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Investments

12 Months Ended

Dec. 31, 2023

Investments, Debt and Equity Securities [Abstract]

INVESTMENTS

Fixed Maturities

The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at December 31, 2023 were:


DOLLARS IN MILLIONS	Amortized Cost		Gross Unrealized				Allowance for Expected Credit Losses		Fair Value
			Gains		Losses
U.S. Government and Government Agencies and Authorities	$	594.1	$	1.9	$	(84.5)	$	—	$	511.5
States and Political Subdivisions	1,575.9		16.3		(189.8)		(0.5)		1,401.9
Foreign Governments	4.4		—		(0.6)		—		3.8
Corporate Securities:
Bonds and Notes	4,046.8		35.5		(383.8)		(7.7)		3,690.8
Redeemable Preferred Stocks	9.0		0.1		(0.8)		—		8.3
Collateralized Loan Obligations	973.6		0.7		(24.5)		—		949.8
Other Mortgage- and Asset-backed	362.0		0.1		(46.3)		—		315.8
Investments in Fixed Maturities	$	7,565.8	$	54.6	$	(730.3)	$	(8.2)	$	6,881.9

The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at December 31, 2022 were:


	Amortized Cost		Gross Unrealized				Allowance for Expected Credit Losses		Fair Value
DOLLARS IN MILLIONS			Gains		Losses
U.S. Government and Government Agencies and Authorities	$	612.5	$	1.3	$	(85.8)	$	—	$	528.0
States and Political Subdivisions	1,797.6		10.3		(238.3)		(0.7)		1,568.9
Foreign Governments	5.0		—		(0.9)		—		4.1
Corporate Securities:
Bonds and Notes	4,030.3		17.7		(499.7)		(8.9)		3,539.4
Redeemable Preferred Stocks	9.0		—		(1.0)		—		8.0
Collateralized Loan Obligations	1,014.7		—		(60.8)		—		953.9
Other Mortgage- and Asset-backed	342.7		0.1		(50.3)		—		292.5
Investments in Fixed Maturities	$	7,811.8	$	29.4	$	(936.8)	$	(9.6)	$	6,894.8

Other Receivables included $0.9 million and $5.8 million of unsettled sales of Investments in Fixed Maturities at December 31, 2023 and December 31, 2022, respectively. There were no unsettled purchases of Investments in Fixed Maturities included in Accrued Expenses and Other Liabilities as of December 31, 2023. There were $25.9 million of unsettled purchases of Investments in Fixed Maturities included in Accrued Expenses and Other Liabilities as of December 31, 2022.

The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at December 31, 2023 by contractual maturity were:


DOLLARS IN MILLIONS	Amortized Cost		Fair Value
Due in One Year or Less	$	173.8	$	169.9
Due after One Year to Five Years	903.0		876.3
Due after Five Years to Ten Years	1,069.5		940.1
Due after Ten Years	3,615.5		3,235.4
Mortgage- and Asset-backed Securities Not Due at a Single Maturity Date	1,804.0		1,660.2
Investments in Fixed Maturities	$	7,565.8	$	6,881.9

NOTE 10. INVESTMENTS (Continued)

The expected maturities of the Company’s Investments in Fixed Maturities may differ from the contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

Investments in Mortgage- and Asset-backed Securities Not Due at a Single Maturity Date at December 31, 2023 consisted of securities issued by the Government National Mortgage Association with a fair value of $237.8 million, securities issued by the Federal National Mortgage Association with a fair value of $92.5 million, securities issued by the Federal Home Loan Mortgage Corporation with a fair value of $64.3 million and securities of other non-governmental issuers with a fair value of $1,265.6 million.

An aging of unrealized losses on the Company’s Investments in Fixed Maturities at December 31, 2023 is presented below.


DOLLARS IN MILLIONS	Less Than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Fixed Maturities:
U.S. Government and Government Agencies and Authorities	$	52.0	$	(0.8)	$	401.6	$	(83.7)	$	453.6	$	(84.5)
States and Political Subdivisions	112.9		(2.3)		928.3		(187.5)		1,041.2		(189.8)
Foreign Governments	—		—		1.9		(0.6)		1.9		(0.6)
Corporate Securities:
Bonds and Notes	198.4		(5.5)		2,813.0		(378.3)		3,011.4		(383.8)
Redeemable Preferred Stocks	—		—		7.9		(0.8)		7.9		(0.8)
Collateralized Loan Obligations	38.8		(0.4)		747.7		(24.1)		786.5		(24.5)
Other Mortgage- and Asset-backed	15.7		(0.1)		287.3		(46.2)		303.0		(46.3)
Total Fixed Maturities	$	417.8	$	(9.1)	$	5,187.7	$	(721.2)	$	5,605.5	$	(730.3)

The Company regularly reviews its fixed maturity investment portfolio for factors that may indicate that a decline in fair value of an investment has resulted from an expected credit loss. The portions of the declines in the fair values of fixed maturity investments that are determined to be due to expected credit losses are reported as losses in the Consolidated Statements of Loss in the periods when such determinations are made.

Investment-grade fixed maturity investments comprised $704.8 million and below-investment-grade fixed maturity investments comprised $25.5 million of the unrealized losses on investments in fixed maturities at December 31, 2023. For below-investment-grade fixed maturity investments in an unrealized loss position, the unrealized loss amount, on average, was 8.8% of the amortized cost basis.

An aging of unrealized losses on the Company’s Investments in Fixed Maturities at December 31, 2022 is presented below.


DOLLARS IN MILLIONS	Less Than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Fixed Maturities:
U.S. Government and Government Agencies and Authorities	$	337.3	$	(49.3)	$	126.5	$	(36.5)	$	463.8	$	(85.8)
States and Political Subdivisions	854.7		(140.6)		276.8		(97.7)		1,131.5		(238.3)
Foreign Governments	0.1		—		2.6		(0.9)		2.7		(0.9)
Corporate Securities:
Bonds and Notes	2,730.6		(373.9)		424.4		(125.8)		3,155.0		(499.7)
Redeemable Preferred Stocks	7.7		(1.0)		—		—		7.7		(1.0)
Collateralized Loan Obligations	568.2		(34.2)		373.9		(26.6)		942.1		(60.8)
Other Mortgage- and Asset-backed	205.4		(28.9)		79.5		(21.4)		284.9		(50.3)
Total Fixed Maturities	$	4,704.0	$	(627.9)	$	1,283.7	$	(308.9)	$	5,987.7	$	(936.8)

NOTE 10. INVESTMENTS (Continued)

Investment-grade fixed maturity investments comprised $904.0 million and below-investment-grade fixed maturity investments comprised $32.8 million of the unrealized losses on investments in fixed maturities at December 31, 2022. For below-investment-grade fixed maturity investments in an unrealized loss position, the unrealized loss amount, on average, was approximately 11% of the amortized cost basis of the investment.

At December 31, 2023 and 2022, the Company did not have the intent to sell these investments, and it was not more likely than not that the Company would be required to sell these investments before an anticipated recovery of value. The Company evaluated these investments for credit losses at December 31, 2023 and 2022. The Company considers many factors in evaluating whether the unrealized losses were credit related including, but not limited to, the extent to which the fair value has been less than amortized cost, conditions related to the security, industry, or geographic area, payment structure of the investment and the likelihood of the issuer’s ability to make contractual cashflows, defaults or other collectability concerns related to the issuer, changes in the ratings assigned by a rating agency, and other credit enhancements that affect the investment’s expected performance. The Company determined that the unrealized losses on these securities were due to non-credit related factors at the evaluation date.

Fixed Maturities - Expected Credit Losses

The following table sets forth the change in allowance for credit losses on fixed maturities available-for-sale by major security type for year ended December 31, 2023.


	States and Political Subdivisions		Corporate Bonds and Notes		Total
(Dollars in Millions)
Beginning of the Year	$	0.7	$	8.9	$	9.6
Additions for Securities for which No Previous Expected Credit Losses were Recognized	—		2.9		2.9
Reductions due to Sales	—		(2.6)		(2.6)
Net Increase (Decrease) in Allowance on Securities for which Expected Credit Losses were Previously Recognized	0.2		(1.1)		(0.9)
Write-offs Charged Against Allowance	(0.4)		(0.4)		(0.8)
End of the Year	$	0.5	$	7.7	$	8.2

The following table sets forth the change in allowance for credit losses on fixed maturities available-for-sale by major security type for year ended December 31, 2022.


	States and Political Subdivisions		Corporate Bonds and Notes		Total
(Dollars in Millions)
Beginning of the Year	$	—	$	7.5	$	7.5

Additions for Securities for which No Previous Expected Credit Losses were Recognized	0.7		6.3		7.0
Net Increase in Allowance on Securities for which Expected Credit Losses were Previously Recognized	—		5.8		5.8
Write-offs Charged Against Allowance	—		(10.7)		(10.7)
End of the Year	$	0.7	$	8.9	$	9.6

Equity Securities

Equity Securities at Fair Value

Equity securities with readily-determinable fair values, including equity securities which the Company has elected to report at fair value are classified as Equity Securities at Fair Value in the Consolidated Balance Sheets with changes in fair value recorded as Income from Change in Fair Value of Equity and Convertible Securities in the Consolidated Statements of Loss. Net unrealized gains arising during the year ended December 31, 2023 and recognized in earnings, related to such investments still held as of December 31, 2023 were $3.0 million.

NOTE 10. INVESTMENTS (Continued)

There were no unsettled purchases of Investments in Equity Securities at Fair Value at December 31, 2023 or December 31, 2022. There were $0.1 million in unsettled sales of Investments in Equity Securities at Fair Value at December 31, 2023. There were no unsettled sales of Investments in Equity Securities at Fair Value at December 31, 2022.

Equity Method Limited Liability Investments

Equity Method Limited Liability Investments include investments in limited liability investment companies and limited partnerships in which the Company’s interests are not deemed minor and are accounted for under the equity method of accounting. The Company’s investments in Equity Method Limited Liability Investments are generally of a passive nature in that the Company does not take an active role in the management of the investment entity.

In 2023 and 2022, aggregate investment income from Equity Method Limited Liability Investments exceeded 10% of the Company’s pretax consolidated net income. Accordingly, the Company is disclosing aggregated summarized financial data for its Equity Method Limited Liability Investments for all periods presented in the Consolidated Financial Statements. Such aggregated summarized financial data does not represent the Company’s proportionate share of the Equity Method Limited Liability Investment assets or earnings. Aggregate total assets of the Equity Method Limited Liability Investments in which the Company invested totaled $5,720.9 million and $5,585.9 million, as of December 31, 2023 and 2022, respectively. Aggregate total liabilities of the Equity Method Limited Liability Investments in which the Company invested totaled $2,565.5 million and $2,367.0 million, as of December 31, 2023 and 2022, respectively. Aggregate net income of the Equity Method Limited Liability Investments in which the Company invested totaled $244.5 million, $381.8 million and $585.1 million for the years ended December 31, 2023, 2022, and 2021, respectively. The aggregate summarized financial data is based on the most recent and sufficiently-timely financial information available to the Company as of the respective reporting dates and periods. The Company’s maximum exposure to loss at December 31, 2023 is limited to the total carrying value of $221.7 million. In addition, the Company had outstanding commitments totaling approximately $85.3 million to fund Equity Method Limited Liability Investments at December 31, 2023. At December 31, 2023, 2.9% of Equity Method Limited Liability Investments were reported without a reporting lag, 5.4% of the total carrying value were reported with a one month lag, and the remainder were reported with more than a one month lag.

There were no unsettled purchases of Equity Method Limited Liability Investments as of December 31, 2023 and 2022. There were no unsettled sales of Equity Method Limited Liability Investments at December 31, 2023. There were $35.2 million in unsettled sales of Equity Method Limited Liability Investments at December 31, 2022.

Alternative Energy Partnership Investments

Alternative Energy Partnership Investments include partnerships formed to invest in newly installed residential solar leases and power purchase agreements. As a result of this investment, the Company has the right to certain investment tax credits and tax depreciation benefits, and to a lesser extent, cash flows generated from the installed solar systems leased to individual consumers for a fixed period of time. The HLBV equity method of accounting is used for the Company’s investments in Alternative Energy Partnership Investments.

The Company’s maximum exposure to loss at December 31, 2023 is limited to the total carrying value of $17.3 million. The Company has no outstanding commitments to fund Alternative Energy Partnership Investments as of December 31, 2023. Alternative Energy Partnership Investments are reported on a three month lag.

Company-Owned Life Insurance

The carrying values of the Company’s COLI investment at December 31, 2023 and 2022 were $513.5 million and $586.5 million, respectively.

Loans to Policyholders

Loans to Policyholders represents funds loaned to policyholders up to the cash surrender value of the associated insurance policies and are carried at the unpaid principal balances due to the Company from the policyholders. Interest income on policy loans is recognized in Net Investment Income at the contract interest rate when earned. Policy loans are fully collateralized by the cash surrender value of the associated insurance policies.

The carrying values of the Company’s Loans to Policyholders at Unpaid Principal investment at December 31, 2023 and 2022 were $281.2 million and $283.4 million, respectively.

NOTE 10. INVESTMENTS (Continued)

Other Investments

The carrying values of the Company’s Other Investments at December 31, 2023 and 2022 were:


DOLLARS IN MILLIONS	2023		2022
Equity Securities at Modified Cost	$	32.6	$	38.4
Convertible Securities at Fair Value	—		43.3
Real Estate at Depreciated Cost	94.7		93.6
Mortgage Loans	99.8		91.1
Other	14.8		3.5
Total	$	241.9	$	269.9

Investments in Equity Securities at Modified Cost were $32.6 million and $38.4 million at December 31, 2023 and 2022, respectively. The Company performs a qualitative impairment analysis on a quarterly basis consisting of various factors such as earnings performance, current market conditions, changes in credit ratings, changes in the regulatory environment and other factors. If the qualitative analysis identifies the presence of impairment indicators, the Company estimates the fair value of the investment. If the estimated fair value is below the carrying value, the Company records an impairment in the Consolidated Statements of Loss to reduce the carrying value to the estimated fair value. When the Company identifies observable transactions of the same or similar securities to those held by the Company, the Company increases or decreases the carrying value to the observable transaction price. The Company did not recognize any changes in carrying value due to observable transactions for the year ended December 31, 2023 and 2022. The Company recognized an impairment of $0.5 million, $— million and $4.2 million on Equity Securities at Modified Cost for the years ended December 31, 2023, 2022 and 2021, respectively, as a result of the Company’s impairment analysis. The Company recognized no cumulative increases or decreases in the carrying value due to observable transactions and $8.0 million of cumulative impairments on Equity Securities at Modified Cost held as of December 31, 2023.

INCOME FROM INVESTMENTS

Net Investment Income for the years ended December 31, 2023, 2022 and 2021 was:


DOLLARS IN MILLIONS	2023		2022		2021
Investment Income:
Interest on Fixed Income Securities	$	346.0	$	300.1	$	277.7
Dividends on Equity Securities Excluding Alternative Investments	4.4		6.3		15.9
Alternative Investments:
Equity Method Limited Liability Investments	10.5		31.3		56.7

Limited Liability Investments Included in Equity Securities	19.0		42.1		46.9
Total Alternative Investments	29.5		73.4		103.6
Short-term Investments	18.0		3.7		1.0
Loans to Policyholders	20.9		21.5		21.7
Real Estate	8.9		10.1		9.3
Company-Owned Life Insurance	29.2		37.9		25.7
Other	12.9		7.7		6.7
Total Investment Income	469.8		460.7		461.6
Investment Expenses:
Real Estate	8.8		7.9		9.7
Other Investment Expenses	41.3		30.2		24.6
Total Investment Expenses	50.1		38.1		34.3
Net Investment Income	$	419.7	$	422.6	$	427.3

Other Receivables includes accrued investment income of $88.4 million and $94.3 million at December 31, 2023 and 2022, respectively.

NOTE 11. INCOME FROM INVESTMENTS (Continued)

The components of Net Realized (Losses) Gains on Sales of Investments for the years ended December 31, 2023, 2022 and 2021 were:


DOLLARS IN MILLIONS	2023		2022		2021
Fixed Maturities:
Gains on Sales	$	5.9	$	31.6	$	63.4
Losses on Sales	(10.9)		(31.9)		(2.1)
(Losses) Gains on Hedging Activity	(11.9)		1.7		—
Equity Securities:
Gains on Sales	0.6		9.7		4.1
Losses on Sales	(2.5)		(6.8)		(0.7)
Equity Method Limited Liability Investments:
Gains on Sales	—		—		0.4

Real Estate:
Gains on Sales	—		—		0.1
Losses on Sales	—		—		(0.4)
Other Investments:

Gains on Sales	0.2		—		—


Net Realized Investment (Losses) Gains	$	(18.6)	$	4.3	$	64.8

Gross Gains on Sales	$	6.7	$	41.3	$	68.0
Gross Losses on Sales	(13.4)		(38.7)		(3.2)
(Losses) Gains on Hedging Activity	(11.9)		1.7		—
Net Realized Investment (Losses) Gains	$	(18.6)	$	4.3	$	64.8

The components of Impairment Losses reported in the Consolidated Statements of Loss for the years ended December 31, 2023, 2022 and 2021 were:


DOLLARS IN MILLIONS	2023		2022		2021
Fixed Maturities	$	(0.1)	$	(25.8)	$	(6.4)
Equity Securities at Modified Cost	(0.5)		—		(4.2)
Real Estate	—		—		(0.4)
Other	(0.5)		—		—
Net Impairment Losses Recognized in Earnings1	$	(1.1)	$	(25.8)	$	(11.0)

I Includes losses from intent-to-sell securities of $(2.0) million, $(23.8) million and $(6.6) million for the years ended December 31, 2023, 2022 and 2021, respectively.