Investment [Text Block] | Investment Operations Fixed Maturity and Equity Securities Available-For-Sale Fixed Maturity and Equity Securities by Investment Category December 31, 2016 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Non-credit losses on other-than-temporary impairments (1) (Dollars in thousands) Fixed maturities: Corporate (2) $ 3,529,997 $ 228,601 $ (49,943 ) $ 3,708,655 $ (1,082 ) Residential mortgage-backed 396,110 29,121 (2,931 ) 422,300 (983 ) Commercial mortgage-backed 546,446 33,645 (4,137 ) 575,954 — Other asset-backed 771,570 8,846 (9,766 ) 770,650 2,544 United States Government and agencies 30,575 1,629 (132 ) 32,072 — State, municipal and other governments 1,387,013 119,298 (7,152 ) 1,499,159 — Total fixed maturities $ 6,661,711 $ 421,140 $ (74,061 ) $ 7,008,790 $ 479 Equity securities: Non-redeemable preferred stocks $ 100,042 $ 4,050 $ (1,675 ) $ 102,417 Common stocks 30,437 114 — 30,551 Total equity securities $ 130,479 $ 4,164 $ (1,675 ) $ 132,968 December 31, 2015 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Non-credit losses on other-than-temporary impairments (1) (Dollars in thousands) Fixed maturities: Corporate (2) $ 3,464,402 $ 192,149 $ (137,844 ) $ 3,518,707 $ 351 Residential mortgage-backed 436,969 33,880 (5,343 ) 465,506 (3,584 ) Commercial mortgage-backed 514,195 42,284 (2,487 ) 553,992 — Other asset-backed 578,692 11,554 (7,124 ) 583,122 3,058 United States Government and agencies 41,050 3,129 (81 ) 44,098 — State, municipal and other governments 1,344,611 129,923 (2,183 ) 1,472,351 — Total fixed maturities $ 6,379,919 $ 412,919 $ (155,062 ) $ 6,637,776 $ (175 ) Equity securities: Non-redeemable preferred stocks $ 87,029 $ 6,095 $ (1,173 ) $ 91,951 Common stocks 29,307 450 (41 ) 29,716 Total equity securities $ 116,336 $ 6,545 $ (1,214 ) $ 121,667 (1) Non-credit losses subsequent to the initial impairment measurement date on OTTI losses are included in the gross unrealized gains and gross unrealized losses columns above. The non-credit loss component of OTTI losses for other asset-backed securities were in an unrealized gain position at December 31, 2016 and corporate and other asset-backed securities at December 31, 2015 due to increases in estimated fair value subsequent to initial recognition of non-credit losses on such securities. (2) Corporate securities include hybrid preferred securities with a fair value of $23.3 million at December 31, 2016 and $43.5 million at December 31, 2015 . Corporate securities also include redeemable preferred stock with a fair value of $24.5 million at December 31, 2016 and $24.8 million at December 31, 2015 . Available-For-Sale Fixed Maturities by Maturity Date December 31, 2016 Amortized Cost Fair Value (Dollars in thousands) Due in one year or less $ 87,893 $ 89,546 Due after one year through five years 788,543 847,046 Due after five years through ten years 716,499 742,640 Due after ten years 3,354,650 3,560,654 4,947,585 5,239,886 Mortgage-backed and other asset-backed 1,714,126 1,768,904 Total fixed maturities $ 6,661,711 $ 7,008,790 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. Fixed maturities not due at a single maturity date have been included in the above table in the year of final contractual maturity. Net Unrealized Gains (Losses) on Investments in Accumulated Other Comprehensive Income December 31, 2016 2015 (Dollars in thousands) Net unrealized appreciation on: Fixed maturities - available for sale $ 347,079 $ 257,857 Equity securities - available for sale 2,489 5,331 349,568 263,188 Adjustments for assumed changes in amortization pattern of: Deferred acquisition costs (95,647 ) (73,735 ) Value of insurance in force acquired (12,382 ) (3,087 ) Unearned revenue reserve 4,215 3,352 Adjustments for assumed changes in policyholder liabilities (3,795 ) (4,090 ) Provision for deferred income taxes (84,684 ) (64,955 ) Net unrealized investment gains $ 157,275 $ 120,673 Change in Unrealized Appreciation/Depreciation of Investments - Recorded in Accumulated Other Comprehensive Income Year ended December 31, 2016 2015 2014 (Dollars in thousands) Fixed maturities - available for sale $ 89,222 $ (331,408 ) $ 336,051 Equity securities - available for sale (2,842 ) 118 3,729 Change in unrealized appreciation/depreciation of investments $ 86,380 $ (331,290 ) $ 339,780 The changes in net unrealized investment gains and losses are recorded net of deferred income taxes and other adjustments for assumed changes in deferred acquisition costs, value of insurance in force acquired, unearned revenue reserve and policyholder liabilities. Subsequent changes in the fair value of securities for which a previous non-credit OTTI loss was recognized in accumulated other comprehensive income are reported along with changes in fair value for which no OTTI losses were previously recognized. Fixed Maturity and Equity Securities with Unrealized Losses by Length of Time December 31, 2016 Less than one year One year or more Total Description of Securities Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Percent of Total (Dollars in thousands) Fixed maturities: Corporate $ 742,626 $ (23,142 ) $ 220,939 $ (26,801 ) $ 963,565 $ (49,943 ) 67.3 % Residential mortgage-backed 51,873 (1,014 ) 22,744 (1,917 ) 74,617 (2,931 ) 4.0 Commercial mortgage-backed 95,690 (3,590 ) 6,610 (547 ) 102,300 (4,137 ) 5.6 Other asset-backed 371,829 (5,810 ) 95,740 (3,956 ) 467,569 (9,766 ) 13.2 United States Government and agencies 6,438 (132 ) — — 6,438 (132 ) 0.2 State, municipal and other governments 150,052 (7,152 ) — — 150,052 (7,152 ) 9.7 Total fixed maturities $ 1,418,508 $ (40,840 ) $ 346,033 $ (33,221 ) $ 1,764,541 $ (74,061 ) 100.0 % Equity securities: Non-redeemable preferred stocks $ 12,774 $ (150 ) $ 13,438 $ (1,525 ) $ 26,212 $ (1,675 ) Total equity securities $ 12,774 $ (150 ) $ 13,438 $ (1,525 ) $ 26,212 $ (1,675 ) December 31, 2015 Less than one year One year or more Total Description of Securities Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Percent of Total (Dollars in thousands) Fixed maturities: Corporate $ 1,115,324 $ (96,062 ) $ 115,730 $ (41,782 ) $ 1,231,054 $ (137,844 ) 88.9 % Residential mortgage-backed 21,646 (725 ) 26,537 (4,618 ) 48,183 (5,343 ) 3.4 Commercial mortgage-backed 48,424 (1,947 ) 7,657 (540 ) 56,081 (2,487 ) 1.6 Other asset-backed 285,395 (3,323 ) 65,298 (3,801 ) 350,693 (7,124 ) 4.6 United States Government and agencies 4,807 (81 ) — — 4,807 (81 ) 0.1 State, municipal and other governments 77,980 (2,183 ) — — 77,980 (2,183 ) 1.4 Total fixed maturities $ 1,553,576 $ (104,321 ) $ 215,222 $ (50,741 ) $ 1,768,798 $ (155,062 ) 100.0 % Equity securities: Non-redeemable preferred stocks $ 21,280 $ (573 ) $ 4,400 $ (600 ) $ 25,680 $ (1,173 ) Common stocks 1,428 (41 ) — — $ 1,428 $ (41 ) Total equity securities $ 22,708 $ (614 ) $ 4,400 $ (600 ) $ 27,108 $ (1,214 ) Fixed maturities in the above tables include 516 securities from 404 issuers at December 31, 2016 and 542 securities from 435 issuers at December 31, 2015 . Unrealized losses decreased during 2016 primarily due to a decrease in overall spreads, offset slightly by an increase in treasury yields over the same period. We do not consider securities to be OTTI when the market decline is attributable to factors such as interest rate movements, market volatility, liquidity, spread widening and credit quality when recovery of all amounts due under the contractual terms of the security is anticipated. Based on our intent not to sell or our belief that we will not be required to sell these securities before recovery of their amortized cost basis, we do not consider these investments to be OTTI at December 31, 2016 . We will continue to monitor the investment portfolio for future changes in issuer facts and circumstances that could result in future impairments beyond those currently identified. Excluding mortgage- and asset-backed securities, our largest unrealized loss was from an oil field service provider and totaled $2.1 million at December 31, 2016 . With respect to mortgage- and asset-backed securities not backed by the United States Government, our largest aggregate unrealized loss from the same issuer at December 31, 2016 was $1.2 million , consisting of two different securities that are backed by different pools of Alt-A residential mortgage loans. Both securities are rated non-investment grade and the largest unrealized loss totaled $0.7 million . Mortgage Loans Our mortgage loan portfolio consists of commercial mortgage loans that we have originated. Our lending policies require that the loans be collateralized by the value of the related property, establish limits on the amount that can be loaned to one borrower and require diversification by geographic location and collateral type. We originate loans with an initial loan-to-value ratio that provides sufficient collateral to absorb losses should we be required to foreclose and take possession of the collateral. In order to identify impairment losses, management maintains and regularly reviews a watch list of mortgage loans that have heightened risk. These loans may include those with borrowers delinquent on contractual payments, borrowers experiencing financial difficulty, increases in rental real estate vacancies and significant declines in collateral value. We evaluate each of our mortgage loans individually and establish an estimated loss, if needed, for each impaired loan identified. An estimated loss is needed for loans for which we do not believe we will collect all amounts due according to the contractual terms of the respective loan agreements. Any loan delinquent on contractual payments is considered non-performing. At December 31, 2016 and December 31, 2015 , there were no non-performing loans over 90 days past due on contractual payments. At December 31, 2016 , we had committed to provide additional funding for mortgage loans totaling $50.0 million . These commitments arose in the normal course of business at terms that are comparable to similar investments. Mortgage Loans by Collateral Type December 31, 2016 December 31, 2015 Collateral Type Carrying Value Percent of Total Carrying Value Percent of Total (Dollars in thousands) Office $ 361,088 44.2 % $ 333,400 44.8 % Retail 240,602 29.5 227,039 30.5 Industrial 154,005 18.9 133,085 17.9 Other 60,776 7.4 50,779 6.8 Total $ 816,471 100.0 % $ 744,303 100.0 % Mortgage Loans by Geographic Location within the United States December 31, 2016 December 31, 2015 Region of the United States Carrying Value Percent of Total Carrying Value Percent of Total (Dollars in thousands) South Atlantic $ 266,019 32.6 % $ 233,522 31.4 % West North Central 105,753 12.9 102,555 13.8 Pacific 104,337 12.8 100,188 13.4 East North Central 91,550 11.2 86,019 11.5 Mountain 79,707 9.8 78,750 10.6 West South Central 74,258 9.1 66,677 9.0 Other 94,847 11.6 76,592 10.3 Total $ 816,471 100.0 % $ 744,303 100.0 % Mortgage Loans by Loan-to-Value Ratio December 31, 2016 December 31, 2015 Loan-to-Value Ratio Carrying Value Percent of Total Carrying Value Percent of Total (Dollars in thousands) 0% - 50% $ 274,953 33.7 % $ 264,605 35.6 % 50% - 60% 210,555 25.8 169,045 22.7 60% - 70% 233,216 28.5 234,544 31.5 70% - 80% 67,607 8.3 67,072 9.0 80% - 90% 30,140 3.7 9,037 1.2 Total $ 816,471 100.0 % $ 744,303 100.0 % The loan-to-value ratio is determined using the most recent appraised value. Appraisals are updated periodically when there is indication of a possible significant collateral decline or there are loan modifications or refinance requests. Mortgage Loans by Year of Origination December 31, 2016 December 31, 2015 Carrying Value Percent of Total Carrying Value Percent of Total (Dollars in thousands) 2016 $ 158,817 19.4 % $ — — % 2015 149,302 18.3 154,582 20.9 2014 80,771 9.9 83,546 11.2 2013 69,887 8.6 79,879 10.7 2012 59,983 7.3 65,817 8.8 2011 and prior 297,711 36.5 360,479 48.4 Total $ 816,471 100.0 % $ 744,303 100.0 % Impaired Mortgage Loans December 31, 2016 2015 (Dollars in thousands) Unpaid principal balance $ 21,459 $ 21,766 Less: Related allowance (713 ) (851 ) Discount — (87 ) Carrying value of impaired mortgage loans $ 20,746 $ 20,828 Allowance on Mortgage Loans Year ended December 31, 2016 2015 (Dollars in thousands) Balance at beginning of period $ 851 $ 857 Charge offs (138 ) (6 ) Balance at end of period $ 713 $ 851 Mortgage Loan Modifications Our commercial mortgage loan portfolio includes loans that have been modified. We assess loan modifications on a loan-by-loan basis to evaluate whether a troubled-debt restructuring has occurred. Generally, the types of concessions include: reduction of the contractual interest rate to a below-market rate, extension of the maturity date and/or a reduction of accrued interest. The amount, timing and extent of the concession granted is considered in determining if an impairment loss is needed for the restructuring. There were no loan modifications during 2016 or 2015 . Components of Net Investment Income Year ended December 31, 2016 2015 2014 (Dollars in thousands) Fixed maturities - available for sale $ 342,657 $ 338,952 $ 333,759 Equity securities - available for sale 6,558 6,091 5,388 Mortgage loans 38,098 35,923 32,759 Real estate — 169 140 Policy loans 8,956 8,871 8,620 Short-term investments, cash and cash equivalents 365 141 — Derivative income (loss) 3,935 (2,266 ) 2,496 Prepayment fee income and other 10,992 11,555 6,959 411,561 399,436 390,121 Less investment expenses (7,391 ) (8,287 ) (8,039 ) Net investment income $ 404,170 $ 391,149 $ 382,082 Realized Gains (Losses) - Recorded in Income Year ended December 31, 2016 2015 2014 (Dollars in thousands) Realized gains (losses) on sales of investments Fixed maturities: Gross gains $ 9,793 $ 4,781 $ 4,593 Gross losses (8,523 ) (1,952 ) (833 ) Equity securities 529 — — Mortgage loans 817 — — Short-term investments, cash and cash equivalents (1 ) — — Other 491 8,233 — 3,106 11,062 3,760 Impairment losses recognized in earnings: Credit-related portion of fixed maturity losses (1) (4,767 ) (363 ) — Other credit-related (2) (102 ) (210 ) (822 ) Realized gains (losses) on investments recorded in income $ (1,763 ) $ 10,489 $ 2,938 (1) Amount represents the credit-related losses recognized for fixed maturities that were impaired through income but not written down to fair value. As discussed above, the non-credit portion of the losses have been recognized in other comprehensive income (loss). (2) Amount represents credit-related losses for other investments, real estate and fixed maturities written down to fair value through income. Proceeds from sales of fixed maturities were $109.5 million in 2016 , $108.5 million in 2015 and $67.2 million in 2014 . Realized losses on sales were on securities that we did not intend to sell at the prior balance sheet date or on securities that were impaired in a prior period, but decreased in value and were sold during the current reporting period. Credit Loss Component of Other-Than-Temporary Impairments on Fixed Maturities The following table sets forth the amount of credit loss impairments on fixed maturities held by the Company as of the dates indicated for which the non-credit portion of the OTTI was recognized in other comprehensive income (loss) and corresponding changes in such amounts. Year ended December 31, 2016 2015 (Dollars in thousands) Balance at beginning of period $ (11,498 ) $ (16,772 ) Increases for newly impaired investments (2,595 ) — Increases to previously impaired investments (2,172 ) (363 ) Reductions due to investments sold 1,765 5,637 Balance at end of period $ (14,500 ) $ (11,498 ) Variable Interest Entities We evaluate our variable interest entity (VIE) investees to determine whether the level of our direct ownership interest, our rights to manage operations or our obligation to provide ongoing financial support are such that we are the primary beneficiary of the entity, and would therefore be required to consolidate it for financial reporting purposes. After determining that VIE status exists, we review our involvement in the VIE to determine whether we have both the power to direct activities that most significantly impact the economic performance of the VIE, and the obligation to absorb losses or the rights to receive benefits that could be potentially significant to the VIE. This analysis includes a review of the purpose and design of the VIE, as well as the role that we played in the formation of the entity and how that role could impact our ability to control the VIE. We also review the activities and decisions considered significant to the economic performance of the VIE and assess what power we have in directing those activities and decisions. Finally, we review the agreements in place to determine if there are any guarantees that would affect our maximum exposure to loss. We have reviewed the circumstances surrounding our investments in VIEs, which are classified as securities and indebtedness of related parties, and consist of LIHTC, limited partnerships or limited liability companies accounted for under the equity method. In addition, we have reviewed the ownership interests in our VIEs and determined that we do not hold direct majority ownership or have other contractual rights (such as kick out rights) that give us effective control over these entities resulting in us having both the power to direct activities that most significantly impact the economic performance of the VIE and the obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. The maximum loss exposure relative to our VIEs is limited to the carrying value and any unfunded commitments that exist for each particular VIE. Based on this analysis, none of our VIEs were required to be consolidated at December 31, 2016 or December 31, 2015. There were no circumstances that occurred during 2016 or 2015 that resulted in any changes in our decision not to consolidate any of our VIEs. We also have not provided additional support or other guarantees that was not previously contractually required (financial or otherwise) to any of the VIEs as of December 31, 2016 or December 31, 2015. VIE Investments by Category December 31, 2016 December 31, 2015 Carrying Value Maximum Exposure to Loss Carrying Value (1) Maximum Exposure to Loss (1) (Dollars in thousands) LIHTC $ 91,255 $ 95,058 $ 94,170 $ 102,626 Investment companies 23,379 45,569 20,004 35,604 Real estate limited partnerships 10,790 14,558 9,554 15,610 Other 429 2,034 637 2,448 Total $ 125,853 $ 157,219 $ 124,365 $ 156,288 (1) Prior year values have been updated for comparability with the amounts as presented under the new accounting guidance discussed in Note 1. In addition, we make passive investments in the normal course of business in structured securities issued by VIEs for which we are not the investment manager. These structured securities include all of the residential mortgage-backed securities, commercial mortgage-backed securities and other asset-backed securities included in our fixed maturities. Our maximum exposure to loss on these securities is limited to our carrying value in the investment. We have determined that we are not the primary beneficiary of these structured securities because we do not have the power to direct the activities that most significantly impact the entities' economic performance. Derivative Instruments Our primary derivative exposure relates to purchased call options, which provide an economic hedge to the embedded derivatives in our indexed annuity and universal life insurance products. We also have embedded derivatives within our modified coinsurance agreements as well as an interest-only fixed maturity investment. We do not apply hedge accounting to any of our derivative positions, and they are held at fair value. Derivatives Instruments by Type December 31, 2016 December 31, 2015 (Dollars in thousands) Assets Freestanding derivatives: Call options (reported in other investments) $ 9,360 $ 2,331 Embedded derivatives: Modified coinsurance (reported in reinsurance recoverable) 3,411 2,636 Interest-only security (reported in fixed maturities) 3,374 4,551 Total assets $ 16,145 $ 9,518 Liabilities Embedded derivatives: Indexed annuity and universal life products (reported in liability for future policy benefits) $ 15,778 $ 9,374 Modified coinsurance agreements (reported in other liabilities) 114 56 Total liabilities $ 15,892 $ 9,430 Derivative Income (Loss) Year ended December 31, 2016 2015 2014 (Dollars in thousands) Change in fair value of free standing derivatives: Call options $ 5,603 $ (1,904 ) $ 1,559 Change in fair value of embedded derivatives: Modified coinsurance agreements 716 (809 ) 711 Interest-only security 229 23 — Indexed annuity and universal life products (2,390 ) 2,577 (432 ) Call option amortization (5,601 ) (3,122 ) (1,535 ) Call option proceeds 2,988 3,546 1,761 Total income from derivatives $ 1,545 $ 311 $ 2,064 Derivative income (loss) is reported in net investment income except for the change in fair value of the embedded derivatives on our indexed annuity and universal life products, which is reported in interest sensitive product benefits. The call options are supported by securities collateral received of $6.3 million at December 31, 2016 , which is held in a separate custodial account. Subject to certain constraints, we are permitted to sell or re-pledge this collateral, but do not have legal rights to the collateral; accordingly, it has not been recorded on our balance sheet. At December 31, 2016 , none of the collateral had been sold or re-pledged. All of our counterparties are rated A- or better by a nationally recognized statistical rating organization. Low Income Housing Tax Credit Investments We invest in non-guaranteed federal LIHTC, which are included in securities and indebtedness of related parties in the balance sheet. The carrying value of these investments totaled $91.3 million at December 31, 2016 and $94.2 million at December 31, 2015 . There were no impairment losses recorded on these investments during 2016 , 2015 or 2014 . We use the equity method of accounting for these investments and recorded the following in our consolidated statement of operations. LIHTC Equity Income (Loss), Net of Related Income Taxes Year ended December 31, 2016 2015 2014 (Dollars in thousands) Equity losses from LIHTC $ (7,547 ) $ (7,022 ) $ (6,411 ) Income tax benefits: Tax benefits from equity losses 2,641 2,458 2,244 Investment tax credits 14,077 13,542 12,209 Equity income from LIHTC, net of related income benefits $ 9,171 $ 8,978 $ 8,042 At December 31, 2016 , we had committed to provide additional funds for limited partnerships and limited liability companies in which we invest. The amounts of these unfunded commitments totaled $31.4 million , including $3.8 million for commitments to LIHTC, which are summarized by year in the following table. Commitments to LIHTC by Year December 31, 2016 (Dollars in thousands) 2017 $ 2,898 2018 590 2019 - 2024 315 Total $ 3,803 Other At December 31, 2016 , affidavits of deposits covering investments with a carrying value totaling $7,561.9 million were on deposit with state agencies to meet regulatory requirements. Fixed maturities with a carrying value of $496.8 million were on deposit with the Federal Home Loan Bank of Des Moines (FHLB) as collateral for funding agreements. The carrying value of investments which have been non-income producing for the twelve months preceding December 31, 2016 includes real estate totaling $2.0 million . No investment in any entity or its affiliates (other than bonds issued by agencies of the United States Government) exceeded 10.0% of stockholders' equity at December 31, 2016 . |