Investments (Tables)

3 Months Ended

Mar. 31, 2015

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 (1)
March 31, 2015
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (2):
Mortgage-backed securities	$	481,801	$	59,872	$	313	$	541,360	$	-
Other, including
U.S. Treasury securities		544,912		32,538		981		576,469		-
Municipal bonds		1,489,255		201,160		5,329		1,685,086		-
Foreign government bonds		57,042		8,069		30		65,081		-
Corporate bonds		2,582,763		266,816		8,517		2,841,062		-
Other mortgage-backed securities		1,323,497		35,303		2,059		1,356,741		2,879
Totals	$	6,479,270	$	603,758	$	17,229	$	7,065,799	$	2,879

Equity securities (3)	$	99,860	$	10,205	$	4,999	$	105,066	$	-

December 31, 2014
Fixed maturity securities
U.S. Government and federally sponsored agency obligations (2):
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 (3)	$	99,904	$	14,159	$	3,408	$	110,655	$	-

(1)	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.
(2)	Fair value includes securities issued by Federal National Mortgage Association (“FNMA”) of $265,066 and $302,222; Federal Home Loan Mortgage Corporation (“FHLMC”) of $444,117 and $432,432; and Government National Mortgage Association (“GNMA”) of $137,856 and $137,867 as of March 31, 2015 and December 31, 2014, respectively.
(3)	Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds.

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
March 31, 2015
Fixed maturity securities
U.S. Government and federally
sponsored agency obligations:
Mortgage-backed securities	$	13,144			$	160		$	1,629			$	153		$	14,773			$	313
Other		111,579				935			1,952				46			113,531				981
Municipal bonds		39,258				622			24,774				4,707			64,032				5,329
Foreign government bonds		3,970				30			-				-			3,970				30
Corporate bonds		112,988				5,166			38,711				3,351			151,699				8,517
Other mortgage-backed securities		248,866				1,540			35,547				519			284,413				2,059
Total fixed
maturity securities		529,805				8,453			102,613				8,776			632,418				17,229
Equity securities (1)		21,718				4,354			6,830				645			28,548				4,999
Combined totals	$	551,523			$	12,807		$	109,443			$	9,421		$	660,966			$	22,228

Number of positions with a
gross unrealized loss		203							48							251
Fair value as a percentage of
total fixed maturities and
equity securities fair value		7.7	%						1.5	%						9.2	%

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	%

(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 March 31, 2015 and 2014 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):

	Three Months Ended
	March 31,
	2015		2014
Cumulative credit loss (1)
Beginning of period	$	2,877	$	4,097
New credit losses		-		-
Losses related to securities sold or paid down during the period		-		-
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

The following table presents the distribution of the Company's fixed maturity securities portfolio by estimated expected maturity. Estimated expected maturities differ from contractual maturities, reflecting assumptions regarding borrowers’ utilization of the right to call or prepay obligations with or without call or prepayment penalties. 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						March 31, 2015
	March 31,			December 31,			Fair		Amortized
	2015			2014			Value		Cost
Estimated expected maturity:
Due in 1 year or less		4.0	%		4.0	%	$	285,424	$	261,731
Due after 1 year through 5 years		23.8			23.4			1,682,730		1,543,047
Due after 5 years through 10 years		39.6			40.1			2,797,801		2,565,557
Due after 10 years
through 20 years		20.2			20.1			1,426,306		1,307,909
Due after 20 years		12.4			12.4			873,538		801,026
Total		100.0	%		100.0	%	$	7,065,799	$	6,479,270

Average option-adjusted duration, in years		5.7			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 period were:

	Three Months Ended
	March 31,
	2015			2014
Fixed maturity securities
Proceeds received	$	81,320		$	52,940
Gross gains realized		1,654			1,527
Gross losses realized		(463	)		(675	)

Equity securities
Proceeds received	$	13,969		$	3,648
Gross gains realized		4,602			479
Gross losses realized		(10	)		(117	)

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:

	Three Months Ended
	March 31,
	2015			2014
Net unrealized investment gains (losses)
on fixed maturity securities, net of tax
Beginning of period	$	336,604		$	146,489
Change in unrealized investment gains and losses		45,486			93,225
Reclassification of net realized investment (gains)
losses to net income		(846	)		(860	)
End of period	$	381,244		$	238,854

Net unrealized investment gains (losses)
on equity securities, net of tax
Beginning of period	$	6,988		$	4,618
Change in unrealized investment gains and losses		(658	)		1,313
Reclassification of net realized investment (gains)
losses to net income		(2,946	)		(236	)
End of period	$	3,384		$	5,695

Offsetting assets and liability

The following table presents the instruments that were subject to a master netting arrangement for the Company.

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

March 31, 2015

Asset derivatives:

Free-standing derivatives

$2,412

$ -

$2,412

$ -

$2,177

$235

December 31, 2014

Asset derivatives:

Free-standing derivatives

2,458

1,955

503

- 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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