Investments | Investments (a) Our HTM fixed income securities as of September 30, 2019 represented less than 1% of our total invested assets, down slightly compared to December 31, 2018 . The carry value and net unrealized/unrecognized gains were $26.9 million and $ 1.5 million , respectively, at September 30, 2019 , and $37.1 million and $ 1.3 million , respectively, at December 31, 2018 . Included in the net unrealized/unrecognized gains were gross unrealized/unrecognized losses of less than $ 0.1 million at September 30, 2019 and $ 0.2 million at December 31, 2018 . Unrecognized holding gains and losses of HTM securities are not reflected in the Financial Statements, as they represent fair value fluctuations from the date a security is designated as HTM through the date of the balance sheet. (b) Information regarding our AFS securities as of September 30, 2019 and December 31, 2018 was as follows: September 30, 2019 ($ in thousands) Cost/ Amortized Cost Unrealized Gains Unrealized Losses Fair Value AFS fixed income securities: U.S. government and government agencies $ 116,555 4,357 (12 ) 120,900 Foreign government 20,947 573 — 21,520 Obligations of states and political subdivisions 1,127,709 62,910 (4 ) 1,190,615 Corporate securities 1,762,981 78,345 (2,399 ) 1,838,927 Collateralized loan obligations and other asset-backed securities ("CLO and other ABS") 764,038 8,998 (4,653 ) 768,383 Commercial mortgage-backed securities ("CMBS") 524,441 31,435 (145 ) 555,731 Residential mortgage-backed securities (“RMBS”) 1,389,985 44,710 (534 ) 1,434,161 Total AFS fixed income securities $ 5,706,656 231,328 (7,747 ) 5,930,237 December 31, 2018 ($ in thousands) Cost/ Amortized Cost Unrealized Gains Unrealized Losses Fair Value AFS fixed income securities: U.S. government and government agencies $ 120,092 1,810 (592 ) 121,310 Foreign government 23,202 36 (107 ) 23,131 Obligations of states and political subdivisions 1,121,615 19,485 (2,631 ) 1,138,469 Corporate securities 1,639,852 5,521 (27,965 ) 1,617,408 CLO and other ABS 720,193 4,112 (6,943 ) 717,362 CMBS 527,409 3,417 (3,748 ) 527,078 RMBS 1,118,435 12,988 (3,081 ) 1,128,342 Total AFS fixed income securities $ 5,270,798 47,369 (45,067 ) 5,273,100 Unrealized gains and losses of AFS securities represent fair value fluctuations from the later of: (i) the date a security is designated as AFS; or (ii) the date that an other-than-temporary impairment ("OTTI") charge is recognized on an AFS security, through the date of the balance sheet. These unrealized gains and losses are recorded in AOCI on the Consolidated Balance Sheets. (c) The severity of impairment on AFS securities in an unrealized/unrecognized loss position averaged approximately 1% of amortized cost at September 30, 2019 and approximately 2% at December 31, 2018 . Quantitative information regarding these losses is provided below. September 30, 2019 Less than 12 months 12 months or longer Total ($ in thousands) Fair Value Unrealized Losses 1 Fair Value Unrealized Losses 1 Fair Value Unrealized 1 AFS fixed income securities: U.S. government and government agencies $ 5,014 (11 ) 498 (1 ) 5,512 (12 ) Obligations of states and political subdivisions 437 (4 ) — — 437 (4 ) Corporate securities 89,919 (1,862 ) 15,867 (537 ) 105,786 (2,399 ) CLO and other ABS 176,999 (2,458 ) 180,898 (2,195 ) 357,897 (4,653 ) CMBS 59,857 (126 ) 7,665 (19 ) 67,522 (145 ) RMBS 84,408 (503 ) 9,513 (31 ) 93,921 (534 ) Total AFS fixed income securities $ 416,634 (4,964 ) 214,441 (2,783 ) 631,075 (7,747 ) December 31, 2018 Less than 12 months 12 months or longer Total ($ in thousands) Fair Value Unrealized Losses 1 Fair Value Unrealized Losses 1 Fair Value Unrealized 1 AFS fixed income securities: U.S. government and government agencies $ 6,693 (174 ) 23,163 (418 ) 29,856 (592 ) Foreign government 12,208 (93 ) 1,482 (14 ) 13,690 (107 ) Obligations of states and political subdivisions 196,798 (2,074 ) 42,821 (557 ) 239,619 (2,631 ) Corporate securities 1,041,952 (23,649 ) 78,953 (4,316 ) 1,120,905 (27,965 ) CLO and other ABS 516,106 (6,750 ) 16,800 (193 ) 532,906 (6,943 ) CMBS 229,338 (2,548 ) 66,294 (1,200 ) 295,632 (3,748 ) RMBS 139,338 (1,660 ) 45,661 (1,421 ) 184,999 (3,081 ) Total AFS fixed income securities $ 2,142,433 (36,948 ) 275,174 (8,119 ) 2,417,607 (45,067 ) 1 Gross unrealized losses include non-OTTI unrealized amounts and OTTI losses recognized in AOCI. The $37.3 million decrease in the unrealized loss position reflected: (i) lower interest rates, with an 87-basis point decrease in 2-year U.S. Treasury Note yields and a 102-basis point decrease in 10-year U.S. Treasury Note yields during Nine Months 2019; and (ii) tightening option adjusted corporate credit spreads, with a 38-basis point decrease in the Bloomberg Barclays U.S. Aggregate Corporate Bond Index during Nine Months 2019. We do not currently intend to sell any of the securities in the tables above, nor will we be required to sell any of these securities. Considering these factors, and in accordance with our review of these securities under our OTTI policy, as described in Note 2. “Summary of Significant Accounting Policies” within Item 8. “Financial Statements and Supplementary Data.” of our 2018 Annual Report, we have concluded that they are temporarily impaired as we believe: (i) they will mature at par value; (ii) they have not incurred a credit impairment; and (iii) future values of these securities will fluctuate with changes in interest rates. This conclusion reflects our current judgment as to the financial position and future prospects of the entity that issued the investment security and underlying collateral. (d) Fixed income securities at September 30, 2019 , by contractual maturity, are shown below. Mortgage-backed securities are included in the maturity tables using the estimated average life of each security. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations, with or without call or prepayment penalties. Listed below are the contractual maturities of fixed income securities at September 30, 2019 : AFS HTM ($ in thousands) Fair Value Carrying Value Fair Value Due in one year or less $ 310,387 4,754 4,773 Due after one year through five years 3,296,126 16,334 17,589 Due after five years through 10 years 2,191,633 5,837 5,994 Due after 10 years 132,091 — — Total fixed income securities $ 5,930,237 26,925 28,356 (e) The following table summarizes our other investment portfolio by strategy: Other Investments September 30, 2019 December 31, 2018 ($ in thousands) Carrying Value Remaining Commitment Maximum Exposure to Loss 1 Carrying Value Remaining Commitment Maximum Exposure to Loss 1 Alternative Investments Private equity $ 105,922 97,552 203,474 84,352 93,688 178,040 Private credit 37,710 109,797 147,507 41,682 81,453 123,135 Real assets 21,828 22,534 44,362 27,862 27,129 54,991 Total alternative investments 165,460 229,883 395,343 153,896 202,270 356,166 Other securities 23,783 — 23,783 25,042 — 25,042 Total other investments $ 189,243 229,883 419,126 178,938 202,270 381,208 1 The maximum exposure to loss includes both the carry value of these investments and the related remaining commitments. In addition, tax credits that have been previously recognized in Other securities are subject to the risk of recapture, which we do not consider significant. We are contractually committed to make additional investments up to the remaining commitments outlined above; however, we do not have a future obligation to fund losses or debts on behalf of these investments. We have not provided any non-contractual financial support at any time during 2019 or 2018 . The following table sets forth gross summarized financial information for our other investments portfolio, including the portion not owned by us. The majority of these investments are carried under the equity method of accounting. The last line of the table below reflects our share of the aggregate income or loss, which is the portion included in our Financial Statements. As the majority of these investments report results to us on a one quarter lag, the summarized financial statement information for the three-month period ended June 30 is included in our Third Quarter results. This information is as follows: Income Statement Information Quarter ended September 30, Nine Months ended September 30, ($ in millions) 2019 2018 2019 2018 Net investment (loss) income $ (14.0 ) 11.9 10.1 (29.9 ) Realized gains 121.1 124.8 370.4 1,348.3 Net change in unrealized appreciation (depreciation) 1,739.4 1,434.3 4,517.4 695.8 Net income $ 1,846.5 1,571.0 4,897.9 2,014.2 Insurance subsidiaries’ alternative investments income $ 5.2 7.1 13.0 10.6 (f) We have pledged certain AFS fixed income securities as collateral related to our relationships with the Federal Home Loan Bank of Indianapolis ("FHLBI") and the Federal Home Loan Bank of New York ("FHLBNY"). In addition, certain securities were on deposit with various state and regulatory agencies at September 30, 2019 to comply with insurance laws. We retain all rights regarding all securities pledged as collateral. The following table summarizes the market value of these securities at September 30, 2019 : ($ in millions) FHLBI Collateral FHLBNY Collateral State and Regulatory Deposits Total U.S. government and government agencies $ — — 22.9 22.9 Obligations of states and political subdivisions — — 3.9 3.9 Corporate securities — — 0.3 0.3 CMBS 7.3 19.6 — 26.9 RMBS 57.4 81.1 — 138.5 Total pledged as collateral $ 64.7 100.7 27.1 192.5 (g) We did not have exposure to any credit concentration risk of a single issuer greater than 10% of our stockholders' equity, other than certain U.S. government-backed investments, as of September 30, 2019 or December 31, 2018 . (h) The components of pre-tax net investment income earned were as follows: Quarter ended September 30, Nine Months ended September 30, ($ in thousands) 2019 2018 2019 2018 Fixed income securities $ 50,749 45,088 150,689 130,903 Equity securities 1,885 2,079 5,265 5,876 Short-term investments 1,410 867 5,213 2,001 Other investments 5,267 7,211 13,421 10,868 Investment expenses (3,485 ) (2,802 ) (9,639 ) (8,421 ) Net investment income earned $ 55,826 52,443 164,949 141,227 (i) OTTI charges were $2.3 million and $1.4 million in Third Quarter 2019 and Third Quarter 2018 , respectively, and $ 3.4 million and $ 5.5 million in Nine Months 2019 and Nine Months 2018, respectively. All of these charges were related to securities for which we had the intent to sell. For a discussion of our evaluation for OTTI, refer to Note 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data." of our 2018 Annual Report. (j) Net realized and unrealized gains and losses (excluding OTTI charges) for Third Quarter 2019 and 2018 included the following: Quarter ended September 30, Nine Months ended September 30, ($ in thousands) 2019 2018 2019 2018 Net realized gains (losses) on the disposals of securities: Fixed income securities $ (1,141 ) (9,413 ) 2,063 (13,922 ) Equity securities 21,602 8,665 24,733 17,960 Short-term investments (36 ) 2 (21 ) 1 Other investments — (5 ) (23 ) (5 ) Net realized gains (losses) on the disposal of securities 20,425 (751 ) 26,752 4,034 OTTI charges (2,291 ) (1,426 ) (3,366 ) (5,459 ) Net realized gains (losses) 18,134 (2,177 ) 23,386 (1,425 ) Unrealized (losses) recognized in income on equity securities (20,317 ) (2,610 ) (8,091 ) (15,563 ) Total net realized and unrealized investment (losses) gains $ (2,183 ) (4,787 ) $ 15,295 (16,988 ) Unrealized (losses) recognized in income on equity securities, as reflected in the table above, include the following: Quarter ended September 30, Nine Months ended September 30, ($ in thousands) 2019 2018 2019 2018 Unrealized gains (losses) recognized in income on equity securities: On securities remaining in our portfolio at September 30, 2019 $ 1,109 5,476 1,805 4,199 On securities sold in each respective period (21,426 ) (8,086 ) (9,896 ) (19,762 ) Total unrealized (losses) recognized in income on equity securities $ (20,317 ) (2,610 ) $ (8,091 ) (15,563 ) The components of net realized gains on disposals of securities for the periods indicated were as follows: Quarter ended September 30, Nine Months ended September 30, ($ in thousands) 2019 2018 2019 2018 HTM fixed income securities Gains $ — — 1 2 Losses — — (15 ) — AFS fixed income securities Gains 1,078 462 5,565 5,056 Losses (2,219 ) (9,875 ) (3,488 ) (18,980 ) Equity securities Gains 21,630 10,584 24,868 20,209 Losses (28 ) (1,919 ) (135 ) (2,249 ) Short-term investments Gains 2 3 18 6 Losses (38 ) (1 ) (39 ) (5 ) Other investments Gains — — 7 — Losses — (5 ) (30 ) (5 ) Total net realized gains on disposals of securities $ 20,425 (751 ) 26,752 4,034 Realized gains and losses on the sale of investments are determined on the basis of the cost of the specific investments sold. Proceeds from the sales of AFS fixed income securities were $89.7 million and $444.4 million in Third Quarter 2019 and Third Quarter 2018 , respectively, and $ 461.8 million and $ 1,382.7 million in Nine Months 2019 and Nine Months 2018, respectively. Proceeds from the sales of equity securities were $95.2 million and $36.1 million in Third Quarter 2019 and Third Quarter 2018 , respectively, and $ 125.3 million and $ 79.7 million in Nine Months 2019 and Nine Months 2018, respectively. |