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Income from Investments

12 Months Ended

Dec. 31, 2024

INVESTMENTS

Fixed Maturities

The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at December 31, 2024 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	$	588.6	$	0.6	$	(102.4)	$	—	$	486.8
States and Political Subdivisions	1,457.3		1.6		(225.4)		(0.3)		1,233.2
Foreign Governments	6.5		0.3		(0.2)		—		6.6
Corporate Securities:
Bonds and Notes	4,038.3		8.9		(518.8)		(8.8)		3,519.6
Redeemable Preferred Stocks	9.8		0.1		(1.0)		—		8.9
Collateralized Loan Obligations	747.8		2.5		(7.2)		(1.6)		741.5
Other Mortgage- and Asset-backed	446.7		0.8		(34.5)		—		413.0
Investments in Fixed Maturities	$	7,295.0	$	14.8	$	(889.5)	$	(10.7)	$	6,409.6

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

Other Receivables included $1.8 million and $0.9 million of unsettled sales of Investments in Fixed Maturities at December 31, 2024 and December 31, 2023, respectively. There were $11.6 million of unsettled purchases of Investments in Fixed Maturities included in Accrued Expenses and Other Liabilities as of December 31, 2024. There were no unsettled purchases of Investments in Fixed Maturities included in Accrued Expenses and Other Liabilities as of December 31, 2023.

The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at December 31, 2024 by contractual maturity were:


(Dollars in Millions)	Amortized Cost		Fair Value
Due in One Year or Less	$	337.0	$	332.3
Due after One Year to Five Years	773.5		746.3
Due after Five Years to Ten Years	1,021.6		890.0
Due after Ten Years	3,496.9		2,903.7
Mortgage- and Asset-backed Securities Not Due at a Single Maturity Date	1,666.0		1,537.3
Investments in Fixed Maturities	$	7,295.0	$	6,409.6

NOTE 11. 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, 2024 consisted of securities issued by the Government National Mortgage Association with a fair value of $207.0 million, securities issued by the Federal National Mortgage Association with a fair value of $99.5 million, securities issued by the Federal Home Loan Mortgage Corporation with a fair value of $76.3 million and securities of other non-governmental issuers with a fair value of $1,154.5 million.

An aging of unrealized losses on the Company’s Investments in Fixed Maturities at December 31, 2024 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	$	41.7	$	(0.5)	$	383.6	$	(101.9)	$	425.3	$	(102.4)
States and Political Subdivisions	242.7		(10.3)		933.4		(215.1)		1,176.1		(225.4)
Foreign Governments	—		—		1.4		(0.2)		1.4		(0.2)
Corporate Securities:
Bonds and Notes	674.3		(40.9)		2,605.7		(477.9)		3,280.0		(518.8)
Redeemable Preferred Stocks	2.0		—		6.6		(1.0)		8.6		(1.0)
Collateralized Loan Obligations	34.2		(0.1)		89.5		(7.1)		123.7		(7.2)
Other Mortgage- and Asset-backed	12.0		(0.1)		261.7		(34.4)		273.7		(34.5)
Total Fixed Maturities	$	1,006.9	$	(51.9)	$	4,281.9	$	(837.6)	$	5,288.8	$	(889.5)

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 Income (Loss) in the periods when such determinations are made.

Investment-grade fixed maturity investments comprised $875.3 million and below-investment-grade fixed maturity investments comprised $14.2 million of the unrealized losses on investments in fixed maturities at December 31, 2024. For below-investment-grade fixed maturity investments in an unrealized loss position, the unrealized loss amount, on average, was 4.9% of the amortized cost basis of the investment.

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)

NOTE 11. INVESTMENTS (Continued)

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 approximately 8.8% of the amortized cost basis of the investment.

At December 31, 2024 and 2023, 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, 2024 and 2023. 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 the year ended December 31, 2024. Accrued interest excluded from the amortized cost of fixed income securities total $70.9 million and $77.0 million as of December 31, 2024 and 2023, respectively, and is reported within the Other Receivables line of the Consolidated Balance Sheets. The Company monitors accrued interest and writes off amounts when they are deemed uncollectible.


	States and Political Subdivisions		Corporate Bonds and Notes		Total
(Dollars in Millions)
Balance, Beginning of Year	$	0.5	$	7.7	$	8.2
Additions for Securities for which No Previous Expected Credit Losses were Recognized	—		3.4		3.4
Reductions due to Sales	—		(0.8)		(0.8)
Net (Decrease) Increase in Allowance on Securities for which Expected Credit Losses were Previously Recognized	(0.2)		0.1		(0.1)

Balance, End of Year	$	0.3	$	10.4	$	10.7

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


	States and Political Subdivisions		Corporate Bonds and Notes		Total
(Dollars in Millions)
Balance, Beginning of Year	$	0.7	$	8.9	$	9.6

Additions for Securities for which No Previous Expected Credit Losses were Recognized	—		2.9		2.9
Reduction 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)
Balance, End of Year	$	0.5	$	7.7	$	8.2

Equity Securities

Equity Securities at Fair Value

Investments in Equity Securities at Fair Value were $218.5 million and $225.8 million at December 31, 2024 and 2023, respectively. Net unrealized (losses) gains arising during the year ended December 31, 2024 and 2023 and recognized in

NOTE 11. INVESTMENTS (Continued)

earnings, related to such investments still held as of December 31, 2024 and December 31, 2023 were $(5.1) million and $3.0 million, respectively.

There were no unsettled purchases of Investments in Equity Securities at Fair Value at December 31, 2024 or December 31, 2023. There was $0.3 million and $0.1 million in unsettled sales of Investments in Equity Securities at Fair Value at December 31, 2024 and December 31, 2023, respectively.

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.

The Company’s maximum exposure to loss at December 31, 2024 is limited to the total carrying value of $186.3 million. In addition, the Company had outstanding commitments totaling approximately $91.3 million to fund Equity Method Limited Liability Investments at December 31, 2024. At December 31, 2024, 3.1% of Equity Method Limited Liability Investments were reported without a reporting lag, 4.1% of the total carrying value were reported with a one-month lag, and the remainder were reported with a greater than a one-month but less than or equal to three-month lag.

There were no unsettled purchases of Equity Method Limited Liability Investments as of December 31, 2024 or 2023. There were no unsettled sales of Equity Method Limited Liability Investments as of December 31, 2024 or 2023. Unsettled purchases and sales of Equity Method Limited Liability Investments are carried within the Accrued Expenses and Other Liabilities and Other Receivables, respectively, on the Consolidated Balance Sheets.

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, 2024 is limited to the total carrying value of $17.6 million. The Company has no outstanding commitments to fund Alternative Energy Partnership Investments as of December 31, 2024. 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, 2024 and 2023 were $539.2 million and $513.5 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, 2024 and 2023 were $280.7 million and $281.2 million, respectively.

NOTE 11. INVESTMENTS (Continued)

Other Investments

The carrying values of the Company’s Other Investments at December 31, 2024 and 2023 were:


(Dollars in Millions)	2024		2023
Equity Securities at Modified Cost	$	22.5	$	32.6

Real Estate at Depreciated Cost	99.5		94.7
Mortgage Loans	75.3		99.8
Other	2.2		14.8
Total Other Investments	$	199.5	$	241.9

Investments in Equity Securities at Modified Cost were $22.5 million and $32.6 million at December 31, 2024 and 2023, 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 Income (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 years ended December 31, 2024 and 2023. The Company recognized an impairment of $0.4 million and $0.5 million on Equity Securities at Modified Cost for the years ended December 31, 2024 and 2023, respectively, as a result of the Company’s impairment analysis. No impairments were recognized for the year ended December 31, 2022 on Equity Securities at Modified Cost. The Company recognized no cumulative increases or decreases in the carrying value due to observable transactions and $3.2 million of cumulative impairments on Equity Securities at Modified Cost held as of December 31, 2024. 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, 2024, 2023 and 2022 was:


DOLLARS IN MILLIONS	2024		2023		2022
Investment Income:
Interest on Fixed Income Securities1,2	$	315.3	$	323.3	$	290.0
Dividends on Equity Securities Excluding Alternative Investments	5.4		4.4		6.3
Alternative Investments:
Equity Method Limited Liability Investments	(18.2)		10.5		31.3

Limited Liability Investments Included in Equity Securities	24.5		19.0		42.1
Total Alternative Investments	6.3		29.5		73.4
Short-term Investments	33.5		18.0		3.7
Loans to Policyholders	21.0		20.9		21.5
Real Estate	8.8		8.9		10.1
Company-Owned Life Insurance	35.7		29.2		37.9
Other	8.2		12.9		7.7
Total Investment Income	434.2		447.1		450.6
Investment Expenses:
Real Estate	8.7		8.8		7.9
Other Investment Expenses1	18.0		18.6		20.1
Total Investment Expenses	26.7		27.4		28.0
Net Investment Income	$	407.5	$	419.7	$	422.6
1In 2024, the Company changed its presentation of the details of investment performance to report interest expense incurred on Federal Home Loan Bank ("FHLB") borrowings as an offset to interest on fixed income securities since FHLB borrowings are used for spread lending purposes. The interest expense incurred on FHLB borrowings was previously reported within Other Investment Expenses. The prior period amounts presented above have been updated to reflect this change in presentation.
2Reduced by interest expense incurred on FHLB borrowings used for spread lending purposes of $20.3 million, $22.7 million and $10.1 million for the year ended December 31, 2024, 2023, and 2022, respectively.

Other Receivables includes accrued investment income of $81.9 million and $88.4 million at December 31, 2024 and 2023, respectively.

NOTE 12. INCOME FROM INVESTMENTS (Continued)

The components of Net Realized Gains (Losses) for the years ended December 31, 2024, 2023 and 2022 were:


DOLLARS IN MILLIONS	2024		2023		2022
Fixed Maturities:
Gains on Sales	$	20.2	$	5.9	$	31.6
Losses on Sales	(3.2)		(10.9)		(31.9)
(Losses) Gains on Hedging Activity	(7.9)		(11.9)		1.7
Equity Securities:
Gains on Sales	4.2		0.6		9.7
Losses on Sales	(0.1)		(2.5)		(6.8)






Other Investments:

Gains on Sales	4.2		0.2		—
Losses on Sales	(4.2)		—		—

Net Realized Investment Gains (Losses)	$	13.2	$	(18.6)	$	4.3

Gross Gains on Sales	$	28.6	$	6.7	$	41.3
Gross Losses on Sales	(7.5)		(13.4)		(38.7)
(Losses) Gains on Hedging Activity	(7.9)		(11.9)		1.7
Net Realized Investment Gains (Losses)	$	13.2	$	(18.6)	$	4.3

The components of Impairment Losses reported in the Consolidated Statements of Income (Loss) for the years ended December 31, 2024, 2023 and 2022 were:


DOLLARS IN MILLIONS	2024		2023		2022
Fixed Maturities	$	(4.8)	$	(0.1)	$	(25.8)
Equity Securities at Modified Cost	(0.4)		(0.5)		—
Real Estate	(0.4)		—		—
Other	(0.2)		(0.5)		—
Net Impairment Losses Recognized in Earnings1	$	(5.8)	$	(1.1)	$	(25.8)

I Includes losses from intent-to-sell securities of $3.3 million, $2.0 million and $23.8 million for the years ended December 31, 2024, 2023 and 2022, respectively.