XML 36 R26.htm IDEA: XBRL DOCUMENT v3.8.0.1
Investments (Tables)
 3 Months Ended
Mar. 31, 2018
Investments [Abstract]  
Schedule of reconciliation of cost to fair value of available-for-sale securities
The following tables summarize the cost and fair value of our available-for-sale securities:
 
 
 
At March 31, 2018
 (in thousands)
 
Amortized
cost
 
Gross unrealized gains
 
Gross unrealized losses
 
Estimated fair value
Available-for-sale securities:
 
 
 
 
 
 
 
 
U.S. treasury
 
$
36,740

 
$
0

 
$
276

 
$
36,464

States & political subdivisions
 
260,153

 
3,663

 
2,664

 
261,152

Foreign government securities
 
501

 
0

 
0

 
501

Corporate debt securities
 
302,395

 
1,008

 
3,804

 
299,599

Residential mortgage-backed securities
 
23,980

 
357

 
227

 
24,110

Commercial mortgage-backed securities
 
34,663

 
12

 
1,000

 
33,675

Collateralized debt obligations
 
71,200

 
206

 
101

 
71,305

Other debt securities
 
2,986

 
12

 
0

 
2,998

Total available-for-sale securities
 
$
732,618

 
$
5,258

 
$
8,072

 
$
729,804

 

 
 
At December 31, 2017
(in thousands)
 
Amortized
cost
 
Gross unrealized gains
 
Gross unrealized losses
 
Estimated fair value
Available-for-sale securities:
 
 
 
 
 
 
 
 
U.S. treasury
 
$
11,873

 
$
0

 
$
139

 
$
11,734

States & political subdivisions
 
254,533

 
5,351

 
620

 
259,264

Foreign government securities
 
501

 
2

 
0

 
503

Corporate debt securities
 
346,759

 
1,688

 
1,924

 
346,523

Residential mortgage-backed securities
 
25,324

 
371

 
124

 
25,571

Commercial mortgage-backed securities
 
33,475

 
26

 
697

 
32,804

Collateralized debt obligations
 
57,838

 
237

 
41

 
58,034

Other debt securities
 
11,496

 
32

 
0

 
11,528

Total fixed maturities
 
741,799

 
7,707

 
3,545

 
745,961

Nonredeemable preferred stock - financial services sector
 
11,719

 
15

 
75

 
11,659

Nonredeemable preferred stock - utilities sector
 
1,118

 
0

 
25

 
1,093

Total available-for-sale securities
 
$
754,636

 
$
7,722

 
$
3,645

 
$
758,713
Schedule of amortized cost and estimated fair value of available-for-sale securities by remaining contractual term to maturity
The amortized cost and estimated fair value of available-for-sale securities at March 31, 2018, are shown below by remaining contractual term to maturity.  Mortgage-backed securities are allocated based upon stated maturity dates.  Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
 
 
 
At March 31, 2018
 
 
Amortized
 
Estimated
(in thousands)
 
cost
 
fair value
Due in one year or less
 
$
96,656

 
$
96,574

Due after one year through five years
 
254,866

 
255,157

Due after five years through ten years
 
258,775

 
257,096

Due after ten years
 
122,321

 
120,977

Total available-for-sale securities
 
$
732,618

 
$
729,804
Schedule of available-for-sale securities in a gross unrealized loss position by length of time
Available-for-sale securities in a gross unrealized loss position are as follows.  Data is provided by length of time for securities in a gross unrealized loss position.
 
 
 
At March 31, 2018
 
 
Less than 12 months
 
12 months or longer
 
Total
(dollars in thousands)
 
Fair
value
 
Unrealized losses
 
Fair
value
 
Unrealized losses
 
Fair
 value
 
Unrealized losses
 
No. of holdings
Available-for-sale securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. treasury
 
$
34,984

 
$
232

 
$
1,480

 
$
44

 
$
36,464

 
$
276

 
5

States & political subdivisions
 
103,285

 
1,934

 
13,896

 
730

 
117,181

 
2,664

 
59

Corporate debt securities
 
180,493

 
3,290

 
28,812

 
514

 
209,305

 
3,804

 
438

Residential mortgage-backed securities
 
4,779

 
94

 
6,476

 
133

 
11,255

 
227

 
14

Commercial mortgage-backed securities
 
15,108

 
264

 
11,816

 
736

 
26,924

 
1,000

 
23

Collateralized debt obligations
 
27,463

 
101

 
0

 
0

 
27,463

 
101

 
18

Other debt securities
 
333

 
0

 
0

 
0

 
333

 
0

 
1

Total available-for-sale securities
 
$
366,445

 
$
5,915

 
$
62,480

 
$
2,157

 
$
428,925

 
$
8,072

 
558

Quality breakdown of available-for-sale securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment grade
 
$
286,647

 
$
3,671

 
$
58,721

 
$
1,693

 
$
345,368

 
$
5,364

 
194

Non-investment grade
 
79,798

 
2,244

 
3,759

 
464

 
83,557

 
2,708

 
364

Total available-for-sale securities
 
$
366,445

 
$
5,915

 
$
62,480

 
$
2,157

 
$
428,925

 
$
8,072

 
558




 
 
At December 31, 2017
 
 
Less than 12 months
 
12 months or longer
 
Total
(dollars in thousands)
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
 
No. of
holdings
Available-for-sale securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. treasury
 
$
10,237

 
$
110

 
$
1,497

 
$
29

 
$
11,734

 
$
139

 
4

States & political subdivisions
 
52,553

 
288

 
14,361

 
332

 
66,914

 
620

 
33

Corporate debt securities
 
171,154

 
1,585

 
31,113

 
339

 
202,267

 
1,924

 
331

Residential mortgage-backed securities
 
4,156

 
29

 
7,064

 
95

 
11,220

 
124

 
11

Commercial mortgage-backed securities
 
10,836

 
85

 
11,984

 
612

 
22,820

 
697

 
19

Collateralized debt obligations
 
21,598

 
41

 
0

 
0

 
21,598

 
41

 
12

Other debt securities
 
1,499

 
0

 
0

 
0

 
1,499

 
0

 
1

Total fixed maturities
 
272,033

 
2,138

 
66,019

 
1,407

 
338,052

 
3,545

 
411

Nonredeemable preferred stock - financial services sector
 
9,644

 
25

 
0

 
0

 
9,644

 
25

 
1

Nonredeemable preferred stock - utilities sector
 
1,093

 
75

 
0

 
0

 
1,093

 
75

 
5

Total available-for-sale securities
 
$
282,770

 
$
2,238

 
$
66,019

 
$
1,407

 
$
348,789

 
$
3,645

 
417

Quality breakdown of fixed maturities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment grade
 
$
214,586

 
$
1,064

 
$
62,193

 
$
985

 
$
276,779

 
$
2,049

 
158

Non-investment grade
 
57,447

 
1,074

 
3,826

 
422

 
61,273

 
1,496

 
253

Total fixed maturities
 
$
272,033

 
$
2,138

 
$
66,019

 
$
1,407

 
$
338,052

 
$
3,545

 
411


 
Schedule of investment income, net of expenses, from portfolios
Interest and dividend income are recognized as earned and recorded to net investment income. Investment income, net of expenses, was generated from the following portfolios:
 
 
Three months ended March 31,
(in thousands)
 
2018
 
2017
Fixed maturities (1)
 
$
6,110

 
$
5,904

Equity securities
 
142

 
32

Cash equivalents and other
 
1,008

 
521

Total investment income
 
7,260

 
6,457

Less: investment expenses
 
440

 
476

Investment income, net of expenses
 
$
6,820

 
$
5,981



    (1) Includes interest earned on note receivable from Erie Family Life Insurance Company ("EFL") of $0.4 million in 2018 and 2017.
Schedule of realized gains and losses on sales of securities recognized in income based upon the specific identification method and net unrealized losses recognized during the reporting period, related to equity securities still held at the reporting date
Realized gains and losses on sales of securities are recognized in income based upon the specific identification method. Realized gains (losses) on investments were as follows:
 
 
Three months ended March 31,
(in thousands)
 
2018
 
2017
Available-for-sale securities:
 
 

 
 

Gross realized gains
 
$
340

 
$
580

Gross realized losses
 
(685
)
 
(158
)
Net realized (losses) gains on available-for-sale securities
 
(345
)
 
422

Equity securities
 
(120
)
 
—

Miscellaneous
 
0

 
94

Net realized investment (losses) gains
 
$
(465
)
 
$
516


 
The portion of net unrealized losses recognized during the reporting period, related to equity securities still held at the reporting date, is calculated as follows:
 
 
Three months ended March 31,
(in thousands)
 
2018
 
2017
Equity securities: (1)
 
 
 
 
Total net realized losses
 
$
(120
)
 
$
—

Less: net losses realized on securities sold
 
(34
)
 
—

Net unrealized losses recognized during the period on securities held at reporting date
 
$
(86
)
 
$
—


 
(1) With the adoption of ASU 2016-01, effective January 1, 2018, changes in unrealized gains and losses on equity securities are included in net realized investment gains (losses) in the Statement of Operations. The adoption of this guidance resulted in a reclassification of net unrealized losses of $0.1 million from accumulated other comprehensive loss to retained earnings at January 1, 2018.
Schedule of limited partnership results, generally reported on a one-quarter lag
Amounts included in equity in (losses) earnings of limited partnerships by method of accounting are included below:
 
 
 
Three months ended March 31,
(in thousands)
 
2018
 
2017
Equity in earnings of limited partnerships accounted for under the equity method
 
$
195

 
$
250

Change in fair value of limited partnerships accounted for under the fair value option
 
(387
)
 
(37
)
Equity in (losses) earnings of limited partnerships
 
$
(192
)
 
$
213



The following table summarizes limited partnership investments by sector:

(in thousands)
 
At March 31, 2018
 
At December 31, 2017
Private equity
 
$
31,705

 
$
31,663

Mezzanine debt
 
3,288

 
3,516

Real estate
 
4,692

 
5,127

Real estate - fair value option
 
4,429

 
4,816

Total limited partnership investments
 
$
44,114

 
$
45,122