| Debt and Equity Securities |
Note 3 – Debt and Equity Securities
Investments in debt securities, classified as available-for-sale, are as follows:
|
(in thousands) |
Amortized
cost |
|
|
Gross unrealized |
|
|
Estimated
fair value |
|
|
Gains |
|
|
Losses |
|
|
June 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury bonds |
$ |
121,611 |
|
|
$ |
2,777 |
|
|
$ |
— |
|
|
$ |
124,388 |
|
|
Municipal bonds |
|
743,942 |
|
|
|
23,407 |
|
|
|
(434 |
) |
|
|
766,915 |
|
|
Foreign government bonds |
|
141,315 |
|
|
|
2,058 |
|
|
|
(56 |
) |
|
|
143,317 |
|
|
Governmental agency bonds |
|
338,201 |
|
|
|
3,554 |
|
|
|
— |
|
|
|
341,755 |
|
|
Governmental agency mortgage-backed securities |
|
2,207,589 |
|
|
|
15,830 |
|
|
|
(5,607 |
) |
|
|
2,217,812 |
|
|
U.S. corporate debt securities |
|
701,935 |
|
|
|
19,582 |
|
|
|
(3,135 |
) |
|
|
718,382 |
|
|
Foreign corporate debt securities |
|
226,227 |
|
|
|
4,736 |
|
|
|
(1,111 |
) |
|
|
229,852 |
|
|
|
$ |
4,480,820 |
|
|
$ |
71,944 |
|
|
$ |
(10,343 |
) |
|
$ |
4,542,421 |
|
|
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
fair value |
|
|
(in thousands) |
|
|
Gains |
|
|
Losses |
|
|
|
|
June 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stocks |
$ |
19,558 |
|
|
$ |
195 |
|
|
$ |
(4,584 |
) |
|
$ |
15,169 |
|
|
Common stocks |
|
340,638 |
|
|
|
14,421 |
|
|
|
(7,962 |
) |
|
|
347,097 |
|
|
|
$ |
360,196 |
|
|
$ |
14,616 |
|
|
$ |
(12,546 |
) |
|
$ |
362,266 |
|
|
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 $12.2 million and $1.5 million and realized losses of $4.6 million and $0.4 million for the three months ended June 30, 2016 and 2015, respectively, and realized gains of $13.2 million and $5.1 million and realized losses of $7.0 million and $6.6 million for the six months ended June 30, 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
fair value |
|
|
Unrealized
losses |
|
|
Estimated
fair value |
|
|
Unrealized
losses |
|
|
Estimated
fair value |
|
|
Unrealized
losses |
|
|
June 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal bonds |
$ |
41,605 |
|
|
$ |
(312 |
) |
|
$ |
13,668 |
|
|
$ |
(122 |
) |
|
$ |
55,273 |
|
|
$ |
(434 |
) |
|
Foreign government bonds |
|
8,389 |
|
|
|
(11 |
) |
|
|
3,506 |
|
|
|
(45 |
) |
|
|
11,895 |
|
|
|
(56 |
) |
|
Governmental agency mortgage-backed securities |
|
749,708 |
|
|
|
(2,898 |
) |
|
|
281,816 |
|
|
|
(2,709 |
) |
|
|
1,031,524 |
|
|
|
(5,607 |
) |
|
U.S. corporate debt securities |
|
73,749 |
|
|
|
(1,192 |
) |
|
|
51,399 |
|
|
|
(1,943 |
) |
|
|
125,148 |
|
|
|
(3,135 |
) |
|
Foreign corporate debt securities |
|
24,080 |
|
|
|
(549 |
) |
|
|
20,101 |
|
|
|
(562 |
) |
|
|
44,181 |
|
|
|
(1,111 |
) |
|
Total debt securities |
|
897,531 |
|
|
|
(4,962 |
) |
|
|
370,490 |
|
|
|
(5,381 |
) |
|
|
1,268,021 |
|
|
|
(10,343 |
) |
|
Equity securities |
|
41,343 |
|
|
|
(1,199 |
) |
|
|
72,578 |
|
|
|
(11,347 |
) |
|
|
113,921 |
|
|
|
(12,546 |
) |
|
Total |
$ |
938,874 |
|
|
$ |
(6,161 |
) |
|
$ |
443,068 |
|
|
$ |
(16,728 |
) |
|
$ |
1,381,942 |
|
|
$ |
(22,889 |
) |
|
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 June 30, 2016, by contractual maturities, are as follows:
|
(in thousands) |
Due in one
year or less |
|
|
Due after
one through
five years |
|
|
Due after
five through
ten years |
|
|
Due after
ten years |
|
|
Total |
|
|
U.S. Treasury bonds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost |
$ |
27,855 |
|
|
$ |
64,029 |
|
|
$ |
13,800 |
|
|
$ |
15,927 |
|
|
$ |
121,611 |
|
|
Estimated fair value |
$ |
27,870 |
|
|
$ |
64,603 |
|
|
$ |
14,331 |
|
|
$ |
17,584 |
|
|
$ |
124,388 |
|
|
Municipal bonds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost |
$ |
44,059 |
|
|
$ |
326,255 |
|
|
$ |
223,201 |
|
|
$ |
150,427 |
|
|
$ |
743,942 |
|
|
Estimated fair value |
$ |
44,127 |
|
|
$ |
333,004 |
|
|
$ |
231,647 |
|
|
$ |
158,137 |
|
|
$ |
766,915 |
|
|
Foreign government bonds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost |
$ |
12,314 |
|
|
$ |
109,665 |
|
|
$ |
10,968 |
|
|
$ |
8,368 |
|
|
$ |
141,315 |
|
|
Estimated fair value |
$ |
12,347 |
|
|
$ |
110,912 |
|
|
$ |
11,318 |
|
|
$ |
8,740 |
|
|
$ |
143,317 |
|
|
Governmental agency bonds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost |
$ |
20,842 |
|
|
$ |
207,230 |
|
|
$ |
73,135 |
|
|
$ |
36,994 |
|
|
$ |
338,201 |
|
|
Estimated fair value |
$ |
20,864 |
|
|
$ |
207,870 |
|
|
$ |
73,760 |
|
|
$ |
39,261 |
|
|
$ |
341,755 |
|
|
U.S. corporate debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost |
$ |
15,137 |
|
|
$ |
324,828 |
|
|
$ |
287,199 |
|
|
$ |
74,771 |
|
|
$ |
701,935 |
|
|
Estimated fair value |
$ |
15,205 |
|
|
$ |
331,095 |
|
|
$ |
292,749 |
|
|
$ |
79,333 |
|
|
$ |
718,382 |
|
|
Foreign corporate debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost |
$ |
7,109 |
|
|
$ |
110,605 |
|
|
$ |
95,282 |
|
|
$ |
13,231 |
|
|
$ |
226,227 |
|
|
Estimated fair value |
$ |
7,103 |
|
|
$ |
111,978 |
|
|
$ |
96,637 |
|
|
$ |
14,134 |
|
|
$ |
229,852 |
|
|
Total debt securities excluding mortgage-backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost |
$ |
127,316 |
|
|
$ |
1,142,612 |
|
|
$ |
703,585 |
|
|
$ |
299,718 |
|
|
$ |
2,273,231 |
|
|
Estimated fair value |
$ |
127,516 |
|
|
$ |
1,159,462 |
|
|
$ |
720,442 |
|
|
$ |
317,189 |
|
|
$ |
2,324,609 |
|
|
Total mortgage-backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,207,589 |
|
|
Estimated fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,217,812 |
|
|
Total debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
4,480,820 |
|
|
Estimated fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
4,542,421 |
|
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 June 30, 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 |
|
|
June 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury bonds |
$ |
124,388 |
|
|
|
100.0 |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
124,388 |
|
|
|
100.0 |
|
|
Municipal bonds |
|
733,263 |
|
|
|
95.5 |
|
|
|
27,446 |
|
|
|
3.5 |
|
|
|
6,206 |
|
|
|
1.0 |
|
|
|
766,915 |
|
|
|
100.0 |
|
|
Foreign government bonds |
|
129,866 |
|
|
|
90.6 |
|
|
|
9,930 |
|
|
|
6.9 |
|
|
|
3,521 |
|
|
|
2.5 |
|
|
|
143,317 |
|
|
|
100.0 |
|
|
Governmental agency bonds |
|
341,755 |
|
|
|
100.0 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
341,755 |
|
|
|
100.0 |
|
|
Governmental agency mortgage-backed securities |
|
2,217,812 |
|
|
|
100.0 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,217,812 |
|
|
|
100.0 |
|
|
U.S. corporate debt securities |
|
308,868 |
|
|
|
43.0 |
|
|
|
202,157 |
|
|
|
28.1 |
|
|
|
207,357 |
|
|
|
28.9 |
|
|
|
718,382 |
|
|
|
100.0 |
|
|
Foreign corporate debt securities |
|
118,692 |
|
|
|
51.6 |
|
|
|
74,241 |
|
|
|
32.3 |
|
|
|
36,919 |
|
|
|
16.1 |
|
|
|
229,852 |
|
|
|
100.0 |
|
|
Total debt securities |
|
3,974,644 |
|
|
|
87.5 |
|
|
|
313,774 |
|
|
|
6.9 |
|
|
|
254,003 |
|
|
|
5.6 |
|
|
|
4,542,421 |
|
|
|
100.0 |
|
|
Preferred stocks |
|
— |
|
|
|
— |
|
|
|
8,866 |
|
|
|
58.4 |
|
|
|
6,303 |
|
|
|
41.6 |
|
|
|
15,169 |
|
|
|
100.0 |
|
|
Total |
$ |
3,974,644 |
|
|
|
87.2 |
|
|
$ |
322,640 |
|
|
|
7.1 |
|
|
$ |
260,306 |
|
|
|
5.7 |
|
|
$ |
4,557,590 |
|
|
|
100.0 |
|
As of June 30, 2016, the estimated fair value of total debt securities included $144.2 million of bank loans, of which $134.1 million was non-investment grade; $103.4 million of high yield corporate debt securities, all of which was non-investment grade; and $53.7 million of emerging market debt securities, of which $10.3 million was non-investment grade.
The composition of the investment portfolio in an unrealized loss position at June 30, 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 |
|
|
June 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal bonds |
$ |
49,907 |
|
|
|
90.2 |
|
|
$ |
1,634 |
|
|
|
3.0 |
|
|
$ |
3,732 |
|
|
|
6.8 |
|
|
$ |
55,273 |
|
|
|
100.0 |
|
|
Foreign government bonds |
|
9,435 |
|
|
|
79.3 |
|
|
|
1,033 |
|
|
|
8.7 |
|
|
|
1,427 |
|
|
|
12.0 |
|
|
|
11,895 |
|
|
|
100.0 |
|
|
Governmental agency mortgage-backed securities |
|
1,031,524 |
|
|
|
100.0 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,031,524 |
|
|
|
100.0 |
|
|
U.S. corporate debt securities |
|
13,722 |
|
|
|
11.0 |
|
|
|
29,183 |
|
|
|
23.3 |
|
|
|
82,243 |
|
|
|
65.7 |
|
|
|
125,148 |
|
|
|
100.0 |
|
|
Foreign corporate debt securities |
|
2,898 |
|
|
|
6.6 |
|
|
|
18,155 |
|
|
|
41.1 |
|
|
|
23,128 |
|
|
|
52.3 |
|
|
|
44,181 |
|
|
|
100.0 |
|
|
Total debt securities |
|
1,107,486 |
|
|
|
87.4 |
|
|
|
50,005 |
|
|
|
3.9 |
|
|
|
110,530 |
|
|
|
8.7 |
|
|
|
1,268,021 |
|
|
|
100.0 |
|
|
Preferred stocks |
|
— |
|
|
|
— |
|
|
|
8,866 |
|
|
|
59.3 |
|
|
|
6,093 |
|
|
|
40.7 |
|
|
|
14,959 |
|
|
|
100.0 |
|
|
Total |
$ |
1,107,486 |
|
|
|
86.3 |
|
|
$ |
58,871 |
|
|
|
4.6 |
|
|
$ |
116,623 |
|
|
|
9.1 |
|
|
$ |
1,282,980 |
|
|
|
100.0 |
|
As of June 30, 2016, the estimated fair value of total debt securities in an unrealized loss position included $50.8 million of bank loans, of which $46.3 million was non-investment grade; $54.0 million of high yield corporate debt securities, all of which was non-investment grade; and $9.5 million of emerging market debt securities, of which $6.5 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.
|