Investment in Securities | Note 4 – Investment in Securities The cost or amortized cost and fair value of investments in securities are shown below (in thousands): September 30, 2017 Cost or Amortized Cost Gross Unrealized Gains Gross Unrealized (Losses) Fair Value Fixed maturity securities, bonds held-to-maturity U.S. states and political subdivisions $ 271,297 $ 14,759 $ (22 ) $ 286,034 Foreign governments 4,023 657 — 4,680 Corporate debt securities 6,831,509 268,231 (15,252 ) 7,084,488 Residential mortgage-backed securities 232,678 11,504 (1,028 ) 243,154 Collateralized debt securities 925 50 — 975 Other debt securities 1,792 59 — 1,851 Total bonds held-to-maturity 7,342,224 295,260 (16,302 ) 7,621,182 Fixed maturity securities, bonds available-for-sale U.S. treasury and government 28,221 536 (41 ) 28,716 U.S. states and political subdivisions 892,998 32,890 (1,343 ) 924,545 Foreign governments 5,000 1,506 — 6,506 Corporate debt securities 4,868,920 200,900 (15,224 ) 5,054,596 Residential mortgage-backed securities 15,149 47 (173 ) 15,023 Collateralized debt securities 3,285 674 (4 ) 3,955 Other debt securities 11,625 440 (176 ) 11,889 Total bonds available-for-sale 5,825,198 236,993 (16,961 ) 6,045,230 Equity securities Common stock 745,018 940,944 (7,434 ) 1,678,528 Preferred stock 19,129 4,646 — 23,775 Total equity securities 764,147 945,590 (7,434 ) 1,702,303 Total investments in securities $ 13,931,569 $ 1,477,843 $ (40,697 ) $ 15,368,715 December 31, 2016 Cost or Amortized Cost Gross Unrealized Gains Gross Unrealized (Losses) Fair Value Fixed maturity securities, bonds held-to-maturity U.S. states and political subdivisions $ 301,994 $ 17,190 $ (102 ) $ 319,082 Foreign governments 4,057 659 — 4,716 Corporate debt securities 6,711,508 253,191 (38,721 ) 6,925,978 Residential mortgage-backed securities 229,758 14,112 (1,185 ) 242,685 Collateralized debt securities 1,290 64 — 1,354 Other debt securities 2,778 99 — 2,877 Total bonds held-to-maturity 7,251,385 285,315 (40,008 ) 7,496,692 Fixed maturity securities, bonds available-for-sale U.S. treasury and government 25,062 594 (16 ) 25,640 U.S. states and political subdivisions 945,431 21,170 (6,378 ) 960,223 Foreign governments 5,000 1,567 — 6,567 Corporate debt securities 4,666,096 145,716 (31,049 ) 4,780,763 Residential mortgage-backed securities 18,588 2,267 (342 ) 20,513 Collateralized debt securities 5,574 821 (3 ) 6,392 Other debt securities 3,233 — (55 ) 3,178 Total bonds available-for-sale 5,668,984 172,135 (37,843 ) 5,803,276 Equity securities Common stock 713,099 810,611 (5,195 ) 1,518,515 Preferred stock 19,334 3,889 (62 ) 23,161 Total equity securities 732,433 814,500 (5,257 ) 1,541,676 Total investments in securities $ 13,652,802 $ 1,271,950 $ (83,108 ) $ 14,841,644 The amortized cost and fair value, by contractual maturity, of fixed maturity securities are shown below (in thousands): September 30, 2017 Bonds Held-to-Maturity Bonds Available-for-Sale Amortized Cost Fair Value Amortized Cost Fair Value Due in one year or less $ 403,881 $ 410,402 $ 234,115 $ 237,826 Due after one year through five years 3,715,433 3,898,649 1,680,069 1,761,874 Due after five years through ten years 2,772,273 2,850,963 3,300,320 3,421,349 Due after ten years 444,787 456,149 610,694 624,181 Without single maturity date 5,850 5,019 — — Total $ 7,342,224 $ 7,621,182 $ 5,825,198 $ 6,045,230 Actual maturities differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Residential and commercial mortgage-backed securities, which are not due at a single maturity, have been allocated to their respective categories based on the year of final contractual maturity. Proceeds from sales of available-for-sale Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Proceeds from sales of available-for-sale $ 72,910 $ 36,950 $ 117,467 $ 79,681 Gross realized gains 31,397 12,990 46,385 21,574 Gross realized losses (4,837 ) (244 ) (4,983 ) (582 ) Gains and losses are determined using specific identification of the securities sold. During the nine months ended September 30, 2017, bonds with a carrying value of $25,266,000 transferred from held-to-maturity available-for-sale held-to-maturity available-for-sale. The components of the change in net unrealized gains (losses) on securities are shown below (in thousands): Nine months ended September 30, 2017 2016 Bonds available-for-sale $ 85,740 $ 268,148 Equity securities 128,913 55,529 Change in net unrealized gains on securities during the year 214,653 323,677 Adjustments for Deferred policy acquisition costs (11,551 ) (70,426 ) Participating policyholders’ interest (9,140 ) (13,472 ) Deferred federal income tax expense (67,600 ) (83,713 ) Change in net unrealized gains on securities, net of tax $ 126,362 $ 156,066 The gross unrealized losses and fair value of the investment securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are shown below (in thousands): September 30, 2017 Less than 12 months 12 Months or more Total Unrealized (Losses) Fair Value Unrealized (Losses) Fair Value Unrealized (Losses) Fair Value Fixed maturity securities, bonds held-to-maturity U.S. states and political subdivisions $ (22 ) $ 3,030 $ — $ — $ (22 ) $ 3,030 Corporate debt securities (6,134 ) 521,274 (9,118 ) 147,053 (15,252 ) 668,327 Residential mortgage-backed securities (527 ) 57,465 (501 ) 9,249 (1,028 ) 66,714 Total bonds held-to-maturity (6,683 ) 581,769 (9,619 ) 156,302 (16,302 ) 738,071 Fixed maturity securities, bonds available-for-sale U.S. treasury and government (41 ) 21,969 — — (41 ) 21,969 U.S. states and political subdivisions (366 ) 39,274 (977 ) 27,202 (1,343 ) 66,476 Corporate debt securities (4,267 ) 361,101 (10,957 ) 134,308 (15,224 ) 495,409 Residential mortgage-backed securities (46 ) 12,570 (127 ) 1,492 (173 ) 14,062 Collateralized debt securities — — (4 ) 127 (4 ) 127 Other Debt Securities (176 ) 9,472 — — (176 ) 9,472 Total bonds available-for-sale (4,896 ) 444,386 (12,065 ) 163,129 (16,961 ) 607,515 Equity securities Common stock (7,434 ) 64,921 — — (7,434 ) 64,921 Total equity securities (7,434 ) 64,921 — — (7,434 ) 64,921 Total $ (19,013 ) $ 1,091,076 $ (21,684 ) $ 319,431 $ (40,697 ) $ 1,410,507 December 31, 2016 Less than 12 months 12 Months or more Total Unrealized Fair Value Unrealized (Losses) Fair Value Unrealized (Losses) Fair Fixed maturity securities, bonds held-to-maturity U.S. states and political subdivisions $ (102 ) $ 18,886 $ — $ — $ (102 ) $ 18,886 Corporate debt securities (18,110 ) 971,361 (20,611 ) 186,262 (38,721 ) 1,157,623 Residential mortgage-backed securities (558 ) 22,806 (627 ) 10,248 (1,185 ) 33,054 Total bonds held-to-maturity (18,770 ) 1,013,053 (21,238 ) 196,510 (40,008 ) 1,209,563 Fixed maturity securities, bonds available-for-sale U.S. treasury and government (16 ) 10,640 — — (16 ) 10,640 U.S. states and political subdivisions (6,376 ) 282,141 (2 ) 122 (6,378 ) 282,263 Corporate debt securities (19,828 ) 917,215 (11,221 ) 126,584 (31,049 ) 1,043,799 Residential mortgage-backed securities (204 ) 12,420 (138 ) 3,982 (342 ) 16,402 Collateralized debt securities — 1 (3 ) 146 (3 ) 147 Other Debt Securities (55 ) 3,178 — — (55 ) 3,178 Total bonds available-for-sale (26,479 ) 1,225,595 (11,364 ) 130,834 (37,843 ) 1,356,429 Equity securities Common stock (5,195 ) 53,068 — — (5,195 ) 53,068 Preferred stock (62 ) 4,324 — — (62 ) 4,324 Total equity securities (5,257 ) 57,392 — — (5,257 ) 57,392 Total $ (50,506 ) $ 2,296,040 $ (32,602 ) $ 327,344 $ (83,108 ) $ 2,623,384 As of September 30, 2017, the securities with unrealized losses including those exceeding one year were not deemed to be other-than-temporarily impaired. American National has the ability and intent to hold those securities until a market price recovery or maturity. It is not more-likely-than-not The following table identifies the total bonds distributed by credit quality rating (in thousands, except percentages): September 30, 2017 December 31, 2016 Amortized Estimated % of Fair Amortized Estimated % of Fair Cost Fair Value Value Cost Fair Value Value AAA $ 633,694 $ 662,865 4.9 % $ 667,561 $ 691,296 5.2 % AA 1,302,818 1,357,106 9.9 1,393,137 1,440,667 10.8 A 4,643,929 4,822,438 35.3 4,538,471 4,696,909 35.3 BBB 6,095,264 6,343,348 46.4 5,758,560 5,931,112 44.6 BB and below 491,717 480,655 3.5 562,640 539,984 4.1 Total $ 13,167,422 $ 13,666,412 100.0 % $ 12,920,369 $ 13,299,968 100.0 % Equity securities by market sector distribution are shown below: September 30, 2017 December 31, 2016 Consumer goods 19.6 % 20.4 % Energy and utilities 8.9 11.1 Finance 21.9 22.1 Healthcare 13.1 12.7 Industrials 9.5 9.0 Information technology 19.1 17.1 Other 7.9 7.6 Total 100.0 % 100.0 % |