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Investment in Securities
 12 Months Ended
Dec. 31, 2019
Investments, Debt and Equity Securities [Abstract]  
Investment in Securities
The cost or amortized cost and fair value of investments in securities are shown below (in thousands):
 
 
December 31, 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
 
$
165,109

 
$
5,005

 
$
—

 
$
170,114

Foreign governments
 
3,907

 
442

 
—

 
4,349

Corporate debt securities
 
8,099,098

 
332,410

 
(6,539
)
 
8,424,969

Residential mortgage-backed securities
 
237,516

 
6,460

 
(1,148
)
 
242,828

Collateralized debt securities
 
125,631

 
1,146

 
(347
)
 
126,430

Total bonds held-to-maturity
 
8,631,261

 
345,463

 
(8,034
)
 
8,968,690

Fixed maturity securities, bonds available-for-sale
 
 
 
 
 
 
 
 
U.S. treasury and government
 
29,505

 
441

 
(5
)
 
29,941

U.S. states and political subdivisions
 
1,030,309

 
47,865

 
(9
)
 
1,078,165

Foreign governments
 
5,000

 
1,287

 
—

 
6,287

Corporate debt securities
 
5,338,007

 
251,408

 
(12,795
)
 
5,576,620

Residential mortgage-backed securities
 
23,405

 
739

 
(201
)
 
23,943

Collateralized debt securities
 
9,444

 
686

 
(1
)
 
10,129

Total bonds available-for-sale
 
6,435,670

 
302,426

 
(13,011
)
 
6,725,085

Total investments in fixed maturity securities
 
$
15,066,931

 
$
647,889

 
$
(21,045
)
 
$
15,693,775


 
 
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 fixed maturity 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):
 
 
December 31, 2019
 
 
Bonds Held-to-Maturity
 
Bonds Available-for-Sale
 
 
Amortized Cost
 
Fair Value
 
Amortized Cost
 
Fair Value
Due in one year or less
 
$
781,746

 
$
791,175

 
$
450,482

 
$
454,992

Due after one year through five years
 
3,446,425

 
3,566,116

 
3,063,725

 
3,185,728

Due after five years through ten years
 
3,398,612

 
3,572,333

 
2,326,706

 
2,465,073

Due after ten years
 
1,004,478

 
1,039,066

 
594,757

 
619,292

Total
 
$
8,631,261

 
$
8,968,690

 
$
6,435,670

 
$
6,725,085


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):
 
 
Years ended December 31,
 
 
2019
 
2018
 
2017
Proceeds from sales of fixed maturity available-for-sale securities
 
$
45,017

 
$
85,590

 
$
161,223

Gross realized gains
 
250

 
376

 
63,075

Gross realized losses
 
(1,124
)
 
(2,298
)
 
(6,406
)

Gains and losses are determined using specific identification of the securities sold. During 2019 and 2018, bonds below 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’ creditworthiness. 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 losses were recorded in 2019 or 2018.
In accordance with various regulations, American National has bonds on deposit with regulating authorities with a carrying value of $48,017,000 and $48,068,000 at December 31, 2019 and 2018, respectively. In addition, American National has pledged bonds in connection with agreements and transactions, such as financing and reinsurance agreements. The carrying value of bonds pledged was $162,233,000 and $168,118,000 at December 31, 2019 and 2018, respectively.
The components of the change in net unrealized gains (losses) on debt securities are shown below (in thousands):
 
 
Years ended December 31,
 
 
2019
 
2018
 
2017
Bonds available-for-sale: change in unrealized gains (losses)
 
$
335,473

 
$
(233,465
)
 
$
53,115

Adjustments for
 
 
 
 
 
 
Deferred policy acquisition costs
 
(87,003
)
 
51,920

 
(2,083
)
Participating policyholders’ interest
 
(16,056
)
 
11,157

 
(7,086
)
Deferred federal income tax benefit (expense)
 
(48,258
)
 
34,127

 
(15,516
)
Change in net unrealized gains (losses) on debt securities, net of tax
 
$
184,156

 
$
(136,261
)
 
$
28,430


The components of the change in net gains (losses) on equity securities are shown below (in thousands):
 
Years ended December 31,
 
2019
 
2018
Unrealized gains (losses) on equity securities
$
375,395

 
$
(109,230
)
Net gains on equity securities sold
47,140

 
2,042

Net gains (losses) on equity securities
$
422,535

 
$
(107,188
)


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):
 
 
December 31, 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
 
$
(5,300
)
 
$
547,329

 
$
(1,239
)
 
$
45,086

 
$
(6,539
)
 
$
592,415

Residential mortgage-backed securities
 
(638
)
 
86,178

 
(510
)
 
5,331

 
(1,148
)
 
91,509

Collateralized debt securities
 
(347
)
 
45,533

 
—

 
—

 
(347
)
 
45,533

Total bonds held-to-maturity
 
(6,285
)
 
679,040

 
(1,749
)
 
50,417

 
(8,034
)
 
729,457

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

 
—

 
(5
)
 
8,299

 
(5
)
 
8,299

U.S. states and political subdivisions
 
(9
)
 
1,733

 
—

 
—

 
(9
)
 
1,733

Corporate debt securities
 
(5,257
)
 
94,942

 
(7,538
)
 
132,626

 
(12,795
)
 
227,568

Residential mortgage-backed securities
 
(9
)
 
10,169

 
(192
)
 
722

 
(201
)
 
10,891

Collaterized debt securities
 
(1
)
 
159

 
—

 
—

 
(1
)
 
159

Total bonds available-for-sale
 
(5,276
)
 
107,003

 
(7,735
)
 
141,647

 
(13,011
)
 
248,650

Total
 
$
(11,561
)
 
$
786,043

 
$
(9,484
)
 
$
192,064

 
$
(21,045
)
 
$
978,107


 
 
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 December 31, 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):
 
 
December 31, 2019
 
December 31, 2018
 
 
Amortized
Cost
 
Estimated
Fair Value
 
% of Fair
Value
 
Amortized
Cost
 
Estimated
Fair Value
 
% of Fair
Value
AAA
 
$
722,542

 
$
751,560

 
4.8
%
 
$
690,009

 
$
702,531

 
4.9
%
AA
 
1,174,698

 
1,224,210

 
7.8

 
1,326,947

 
1,336,380

 
9.3

A
 
5,589,846

 
5,835,821

 
37.1

 
5,350,316

 
5,314,589

 
37.0

BBB
 
7,045,065

 
7,352,915

 
46.9

 
6,584,478

 
6,507,212

 
45.4

BB and below
 
534,780

 
529,269

 
3.4

 
521,320

 
484,935

 
3.4

Total
 
$
15,066,931

 
$
15,693,775

 
100.0
%
 
$
14,473,070

 
$
14,345,647

 
100.0
%

Equity securities by market sector distribution are shown below:
 
 
December 31,
 
 
2019
 
2018
Consumer goods
 
18.9
%
 
21.1
%
Energy and utilities
 
8.0

 
8.2

Finance
 
18.0

 
18.1

Healthcare
 
13.0

 
13.5

Industrials
 
7.6

 
9.0

Information technology
 
25.0

 
22.6

Other
 
9.5

 
7.5

Total
 
100.0
%
 
100.0
%