Summary of Investments

6 Months Ended

Jun. 30, 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 June 30, 2019 and December 31, 2018, is provided below:



June 30, 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	$	28,937	$	177	$	42	$	29,072
U.S. government agency	137,846		2,245		41		140,050
States, municipalities and political subdivisions
General obligations:
Midwest	86,696		2,674		—		89,370
Northeast	31,213		1,111		—		32,324
South	113,289		2,757		71		115,975
West	105,978		3,927		12		109,893
Special revenue:
Midwest	139,244		5,203		9		144,438
Northeast	62,469		2,232		—		64,701
South	228,469		8,195		98		236,566
West	142,661		4,664		8		147,317
Foreign bonds	4,939		178		—		5,117
Public utilities	62,749		2,031		62		64,718
Corporate bonds
Energy	26,634		1,139		—		27,773
Industrials	53,751		1,454		43		55,162
Consumer goods and services	48,118		1,844		73		49,889
Health care	13,982		585		—		14,567
Technology, media and telecommunications	25,897		1,231		—		27,128
Financial services	91,870		3,049		256		94,663
Mortgage-backed securities	7,071		83		60		7,094
Collateralized mortgage obligations
Government national mortgage association	76,524		2,022		80		78,466
Federal home loan mortgage corporation	109,450		2,100		87		111,463
Federal national mortgage association	52,247		1,755		37		53,965
Asset-backed securities	3,262		430		84		3,608
Total Available-for-Sale Fixed Maturities	$	1,653,296	$	51,086	$	1,063	$	1,703,319



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 June 30, 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
June 30, 2019	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	44,381	$	44,604	$	6,176	$	7,346
Due after one year through five years	233,480		239,201		4,739		7,294
Due after five years through 10 years	514,156		533,677		—		—
Due after 10 years	612,725		631,241		2,017		2,503
Asset-backed securities	3,262		3,608		—		—
Mortgage-backed securities	7,071		7,094		—		—
Collateralized mortgage obligations	238,221		243,894		—		—
	$	1,653,296	$	1,703,319	$	12,932	$	17,143

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 June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net realized investment gains (losses) from continuing operations:
Fixed maturities:
Available-for-sale	$	(8	)	$	(219	)	$	142		$	(193	)
Trading securities
Change in fair value	501			(148		)	2,247			(259		)
Sales	92			349			92			905
Equity securities
Change in fair value	12,499			305			37,133			(8,883		)
Sales	507			1,010			705			1,863
Mortgage loans	—			—			(15		)	—
Total net realized investment gains (losses) from continuing operations	$	13,591		$	1,297		$	40,304		$	(6,567	)
Total net realized investment gains (losses) from discontinued operations	—			—			—			(1,057		)
Total net realized investment gains (losses)	$	13,591		$	1,297		$	40,304		$	(7,624	)

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



	Three Months Ended June 30,					Six Months Ended June 30,
	2019		2018			2019		2018
Proceeds from sales	$	—	$	23,994		$	36,490	$	23,994
Gross realized gains	—		140			30		140
Gross realized losses	—		(307		)	13		(307		)

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 $17,143 and $13,240 at June 30, 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 $17,791 at June 30, 2019.

Unrealized Appreciation

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



	Six Months Ended June 30,
	2019			2018
Change in net unrealized investment appreciation
Available-for-sale fixed maturities	$	61,824		$	(65,127	)
Deferred policy acquisition costs	—			7,274
Income tax effect	(12,983		)	12,148
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	$	48,841		$	(230,235	)

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 June 30, 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 June 30, 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 June 30, 2019 or at June 30, 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.




June 30, 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	—	$	—	$	—	3	$	8,737	$	42	$	8,737	$	42
U.S. government agency	—	—		—		2	7,959		41		7,959		41
States, municipalities and political subdivisions
General obligations
Midwest	—	—		—		—	—		—		—		—
South	—	—		—		3	9,519		71		9,519		71
West	—	—		—		1	2,086		12		2,086		12
Special revenue
Midwest	—	—		—		2	3,339		9		3,339		9
Northeast	—	—		—		1	1,296		—		1,296		—
South	—	—		—		6	14,039		98		14,039		98
West	—	—		—		4	4,115		8		4,115		8
Public utilities	1	2,934		62		—	—		—		2,934		62
Corporate bonds
Energy	—	—		—		—	—		—		—		—
Industrials	1	5,009		1		1	3,996		42		9,005		43
Consumer goods and services	—	—		—		3	4,637		73		4,637		73
Health care	—	—		—		—	—		—		—		—
Technology, media and telecommunications	—	—		—		—	—		—		—		—
Financial services	1	4,744		256		1	998		—		5,742		256
Mortgage-backed securities	—	—		—		20	3,749		60		3,749		60
Collateralized mortgage obligations
Government national mortgage association	—	—		—		7	10,194		80		10,194		80
Federal home loan mortgage corporation	—	—		—		7	11,199		87		11,199		87
Federal national mortgage association	—	—		—		5	3,843		37		3,843		37
Asset-backed securities	—	—		—		1	2,864		84		2,864		84
Total Available-for-Sale Fixed Maturities	3	$	12,687	$	319	67	$	92,570	$	744	$	105,257	$	1,063




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