Investments

The amortized cost, gross unrealized gains and losses and fair value of the investment portfolio as of December 31, 2015 and 2014 are shown below:



December 31, 2015
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses (1)			Fair Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	160,393	$	2,133	$	(1,942	)	$	160,584
Obligations of U.S. states and political subdivisions	1,766,407		33,410		(7,290		)	1,792,527
Corporate debt securities	2,046,697		2,836		(44,770		)	2,004,763
Asset-backed securities	116,764		56		(203		)	116,617
Residential mortgage-backed securities	265,879		161		(8,392		)	257,648
Commercial mortgage-backed securities	237,304		162		(3,975		)	233,491
Collateralized loan obligations	61,345		3		(1,148		)	60,200
Debt securities issued by foreign sovereign governments	29,359		2,474		(102		)	31,731
Total debt securities	4,684,148		41,235		(67,822		)	4,657,561
Equity securities	5,625		38		(18		)	5,645
Total investment portfolio	$	4,689,773	$	41,273	$	(67,840	)	$	4,663,206



December 31, 2014
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses (1)			Fair Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	349,153	$	2,752	$	(5,130	)	$	346,775
Obligations of U.S. states and political subdivisions	844,942		12,961		(2,761		)	855,142
Corporate debt securities	2,418,991		16,325		(10,035		)	2,425,281
Asset-backed securities	286,260		535		(140		)	286,655
Residential mortgage-backed securities	329,983		254		(9,000		)	321,237
Commercial mortgage-backed securities	276,215		1,221		(2,158		)	275,278
Collateralized loan obligations	61,340		—		(1,264		)	60,076
Debt securities issued by foreign sovereign governments	35,630		3,540		—			39,170
Total debt securities	4,602,514		37,588		(30,488		)	4,609,614
Equity securities	3,003		61		(9		)	3,055
Total investment portfolio	$	4,605,517	$	37,649	$	(30,497	)	$	4,612,669


(1)	There were no other-than-temporary impairment losses recorded in other comprehensive income (loss) as of December 31, 2015 and 2014.

Our foreign investments primarily consist of the investment portfolio supporting our Australian domiciled subsidiary. The portfolio is comprised of Australian government and semi government securities, representing 87% of the market value of our foreign investments with the remaining 7% invested in corporate securities and 6% in cash equivalents. Eighty-nine percent of the Australian portfolio is rated AAA, by one or more of Moody’s, Standard & Poor’s and Fitch Ratings, and the remaining 11% is rated AA. As of December 31, 2015, the investment portfolio fair value in our Australian operations was approximately $34 million.

The amortized cost and fair values of debt securities as of December 31, 2015, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Because most asset-backed and mortgage-backed securities and collateralized loan obligations provide for periodic payments throughout their lives, they are listed below in separate categories.



December 31, 2015
(In thousands)	Amortized Cost		Fair Value
Due in one year or less	$	280,697	$	281,063
Due after one year through five years	1,450,854		1,450,315
Due after five years through ten years	1,207,011		1,176,468
Due after ten years	1,064,294		1,081,759
	4,002,856		3,989,605

Asset-backed securities	116,764		116,617
Residential mortgage-backed securities	265,879		257,648
Commercial mortgage-backed securities	237,304		233,491
Collateralized loan obligations	61,345		60,200
Total as of December 31, 2015	$	4,684,148	$	4,657,561

At December 31, 2015 and 2014, the investment portfolio had gross unrealized losses of $67.8 million and $30.5 million, respectively. For those securities in an unrealized loss position, the length of time the securities were in such a position, as measured by their month-end fair values, is as follows:



December 31, 2015	Less Than 12 Months					12 Months or Greater					Total
(In thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	60,548	$	(1,467	)	$	1,923	$	(475	)	$	62,471	$	(1,942	)
Obligations of U.S. states and political subdivisions	417,615		(6,404		)	37,014		(886		)	454,629		(7,290		)
Corporate debt securities	1,470,628		(38,519		)	114,982		(6,251		)	1,585,610		(44,770		)
Asset-backed securities	86,604		(173		)	5,546		(30		)	92,150		(203		)
Residential mortgage-backed securities	35,064		(312		)	209,882		(8,080		)	244,946		(8,392		)
Commercial mortgage-backed securities	134,488		(2,361		)	69,927		(1,614		)	204,415		(3,975		)
Collateralized loan obligations	—		—			51,750		(1,148		)	51,750		(1,148		)
Debt securities issued by foreign sovereign governments	4,463		(102		)	—		—			4,463		(102		)
Equity securities	355		(8		)	171		(10		)	526		(18		)
Total investment portfolio	$	2,209,765	$	(49,346	)	$	491,195	$	(18,494	)	$	2,700,960	$	(67,840	)



December 31, 2014	Less Than 12 Months					12 Months or Greater					Total
(In thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	58,166	$	(138	)	$	232,351	$	(4,992	)	$	290,517	$	(5,130	)
Obligations of U.S. states and political subdivisions	166,408		(1,066		)	114,465		(1,695		)	280,873		(2,761		)
Corporate debt securities	816,555		(5,259		)	243,208		(4,776		)	1,059,763		(10,035		)
Asset-backed securities	54,491		(80		)	11,895		(60		)	66,386		(140		)
Residential mortgage-backed securities	24,168		(34		)	263,002		(8,966		)	287,170		(9,000		)
Commercial mortgage-backed securities	89,301		(810		)	110,652		(1,348		)	199,953		(2,158		)
Collateralized loan obligations	—		—			60,076		(1,264		)	60,076		(1,264		)
Debt securities issued by foreign sovereign governments	—		—			—		—			—		—
Equity securities	167		(1		)	235		(8		)	402		(9		)
Total investment portfolio	$	1,209,256	$	(7,388	)	$	1,035,884	$	(23,109	)	$	2,245,140	$	(30,497	)

The unrealized losses in all categories of our investments as of December 31, 2015 were primarily caused by the difference in interest rates at December 31, 2015 compared to interest rates at the time of purchase. There were 303 and 423 securities in an unrealized loss position as of December 31, 2015 and 2014, respectively. As of December 31, 2015, the fair value as a percent of amortized cost of the securities in an unrealized loss position was 98% and approximately 15% of the securities in an unrealized loss position were backed by the U.S. Government.

There were no other-than-temporary impairment (“OTTI”) losses in earnings during 2015. We recognized OTTI losses of $0.1 million and $0.3 million during 2014 and 2013, respectively.

For the years ended December 31, 2015, 2014, and 2013, there were no credit losses recognized in earnings for which a portion of an OTTI loss was recognized in accumulated other comprehensive loss.

The source of net investment income is as follows:



(In thousands)	2015			2014			2013
Fixed maturities	$	105,882		$	89,437		$	82,168
Equity securities	208			227			229
Cash equivalents	191			179			353
Other	455			711			675
Investment income	106,736			90,554			83,425
Investment expenses	(2,995		)	(2,907		)	(2,686		)
Net investment income	$	103,741		$	87,647		$	80,739

The net realized investment gains, including impairment losses, and change in net unrealized gains (losses) of investments are as follows:



(In thousands)	2015			2014		2013
Net realized investment gains on investments:
Fixed maturities	$	28,335		$	1,000	$	3,274
Equity securities	26			356		1,068
Other	—			1		1,389
Total net realized investment gains	$	28,361		$	1,357	$	5,731

Change in net unrealized gains (losses):
Fixed maturities	$	(33,687	)	$	91,718	$	(126,020	)
Equity securities	(32		)	66		(153		)
Other	—			—		—
Total (decrease) increase in net unrealized gains/losses	$	(33,719	)	$	91,784	$	(126,173	)

The gross realized gains, gross realized losses and impairment losses are as follows:



(In thousands)	2015			2014			2013
Gross realized gains	$	30,039		$	4,966		$	11,043
Gross realized losses	(1,678		)	(3,465		)	(4,984		)
Other-than-temporary-impairment losses	—			(144		)	(328		)
Net realized gains on securities	$	28,361		$	1,357		$	5,731

We had $18.9 million and $20.2 million of investments at fair value on deposit with various states as of December 31, 2015 and 2014, respectively, due to regulatory requirements of those state insurance departments.