
(4)	Investments

Debt and equity securities are classified as AFS and are carried at fair value. The Company evaluates whether AFS securities are other-than-temporarily impaired (OTTI) based on criteria that include the extent to which cost exceeds market value, the duration of the market value decline, the credit rating of the issuer or security, the failure of the issuer to make scheduled principal or interest payments and the financial health and prospects of the issuer or security.

Declines in the value of AFS securities determined to be OTTI are recognized in earnings and reported as OTTI losses. Debt securities with unrealized losses are considered OTTI if the Company intends to sell the debt security or if the Company will be required to sell the debt security prior to any anticipated recovery. If the Company determines that a debt security is OTTI under these circumstances, the impairment recognized in earnings is measured as the difference between the amortized cost and the current fair value. A debt security is also determined to be OTTI if the Company does not expect to recover the amortized cost of the debt security. However, in this circumstance, if the Company does not intend to sell the debt security and will not be required to sell the debt security, the impairment recognized in earnings equals the estimated credit loss as measured by the difference between the present value of expected cash flows and the amortized cost of the debt security. Expected cash flows are discounted using the debt security’s effective interest rate. An equity security is determined to be OTTI if the Company does not expect to recover the cost of the equity security. Declines in the value of AFS securities determined to be temporary are reported net of income taxes as other comprehensive losses and included as a component of stockholders’ equity.

Interest and dividend income, amortization of premiums, accretion of discounts and realized gains and losses on AFS securities are included in investment income. Interest income is accrued as earned. Dividend income is recognized as income on the ex-dividend date of the security. The cost of AFS securities sold is based on the first-in, first-out method.

Following is a summary of AFS securities as of April 1, 2017 and December 31, 2016:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(Amounts are in thousands)
April 1, 2017
Tax exempt bonds	$	2,919,378		4,964		9,748	2,914,594
Taxable bonds	2,616,734			1,530		28,113	2,590,151
Restricted investments	164,548			—		—	164,548
Equity securities	1,279,526			114,410		3,409	1,390,527
	$	6,980,186		120,904		41,270	7,059,820
December 31, 2016
Tax exempt bonds	$	3,036,060		2,211		24,649	3,013,622
Taxable bonds	2,469,192			1,359		33,903	2,436,648
Restricted investments	164,548			—		463	164,085
Equity securities	1,021,340			110,879		7,956	1,124,263
	$	6,691,140		114,449		66,971	6,738,618

Realized gains on sales of AFS securities totaled $34,622,000 for the three months ended April 1, 2017. Realized losses on sales of AFS securities totaled $3,353,000 for the three months ended April 1, 2017.

Realized gains on sales of AFS securities totaled $9,251,000 for the three months ended March 26, 2016. Realized losses on sales of AFS securities totaled $3,555,000 for the three months ended March 26, 2016.

The amortized cost and fair value of AFS securities by expected maturity as of April 1, 2017 and December 31, 2016 are as follows:



	April 1, 2017			December 31, 2016
	Amortized Cost		Fair Value	Amortized Cost	Fair Value
	(Amounts are in thousands)
Due in one year or less	$	1,597,922	1,597,903	1,592,144	1,591,740
Due after one year through five years	3,133,550		3,117,869	3,218,371	3,187,739
Due after five years through ten years	792,266		776,095	680,641	656,162
Due after ten years	12,374		12,878	14,096	14,629
	5,536,112		5,504,745	5,505,252	5,450,270
Restricted investments	164,548		164,548	164,548	164,085
Equity securities	1,279,526		1,390,527	1,021,340	1,124,263
	$	6,980,186	7,059,820	6,691,140	6,738,618

Following is a summary of temporarily impaired AFS securities by the time period impaired as of April 1, 2017 and December 31, 2016:



	Less Than 12 Months				12 Months or Longer			Total
	Fair Value		Unrealized Losses		Fair Value	Unrealized Losses		Fair Value	Unrealized Losses
	(Amounts are in thousands)
April 1, 2017
Tax exempt bonds	$	1,304,761		8,696	23,986		1,052	1,328,747		9,748
Taxable bonds	2,041,367			27,645	51,806		468	2,093,173		28,113
Equity securities	163,598			1,613	4,054		1,796	167,652		3,409
	$	3,509,726		37,954	79,846		3,316	3,589,572		41,270
December 31, 2016
Tax exempt bonds	$	2,360,143		24,416	6,099		233	2,366,242		24,649
Taxable bonds	1,921,367			33,354	51,769		549	1,973,136		33,903
Restricted investments	164,085			463	—		—	164,085		463
Equity securities	61,625			3,924	38,141		4,032	99,766		7,956
	$	4,507,220		62,157	96,009		4,814	4,603,229		66,971

There are 441 AFS securities contributing to the total unrealized loss of $41,270,000 as of April 1, 2017. Unrealized losses related to debt securities are primarily due to interest rate volatility impacting the market value of certain bonds. The Company continues to receive scheduled principal and interest payments on these debt securities. Unrealized losses related to equity securities are primarily due to temporary equity market fluctuations that are expected to recover.