
($ in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Fixed maturity securities	$	56,420	$	59,319	$	174,727	$	227,196
Equity securities	1,130		1,107		3,520		3,697
Limited partnership interests	11,046		6,859		4,862		22,759
Short-term and other investments	2,774		4,207		8,415		(13,856)
Investment expenses	(2,151)		(2,179)		(7,262)		(7,420)
Net investment income - investment portfolio	69,219		69,313		184,262		232,376
Investment income - deposit asset on reinsurance	24,499		23,758		72,141		46,953
Total net investment income	$	93,718	$	93,071	$	256,403	$	279,329


($ in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Fixed maturity securities	$	2,656	$	206	$	3,116	$	141,955
Equity securities	3,982		1,478		(3,670)		13,311
Short-term investments and other	(4,169)		(3,840)		(12,279)		(3,672)
Net investment gains (losses)	$	2,469	$	(2,156)	$	(12,833)	$	151,594

The Company, from time to time, sells invested assets subsequent to the reporting date that were considered temporarily impaired at such reporting date. Such sales are due to issuer specific events occurring subsequent to the reporting date that result in a change in the Company's intent or ability to hold an invested asset. The types of events that may result in a sale include significant changes in the economic facts and circumstances related to the invested asset, significant unforeseen changes in liquidity needs, or changes in the Company's investment strategy.


($ in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Credit impairment write-downs	$	—	$	—	$	—	$	—
Change in intent write-downs	(1,057)		(5)		(5,272)		(276)
Net other-than-temporary impairment losses on securities recognized in net income	(1,057)		(5)		(5,272)		(276)
Sales and other, net	3,736		608		8,645		147,513
Change in fair value - equity securities	2,242		1,081		(5,644)		8,029
Change in fair value and gains (losses) realized on settlements - derivatives	(2,452)		(3,840)		(10,562)		(3,672)
Net investment gains (losses)	$	2,469	$	(2,156)	$	(12,833)	$	151,594


($ in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
September 30, 2020
Fixed maturity securities
U.S. Government and federally sponsored agency obligations: (1)
Mortgage-backed securities	$	617,856	$	85,219	$	213	$	702,862
Other, including U.S. Treasury securities	341,771		42,683		317		384,137
Municipal bonds	1,621,308		196,317		1,124		1,816,501
Foreign government bonds	40,143		4,644		—		44,787
Corporate bonds	1,802,423		189,986		8,926		1,983,483
Other asset-backed securities	1,248,814		22,353		34,379		1,236,788
Totals	$	5,672,315	$	541,202	$	44,959	$	6,168,558

December 31, 2019
Fixed maturity securities
U.S. Government and federally sponsored agency obligations: (1)
Mortgage-backed securities	$	684,543	$	41,263	$	1,487	$	724,319
Other, including U.S. Treasury securities	436,665		22,824		621		458,868
Municipal bonds	1,545,787		141,996		1,580		1,686,203
Foreign government bonds	42,801		2,569		—		45,370
Corporate bonds	1,464,444		118,775		1,795		1,581,424
Other asset-backed securities	1,282,740		20,883		8,131		1,295,492
Totals	$	5,456,980	$	348,310	$	13,614	$	5,791,676

(1) Fair value includes securities issued by Federal National Mortgage Association (FNMA) of $390.7 million and $405.1 million; Federal Home Loan Mortgage Corporation (FHLMC) of $322.4 million and $283.1 million; and Government National Mortgage Association (GNMA) of $137.4 million and $147.4 million as of September 30, 2020 and December 31, 2019, respectively.

The following table presents the fair value and gross unrealized losses for fixed maturity securities in an unrealized loss position at September 30, 2020 and December 31, 2019, respectively. The Company views the decrease in fair value of all of the fixed maturity securities with unrealized losses at September 30, 2020 — which was driven largely by increasing interest rates, spread widening, financial market illiquidity and/or market volatility from the date of acquisition — as temporary. As of September 30, 2020, the Company has not made the decision to sell and it is not more likely than not the Company will be required to sell the fixed maturity securities with unrealized losses before an anticipated recovery in value. Therefore, it was determined that the unrealized losses on the fixed maturity securities presented in the table below were not other-than-temporarily impaired as of September 30, 2020.


($ in thousands)	12 Months or Less					More than 12 Months					Total
	Fair Value			Gross Unrealized Losses		Fair Value			Gross Unrealized Losses		Fair Value			Gross Unrealized Losses
September 30, 2020
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	8,519		$	134	$	1,246		$	79	$	9,765		$	213
Other	31,797			317		—			—		31,797			317
Municipal bonds	47,067			1,124		—			—		47,067			1,124
Foreign government bonds	—			—		—			—		—			—
Corporate bonds	203,521			8,444		9,873			482		213,394			8,926
Other asset-backed securities	397,424			24,376		413,159			10,003		810,583			34,379
Total	$	688,328		$	34,395	$	424,278		$	10,564	$	1,112,606		$	44,959

Number of positions with a gross unrealized loss	475					124					599
Fair value as a percentage of total fixed maturity securities at fair value	11.2		%			6.9		%			18.1		%

December 31, 2019
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	72,422		$	1,282	$	2,620		$	205	$	75,042		$	1,487
Other	38,341			619		1,527			2		39,868			621
Municipal bonds	91,195			977		9,160			603		100,355			1,580
Foreign government bonds	—			—		—			—		—			—
Corporate bonds	58,198			886		16,622			909		74,820			1,795
Other asset-backed securities	218,710			1,970		442,791			6,161		661,501			8,131
Total	$	478,866		$	5,734	$	472,720		$	7,880	$	951,586		$	13,614

Number of positions with a gross unrealized loss	330					137					467
Fair value as a percentage of total fixed maturity securities at fair value	8.3		%			8.2		%			16.5		%

Fixed maturity securities with an investment grade rating represented 80.8% of the gross unrealized losses as of September 30, 2020. With respect to fixed maturity securities involving securitized financial assets, the underlying collateral cash flows were stress tested to determine there was no adverse change in the present value of cash flows below the amortized cost basis.

The following table summarizes the cumulative amounts related to the Company's credit loss component of other-than-temporary impairment (OTTI) losses on fixed maturity securities held as of September 30, 2020 and 2019 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 an anticipated recovery in value, for which the non-credit portions of OTTI losses were recognized in OCI:


($ in thousands)	Nine Months Ended September 30,
	2020		2019
Cumulative credit loss (1)
Beginning of period	$	1,529	$	1,529
New credit losses	184		—
Increases to previously recognized credit losses	—		—
Losses related to securities sold or paid down during the period	(103)		—
End of period	$	1,610	$	1,529

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, estimated expected maturities consider broker-dealer survey prepayment assumptions and are verified for consistency with the interest rate and economic environments.


($ in thousands)	Percent of Total Fair Value				September 30, 2020
	September 30, 2020		December 31, 2019		Fair Value		Amortized Cost
Estimated expected maturity:
Due in 1 year or less	4.2	%	3.6	%	$	261,323	$	258,244
Due after 1 year through 5 years	28.1	%	27.4	%	1,734,450		1,676,356
Due after 5 years through 10 years	28.9	%	29.6	%	1,782,261		1,628,583
Due after 10 years through 20 years	24.3	%	26.1	%	1,496,331		1,309,759
Due after 20 years	14.5	%	13.3	%	894,193		799,373
Total	100.0	%	100.0	%	$	6,168,558	$	5,672,315

Average option-adjusted duration, in years	6.3		6.0


($ in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019 (1)
Fixed maturity securities
Proceeds received	$	58,604	$	149,319	$	352,766	$	651,058
Gross gains realized	3,744		1,258		14,029		149,574
Gross losses realized	(31)		(1,047)		(5,924)		(7,128)

Equity securities
Proceeds received	$	309	$	1,367	$	12,368	$	18,489
Gross gains realized	79		428		2,119		5,562
Gross losses realized	(38)		(32)		(1,843)		(542)

(1)Gross gains realized presented above include a $135.3 million realized investment gain associated with a transfer of investments to a reinsurer as consideration paid during the second quarter of 2019 in connection with the reinsurance of a $2.9 billion block of in force fixed and variable annuity business. See Note 5 for further information.


($ in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Net unrealized investment gains (losses) on fixed maturity securities, net of tax
Beginning of period	$	329,887	$	231,087	$	264,410	$	111,712
Change in net unrealized investment gains (losses) on fixed maturity securities	56,901		75,283		128,060		315,988
Reclassification of net investment (gains) losses on securities to net income	5,244		(1,330)		(438)		(122,660)
End of period	$	392,032	$	305,040	$	392,032	$	305,040

As of September 30, 2020 and December 31, 2019, the carrying value of equity method limited partnership interests totaled $418.2 million and $383.7 million, respectively. Principal factors influencing carrying value appreciation or decline include operating performance, comparable public company earnings multiples, capitalization rates and the economic environment. The Company recognizes an impairment loss for equity method limited partnership interests when evidence demonstrates that the loss is other than temporary. Evidence of a loss in value that is other than temporary may include the absence of an ability to recover the carrying amount of the investment or the inability of the investee to sustain a level of earnings that would justify the carrying amount of the investment.


($ in thousands)			Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets
	Gross Amounts						Financial Instruments		Cash Collateral Received		Net Amount
September 30, 2020
Asset derivatives:
Free-standing derivatives	$	10,793	$	—	$	10,793	$	7,952	$	1,960	$	881

December 31, 2019
Asset derivatives:
Free-standing derivatives	13,239		—		13,239		7,687		6,640		(1,088)

At September 30, 2020 and December 31, 2019, fixed maturity securities with a fair value of $26.9 million and $26.0 million, respectively, were on deposit with governmental agencies as required by law in various states for which the insurance subsidiaries of HMEC conduct business. In addition, at September 30, 2020 and December 31, 2019, fixed maturity securities with a fair value of $697.1 million and $594.2 million, respectively, were on deposit with the Federal Home Loan Bank of Chicago (FHLB) as collateral for amounts subject to funding agreements, advances and borrowings which were equal to $644.5 million at September 30, 2020 and $545.0 million at December 31, 2019. The deposited securities are included in Fixed maturity securities on the Company’s Consolidated Balance Sheets.