Investments
 3 Months Ended
Mar. 31, 2015
Investments [Abstract]  
Investments
Investments
Fixed Maturity and Equity Securities Available for Sale
Securities by Asset Class
The following table provides amortized cost and fair value of securities by asset class at March 31, 2015.
 
 
Amortized
Cost
 
Gross
Unrealized
 
Fair
Value
 
Gains
 
Losses
 
U.S. Treasury securities and
obligations of U.S. Government
$
154,498

 
$
11,960

 
$
61

 
$
166,397

Federal agencies 1
19,771

 
2,112

 
—

 
21,883

Federal agency issued residential
      mortgage-backed securities 1
41,778

 
4,755

 
2

 
46,531

Subtotal
216,047

 
18,827

 
63

 
234,811

Corporate obligations:
 
 
 
 
 
 
 
Industrial
542,461

 
39,249

 
690

 
581,020

Energy
225,042

 
15,640

 
2,673

 
238,009

Communications and technology
241,914

 
20,026

 
127

 
261,813

Financial
248,788

 
19,883

 
1,033

 
267,638

Consumer
522,294

 
33,239

 
440

 
555,093

Public utilities
229,662

 
26,339

 
77

 
255,924

Subtotal
2,010,161

 
154,376

 
5,040

 
2,159,497

Corporate private-labeled residential
mortgage-backed securities
85,651

 
4,228

 
—

 
89,879

Municipal securities
134,836

 
24,689

 
—

 
159,525

Other
102,261

 
4,250

 
2,433

 
104,078

Redeemable preferred stocks
17,463

 
584

 
227

 
17,820

Fixed maturity securities
2,566,419

 
206,954

 
7,763

 
2,765,610

Equity securities
23,549

 
1,828

 
130

 
25,247

Total
$
2,589,968

 
$
208,782

 
$
7,893

 
$
2,790,857


 1 Federal agency securities are not backed by the full faith and credit of the U.S. Government.
The following table provides amortized cost and fair value of securities by asset class at December 31, 2014.
 
 
Amortized
Cost
 
Gross
Unrealized
 
Fair
Value
 
Gains
 
Losses
 
U.S. Treasury securities and
     obligations of U.S. Government
$
154,937

 
$
9,939

 
$
83

 
$
164,793

Federal agencies 1
19,769

 
2,182

 
—

 
21,951

Federal agency issued residential
      mortgage-backed securities 1
44,287

 
4,457

 
2

 
48,742

Subtotal
218,993

 
16,578

 
85

 
235,486

Corporate obligations:
 
 
 
 
 
 
 
Industrial
527,269

 
33,400

 
1,292

 
559,377

Energy
219,518

 
14,147

 
3,575

 
230,090

Communications and technology
226,442

 
16,705

 
242

 
242,905

Financial
276,586

 
18,826

 
1,083

 
294,329

Consumer
517,050

 
28,290

 
1,261

 
544,079

Public utilities
225,375

 
24,932

 
228

 
250,079

Subtotal
1,992,240

 
136,300

 
7,681

 
2,120,859

Corporate private-labeled residential
mortgage-backed securities
90,819

 
4,463

 
—

 
95,282

Municipal securities
135,518

 
22,974

 
—

 
158,492

Other
98,373

 
3,818

 
2,718

 
99,473

Redeemable preferred stocks
17,473

 
379

 
713

 
17,139

Fixed maturity securities
2,553,416

 
184,512

 
11,197

 
2,726,731

Equity securities
23,576

 
1,895

 
590

 
24,881

Total
$
2,576,992

 
$
186,407

 
$
11,787

 
$
2,751,612

 1 Federal agency securities are not backed by the full faith and credit of the U.S. Government.
Contractual Maturities
The following table provides the distribution of maturities for fixed maturity securities available for sale at March 31, 2015 and December 31, 2014. Expected maturities may differ from these contractual maturities since borrowers may have the right to call or prepay obligations.
 
 
March 31, 2015
 
December 31, 2014
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
Due in one year or less
$
128,168

 
$
130,587

 
$
165,955

 
$
168,913

Due after one year through five years
722,917

 
789,080

 
694,809

 
757,397

Due after five years through ten years
1,096,531

 
1,157,090

 
1,045,557

 
1,087,891

Due after ten years
420,569

 
476,278

 
438,719

 
490,976

Securities with variable principal payments
180,770

 
194,755

 
190,903

 
204,415

Redeemable preferred stocks
17,464

 
17,820

 
17,473

 
17,139

Total
$
2,566,419

 
$
2,765,610

 
2,553,416

 
2,726,731


No material derivative financial instruments were held at March 31, 2015 or December 31, 2014.
Unrealized Losses on Investments
At the end of each quarter, all securities are reviewed to determine whether impairments exist and whether other-than-temporary impairments should be recorded. This quarterly process includes an assessment of the credit quality of each investment in the entire securities portfolio. Additional reporting and review procedures are conducted for those securities where fair value is less than 90% of amortized cost. The Company prepares a formal review document no less often than quarterly of all investments where fair value is less than 80% of amortized cost for six months or more and selected investments that have changed significantly from a previous period and that have a decline in fair value greater than 10% of amortized cost. For additional information on the Company's process and considerations, as well as related accounting when other-than-temporary impairments are identified, please refer to Note 4 - Investments of the Company's 2014 Form 10-K, as amended.
The following table provides information regarding fixed maturity and equity security investments available for sale with unrealized losses by length of time at March 31, 2015.
 
Less Than 12 Months
 
12 Months or Longer
 
Total
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
U.S. Treasury securities and
obligations of U.S. Government
$
5,098

 
$
61

 
$
100

 
$
—

 
$
5,198

 
$
61

Federal agency issued residential
      mortgage-backed securities 1
—

 
—

 
339

 
2

 
339

 
2

Subtotal
5,098

 
61

 
439

 
2

 
5,537

 
63

Corporate obligations:
 
 
 
 
 
 
 
 
 
 
 
Industrial
32,472

 
219

 
10,567

 
471

 
43,039

 
690

Energy
38,343

 
2,282

 
21,692

 
391

 
60,035

 
2,673

Communications and technology
16,303

 
127

 
—

 
—

 
16,303

 
127

Financial
—

 
—

 
4,849

 
1,033

 
4,849

 
1,033

Consumer
22,943

 
179

 
8,274

 
261

 
31,217

 
440

Public utilities
3,001

 
1

 
3,920

 
76

 
6,921

 
77

Subtotal
113,062

 
2,808

 
49,302

 
2,232

 
162,364

 
5,040

Other
8,584

 
34

 
31,174

 
2,399

 
39,758

 
2,433

Redeemable preferred stocks
—

 
—

 
6,806

 
227

 
6,806

 
227

Fixed maturity securities
126,744

 
2,903

 
87,721

 
4,860

 
214,465

 
7,763

Equity securities
3,056

 
5

 
4,910

 
125

 
7,966

 
130

Total
$
129,800

 
$
2,908

 
$
92,631

 
$
4,985

 
$
222,431

 
7,893

 1 Federal agency securities are not backed by the full faith and credit of the U.S. Government.
The following table provides information regarding fixed maturity and equity security investments available for sale with unrealized losses by length of time at December 31, 2014.
 
Less Than 12 Months
 
12 Months or Longer
 
Total
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
U.S. Treasury securities and
obligations of U.S. Government
$
468

 
$
—

 
$
4,944

 
$
83

 
$
5,412

 
$
83

Federal agency issued residential
      mortgage-backed securities 1
60

 
2

 
281

 
—

 
341

 
2

Subtotal
528

 
2

 
5,225

 
83

 
5,753

 
85

Corporate obligations:
 
 
 
 
 
 
 
 
 
 
 
Industrial
15,289

 
184

 
42,830

 
1,108

 
58,119

 
1,292

Energy
40,493

 
1,962

 
36,789

 
1,613

 
77,282

 
3,575

Communications and technology
5,061

 
33

 
9,676

 
209

 
14,737

 
242

Financial
14,831

 
165

 
4,963

 
918

 
19,794

 
1,083

Consumer
10,991

 
165

 
40,185

 
1,096

 
51,176

 
1,261

Public utilities
—

 
—

 
6,768

 
228

 
6,768

 
228

Subtotal
86,665

 
2,509

 
141,211

 
5,172

 
227,876

 
7,681

Other
12,567

 
396

 
30,210

 
2,322

 
42,777

 
2,718

Redeemable preferred stocks
—

 
—

 
9,404

 
713

 
9,404

 
713

Fixed maturity securities
99,760

 
2,907

 
186,050

 
8,290

 
285,810

 
11,197

Equity securities
—

 
—

 
11,515

 
590

 
11,515

 
590

Total
$
99,760

 
$
2,907

 
$
197,565

 
$
8,880

 
$
297,325

 
$
11,787

 1 Federal agency securities are not backed by the full faith and credit of the U.S. Government.
At March 31, 2015, the Company had 72 issues in its investment portfolio of fixed maturity and equity securities with unrealized losses. Included in this total, 44 security issues were below cost for less than one year; 23 security issues were below cost for one year or more and less than three years; and five security issues were below cost for three years or more. At December 31, 2014, the Company had 96 issues in its investment portfolio of fixed maturity and equity securities with unrealized losses. Included in this total, 40 security issues were below cost for less than one year; 50 security issues were below cost for one year or more and less than three years; and six security issues were below cost for three years or more.
The Company does not consider these unrealized losses to be credit-related. These unrealized losses primarily relate to changes in interest rates and market spreads subsequent to purchase. A substantial portion of investment securities that have unrealized losses are either corporate debt issued with investment grade credit ratings or other investment securities for which discounted cash flow projections are performed.
The following table provides the distribution of maturities for fixed maturity securities available for sale with unrealized losses at March 31, 2015 and December 31, 2014. Expected maturities may differ from these contractual maturities since borrowers may have the right to call or prepay obligations.
 
 
March 31, 2015
 
December 31, 2014
 
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
Fixed maturity securities available for sale:
 
 
 
 
 
 
 
Due in one year or less
$
168

 
$
—

 
$
5,052

 
$
115

Due after one year through five years
11,095

 
1,668

 
21,033

 
960

Due after five years through ten years
149,843

 
2,394

 
202,240

 
5,772

Due after ten years
46,151

 
3,472

 
47,740

 
3,635

Total
207,257

 
7,534

 
276,065

 
10,482

Securities with variable principal payments
402

 
2

 
341

 
2

Redeemable preferred stocks
6,806

 
227

 
9,404

 
713

Total
$
214,465

 
$
7,763

 
$
285,810

 
$
11,197


The Company recognized other-than-temporary impairments on corporate private-labeled residential mortgage-backed and other securities of less than $0.1 million and $0.2 million for the first quarters ended March 31, 2015 and 2014, respectively.
The following table provides a reconciliation of credit losses recognized in earnings on fixed maturity securities held by the Company for which a portion of the other-than-temporary impairment loss was recognized in other comprehensive income.
 
Quarter Ended
 
March 31
 
2015
 
2014
Credit losses on securities held at beginning of the period
$
17,889

 
$
16,375

Additions for credit losses not previously recognized in
other-than-temporary impairment
—

 
4

Additions for increases in the credit loss for which an other-
than-temporary impairment was previously recognized
when there was no intent to sell the security before
recovery of its amortized cost basis
7

 
158

Reductions for increases in cash flows expected to be
collected that are recognized over the remaining
life of the security
(5
)
 
(5
)
Credit losses on securities held at the end of the period
$
17,891

 
$
16,532


The Company reviews and evaluates information on securities previously impaired and still owned. The identification of additional information or further deteriorations could result in additional impairments in future periods.
Realized Gains (Losses)
The following table provides detail concerning realized investment gains and losses for the first quarters ended March 31, 2015 and 2014.
 
 
Quarter Ended
 
March 31
 
2015
 
2014
Gross gains resulting from:
 
 
 
Sales of investment securities
$
—

 
$
178

Investment securities called and other
227

 
1,295

Real estate
—

 
339

Total gross gains
227

 
1,812

Gross losses resulting from:
 
 
 
Investment securities called and other
(50
)
 
(254
)
Mortgage loans
(193
)
 
(24
)
Total gross losses
(243
)
 
(278
)
Change in allowance for loan losses
(9
)
 
172

Amortization of DAC and VOBA
(3
)
 
(41
)
Net realized investment gains (losses), excluding
other-than-temporary impairment losses
(28
)
 
1,665

 
 
 
 
Net impairment losses recognized in earnings:
 
 
 
Other-than-temporary impairment losses on fixed
maturity and equity securities
—

 
(213
)
Portion of loss recognized in other comprehensive
income
(7
)
 
51

Net other-than-temporary impairment losses
recognized in earnings
(7
)
 
(162
)
Net realized investment gains (losses)
$
(35
)
 
$
1,503

Proceeds From Sales of Investment Securities
The table below details proceeds from the sale of fixed maturity and equity securities, excluding maturities and calls, for the first quarters ended March 31, 2015 and 2014.
 
 
Quarter Ended
 
March 31
 
2015
 
2014
Proceeds
$
—

 
$
4,374

Mortgage Loans
The Company invests in commercial mortgage loans that are secured by commercial real estate and are stated at cost, adjusted for amortization of premium and accrual of discount, less an allowance for loan losses. This allowance is maintained at a level believed by management to be adequate to absorb estimated credit losses and was $1.9 million at both March 31, 2015 and December 31, 2014. The Company had 15% of its total investments in commercial mortgage loans at both March 31, 2015 and December 31, 2014. In addition to the subject collateral underlying the mortgage, the Company typically requires some amount of recourse from borrowers as another potential source of repayment. The recourse requirement is determined as part of the underwriting requirements of each loan. The average loan to value ratio for the overall portfolio was 46% at both March 31, 2015 and December 31, 2014. These ratios are based upon the current balance of loans relative to the appraisal of value at the time the loan was originated or acquired.
The following table identifies the gross mortgage loan principal outstanding and the allowance for loan losses at March 31, 2015 and December 31, 2014.
 
March 31
2015
 
December 31
2014
Principal outstanding
$
546,863

 
$
543,094

Allowance for loan losses
(1,923
)
 
(1,914
)
Carrying value
$
544,940

 
$
541,180


The following table summarizes the amount of mortgage loans held by the Company at March 31, 2015 and December 31, 2014, segregated by year of origination. Purchased loans are shown in the year acquired by the Company, although the individual loans may have been initially originated in prior years.
 
March 31
2015
 
%
of Total
 
December 31
2014
 
%
of Total
Prior to 2006
$
43,177

 
9
%
 
$
47,843

 
9
%
2006
15,818

 
3
%
 
16,280

 
3
%
2007
18,592

 
3
%
 
19,991

 
4
%
2008
22,570

 
4
%
 
22,938

 
4
%
2009
17,584

 
3
%
 
20,754

 
4
%
2010
48,872

 
9
%
 
51,205

 
9
%
2011
88,784

 
16
%
 
91,943

 
17
%
2012
126,783

 
23
%
 
133,912

 
25
%
2013
76,840

 
14
%
 
77,784

 
14
%
2014
59,863

 
11
%
 
60,444

 
11
%
2015
27,980

 
5
%
 
—

 
—
%
Principal outstanding
$
546,863

 
100
%
 
$
543,094

 
100
%

The following table identifies mortgage loans by geographic location at March 31, 2015 and December 31, 2014.
 
March 31
2015
 
%
of Total
 
December 31
2014
 
%
of Total
Pacific
$
128,912

 
24
%
 
$
131,109

 
25
%
West south central
100,295

 
18
%
 
94,122

 
17
%
West north central
76,631

 
14
%
 
78,027

 
14
%
Mountain
64,800

 
12
%
 
68,961

 
13
%
East north central
62,571

 
12
%
 
64,013

 
12
%
South Atlantic
62,477

 
11
%
 
60,557

 
11
%
Middle Atlantic
27,166

 
5
%
 
21,877

 
4
%
East south central
24,011

 
4
%
 
24,428

 
4
%
Principal outstanding
$
546,863

 
100
%
 
$
543,094

 
100
%

The following table identifies the concentration of mortgage loans by state greater than 5% of total at March 31, 2015 and December 31, 2014.
 
March 31
2015
 
%
of Total
 
December 31
2014
 
%
of Total
California
$
109,872

 
20
%
 
$
108,683

 
20
%
Texas
96,148

 
18
%
 
89,923

 
16
%
Minnesota
55,049

 
10
%
 
55,916

 
10
%
Ohio
29,453

 
5
%
 
30,432

 
6
%
Florida
27,208

 
5
%
 
26,452

 
5
%
All others
229,133

 
42
%
 
231,688

 
43
%
Principal outstanding
$
546,863

 
100
%
 
$
543,094

 
100
%

The following table identifies mortgage loans by property type at March 31, 2015 and December 31, 2014. The Other category consists principally of apartments and retail properties.
 
March 31
2015
 
%
of Total
 
December 31
2014
 
%
of Total
Industrial
$
288,281

 
52
%
 
$
281,671

 
51
%
Office
164,038

 
30
%
 
165,859

 
31
%
Medical
24,629

 
5
%
 
25,617

 
5
%
Other
69,915

 
13
%
 
69,947

 
13
%
Principal outstanding
$
546,863

 
100
%
 
$
543,094

 
100
%

The table below identifies mortgage loans by maturity at March 31, 2015 and December 31, 2014.
 
March 31
2015
 
%
of Total
 
December 31
2014
 
%
of Total
Due in one year or less
$
28,862

 
5
%
 
$
27,607

 
5
%
Due after one year through five years
139,733

 
26
%
 
145,530

 
27
%
Due after five years through ten years
131,747

 
24
%
 
143,382

 
26
%
Due after ten years
246,521

 
45
%
 
226,575

 
42
%
Principal outstanding
$
546,863

 
100
%
 
$
543,094

 
100
%

The Company may refinance commercial mortgage loans prior to contractual maturity as a means of originating new loans that meet the Company's underwriting and pricing parameters.  The Company refinanced three loans with outstanding balances totaling $4.5 million during the quarter ended March 31, 2015 and two loans with outstanding balances totaling $3.2 million during the quarter ended March 31, 2014.
In the normal course of business, the Company generally commits to fund commercial mortgage loans up to 120 days in advance. These commitments typically have fixed expiration dates. A small percentage of commitments expire due to the borrower's failure to deliver the requirements of the commitment by the expiration date. In these cases, the Company retains the commitment fee. For additional information, please see Note 16 - Commitments.