INVESTMENTS


(A)	Investment Gains and Losses

The table below presents realized investment gains and losses, excluding impairment losses, for the periods indicated.



	Three Months Ended March 31,
	2014			2013
	(In thousands)

Available for sale debt securities:
Realized gains on disposal	$	692		1,796
Realized losses on disposal	(8		)	—
Held to maturity debt securities:
Realized gains on disposal	782			329
Realized losses on disposal	(11		)	(69	)
Equity securities realized gains (losses)	4			318
Real estate gains (losses)	89			—
Mortgage loans write-downs	—			—
Other	—			—

Totals	$	1,548		2,374

The Company uses the specific identification method in computing realized gains and losses. Approximately 96.9% of the gains on bonds are due to calls of securities rather than sales. This includes calls out of the Company's available for sale portfolio of debt securities.

The table below presents net impairment losses recognized in earnings for the periods indicated.



	Three Months Ended
	March 31,
	2014			2013
	(In thousands)

Total other-than-temporary impairment gains (losses) on debt securities	$	(4	)	382
Portion of loss (gain) recognized in comprehensive income	(3		)	(443	)

Net impairment losses on debt securities recognized in earnings	(7		)	(61	)
Equity securities impairments	(28		)	—

Totals	$	(35	)	(61	)

The table below presents a roll forward of credit losses on securities for which the Company also recorded non-credit other-than-temporary impairments in other comprehensive loss.



	Three months ended March 31, 2014		Twelve Months Ended December 31, 2013


Beginning balance, cumulative credit losses related to other-than-temporary impairments	$	2,472	2,247
Reductions for securities sold during current period	—		(17	)
Additions for credit losses not previously recognized in other-than-temporary impairments	7		242

Ending balance, cumulative credit losses related to other-than-temporary impairments	$	2,479	2,472


(B)	Debt and Equity Securities

The table below presents amortized costs and fair values of securities held to maturity at March 31, 2014.



	Securities Held to Maturity
	Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses		Fair Value
	(In thousands)

Debt securities:
U.S. agencies	$	23,082	1,426	—		24,508
U.S. Treasury	1,915		433	—		2,348
States and political subdivisions	425,741		21,586	(5,059	)	442,268
Foreign governments	9,999		43	—		10,042
Public utilities	866,304		58,534	(3,912	)	920,926
Corporate	3,535,559		173,952	(44,891	)	3,664,620
Mortgage-backed	1,716,534		59,658	(19,568	)	1,756,624
Home equity	19,953		4,834	(29	)	24,758
Manufactured housing	6,767		403	—		7,170

Totals	$	6,605,854	320,869	(73,459	)	6,853,264

The table below presents amortized costs and fair values of securities available for sale at March 31, 2014.



	Securities Available for Sale
	Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses		Fair Value
	(In thousands)

Debt securities:
States and political subdivisions	$	593	—	(64	)	529
Foreign governments	9,933		92	—		10,025
Public utilities	218,776		14,300	(818	)	232,258
Corporate	2,214,837		139,585	(15,037	)	2,339,385
Mortgage-backed	63,301		4,589	—		67,890
Home equity	11,978		266	(5	)	12,239
Manufactured housing	3,532		117	—		3,649
	2,522,950		158,949	(15,924	)	2,665,975

Equity public	11,166		5,006	(485	)	15,687

Totals	$	2,534,116	163,955	(16,409	)	2,681,662

The table below presents amortized costs and fair values of securities held to maturity at December 31, 2013.



	Securities Held to Maturity
	Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses		Fair Value
	(In thousands)

Debt securities:
U.S. agencies	$	23,088	1,700	—		24,788
U.S. Treasury	1,913		434	—		2,347
States and political subdivisions	423,286		13,433	(10,944	)	425,775
Foreign governments	9,997		159	—		10,156
Public utilities	864,324		53,222	(9,687	)	907,859
Corporate	3,463,521		153,442	(81,760	)	3,535,203
Mortgage-backed	1,696,887		54,035	(33,376	)	1,717,546
Home equity	20,179		4,738	(32	)	24,885
Manufactured housing	7,125		460	—		7,585

Totals	$	6,510,320	281,623	(135,799	)	6,656,144

The table below presents amortized costs and fair values of securities available for sale at December 31, 2013.



	Securities Available for Sale
	Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses		Fair Value
	(In thousands)

Debt securities:
States and political subdivisions	$	594	—	(110	)	484
Foreign governments	9,931		—	(156	)	9,775
Public utilities	233,788		15,014	(1,397	)	247,405
Corporate	2,195,124		124,519	(30,732	)	2,288,911
Mortgage-backed	68,799		5,040	—		73,839
Home equity	12,079		245	(7	)	12,317
Manufactured housing	3,803		132	—		3,935
	2,524,118		144,950	(32,402	)	2,636,666

Equity public	11,146		4,489	(757	)	14,878

Totals	$	2,535,264	149,439	(33,159	)	2,651,544

The following table shows the gross unrealized losses and fair values of the Company's held to maturity investments by investment category and length of time the individual securities have been in a continuous unrealized loss position at March 31, 2014.



	Securities Held to Maturity
	Less than 12 Months				12 Months or Greater			Total
	Fair Value		Unrealized Losses		Fair Value	Unrealized Losses		Fair Value	Unrealized Losses
	(In thousands)

Debt securities:
U.S. agencies	$	—	—		—	—		—	—
U.S. Treasury	—		—		—	—		—	—
States and political subdivisions	40,723		(2,744	)	19,738	(2,315	)	60,461	(5,059	)
Foreign governments	—		—		—	—		—	—
Public utilities	158,771		(2,696	)	22,260	(1,216	)	181,031	(3,912	)
Corporate	850,901		(28,017	)	305,147	(16,874	)	1,156,048	(44,891	)
Mortgage-backed	488,373		(17,572	)	29,282	(1,996	)	517,655	(19,568	)
Home equity	—		—		2,567	(29	)	2,567	(29	)
Manufactured housing	—		—		—	—		—	—

Total temporarily impaired securities	$	1,538,768	(51,029	)	378,994	(22,430	)	1,917,762	(73,459	)

The following table shows the gross unrealized losses and fair values of the Company's available for sale investments by investment category and length of time the individual securities have been in a continuous unrealized loss position at March 31, 2014.



	Securities Available for Sale
	Less than 12 Months				12 Months or Greater			Total
	Fair Value		Unrealized Losses		Fair Value	Unrealized Losses		Fair Value	Unrealized Losses
	(In thousands)

Debt securities:
U.S. agencies	$	—	—		—	—		—	—
U.S. Treasury	—		—		—	—		—	—
States and political subdivisions	—		—		529	(64	)	529	(64	)
Foreign governments	—		—		—	—		—	—
Public utilities	20,645		(790	)	987	(28	)	21,632	(818	)
Corporate	265,794		(9,275	)	113,874	(5,762	)	379,668	(15,037	)
Mortgage-backed	—		—		—	—		—	—
Home equity	4,830		(5	)	—	—		4,830	(5	)
Manufactured housing	—		—		—	—		—	—
	291,269		(10,070	)	115,390	(5,854	)	406,659	(15,924	)

Equity public	3,985		(485	)	29	—		4,014	(485	)

Total temporarily impaired securities	$	295,254	(10,555	)	115,419	(5,854	)	410,673	(16,409	)

Unrealized losses have decreased during the first quarter of 2014 due primarily to the decline in market interest rates. The Company does not consider these investments to be other-than-temporarily impaired as the Company does not intend to sell these securities nor does it think it will be forced to sell until recovery in fair value or maturity, and expects to receive all amounts due relative to principal and interest.

The Company does not consider securities to be other-than-temporarily impaired when the market decline is attributable to factors such as interest rate movements, market volatility, liquidity, spread widening and credit quality and when recovery of all amounts due under the contractual terms of the security is anticipated. Based on the review and the Company's ability and intent not to sell these securities until maturity, the Company does not consider these investments to be other-than-temporarily impaired at March 31, 2014. The Company will monitor the investment portfolio for future changes in issuer facts and circumstances that could result in future impairments beyond those currently identified.

During the first quarter of 2014, the Company recorded an other-than-temporary impairment on one asset-backed security. The security had a $7 thousand credit impairment which is reported in the Condensed Consolidated Statements of Earnings and there were minimal liquidity gains which did not affect current earnings. The Company intends to hold the security until recovery of fair market value or maturity.

Debt securities. The gross unrealized losses for debt securities are made up of 303 individual issues, or 23.5% of the total debt securities held by the Company. The market value of these bonds as a percent of amortized cost averages 96.3%. Of the 303 securities, 83, or approximately 27.4%, fall in the 12 months or greater aging category; and 297 were rated investment grade at March 31, 2014.

Equity securities. The gross unrealized losses for equity securities are made up of 15 individual issues. These holdings are reviewed quarterly for impairment. One equity security was other-than-temporarily impaired during the three months ended March 31, 2014, in accordance with Company policy. The following table shows the gross unrealized losses and fair values of the Company's held to maturity investments by investment category and length of time the individual securities have been in a continuous unrealized loss position at December 31, 2013.



	Securities Held to Maturity
	Less than 12 Months				12 Months or Greater			Total
	Fair Value		Unrealized Losses		Fair Value	Unrealized Losses		Fair Value	Unrealized Losses
	(In thousands)

Debt securities:
U.S. agencies	$	—	—		—	—		—	—
U.S. Treasury	—		—		—	—		—	—
States and political subdivisions	128,711		(9,249	)	8,080	(1,695	)	136,791	(10,944	)
Foreign governments	—		—		—	—		—	—
Public utilities	260,982		(8,998	)	7,821	(689	)	268,803	(9,687	)
Corporate	1,335,088		(71,330	)	117,179	(10,430	)	1,452,267	(81,760	)
Mortgage-backed	581,373		(32,043	)	13,861	(1,333	)	595,234	(33,376	)
Home equity	—		—		2,617	(32	)	2,617	(32	)
Manufactured housing	—		—		—	—		—	—

Total temporarily impaired securities	$	2,306,154	(121,620	)	149,558	(14,179	)	2,455,712	(135,799	)

The following table shows the gross unrealized losses and fair values of the Company's available for sale investments by investment category and length of time that the individual securities have been in a continuous unrealized loss position at December 31, 2013.



	Securities Available for Sale
	Less than 12 Months				12 Months or Greater			Total
	Fair Value		Unrealized Losses		Fair Value	Unrealized Losses		Fair Value	Unrealized Losses
	(In thousands)

Debt securities:
U.S. agencies	$	—	—		—	—		—	—
U.S. Treasury	—		—		—	—		—	—
States and political subdivisions	—		—		484	(110	)	484	(110	)
Foreign governments	9,775		(156	)	—	—		9,775	(156	)
Public utilities	20,090		(1,343	)	962	(54	)	21,052	(1,397	)
Corporate	532,310		(26,376	)	46,187	(4,356	)	578,497	(30,732	)
Mortgage-backed	—		—		—	—		—	—
Home equity	4,833		(7	)	—	—		4,833	(7	)
Manufactured housing	—		—		—	—		—	—
	567,008		(27,882	)	47,633	(4,520	)	614,641	(32,402	)

Equity public	3,707		(757	)	—	—		3,707	(757	)

Total temporarily impaired securities	$	570,715	(28,639	)	47,633	(4,520	)	618,348	(33,159	)


(C)	Transfer of Securities

During the three months ended March 31, 2014 and 2013, the Company made no transfers to the held to maturity category from securities available for sale.

(D) Mortgage Loans and Real Estate

A financing receivable is a contractual right to receive money on demand or on fixed or determinable dates that is recognized as an asset in a company's statement of financial position. Mortgage, equity, participation and mezzanine loans on real estate are considered financing receivables reported by the Company.

Credit and default risk is minimized through strict underwriting guidelines and diversification of underlying property types and geographic locations. In addition to being secured by the property, mortgage loans with leases on the underlying property are often guaranteed by the lease payments and also by the borrower. This approach has proven to result in quality mortgage loans with few defaults. Mortgage loan interest income is recognized on an accrual basis with any premium or discount amortized over the life of the loan. Prepayment and late fees are recorded on the date of collection.

Loans in foreclosure, loans considered impaired or loans past due 90 days or more are placed on a non-accrual status. If a mortgage loan is determined to be on non-accrual status, the mortgage loan does not accrue any revenue into the Condensed Consolidated Statements of Earnings. The loan is independently monitored and evaluated as to potential impairment or foreclosure. If delinquent payments are made and the loan is brought current, then the Company returns the loan to active status and accrues income accordingly. The Company had no mortgage loans past due three months or more at March 31, 2014 or 2013. There was no interest income not recognized at March 31, 2014 or 2013.

The following table represents the loan-to-value ratio using the most recent appraised value.



	March 31, 2014					December 31, 2013
	Amount			%		Amount			%
	(In thousands)					(In thousands)

Mortgage Loans by Loan-to-Value Ratio (1):
Less than 50%	$	52,366		40.5		$	57,445		43.0
50% to 60%	27,073			21.0		23,339			17.5
60% to 70%	17,384			13.5		20,120			15.1
70% to 80%	9,678			7.5		9,723			7.3
80% to 90%	—			—		—			—
Greater than 90%	22,655			17.5		22,788			17.1
Gross balance	129,156			100.0		133,415			100.0

Allowance for possible losses	(650		)	(0.5	)	(650		)	(0.5	)

Totals	$	128,506		99.5		$	132,765		99.5

(1) Loan-to-Value Ratio using the most recent appraised value.

The mortgage loans in the greater than 90% category relate to loans made with a long standing borrower. The loans are backed by the investment property, contracted leases, as well as a separate and additional guarantee of the long standing borrower.

The Company does not consider its mortgage loans to be a separate portfolio segment. The Company considers its primary class to be property type and primarily uses loan-to-value as its credit risk quality indicator. All loans within the portfolio are analyzed quarterly in order to monitor the financial quality of these assets. Based on ongoing monitoring, mortgage loans with a likelihood of becoming delinquent are identified and placed on an internal “watch list”. Among the criteria that would indicate a potential problem are: major tenant vacancies or bankruptcies, late payments, and loan relief/restructuring requests. The mortgage loan portfolio is analyzed for the need for a valuation allowance on any loan that is on the internal watch list, in the process of foreclosure or that currently has a valuation allowance.

Mortgage loans are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. When it is determined that a loan is impaired, a loss is recognized for the difference between the carrying amount of the mortgage loan and the estimated value reduced by the cost to sell. Estimated value is typically based on the loan's observable market price or the fair value of the collateral less cost to sell. Impairments and changes in the valuation allowance are reported in net realized investment gains (losses) in the Condensed Consolidated Statements of Earnings.

The following table represents the mortgage loan allowance at March 31, 2014 and December 31, 2013:



	March 31, 2014		December 31, 2013
	(In thousands)

Balance, beginning of period	$	650	650
Provision	—		—
Releases	—		—

Balance, end of period	$	650	650