Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2017

Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis

The estimated fair value and hierarchy classifications for assets and liabilities that are measured at fair value on a recurring basis were as follows:

	December 31, 2017
	Level 1		Level 2		Level 3		Total
	(In thousands)
Fair value assets:
Available-for-sale fixed-maturity securities:
U.S. government and agencies	$	-	$	11,813	$	-	$	11,813
Foreign government		-		144,489		-		144,489
States and political subdivisions		-		56,127		-		56,127
Corporates		3,240		1,373,039		3		1,376,282
Residential mortgage-backed securities		-		122,544		414		122,958
Commercial mortgage-backed securities		-		135,392		-		135,392
Other asset-backed securities		-		80,781		-		80,781
Total available-for-sale fixed-maturity securities		3,240		1,924,185		417		1,927,842
Available-for-sale equity securities		39,026		1,931		150		41,107
Trading securities		1,428		4,800		-		6,228
Separate accounts		-		2,572,872		-		2,572,872
Total fair value assets	$	43,694	$	4,503,788	$	567	$	4,548,049
Fair value liabilities:
Separate accounts	$	-	$	2,572,872	$	-	$	2,572,872
Total fair value liabilities	$	-	$	2,572,872	$	-	$	2,572,872

	December 31, 2016
	Level 1		Level 2		Level 3		Total
	(In thousands)
Fair value assets:
Available-for-sale fixed-maturity securities:
U.S. government and agencies	$	-	$	10,474	$	-	$	10,474
Foreign government		-		129,306		-		129,306
States and political subdivisions		-		45,724		-		45,724
Corporates		3,113		1,322,257		3		1,325,373
Residential mortgage-backed securities		-		98,966		585		99,551
Commercial mortgage-backed securities		-		109,443		-		109,443
Other asset-backed securities		-		65,075		7,492		72,567
Total available-for-sale fixed-maturity securities		3,113		1,781,245		8,080		1,792,438
Available-for-sale equity securities		39,556		5,256		82		44,894
Trading securities		51		7,332		-		7,383
Separate accounts		-		2,287,953		-		2,287,953
Total fair value assets	$	42,720	$	4,081,786	$	8,162	$	4,132,668
Fair value liabilities:
Separate accounts	$	-	$	2,287,953	$	-	$	2,287,953
Total fair value liabilities	$	-	$	2,287,953	$	-	$	2,287,953

Roll forward of Level 3 Assets Measured on Recurring Basis

The roll-forward of the Level 3 assets measured at fair value on a recurring basis was as follows:

	Year ended December 31,
	2017			2016
	(In thousands)
Level 3 assets, beginning of period	$	8,162		$	783
Net unrealized gains (losses) included in other comprehensive income		232			(23	)
Realized gains (losses) and accretion (amortization) recognized in earnings, including OTTI		26			7
Purchases		-			7,556
Settlements		(958	)		(162	)
Transfers into Level 3		-			1
Transfers out of Level 3⁽¹⁾		(6,895	)		-
Level 3 assets, end of period	$	567		$	8,162

⁽¹⁾	During the year ended December 31, 2017, transfers out of Level 3 assets primarily consisted of newly issued fixed-maturity securities purchased in the fourth quarter of 2016 for which observable inputs, most notably quoted prices, used to derive valuations were not yet readily available.

Carrying Values and Estimated Fair Values of Financial Instruments

The carrying values and estimated fair values of our financial instruments were as follows:

	December 31, 2017				December 31, 2016
	Carrying value		Estimated fair value		Carrying value		Estimated fair value
	(In thousands)
Assets:
Fixed-maturity securities (available-for-sale)	$	1,927,842	$	1,927,842	$	1,792,438	$	1,792,438
Fixed-maturity securities (held-to-maturity)		737,150		779,472		503,230		513,015
Equity securities (available-for-sale)		41,107		41,107		44,894		44,894
Trading securities		6,228		6,228		7,383		7,383
Policy loans		32,816		32,816		30,916		30,916
Deposit asset underlying 10% coinsurance agreement		217,336		217,336		202,435		202,435
Separate accounts		2,572,872		2,572,872		2,287,953		2,287,953
Liabilities:
Notes payable⁽¹⁾	$	373,288	$	400,628	$	372,919	$	401,340
Surplus note⁽¹⁾		736,381		778,050		502,491		512,669
Separate accounts		2,572,872		2,572,872		2,287,953		2,287,953

⁽¹⁾	Carrying value amounts shown are net of issuance costs.