Summary of Investments

3 Months Ended

Mar. 31, 2019

SUMMARY OF INVESTMENTS

Fair Value of Investments

A reconciliation of the amortized cost (cost for equity securities) to fair value of investments in held-to-maturity and available-for-sale fixed maturity and equity securities, presented on a consolidated basis, as of March 31, 2019 and December 31, 2018, is provided below:



March 31, 2019
Type of Investment	Cost or Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Fair Value
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	26,821	$	13	$	143	$	26,691
U.S. government agency	188,529		1,417		405		189,541
States, municipalities and political subdivisions
General obligations:
Midwest	86,782		1,995		98		88,679
Northeast	31,266		866		—		32,132
South	114,500		1,755		475		115,780
West	107,580		2,592		305		109,867
Special revenue:
Midwest	139,803		3,520		194		143,129
Northeast	62,604		1,123		406		63,321
South	229,505		4,532		1,101		232,936
West	142,974		2,905		537		145,342
Foreign bonds	4,941		106		—		5,047
Public utilities	62,774		878		444		63,208
Corporate bonds
Energy	28,158		536		41		28,653
Industrials	53,836		613		171		54,278
Consumer goods and services	48,151		857		209		48,799
Health care	13,974		294		2		14,266
Technology, media and telecommunications	25,895		463		138		26,220
Financial services	91,876		1,366		669		92,573
Mortgage-backed securities	7,401		48		134		7,315
Collateralized mortgage obligations
Government national mortgage association	77,401		750		763		77,388
Federal home loan mortgage corporation	108,333		889		513		108,709
Federal national mortgage association	52,722		635		204		53,153
Asset-backed securities	3,274		387		125		3,536
Total Available-for-Sale Fixed Maturities	$	1,709,100	$	28,540	$	7,077	$	1,730,563



December 31, 2018
Type of Investment	Cost or Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Fair Value
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	27,632	$	6	$	220	$	27,418
U.S. government agency	215,535		896		1,749		214,682
States, municipalities and political subdivisions
General obligations:
Midwest	94,806		1,091		685		95,212
Northeast	37,326		432		103		37,655
South	114,710		754		1,553		113,911
West	107,787		1,229		1,175		107,841
Special revenue:
Midwest	140,025		1,609		870		140,764
Northeast	62,737		452		1,241		61,948
South	237,848		1,669		3,708		235,809
West	143,829		1,294		2,203		142,920
Foreign bonds	9,698		31		13		9,716
Public utilities	56,808		274		1,023		56,059
Corporate bonds
Energy	28,909		43		304		28,648
Industrials	53,867		124		906		53,085
Consumer goods and services	54,323		142		819		53,646
Health care	16,721		42		105		16,658
Technology, media and telecommunications	26,819		35		678		26,176
Financial services	81,286		238		2,175		79,349
Mortgage-backed securities	7,642		14		232		7,424
Collateralized mortgage obligations
Government national mortgage association	78,055		380		1,734		76,701
Federal home loan mortgage corporation	108,403		524		1,304		107,623
Federal national mortgage association	53,267		213		732		52,748
Asset-backed securities	3,256		352		113		3,495
Total Available-for-Sale Fixed Maturities	$	1,761,289	$	11,844	$	23,645	$	1,749,488

Maturities

The amortized cost and fair value of held-to-maturity, available-for-sale and trading fixed maturity securities at March 31, 2019, by contractual maturity, are shown in the following tables. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Asset-backed securities, mortgage-backed securities and collateralized mortgage obligations may be subject to prepayment risk and are therefore not categorized by contractual maturity.



Maturities
	Available-For-Sale				Trading
March 31, 2019	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	35,003	$	35,183	$	4,572	$	5,582
Due after one year through five years	231,390		234,309		6,292		8,406
Due after five years through 10 years	537,692		547,933		—		—
Due after 10 years	655,884		663,037		1,835		2,421
Asset-backed securities	3,274		3,536		—		—
Mortgage-backed securities	7,401		7,315		—		—
Collateralized mortgage obligations	238,456		239,250		—		—
	$	1,709,100	$	1,730,563	$	12,699	$	16,409

Net Realized Investment Gains and Losses

Net realized gains on disposition of investments are computed using the specific identification method and are included in the computation of net income. A summary of the components of net realized investment gains (losses) is as follows:



	Three Months Ended March 31,
	2019			2018
Net realized investment gains (losses) from continuing operations:
Fixed maturities:
Available-for-sale	$	150		$	4
Trading securities
Change in fair value	1,746			(111		)
Sales	—			556
Equity securities
Change in fair value	24,634			(9,188		)
Sales	198			875
Mortgage loans	(15		)	—
Total net realized investment gains (losses) from continuing operations	$	26,713		$	(7,864	)
Total net realized investment gains (losses) from discontinued operations	—			(1,057		)
Total net realized investment gains (losses)	$	26,713		$	(8,921	)

The proceeds and gross realized gains on the sale of available-for-sale fixed maturity securities are as follows:



	Three Months Ended March 31,
	2019		2018
Proceeds from sales	$	36,490	$	—
Gross realized gains	30		—
Gross realized losses	13		—

Our investment portfolio includes trading securities with embedded derivatives. These securities are primarily convertible securities which are recorded at fair value. Income or loss, including the change in the fair value of these trading securities, is recognized currently in earnings as a component of net realized investment gains. Our portfolio of trading securities had a fair value of $16,409 and $13,240 at March 31, 2019 and December 31, 2018, respectively.

Funding Commitment

Pursuant to an agreement with one of our limited liability partnership investments, we are contractually committed through July 31, 2028 to make capital contributions upon request of the partnership. Our remaining potential contractual obligation was $18,991 at March 31, 2019.

Unrealized Appreciation

A summary of the changes in net unrealized investment appreciation during the reporting period is as follows:



	Three Months Ended March 31,
	2019			2018
Change in net unrealized investment appreciation
Available-for-sale fixed maturities	$	33,264		$	(59,126	)
Deferred policy acquisition costs	—			7,274
Income tax effect	(6,985		)	10,890
Net unrealized investment depreciation of discontinued operations, sold	—			6,714
Cumulative change in accounting principles	—			(191,244		)
Total change in net unrealized investment appreciation, net of tax	$	26,279		$	(225,492	)

We continually monitor the difference between our cost basis and the estimated fair value of our investments. Our accounting policy for impairment recognition requires other-than-temporary impairment ("OTTI") charges to be recorded when we determine that it is more likely than not that we will be unable to collect all amounts due according to the contractual terms of the fixed maturity security or that the anticipated recovery in fair value of the equity security will not occur in a reasonable amount of time. Impairment charges on investments are recorded based on the fair value of the investments at the measurement date or based on the value calculated using a discounted cash flow model. Credit-related impairments on fixed maturity securities that we do not plan to sell, and for which we are not more likely than not to be required to sell, are recognized in net income. Any non-credit related impairment is recognized as a component of other comprehensive income. Factors considered in evaluating whether a decline in value is other-than-temporary include: the length of time and the extent to which fair value has been less than cost; the financial condition and near-term prospects of the issuer; our intention to hold the investment; and the likelihood that we will be required to sell the investment.

The tables on the following pages summarize our fixed maturity and equity securities that were in an unrealized loss position on a consolidated basis at March 31, 2019 and December 31, 2018. The securities are presented by the length of time they have been continuously in an unrealized loss position. It is possible that we could recognize OTTI charges in future periods on securities held at March 31, 2019, if future events or information cause us to determine that a decline in fair value is other-than-temporary.

We have evaluated the near-term prospects of the issuers of our fixed maturity securities in relation to the severity and duration of the unrealized loss and determined that these losses did not warrant the recognition of an OTTI charge at March 31, 2019 or at March 31, 2018. We have no intent to sell, and it is more likely than not that we will not be required to sell, these securities until the fair value recovers to at least equal our cost basis or the securities mature.




March 31, 2019	Less than 12 months					12 months or longer					Total
Type of Investment	Number of Issues	Fair Value		Gross Unrealized Depreciation		Number of Issues	Fair Value		Gross Unrealized Depreciation		Fair Value		Gross Unrealized Depreciation
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	1	$	8,006	$	2	5	$	14,672	$	141	$	22,678	$	143
U.S. government agency	—	—		—		9	44,960		405		44,960		405
States, municipalities and political subdivisions
General obligations
Midwest	—	—		—		3	13,089		98		13,089		98
South	—	—		—		8	24,642		475		24,642		475
West	—	—		—		8	24,221		305		24,221		305
Special revenue
Midwest	—	—		—		8	18,051		194		18,051		194
Northeast	—	—		—		7	19,711		406		19,711		406
South	—	—		—		25	61,235		1,101		61,235		1,101
West	—	—		—		18	50,929		537		50,929		537
Public utilities	4	9,755		244		7	16,101		200		25,856		444
Corporate bonds
Energy	—	—		—		2	4,224		41		4,224		41
Industrials	1	5,010		17		4	12,389		154		17,399		171
Consumer goods and services	—	—		—		6	12,851		209		12,851		209
Health care	—	—		—		1	351		2		351		2
Technology, media and telecommunications	—	—		—		4	8,929		138		8,929		138
Financial services	1	4,744		256		11	29,445		413		34,189		669
Mortgage-backed securities	9	549		4		27	4,548		130		5,097		134
Collateralized mortgage obligations
Government national mortgage association	1	4,841		22		20	43,142		741		47,983		763
Federal home loan mortgage corporation	1	—		—		11	26,018		513		26,018		513
Federal national mortgage association	—	—		—		11	21,334		204		21,334		204
Asset-backed securities	—	—		—		1	2,835		125		2,835		125
Total Available-for-Sale Fixed Maturities	18	$	32,905	$	545	196	$	453,677	$	6,532	$	486,582	$	7,077




December 31, 2018	Less than 12 months					12 months or longer					Total
Type of Investment	Number of Issues	Fair Value		Gross Unrealized Depreciation		Number of Issues	Fair Value		Gross Unrealized Depreciation		Fair Value		Gross Unrealized Depreciation
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	1	$	8,018	$	7	5	$	14,645	$	213	$	22,663	$	220
U.S. government agency	4	17,907		81		17	80,696		1,668		98,603		1,749
States, municipalities and political subdivisions
General obligations
Midwest	2	2,939		5		7	23,749		680		26,688		685
Northeast	—	—		—		3	12,110		103		12,110		103
South	1	778		2		22	50,174		1,551		50,952		1,553
West	1	1,203		5		16	48,499		1,170		49,702		1,175
Special revenue
Midwest	4	3,892		8		19	43,854		862		47,746		870
Northeast	—	—		—		14	37,629		1,241		37,629		1,241
South	4	4,298		30		45	107,016		3,678		111,314		3,708
West	4	11,115		32		28	69,667		2,171		80,782		2,203
Foreign bonds	1	2,984		13		—	—		—		2,984		13
Public utilities	12	25,781		552		8	17,253		471		43,034		1,023
Corporate bonds
Energy	7	12,556		148		2	4,099		156		16,655		304
Industrials	9	21,970		397		4	11,040		509		33,010		906
Consumer goods and services	14	30,399		527		5	9,554		292		39,953		819
Health care	3	6,203		97		1	345		8		6,548		105
Technology, media and telecommunications	6	12,638		288		5	9,619		390		22,257		678
Financial services	13	30,177		650		13	32,855		1,525		63,032		2,175
Mortgage-backed securities	22	1,539		34		22	4,166		198		5,705		232
Collateralized mortgage obligations
Government national mortgage association	2	3,797		55		22	44,690		1,679		48,487		1,734
Federal home loan mortgage corporation	3	4,541		20		18	38,189		1,284		42,730		1,304
Federal national mortgage association	4	2,107		3		15	38,986		729		41,093		732
Asset-backed securities	1	2,829		113		—	—		—		2,829		113
Total Available-for-Sale Fixed Maturities	118	$	207,671	$	3,067	291	$	698,835	$	20,578	$	906,506	$	23,645