Investments (Tables)

12 Months Ended

Dec. 31, 2014

The components of net investment income for the following periods were:

		Year Ended December 31,
		2014			2013			2012

Fixed maturities	$	317,756		$	304,024		$	297,042
Equity securities		4,849			3,698			2,814
Short-term and other investments		8,459			8,242			8,109
Other invested assets (equity method investments)		7,229			5,902			5,892
Total investment income		338,293			321,866			313,857
Investment expenses		(8,478	)		(8,256	)		(7,854	)
Net investment income	$	329,815		$	313,610		$	306,003

Summary of realized investment gains (losses)

Net realized investment gains (losses) for the following periods were:

		Year Ended December 31,
		2014			2013		2012

Fixed maturities	$	8,150		$	18,480	$	23,218
Equity securities		2,793			3,765		4,080
Short-term investments and other		(26	)		-		-
Net realized investment gains	$	10,917		$	22,245	$	27,298

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)
December 31, 2014
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (1):
Mortgage-backed securities		$	484,561		$	52,555		$	1,390		$	535,726		$	-
Other, including
U.S. Treasury securities			512,596			28,652			3,049			538,199			-
Municipal bonds			1,462,717			189,533			4,428			1,647,822			-
Foreign government bonds			52,552			6,984			-			59,536			-
Corporate bonds			2,608,633			237,372			11,256			2,834,749			-
Other mortgage-backed securities			1,254,178			28,772			5,892			1,277,058			2,879
Totals		$	6,375,237		$	543,868		$	26,015		$	6,893,090		$	2,879

Equity securities		$	99,904		$	14,159		$	3,408		$	110,655		$	-

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		$	-

(1)

Fair value includes securities issued by Federal National Mortgage Association (“FNMA”) of $302,222 and $336,193; Federal Home Loan Mortgage Corporation (“FHLMC”) of $432,432 and $427,172; and Government National Mortgage Association (“GNMA”) of $137,867 and $126,245 as of December 31, 2014 and 2013, respectively.

(2)

Related to securities for which an unrealized loss was bifurcated to distinguish the credit related portion and the portion driven by other market factors. Represents the amount of other-than-temporary impairment losses in AOCI which was not included in earnings; amounts also include unrealized gains/(losses) on such impaired securities relating to changes in the fair value of those 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

Therefore, no impairment of these securities was recorded at December 31, 2014.

	12 months or less					More than 12 months					Total
				Gross					Gross					Gross
				Unrealized					Unrealized					Unrealized
	Fair Value			Losses		Fair Value			Losses		Fair Value			Losses
December 31, 2014
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	2		$	-	$	39,809		$	1,390	$	39,811		$	1,390
Other		10,317			34		117,615			3,015		127,932			3,049
Municipal bonds		31,821			200		59,715			4,228		91,536			4,428
Foreign government bonds		-			-		-			-		-			-
Corporate bonds		213,612			6,883		76,099			4,373		289,711			11,256
Other mortgage-backed securities		477,877			4,797		88,663			1,095		566,540			5,892
Total fixed maturity securities		733,629			11,914		381,901			14,101		1,115,530			26,015
Equity securities (1)		12,955			2,568		6,635			840		19,590			3,408
Combined totals	$	746,584		$	14,482	$	388,536		$	14,941	$	1,135,120		$	29,423

Number of positions with a gross unrealized loss		234					112					346
Fair value as a percentage of total fixed maturities and equity securities fair value		10.7	%				5.5	%				16.2	%

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	%

(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 December 31, 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):

	Year Ended December 31,
		2014			2013
Cumulative credit loss (1)
Beginning of period	$	4,097		$	2,877
New credit losses		280			1,220
Losses related to securities sold or paid down during the period		(1,500	)		-
End of period	$	2,877		$	4,097

(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.

	December 31, 2014
					Percent of
	Amortized		Fair		Total Fair
	Cost		Value		Value
Estimated expected maturity:
Due in 1 year or less	$	251,888	$	272,348		4.0	%
Due after 1 year through 5 years		1,494,345		1,615,729		23.4
Due after 5 years through 10 years		2,557,026		2,764,730		40.1
Due after 10 years through 20 years		1,278,903		1,382,787		20.1
Due after 20 years		793,075		857,496		12.4
Total	$	6,375,237	$	6,893,090		100.0	%

Average option-adjusted duration, in years		5.8

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 year were:

	Year Ended December 31,
	2014			2013			2012
Fixed maturity securities
Proceeds received	$	261,696		$	298,045		$	576,708
Gross gains realized		13,224			17,177			32,532
Gross losses realized		(6,325	)		(4,945	)		(11,971	)

Equity securities
Proceeds received	$	17,194		$	18,643		$	6,057
Gross gains realized		3,206			4,368			231
Gross losses realized		(482	)		(616	)		(438	)

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

	Year Ended December 31,
	2014			2013			2012
Net unrealized investment gains (losses) on fixed maturity securities, net of tax
Beginning of period	$	146,489		$	423,004		$	284,338
Change in unrealized investment gains and losses		195,413			(264,503	)		153,758
Reclassification of net realized investment (gains) losses to net income		(5,298	)		(12,012	)		(15,092	)
End of period	$	336,604		$	146,489		$	423,004

Net unrealized investment gains (losses) on equity securities, net of tax
Beginning of period	$	4,618		$	720		$	2,408
Change in unrealized investment gains and losses		4,185			6,345			964
Reclassification of net realized investment (gains) losses to net income		(1,815	)		(2,447	)		(2,652	)
End of period	$	6,988		$	4,618		$	720

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

December 31, 2014

Asset derivatives:

Free-standing derivatives

2,458

1,955

503