments (Tables)
 9 Months Ended
Sep. 30, 2018
Fair Value Disclosures [Abstract]  
Summary of Company's fair value hierarchy measured at recurring basis The following table presents the Company’s fair value hierarchy for those assets and liabilities measured and carried at fair value on a recurring basis. At September 30, 2018, Level 3 invested assets comprised 3.2% of the Company’s total investment portfolio at fair value.
($ in thousands)
 
 
 
Fair Value Measurements at
 
 
Carrying
 
Fair
 
Reporting Date Using
 
 
Amount
 
Value
 
Level 1
 
Level 2
 
Level 3
September 30, 2018
 
 
 
 
 
 
 
 
 
 
Financial Assets
 
 
 
 
 
 
 
 
 
 
Investments
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities
 
 
 
 
 
 
 
 
 
 
U.S. Government and federally
sponsored agency obligations:
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities
 
$
750,836

 
$
750,836

 
$
—

 
$
747,469

 
$
3,367

Other, including U.S. Treasury securities
 
782,600

 
782,600

 
13,101

 
769,499

 
—

Municipal bonds
 
1,883,674

 
1,883,674

 
—

 
1,834,345

 
49,329

Foreign government bonds
 
95,003

 
95,003

 
—

 
95,003

 
—

Corporate bonds
 
2,335,496

 
2,335,496

 
13,188

 
2,233,443

 
88,865

Other mortgage-backed securities
 
1,681,530

 
1,681,530

 
—

 
1,561,613

 
119,917

Total fixed maturity securities
 
7,529,139

 
7,529,139

 
26,289

 
7,241,372

 
261,478

Equity securities
 
133,184

 
133,184

 
82,389

—

50,789

—

6

Short-term investments
 
74,647

 
74,647

 
70,705

 
3,942

 
—

Other investments
 
22,698

 
22,698

 
—

 
22,698

 
—

Totals
 
$
7,759,668

 
$
7,759,668

 
$
179,383

 
$
7,318,801

 
$
261,484

Financial Liabilities
 
 
 
 
 
 
 
 
 
 
Investment contract and life policy
reserves, embedded derivatives
 
$
722

 
$
722

 
$
—

 
$
722

 
$
—

Other policyholder funds, embedded derivatives
 
82,265

 
82,265

 
—

 
—

 
82,265

 
 
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
 
 
 
Financial Assets
 
 
 
 
 
 
 
 
 
 
Investments
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities
 
 
 
 
 
 
 
 
 
 
U.S. Government and federally
sponsored agency obligations:
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities
 
$
696,725

 
$
696,725

 
$
—

 
$
693,375

 
$
3,350

Other, including U.S. Treasury securities
 
735,408

 
735,408

 
13,393

 
722,015

 
—

Municipal bonds
 
1,893,253

 
1,893,253

 
—

 
1,843,925

 
49,328

Foreign government bonds
 
102,738

 
102,738

 
—

 
102,738

 
—

Corporate bonds
 
2,578,954

 
2,578,954

 
14,345

 
2,491,630

 
72,979

Other mortgage-backed securities
 
1,716,997

 
1,716,997

 
—

 
1,612,403

 
104,594

Total fixed maturity securities
 
7,724,075

 
7,724,075

 
27,738

 
7,466,086

 
230,251

Equity securities
 
135,466

 
135,466

 
82,208

 
53,252

 
6

Short-term investments
 
62,593

 
62,593

 
62,593

 
—

 
—

Other investments
 
28,050

 
28,050

 
—

 
28,050

 
—

Totals
 
$
7,950,184

 
$
7,950,184

 
$
172,539

 
$
7,547,388

 
$
230,257

Financial Liabilities
 
 

 
 

 
 

 
 

 
 

Investment contract and life policy
reserves, embedded derivatives
 
$
594

 
$
594

 
$
—

 
$
594

 
$
—

Other policyholder funds, embedded derivatives
 
80,733

 
80,733

 
—

 
—

 
80,733
Table for reconciliations for all Level 3 assets measured at fair value on a recurring basis The following table presents reconciliations for the periods indicated for all Level 3 assets and liabilities measured at fair value on a recurring basis.
($ in thousands)
 
Financial Assets
 
Financial
Liabilities(1)
 
 
Municipal
Bonds
 
Corporate
Bonds
 
Other
Mortgage-
Backed
Securities (2)
 
Total
Fixed
Maturity
Securities
 
Equity
Securities
 
Short-term
Investments
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance, July 1, 2018
 
$
49,921

 
$
92,663

 
$
129,061

 
$
271,645

 
$
6

 
$
—

 
$
271,651

 
$
77,788

Transfers into Level 3 (3)
 
—

 
—

 
17,030

 
17,030

 
—

 
—

 
17,030

 
—

Transfers out of Level 3 (3)
 
—

 
—

 
(970
)
 
(970
)
 
—

 
—

 
(970
)
 
—

Total gains or losses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment gains (losses) included in net income
related to financial assets
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Net (gains) losses included
in net income related
to financial liabilities
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
2,205

Net unrealized investment gains
(losses) on securities
included in OCI
 
(471
)
 
128

 
(6,184
)
 
(6,527
)
 
—

 
—

 
(6,527
)
 
—

Purchases
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Issuances
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
3,940

Sales
 
—

 
—

 
(187
)
 
(187
)
 
—

 
—

 
(187
)
 
—

Settlements
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Paydowns, maturities
and distributions
 
(121
)
 
(3,926
)
 
(15,466
)
 
(19,513
)
 
—

 
—

 
(19,513
)
 
(1,668
)
Ending balance, September 30, 2018
 
$
49,329

 
$
88,865

 
$
123,284

 
$
261,478

 
$
6

 
$
—

 
$
261,484

 
$
82,265

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance, January 1, 2018
 
$
49,328

 
$
72,979

 
$
107,944

 
$
230,251

 
$
6

 
$
—

 
$
230,257

 
$
80,733

Transfers into Level 3 (3)
 
—

 
40,487

 
50,174

 
90,661

 
—

 
—

 
90,661

 
—

Transfers out of Level 3 (3)
 
—

 
(11,279
)
 
(5,200
)
 
(16,479
)
 
—

 
—

 
(16,479
)
 
—

Total gains or losses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment gains (losses) included in net income related to financial assets
 
—

 
(246
)
 
—

 
(246
)
 
3

 
—

 
(243
)
 
—

Net (gains) losses included
in net income related
to financial liabilities
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(1,308
)
Net unrealized investment gains
(losses) on securities
included in OCI
 
369

 
(1,459
)
 
(5,547
)
 
(6,637
)
 
—

 
—

 
(6,637
)
 
—

Purchases
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Issuances
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
7,379

Sales
 
—

 
—

 
(187
)
 
(187
)
 
(3
)
 
—

 
(190
)
 
—

Settlements
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Paydowns, maturities
and distributions
 
(368
)
 
(11,617
)
 
(23,900
)
 
(35,885
)
 
—

 
—

 
(35,885
)
 
(4,539
)
Ending balance, September 30, 2018
 
$
49,329

 
$
88,865

 
$
123,284

 
$
261,478

 
$
6

 
$
—

 
$
261,484

 
$
82,265

________________
(1) 
Represents embedded derivatives, all related to FIA products, reported in Other policyholder funds in the Company’s Consolidated Balance Sheets.
(2) 
Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities.
(3) 
Transfers into and out of Level 3 during the three and nine month periods ended September 30, 2018 were attributable to changes in the availability of observable market information for individual fixed maturity securities. The Company’s policy is to recognize transfers into and transfers out of the levels as having occurred at the end of the reporting period in which the transfers were determined.


($ in thousands)
 
Financial Assets
 
Financial
Liabilities(1)
 
 
Municipal
Bonds
 
Corporate
Bonds
 
Mortgage-
Backed
Securities (2)
 
Total
Fixed
Maturity
Securities
 
Equity
Securities
 
Short-term
Investments
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance, July 1, 2017
 
$
49,123

 
$
77,052

 
$
120,324

 
$
246,499

 
$
6

 
$
—

 
$
246,505

 
$
67,995

Transfers into Level 3 (3)
 
—

 
23,501

 
11,961

 
35,462

 
—

 
—

 
35,462

 
—

Transfers out of Level 3 (3)
 
—

 
1

 
(881
)
 
(880
)
 
—

 
—

 
(880
)
 
—

Total gains or losses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment gains (losses) included in net income
related to financial assets
 
—

 
(1
)
 
(160
)
 
(161
)
 
—

 
—

 
(161
)
 
—

Net (gains) losses included
in net income related
to financial liabilities
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
2,587

Net unrealized investment gains
(losses) on securities
included in OCI
 
382

 
(192
)
 
(377
)
 
(187
)
 
—

 
—

 
(187
)
 
—

Purchases
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Issuances
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
3,752

Sales
 
—

 
(1,999
)
 
—

 
(1,999
)
 
—

 
—

 
(1,999
)
 
—

Settlements
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Paydowns, maturities
and distributions
 
(293
)
 
(4,117
)
 
(9,249
)
 
(13,659
)
 
—

 
—

 
(13,659
)
 
(1,348
)
Ending balance, September 30, 2017
 
$
49,212

 
$
94,245

 
$
121,618

 
$
265,075

 
$
6

 
$
—

 
$
265,081

 
$
72,986

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance, January 1, 2017
 
$
46,497

 
$
60,191

 
$
104,659

 
$
211,347

 
$
6

 
$
751

 
$
212,104

 
$
59,393

Transfers into Level 3 (3)
 
5,214

 
55,420

 
36,482

 
97,116

 
—

 
—

 
97,116

 
—

Transfers out of Level 3 (3)
 
(5,557
)
 
(11,962
)
 
(881
)
 
(18,400
)
 
—

 
(751
)
 
(19,151
)
 
—

Total gains or losses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment gains (losses)
included in net income
related to financial assets
 
—

 
(1
)
 
(1,874
)
 
(1,875
)
 
—

 
—

 
(1,875
)
 
—

Net (gains) losses included
in net income related
to financial liabilities
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
6,133

Net unrealized investment gains
(losses) on securities
included in OCI
 
3,540

 
263

 
1,945

 
5,748

 
—

 
—

 
5,748

 
—

Purchases
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Issuances
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
10,538

Sales
 
—

 
(1,999
)
 
—

 
(1,999
)
 
—

 
—

 
(1,999
)
 
—

Settlements
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Paydowns, maturities
and distributions
 
(482
)
 
(7,667
)
 
(18,713
)
 
(26,862
)
 
—

 
—

 
(26,862
)
 
(3,078
)
Ending balance, September 30, 2017
 
$
49,212

 
$
94,245

 
$
121,618

 
$
265,075

 
$
6

 
$
—

 
$
265,081

 
$
72,986

________________
(1) 
Represents embedded derivatives, all related to FIA products, reported in Other policyholder funds in the Company’s Consolidated Balance Sheets.
(2) 
Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities.
(3) 
Transfers into and out of Level 3 during the three and nine month periods ended September 30, 2017 were attributable to changes in the availability of observable market information for individual fixed maturity securities and short-term investments. The Company’s policy is to recognize transfers into and transfers out of the levels as having occurred at the end of the reporting period in which the transfers were determined.
Summary of fair value assets and liabilities measured on nonrecurring basis The Company has various other financial assets and financial liabilities used in the normal course of business that are not carried at fair value, but for which fair value disclosure is required. The following table presents the carrying value, fair value and fair value hierarchy of these financial assets and financial liabilities.
($ in thousands)
 
 
 
Fair Value Measurements at
 
 
Carrying
 
Fair
 
Reporting Date Using
 
 
Amount
 
Value
 
Level 1
 
Level 2
 
Level 3
September 30, 2018
 
 
 
 
 
 
 
 
 
 
Financial Assets
 
 
 
 
 
 
 
 
 
 
Investments
 
 
 
 
 
 
 
 
 
 
Other investments
 
$
155,410

 
$
160,121

 
$
—

 
$
—

 
$
160,121

Financial Liabilities
 
 
 
 
 
 
 
 
 
 
Investment contract and life policy reserves,
fixed annuity contracts
 
4,545,232

 
4,445,442

 
—

 
—

 
4,445,442

Investment contract and life policy reserves,
account values on life contracts
 
85,698

 
91,254

 
—

 
—

 
91,254

Other policyholder funds
 
640,187

 
640,187

 
—

 
576,021

 
64,166

Long-term debt
 
297,671

 
304,614

 
—

 
304,614

 
—

 
 
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
 
 
 
Financial Assets
 
 
 
 
 
 
 
 
 
 
Investments
 
 
 
 
 
 
 
 
 
 
Other investments
 
$
154,898

 
$
159,575

 
$
—

 
$
—

 
$
159,575

Financial Liabilities
 
 

 
 

 
 

 
 

 
 

Investment contract and life policy reserves,
fixed annuity contracts
 
4,452,972

 
4,366,334

 
—

 
—

 
4,366,334

Investment contract and life policy reserves,
account values on life contracts
 
82,911

 
88,620

 
—

 
—

 
88,620

Other policyholder funds
 
643,528

 
643,528

 
—

 
575,622

 
67,906

Long-term debt
 
297,469

 
311,315

 
—

 
311,315

 
—