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Investments (Tables)

6 Months Ended

Jun. 30, 2018

Schedule of Investments Debt and Equity Securities [Line Items]

Schedule of Available-for-sale Securities

The period-end amortized cost, gross unrealized gains and losses, and fair value of available-for-sale securities were as follows:

	June 30, 2018
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
	(In thousands)
Securities available-for-sale, carried at fair value:
Fixed-maturity securities:
U.S. government and agencies	$	11,636	$	165	$	(87	)	$	11,714
Foreign government		148,158		4,033		(1,144	)		151,047
States and political subdivisions		54,943		1,076		(388	)		55,631
Corporates		1,391,181		17,607		(18,262	)		1,390,526
Residential mortgage-backed securities		161,338		2,388		(2,344	)		161,382
Commercial mortgage-backed securities		136,639		1,973		(2,469	)		136,143
Other asset-backed securities		80,061		210		(824	)		79,447
Total available-for-sale securities⁽¹⁾	$	1,983,956	$	27,452	$	(25,518	)	$	1,985,890

⁽¹⁾	Includes $0.2 million of other-than-temporary impairment ("OTTI") losses related to corporates and mortgage- and asset-backed securities recognized in accumulated other comprehensive income (loss).

	December 31, 2017
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
	(In thousands)
Securities available-for-sale, carried at fair value:
Fixed-maturity securities:
U.S. government and agencies	$	11,577	$	283	$	(47	)	$	11,813
Foreign government		139,486		5,651		(648	)		144,489
States and political subdivisions		54,714		1,554		(141	)		56,127
Corporates		1,337,321		42,616		(3,655	)		1,376,282
Residential mortgage-backed securities		119,672		3,583		(297	)		122,958
Commercial mortgage-backed securities		134,003		2,299		(910	)		135,392
Other asset-backed securities		80,553		452		(224	)		80,781
Total fixed-maturity securities⁽¹⁾		1,877,326		56,438		(5,922	)		1,927,842
Equity securities		31,331		9,796		(20	)		41,107
Total fixed-maturity and equity securities	$	1,908,657	$	66,234	$	(5,942	)	$	1,968,949

⁽¹⁾	Includes $0.2 million of OTTI losses related to corporates and mortgage- and asset-backed securities recognized in accumulated other comprehensive income (loss).

Fixed-maturity Securities Classified by Contractual Maturity Date

The scheduled maturity distribution of the available-for-sale fixed-maturity portfolio as of June 30, 2018 was as follows:

	Amortized cost		Fair value
	(In thousands)
Due in one year or less	$	167,037	$	168,983
Due after one year through five years		861,401		864,997
Due after five years through 10 years		526,109		520,398
Due after 10 years		51,371		54,540
		1,605,918		1,608,918
Mortgage- and asset-backed securities		378,038		376,972
Total fixed-maturity securities	$	1,983,956	$	1,985,890

Net Effect on Stockholders' Equity of Unrealized Gains and Losses on Available-for-sale Securities

The net effect on stockholders’ equity of unrealized gains and losses on available-for-sale investments was as follows:

	June 30, 2018			December 31, 2017
	(In thousands)
Net unrealized investment gains on available-for-sale securities including OTTI:
Available-for-sale securities	$	1,934		$	60,292		⁽¹⁾
OTTI		172			174
Net unrealized investment gains on available-for-sale securities excluding OTTI		2,106			60,466
Deferred income taxes		(613	)		(20,780	)
Net unrealized investment gains on available-for-sale securities excluding OTTI, net of tax	$	1,493		$	39,686

⁽¹⁾	Includes $9.8 million of net unrealized gains for equity securities recognized in accumulated other comprehensive income (loss) prior to the adoption of ASU 2016-01.

Amortized Costs and Fair Value of Securities Classified as Trading Securities

The amortized cost and fair value of the securities classified as trading securities were as follows:

	June 30, 2018				December 31, 2017
	Amortized cost		Fair value		Amortized cost		Fair value
	(In thousands)
Fixed-maturity securities	$	23,090	$	23,079	$	4,801	$	4,800
Equity securities⁽¹⁾		-		-		1,371		1,428
Total trading securities	$	23,090	$	23,079	$	6,172	$	6,228

⁽¹⁾	Equity securities, previously classified as trading securities, are no longer classified as trading securities due to the adoption of ASU 2016-01. As of June 30, 2018, all equity security investments held by the Company are presented in the balance sheet as equity securities.

Net Investment Income

Investment Income. The components of net investment income were as follows:

	Three months ended June 30,						Six months ended June 30,
	2018			2017			2018			2017
	(In thousands)
Fixed-maturity securities (available-for-sale)	$	19,743		$	19,200		$	39,031		$	38,269
Fixed-maturity security (held-to-maturity)		9,052			6,087			17,425			11,806
Equity securities		466			515			979			1,051
Policy loans and other invested assets		390			316			801			622
Cash and cash equivalents		641			246			1,227			439
Total return on deposit asset underlying 10% coinsurance agreement⁽¹⁾		895			770			788			1,801
Gross investment income		31,187			27,134			60,251			53,988
Investment expenses		(2,105	)		(1,305	)		(3,779	)		(2,546	)
Investment income net of investment expenses		29,082			25,829			56,472			51,442
Interest expense on surplus note		(9,052	)		(6,087	)		(17,425	)		(11,806	)
Net investment income	$	20,030		$	19,742		$	39,047		$	39,636

⁽¹⁾

Includes $0.4 million and $1.7 million of losses recognized for the change in fair value of the deposit asset underlying the 10% coinsurance agreement for the three and six months ended June 30, 2018, respectively. The change in fair value of the deposit asset underlying the 10% coinsurance agreement for the three and six months ended June 30, 2017 was not material.

Schedule of Net Realized Investment Gains and Losses Recognized in Net Income

The components of net realized investment gains (losses) recognized in net income as well as details on gross realized investment gains and losses were as follows:

	Three months ended June 30,						Six months ended June 30,
	2018			2017			2018			2017
	(In thousands)
Net realized investment gains (losses):
Gross gains from sales of available-for-sale securities	$	404		$	770		$	786		$	1,064
Gross losses from sales of available-for-sale securities		(3	)		(13	)		(21	)		(28	)
OTTI losses of available-for-sale securities		(54	)		(484	)		(103	)		(695	)
Net gains (losses) recognized in net income during the period on equity securities		539			-			(1,406	)		-
Gains (losses) from bifurcated options		427			(169	)		400			(103	)
Net realized investment gains (losses)	$	1,313		$	104		$	(344	)	$	238

Schedule of Proceeds from Sales or Other Redemptions of Available-for-Sale Securities

The proceeds from sales or other redemptions of available-for-sale securities were as follows:

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
	(In thousands)
Proceeds from sales or other redemptions	$	118,557	$	67,721	$	240,263	$	142,698

Schedule of Unrealized Net Gains (Losses) Recognized in NI on Equity Securities Still Held at Period-End

The components of net gains (losses) recognized in net income during the three and six months ended June 30, 2018 on equity securities still held as of period-end were as follows:

	Three months ended June 30,					Six months ended June 30,
	2018			2017		2018			2017
	(In thousands)
Net gains (losses) recognized on equity securities	$	539		$	-	$	(1,406	)	$	-
Less: Net gains (losses) recognized on equity securities sold		(49	)		-		(49	)		-
Net gains (losses) recognized in net income on equity securities still held as of period-end	$	588		$	-	$	(1,357	)	$	-

Schedule of Securities in Unrealized Loss Position

The following tables summarize, for all available-for-sale securities in an unrealized loss position, the aggregate fair value and the gross unrealized loss by length of time such securities have continuously been in an unrealized loss position:

	June 30, 2018
	Less than 12 months							12 months or longer
	Fair value		Unrealized losses			Number of securities		Fair value		Unrealized losses			Number of securities
	(Dollars in thousands)
Fixed-maturity securities:
U.S. government and agencies	$	6,044	$	(80	)		5	$	1,729	$	(7	)		3
Foreign government		43,032		(578	)		40		25,350		(566	)		31
States and political subdivisions		21,410		(252	)		19		6,229		(136	)		7
Corporates		730,969		(15,574	)		588		51,454		(2,688	)		60
Residential mortgage-backed securities		97,132		(2,271	)		49		2,332		(73	)		6
Commercial mortgage-backed securities		100,307		(1,902	)		82		19,084		(567	)		24
Other asset-backed securities		52,116		(698	)		53		10,541		(126	)		13
Total fixed-maturity securities	$	1,051,010	$	(21,355	)			$	116,719	$	(4,163	)

	December 31, 2017
	Less than 12 months							12 months or longer
	Fair value		Unrealized losses			Number of securities		Fair value		Unrealized losses			Number of securities
	(Dollars in thousands)
Fixed-maturity securities:
U.S. government and agencies	$	4,754	$	(34	)		5	$	2,975	$	(13	)		3
Foreign government		40,287		(465	)		45		7,102		(183	)		7
States and political subdivisions		7,369		(43	)		7		6,267		(98	)		7
Corporates		247,613		(2,323	)		216		39,767		(1,332	)		43
Residential mortgage-backed securities		33,610		(263	)		16		2,592		(34	)		8
Commercial mortgage-backed securities		60,116		(394	)		52		22,149		(516	)		25
Other asset-backed securities		32,605		(121	)		33		14,819		(103	)		19
Total fixed-maturity securities		426,354		(3,643	)				95,671		(2,279	)
Equity securities		1,076		(16	)		4		170		(4	)		2
Total fixed-maturity and equity securities	$	427,430	$	(3,659	)			$	95,841	$	(2,283	)

Amortized Cost and Fair Value of Available-for-sale Fixed-maturity Securities in Default

The amortized cost and fair value of available-for-sale fixed-maturity securities in default were as follows:

	June 30, 2018				December 31, 2017
	Amortized cost		Fair value		Amortized cost		Fair value
	(In thousands)
Fixed-maturity securities in default	$	10	$	201	$	503	$	654

OTTI in Earnings on Available-for-sale Securities

OTTI recognized in earnings on available-for-sale securities were as follows:

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
	(In thousands)
OTTI on fixed-maturity securities not in default	$	54	$	459	$	103	$	535
OTTI on fixed-maturity securities in default		-		-		-		-
OTTI on equity securities⁽¹⁾		-		25		-		160
Total OTTI recognized in earnings	$	54	$	484	$	103	$	695

⁽¹⁾	Subsequent to the adoption of ASU 2016-01 all changes in the fair value of equity securities are recognized in net income and thus OTTI no longer applies to equity securities.

Schedule of OTTI Recognized in Earnings for Available-for-sale Securities

The rollforward of the OTTI recognized in net income for all fixed-maturity securities still held was as follows:

	Three months ended June 30,						Six months ended June 30,
	2018			2017			2018			2017
	(In thousands)
Cumulative OTTI recognized in net income for securities still held, beginning of period	$	4,298		$	5,759		$	4,346		$	5,774
Additions for securities where no OTTI were recognized prior to the beginning of the period		-			-			-			-
Additions for securities where OTTI have been recognized prior to the beginning of the period		54			459			103			535
Reductions due to sales, maturities, calls, amortization or increases in cash flows expected to be collected over the remaining life of credit impaired securities		(1,058	)		(643	)		(1,155	)		(597	)
Reductions for exchanges of securities previously impaired		-			-			-			(137	)
Cumulative OTTI recognized in net income for securities still held, end of period	$	3,294		$	5,575		$	3,294		$	5,575

Available-for-Sale [Member]

Schedule of Investments Debt and Equity Securities [Line Items]

Schedule of OTTI Recognized in Earnings for Available-for-sale Securities

OTTI recognized in earnings for available-for-sale securities were as follows:

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
	(In thousands)
Total OTTI related to securities which the Company does not intend to sell or more-likely-than-not will not be required to sell:
Total OTTI losses recognized	$	54	$	459	$	103	$	535
Less portion of OTTI recognized in accumulated other comprehensive income (loss)		-		-		-		-
OTTI recognized in earnings for securities which the Company does not intend to sell or more-likely than-not will not be required to sell		54		459		103		535
OTTI recognized in earnings for securities which the Company intends to sell or more-likely-than-not will be required to sell before recovery		-		25		-		160
OTTI recognized in earnings	$	54	$	484	$	103	$	695