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, 2017 U.S. Treasury bonds $ 173,049 $ 2,199 $ (1,250 ) $ 173,998 Municipal bonds 1,031,146 12,185 (7,394 ) 1,035,937 Foreign government bonds 170,220 489 (1,221 ) 169,488 Governmental agency bonds 212,731 1,061 (2,322 ) 211,470 Governmental agency mortgage-backed securities 2,172,377 3,168 (16,588 ) 2,158,957 U.S. corporate debt securities 734,409 11,768 (2,962 ) 743,215 Foreign corporate debt securities 256,430 4,145 (956 ) 259,619 $ 4,750,362 $ 35,015 $ (32,693 ) $ 4,752,684 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 Investments in equity securities, classified as available-for-sale, are as follows: Cost Gross unrealized Estimated (in thousands) gains losses December 31, 2017 Preferred stocks $ 19,233 $ 320 $ (563 ) $ 18,990 Common stocks 394,439 54,090 (1,003 ) 447,526 $ 413,672 $ 54,410 $ (1,566 ) $ 466,516 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 Sales of debt and equity securities resulted in realized gains of $35.5 million, $30.7 million and $8.7 million and realized losses of $18.4 million, $9.7 million and $10.0 million for the years ended December 31, 2017, 2016 and 2015, 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, 2017 Debt securities: U.S. Treasury bonds $ 78,605 $ (511 ) $ 37,498 $ (739 ) $ 116,103 $ (1,250 ) Municipal bonds 279,292 (1,714 ) 226,895 (5,680 ) 506,187 (7,394 ) Foreign government bonds 98,942 (972 ) 6,678 (249 ) 105,620 (1,221 ) Governmental agency bonds 55,707 (409 ) 93,737 (1,913 ) 149,444 (2,322 ) Governmental agency mortgage-backed securities 671,871 (4,868 ) 774,959 (11,720 ) 1,446,830 (16,588 ) U.S. corporate debt securities 171,817 (1,568 ) 60,724 (1,394 ) 232,541 (2,962 ) Foreign corporate debt securities 81,525 (821 ) 5,697 (135 ) 87,222 (956 ) Total debt securities 1,437,759 (10,863 ) 1,206,188 (21,830 ) 2,643,947 (32,693 ) Equity securities 38,742 (1,041 ) 12,849 (525 ) 51,591 (1,566 ) Total $ 1,476,501 $ (11,904 ) $ 1,219,037 $ (22,355 ) $ 2,695,538 $ (34,259 ) 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 ) Based on the Company’s review of its investment securities in an unrealized loss position at December 31, 2017 and 2016, it determined that the losses were primarily the result of changes in interest rates, which were considered to be temporary, rather than a deterioration in credit quality. The Company does not intend to sell and it is not more likely than not that the Company will be required to sell these securities prior to recovering their amortized cost. As such, the Company does not consider these securities to be other-than-temporarily impaired at December 31, 2017 and 2016. Investments in debt securities at December 31, 2017, by contractual maturities, are as follows: (in thousands) Due in one Due after Due after Due after Total U.S. Treasury bonds Amortized cost $ 16,458 $ 65,124 $ 41,014 $ 50,453 $ 173,049 Estimated fair value $ 16,425 $ 64,550 $ 40,816 $ 52,207 $ 173,998 Municipal bonds Amortized cost $ 62,308 $ 301,477 $ 245,510 $ 421,851 $ 1,031,146 Estimated fair value $ 62,311 $ 302,404 $ 248,683 $ 422,539 $ 1,035,937 Foreign government bonds Amortized cost $ 13,494 $ 118,166 $ 21,783 $ 16,777 $ 170,220 Estimated fair value $ 13,506 $ 117,401 $ 21,963 $ 16,618 $ 169,488 Governmental agency bonds Amortized cost $ 30,209 $ 81,498 $ 57,941 $ 43,083 $ 212,731 Estimated fair value $ 30,075 $ 80,713 $ 57,661 $ 43,021 $ 211,470 U.S. corporate debt securities Amortized cost $ 23,264 $ 327,960 $ 308,785 $ 74,400 $ 734,409 Estimated fair value $ 23,323 $ 329,199 $ 311,998 $ 78,695 $ 743,215 Foreign corporate debt securities Amortized cost $ 16,790 $ 134,522 $ 92,459 $ 12,659 $ 256,430 Estimated fair value $ 16,827 $ 135,107 $ 94,252 $ 13,433 $ 259,619 Total debt securities excluding mortgage-backed securities Amortized cost $ 162,523 $ 1,028,747 $ 767,492 $ 619,223 $ 2,577,985 Estimated fair value $ 162,467 $ 1,029,374 $ 775,373 $ 626,513 $ 2,593,727 Total mortgage-backed securities Amortized cost $ 2,172,377 Estimated fair value $ 2,158,957 Total debt securities Amortized cost $ 4,750,362 Estimated fair value $ 4,752,684 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, 2017, by credit rating, is as follows: A- or higher BBB+ to BBB- 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, 2017 Debt securities: U.S. Treasury bonds $ 173,998 100.0 $ — — $ — — $ 173,998 100.0 Municipal bonds 964,855 93.2 54,255 5.2 16,827 1.6 1,035,937 100.0 Foreign government bonds 138,417 81.7 25,486 15.0 5,585 3.3 169,488 100.0 Governmental agency bonds 211,470 100.0 — — — — 211,470 100.0 Governmental agency mortgage-backed securities 2,158,957 100.0 — — — — 2,158,957 100.0 U.S. corporate debt securities 260,537 35.1 274,340 36.9 208,338 28.0 743,215 100.0 Foreign corporate debt 119,599 46.1 110,685 42.6 29,335 11.3 259,619 100.0 Total debt securities 4,027,833 84.7 464,766 9.8 260,085 5.5 4,752,684 100.0 Preferred stocks — — 13,900 73.2 5,090 26.8 18,990 100.0 Total $ 4,027,833 84.4 $ 478,666 10.0 $ 265,175 5.6 $ 4,771,674 100.0 As of December 31, 2017, the estimated fair value of total debt securities included $142.9 million of bank loans, of which $130.7 million were non-investment grade; $103.5 million of high yield corporate debt securities, all of which were non-investment grade; and $81.0 million of emerging market debt securities, of which $9.1 million were non-investment grade. The composition of the investment portfolio in an unrealized loss position at December 31, 2017, by credit rating, is as follows: A- or higher BBB+ to BBB- 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, 2017 Debt securities: U.S. Treasury bonds $ 116,103 100.0 $ — — $ — — $ 116,103 100.0 Municipal bonds 491,801 97.1 12,075 2.4 2,311 0.5 506,187 100.0 Foreign government bonds 90,829 86.0 12,393 11.7 2,398 2.3 105,620 100.0 Governmental agency bonds 149,444 100.0 — — — — 149,444 100.0 Governmental agency mortgage-backed securities 1,446,830 100.0 — — — — 1,446,830 100.0 U.S. corporate debt securities 75,173 32.3 115,951 49.9 41,417 17.8 232,541 100.0 Foreign corporate debt 40,063 46.0 40,688 46.6 6,471 7.4 87,222 100.0 Total debt securities 2,410,243 91.1 181,107 6.8 52,597 2.1 2,643,947 100.0 Preferred stocks — — 7,208 63.1 4,219 36.9 11,427 100.0 Total $ 2,410,243 90.8 $ 188,315 7.1 $ 56,816 2.1 $ 2,655,374 100.0 As of December 31, 2017, the estimated fair value of total debt securities in an unrealized loss position included $25.9 million of bank loans, of which $25.2 million were non-investment grade; $22.6 million of high yield corporate debt securities, all of which were non-investment grade; and $23.1 million of emerging market debt securities, of which $2.5 million were non-investment grade. The credit ratings in the above tables reflect published ratings obtained from globally recognized securities rating agencies. 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- or higher” category because the payments of principal and interest are guaranteed by the governmental agency that issued the security. |