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Investments (Tables)
 3 Months Ended
Mar. 31, 2017
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 (“AOCI”) of all fixed maturity and equity securities in the portfolio were as follows:
 
 
 
 
 
 
Unrealized
 
 
Unrealized
 
 
 
 
 
 
 
 
Amortized
 
 
Investment
 
 
Investment
 
 
Fair
 
 
OTTI in
 
 
Cost or Cost
 
 
Gains
 
 
Losses
 
 
Value
 
 
AOCI (1)
March 31, 2017
 
 
 
 
 
 
 
   
 
 
   
 
 
    
 
 
    
 
 
  
 
 
  
 
 
       
 
 
    
Fixed maturity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Government and federally
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
sponsored agency obligations (2):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities
 
 
$
581,346
 
 
 
 
$
33,904
 
 
 
 
$
5,443
 
 
 
 
$
609,807
 
 
 
 
$
-
 
Other, including
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
 
 
 
520,718
 
 
 
 
 
19,809
 
 
 
 
 
9,219
 
 
 
 
 
531,308
 
 
 
 
 
-
 
Municipal bonds
 
 
 
1,647,314
 
 
 
 
 
148,319
 
 
 
 
 
18,206
 
 
 
 
 
1,777,427
 
 
 
 
 
-
 
Foreign government bonds
 
 
 
93,845
 
 
 
 
 
5,897
 
 
 
 
 
56
 
 
 
 
 
99,686
 
 
 
 
 
-
 
Corporate bonds
 
 
 
2,683,746
 
 
 
 
 
162,602
 
 
 
 
 
9,175
 
 
 
 
 
2,837,173
 
 
 
 
 
-
 
Other mortgage-backed securities
 
 
 
1,646,266
 
 
 
 
 
21,755
 
 
 
 
 
12,672
 
 
 
 
 
1,655,349
 
 
 
 
 
1,538
 
Totals
 
 
$
7,173,235
 
 
 
 
$
392,286
 
 
 
 
$
54,771
 
 
 
 
$
7,510,750
 
 
 
 
$
1,538
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity securities (3)
 
 
$
143,203
 
 
 
 
$
15,743
 
 
 
 
$
1,971
 
 
 
 
$
156,975
 
 
 
 
$
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Government and federally
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
sponsored agency obligations (2):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities
 
 
$
587,355
 
 
 
 
$
34,256
 
 
 
 
$
6,720
 
 
 
 
$
614,891
 
 
 
 
$
-
 
Other, including
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
 
 
 
458,745
 
 
 
 
 
18,518
 
 
 
 
 
10,120
 
 
 
 
 
467,143
 
 
 
 
 
-
 
Municipal bonds
 
 
 
1,648,252
 
 
 
 
 
143,733
 
 
 
 
 
22,588
 
 
 
 
 
1,769,397
 
 
 
 
 
-
 
Foreign government bonds
 
 
 
93,864
 
 
 
 
 
5,102
 
 
 
 
 
297
 
 
 
 
 
98,669
 
 
 
 
 
-
 
Corporate bonds
 
 
 
2,672,818
 
 
 
 
 
152,229
 
 
 
 
 
14,826
 
 
 
 
 
2,810,221
 
 
 
 
 
-
 
Other mortgage-backed securities
 
 
 
1,691,093
 
 
 
 
 
21,153
 
 
 
 
 
15,859
 
 
 
 
 
1,696,387
 
 
 
 
 
1,618
 
Totals
 
 
$
7,152,127
 
 
 
 
$
374,991
 
 
 
 
$
70,410
 
 
 
 
$
7,456,708
 
 
 
 
$
1,618
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity securities (3)
 
 
$
134,013
 
 
 
 
$
13,210
 
 
 
 
$
5,574
 
 
 
 
$
141,649
 
 
 
 
$
-
 
 
 
(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 OTTI losses in AOCI which was not included in earnings; amounts also include net unrealized investment gains and 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 $283,039 and $272,668; Federal Home Loan Mortgage Corporation (“FHLMC”) of $373,017 and $378,683; and Government National Mortgage Association (“GNMA”) of $112,065 and $115,627 as of March 31, 2017 and December 31, 2016, 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
For equity securities, the Company has the ability and intent to hold the securities for the recovery of cost and recovery of cost is expected within a reasonable period of time.
 
 
 
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, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Government and federally
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
sponsored agency obligations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities
 
 
$
169,786
 
 
 
$
5,035
 
 
 
$
3,381
 
 
 
$
408
 
 
 
$
173,167
 
 
 
$
5,443
 
Other
 
 
 
262,517
 
 
 
 
9,219
 
 
 
 
-
 
 
 
 
-
 
 
 
 
262,517
 
 
 
 
9,219
 
Municipal bonds
 
 
 
325,610
 
 
 
 
14,754
 
 
 
 
10,082
 
 
 
 
3,452
 
 
 
 
335,692
 
 
 
 
18,206
 
Foreign government bonds
 
 
 
1,444
 
 
 
 
56
 
 
 
 
-
 
 
 
 
-
 
 
 
 
1,444
 
 
 
 
56
 
Corporate bonds
 
 
 
285,724
 
 
 
 
6,492
 
 
 
 
37,490
 
 
 
 
2,683
 
 
 
 
323,214
 
 
 
 
9,175
 
Other mortgage-backed securities
 
 
 
444,102
 
 
 
 
9,060
 
 
 
 
188,904
 
 
 
 
3,612
 
 
 
 
633,006
 
 
 
 
12,672
 
Total fixed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
maturity securities
 
 
 
1,489,183
 
 
 
 
44,616
 
 
 
 
239,857
 
 
 
 
10,155
 
 
 
 
1,729,040
 
 
 
 
54,771
 
Equity securities (1)
 
 
 
37,554
 
 
 
 
1,013
 
 
 
 
8,068
 
 
 
 
958
 
 
 
 
45,622
 
 
 
 
1,971
 
Combined totals
 
 
$
1,526,737
 
 
 
$
45,629
 
 
 
$
247,925
 
 
 
$
11,113
 
 
 
$
1,774,662
 
 
 
$
56,742
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of positions with a
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
gross unrealized loss
 
 
 
560
 
 
 
 
 
 
 
 
 
91
 
 
 
 
 
 
 
 
 
651
 
 
 
 
 
 
Fair value as a percentage of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
total fixed maturity and
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
equity securities fair value
 
 
 
19.9
%
 
 
 
 
 
 
 
 
3.2
%
 
 
 
 
 
 
 
 
23.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Government and federally
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
sponsored agency obligations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities
 
 
$
186,439
 
 
 
$
6,176
 
 
 
$
3,235
 
 
 
$
544
 
 
 
$
189,674
 
 
 
$
6,720
 
Other
 
 
 
219,372
 
 
 
 
10,120
 
 
 
 
-
 
 
 
 
-
 
 
 
 
219,372
 
 
 
 
10,120
 
Municipal bonds
 
 
 
408,163
 
 
 
 
19,006
 
 
 
 
9,928
 
 
 
 
3,582
 
 
 
 
418,091
 
 
 
 
22,588
 
Foreign government bonds
 
 
 
24,182
 
 
 
 
297
 
 
 
 
-
 
 
 
 
-
 
 
 
 
24,182
 
 
 
 
297
 
Corporate bonds
 
 
 
459,402
 
 
 
 
11,056
 
 
 
 
57,261
 
 
 
 
3,770
 
 
 
 
516,663
 
 
 
 
14,826
 
Other mortgage-backed securities
 
 
 
640,691
 
 
 
 
10,470
 
 
 
 
229,106
 
 
 
 
5,389
 
 
 
 
869,797
 
 
 
 
15,859
 
Total fixed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
maturity securities
 
 
 
1,938,249
 
 
 
 
57,125
 
 
 
 
299,530
 
 
 
 
13,285
 
 
 
 
2,237,779
 
 
 
 
70,410
 
Equity securities (1)
 
 
 
56,676
 
 
 
 
4,567
 
 
 
 
7,956
 
 
 
 
1,007
 
 
 
 
64,632
 
 
 
 
5,574
 
Combined totals
 
 
$
1,994,925
 
 
 
$
61,692
 
 
 
$
307,486
 
 
 
$
14,292
 
 
 
$
2,302,411
 
 
 
$
75,984
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of positions with a
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
gross unrealized loss
 
 
 
629
 
 
 
 
 
 
 
 
 
102
 
 
 
 
 
 
 
 
 
731
 
 
 
 
 
 
Fair value as a percentage of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
total fixed maturity and
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
equity securities fair value
 
 
 
26.3
%
 
 
 
 
 
 
 
 
4.0
%
 
 
 
 
 
 
 
 
30.3
%
 
 
 
 
 
 
 
(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 OTTI losses on fixed maturity securities held as of March 31, 2017 and 2016 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 OTTI losses were recognized in other comprehensive income:
 
 
 
 
Three Months Ended
 
 
 
 
March 31,
 
 
 
 
 
2017
 
 
 
2016
 
Cumulative credit loss (1)
 
 
 
 
 
 
 
 
 
 
Beginning of period
 
 
$
13,703
 
     
 
$
7,844
 
New credit losses
 
 
 
-
 
 
 
 
1,824
 
Increases to previously recognized credit losses
 
 
 
726
 
 
 
 
-
 
Gains related to securities sold or paid down during the period
 
 
 
(2
)
 
 
 
-
 
End of period
 
 
$
14,427
 
 
 
$
9,668
 
 
 
(1)
The cumulative credit loss amounts exclude OTTI 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, 2017
 
 
 
March 31,
 
December 31,
 
Fair
 
 
Amortized
 
 
 
2017
 
2016
 
Value
 
 
Cost
 
Estimated expected maturity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Due in 1 year or less
 
 
 
3.8
%
 
 
 
3.9
%
 
 
$
284,164
 
 
 
$
271,394
 
 
Due after 1 year through 5 years
 
 
 
28.1
 
 
 
 
28.7
 
 
 
 
2,109,683
 
 
 
 
2,014,879
 
 
Due after 5 years through 10 years
 
 
 
34.1
 
 
 
 
35.2
 
 
 
 
2,562,229
 
 
 
 
2,447,089
 
 
Due after 10 years
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
through 20 years
 
 
 
21.1
 
 
 
 
19.5
 
 
 
 
1,582,732
 
 
 
 
1,511,608
 
 
Due after 20 years
 
 
 
12.9
 
 
 
 
12.7
 
 
 
 
971,942
 
 
 
 
928,265
 
 
Total
 
 
 
100.0
%
 
 
 
100.0
%
 
 
$
7,510,750
 
 
 
$
7,173,235
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average option-adjusted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
duration, in years
 
 
 
6.0
 
 
 
 
5.9
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds received from sales of fixed maturities and equity securities
Proceeds received from sales of fixed maturity 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,
 
 
 
 
2017
 
 
 
2016
 
Fixed maturity securities
 
 
 
 
 
 
 
 
 
 
Proceeds received
 
 
$
110,872
 
 
 
$
82,090
 
Gross gains realized
 
 
 
2,489
 
 
 
 
2,476
 
Gross losses realized
 
 
 
(881
)
       
 
 
(492
)
 
 
 
 
 
 
 
 
 
 
 
Equity securities
 
 
 
 
 
 
 
 
 
 
Proceeds received
 
 
$
5,489
 
 
 
$
6,147
 
Gross gains realized
 
 
 
1,048
 
 
 
 
520
 
Gross losses realized
 
 
 
(192
)
 
 
 
(646
)
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,
 
 
 
 
 
 2017 
 
 
 
 
 2016 
 
 
Net unrealized investment gains and losses
 
 
 
 
 
 
 
 
on fixed maturity securities, net of tax
 
 
 
 
 
 
 
 
Beginning of period
 
$
197,978
 
 
$
198,714
 
Change in net unrealized investment
 
 
 
 
 
 
 
 
gains and losses
 
 
21,891
 
 
 
78,341
 
Reclassification of net realized
 
 
 
 
 
 
 
 
investment gains to net income
 
 
(484
)
   
 
(674
)
End of period
 
$
219,385
 
 
$
276,381
 
 
 
 
 
 
 
 
 
 
Net unrealized investment gains and losses
 
 
 
 
 
 
 
 
on equity securities, net of tax
 
 
 
 
 
 
 
 
Beginning of period
 
$
4,963
 
 
$
2,649
 
Change in net unrealized investment
 
 
 
 
 
 
 
 
gains and losses
 
 
3,302
 
 
 
2,188
 
Reclassification of net realized
 
 
 
 
 
 
 
 
investment losses to net income
 
 
687
 
 
 
193
 
End of period
 
$
8,952
 
 
$
5,030
 
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 Sheets
 
 
 
 
 
 
 
 
 
 
Consolidated
 
Consolidated
 
 
 
 
 
Cash
 
 
 
 
 
 
Gross
 
Balance
 
Balance
 
Financial
 
Collateral
 
Net
 
 
Amounts
 
Sheets
 
Sheets
 
Instruments
 
Received
 
Amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset derivatives:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Free-standing derivatives
 
 
$
9,932
 
 
 
$
-
 
 
 
$
9,932
 
 
 
$
-
 
 
 
$
10,449
 
 
 
$
(517
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset derivatives:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Free-standing derivatives
 
 
 
8,694
 
 
 
 
-
 
 
 
 
8,694
 
 
 
 
-
 
 
 
 
8,824
 
 
 
 
(130
)