Investments (Tables)
|
9 Months Ended |
Sep. 30, 2018 |
|---|
| Investments Schedule [Abstract] |
|
| Schedule of Amortized Cost and Estimated Fair Value of Investments |
The amortized cost and estimated fair value of investments were as follows as of September 30, 2018 and December 31, 2017:
|
(Dollars in thousands) |
|
Amortized
Cost |
|
|
Gross
Unrealized
Gains |
|
|
Gross
Unrealized
Losses |
|
|
Estimated
Fair Value |
|
|
Other than
temporary
impairments
recognized
in AOCI (1) |
|
|
As of September 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed maturities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. treasury and agency obligations |
|
$ |
81,565 |
|
|
$ |
156 |
|
|
$ |
(2,051 |
) |
|
$ |
79,670 |
|
|
$ |
- |
|
|
Obligations of states and political subdivisions |
|
|
100,494 |
|
|
|
131 |
|
|
|
(998 |
) |
|
|
99,627 |
|
|
|
- |
|
|
Mortgage-backed securities |
|
|
138,442 |
|
|
|
280 |
|
|
|
(3,878 |
) |
|
|
134,844 |
|
|
|
- |
|
|
Asset-backed securities |
|
|
201,317 |
|
|
|
46 |
|
|
|
(1,641 |
) |
|
|
199,722 |
|
|
|
(1 |
) |
|
Commercial mortgage-backed securities |
|
|
186,081 |
|
|
|
3 |
|
|
|
(5,876 |
) |
|
|
180,208 |
|
|
|
- |
|
|
Corporate bonds |
|
|
466,198 |
|
|
|
235 |
|
|
|
(9,601 |
) |
|
|
456,832 |
|
|
|
- |
|
|
Foreign corporate bonds |
|
|
125,559 |
|
|
|
33 |
|
|
|
(2,814 |
) |
|
|
122,778 |
|
|
|
- |
|
|
Total fixed maturities |
|
|
1,299,656 |
|
|
|
884 |
|
|
|
(26,859 |
) |
|
|
1,273,681 |
|
|
|
(1 |
) |
|
Common stock |
|
|
137,554 |
|
|
|
- |
|
|
|
- |
|
|
|
137,554 |
|
|
|
- |
|
|
Other invested assets |
|
|
85,268 |
|
|
|
- |
|
|
|
- |
|
|
|
85,268 |
|
|
|
- |
|
|
Total |
|
$ |
1,522,478 |
|
|
$ |
884 |
|
|
$ |
(26,859 |
) |
|
$ |
1,496,503 |
|
|
$ |
(1 |
) |
|
(1) |
Represents the total amount of other than temporary impairment losses relating to factors other than credit losses recognized in accumulated other comprehensive income (“AOCI”). |
|
(Dollars in thousands) |
|
Amortized
Cost |
|
|
Gross
Unrealized
Gains |
|
|
Gross
Unrealized
Losses |
|
|
Estimated
Fair Value |
|
|
Other than
temporary
impairments
recognized
in AOCI (1) |
|
|
As of December 31, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed maturities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. treasury and agency obligations |
|
$ |
105,311 |
|
|
$ |
562 |
|
|
$ |
(1,193 |
) |
|
$ |
104,680 |
|
|
$ |
- |
|
|
Obligations of states and political subdivisions |
|
|
94,947 |
|
|
|
441 |
|
|
|
(274 |
) |
|
|
95,114 |
|
|
|
- |
|
|
Mortgage-backed securities |
|
|
150,237 |
|
|
|
404 |
|
|
|
(1,291 |
) |
|
|
149,350 |
|
|
|
- |
|
|
Asset-backed securities |
|
|
203,827 |
|
|
|
267 |
|
|
|
(393 |
) |
|
|
203,701 |
|
|
|
(1 |
) |
|
Commercial mortgage-backed securities |
|
|
140,761 |
|
|
|
101 |
|
|
|
(1,067 |
) |
|
|
139,795 |
|
|
|
- |
|
|
Corporate bonds |
|
|
422,486 |
|
|
|
2,295 |
|
|
|
(1,391 |
) |
|
|
423,390 |
|
|
|
- |
|
|
Foreign corporate bonds |
|
|
125,575 |
|
|
|
377 |
|
|
|
(545 |
) |
|
|
125,407 |
|
|
|
- |
|
|
Total fixed maturities |
|
|
1,243,144 |
|
|
|
4,447 |
|
|
|
(6,154 |
) |
|
|
1,241,437 |
|
|
|
(1 |
) |
|
Common stock |
|
|
124,915 |
|
|
|
18,574 |
|
|
|
(3,260 |
) |
|
|
140,229 |
|
|
|
- |
|
|
Other invested assets |
|
|
77,820 |
|
|
|
- |
|
|
|
- |
|
|
|
77,820 |
|
|
|
- |
|
|
Total |
|
$ |
1,445,879 |
|
|
$ |
23,021 |
|
|
$ |
(9,414 |
) |
|
$ |
1,459,486 |
|
|
$ |
(1 |
) |
|
(1) |
Represents the total amount of other than temporary impairment losses relating to factors other than credit losses recognized in accumulated other comprehensive income (“AOCI”). |
|
| Summary of Amortized Cost and Estimated Fair Value Through Fixed Maturities |
The amortized cost and estimated fair value of the Company’s fixed maturities portfolio classified as available for sale at September 30, 2018, by contractual maturity, are shown below. 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.
|
(Dollars in thousands) |
|
Amortized
Cost |
|
|
Estimated
Fair Value |
|
|
Due in one year or less |
|
$ |
84,071 |
|
|
$ |
83,626 |
|
|
Due in one year through five years |
|
|
440,787 |
|
|
|
433,350 |
|
|
Due in five years through ten years |
|
|
238,245 |
|
|
|
231,360 |
|
|
Due in ten years through fifteen years |
|
|
6,501 |
|
|
|
6,331 |
|
|
Due after fifteen years |
|
|
4,212 |
|
|
|
4,240 |
|
|
Mortgage-backed securities |
|
|
138,442 |
|
|
|
134,844 |
|
|
Asset-backed securities |
|
|
201,317 |
|
|
|
199,722 |
|
|
Commercial mortgage-backed securities |
|
|
186,081 |
|
|
|
180,208 |
|
|
Total |
|
$ |
1,299,656 |
|
|
$ |
1,273,681 |
|
|
| Summary of Securities With Gross Unrealized Losses |
The following table contains an analysis of the Company’s fixed income securities with gross unrealized losses, categorized by the period that the securities were in a continuous loss position as of September 30, 2018. Due to new accounting guidance implemented in 2018 regarding the treatment of gains and losses on equity securities, common stock is no longer included in the table:
|
|
|
Less than 12 months |
|
|
12 months or longer (1) |
|
|
Total |
|
|
(Dollars in thousands) |
|
Fair Value |
|
|
Gross
Unrealized
Losses |
|
|
Fair Value |
|
|
Gross
Unrealized
Losses |
|
|
Fair Value |
|
|
Gross
Unrealized
Losses |
|
|
Fixed maturities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. treasury and agency obligations |
|
$ |
16,462 |
|
|
$ |
(279 |
) |
|
$ |
61,137 |
|
|
$ |
(1,772 |
) |
|
$ |
77,599 |
|
|
$ |
(2,051 |
) |
|
Obligations of states and political subdivisions |
|
|
62,981 |
|
|
|
(778 |
) |
|
|
8,849 |
|
|
|
(220 |
) |
|
|
71,830 |
|
|
|
(998 |
) |
|
Mortgage-backed securities |
|
|
90,574 |
|
|
|
(2,563 |
) |
|
|
35,442 |
|
|
|
(1,315 |
) |
|
|
126,016 |
|
|
|
(3,878 |
) |
|
Asset-backed securities |
|
|
138,627 |
|
|
|
(1,247 |
) |
|
|
23,861 |
|
|
|
(394 |
) |
|
|
162,488 |
|
|
|
(1,641 |
) |
|
Commercial mortgage-backed securities |
|
|
97,440 |
|
|
|
(3,249 |
) |
|
|
77,775 |
|
|
|
(2,627 |
) |
|
|
175,215 |
|
|
|
(5,876 |
) |
|
Corporate bonds |
|
|
385,878 |
|
|
|
(8,625 |
) |
|
|
34,749 |
|
|
|
(976 |
) |
|
|
420,627 |
|
|
|
(9,601 |
) |
|
Foreign corporate bonds |
|
|
83,304 |
|
|
|
(2,224 |
) |
|
|
28,124 |
|
|
|
(590 |
) |
|
|
111,428 |
|
|
|
(2,814 |
) |
|
Total fixed maturities |
|
$ |
875,266 |
|
|
$ |
(18,965 |
) |
|
$ |
269,937 |
|
|
$ |
(7,894 |
) |
|
$ |
1,145,203 |
|
|
$ |
(26,859 |
) |
|
(1) |
Fixed maturities in a gross unrealized loss position for twelve months or longer are primarily comprised of non-credit losses on investment grade securities where management does not intend to sell, and it is more likely than not that the Company will not be forced to sell the security before recovery. The Company has analyzed these securities and has determined that they are not other than temporarily impaired. |
The following table contains an analysis of the Company’s securities with gross unrealized losses, categorized by the period that the securities were in a continuous loss position as of December 31, 2017:
|
|
|
Less than 12 months |
|
|
12 months or longer (1) |
|
|
Total |
|
|
(Dollars in thousands) |
|
Fair Value |
|
|
Gross
Unrealized
Losses |
|
|
Fair Value |
|
|
Gross
Unrealized
Losses |
|
|
Fair Value |
|
|
Gross
Unrealized
Losses |
|
|
Fixed maturities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. treasury and agency obligations |
|
$ |
79,403 |
|
|
$ |
(962 |
) |
|
$ |
17,469 |
|
|
$ |
(231 |
) |
|
$ |
96,872 |
|
|
$ |
(1,193 |
) |
|
Obligations of states and political subdivisions |
|
|
34,537 |
|
|
|
(149 |
) |
|
|
12,060 |
|
|
|
(125 |
) |
|
|
46,597 |
|
|
|
(274 |
) |
|
Mortgage-backed securities |
|
|
127,991 |
|
|
|
(1,247 |
) |
|
|
1,866 |
|
|
|
(44 |
) |
|
|
129,857 |
|
|
|
(1,291 |
) |
|
Asset-backed securities |
|
|
97,817 |
|
|
|
(371 |
) |
|
|
6,423 |
|
|
|
(22 |
) |
|
|
104,240 |
|
|
|
(393 |
) |
|
Commercial mortgage-backed securities |
|
|
83,051 |
|
|
|
(523 |
) |
|
|
27,976 |
|
|
|
(544 |
) |
|
|
111,027 |
|
|
|
(1,067 |
) |
|
Corporate bonds |
|
|
147,064 |
|
|
|
(754 |
) |
|
|
53,024 |
|
|
|
(637 |
) |
|
|
200,088 |
|
|
|
(1,391 |
) |
|
Foreign corporate bonds |
|
|
53,320 |
|
|
|
(305 |
) |
|
|
20,582 |
|
|
|
(240 |
) |
|
|
73,902 |
|
|
|
(545 |
) |
|
Total fixed maturities |
|
|
623,183 |
|
|
|
(4,311 |
) |
|
|
139,400 |
|
|
|
(1,843 |
) |
|
|
762,583 |
|
|
|
(6,154 |
) |
|
Common stock |
|
|
32,759 |
|
|
|
(3,260 |
) |
|
|
- |
|
|
|
- |
|
|
|
32,759 |
|
|
|
(3,260 |
) |
|
Total |
|
$ |
655,942 |
|
|
$ |
(7,571 |
) |
|
$ |
139,400 |
|
|
$ |
(1,843 |
) |
|
$ |
795,342 |
|
|
$ |
(9,414 |
) |
|
(1) |
Fixed maturities in a gross unrealized loss position for twelve months or longer are primarily comprised of non-credit losses on investment grade securities where management does not intend to sell, and it is more likely than not that the Company will not be forced to sell the security before recovery. The Company has analyzed these securities and has determined that they are not other than temporarily impaired. |
|
| Schedule of Other Than Temporary Impairments on Investments |
The Company recorded the following other than temporary impairments (“OTTI”) on its investment portfolio for the quarters and nine months ended September 30, 2018 and 2017:
|
|
|
Quarters Ended
September 30, |
|
|
Nine Months Ended September 30, |
|
|
(Dollars in thousands) |
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
Fixed maturities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTTI losses, gross |
|
$ |
(24 |
) |
|
$ |
- |
|
|
$ |
(395 |
) |
|
$ |
(31 |
) |
|
Portion of loss recognized in other comprehensive income (pre-tax) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Net impairment losses on fixed maturities recognized in earnings |
|
|
(24 |
) |
|
|
- |
|
|
|
(395 |
) |
|
|
(31 |
) |
|
Equity securities |
|
|
- |
|
|
|
(1,020 |
) |
|
|
- |
|
|
|
(1,677 |
) |
|
Total |
|
$ |
(24 |
) |
|
$ |
(1,020 |
) |
|
$ |
(395 |
) |
|
$ |
(1,708 |
) |
|
| Schedule of Credit Losses Recognized in Earnings |
The following table is an analysis of the credit losses recognized in earnings on fixed maturities held by the Company for the quarters and nine months ended September 30, 2018 and 2017 for which a portion of the OTTI loss was recognized in other comprehensive income.
|
|
|
Quarters Ended
September 30, |
|
|
Nine Months Ended September 30, |
|
|
(Dollars in thousands) |
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
Balance at beginning of period |
|
$ |
13 |
|
|
$ |
16 |
|
|
$ |
13 |
|
|
$ |
31 |
|
|
Additions where no OTTI was previously recorded |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Additions where an OTTI was previously recorded |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Reductions for securities for which the company intends to sell or more likely than not will be required to sell before recovery |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Reductions reflecting increases in expected cash
flows to be collected |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Reductions for securities sold during the period |
|
|
- |
|
|
|
(3 |
) |
|
|
- |
|
|
|
(18 |
) |
|
Balance at end of period |
|
$ |
13 |
|
|
$ |
13 |
|
|
$ |
13 |
|
|
$ |
13 |
|
|
| Schedule of Accumulated Other Comprehensive Income, Net of Tax |
Accumulated other comprehensive income, net of tax, as of September 30, 2018 and December 31, 2017 was as follows:
|
(Dollars in thousands) |
|
September 30, 2018 |
|
|
December 31, 2017 |
|
|
Net unrealized gains (losses)from: |
|
|
|
|
|
|
|
|
|
Fixed maturities |
|
$ |
(25,975 |
) |
|
$ |
(1,707 |
) |
|
Common stock |
|
|
- |
|
|
|
15,314 |
|
|
Foreign currency fluctuations |
|
|
(1,003 |
) |
|
|
551 |
|
|
Deferred taxes |
|
|
3,149 |
|
|
|
(5,175 |
) |
|
Accumulated other comprehensive income, net of tax |
|
$ |
(23,829 |
) |
|
$ |
8,983 |
|
|
| Changes in Accumulated Other Comprehensive Income |
The following tables present the changes in accumulated other comprehensive income, net of tax, by component for the quarters and nine months ended September 30, 2018 and 2017:
|
Quarter Ended September 30, 2018
(Dollars In Thousands) |
|
Unrealized
Gains
and Losses
on Available
for Sale
Securities |
|
|
Foreign
Currency
Items |
|
|
Accumulated
Other
Comprehensive
Income |
|
|
Beginning balance, net of tax |
|
$ |
(21,926 |
) |
|
$ |
(549 |
) |
|
$ |
(22,475 |
) |
|
Other comprehensive loss before reclassification, before tax |
|
|
(1,945 |
) |
|
|
(454 |
) |
|
|
(2,399 |
) |
|
Amounts reclassified from accumulated other comprehensive income (loss), before tax |
|
|
835 |
|
|
|
- |
|
|
|
835 |
|
|
Other comprehensive loss, before tax |
|
|
(1,110 |
) |
|
|
(454 |
) |
|
|
(1,564 |
) |
|
Income tax benefit related to items of OCI |
|
|
210 |
|
|
|
- |
|
|
|
210 |
|
|
Cumulative effect adjustment, net of tax |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Ending balance, net of tax |
|
$ |
(22,826 |
) |
|
$ |
(1,003 |
) |
|
$ |
(23,829 |
) |
|
Quarter Ended September 30, 2017
(Dollars In Thousands) |
|
Unrealized
Gains
and Losses
on Available
for Sale
Securities |
|
|
Foreign
Currency
Items |
|
|
Accumulated
Other
Comprehensive
Income |
|
|
Beginning balance, net of tax |
|
$ |
5,549 |
|
|
$ |
437 |
|
|
$ |
5,986 |
|
|
Other comprehensive income before reclassification, before tax |
|
|
4,486 |
|
|
|
548 |
|
|
|
5,034 |
|
|
Amounts reclassified from accumulated other comprehensive income (loss), before tax |
|
|
923 |
|
|
|
(326 |
) |
|
|
597 |
|
|
Other comprehensive income, before tax |
|
|
5,409 |
|
|
|
222 |
|
|
|
5,631 |
|
|
Income Tax (expense) benefit related to items of OCI |
|
|
(1,583 |
) |
|
|
51 |
|
|
|
(1,532 |
) |
|
Cumulative effect adjustment, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance, net of tax |
|
$ |
9,375 |
|
|
$ |
710 |
|
|
$ |
10,085 |
|
|
Nine Months Ended September 30, 2018
(Dollars In Thousands) |
|
Unrealized
Gains
and Losses
on Available
for Sale
Securities |
|
|
Foreign
Currency
Items |
|
|
Accumulated
Other
Comprehensive
Income |
|
|
Beginning balance, net of tax |
|
$ |
8,272 |
|
|
$ |
711 |
|
|
$ |
8,983 |
|
|
Other comprehensive loss before reclassification, before tax |
|
|
(25,928 |
) |
|
|
(1,554 |
) |
|
|
(27,482 |
) |
|
Amounts reclassified from accumulated other comprehensive income (loss), before tax |
|
|
1,660 |
|
|
|
- |
|
|
|
1,660 |
|
|
Other comprehensive loss, before tax |
|
|
(24,268 |
) |
|
|
(1,554 |
) |
|
|
(25,822 |
) |
|
Income Tax benefit related to items of OCI |
|
|
3,038 |
|
|
|
- |
|
|
|
3,038 |
|
|
Cumulative effect adjustment, net of tax |
|
|
(9,868 |
) |
|
|
(160 |
) |
|
|
(10,028 |
) |
|
Ending balance, net of tax |
|
$ |
(22,826 |
) |
|
$ |
(1,003 |
) |
|
$ |
(23,829 |
) |
|
Nine Months Ended September 30, 2017
(Dollars In Thousands) |
|
Unrealized
Gains
and Losses
on Available
for Sale
Securities |
|
|
Foreign
Currency
Items |
|
|
Accumulated
Other
Comprehensive
Income |
|
|
Beginning balance, net of tax |
|
$ |
(554 |
) |
|
$ |
(64 |
) |
|
$ |
(618 |
) |
|
Other comprehensive income before reclassification, before tax |
|
|
14,675 |
|
|
|
1,212 |
|
|
|
15,887 |
|
|
Amounts reclassified from accumulated other comprehensive income (loss), before tax |
|
|
(830 |
) |
|
|
(336 |
) |
|
|
(1,166 |
) |
|
Other comprehensive income, before tax |
|
|
13,845 |
|
|
|
876 |
|
|
|
14,721 |
|
|
Income Tax (expense) related to items of OCI |
|
|
(3,916 |
) |
|
|
(102 |
) |
|
|
(4,018 |
) |
|
Cumulative effect adjustment, net of tax |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Ending balance, net of tax |
|
$ |
9,375 |
|
|
$ |
710 |
|
|
$ |
10,085 |
|
|
| Reclassifications Out of Accumulated Other Comprehensive Income |
The reclassifications out of accumulated other comprehensive income for the quarters and nine months ended September 30, 2018 and 2017 were as follows:
|
|
|
|
|
Amounts Reclassified from
Accumulated Other
Comprehensive Income |
|
|
(Dollars in thousands) |
|
|
|
Quarters Ended
September 30, |
|
|
Details about Accumulated Other
Comprehensive Income Components |
|
Affected Line Item in the Consolidated
Statements of Operations |
|
2018 |
|
|
2017 |
|
|
Unrealized gains and losses on available for sale securities |
|
Other net realized investment (gains) losses |
|
$ |
811 |
|
|
$ |
(97 |
) |
|
|
|
Other than temporary impairment losses on investments |
|
|
24 |
|
|
|
1,020 |
|
|
|
|
Total before tax |
|
|
835 |
|
|
|
923 |
|
|
|
|
Income tax (benefit) |
|
|
(118 |
) |
|
|
(270 |
) |
|
|
|
Unrealized gains and losses on available for sale securities, net of tax |
|
|
717 |
|
|
|
653 |
|
|
Foreign currency items |
|
Other net realized investment (gains) |
|
|
- |
|
|
$ |
(326 |
) |
|
|
|
Income tax expense |
|
|
- |
|
|
|
114 |
|
|
|
|
Foreign currency items, net of tax |
|
|
- |
|
|
|
(212 |
) |
|
Total reclassifications |
|
Total reclassifications, net of tax |
|
$ |
717 |
|
|
$ |
441 |
|
|
|
|
|
|
Amounts Reclassified from
Accumulated Other
Comprehensive Income |
|
|
(Dollars in thousands) |
|
|
|
Nine Months Ended September 30, |
|
|
Details about Accumulated Other
Comprehensive Income Components |
|
Affected Line Item in the Consolidated
Statements of Operations |
|
2018 |
|
|
2017 |
|
|
Unrealized gains and losses on available for sale securities |
|
Other net realized investment (gains) losses |
|
$ |
1,265 |
|
|
$ |
(2,538 |
) |
|
|
|
Other than temporary impairment losses on investments |
|
|
395 |
|
|
|
1,708 |
|
|
|
|
Total before tax |
|
|
1,660 |
|
|
|
(830 |
) |
|
|
|
Income tax expense (benefit) |
|
|
(257 |
) |
|
|
261 |
|
|
|
|
Unrealized gains and losses on available for sale securities, net of tax |
|
|
1,403 |
|
|
|
(569 |
) |
|
Foreign currency items |
|
Other net realized investment (gains) |
|
|
- |
|
|
|
(336 |
) |
|
|
|
Income tax expense |
|
|
- |
|
|
|
117 |
|
|
|
|
Foreign currency items, net of tax |
|
|
- |
|
|
|
(219 |
) |
|
Total reclassifications |
|
Total reclassifications, net of tax |
|
$ |
1,403 |
|
|
$ |
(788 |
) |
|
| Components of Net Realized Investment Gains (Losses) |
The components of net realized investment gains (losses) for the quarters and nine months ended September 30, 2018 and 2017 were as follows:
|
|
|
Quarters Ended
September 30, |
|
|
Nine Months Ended September 30, |
|
|
(Dollars in thousands) |
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
Fixed maturities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross realized gains |
|
$ |
329 |
|
|
$ |
434 |
|
|
$ |
373 |
|
|
$ |
3,122 |
|
|
Gross realized losses |
|
|
(1,164 |
) |
|
|
(300 |
) |
|
|
(2,033 |
) |
|
|
(2,358 |
) |
|
Net realized gains (losses) |
|
|
(835 |
) |
|
|
134 |
|
|
|
(1,660 |
) |
|
|
764 |
|
|
Common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross realized gains |
|
|
5,789 |
|
|
|
917 |
|
|
|
12,116 |
|
|
|
2,711 |
|
|
Gross realized losses |
|
|
(946 |
) |
|
|
(1,648 |
) |
|
|
(9,582 |
) |
|
|
(2,309 |
) |
|
Net realized gains (losses) |
|
|
4,843 |
|
|
|
(731 |
) |
|
|
2,534 |
|
|
|
402 |
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross realized gains |
|
|
1,690 |
|
|
|
486 |
|
|
|
8,457 |
|
|
|
822 |
|
|
Gross realized losses |
|
|
(379 |
) |
|
|
(852 |
) |
|
|
(1,498 |
) |
|
|
(2,838 |
) |
|
Net realized gains (losses) (1) |
|
|
1,311 |
|
|
|
(366 |
) |
|
|
6,959 |
|
|
|
(2,016 |
) |
|
Total net realized investment gains (losses) |
|
$ |
5,319 |
|
|
$ |
(963 |
) |
|
$ |
7,833 |
|
|
$ |
(850 |
) |
|
(1) |
Includes periodic net interest settlements related to the derivatives of $0.4 million and $0.9 million for the quarters ended September 30, 2018 and 2017, respectively, and $1.5 million and $2.8 million for the nine months ended September 30, 2018 and 2017, respectively. |
|
| Summary of Calculation of Realized Gains and Losses |
The following table shows the calculation of the portion of realized gains and losses related to common stock held as of September 30, 2018:
|
|
|
Quarter Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
(Dollars in thousands) |
|
2018 |
|
|
2018 |
|
|
Net gains and losses recognized during the period on equity securities |
|
$ |
4,843 |
|
|
$ |
2,534 |
|
|
Less: Net gains and losses recognized during the
period on equity securities sold during the period |
|
|
2,096 |
|
|
|
3,958 |
|
|
Unrealized gains and losses recognized during
the reporting period on equity securities still held
at the reporting date |
|
$ |
2,747 |
|
|
$ |
(1,424 |
) |
|
| Proceeds from Sales and Redemptions of Available-for-Sale Securities |
The proceeds from sales and redemptions of available for sale and equity securities resulting in net realized investment gains (losses) for the nine months ended September 30, 2018 and 2017 were as follows:
|
|
|
Nine Months Ended September 30, |
|
|
(Dollars in thousands) |
|
2018 |
|
|
2017 |
|
|
Fixed maturities |
|
$ |
229,362 |
|
|
$ |
742,229 |
|
|
Equity securities |
|
|
28,141 |
|
|
|
24,483 |
|
|
| Schedule of Investment Income |
The sources of net investment income for the quarters and nine months ended September 30, 2018 and 2017 were as follows:
|
|
|
Quarters Ended
September 30, |
|
|
Nine Months Ended September 30, |
|
|
(Dollars in thousands) |
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
Fixed maturities |
|
$ |
9,520 |
|
|
$ |
9,020 |
|
|
$ |
27,236 |
|
|
$ |
24,032 |
|
|
Equity securities |
|
|
1,006 |
|
|
|
906 |
|
|
|
3,010 |
|
|
|
2,740 |
|
|
Cash and cash equivalents |
|
|
285 |
|
|
|
226 |
|
|
|
814 |
|
|
|
621 |
|
|
Other invested assets |
|
|
1,631 |
|
|
|
655 |
|
|
|
5,194 |
|
|
|
2,423 |
|
|
Total investment income |
|
|
12,442 |
|
|
|
10,807 |
|
|
|
36,254 |
|
|
|
29,816 |
|
|
Investment expense |
|
|
(692 |
) |
|
|
(673 |
) |
|
|
(2,146 |
) |
|
|
(2,198 |
) |
|
Net investment income |
|
$ |
11,750 |
|
|
$ |
10,134 |
|
|
$ |
34,108 |
|
|
$ |
27,618 |
|
|
| Schedule of Total Investment Return |
The Company’s total investment return on a pre-tax basis for the quarters and nine months ended September 30, 2018 and 2017 were as follows:
|
|
|
Quarters Ended
September 30, |
|
|
Nine Months Ended September 30, |
|
|
(Dollars in thousands) |
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
Net investment income |
|
$ |
11,750 |
|
|
$ |
10,134 |
|
|
$ |
34,108 |
|
|
$ |
27,618 |
|
|
Net realized investment gains (losses) |
|
|
5,319 |
|
|
|
(963 |
) |
|
|
7,833 |
|
|
|
(850 |
) |
|
Change in unrealized holding gains and losses |
|
|
(1,564 |
) |
|
|
5,631 |
|
|
|
(25,822 |
) |
|
|
14,721 |
|
|
Net realized and unrealized investment returns |
|
|
3,755 |
|
|
|
4,668 |
|
|
|
(17,989 |
) |
|
|
13,871 |
|
|
Total investment return |
|
$ |
15,505 |
|
|
$ |
14,802 |
|
|
$ |
16,119 |
|
|
$ |
41,489 |
|
|
Total investment return % (1) |
|
|
1.0 |
% |
|
|
0.9 |
% |
|
|
1.1 |
% |
|
|
2.6 |
% |
|
Average investment portfolio |
|
$ |
1,541,975 |
|
|
$ |
1,629,989 |
|
|
$ |
1,533,825 |
|
|
$ |
1,587,645 |
|
|
| Summary of Insurance Enhanced Municipal Bonds Backed by Financial Guarantors |
A summary of the Company’s insurance enhanced municipal bonds that are backed by financial guarantors, including the pre-refunded bonds that are escrowed in U.S. government obligations, as of September 30, 2018, is as follows:
|
(Dollars in thousands) Financial Guarantor |
|
Total |
|
|
Pre-
refunded
Securities |
|
|
Government
Guaranteed
Securities |
|
|
Exposure
Net of Pre-
refunded &
Government
Guaranteed
Securities |
|
|
Municipal Bond Insurance Association |
|
$ |
708 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
708 |
|
|
Total backed by financial guarantors |
|
|
708 |
|
|
|
- |
|
|
|
- |
|
|
|
708 |
|
|
Other credit enhanced municipal bonds |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Total |
|
$ |
708 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
708 |
|
|
| Summary of Estimated Fair Values of Bonds Held on Deposit |
The fair values were as follows as of September 30, 2018 and December 31, 2017:
|
|
|
Estimated Fair Value |
|
|
(Dollars in thousands) |
|
September 30, 2018 |
|
|
December 31, 2017 |
|
|
On deposit with governmental authorities |
|
$ |
25,817 |
|
|
$ |
26,852 |
|
|
Intercompany trusts held for the benefit of U.S. policyholders |
|
|
205,995 |
|
|
|
328,494 |
|
|
Held in trust pursuant to third party requirements |
|
|
97,407 |
|
|
|
94,098 |
|
|
Letter of credit held for third party requirements |
|
|
2,317 |
|
|
|
3,944 |
|
|
Securities held as collateral for borrowing arrangements (1) |
|
|
74,714 |
|
|
|
88,040 |
|
|
Total |
|
$ |
406,250 |
|
|
$ |
541,428 |
|
|
(1) |
Amount required to collateralize margin borrowing facility. |
|