Investments (Tables)

12 Months Ended

Dec. 31, 2018

Schedule for Fixed Income Securities at Amortized Cost, Gross Unrealized Gains and Losses and Fair Value

The amortized cost, gross unrealized gains and losses and fair value for fixed maturities as of December 31, 2018 and 2017 were as follows:

December 31, 2018			Gross		Gross
($ in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Fixed maturities, available for sale
U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies	$	305,336	$	5,423	$	(8,833	)	$	301,926
Obligations of U.S. States and Political Subdivisions		747,872		21,407		(6,814	)		762,465
Foreign government		22,476		8		(2,507	)		19,977
All other corporate securities		5,830,098		22,671		(328,363	)		5,524,406
ABS		404,935		422		(13,312	)		392,045
CMBS		307,430		1,494		(7,957	)		300,967
RMBS		83,965		4,289		(566	)		87,688
Redeemable preferred stock		14,800		—		—			14,800
Total fixed maturities, available for sale	$	7,716,912	$	55,714	$	(368,352	)	$	7,404,274
December 31, 2017			Gross		Gross
($ in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Fixed maturities, available for sale
U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies	$	416,639	$	5,322	$	(12,366	)	$	409,595
Obligations of U.S. States and Political Subdivisions		741,343		37,908		(2,720	)		776,531
Foreign government		24,242		234		(1,685	)		22,791
All other corporate securities		6,169,204		258,440		(37,898	)		6,389,746
ABS		478,329		5,289		(3,395	)		480,223
CMBS		189,596		1,377		(3,148	)		187,825
RMBS		127,439		6,520		(509	)		133,450
Redeemable preferred stock		14,800		—		—			14,800
Total fixed maturities, available for sale	$	8,161,592	$	315,090	$	(61,721	)	$	8,414,961

Schedule for Fixed Income Securities Based on Contractual Maturities

The scheduled maturities for fixed maturities, available for sale, were as follows as of December 31, 2018:

($ in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	198,865	$	198,415
Due after one year through five years		782,318		783,443
Due after five years through ten years		801,362		783,970
Due after ten years		4,927,645		4,651,395
Total before asset and mortgage-backed securities	$	6,710,190	$	6,417,223
Asset and mortgage-backed securities		1,006,722		987,051
Total fixed maturities	$	7,716,912	$	7,404,274

Schedule of Commercial Mortgage Loan Portfolio by Geographical Region

The Company diversifies its commercial mortgage loan portfolio by geographical region to reduce concentration risk. The Company’s commercial mortgage loan portfolio by geographical region was as follows as of December 31, 2018 and 2017:

($ in thousands)	December 31, 2018		December 31, 2017
Alabama	$	815	$	1,056
Arizona		36,110		20,009
California		145,023		173,101
Colorado		61,191		57,293
Florida		54,630		103,869
Georgia		20,144		63,526
Hawaii		3,895		5,020
Illinois		86,832		87,957
Iowa		538		791
Kansas		9,200		9,200
Kentucky		—		6,538
Maryland		—		19,851
Massachusetts		29,836		53,605
Minnesota		23,612		116,923
Nevada		80,396		80,768
New Jersey		20,773		34,101
New York		48,375		50,691
North Carolina		33,447		34,022
Ohio		12,322		12,526
Pennsylvania		50,351		1,007
South Carolina		24,766		1,310
Texas		109,735		100,066
Utah		—		7,823
Virginia		248		975
Washington		—		77
Wisconsin		834		1,082
General allowance for loan loss		—		—
Total commercial mortgage loans	$	853,073	$	1,043,187

Schedule of Credit Quality of Commercial Mortgage Loans Held-For-Investment

The credit quality of commercial mortgage loans held-for-investment was as follows at December 31, 2018 and 2017:

December 31, 2018	Recorded Investment
	Debt Service Coverage Ratios
($ in thousands)	> 1.20x		1.00x - 1.20x		< 1.00x		Total		% of Total			Estimated Fair Value		% of Total
Loan-to-value ratios:
Less than 65%	$	628,279	$	88,404	$	37,446	$	754,129		88.4	%	$	752,667		88.3	%
65% to 75%		50,000		48,944		—		98,944		11.6	%		99,367		11.7	%
76% to 80%		—		—		—		—		0.0	%		—		0.0	%
Greater than 80%		—		—		—		—		0.0	%		—		0.0	%
Total	$	678,279	$	137,348	$	37,446	$	853,073		100.0	%	$	852,034		100.0	%
December 31, 2017	Recorded Investment
	Debt Service Coverage Ratios
($ in thousands)	> 1.20x		1.00x - 1.20x		< 1.00x		Total		% of Total			Estimated Fair Value		% of Total
Loan-to-value ratios:
Less than 65%	$	731,577	$	48,895	$	—	$	780,472		74.8	%	$	782,640		74.9	%
65% to 75%		222,771		39,944		—		262,715		25.2	%		261,891		25.1	%
76% to 80%		—		—		—		—		0.0	%		—		0.0	%
Greater than 80%		—		—		—		—		0.0	%		—		0.0	%
Total	$	954,348	$	88,839	$	—	$	1,043,187		100.0	%	$	1,044,531		100.0	%

Composition of Other Invested Assets

Other invested assets were as follows as of December 31, 2018 and 2017:

	December 31, 2018		December 31, 2017
($ in thousands)
Low income housing tax credit properties	$	—	$	138
Derivatives		2,976		21,045
	$	2,976	$	21,183

Schedule of Net Investment Income

Net investment income for the years ended December 31, 2018, 2017 and 2016 was as follows:

	2018		2017		2016
($ in thousands)
Fixed maturities, available for sale	$	332,082	$	345,299	$	330,253
Fixed maturties, trading		5,963		3,424		—
Fixed maturities, fair value option		234		331		454
Common stock		314		224		—
Commercial mortgage loans		43,781		56,510		69,360
Cash, cash equivalents and short-term investments		4,262		1,718		1,007
Other investments		8,703		8,421		8,845
Gross investment income	$	395,339	$	415,927	$	409,919
Investment expenses		14,527		14,814		12,836
Net investment income	$	380,812	$	401,113	$	397,083

Schedule of Realized Investment Gains and Losses

Realized investment gains and losses for the years ended December 31, 2018, 2017 and 2016 were as follows:

	2018			2017			2016
($ in thousands)
Realized investment gains, net
Fixed maturities, available for sale	$	(45,240	)	$	11,434		$	66,560
Fixed maturities, trading		(1,864	)		1,081			—
Fixed maturties, fair value option		(247	)		405			(733	)
Commercial mortgage loans		1,201			5,935			4,037
Derivatives		(7,136	)		19,360			3,856
Other invested assets		(9	)		(92	)		—
Net realized gains (losses)	$	(53,295	)	$	38,123		$	73,720

Proceeds from Sale of Fixed Maturities and Gross Realized Investment Gains and Losses

Proceeds from sales of fixed maturities and gross realized investment gains and losses for the years ended December 31, 2018, 2017 and 2016 were as follows:

	2018			2017			2016
($ in thousands)
Fixed maturities, available-for-sale
Proceeds from sales	$	919,347		$	1,496,242		$	3,027,998
Gross investment gains from sales		4,682			29,271			109,282
Gross investment losses from sales		(42,996	)		(11,893	)		(35,136	)

Summary of Gross Unrealized Losses and Fair Value of Fixed Income by Length of Time

The gross unrealized losses and fair value of fixed maturities, available for sale, by the length of time that individual securities have been in a continuous unrealized loss position were as follows as of December 31, 2018 and 2017:

December 31, 2018	Less than 12 months					Greater than 12 months
($ in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies	$	40,085	$	(1,337	)	$	139,944	$	(7,496	)	$	180,029	$	(8,833	)
Obligations of U.S. States and Political Subdivisions		113,634		(1,932	)		75,444		(4,882	)		189,078		(6,814	)
Foreign government		8,894		(2	)		10,573		(2,505	)		19,467		(2,507	)
All other corporate securities		3,626,045		(222,408	)		805,107		(105,955	)		4,431,152		(328,363	)
ABS		237,153		(4,935	)		107,437		(8,377	)		344,590		(13,312	)
CMBS		110,483		(2,936	)		86,765		(5,021	)		197,248		(7,957	)
RMBS		10,028		(85	)		13,793		(481	)		23,821		(566	)
Total fixed maturities	$	4,146,322	$	(233,635	)	$	1,239,063	$	(134,717	)	$	5,385,385	$	(368,352	)
December 31, 2017	Less than 12 months					Greater than 12 months
($ in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies	$	215,767	$	(3,499	)	$	107,344	$	(8,867	)	$	323,111	$	(12,366	)
Obligations of U.S. States and Political Subdivisions		38,171		(825	)		45,877		(1,895	)		84,048		(2,720	)
Foreign government		296		(4	)		11,098		(1,681	)		11,394		(1,685	)
All other corporate securities		740,795		(6,841	)		489,367		(31,057	)		1,230,162		(37,898	)
ABS		77,050		(689	)		99,327		(2,706	)		176,377		(3,395	)
CMBS		72,725		(593	)		36,540		(2,555	)		109,265		(3,148	)
RMBS		6,908		(118	)		21,835		(391	)		28,743		(509	)
Total fixed maturities	$	1,151,712	$	(12,569	)	$	811,388	$	(49,152	)	$	1,963,100	$	(61,721	)

Net Unrealized Investment Gains and Losses in AOCI

The changes in unrealized gains and losses in accumulated other comprehensive income (loss) (“AOCI”) were as follows for the years ended December 31, 2018, 2017 and 2016:

($ in thousands)	Net Unrealized Gain (Losses) on Investments			VOBA			Future Policy Benefits and Policyholders’ Account Balances			Deferred Income Tax (Liability) Benefit			Accumulated Other Comprehensive Income (Loss) Related to Net Unrealized Investment Gains (Losses)
Balance, December 31, 2015	$	(327,781	)	$	36,774		$	52,906		$	83,402		$	(154,699	)
Net investment gains and losses on investments arising during the period		160,311			—			—			(56,111	)		104,200
Reclassification adjustment for gains and losses included in net income		(81,920	)		—			—			28,672			(53,248	)
Impact of net unrealized investment gains and losses on VOBA		—			(30,948	)		—			10,832			(20,116	)
Impact of net unrealized investment gains and losses on future policy benefits and policyholders’ account balances		—			—			(28,924	)		10,123			(18,801	)
Balance, December 31, 2016	$	(85,550	)	$	5,826		$	23,982		$	19,574		$	(36,168	)
Net investment gains and losses on investments arising during the period		332,918			—			—			(111,486	)		221,432
Reclassification adjustment for gains and losses included in net income		(6,001	)		—			—			2,100			(3,901	)
Impact of net unrealized investment gains and losses on VOBA		—			(21,843	)		—			7,645			(14,198	)
Impact of net unrealized investment gains and losses on future policy benefits and policyholders’ account balances		—			—			(157,156	)		55,005			(102,151	)
Balance, December 31, 2017	$	253,369		$	(16,017	)	$	(133,174	)	$	(31,362	)	$	72,816
Net investment gains and losses on investments arising during the period		(560,739	)		—			—			117,756			(442,983	)
Reclassification adjustment for gains and losses included in net income		5,268			—			—			(1,106	)		4,162
Establishement of valuation allowance related to deferred income tax assets		—			—			—			(65,654	)		(65,654	)
Impact of net unrealized investment gains and losses on VOBA		—			45,560			—			(9,568	)		35,992
Impact of net unrealized investment gains and losses on future policy benefits and policyholders’ account balances		—			—			251,235			(52,760	)		198,475
Implementation of accounting standard related to the reclassification of certain tax effects		—			—			—			9,558			9,558
Balance, December 31, 2018	$	(312,638	)	$	29,543		$	118,061		$	(30,924	)	$	(195,958	)