XML 41 R30.htm IDEA: XBRL DOCUMENT v3.19.1
INVESTMENT OPERATIONS (Tables)
 3 Months Ended
Mar. 31, 2019
Investments, Debt and Equity Securities [Abstract]  
Realized Gain (Loss) on Investments
Net realized gains (losses) are summarized as follows:
 
For The
Three Months Ended
March 31,
 
2019
 
2018
 
(Dollars In Thousands)
Fixed maturities
$
5,137

 
$
2,783

Equity gains and losses
30,635

 
(8,738
)
Modco trading portfolio
94,902

 
(84,709
)
Other investments
(1,146
)
 
3,113

Realized gains (losses) - all other investments
129,528

 
(87,551
)
Realized gains (losses) - derivatives(1)
(73,308
)
 
46,826

Realized investment gains (losses)
$
56,220

 
$
(40,725
)
 
 
 
 
Net impairments losses recognized in earnings
$
(3,142
)
 
$
(3,645
)
 
 
 
 
(1) See Note 7, Derivative Financial Instruments
 
 
 
Gross realized gains and gross realized losses on investments available-for-sale (fixed maturities and short-term investments) are as follows:
 
For The
Three Months Ended
March 31,
 
2019
 
2018
 
(Dollars In Thousands)
Gross realized gains
$
7,870

 
$
8,049

Gross realized losses:
 
 
 
Impairment losses
$
(3,142
)
 
$
(3,645
)
Other realized losses
$
(2,733
)
 
$
(5,267
)
Schedule of Investments' Gross Unrealized Losses and Fair Value of the Company's Investments that are Not Deemed to be Other-than-Temporarily Impaired
The chart below summarizes the fair value (proceeds) and the gains (losses) realized on securities the Company sold that were in an unrealized gain position and an unrealized loss position.
 
For The
Three Months Ended
March 31,
 
2019
 
2018
 
(Dollars In Thousands)
Securities in an unrealized gain position:
 
 
 
Fair value (proceeds)
$
648,891

 
$
142,133

Gains realized
$
7,870

 
$
8,049

 
 
 
 
Securities in an unrealized loss position(1):
 
 
 
Fair value (proceeds)
$
171,302

 
$
56,984

Losses realized
$
(2,733
)
 
$
(5,267
)
 
 
 
 
(1) The Company made the decision to exit these holdings in conjunction with its overall asset/liability management process.
The following table includes the gross unrealized losses and fair value of the Company’s investments that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2019:
 
Less Than 12 Months
 
12 Months or More
 
Total
 
Fair
Value
 
Unrealized
Loss
 
Fair
Value
 
Unrealized
Loss
 
Fair
Value
 
Unrealized
Loss
 
(Dollars In Thousands)
Residential mortgage-backed securities
$
158,901

 
$
(1,772
)
 
$
1,238,524

 
$
(27,543
)
 
$
1,397,425

 
$
(29,315
)
Commercial mortgage-backed securities
52,747

 
(1,235
)
 
1,454,220

 
(26,026
)
 
1,506,967

 
(27,261
)
Other asset-backed securities
531,548

 
(11,905
)
 
192,201

 
(3,718
)
 
723,749

 
(15,623
)
U.S. government-related securities
43,977

 
(640
)
 
1,045,717

 
(29,772
)
 
1,089,694

 
(30,412
)
Other government-related securities
51,767

 
(1,279
)
 
198,112

 
(10,604
)
 
249,879

 
(11,883
)
States, municipals, and political subdivisions
60,555

 
(369
)
 
911,555

 
(24,887
)
 
972,110

 
(25,256
)
Corporate securities
3,327,367

 
(136,044
)
 
17,570,174

 
(1,075,786
)
 
20,897,541

 
(1,211,830
)
Redeemable preferred stocks
10,154

 
(3
)
 
68,291

 
(4,121
)
 
78,445

 
(4,124
)
 
$
4,237,016

 
$
(153,247
)
 
$
22,678,794

 
$
(1,202,457
)
 
$
26,915,810

 
$
(1,355,704
)
The following table includes the gross unrealized losses and fair value of the Company’s investments that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2018:
 
Less Than 12 Months
 
12 Months or More
 
Total
 
Fair
Value
 
Unrealized
Loss
 
Fair
Value
 
Unrealized
Loss
 
Fair
Value
 
Unrealized
Loss
 
(Dollars In Thousands)
Residential mortgage-backed securities
$
1,485,009

 
$
(31,302
)
 
$
795,765

 
$
(30,633
)
 
$
2,280,774

 
$
(61,935
)
Commercial mortgage-backed securities
419,420

 
(7,398
)
 
1,405,690

 
(49,602
)
 
1,825,110

 
(57,000
)
Other asset-backed securities
687,271

 
(30,963
)
 
148,871

 
(4,435
)
 
836,142

 
(35,398
)
U.S. government-related securities
130,290

 
(4,668
)
 
1,085,654

 
(41,054
)
 
1,215,944

 
(45,722
)
Other government-related securities
224,273

 
(15,207
)
 
131,569

 
(18,583
)
 
355,842

 
(33,790
)
States, municipals, and political subdivisions
1,004,262

 
(27,180
)
 
1,129,152

 
(91,722
)
 
2,133,414

 
(118,902
)
Corporate securities
18,225,656

 
(966,825
)
 
12,824,024

 
(1,411,415
)
 
31,049,680

 
(2,378,240
)
Redeemable preferred stocks
41,147

 
(4,467
)
 
41,655

 
(7,093
)
 
82,802

 
(11,560
)
 
$
22,217,328

 
$
(1,088,010
)
 
$
17,562,380

 
$
(1,654,537
)
 
$
39,779,708

 
$
(2,742,547
)
Debt Securities, Trading, and Equity Securities
The chart below summarizes the realized gains (losses) on equity securities sold during the period and equity securities still held at the reporting date.
 
For The
Three Months Ended
March 31,
 
2019
 
2018
 
(Dollars In Thousands)
Net gains (losses) recognized during the period on equity securities
$
30,635

 
$
(8,738
)
Less: net gains (losses) recognized on equity securities sold during the period
$
60

 
$
(1,702
)
Gains (losses) recognized during the period on equity securities still held
$
30,575

 
$
(7,036
)
Schedule of Amortized Cost and Fair Value of the Company's Investments Classified as Available-for-Sale
The amortized cost and fair value of the Company’s investments classified as available-for-sale are as follows:
As of March 31, 2019
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
Total OTTI
Recognized
in OCI(1)
 
 
(Dollars In Thousands)
Fixed maturities:
 
 

 
 

 
 

 
 

 
 

Residential mortgage-backed securities
 
$
3,871,471

 
$
57,375

 
$
(29,315
)
 
$
3,899,531

 
$
—

Commercial mortgage-backed securities
 
2,334,211

 
17,148

 
(27,261
)
 
2,324,098

 
—

Other asset-backed securities
 
1,359,813

 
18,421

 
(15,623
)
 
1,362,611

 
—

U.S. government-related securities
 
1,439,136

 
2,382

 
(30,412
)
 
1,411,106

 
—

Other government-related securities
 
521,713

 
12,295

 
(11,883
)
 
522,125

 
—

States, municipals, and political subdivisions
 
3,632,880

 
84,040

 
(25,256
)
 
3,691,664

 
1,021

Corporate securities
 
38,424,196

 
573,892

 
(1,211,830
)
 
37,786,258

 
(18,719
)
Redeemable preferred stocks
 
87,579

 
368

 
(4,124
)
 
83,823

 
—

 
 
51,670,999

 
765,921

 
(1,355,704
)
 
51,081,216

 
(17,698
)
Short-term investments
 
607,017

 
—

 
—

 
607,017

 
—

 
 
$
52,278,016

 
$
765,921

 
$
(1,355,704
)
 
$
51,688,233

 
$
(17,698
)
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2018
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
Total OTTI
Recognized
in OCI(1)
 
 
(Dollars In Thousands)
Fixed maturities:
 
 

 
 

 
 

 
 

 
 

Residential mortgage-backed securities
 
$
3,641,678

 
$
23,248

 
$
(61,935
)
 
$
3,602,991

 
$
(18
)
Commercial mortgage-backed securities
 
2,319,476

 
3,911

 
(57,000
)
 
2,266,387

 
—

Other asset-backed securities
 
1,410,059

 
17,232

 
(35,398
)
 
1,391,893

 
—

U.S. government-related securities
 
1,658,433

 
1,794

 
(45,722
)
 
1,614,505

 
—

Other government-related securities
 
543,534

 
4,292

 
(33,790
)
 
514,036

 
—

States, municipals, and political subdivisions
 
3,682,037

 
25,706

 
(118,902
)
 
3,588,841

 
876

Corporate securities
 
38,467,380

 
112,438

 
(2,378,240
)
 
36,201,578

 
(29,685
)
Redeemable preferred stocks
 
94,362

 
—

 
(11,560
)
 
82,802

 
—

 
 
51,816,959

 
188,621

 
(2,742,547
)
 
49,263,033

 
(28,827
)
Short-term investments
 
635,375

 
—

 
—

 
635,375

 
—

 
 
$
52,452,334

 
$
188,621

 
$
(2,742,547
)
 
$
49,898,408

 
$
(28,827
)
 
 
 
 
 
 
 
 
 
 
 
(1) These amounts are included in the gross unrealized gains and gross unrealized losses columns above.
Schedule of Fair Value of Trading Securities
The fair value of the investments held pursuant to these Modco arrangements are as follows:
 
 
As of
March 31, 2019
 
As of
December 31, 2018
 
 
(Dollars In Thousands)
Fixed maturities:
 
 

 
 

Residential mortgage-backed securities
 
$
213,259

 
$
241,836

Commercial mortgage-backed securities
 
209,482

 
188,925

Other asset-backed securities
 
149,541

 
159,907

U.S. government-related securities
 
59,627

 
59,794

Other government-related securities
 
23,640

 
44,207

States, municipals, and political subdivisions
 
292,796

 
286,413

Corporate securities
 
1,533,256

 
1,423,833

Redeemable preferred stocks
 
11,860

 
11,277

 
 
2,493,461

 
2,416,192

Equity securities
 
9,207

 
9,892

Short-term investments
 
34,631

 
30,926

 
 
$
2,537,299

 
$
2,457,010
Schedule of Amortized Cost and Fair Value of Available-for-Sale and Held-to-Maturity Fixed Maturities, by Expected Maturity
The amortized cost and fair value of available-for-sale and held-to-maturity fixed maturities as of March 31, 2019, by expected maturity, are shown below. Expected maturities of securities without a single maturity date are allocated based on estimated rates of prepayment that may differ from actual rates of prepayment.
 
Available-for-sale
 
Held-to-maturity
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
(Dollars In Thousands)
Due in one year or less
$
1,259,571

 
$
1,257,644

 
$
—

 
$
—

Due after one year through five years
8,936,843

 
8,920,426

 
—

 
—

Due after five years through ten years
8,822,759

 
8,877,578

 
—

 
—

Due after ten years
32,651,826

 
32,025,568

 
2,607,356

 
2,594,441

 
$
51,670,999

 
$
51,081,216

 
$
2,607,356

 
$
2,594,441
Gain (Loss) on Investments
The charts below summarize the Company’s other-than-temporary impairments of investments. All of the impairments were related to fixed maturities.
 
For The
Three Months Ended
March 31, 2019
 
Fixed
Maturities
 
(Dollars In Thousands)
Other-than-temporary impairments
$
(1,295
)
Non-credit impairment losses recorded in other comprehensive income
(1,847
)
Net impairment losses recognized in earnings
$
(3,142
)

 
For The
Three Months Ended
March 31, 2018
 
Fixed
Maturities
 
(Dollars In Thousands)
Other-than-temporary impairments
$
(691
)
Non-credit impairment losses recorded in other comprehensive income
(2,954
)
Net impairment losses recognized in earnings
$
(3,645
)
Schedule of Available-for-Sale Credit Losses on Fixed Maturities Held by the Company for Which a Portion of Other-than-Temporary Impairments were Recognized in Other Comprehensive Income (Loss)
The following chart is a rollforward of available-for-sale credit losses on fixed maturities held by the Company for which a portion of an other-than-temporary impairment was recognized in other comprehensive income (loss):
 
For The
Three Months Ended
March 31,
 
2019
 
2018
 
(Dollars In Thousands)
Beginning balance
$
24,868

 
$
3,268

Additions for newly impaired securities
751

 
—

Additions for previously impaired securities
2,347

 
—

Reductions for previously impaired securities due to a change in expected cash flows
(632
)
 
(1,033
)
Reductions for previously impaired securities that were sold in the current period
(119
)
 
—

Ending balance
$
27,215

 
$
2,235
Summary of Change in Unrealized Gains (Losses), Net of Income Tax, on Fixed Maturity and Equity Securities, Classified as Available-for-Sale
The change in unrealized gains (losses), net of income tax, on fixed maturities, classified as available-for-sale is summarized as follows:
 
For The
Three Months Ended
March 31,
 
2019
 
2018
 
(Dollars In Thousands)
Fixed maturities
$
1,551,674

 
$
(915,075
)
Schedule of Amortized Cost and Fair Value of the Company's Investments Classified as Held-to-Maturity
The amortized cost and fair value of the Company’s investments classified as held-to-maturity as of March 31, 2019 and December 31, 2018, are as follows:
As of March 31, 2019
 
Amortized
Cost
 
Gross
Unrecognized
Holding
Gains
 
Gross
Unrecognized
Holding
Losses
 
Fair
Value
 
Total OTTI
Recognized
in OCI
 
 
(Dollars In Thousands)
Fixed maturities:
 
 

 
 

 
 

 
 

 
 

Securities issued by affiliates:
 
 
 
 
 
 
 
 
 
 
Red Mountain, LLC
 
$
764,356

 
$
—

 
$
(56,483
)
 
$
707,873

 
$
—

Steel City, LLC
 
1,843,000

 
43,568

 
—

 
1,886,568

 
—

 
 
$
2,607,356

 
$
43,568

 
$
(56,483
)
 
$
2,594,441

 
$
—

 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2018
 
Amortized
Cost
 
Gross
Unrecognized
Holding
Gains
 
Gross
Unrecognized
Holding
Losses
 
Fair
Value
 
Total OTTI
Recognized
in OCI
 
 
(Dollars In Thousands)
Fixed maturities:
 
 

 
 

 
 

 
 

 
 

Securities issued by affiliates:
 
 
 
 
 
 
 
 
 
 
Red Mountain, LLC
 
$
750,474

 
$
—

 
$
(81,657
)
 
$
668,817

 
$
—

Steel City, LLC
 
1,883,000

 
—

 
(4,607
)
 
1,878,393

 
—

 
 
$
2,633,474

 
$
—

 
$
(86,264
)
 
$
2,547,210

 
$
—