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 |
|
|