
($ in thousands)	Year Ended December 31,
	2020		2019		2018
Fixed maturity securities	$	232,917	$	283,228	$	353,303
Equity securities	4,665		4,923		6,017
Limited partnership interests	20,863		25,694		15,406
Short-term and other investments	11,409		(10,122)		11,981
Investment expenses	(9,542)		(9,484)		(10,200)
Net investment income - investment portfolio	260,312		294,239		376,507
Investment income - deposit asset on reinsurance	97,284		70,825		—
Total net investment income	$	357,596	$	365,064	$	376,507

(1) Net investment gains on fixed maturity securities 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 Notes 5 and 17 for further information.

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)	Year Ended December 31,
	2020		2019		2018
Credit impairment write-downs	$	—	$	(1,105)	$	—
Change in intent write-downs	(5,283)		(275)		(1,530)
Net other-than-temporary impairment losses on securities recognized in net income	(5,283)		(1,380)		(1,530)
Sales and other, net	14,968		151,495		3,491
Change in fair value - equity securities (1)	(167)		7,308		(18,323)
Change in fair value and gains (losses) realized on settlements - derivatives	(11,807)		(4,083)		3,819
Net investment gains (losses)	$	(2,289)	$	153,340	$	(12,543)

(1) Effective January 1, 2018, with the adoption of new accounting guidance for recognition and measurement of financial instruments, equity securities are reported at fair value with changes in fair value recognized in Net investment gains (losses) and are no longer included in impairment write-downs or change in intent write-downs.


($ in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
December 31, 2020
Fixed maturity securities
U.S. Government and federally sponsored agency obligations: (1)
Mortgage-backed securities	$	605,468	$	79,601	$	231	$	684,838
Other, including U.S. Treasury securities	395,042		39,144		1,033		433,153
Municipal bonds	1,612,290		215,711		504		1,827,497
Foreign government bonds	40,145		4,908		—		45,053
Corporate bonds	1,905,207		221,634		3,942		2,122,899
Other asset-backed securities	1,230,399		24,123		22,672		1,231,850
Totals	$	5,788,551	$	585,121	$	28,382	$	6,345,290

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 $387.1 million and $405.1 million; Federal Home Loan Mortgage Corporation (FHLMC) of $344.3 million and $283.1 million; and Government National Mortgage Association (GNMA) of $132.3 million and $147.4 million as of December 31, 2020 and 2019, respectively.

The following table presents the fair value and gross unrealized losses for fixed maturity securities in an unrealized loss position at December 31, 2020 and 2019, respectively. The Company views the decrease in fair value of all of the fixed maturity securities with unrealized losses at December 31, 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 December 31, 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 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 December 31, 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
December 31, 2020
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	4,842		$	75	$	2,644		$	156	$	7,486		$	231
Other	95,919			1,033		—			—		95,919			1,033
Municipal bonds	18,097			504		—			—		18,097			504
Foreign government bonds	—			—		—			—		—			—
Corporate bonds	126,619			3,768		10,879			174		137,498			3,942
Other asset-backed securities	316,973			17,153		409,274			5,519		726,247			22,672
Total	$	562,450		$	22,533	$	422,797		$	5,849	$	985,247		$	28,382

Number of positions with a gross unrealized loss	308					123					431
Fair value as a percentage of total fixed maturities securities fair value	8.9		%			6.7		%			15.6		%

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 maturities securities fair value	8.3		%			8.2		%			16.5		%

Fixed maturity securities with an investment grade rating represented 81.2% of the gross unrealized losses as of December 31, 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 OTTI losses on fixed maturity securities held as of December 31, 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)	Year Ended December 31,
	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	(184)		—
End of period	$	1,529	$	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)	December 31, 2020
	Amortized Cost		Fair Value		Percent of Total Fair Value
Estimated expected maturity:
Due in 1 year or less	$	255,416	$	261,387	4.0	%
Due after 1 year through 5 years	1,712,114		1,793,111		28.3	%
Due after 5 years through 10 years	1,608,614		1,775,766		28.0	%
Due after 10 years through 20 years	1,358,865		1,559,501		24.6	%
Due after 20 years	853,542		955,525		15.1	%
Total	$	5,788,551	$	6,345,290	100.0	%

Average option-adjusted duration, in years	6.4


($ in thousands)	Year Ended December 31,
	2020		2019 (1)		2018
Fixed maturity securities
Proceeds received	$	472,913	$	805,887	$	625,527
Gross gains realized	20,470		150,852		10,536
Gross losses realized	(6,072)		(7,807)		(14,932)

Equity securities
Proceeds received	$	12,717	$	29,863	$	25,498
Gross gains realized	2,197		9,193		8,592
Gross losses realized	(1,885)		(788)		(917)

(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 Notes 5 and 17 for further information.


($ in thousands)	Year Ended December 31,
	2020		2019		2018
Net unrealized investment gains (losses) on fixed maturity securities, net of tax
Beginning of period	$	264,410	$	111,712	$	286,176
Change in net unrealized investment gains (losses) on fixed maturity securities	184,290		277,062		(172,350)
Reclassification of net investment (gains) losses on securities to net income	(8,876)		(124,364)		12,927
Cumulative effect of change in accounting principle (1)	—		—		(15,041)
End of period	$	439,824	$	264,410	$	111,712

(1) Effective January 1, 2018, with the adoption of new accounting guidance for recognition and measurement of financial instruments, available for sale equity securities were reclassified to equity securities at fair value and the related net unrealized gains were reclassified from AOCI to Retained earnings.

As of December 31, 2020 and 2019, the carrying amount of equity method limited partnership interests totaled $449.0 million and $383.7 million, respectively. Principal factors influencing carrying amount 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 partnerships 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
December 31, 2020
Asset derivatives
Free-standing derivatives	$	16,805	$	—	$	16,805	$	13,671	$	2,620	$	514

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

At December 31, 2020 and 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 December 31, 2020 and 2019, fixed maturity securities with a fair value of $707.3 million and $594.2 million, respectively, were on deposit with FHLB as collateral for amounts subject to funding agreements, advances and borrowings which were equal to $644.5 million and $545.0 million at the respective dates. The deposited securities are reported as Fixed maturity securities on the Company's Consolidated Balance Sheets.