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Investments
 9 Months Ended
Sep. 30, 2017
Investments, Debt and Equity Securities [Abstract]  
Investments
Note 2 - Investments
The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at September 30, 2017 were:
 
 
Amortized
Cost
 
Gross Unrealized
 
Fair Value
(Dollars in Millions)
 
Gains
 
Losses
 
U.S. Government and Government Agencies and Authorities
 
$
342.8

 
$
21.2

 
$
(4.9
)
 
$
359.1

States and Political Subdivisions
 
1,615.0

 
110.8

 
(2.8
)
 
1,723.0

Foreign Governments
 
3.1

 
0.2

 
—

 
3.3

Corporate Securities:
 
 
 
 
 
 
 
 
Bonds and Notes
 
2,796.9

 
247.2

 
(11.0
)
 
3,033.1

Redeemable Preferred Stocks
 
0.1

 
—

 
—

 
0.1

Collateralized Loan Obligations
 
118.4

 
4.7

 
—

 
123.1

Other Mortgage- and Asset-backed
 
0.4

 
0.7

 
—

 
1.1

Investments in Fixed Maturities
 
$
4,876.7

 
$
384.8

 
$
(18.7
)
 
$
5,242.8


The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at December 31, 2016 were:
 
 
Amortized
Cost
 
Gross Unrealized
 
Fair Value
(Dollars in Millions)
 
Gains
 
Losses
 
U.S. Government and Government Agencies and Authorities
 
$
321.2

 
$
22.3

 
$
(7.2
)
 
$
336.3

States and Political Subdivisions
 
1,640.6

 
88.4

 
(14.1
)
 
1,714.9

Foreign Governments
 
3.5

 
—

 
(0.1
)
 
3.4

Corporate Securities:
 
 
 
 
 
 
 
 
Bonds and Notes
 
2,758.9

 
209.9

 
(24.0
)
 
2,944.8

Redeemable Preferred Stocks
 
0.5

 
0.1

 
—

 
0.6

Collateralized Loan Obligations
 
121.2

 
2.7

 
(1.1
)
 
122.8

Other Mortgage- and Asset-backed
 
0.9

 
1.2

 
—

 
2.1

Investments in Fixed Maturities
 
$
4,846.8

 
$
324.6

 
$
(46.5
)
 
$
5,124.9


There were no unsettled sales of Investments in Fixed Maturities at September 30, 2017. Other Receivables included unsettled sales of Investments in Fixed Maturities of $2.7 million at December 31, 2016. Accrued Expenses and Other Liabilities included unsettled purchases of Investments in Fixed Maturities of $4.7 million and $0.1 million at September 30, 2017 and December 31, 2016, respectively.
Note 2 - Investments (continued)
The amortized cost and estimated fair values of the Company’s Investments in Fixed Maturities at September 30, 2017 by contractual maturity were:
(Dollars in Millions)
 
Amortized Cost
 
Fair Value
Due in One Year or Less
 
$
188.3

 
$
190.8

Due after One Year to Five Years
 
785.9

 
814.3

Due after Five Years to Ten Years
 
1,632.7

 
1,710.9

Due after Ten Years
 
1,988.1

 
2,234.3

Mortgage- and Asset-backed Securities Not Due at a Single Maturity Date
 
281.7

 
292.5

Investments in Fixed Maturities
 
$
4,876.7

 
$
5,242.8


The expected maturities of the Company’s Investments in Fixed Maturities may differ from the contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
Investments in Mortgage- and Asset-backed Securities Not Due at a Single Maturity Date at September 30, 2017 consisted of securities issued by the Government National Mortgage Association with a fair value of $152.1 million, securities issued by the Federal National Mortgage Association with a fair value of $11.2 million, securities issued by the Federal Home Loan Mortgage Corporation with a fair value of $4.1 million and securities of other non-governmental issuers with a fair value of $125.1 million.
Gross unrealized gains and gross unrealized losses on the Company’s Investments in Equity Securities at September 30, 2017 were:
 
 
 
 
Gross Unrealized
 
 
(Dollars in Millions)
 
Cost
 
Gains
 
Losses
 
Fair Value
Preferred Stocks:
 
 
 
 
 
 
 
 
Finance, Insurance and Real Estate
 
$
53.6

 
$
5.0

 
$
—

 
$
58.6

Other Industries
 
18.4

 
6.2

 
—

 
24.6

Common Stocks:
 
 
 
 
 
 
 
 
Finance, Insurance and Real Estate
 
6.7

 
1.3

 
(0.8
)
 
7.2

Other Industries
 
8.9

 
5.1

 
(0.2
)
 
13.8

Other Equity Interests:
 
 
 
 
 
 
 
 
Exchange Traded Funds
 
196.7

 
8.3

 
—

 
205.0

Limited Liability Companies and Limited Partnerships
 
184.8

 
23.6

 
(5.5
)
 
202.9

Investments in Equity Securities
 
$
469.1

 
$
49.5

 
$
(6.5
)
 
$
512.1


Gross unrealized gains and gross unrealized losses on the Company’s Investments in Equity Securities at December 31, 2016 were:
 
 
 
 
Gross Unrealized
 
 
(Dollars in Millions)
 
Cost
 
Gains
 
Losses
 
Fair Value
Preferred Stocks:
 
 
 
 
 
 
 
 
Finance, Insurance and Real Estate
 
$
58.1

 
$
2.3

 
$
(0.8
)
 
$
59.6

Other Industries
 
18.5

 
4.9

 
(0.5
)
 
22.9

Common Stocks:
 
 
 
 
 
 
 
 
Finance, Insurance and Real Estate
 
31.2

 
2.3

 
—

 
33.5

Other Industries
 
7.2

 
4.6

 
(0.1
)
 
11.7

Other Equity Interests:
 
 
 
 
 
 
 
 
Exchange Traded Funds
 
136.1

 
9.6

 
(1.3
)
 
144.4

Limited Liability Companies and Limited Partnerships
 
183.3

 
29.2

 
(2.9
)
 
209.6

Investments in Equity Securities
 
$
434.4

 
$
52.9

 
$
(5.6
)
 
$
481.7


Note 2 - Investments (continued)
There were no unsettled sales of Investments in Equity Securities at September 30, 2017. Other Receivables included unsettled sales of Investments in Equity Securities of $0.2 million at December 31, 2016. There were no unsettled purchases of Investments in Equity Securities at either September 30, 2017 or December 31, 2016.
An aging of unrealized losses on the Company’s Investments in Fixed Maturities and Equity Securities at September 30, 2017 is presented below.
 
 
Less Than 12 Months
 
12 Months or Longer
 
Total
(Dollars in Millions)
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
Fixed Maturities:
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Government and Government Agencies and Authorities
 
$
67.4

 
$
(2.1
)
 
$
41.2

 
$
(2.8
)
 
$
108.6

 
$
(4.9
)
States and Political Subdivisions
 
169.3

 
(2.1
)
 
28.9

 
(0.7
)
 
198.2

 
(2.8
)
Corporate Securities:
 
 
 
 
 
 
 
 
 
 
 
 
Bonds and Notes
 
292.7

 
(6.7
)
 
96.2

 
(4.3
)
 
388.9

 
(11.0
)
Collateralized Loan Obligations
 
2.0

 
—

 
2.4

 
—

 
4.4

 
—

Total Fixed Maturities
 
531.4

 
(10.9
)
 
168.7

 
(7.8
)
 
700.1

 
(18.7
)
Equity Securities:
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Stocks:
 
 
 
 
 
 
 
 
 
 
 
 
Finance, Insurance and Real Estate
 
—

 
—

 
0.2

 
—

 
0.2

 
—

Other Industries
 
0.1

 
—

 
0.2

 
—

 
0.3

 
—

Common Stocks:
 
 
 
 
 
 
 
 
 
 
 
 
Finance, Insurance and Real Estate
 
2.2

 
(0.8
)
 
—

 
—

 
2.2

 
(0.8
)
Other Industries
 
0.2

 
(0.2
)
 
0.5

 
—

 
0.7

 
(0.2
)
Other Equity Interests:
 
 
 
 
 
 
 
 
 
 
 
 
Limited Liability Companies and Limited Partnerships
 
46.3

 
(1.9
)
 
32.1

 
(3.6
)
 
78.4

 
(5.5
)
Total Equity Securities
 
48.8

 
(2.9
)
 
33.0

 
(3.6
)
 
81.8

 
(6.5
)
Total
 
$
580.2

 
$
(13.8
)
 
$
201.7

 
$
(11.4
)
 
$
781.9

 
$
(25.2
)

The Company regularly reviews its investment portfolio for factors that may indicate that a decline in fair value of an investment is other than temporary. The portions of the declines in the fair values of investments that are determined to be other than temporary are reported as losses in the Condensed Consolidated Statements of Operations in the periods when such determinations are made.
Note 2 - Investments (continued)
Unrealized losses on fixed maturities, which the Company has determined to be temporary at September 30, 2017, were $18.7 million, of which $7.8 million was related to fixed maturities that were in an unrealized loss position for 12 months or longer. There were no unrealized losses at September 30, 2017 related to securities for which the Company has recognized credit losses in earnings in the preceding table under the heading “Less Than 12 Months.” There were no unrealized losses at September 30, 2017 related to securities for which the Company has recognized credit losses in earnings in the preceding table under the heading “12 Months or Longer.” Investment-grade fixed maturity investments comprised $12.0 million and below-investment-grade fixed maturity investments comprised $6.7 million of the unrealized losses on investments in fixed maturities at September 30, 2017. For below-investment-grade fixed maturity investments in an unrealized loss position, the unrealized loss amount, on average, was approximately 4% of the amortized cost basis of the investment. At September 30, 2017, the Company did not have the intent to sell these investments, and it was not more likely than not that the Company would be required to sell these investments before it recovered the amortized cost of such investments, which may be at maturity. Based on the Company’s evaluation at September 30, 2017 of the prospects of the issuers, including, but not limited to, the credit ratings of the issuers of the investments in the fixed maturities, and the Company’s intention to not sell and its determination that it would not be required to sell before it recovered the amortized cost of such investments, the Company concluded that the declines in the fair values of the Company’s investments in fixed maturities presented in the preceding table were temporary at the evaluation date.
With respect to Investments in Equity Securities, the Company concluded that the unrealized losses on its investments in preferred and common stocks at September 30, 2017 were temporary based on various factors, including the relative short length and magnitude of the losses and overall market volatility. The Company’s investments in other equity interests include investments in limited liability companies and limited partnerships that primarily invest in mezzanine debt, distressed debt and secondary transactions. By the nature of their underlying investments, the Company believes that some of its investments in the limited liability companies and limited partnerships exhibit debt-like characteristics which, among other factors, the Company also considers when evaluating these investments for impairment. Based on evaluations of the factors in the preceding paragraph, the Company concluded that the declines in the fair values of the Company’s investments in equity securities presented in the preceding table were temporary at September 30, 2017.
Note 2 - Investments (continued)
An aging of unrealized losses on the Company’s Investments in Fixed Maturities and Equity Securities at December 31, 2016 is presented below.
 
 
Less Than 12 Months
 
12 Months or Longer
 
Total
(Dollars in Millions)
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
Fixed Maturities:
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Government and Government Agencies and Authorities
 
$
117.7

 
$
(7.2
)
 
$
1.1

 
$
—

 
$
118.8

 
$
(7.2
)
States and Political Subdivisions
 
432.7

 
(14.1
)
 
0.3

 
—

 
433.0

 
(14.1
)
Foreign Governments
 
2.1

 
(0.1
)
 
—

 
—

 
2.1

 
(0.1
)
Corporate Securities:
 
 
 
 
 
 
 
 
 
 
 
 
Bonds and Notes
 
663.3

 
(16.6
)
 
107.3

 
(7.4
)
 
770.6

 
(24.0
)
Collateralized Loan Obligations
 
19.9

 
(0.7
)
 
21.4

 
(0.4
)
 
41.3

 
(1.1
)
Total Fixed Maturities
 
1,235.7

 
(38.7
)
 
130.1

 
(7.8
)
 
1,365.8

 
(46.5
)
Equity Securities:
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Stocks:
 
 
 
 
 
 
 
 
 
 
 
 
Finance, Insurance and Real Estate
 
15.6

 
(0.5
)
 
7.3

 
(0.3
)
 
22.9

 
(0.8
)
Other Industries
 
5.3

 
(0.5
)
 
—

 
—

 
5.3

 
(0.5
)
Common Stocks:
 
 
 
 
 
 
 
 
 
 
 
 
Finance, Insurance and Real Estate
 
2.8

 
—

 
—

 
—

 
2.8

 
—

Other Industries
 
0.6

 
(0.1
)
 
0.5

 
—

 
1.1

 
(0.1
)
Other Equity Interests:
 
 
 
 
 
 
 
 
 
 
 
 
Exchange Traded Funds
 
—

 
—

 
18.6

 
(1.3
)
 
18.6

 
(1.3
)
Limited Liability Companies and Limited Partnerships
 
13.9

 
(0.7
)
 
33.8

 
(2.2
)
 
47.7

 
(2.9
)
Total Equity Securities
 
38.2

 
(1.8
)
 
60.2

 
(3.8
)
 
98.4

 
(5.6
)
Total
 
$
1,273.9

 
$
(40.5
)
 
$
190.3

 
$
(11.6
)
 
$
1,464.2

 
$
(52.1
)

Unrealized losses on fixed maturities, which the Company has determined to be temporary at December 31, 2016, were $46.5 million, of which $7.8 million was related to fixed maturities that were in an unrealized loss position for 12 months or longer. There were $0.1 million unrealized losses at December 31, 2016 related to securities for which the Company has recognized credit losses in earnings in the preceding table under the heading “Less Than 12 Months.” There were no unrealized losses at December 31, 2016 related to securities for which the Company has recognized credit losses in earnings in the preceding table under the heading “12 Months or Longer.” Investment-grade fixed maturity investments comprised $33.8 million and below-investment-grade fixed maturity investments comprised $12.7 million of the unrealized losses on investments in fixed maturities at December 31, 2016. For below-investment-grade fixed maturity investments in an unrealized loss position, the unrealized loss amount, on average, was approximately 5% of the amortized cost basis of the investment. At December 31, 2016, the Company did not have the intent to sell these investments, and it was not more likely than not that the Company would be required to sell these investments before recovery of its amortized cost basis, which may be at maturity. Based on the Company’s evaluation at December 31, 2016 of the prospects of the issuers, including, but not limited to, the credit ratings of the issuers of the investments in the fixed maturities, and the Company’s intention to not sell and its determination that it would not be required to sell before recovery of the amortized cost of such investments, the Company concluded that the declines in the fair values of the Company’s investments in fixed maturities presented in the preceding table were temporary at the evaluation date.
With respect to Investments in Equity Securities, the Company concluded that the unrealized losses on its investments at December 31, 2016 were temporary based on various factors, including the relative short length and magnitude of the losses and overall market volatility, as well as, the debt-like characteristics of investments in certain other equity interests.
Note 2 - Investments (continued)
The following table sets forth the pre-tax amount of other than temporary impairment (“OTTI”) credit losses recognized in Retained Earnings for Investments in Fixed Maturities held by the Company as of the beginning and end of the periods presented for which a portion of the OTTI loss related to factors other than credit has been recognized in AOCI, and the corresponding changes in such amounts.
 
 
Nine Months Ended
 
Three Months Ended
(Dollars in Millions)
 
Sep 30,
2017
 
Sep 30,
2016
 
Sep 30,
2017
 
Sep 30,
2016
Cumulative Balance of Pre-tax Credit Losses Recognized in Retained Earnings at Beginning of Period
 
$
1.4

 
$
5.1

 
$
2.4

 
$
4.2

Pre-tax Credit Losses on Fixed Maturities without Pre-tax Credit Losses Included in Cumulative Balance at Beginning of Period
 
1.2

 
2.7

 
—

 
—

Reductions for Change in Impairment Status:
 
 
 
 
 
 
 
 
From Status of Credit Loss to Status of Intent-to-sell or Required-to-sell
 
—

 
(6.3
)
 
—

 
(2.7
)
Reductions for Investments Sold During Period
 
(0.3
)
 
—

 
(0.1
)
 
—

Cumulative Balance of Pre-tax Credit Losses Recognized in Retained Earnings at End of Period
 
$
2.3

 
$
1.5

 
$
2.3

 
$
1.5


Net Investment Income for the nine and three months ended September 30, 2017 and 2016 was:
 
 
Nine Months Ended
 
Three Months Ended
(Dollars in Millions)
 
Sep 30,
2017
 
Sep 30,
2016
 
Sep 30,
2017
 
Sep 30,
2016
Investment Income (Loss):
 
 
 
 
 
 
 
 
Interest on Fixed Income Securities
 
$
184.0

 
$
181.2

 
$
61.8

 
$
61.4

Dividends on Equity Securities Excluding Alternative Investments
 
7.0

 
9.0

 
2.6

 
2.7

Alternative Investments:
 
 
 
 
 
 
 
 
Equity Method Limited Liability Investments
 
21.9

 
3.7

 
11.1

 
5.2

Fair Value Option Investments
 
1.0

 
(3.9
)
 
0.5

 
(1.4
)
Limited Liability Investments Included in Equity Securities
 
18.7

 
16.6

 
5.9

 
5.7

Total Alternative Investments
 
41.6

 
16.4

 
17.5

 
9.5

Short-term Investments
 
1.0

 
0.4

 
0.5

 
0.2

Loans to Policyholders
 
15.7

 
16.1

 
4.9

 
5.4

Real Estate
 
8.3

 
8.9

 
2.6

 
3.0

Other
 
0.2

 
—

 
0.1

 
—

Total Investment Income
 
257.8

 
232.0

 
90.0

 
82.2

Investment Expenses:
 
 
 
 
 
 
 
 
Real Estate
 
7.7

 
8.4

 
2.6

 
2.9

Other Investment Expenses
 
5.5

 
5.2

 
1.5

 
1.6

Total Investment Expenses
 
13.2

 
13.6

 
4.1

 
4.5

Net Investment Income
 
$
244.6

 
$
218.4

 
$
85.9

 
$
77.7


Note 2 - Investments (continued)
Gross gains and losses on sales of investments in fixed maturities and equity securities for the nine and three months ended September 30, 2017 and 2016 were:
 
 
Nine Months Ended
 
Three Months Ended
(Dollars in Millions)
 
Sep 30,
2017
 
Sep 30,
2016
 
Sep 30,
2017
 
Sep 30,
2016
Fixed Maturities:
 
 
 
 
 
 
 
 
Gains on Sales
 
$
7.3

 
$
14.1

 
$
2.4

 
$
2.7

Losses on Sales
 
(0.4
)
 
(1.1
)
 
—

 
(0.8
)
Equity Securities:
 
 
 
 
 
 
 
 
Gains on Sales
 
31.1

 
9.8

 
3.9

 
9.3

Losses on Sales
 
—

 
(0.1
)
 
—

 
—


Equity Method Limited Liability Investments include investments in limited liability investment companies and limited partnerships in which the Company’s interests are not deemed minor and are accounted for under the equity method of accounting. The Company’s investments in Equity Method Limited Liability Investments are generally of a passive nature in that the Company does not take an active role in the management of the investment entity. The Company’s maximum exposure to loss at September 30, 2017 is limited to the total carrying value of $160.1 million. In addition, the Company had outstanding commitments totaling approximately $82.5 million to fund Equity Method Limited Liability Investments at September 30, 2017.
The carrying values of the Company’s Other Investments at September 30, 2017 and December 31, 2016 were:
(Dollars in Millions)
 
Sep 30,
2017
 
Dec 31,
2016
Loans to Policyholders at Unpaid Principal
 
$
295.5

 
$
294.2

Real Estate at Depreciated Cost
 
118.1

 
140.2

Trading Securities at Fair Value
 
6.3

 
5.3

Other
 
0.1

 
0.2

Total
 
$
420.0

 
$
439.9