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Note 5 - Investments
9 Months Ended
Sep. 30, 2019
Investments [Abstract]  
Investments Investments
Available for Sale Securities
Our available for sale securities within our investment portfolio consisted of the following as of the dates indicated:
 
September 30, 2019
(In thousands)
Amortized
Cost
 
Fair Value
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
Fixed-maturities available for sale:
 
 
 
 
 
 
 
U.S. government and agency securities
$
176,682

 
$
182,415

 
$
5,839

 
$
106

State and municipal obligations
100,070

 
110,981

 
10,911

 

Corporate bonds and notes
2,254,627

 
2,362,004

 
108,541

 
1,164

RMBS
605,687

 
619,935

 
15,286

 
1,038

CMBS
542,284

 
563,338

 
21,966

 
912

Other ABS
718,854

 
717,986

 
2,394

 
3,262

Foreign government and agency securities
5,089

 
5,182

 
93

 

Total securities available for sale, including loaned securities
4,403,293

 
4,561,841

 
$
165,030

 
$
6,482

Less: loaned securities
34,020

 
34,618

 
 
 
 
Total fixed-maturities available for sale
$
4,369,273

 
$
4,527,223

 


 



 
December 31, 2018
(In thousands)
Amortized
Cost
 
Fair Value
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
Fixed-maturities available for sale:
 
 
 
 
 
 
 
U.S. government and agency securities
$
85,532

 
$
84,070

 
$
46

 
$
1,508

State and municipal obligations
138,022

 
138,313

 
2,191

 
1,900

Corporate bonds and notes
2,288,720

 
2,229,885

 
5,053

 
63,888

RMBS
334,843

 
332,142

 
1,785

 
4,486

CMBS
546,729

 
539,915

 
544

 
7,358

Other ABS
712,748

 
704,662

 
814

 
8,900

Total securities available for sale, including loaned securities
4,106,594

 
4,028,987

 
$
10,433

 
$
88,040

Less: loaned securities
7,632

 
7,412

 
 
 
 
Total fixed-maturities available for sale
$
4,098,962

 
$
4,021,575

 


 



Gross Unrealized Losses and Fair Value of Available for Sale Securities
For securities deemed “available for sale” and that are in an unrealized loss position, the following tables show the gross unrealized losses and fair values, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of the dates indicated. Included in the amounts as of September 30, 2019 and December 31, 2018 are loaned securities under securities lending agreements that are classified as other assets in our condensed consolidated balance sheets, as further described below.
 
 
September 30, 2019
($ in thousands) Description of Securities
 
Less Than 12 Months
 
12 Months or Greater
 
Total
 
# of
securities
 
Fair Value
 
Unrealized
Losses
 
# of
securities
 
Fair Value
 
Unrealized
Losses
 
# of
securities
 
Fair Value
 
Unrealized
Losses
U.S. government and agency securities
 
4

 
$
68,719

 
$
89

 
3

 
$
9,051

 
$
17

 
7

 
$
77,770

 
$
106

Corporate bonds and notes
 
28

 
126,732

 
1,145

 
4

 
8,543

 
19

 
32

 
135,275

 
1,164

RMBS
 
5

 
30,478

 
52

 
23

 
44,649

 
986

 
28

 
75,127

 
1,038

CMBS
 
18

 
32,861

 
724

 
10

 
9,120

 
188

 
28

 
41,981

 
912

Other ABS
 
60

 
257,688

 
1,003

 
40

 
155,904

 
2,259

 
100

 
413,592

 
3,262

Total
 
115

 
$
516,478

 
$
3,013

 
80

 
$
227,267

 
$
3,469

 
195

 
$
743,745

 
$
6,482

 
 
December 31, 2018
($ in thousands) Description of Securities
 
Less Than 12 Months
 
12 Months or Greater
 
Total
 
# of
securities
 
Fair Value
 
Unrealized
Losses
 
# of
securities
 
Fair Value
 
Unrealized
Losses
 
# of
securities
 
Fair Value
 
Unrealized
Losses
U.S. government and agency securities
 
2

 
$
27,415

 
$
796

 
8

 
$
23,476

 
$
712

 
10

 
$
50,891

 
$
1,508

State and municipal obligations
 
12

 
41,263

 
955

 
16

 
39,982

 
945

 
28

 
81,245

 
1,900

Corporate bonds and notes
 
330

 
1,208,430

 
36,284

 
126

 
601,533

 
27,604

 
456

 
1,809,963

 
63,888

RMBS
 
15

 
92,315

 
782

 
28

 
77,395

 
3,704

 
43

 
169,710

 
4,486

CMBS
 
62

 
328,696

 
3,973

 
33

 
125,728

 
3,385

 
95

 
454,424

 
7,358

Other ABS
 
129

 
503,109

 
7,917

 
26

 
89,628

 
983

 
155

 
592,737

 
8,900

Total
 
550

 
$
2,201,228

 
$
50,707

 
237

 
$
957,742

 
$
37,333

 
787

 
$
3,158,970

 
$
88,040


Although we held available for sale securities in an unrealized loss position as of September 30, 2019, we did not consider those securities to be other-than-temporarily impaired as of such date. For all investment categories, the unrealized losses of 12 months or greater duration as of September 30, 2019 were generally caused by interest rate or credit spread movements since the purchase date, and as such, we expect to recover the amortized cost basis of these securities. As of September 30, 2019, we did not have the intent to sell any available for sale securities in an unrealized loss position, and we determined that it is more likely than not that we will not be required to sell the securities before recovery of their cost basis, which may be at maturity; therefore, we did not consider these investments to be other-than-temporarily impaired at September 30, 2019.
Other-than-temporary Impairment Activity. To the extent we determine that a security is deemed to have had an other-than-temporary impairment, an impairment loss is recognized. We recognized no other-than-temporary impairment losses in earnings during the nine months ended September 30, 2019 and $1.7 million of other-than-temporary impairment losses in earnings for the nine months ended September 30, 2018. There were no other-than-temporary impairment losses recognized in accumulated other comprehensive income (loss) for those periods.
Securities Lending Agreements
We participate in a securities lending program whereby we loan certain securities in our investment portfolio to third-party borrowers for short periods of time. Although we report such securities at fair value within other assets in our condensed consolidated balance sheets, rather than within investments, the detailed information we provide in this Note 5 includes these securities. See Note 4 for additional detail on the loaned securities, and see Notes 2 and 6 of Notes to Consolidated Financial Statements in our 2018 Form 10-K for additional information about our accounting policies with respect to our securities lending agreements and the collateral requirements thereunder, respectively.
All of our securities lending agreements are classified as overnight and revolving. Securities collateral on deposit with us from third-party borrowers totaling $32.3 million and $16.8 million as of September 30, 2019 and December 31, 2018, respectively, may not be transferred or re-pledged unless the third-party borrower is in default, and is therefore not reflected in our condensed consolidated financial statements.
Net Gains (Losses) on Investments
Net gains (losses) on investments consisted of:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(In thousands)
2019
 
2018
 
2019
 
2018
Net realized gains (losses):
 
 
 
 
 
 
 
Fixed-maturities available for sale (1) 
$
4,401

 
$
(4,219
)
 
$
5,209

 
$
(9,030
)
Trading securities
19

 
(260
)
 
(391
)
 
(910
)
Equity securities
(28
)
 
(69
)
 
(708
)
 
571

Other investments
205

 
101

 
521

 
392

Net realized gains (losses) on investments
4,597

 
(4,447
)
 
4,631

 
(8,977
)
Other-than-temporary impairment losses

 
(900
)
 

 
(1,744
)
Net unrealized gains (losses) on investments
4,419

 
1,405

 
33,005

 
(17,132
)
Total net gains (losses) on investments
$
9,016

 
$
(3,942
)
 
$
37,636

 
$
(27,853
)

______________________
(1)Components of net realized gains (losses) on fixed-maturities available for sale include:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(In thousands)
2019
 
2018
 
2019
 
2018
Gross investment gains from sales and redemptions
$
4,697

 
$
814

 
$
10,926

 
$
1,831

Gross investment losses from sales and redemptions
(296
)
 
(5,033
)
 
(5,717
)
 
(10,861
)

The net changes in unrealized gains (losses) recognized in earnings on investments that were still held at each period-end were as follows:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(In thousands)
2019
 
2018
 
2019
 
2018
Net unrealized gains (losses) on investments still held:
 
 
 
 
 
 
 
Trading securities
$
4,132

 
$
(2,581
)
 
$
18,962

 
$
(18,431
)
Equity securities
563

 
2,971

 
9,170

 
2,238

Other investments
47

 
430

 
(64
)
 
655

Net unrealized gains (losses) on investments still held
$
4,742

 
$
820

 
$
28,068

 
$
(15,538
)

Contractual Maturities
The contractual maturities of fixed-maturities available for sale were as follows:
 
September 30, 2019
 
Available for Sale
(In thousands)
Amortized
Cost
 
Fair
Value
Due in one year or less (1) 
$
132,819

 
$
132,897

Due after one year through five years (1) 
885,660

 
903,546

Due after five years through 10 years (1) 
1,108,946

 
1,168,298

Due after 10 years (1) 
409,043

 
455,841

RMBS (2) 
605,687

 
619,935

CMBS (2) 
542,284

 
563,338

Other ABS (2) 
718,854

 
717,986

Total
4,403,293

 
4,561,841

Less: loaned securities
34,020

 
34,618

Total fixed-maturities available for sale
$
4,369,273

 
$
4,527,223

______________________
(1)
Actual maturities may differ as a result of calls before scheduled maturity.
(2)
RMBS, CMBS and Other ABS are shown separately, as they are not due at a single maturity date.
Other
For the nine months ended September 30, 2019, we did not transfer any securities from the available for sale or trading categories.
Our fixed-maturities available for sale include securities totaling $110.0 million and $88.4 million at September 30, 2019 and December 31, 2018, respectively, serving as collateral for our FHLB advances. See Note 11 for additional information about our FHLB advances.
Our fixed-maturities available for sale include securities totaling $16.8 million and $17.6 million at September 30, 2019 and December 31, 2018, respectively, on deposit and serving as collateral with various state regulatory authorities.