Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

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 March 31, 2018, Level 3 invested assets comprised 3.0% of the Company’s total investment portfolio at fair value.

($ in thousands)					Fair Value Measurements at
	Carrying		Fair		Reporting Date Using
	Amount		Value		Level 1			Level 2			Level 3
March 31, 2018
Financial Assets
Investments
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	710,958	$	710,958	$	—		$	707,842		$	3,116
Other, including U.S. Treasury securities	761,967		761,967		13,249			748,718			—
Municipal bonds	1,861,304		1,861,304		—			1,811,556			49,748
Foreign government bonds	99,041		99,041		—			99,041			—
Corporate bonds	2,481,270		2,481,270		13,733			2,388,757			78,780
Other mortgage-backed securities	1,720,142		1,720,142		—			1,607,924			112,218
Total fixed maturity securities	7,634,682		7,634,682		26,982			7,363,838			243,862
Equity securities	131,023		131,023		79,870		—	51,147		—	6
Short-term investments	22,194		22,194		22,194			—			—
Other investments	25,130		25,130		—			25,130			—
Totals	$	7,813,029	$	7,813,029	$	129,046		$	7,440,115		$	243,868
Financial Liabilities
Investment contract and life policy reserves, embedded derivatives	$	518	$	518	$	—		$	518		$	—
Other policyholder funds, embedded derivatives	78,486		78,486		—			—			78,486
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

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

The following table presents 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, 2018	$	49,328		$	72,979		$	107,944		$	230,251		$	6		$	—		$	230,257		$	80,733
Transfers into Level 3 (3)	—			10,778			14,822			25,600			—			—			25,600			—
Transfers out of Level 3 (3)	—			—			—			—			—			—			—			—
Total gains or losses
Net investment gains (losses) included in net income related to financial assets	—			—			—			—			3			—			3			—
Net (gains) losses included in net income related to financial liabilities	—			—			—			—			—			—			—			(2,222		)
Net unrealized investment gains (losses) included in OCI	443			(887		)	(1,022		)	(1,466		)	—			—			(1,466		)
Purchases	—			—			—			—			—			—			—
Issuances	—			—			—			—			—			—			—			1,332
Sales	—			—			—			—			(3		)	—			(3		)
Settlements	—			—			—			—			—			—			—
Paydowns, maturities and distributions	(23		)	(4,090		)	(6,410		)	(10,523		)	—			—			(10,523		)	(1,357		)
Ending balance, March 31, 2018	$	49,748		$	78,780		$	115,334		$	243,862		$	6		$	—		$	243,868		$	78,486
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			29,918			15,039			50,171			—			—			50,171			—
Transfers out of Level 3 (3)	—			(6,110		)	—			(6,110		)	—			(751		)	(6,861		)	—
Total gains or losses
Net investment gains (losses) included in net income related to financial assets	—			—			—			—			—			—			—			—
Net (gains) losses included in net income related to financial liabilities	—			—			—			—			—			—			—			2,308
Net unrealized investment gains (losses) included in OCI	1,871			96			(771		)	1,196			—			—			1,196			—
Purchases	—			—			—			—			—			—			—			—
Issuances	—			—			—			—			—			—			—			3,389
Sales	—			—			—			—			—			—			—			—
Settlements	—			—			—			—			—			—			—			—
Paydowns, maturities and distributions	(120		)	(1,600		)	(6,133		)	(7,853		)	—			—			(7,853		)	(829		)
Ending balance, March 31, 2017	$	53,462		$	82,495		$	112,794		$	248,751		$	6		$	—		$	248,757		$	64,261

________________

(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 three month periods ended March 31, 2018 and 2017 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 Company has various other financial assets and financial liabilities used in the normal course of business that are not carried at fair value, but for which fair value disclosure is required. The following table presents the carrying value, fair value and fair value hierarchy of these financial assets and financial liabilities.

($ in thousands)					Fair Value Measurements at
	Carrying		Fair		Reporting Date Using
	Amount		Value		Level 1		Level 2		Level 3
March 31, 2018
Financial Assets
Investments
Other investments	$	154,211	$	158,891	$	—	$	—	$	158,891
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts	4,471,733		4,373,529		—		—		4,373,529
Investment contract and life policy reserves, account values on life contracts	83,319		88,968		—		—		88,968
Other policyholder funds	642,035		642,035		—		575,784		66,251
Long-term debt	297,536		306,247		—		306,247		—
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		—