| Investments |
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|
|
(a)
|
Fixed-Maturity Securities
|
At
December 31,
2017 and 2016, the amortized cost, gross
unrealized gains, gross unrealized losses, and fair values of
available-for-sale securities are as shown in
the following tables:
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|
|
|
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|
|
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|
|
|
|
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Amortized
cost
|
|
Gross
unrealized gains
|
|
Gross
unrealized losses
|
|
Fair
value
|
|
2017:
|
|
|
|
|
|
|
|
|
Fixed-maturity
securities, available-for-sale:
|
|
|
|
|
|
|
|
|
U.S.
government
|
$
|
77,857
|
|
|
253
|
|
|
450
|
|
|
77,660
|
|
|
States and political
subdivisions
|
10,502
|
|
|
503
|
|
|
—
|
|
|
11,005
|
|
|
Foreign
government
|
2,984
|
|
|
—
|
|
|
51
|
|
|
2,933
|
|
|
Corporate
securities
|
615,077
|
|
|
28,056
|
|
|
2,258
|
|
|
640,875
|
|
|
Mortgage-backed
securities
|
259,748
|
|
|
1,825
|
|
|
2,823
|
|
|
258,750
|
|
|
Total
fixed-maturity securities, available-for-sale
|
$
|
966,168
|
|
|
30,637
|
|
|
5,582
|
|
|
991,223
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Amortized
cost
|
|
Gross
unrealized gains
|
|
Gross
unrealized losses
|
|
Fair
value
|
|
2016:
|
|
|
|
|
|
|
|
|
Fixed-maturity
securities, available-for-sale:
|
|
|
|
|
|
|
|
|
U.S.
government
|
$
|
48,676
|
|
|
644
|
|
|
103
|
|
|
49,217
|
|
|
States and political
subdivisions
|
10,546
|
|
|
285
|
|
|
187
|
|
|
10,644
|
|
|
Corporate
securities
|
491,518
|
|
|
21,500
|
|
|
3,739
|
|
|
509,279
|
|
|
Mortgage-backed
securities
|
184,217
|
|
|
1,732
|
|
|
3,558
|
|
|
182,391
|
|
|
Total
fixed-maturity securities, available-for-sale
|
$
|
734,957
|
|
|
24,161
|
|
|
7,587
|
|
|
751,531
|
|
At
December 31,
2017 and 2016, the Company did not have
any OTTI losses in AOCI.
The net
unrealized gains (losses) on available-for-sale securities
consist of the
following at December
31:
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|
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|
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|
|
|
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2017
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|
2016
|
|
2015
|
|
Fixed-maturity securities,
available-for-sale:
|
$
|
25,055
|
|
|
16,574
|
|
|
13,608
|
|
|
Adjustments
for:
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|
|
|
|
|
|
Shadow
adjustments
|
(5,704
|
)
|
|
(5,501
|
)
|
|
(5,916
|
)
|
|
Deferred taxes
|
(6,344
|
)
|
|
(3,876
|
)
|
|
(2,692
|
)
|
|
Net unrealized gains
(losses)
|
$
|
13,007
|
|
|
7,197
|
|
|
5,000
|
|
The amortized
cost and fair value of available-for-sale fixed-maturity securities
at December 31,
2017, by contractual maturity,
are shown below:
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Amortized
cost
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Fair
value
|
|
Fixed-maturity securities,
available-for-sale:
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|
|
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Due in one year or
less
|
$
|
39,718
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|
40,248
|
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Due after one year through
five years
|
283,071
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|
287,678
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Due after five years
through ten years
|
238,451
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|
240,552
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Due after ten
years
|
140,938
|
|
|
159,567
|
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Structured
securities
|
263,990
|
|
|
263,178
|
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|
Total fixed-maturity
securities, available-for-sale
|
$
|
966,168
|
|
|
991,223
|
|
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-maturity securities not
due at a single maturity date have been presented in the year of
final contractual maturity. Structured securities are
shown separately, as they are not due at a single
maturity.
As of
December 31,
2017 and 2016, investments with a fair
value of $1,688 and $1,699, respectively were held on
deposit as required by statutory regulations.
The
Company’s fixed-maturity security portfolios include
mortgage-backed securities. Due to the high quality of
these investments and the lack of subprime loans within the
securities, the Company does not have a material exposure to
subprime mortgages.
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(b)
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Unrealized Investment Losses
|
The following
table summarizes the fair value and related unrealized losses on
available-for-sale securities that have been in a continuous loss
position for the respective years
ended December 31
are shown
below:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 months
or less
|
|
Greater
than 12 months
|
|
Total
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|
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Fair
value
|
|
Unrealized
losses
|
|
Fair
value
|
|
Unrealized
losses
|
|
Fair
value
|
|
Unrealized
losses
|
|
2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed-maturity
securities, available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
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|
U.S. government
|
$
|
34,218
|
|
|
400
|
|
|
1,986
|
|
|
50
|
|
|
36,204
|
|
|
450
|
|
|
Foreign
government
|
2,933
|
|
|
51
|
|
|
—
|
|
|
—
|
|
|
2,933
|
|
|
51
|
|
|
Corporate
securities
|
116,272
|
|
|
1,035
|
|
|
41,688
|
|
|
1,223
|
|
|
157,960
|
|
|
2,258
|
|
|
Mortgage-backed
securities
|
90,852
|
|
|
677
|
|
|
54,608
|
|
|
2,146
|
|
|
145,460
|
|
|
2,823
|
|
|
Total
temporarily impaired securities
|
$
|
244,275
|
|
|
2,163
|
|
|
98,282
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|
|
3,419
|
|
|
342,557
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|
|
5,582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 months
or less
|
|
Greater
than 12 months
|
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Total
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|
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Fair
value
|
|
Unrealized
losses
|
|
Fair
value
|
|
Unrealized
losses
|
|
Fair
value
|
|
Unrealized
losses
|
|
2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed-maturity
securities, available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government
|
$
|
11,713
|
|
|
103
|
|
|
—
|
|
|
—
|
|
|
11,713
|
|
|
103
|
|
|
States and
political subdivisions
|
4,286
|
|
|
187
|
|
|
—
|
|
|
—
|
|
|
4,286
|
|
|
187
|
|
|
Corporate
securities
|
132,387
|
|
|
3,313
|
|
|
7,253
|
|
|
426
|
|
|
139,640
|
|
|
3,739
|
|
|
Mortgage-backed
securities
|
102,435
|
|
|
3,483
|
|
|
1,622
|
|
|
75
|
|
|
104,057
|
|
|
3,558
|
|
|
Total
temporarily impaired securities
|
$
|
250,821
|
|
|
7,086
|
|
|
8,875
|
|
|
501
|
|
|
259,696
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|
|
7,587
|
|
As of
December 31,
2017 and 2016, there were
160
and
149
available-for-sale
fixed-maturity security holdings that were in an unrealized loss
position, respectively.
As of
December 31,
2017 and 2016, of the total amount of
unrealized losses, $5,498 or 98.6% and $7,250 or 95.6%, respectively, are related
to unrealized losses on investment grade securities.
Investment
grade is defined as a security having a credit rating of Aaa, Aa,
A, or Baa from Moody’s or a rating of AAA, AA, A, or BBB from
Standards and Poor’s (S&P), or a NAIC rating of 1 or 2 if
a Moody’s or S&P rating is not available.
Unrealized
losses on securities are principally related to changes in interest
rates or changes in sector spreads from the date of purchase. As
contractual payments continue to be met, management continues to
expect all contractual cash flows to be received and does not
consider these investments to be other-than-temporarily
impaired.
The following
table presents a rollforward of the Company’s cumulative
credit impairments on fixed-maturity securities held at
December
31:
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2017
|
|
2016
|
|
Balance as of January
1
|
$
|
—
|
|
|
—
|
|
|
Additions for credit
impairments recognized on:
|
|
|
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|
Securities not previously
impaired
|
257
|
|
|
387
|
|
|
Reductions for credit
impairments previously on:
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|
Securities that matured,
were sold, or were liquidated during the period
|
(257
|
)
|
|
(387
|
)
|
|
Balance as of December
31
|
$
|
—
|
|
|
—
|
|
|
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|
(d)
|
Realized Investment Gains (Losses)
|
Gross and net
realized investment gains (losses) for the years ended
December
31 are
summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
Available-for-sale:
|
|
|
|
|
|
|
Fixed-maturity
securities:
|
|
|
|
|
|
|
Gross gains on sales and
exchanges
|
$
|
52
|
|
|
1,130
|
|
|
895
|
|
|
Gross losses on sales and
exchanges
|
(167
|
)
|
|
(949
|
)
|
|
(133
|
)
|
|
OTTI
|
(257
|
)
|
|
(387
|
)
|
|
(184
|
)
|
|
Net gains (losses) on
available-for-sale securities
|
(372
|
)
|
|
(206
|
)
|
|
578
|
|
|
Other
|
49
|
|
|
1
|
|
|
5
|
|
|
Net realized investment
gains (losses)
|
$
|
(323
|
)
|
|
(205
|
)
|
|
583
|
|
Proceeds from
sales of available-for-sale securities for the years ended
December
31 are
presented in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
Available-for-sale
securities:
|
|
|
|
|
|
|
Fixed-maturity
|
$
|
16,917
|
|
|
59,031
|
|
|
54,740
|
|
|
|
|
(e)
|
Trading Gains and Losses
|
The Company
recognized unrealized gains (losses) of $248, $136, and $(19) during 2017, 2016, and 2015, respectively, on trading
securities still held at the reporting date. The Company did not
recognize any gains or losses on trading securities sold
during 2017, 2016, and 2015.
|
|
|
(f)
|
Interest and Similar Income
|
Major
categories of Interest and similar income, net, for the
respective
years ended December 31
are shown
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
Interest and similar
income:
|
|
|
|
|
|
|
Available-for-sale
fixed-maturity securities
|
$
|
31,442
|
|
|
30,189
|
|
|
27,699
|
|
|
Trading
securities
|
34
|
|
|
16
|
|
|
24
|
|
|
Policy loans
|
22
|
|
|
22
|
|
|
18
|
|
|
Short-term
securities and cash and cash equivalents
|
631
|
|
|
165
|
|
|
24
|
|
|
Total
|
32,129
|
|
|
30,392
|
|
|
27,765
|
|
|
Less: Investment
expenses
|
847
|
|
|
834
|
|
|
378
|
|
|
Total interest and similar
income, net
|
$
|
31,282
|
|
|
29,558
|
|
|
27,387
|
|
|
|
|
(g)
|
Variable Interest Entities
|
The Company
invests in structured securities which represent interests
in VIEs. The Company has carefully analyzed the VIEs to determine
whether the Company is the primary beneficiary, taking into
consideration whether the Company, or the Company together with its
affiliates, has the power to direct the activities of the VIE, that
most affect its economic performance and whether the Company has
the right to benefits from the VIE. The Company has concluded
that it is not the primary beneficiary for any of the VIEs invested
in by the Company as of December 31, 2017
and
2016.
The carrying
amount and maximum exposure to loss relating to VIEs in which the
Company is not deemed to be the primary beneficiary as of
December
31were
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
|
Carrying
amount
|
|
Maximum
exposure to loss
(1)
|
|
Carrying
amount
|
|
Maximum
exposure to loss
(1)
|
|
Fixed-maturity
securities, available-for-sale:
|
|
|
|
|
|
|
|
|
Corporate
securities
|
$
|
4,428
|
|
|
4,428
|
|
|
5,700
|
|
|
5,700
|
|
|
Mortgage-backed
securities
|
258,750
|
|
|
258,750
|
|
|
182,391
|
|
|
182,391
|
|
|
Total
fixed-maturity securities, available-for-sale
|
$
|
263,178
|
|
|
263,178
|
|
|
188,091
|
|
|
188,091
|
|
|
|
|
|
|
|
|
|
|
|
(1) The maximum exposure
to loss is equal to the carrying amount for Fixed-maturity
securities, available-for-sale.
|
|