Debt and Equity Securities | NOTE 3. Debt and Equity Securities: Investments in debt securities, classified as available-for-sale, are as follows: Amortized Gross unrealized Estimated (in thousands) gains losses December 31, 2016 U.S. Treasury bonds $ 155,441 $ 416 $ (4,466 ) $ 151,391 Municipal bonds 1,004,659 6,340 (26,666 ) 984,333 Foreign government bonds 141,887 600 (2,439 ) 140,048 Governmental agency bonds 197,343 691 (4,166 ) 193,868 Governmental agency mortgage-backed securities 2,187,482 2,983 (26,792 ) 2,163,673 U.S. corporate debt securities 675,683 8,282 (5,441 ) 678,524 Foreign corporate debt securities 240,526 2,490 (1,490 ) 241,526 $ 4,603,021 $ 21,802 $ (71,460 ) $ 4,553,363 December 31, 2015 U.S. Treasury bonds $ 130,252 $ 421 $ (1,301 ) $ 129,372 Municipal bonds 692,000 12,640 (845 ) 703,795 Foreign government bonds 129,984 1,132 (1,015 ) 130,101 Governmental agency bonds 419,869 1,023 (2,801 ) 418,091 Governmental agency mortgage-backed securities 2,065,728 4,984 (15,039 ) 2,055,673 U.S. corporate debt securities 642,869 4,297 (12,483 ) 634,683 Foreign corporate debt securities 210,162 1,248 (3,778 ) 207,632 $ 4,290,864 $ 25,745 $ (37,262 ) $ 4,279,347 Investments in equity securities, classified as available-for-sale, are as follows: Cost Gross unrealized Estimated (in thousands) gains losses December 31, 2016 Preferred stocks $ 18,926 $ — $ (3,344 ) $ 15,582 Common stocks 367,169 26,034 (4,700 ) 388,503 $ 386,095 $ 26,034 $ (8,044 ) $ 404,085 December 31, 2015 Preferred stocks $ 18,305 $ 420 $ (3,258 ) $ 15,467 Common stocks 307,429 13,103 (14,714 ) 305,818 $ 325,734 $ 13,523 $ (17,972 ) $ 321,285 Sales of debt and equity securities resulted in realized gains of $30.7 million, $8.7 million and $34.1 million and realized losses of $9.7 million, $10.0 million and $9.1 million for the years ended December 31, 2016, 2015 and 2014, respectively. Gross unrealized losses on investments in debt and equity securities are as follows: Less than 12 months 12 months or longer Total (in thousands) Estimated Unrealized Estimated Unrealized Estimated Unrealized December 31, 2016 Debt securities: U.S. Treasury bonds $ 111,748 $ (4,466 ) $ — $ — $ 111,748 $ (4,466 ) Municipal bonds 635,531 (26,317 ) 16,485 (349 ) 652,016 (26,666 ) Foreign government bonds 63,044 (2,371 ) 324 (68 ) 63,368 (2,439 ) Governmental agency bonds 148,112 (4,166 ) — — 148,112 (4,166 ) Governmental agency mortgage-backed securities 1,295,790 (19,097 ) 432,349 (7,695 ) 1,728,139 (26,792 ) U.S. corporate debt securities 193,533 (4,560 ) 24,499 (881 ) 218,032 (5,441 ) Foreign corporate debt securities 78,658 (1,150 ) 8,154 (340 ) 86,812 (1,490 ) Total debt securities 2,526,416 (62,127 ) 481,811 (9,333 ) 3,008,227 (71,460 ) Equity securities 70,261 (1,173 ) 59,019 (6,871 ) 129,280 (8,044 ) Total $ 2,596,677 $ (63,300 ) $ 540,830 $ (16,204 ) $ 3,137,507 $ (79,504 ) December 31, 2015 Debt securities: U.S. Treasury bonds $ 105,701 $ (1,285 ) $ 1,654 $ (16 ) $ 107,355 $ (1,301 ) Municipal bonds 133,465 (733 ) 13,190 (112 ) 146,655 (845 ) Foreign government bonds 13,601 (890 ) 267 (125 ) 13,868 (1,015 ) Governmental agency bonds 191,035 (2,497 ) 18,237 (304 ) 209,272 (2,801 ) Governmental agency mortgage-backed securities 1,096,301 (9,424 ) 213,020 (5,615 ) 1,309,321 (15,039 ) U.S. corporate debt securities 361,842 (11,272 ) 13,511 (1,211 ) 375,353 (12,483 ) Foreign corporate debt securities 102,801 (2,725 ) 11,246 (1,053 ) 114,047 (3,778 ) Total debt securities 2,004,746 (28,826 ) 271,125 (8,436 ) 2,275,871 (37,262 ) Equity securities 191,248 (12,068 ) 31,974 (5,904 ) 223,222 (17,972 ) Total $ 2,195,994 $ (40,894 ) $ 303,099 $ (14,340 ) $ 2,499,093 $ (55,234 ) Investments in debt securities at December 31, 2016, by contractual maturities, are as follows: (in thousands) Due in one Due after Due after Due after Total U.S. Treasury bonds Amortized cost $ 47,371 $ 49,652 $ 25,047 $ 33,371 $ 155,441 Estimated fair value $ 47,366 $ 49,546 $ 24,522 $ 29,957 $ 151,391 Municipal bonds Amortized cost $ 53,718 $ 331,982 $ 236,718 $ 382,241 $ 1,004,659 Estimated fair value $ 53,763 $ 332,175 $ 234,041 $ 364,354 $ 984,333 Foreign government bonds Amortized cost $ 16,052 $ 91,789 $ 14,317 $ 19,729 $ 141,887 Estimated fair value $ 16,194 $ 91,973 $ 14,223 $ 17,658 $ 140,048 Governmental agency bonds Amortized cost $ 10,268 $ 94,031 $ 54,508 $ 38,536 $ 197,343 Estimated fair value $ 10,266 $ 92,876 $ 53,652 $ 37,074 $ 193,868 U.S. corporate debt securities Amortized cost $ 22,420 $ 303,025 $ 285,155 $ 65,083 $ 675,683 Estimated fair value $ 22,457 $ 306,154 $ 285,604 $ 64,309 $ 678,524 Foreign corporate debt securities Amortized cost $ 11,221 $ 111,626 $ 108,070 $ 9,609 $ 240,526 Estimated fair value $ 11,258 $ 112,162 $ 108,061 $ 10,045 $ 241,526 Total debt securities excluding mortgage-backed securities Amortized cost $ 161,050 $ 982,105 $ 723,815 $ 548,569 $ 2,415,539 Estimated fair value $ 161,304 $ 984,886 $ 720,103 $ 523,397 $ 2,389,690 Total mortgage-backed securities Amortized cost $ 2,187,482 Estimated fair value $ 2,163,673 Total debt securities Amortized cost $ 4,603,021 Estimated fair value $ 4,553,363 Mortgage-backed securities, which include contractual terms to maturity, are not categorized by contractual maturity because borrowers may have the right to call or prepay obligations with, or without, call or prepayment penalties. The composition of the investment portfolio at December 31, 2016, by credit rating, is as follows: A- Ratings or higher BBB+ to BBB- Ratings Non-Investment Grade Total (in thousands, except percentages) Estimated fair value Percentage Estimated fair value Percentage Estimated fair value Percentage Estimated fair value Percentage December 31, 2016 Debt securities: U.S. Treasury bonds $ 151,391 100.0 $ — — $ — — $ 151,391 100.0 Municipal bonds 912,711 92.7 57,483 5.8 14,139 1.5 984,333 100.0 Foreign government bonds 119,151 85.1 18,782 13.4 2,115 1.5 140,048 100.0 Governmental agency bonds 193,868 100.0 — — — — 193,868 100.0 Governmental agency mortgage-backed securities 2,163,673 100.0 — — — — 2,163,673 100.0 U.S. corporate debt securities 240,188 35.4 215,731 31.8 222,605 32.8 678,524 100.0 Foreign corporate debt 114,125 47.2 86,605 35.9 40,796 16.9 241,526 100.0 Total debt securities 3,895,107 85.6 378,601 8.3 279,655 6.1 4,553,363 100.0 Preferred stocks — — 9,203 59.1 6,379 40.9 15,582 100.0 Total $ 3,895,107 85.2 $ 387,804 8.5 $ 286,034 6.3 $ 4,568,945 100.0 As of December 31, 2016, the estimated fair value of total debt securities included $149.9 million of bank loans, of which $138.7 million was non-investment grade; $118.0 million of high yield corporate debt securities, all of which was non-investment grade; and $60.9 million of emerging market debt securities, of which $8.8 million was non-investment grade. The composition of the investment portfolio in an unrealized loss position at December 31, 2016, by credit rating, is as follows: A- Ratings or higher BBB+ to BBB- Ratings Non-Investment Grade Total (in thousands, except percentages) Estimated fair value Percentage Estimated fair value Percentage Estimated fair value Percentage Estimated fair value Percentage December 31, 2016 Debt securities: U.S. Treasury bonds $ 111,748 100.0 $ — — $ — — $ 111,748 100.0 Municipal bonds 609,018 93.4 37,388 5.7 5,610 0.9 652,016 100.0 Foreign government bonds 43,123 68.0 18,290 28.9 1,955 3.1 63,368 100.0 Governmental agency bonds 148,112 100.0 — — — — 148,112 100.0 Governmental agency mortgage-backed securities 1,728,139 100.0 — — — — 1,728,139 100.0 U.S. corporate debt securities 79,166 36.3 95,320 43.7 43,546 20.0 218,032 100.0 Foreign corporate debt 36,787 42.4 38,209 44.0 11,816 13.6 86,812 100.0 Total debt securities 2,756,093 91.6 189,207 6.3 62,927 2.1 3,008,227 100.0 Preferred stocks — — 9,203 59.1 6,379 40.9 15,582 100.0 Total $ 2,756,093 91.1 $ 198,410 6.6 $ 69,306 2.3 $ 3,023,809 100.0 As of December 31, 2016, the estimated fair value of total debt securities in an unrealized loss position included $12.0 million of bank loans, all of which was non-investment grade; $39.2 million of high yield corporate debt securities, all of which was non-investment grade; and $38.0 million of emerging market debt securities, of which $6.1 million was non-investment grade. The credit ratings in the above tables reflect published ratings obtained from Standard & Poor’s Rating Services, DBRS, Inc., Fitch Ratings, Inc. and Moody’s Investor Services, Inc. If a security was rated differently among the rating agencies, the lowest rating was selected. Governmental agency mortgage-backed securities are not rated by any of the ratings agencies; however, these securities have been included in the above table in the “A- Ratings or higher” category because the payments of principal and interest are guaranteed by the governmental agency that issued the security. |