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Investments
 3 Months Ended
Mar. 31, 2015
Investments, Debt and Equity Securities [Abstract]  
Investments
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,
 
2015
 
2014
 
(In thousands)
 
 
 
 
Available for sale debt securities:
 
 
 
Realized gains on disposal
$
213

 
692

Realized losses on disposal
(9
)
 
(8
)
Held to maturity debt securities:
—

 


Realized gains on disposal
724

 
782

Realized losses on disposal
—

 
(11
)
Equity securities realized gains (losses)
50

 
4

Real estate gains (losses)
—

 
89

 
 
 
 
Totals
$
978

 
1,548



The Company uses the specific identification method in computing realized gains and losses. Approximately 75% 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,
 
 
2015
 
2014
 
 
(In thousands)
 
 
 
 
 
Total other-than-temporary impairment gains (losses) on debt securities
 
$
160

 
(4
)
Portion of loss (gain) recognized in comprehensive income
 
(160
)
 
(3
)
 
 
 
 
 
Net impairment losses on debt securities recognized in earnings
 
—

 
(7
)
Equity securities impairments
 
—

 
(28
)
 
 
 
 
 
Totals
 
$
—

 
(35
)



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, 2015
 
Twelve Months
Ended
December 31,
2014
 
 
 
 
 
 
 
 
Beginning balance, cumulative credit losses related to other-than-temporary impairments
$
2,298

 
2,472

Reductions for securities sold during current period
(20
)
 
(181
)
Additions for credit losses not previously recognized in other-than-temporary impairments
—

 
7

 
 
 
 
Ending balance, cumulative credit losses related to other-than-temporary impairments
$
2,278

 
2,298



(B)
Debt and Equity Securities

The table below presents amortized costs and fair values of securities held to maturity at March 31, 2015.

 
Securities Held to Maturity
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
(In thousands)
 
 
 
 
 
 
 
 
Debt securities:
 
 
 
 
 
 
 
U.S. agencies
$
15,047

 
634

 
—

 
15,681

U.S. Treasury
1,921

 
414

 
—

 
2,335

States and political subdivisions
436,398

 
35,935

 
(250
)
 
472,083

Foreign governments
—

 
—

 
—

 
—

Public utilities
975,817

 
78,915

 
(68
)
 
1,054,664

Corporate
3,975,303

 
226,933

 
(4,642
)
 
4,197,594

Mortgage-backed
1,614,749

 
86,462

 
(1,403
)
 
1,699,808

Home equity
18,704

 
4,614

 
—

 
23,318

Manufactured housing
4,294

 
356

 
—

 
4,650

 
 
 
 
 
 
 
 
Totals
$
7,042,233

 
434,263

 
(6,363
)
 
7,470,133



The table below presents amortized costs and fair values of securities available for sale at March 31, 2015.

 
Securities Available for Sale
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
(In thousands)
 
 
 
 
 
 
 
 
Debt securities:
 
 
 
 
 
 
 
States and political subdivisions
$
588

 
—

 
(35
)
 
553

Foreign governments
9,941

 
684

 
—

 
10,625

Public utilities
164,169

 
10,580

 
—

 
174,749

Corporate
2,441,317

 
152,193

 
(5,538
)
 
2,587,972

Mortgage-backed
45,563

 
4,177

 
—

 
49,740

Home equity
11,577

 
213

 
(13
)
 
11,777

Manufactured housing
1,606

 
53

 
—

 
1,659

 
2,674,761

 
167,900

 
(5,586
)
 
2,837,075

 
 
 
 
 
 
 
 
Equity securities
12,807

 
4,964

 
(156
)
 
17,615

 
 
 
 
 
 
 
 
Totals
$
2,687,568

 
172,864

 
(5,742
)
 
2,854,690



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

 
Securities Held to Maturity
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
(In thousands)
 
 
 
 
 
 
 
 
Debt securities:
 
 
 
 
 
 
 
U.S. agencies
$
10,061

 
705

 
—

 
10,766

U.S. Treasury
1,920

 
409

 
—

 
2,329

States and political subdivisions
432,186

 
31,417

 
(336
)
 
463,267

Public utilities
978,847

 
67,836

 
(757
)
 
1,045,926

Corporate
3,754,222

 
183,650

 
(18,591
)
 
3,919,281

Mortgage-backed
1,640,582

 
68,726

 
(4,164
)
 
1,705,144

Home equity
18,886

 
4,734

 
(57
)
 
23,563

Manufactured housing
4,839

 
328

 
—

 
5,167

 
 
 
 
 
 
 
 
Totals
$
6,841,543

 
357,805

 
(23,905
)
 
7,175,443



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

 
Securities Available for Sale
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
(In thousands)
 
 
 
 
 
 
 
 
Debt securities:
 
 
 
 
 
 
 
States and political subdivisions
$
589

 
—

 
(36
)
 
553

Foreign governments
9,939

 
386

 
—

 
10,325

Public utilities
169,179

 
10,163

 
(126
)
 
179,216

Corporate
2,334,700

 
128,280

 
(8,961
)
 
2,454,019

Mortgage-backed
48,674

 
4,116

 
—

 
52,790

Home equity
11,702

 
225

 
(9
)
 
11,918

Manufactured housing
2,492

 
64

 
—

 
2,556

 
2,577,275

 
143,234

 
(9,132
)
 
2,711,377

 
 
 
 
 
 
 
 
Equity securities
12,799

 
4,849

 
(345
)
 
17,303

 
 
 
 
 
 
 
 
Totals
$
2,590,074

 
148,083

 
(9,477
)
 
2,728,680



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, 2015.

 
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:
 
 
 
 
 
 
 
 
 
 
 
States and political subdivisions
$
—

 
—

 
13,220

 
(250
)
 
13,220

 
(250
)
Public utilities
2,003

 
(5
)
 
18,445

 
(63
)
 
20,448

 
(68
)
Corporate
99,277

 
(1,080
)
 
308,553

 
(3,562
)
 
407,830

 
(4,642
)
Mortgage-backed
30,877

 
(159
)
 
88,592

 
(1,244
)
 
119,469

 
(1,403
)
 
 
 
 
 
 
 
 
 
 
 
 
Total temporarily impaired securities
$
132,157

 
(1,244
)
 
428,810

 
(5,119
)
 
560,967

 
(6,363
)


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, 2015.

 
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:
 
 
 
 
 
 
 
 
 
 
 
States and political subdivisions
$
—

 
—

 
553

 
(35
)
 
553

 
(35
)
Public utilities
—

 
—

 
—

 
—

 
—

 
—

Corporate
104,238

 
(2,401
)
 
116,966

 
(3,137
)
 
221,204

 
(5,538
)
Home equity
—

 
—

 
4,822

 
(13
)
 
4,822

 
(13
)
 
104,238

 
(2,401
)
 
122,341

 
(3,185
)
 
226,579

 
(5,586
)
 
 
 
 
 
 
 
 
 
 
 
 
Equity public
598

 
(106
)
 
1,545

 
(50
)
 
2,143

 
(156
)
 
 
 
 
 
 
 
 
 
 
 
 
Total temporarily impaired securities
$
104,836

 
(2,507
)
 
123,886

 
(3,235
)
 
228,722

 
(5,742
)

Unrealized losses for securities held to maturity and securities available for sale decreased during the first three months of 2015 due primarily to the decline in market interest rates. The Company does not consider investments with unrealized losses to be other-than-temporarily impaired since it does not anticipate selling these securities prior to 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, 2015. 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 2015, the Company recorded no other-than-temporary impairment on debt or equity securities.

Debt securities. The gross unrealized losses for debt securities are made up of 109 individual issues, or 8.2% of the total debt securities held by the Company. The market value of these bonds as a percent of amortized cost averages 98.5%. Of the 109 securities, 77, or 70.6%, fall in the 12 months or greater aging category; and 106 were rated investment grade at March 31, 2015.

Equity securities.  The gross unrealized losses for equity securities are made up of 23 individual issues.  These holdings are reviewed quarterly for impairment.  

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, 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:
 
 
 
 
 
 
 
 
 
 
 
States and political subdivisions
$
—

 
—

 
23,076

 
(336
)
 
23,076

 
(336
)
Public utilities
7,078

 
(13
)
 
48,198

 
(744
)
 
55,276

 
(757
)
Corporate
156,839

 
(2,997
)
 
698,316

 
(15,594
)
 
855,155

 
(18,591
)
Mortgage-backed
17,698

 
(240
)
 
181,694

 
(3,924
)
 
199,392

 
(4,164
)
Home equity
2,206

 
(57
)
 
—

 
—

 
2,206

 
(57
)
 
 
 
 
 
 
 
 
 
 
 
 
Total temporarily impaired securities
$
183,821

 
(3,307
)
 
951,284

 
(20,598
)
 
1,135,105

 
(23,905
)


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, 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:
 
 
 
 
 
 
 
 
 
 
 
States and political subdivisions
$
—

 
—

 
553

 
(36
)
 
553

 
(36
)
Public utilities
—

 
—

 
14,827

 
(126
)
 
14,827

 
(126
)
Corporate
100,373

 
(2,990
)
 
187,699

 
(5,971
)
 
288,072

 
(8,961
)
Home equity
—

 
—

 
4,826

 
(9
)
 
4,826

 
(9
)
 
100,373

 
(2,990
)
 
207,905

 
(6,142
)
 
308,278

 
(9,132
)
 
 
 
 
 
 
 
 
 
 
 
 
Equity public
305

 
(52
)
 
3,801

 
(293
)
 
4,106

 
(345
)
 
 
 
 
 
 
 
 
 
 
 
 
Total temporarily impaired securities
$
100,678

 
(3,042
)
 
211,706

 
(6,435
)
 
312,384

 
(9,477
)


(C)
 Transfer of Securities

During the three months ended March 31, 2015 and 2014, the Company made no transfers to the held to maturity category from securities available for sale.

(D) Mortgage Loans

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 90 days or more at March 31, 2015 or 2014 and as a result all interest income was recognized at March 31, 2015 or 2014.

The following table represents the mortgage loan portfolio by loan-to-value ratio.

 
March 31, 2015
 
December 31, 2014
 
Amount
 
%
 
Amount
 
%
 
(In thousands)
 
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
 
Mortgage Loans by Loan-to-Value Ratio (1):
 
 
 
 
 
 
 
Less than 50%
$
47,448

 
32.8

 
$
52,564

 
35.0

50% to 60%
49,388

 
34.2

 
50,553

 
33.7

60% to 70%
20,115

 
13.9

 
14,567

 
9.7

70% to 80%
7,934

 
5.5

 
12,656

 
8.4

80% to 90%
19,683

 
13.6

 
5,399

 
3.6

Greater than 90%
—

 
—

 
14,414

 
9.6

Gross balance
144,568

 
100.0

 
150,153

 
100.0

 
 
 
 
 
 
 
 
Allowance for possible losses
(650
)
 
(0.5
)
 
(650
)
 
(0.4
)
 
 
 
 
 
 
 
 
Totals
$
143,918

 
99.5

 
$
149,503

 
99.6


(1) Loan-to-Value Ratio determined using the most recent appraised value. Appraisals are required at the time of funding and may be updated if a material change occurs from the original loan agreement.

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.

All mortgage loans 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 may indicate a potential problem include: 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.
 
March 31, 2015
 
December 31, 2014
 
(In thousands)
 
 
 
 
Balance, beginning of period
$
650

 
650

Provision
—

 
—

Releases
—

 
—

 
 
 
 
Balance, end of period
$
650

 
650