Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Company's fair value hierarchy measured at recurring basis

The following table presents the Company's fair value hierarchy for those assets and liabilities measured and carried at fair value on a recurring basis. At December 31, 2017, Level 3 investments comprised approximately 2.8% of the Company's total investment portfolio fair value.



($ in thousands)	Carrying		Fair		Fair Value Measurements at Reporting Date Using
	Amount		Value		Level 1		Level 2		Level 3
December 31, 2017
Financial Assets
Investments
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	696,725	$	696,725	$	—	$	693,375	$	3,350
Other, including U.S. Treasury securities	735,408		735,408		13,393		722,015		—
Municipal bonds	1,893,253		1,893,253		—		1,843,925		49,328
Foreign government bonds	102,738		102,738		—		102,738		—
Corporate bonds	2,578,954		2,578,954		14,345		2,491,630		72,979
Other mortgage-backed securities	1,716,997		1,716,997		—		1,612,403		104,594
Total fixed maturity securities	7,724,075		7,724,075		27,738		7,466,086		230,251
Equity securities	135,466		135,466		82,208		53,252		6
Short-term investments	62,593		62,593		62,593		—		—
Other investments	28,050		28,050		—		28,050		—
Totals	$	7,950,184	$	7,950,184	$	172,539	$	7,547,388	$	230,257
Financial Liabilities
Investment contract and life policy reserves, embedded derivatives	$	594	$	594	$	—	$	594	$	—
Other policyholder funds, embedded derivatives	$	80,733	$	80,733	$	—	$	—	$	80,733

December 31, 2016
Financial Assets
Investments
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	442,419	$	442,419	$	—	$	439,004	$	3,415
Other, including U.S. Treasury securities	467,143		467,143		13,631		453,512		—
Municipal bonds	1,769,397		1,769,397		—		1,722,900		46,497
Foreign government bonds	98,669		98,669		—		98,669		—
Corporate bonds	2,810,221		2,810,221		13,532		2,736,498		60,191
Other mortgage-backed securities	1,868,859		1,868,859		—		1,767,615		101,244
Total fixed maturity securities	7,456,708		7,456,708		27,163		7,218,198		211,347
Equity securities	141,649		141,649		98,632		43,011		6
Short-term investments	44,918		44,918		44,167		—		751
Other investments	20,194		20,194		—		20,194		—
Totals	$	7,663,469	$	7,663,469	$	169,962	$	7,281,403	$	212,104
Financial Liabilities
Investment contract and life policy reserves, embedded derivatives	$	158	$	158	$	—	$	158	$	—
Other policyholder funds, embedded derivatives	$	59,393	$	59,393	$	—	$	—	$	59,393

Table for reconciliations for all Level 3 assets measured at fair value on a recurring basis

The following tables present reconciliations for the periods indicated for all Level 3 assets and liabilities measured at fair value on a recurring basis.



($ in thousands)	Financial Assets																						Financial Liabilities(1)
	Municipal Bonds			Corporate Bonds			Other Mortgage- Backed Securities (2)				Total Fixed Maturity Securities				Equity Securities		Short-term Investments			Total

Beginning balance, January 1, 2017	$	46,497		$	60,191		$	104,659			$	211,347			$	6	$	751		$	212,104		$	59,393
Transfers into Level 3 (3)	5,214			38,483			43,091				86,788				—		—			86,788			—
Transfers out of Level 3 (3)	(5,557		)	(16,252		)	(6,542		)		(28,351		)		—		(751		)	(29,102		)	—
Total gains or losses
Net realized investment gains (losses) included in net income related to financial assets	—			(1		)	(1,832		)		(1,833		)		—		—			(1,833		)	—
Net realized (gains) losses included in net income related to financial liabilities	—			—			—				—				—		—			—			12,942
Net unrealized investment gains (losses) included in OCI	3,977			661			2,075				6,713				—		—			6,713			—
Purchases	—			—			—				—				—		—			—			—
Issuances	—			—			—				—				—		—			—			12,605
Sales	—			(1,999		)	(9,179		)		(11,178		)		—		—			(11,178		)	—
Settlements	—			—			—				—				—		—			—			—
Paydowns, maturities and distributions	(803		)	(8,104		)	(24,328		)		(33,235		)		—		—			(33,235		)	(4,207		)
Ending balance, December 31, 2017	$	49,328		$	72,979		$	107,944			$	230,251			$	6	$	—		$	230,257		$	80,733

Beginning balance, January 1, 2016	$	30,379		$	67,575		$	75,466			$	173,420			$	6	$	—		$	173,426		$	39,021
Transfers into Level 3 (3)	17,710			27,561			39,128				84,399				—		751			85,150			—
Transfers out of Level 3 (3)	—			(14,334		)	(6,694		)		(21,028		)		—		—			(21,028		)	—
Total gains or losses
Net realized investment gains (losses) included in net income related to financial assets	—			(1,833		)	(56		)		(1,889		)		—		—			(1,889		)	—
Net realized (gains) losses included in net income related to financial liabilities	—			—			—				—				—		—			—			5,011
Net unrealized investment gains (losses) included in OCI	(990		)	(205		)	5,895			—	4,700			—	—		—			4,700			—
Purchases	—			—			—				—				—		—			—			—
Issuances	—			—			—				—				—		—			—			17,113
Sales	—			—			—				—				—		—			—			—
Settlements	—			—			—				—				—		—			—			—
Paydowns, maturities and distributions	(602		)	(18,573		)	(9,080		)		(28,255		)		—		—			(28,255		)	(1,752		)
Ending balance, December 31, 2016	$	46,497		$	60,191		$	104,659			$	211,347			$	6	$	751		$	212,104		$	59,393

____________________


(1)	Represents embedded derivatives, all related to the Company's FIA products, reported in Other policyholder funds in the Company's Consolidated Balance Sheets.


(2)	Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities.

(3)

Transfers into and out of Level 3 during the years ended December 31, 2017 and 2016 were attributable to changes in the availability of observable market information for individual fixed maturity securities and short-term investments. The Company's policy is to recognize transfers into and transfers out of the levels as having occurred at the end of the reporting period in which the transfers were determined.

Summary of fair value assets and liabilities measured on nonrecurring basis

The following table presents the carrying value, fair value and fair value hierarchy of these financial assets and financial liabilities.



($ in thousands)	Carrying		Fair		Fair Value Measurements at Reporting Date Using
	Amount		Value		Level 1		Level 2		Level 3
December 31, 2017
Financial Assets
Investments
Other investments	$	154,898	$	159,575	$	—	$	—	$	159,575
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts	4,452,972		4,366,334		—		—		4,366,334
Investment contract and life policy reserves, account values on life contracts	82,911		88,620		—		—		88,620
Other policyholder funds	643,528		643,528		—		575,622		67,906
Long-term debt	297,469		311,315		—		311,315		—

December 31, 2016
Financial Assets
Investments
Other investments	$	151,965	$	156,536	$	—	$	—	$	156,536
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts	4,360,456		4,280,528		—		—		4,280,528
Investment contract and life policy reserves, account values on life contracts	79,591		85,066		—		—		85,066
Other policyholder funds	649,557		649,557		—		575,253		74,304
Long-term debt	247,209		248,191		—		248,191		—