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Investment in Securities
 9 Months Ended
Sep. 30, 2019
Investments, Debt and Equity Securities [Abstract]  
Investment in Securities Investment in Securities

The cost or amortized cost and fair value of investments in securities are shown below (in thousands):
 
September 30, 2019
 
Cost or
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
(Losses)
 
Fair Value
Fixed maturity securities, bonds held-to-maturity
 
 
 
 
 
 
 
U.S. states and political subdivisions
$
203,858

 
$
6,969

 
$
—

 
$
210,827

Foreign governments
3,921

 
469

 
—

 
4,390

Corporate debt securities
8,152,982

 
336,960

 
(5,998
)
 
8,483,944

Residential mortgage-backed securities
208,752

 
7,885

 
(629
)
 
216,008

Collateralized debt securities
146,056

 
2,726

 
(263
)
 
148,519

         Total bonds held-to-maturity
8,715,569

 
355,009

 
(6,890
)
 
9,063,688

Fixed maturity securities, bonds available-for-sale
 
 
 
 
 
 
 
U.S. treasury and government
29,510

 
477

 
(26
)
 
29,961

U.S. states and political subdivisions
1,053,360

 
52,394

 
(9
)
 
1,105,745

Foreign governments
5,000

 
1,361

 
—

 
6,361

Corporate debt securities
5,424,250

 
245,034

 
(19,934
)
 
5,649,350

Residential mortgage-backed securities
23,699

 
933

 
(168
)
 
24,464

Collateralized debt securities
9,539

 
825

 
—

 
10,364

         Total bonds available-for-sale
6,545,358

 
301,024

 
(20,137
)
 
6,826,245

Total investments in securities
$
15,260,927

 
$
656,033

 
$
(27,027
)
 
$
15,889,933


 
December 31, 2018
 
Cost or
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
(Losses)
 
Fair Value
Fixed maturity securities, bonds held-to-maturity
 
 
 
 
 
 
 
U.S. states and political subdivisions
$
245,360

 
$
5,840

 
$
(301
)
 
$
250,899

Foreign governments
3,961

 
469

 
—

 
4,430

Corporate debt securities
7,640,891

 
58,772

 
(150,834
)
 
7,548,829

Residential mortgage-backed securities
315,306

 
7,237

 
(2,633
)
 
319,910

Collateralized debt securities
5,214

 
71

 
—

 
5,285

Other debt securities
717

 
14

 
—

 
731

         Total bonds held-to-maturity
8,211,449

 
72,403

 
(153,768
)
 
8,130,084

Fixed maturity securities, bonds available-for-sale
 
 
 
 
 
 
 
U.S. treasury and government
28,304

 
338

 
(243
)
 
28,399

U.S. states and political subdivisions
848,228

 
16,827

 
(3,025
)
 
862,030

Foreign governments
5,000

 
1,210

 
—

 
6,210

Corporate debt securities
5,345,579

 
41,812

 
(103,573
)
 
5,283,818

Residential mortgage-backed securities
31,735

 
424

 
(497
)
 
31,662

Collateralized debt securities
2,775

 
675

 
(6
)
 
3,444

         Total bonds available-for-sale
6,261,621

 
61,286

 
(107,344
)
 
6,215,563

Total investments in securities
$
14,473,070

 
$
133,689

 
$
(261,112
)
 
$
14,345,647





The amortized cost and fair value, by contractual maturity, of fixed maturity securities are shown below (in thousands):
 
September 30, 2019
 
Bonds Held-to-Maturity
 
Bonds Available-for-Sale
 
Amortized Cost
 
Fair Value
 
Amortized Cost
 
Fair Value
Due in one year or less
$
541,108

 
$
547,409

 
$
437,371

 
$
440,611

Due after one year through five years
3,890,976

 
4,018,966

 
3,076,222

 
3,188,171

Due after five years through ten years
3,373,279

 
3,546,108

 
2,440,494

 
2,580,319

Due after ten years
910,206

 
951,205

 
591,271

 
617,144

  Total
$
8,715,569

 
$
9,063,688

 
$
6,545,358

 
$
6,826,245


Actual maturities differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Residential and commercial mortgage-backed securities, which are not due at a single maturity, have been allocated to their respective categories based on the year of final contractual maturity.
Proceeds from sales of available-for-sale securities, with the related gross realized gains and losses, are shown below (in thousands):
 
Three months ended September 30,
 
Nine months ended September 30,
 
2019
 
2018
 
2019
 
2018
Proceeds from sales of fixed maturity available-for-sale securities
$
14,921

 
$
18,424

 
$
15,205

 
$
64,980

Gross realized gains
56

 
—

 
56

 
376

Gross realized losses
—

 
(569
)
 
(23
)
 
(1,156
)

Gains and losses are determined using specific identification of the securities sold. During the nine months ended September 30, 2019 and 2018, bonds below investment grade with a carrying value of $157,939,000 and $34,850,000, respectively, were transferred from held-to-maturity to available-for-sale after a deterioration in the issuers’ credit worthiness. Further, during 2018, a bond with a carrying value of $38,221,000 was transferred from held-to-maturity to available-for-sale due to an isolated event that could not have been reasonably anticipated by the company. No realized loss was recorded in 2019 or 2018.
The components of the change in net unrealized gains (losses) on debt securities are shown below (in thousands):
 
Nine months ended September 30,
 
2019
 
2018
Bonds available-for-sale: change in unrealized gains (losses)
$
326,945

 
$
(232,433
)
Adjustments for
 
 
 
Deferred policy acquisition costs
(82,587
)
 
38,871

Participating policyholders’ interest
(14,989
)
 
13,975

Deferred federal income tax benefit (expense)
(48,064
)
 
37,471

Change in net unrealized gains (losses) on debt securities, net of tax
$
181,305

 
$
(142,116
)
The components of the change in net gains on equity securities are shown below (in thousands):
 
Three months ended September 30,
 
Nine months ended September 30,
 
2019
 
2018
 
2019
 
2018
Unrealized gains on equity securities
$
3,605

 
$
133,825

 
$
258,209

 
$
145,687

Net gains (losses) on equity securities sold
4,984

 
(7,330
)
 
23,817

 
4,800

Net gains on equity securities
$
8,589

 
$
126,495

 
$
282,026

 
$
150,487



The gross unrealized losses and fair value of the investment securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are shown below (in thousands):
 
September 30, 2019
 
Less than 12 months
 
12 months or more
 
Total
 
Unrealized
(Losses)
 
Fair
Value
 
Unrealized
(Losses)
 
Fair
Value
 
Unrealized
(Losses)
 
Fair
Value
Fixed maturity securities, bonds held-to-maturity
 
 
 
 
 
 
 
 
 
 
 
Corporate debt securities
$
(4,124
)
 
$
462,267

 
$
(1,874
)
 
$
39,440

 
$
(5,998
)
 
$
501,707

Residential mortgage-backed securities
(126
)
 
54,250

 
(503
)
 
6,638

 
(629
)
 
60,888

Collateralized debt securities
(263
)
 
37,757

 
—

 
—

 
(263
)
 
37,757

         Total bonds held-to-maturity
(4,513
)
 
554,274

 
(2,377
)
 
46,078

 
(6,890
)
 
600,352

Fixed maturity securities, bonds available-for-sale
 
 
 
 
 
 
 
 
 
 
 
U.S. treasury and government
(4
)
 
4,076

 
(22
)
 
8,280

 
(26
)
 
12,356

U.S. states and political subdivisions
(9
)
 
1,168

 
—

 
—

 
(9
)
 
1,168

Corporate debt securities
(5,707
)
 
162,194

 
(14,227
)
 
214,102

 
(19,934
)
 
376,296

Residential mortgage-backed securities
—

 
—

 
(168
)
 
766

 
(168
)
 
766

         Total bonds available-for-sale
(5,720
)
 
167,438

 
(14,417
)
 
223,148

 
(20,137
)
 
390,586

Total
$
(10,233
)
 
$
721,712

 
$
(16,794
)
 
$
269,226

 
$
(27,027
)
 
$
990,938


 
December 31, 2018
 
Less than 12 months
 
12 months or more
 
Total
 
Unrealized
(Losses)
 
Fair
Value
 
Unrealized
(Losses)
 
Fair
Value
 
Unrealized
(Losses)
 
Fair
Value
Fixed maturity securities, bonds held-to-maturity
 
 
 
 
 
 
 
 
 
 
 
U.S. states and political subdivisions
$
(301
)
 
$
22,605

 
$
—

 
$
—

 
$
(301
)
 
$
22,605

Corporate debt securities
(90,931
)
 
2,969,461

 
(59,903
)
 
1,063,679

 
(150,834
)
 
4,033,140

Residential mortgage-backed securities
(703
)
 
58,119

 
(1,930
)
 
57,661

 
(2,633
)
 
115,780

         Total bonds held-to-maturity
(91,935
)
 
3,050,185

 
(61,833
)
 
1,121,340

 
(153,768
)
 
4,171,525

Fixed maturity securities, bonds available-for-sale
 
 
 
 
 
 
 
 
 
 
 
U.S. treasury and government
(29
)
 
9,741

 
(214
)
 
13,478

 
(243
)
 
23,219

U.S. states and political subdivisions
(1,274
)
 
119,987

 
(1,751
)
 
61,992

 
(3,025
)
 
181,979

Corporate debt securities
(65,492
)
 
2,383,548

 
(38,081
)
 
572,600

 
(103,573
)
 
2,956,148

Residential mortgage-backed securities
(54
)
 
6,034

 
(443
)
 
13,515

 
(497
)
 
19,549

Collateralized debt securities
(2
)
 
158

 
(4
)
 
100

 
(6
)
 
258

         Total bonds available-for-sale
(66,851
)
 
2,519,468

 
(40,493
)
 
661,685

 
(107,344
)
 
3,181,153

Total
$
(158,786
)
 
$
5,569,653

 
$
(102,326
)
 
$
1,783,025

 
$
(261,112
)
 
$
7,352,678


As of September 30, 2019, the securities with unrealized losses including those exceeding one year were not deemed to be other-than-temporarily impaired. American National has the ability and intent to hold those securities until a market price recovery or maturity. It is not more-likely-than-not that American National will be required to sell them prior to recovery, and recovery is expected in a reasonable period of time. It is possible an issuer’s financial circumstances may be different in the future, which may lead to a different impairment conclusion in future periods.
The following table identifies the total bonds distributed by credit quality rating (in thousands, except percentages):
 
September 30, 2019
 
December 31, 2018
 
Amortized
Cost
 
Estimated
Fair Value
 
% of Fair
Value
 
Amortized
Cost
 
Estimated
Fair Value
 
% of Fair
Value
AAA
$
764,050

 
$
795,776

 
5.0
%
 
$
690,009

 
$
702,531

 
4.9
%
AA
1,219,171

 
1,274,409

 
8.0

 
1,326,947

 
1,336,380

 
9.3

A
5,702,178

 
5,959,712

 
37.5

 
5,350,316

 
5,314,589

 
37.0

BBB
7,101,873

 
7,399,545

 
46.6

 
6,584,478

 
6,507,212

 
45.4

BB and below
473,655

 
460,491

 
2.9

 
521,320

 
484,935

 
3.4

Total
$
15,260,927

 
$
15,889,933

 
100.0
%
 
$
14,473,070

 
$
14,345,647

 
100.0
%

Equity securities by market sector distribution are shown below:
 
September 30, 2019
 
December 31, 2018
Consumer goods
19.9
%
 
21.1
%
Energy and utilities
8.5

 
8.2

Finance
17.8

 
18.1

Healthcare
12.7

 
13.5

Industrials
8.1

 
9.0

Information technology
23.6

 
22.6

Other
9.4

 
7.5

        Total
100.0
%
 
100.0
%