Investments (Tables)

6 Months Ended

Jun. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Unrealized gains and losses on fixed maturities and equity securities

The amortized cost or cost, unrealized investment gains and losses, fair values and other-than-temporary impairment (“OTTI”) included in accumulated other comprehensive income (loss) (“AOCI”) of all fixed maturities and equity securities in the portfolio were as follows:

	Amortized			Unrealized			Unrealized			Fair			OTTI in
	Cost/Cost			Gains			Losses			Value			AOCI (2)
June 30, 2014
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (1):
Mortgage-backed securities		$	546,236		$	45,587		$	9,691		$	582,132		$	-
Other, including U.S. Treasury securities			464,978			19,207			8,007			476,178			-
Municipal bonds			1,455,567			149,837			7,515			1,597,889			-
Foreign government bonds			50,604			6,435			-			57,039			-
Corporate bonds			2,599,455			269,905			5,623			2,863,737			-
Other mortgage-backed securities			1,070,589			32,712			3,937			1,099,364			2,866
Totals		$	6,187,429		$	523,683		$	34,773		$	6,676,339		$	2,866

Equity securities		$	97,224		$	13,127		$	889		$	109,462		$	-

December 31, 2013
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (1):
Mortgage-backed securities		$	555,574		$	33,711		$	19,560		$	569,725		$	-
Other, including U.S. Treasury securities			449,060			9,865			23,351			435,574			-
Municipal bonds			1,425,441			80,701			34,615			1,471,527			-
Foreign government bonds			50,641			4,700			390			54,951			-
Corporate bonds			2,457,727			188,832			32,150			2,614,409			-
Other mortgage-backed securities			845,762			26,477			8,852			863,387			2,812
Totals		$	5,784,205		$	344,286		$	118,918		$	6,009,573		$	2,812

Equity securities		$	84,754		$	10,723		$	3,619		$	91,858		$	-

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(1)

Fair value includes securities issued by Federal National Mortgage Association (“FNMA”) of $342,198 and $336,193; Federal Home Loan Mortgage Corporation (“FHLMC”) of $441,363 and $427,172; and Government National Mortgage Association (“GNMA”) of $136,208 and $126,245 as of June 30, 2014 and December 31, 2013, respectively.

(2)

Represents the amount of other-than-temporary impairment losses in AOCI which, beginning April 1, 2009, was not included in earnings under current accounting guidance. Amounts also include unrealized gains/(losses) on impaired securities relating to changes in the fair value of such securities subsequent to the impairment measurement date.

Summary of fair value and gross unrealized losses of fixed maturity securities and equity securities in an unrealized loss position

	12 Months or Less							More than 12 Months							Total
					Gross							Gross							Gross
	Fair Value				Unrealized Losses			Fair Value				Unrealized Losses			Fair Value				Unrealized Losses
June 30, 2014
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities		$	13,483			$	637		$	95,845			$	9,054		$	109,328			$	9,691
Other			5,257				26			165,165				7,981			170,422				8,007
Municipal bonds			45,797				2,883			151,155				4,632			196,952				7,515
Foreign government bonds			-				-			-				-			-				-
Corporate bonds			45,966				432			200,615				5,191			246,581				5,623
Other mortgage-backed securities			259,347				1,463			79,799				2,474			339,146				3,937
Total fixed maturity securities			369,850				5,441			692,579				29,332			1,062,429				34,773
Equity securities (1)			1,148				11			28,701				878			29,849				889
Combined totals		$	370,998			$	5,452		$	721,280			$	30,210		$	1,092,278			$	35,662

Number of positions with a gross unrealized loss			115							202							317
Fair value as a percentage of total fixed maturities and equity securities fair value			5.5	%						10.6	%						16.1	%

December 31, 2013
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities		$	150,602			$	19,145		$	1,383			$	415		$	151,985			$	19,560
Other			249,765				22,479			4,450				872			254,215				23,351
Municipal bonds			375,523				26,529			42,899				8,086			418,422				34,615
Foreign government bonds			6,738				390			-				-			6,738				390
Corporate bonds			582,849				28,634			12,948				3,516			595,797				32,150
Other mortgage-backed securities			274,983				8,300			20,008				552			294,991				8,852
Total fixed maturity securities			1,640,460				105,477			81,688				13,441			1,722,148				118,918
Equity securities (1)			32,392				3,117			1,405				502			33,797				3,619
Combined totals		$	1,672,852			$	108,594		$	83,093			$	13,943		$	1,755,945			$	122,537

Number of positions with a gross unrealized loss			534							46							580
Fair value as a percentage of total fixed maturities and equity securities fair value			27.4	%						1.4	%						28.8	%

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(1) Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds.

Summary of cumulative credit losses

The following table summarizes the cumulative amounts related to the Company’s credit loss component of the other-than-temporary impairment losses on fixed maturity securities held as of June 30, 2014 and 2013 that the Company did not intend to sell as of those dates, and it was not more likely than not that the Company would be required to sell the securities before the anticipated recovery of the amortized cost bases, for which the non-credit portions of the other-than-temporary impairment losses were recognized in other comprehensive income (loss):

	Six Months Ended
	June 30,
	2014			2013
Cumulative credit loss (1)
Beginning of period		$	4,097		$	2,877
New credit losses			280			860
Losses related to securities sold or paid down during the period			-			-
End of period		$	4,377		$	3,737

_________________________________________

(1)

The cumulative credit loss amounts exclude other-than-temporary impairment losses on securities held as of the periods indicated that the Company intended to sell or it was more likely than not that the Company would be required to sell the security before the recovery of the amortized cost basis.

Distribution of the Company's fixed maturity portfolio by estimated expected maturity

For structured securities, including mortgage-backed securities and other asset-backed securities, estimated expected maturities consider broker-dealer survey prepayment assumptions and are verified for consistency with the interest rate and economic environments.

	Percent of Total Fair Value						June 30, 2014
	June 30,			December 31,			Fair			Amortized
	2014			2013			Value			Cost
Estimated expected maturity:
Due in 1 year or less		4.5	%		4.1	%		$	299,402		$	277,477
Due after 1 year through 5 years		23.6			20.9				1,576,524			1,461,075
Due after 5 years through 10 years		38.1			38.4				2,542,155			2,355,992
Due after 10 years through 20 years		19.9			20.8				1,327,483			1,230,271
Due after 20 years		13.9			15.8				930,775			862,614
Total		100.0	%		100.0	%		$	6,676,339		$	6,187,429

Average option-adjusted duration, in years		6.2			6.3

Proceeds received from sales of fixed maturities and equity securities

Proceeds received from sales of fixed maturities and equity securities, each determined using the specific identification method, and gross gains and gross losses realized as a result of those sales for each period were:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Fixed maturity securities
Proceeds received	$	46,309		$	114,804		$	99,249		$	213,986
Gross gains realized		2,600			9,878			4,127			14,390
Gross losses realized		(303	)		(471	)		(978	)		(481	)

Equity securities
Proceeds received	$	4,843		$	6,299		$	8,491		$	11,133
Gross gains realized		995			2,776			1,474			3,344
Gross losses realized		(64	)		(172	)		(181	)		(387	)

Reconciliation of net unrealized investment gains (losses) on fixed maturity securities and equity securities

Net unrealized gains and losses are computed as the difference between fair value and amortized cost for fixed maturities or cost for equity securities. The following table reconciles the net unrealized investment gains and losses, net of tax, included in accumulated other comprehensive income (loss), before the impact on deferred policy acquisition costs:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Net unrealized investment gains (losses) on fixed maturity securities, net of tax
Beginning of period	$	238,854		$	411,979		$	146,489		$	423,004
Change in unrealized investment gains and losses		80,577			(182,919	)		173,802			(189,828	)
Reclassification of net realized investment (gains) losses to net income		(1,640	)		(8,392	)		(2,500	)		(12,508	)
End of period	$	317,791		$	220,668		$	317,791		$	220,668

Net unrealized investment gains (losses) on equity securities, net of tax
Beginning of period	$	5,695		$	3,604		$	4,618		$	720
Change in unrealized investment gains and losses		2,865			1,291			4,178			4,519
Reclassification of net realized investment (gains) losses to net income		(605	)		(1,629	)		(841	)		(1,973	)
End of period	$	7,955		$	3,266		$	7,955		$	3,266

Offsetting assets and liability

The following table presents the instruments that were subject to a master netting arrangement for the Company. No instruments were subject to master netting arrangements as of December 31, 2013.

Net Amounts

of Assets/

Gross

Liabilities

Gross Amounts Not Offset

Amounts

Presented

in the Consolidated

Offset in the

in the

Balance Sheet

Consolidated

Cash

Gross

Balance

Financial

Collateral

Net

Amounts

Sheet

Instruments

Received

Amount

June 30, 2014

Asset derivatives:

Free-standing derivatives

708

300

408

- Definition

Tabular disclosure of the amount of other than temporary impairment (OTTI) related to credit losses recognized in earnings including: (a) the beginning balance of the amount related to credit losses on debt securities held by the investor at the beginning of the period for which a portion of an OTTI was recognized in other comprehensive income; (b) additions for the amount related to the credit loss for which an OTTI was not previously recognized; (c) reductions for securities sold during the period (realized); (d) reductions for securities for which the amount previously recognized in other comprehensive income was recognized in earnings because the investor intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis; (e) additional increases to the amount related to the credit loss for which an OTTI was previously recognized when the investor does not intend to sell the security and it is not more likely than not that the investor will be required to sell the security before recovery of its amortized cost basis; (f) reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security; and (g) the ending balance of the amount related to credit losses on debt securities held by the entity at the end of the period for which a portion of an OTTI was recognized in other comprehensive income.

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